Co-creation and Corporate Management
After the publication of The Future of Competition, companies applied the principles of the Prahalad-Ramaswamy research to a broader range of business activities. Companies engaged customers in the delivery of their experience, including Harley Davidson (bikers riding together and customizing their motorcycles), Scion car dealerships (customization of cars at the dealer and dealer events) or Apple Inc. (exchange of play lists through iTunes). Co-creation played an even bigger role at companies such as Cisco and Goldcorp where executives involved outside resources, such as researchers, academics, and customers, to actually change and redesign the ways things are done inside the firm. Customer-facing functions such as sales or customer service were also opened up to co-creation at companies including Starbucks and Dell Computer.
During the mid-2000s, these innovations in customer engagement and collaboration expanded and morphed into global economic trends including the co-created development of products and services. Authors published bestselling books developing theories influenced by "co-creation" and customer collaboration. Major concepts included crowdsourcing, coined by Jeff Howe in a June 2006 Wired magazine article, open innovation, promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at Berkeley, and consultant Don Tapscott's and Anthony D. Williams's Wikinomics: How Mass Collaboration Changes Everything, a book that popularized the concept of corporations using mass collaboration and open source innovation.
User innovation was coined by Eric Von Hippel, a professor and head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management. He argued that in many industries, new product and service ideas come from lead users – that is, customers who utilize the product or service in extreme conditions and effectively help the company co-create new offerings as a result. After being recognized for his work on this customer-driven innovation, Von Hippel moved on to writing about communities jointly developing new products and services, in the Linux and Apache mode.
Co-creation became global, as practices reached senior managers at companies in Europe and Asia including Linux (open software), Procter & Gamble's Connect & Develop (dramatically improved research productivity through reliance on global collaboration platform with people outside P&G), and InnoCentive (a research collective in the pharmaceutical industry).
Of this rapid morphing of co-creation, Ramaswamy and his co-author Francis Gouillart wrote: "Through their interactions with thousands of managers globally who had begun experimenting with co-creation, they discovered that enterprises were building platforms that engaged not only the firm and its customers but also the entire network of suppliers, partners, and employees, in a continuous development of new experiences with individuals."
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