How Co-Creation Plays A Pivotal Role To Business Value Creation

Grégory Weber, Experience Center Leader at PwC Luxembourg, explains why customers play a central role in a company’s value chain today and why they should be involved since the very early stages of product and service creation.

Photo: According to Grégory Weber, the bottom line is: retention, brand reputation, and revenue growth / Credits © Olivier Toussaint / PwC Luxembourg

During past decades companies considered their consumers as passive target audiences, leaving them out when developing new products and services or when upgrading them. Consequently, value was created through a series of activities before the point of purchase.

“Consumers are anything but passive spectators; they actively define and understand value in the shape of experiences, and push companies to see it the same way,” said Grégory Weber, commenting on a blog.

According to the Experience Center Leader at PwC Luxembourg, organizations need to therefore adopt a co-creation approach which focuses on value-based experience rather than on just the products. And customers need to be kept at the heart of the value creation process.

Grégory Weber, how would you describe this co-creation approach?

Co-creation refers to the design process of products and services in which customers play a central role all along the value chain of any organization. The term and the concept emerged during the late 1990s among tech companies in Silicon Valley. Simply put, the main idea is to create and manufacture for customers, together with customers. In other words, co-creation is pivotal to business value creation.

Earlier, value creation was company-centred and led greatly or fully by them. Nevertheless, today’s customers are much more informed and aware of the manufacturing process and of the value of the product they want to purchase. They also interact to a greater extent with companies and other consumers.

This new reality calls for companies to get closer to their customers and remain devoted to them. And to do so, co-creation – both as an approach and strategy, and even as a mindset– plays an important role in shared value creation.

To go about it, companies need to understand and map out all the interactions where customers see and get value, what we call “customer experience”. Businesses should deliver a positive and meaningful experience across those interactions.

Who are these customers: the product purchasers only? Or does the concept include all suppliers and staff, and even candidates who apply for a job within the organization?

All the departments and stakeholders of the organization should ideally take part in the co-creation process, including suppliers, partners, etc. They can help define their own experiences within the organization.

Employee experience is also a major subject that companies cannot ignore. Employees indeed are key actors in the value creation process and their journey matters, too. After all, they are an extension of the customer experience.

Moreover, corporate social responsibility and business sustainability have nowadays become important concerns to business strategy. Because customers now place more value in social and ethical corporate practices, having them involved in the creation of products and services keeps them informed about the company’s sustainability efforts, it also keeps them aware of the challenges companies face when navigating sustainability.

At which stage of their lifecycle should companies turn to a co-creation approach?

Co-creation adds to the entrepreneurial spirit, and startups are particularly good at putting this approach to work. Throughout the development of products and services, co-creation can reduce future risks by experimenting and verifying the solutions with real users or early adopters. This way startups make sure that their solution, whatever it may be, brings value. For example, the GAFAM have adopted this mindset from a very early stage.

“Co-creation does not aim to launch the imperfectible product, the one that’s the ultimate version; instead, it aims at having the right solution for your customers.”

Does co-creation only work for young digital technology firms? Can larger organizations implement it too?

Although the trend came from tech companies, every industry is tapping into the advantages of co-creation today. In larger corporations, the approach should not only focus on product or service development, but on processes and experiences within all areas of the organization, such as HR, supply, communication, and legal departments to name a few. This is where the business starts to build trust.

Indeed, some larger organizations already have a Customer Experience Officer who makes sure that the experience provided to customers remains highly satisfactory at every interaction point.

What are the best practices that you would recommend to startups and SMEs?

Simply put, the best practice is to remain close to the customer or future users and to keep them involved in the co-creation process. Young companies should first tackle real customer problems or friction before starting to design and develop any solutions. It is all about experimenting during the process.

Then they should build prototypes. Prototyping is key to answering specific assumptions the business has and testing how the solution addresses customers’ problems.

Does co-creation make the process to develop new products lengthier?

Bear in mind that co-creation does not aim to launch the imperfectible product, the one that’s the ultimate version; instead, it aims at having the right solution for your customers. Above all, the goal is twofold: reducing the risk of the business project, while creating value through tangible solutions that actually answer client needs. Co-creation accelerates the development of products and services that companies want to market.

At the end of the day, what companies want and need is to capture and retain clients, something that is becoming increasingly hard. As long as the customer experience is positive, clients will remain loyal to companies’ products and services.

The bottom line is: retention, brand reputation, and revenue growth. And co-creation can help organizations achieve these goals. In terms of innovation, it acts as a catalyst for unrestricted, free-wheeling imagination. And it provides a grounded context, as well as a workflow to help companies creatively focus on a specific target.

Leave a Reply

Your email address will not be published.

Related Posts