When a word is used too many times a year and the context in which the word is used broadens in every article, it is very likely that the management community develops a sort of immunity. There are multiple examples of management terminology being coined as fast as falling out of favor.

Co-creation, as a phenomenon, was destined to have a similar lifecycle. The question that arises in such matters, is whether the term was a hype introduced by some management gurus, or an emerging domain just struggling with its maturity. As we see the world now, co-creation is here to stay. No matter what you would like to fit in the definition, co-creation is the result of a broad and irreversible shift in the society and corporate culture. During the growth to maturity we wonder what is left beyond the hype. What is the essence of co-creation? Which forms of co-creation proved to be most beneficial for the initiators and participants? Which processes are most suitable for ‘outsourcing to the crowd’?

This report will give you insights into the current status of co-creation, as perceived by top managers out of the FEM500 business list. If you would like to verify your current experiences or if you are curious about what co-creation could do for your business, assess the following three basic questions:

· Who contributes, who gets the benefits and who takes the risks?

· Where & when in the process is co-creation applied?

· What is the result of co-creation?

Co-creation assessment

To improve the success of your current co-creation business, it is very important to have the right knowledge to be able to assess the initiatives according to objective criteria. Those assessment criteria can also be used in advance, as a checklist for the design of a co-creation initiative.

Who contributes, who benefits and who takes the risks?
To answer this question you map who has a share in a certain part of the value creation process. There are three important events that are distinguishing: value creation, selection and consumption. Who creates and delivers the actual value, who is allowed to make selections or set priorities within the content that has been provided, and finally, who does benefit from the co-created value?

Content creation
You could ask yourself whether you can still call it co-creation, when the content is purely created by the company. It actually can be co-creation, for instance when the selection is done by the consumer. This is a typical customization setup, where the building blocks are still predefined and internally created. The opposite can work also: content creation by the consumer or business network, but selection by the organizing company. This is a typical ‘contest setup’. In the last phase of value consumption, it is impossible to call it co-creation when the benefits are not shared between the initiator and the participants. The benefits can be split into hard benefits, for instance the firm’s business case and the extraction of economic value by the consumer, and soft benefits, like corporate reputation and social drivers of the consumer.

Initiator or director?

Another important discriminator is the distribution of roles like the initiator and director of the process. Those two can be different. A company could consider joining a current community instead of creating one itself. We learned that you have to have a strong brand or have to claim a clear

theme, to be able to keep a company-owned community alive. The director of the co-creation process is the party that is allowed (or accepted) to set the rules of the game, determine the duration or moderate other contributions. Again, it is not obvious that the firm itself has to control all those elements. The right degree of ‘self guidance’ is always an important factor for success.

Costs & risks
Finally, there are the cost and risk elements, which are in fact closely related. Who bears the costs of setting up a co-creation environment and therefore also runs the risk of there being no significant outcome? You can think of the online environment, but for instance when co-creating during use-phase, it could also mean significant FTE costs for supporting internal processes. The legal implications of the creation process present another risk. Who is responsible for the co-created product or service when it fails physically or economically? Equally applicable to co-creation is the fact that: Sharing benefits also means the willingness to share risks.

Where & when in the process is co-creation applied?

The second key question zooms in on the practical elements in the design of a co-creation initiative. Map the most important processes, using a standard value creation chain, like: strategy, NPD phases (idea generation to product launch), marketing, logistics, use phase, recycling. For every step in this chain you can think of processes within that step that could be open for outside participation. Most of the time co-creation is connected to one of the NPD stages or during marketing (campaigning) phase. This is not wrong, because co-creation has mainly proved its value in those areas, but do not forget to consider customer or b2b cooperation in the other steps.
The impact of the introduction of co-creation is different for each step. Co-creating on strategy formulation for instance, could have significant impact on the organization if you are fully transparent and willing to change course because of external ideas. On the other hand there are a lot of examples of companies that neglected the collective opinion and had to deal with even more organizational impact. In logistics there can also be a nice tradeoff between consumer participation and the price the consumer is willing to pay for the product, including transportation. This often resulted in new business models like IKEA and McDonalds which were introduced in the past, but which have become quite common nowadays. During the use and recycle or replacement phase many opportunities are lost. If you have the right approach towards your brand ambassadors or lead users, using ‘permission based marketing’, you can direct the realization of additional value by the user community. This also provides the opportunity to personalize your product or service according to the exact context the customer is in after the moment of selling. The original targeted needs often change and an intensified number of interactions enable the company to make the necessary adjustments or to provide additional extensions. This brings us to the next question: what is the intended frequency of the interactions and which channels do you plan to use for that? The range of possibilities extends from twice, like in an idea competition, to almost continuously in an innovation development community. This last type of co-creation results in strong ‘learning relationships’, leading to products or services that have an optimal market fit while creating strong loyalty both ways.
When thinking about proper co-creation channels, companies should not forget to define the right balance between on- and offline or even online in virtual worlds. Joining an existing platform or social medium is a fast way to reach potential co-creation participants and saves all the effort of building a platformand keeping it vivid. Another possibility is to share a platform with multiple organizations, which are all interested in a certain topic. Sharing a platform can enable one to attain the larger scale that is necessary to start the co-creation process.

What is the result of co-creation?
The third and final question is all about the outcome of the co-creation process. It is recommended that you try to visualize the results in advance. What about the ‘richness’ of the value created? Is the goal to reach a certain level of customization? This is a form of extreme segmentation, allowing the personalization of the offering based on limited combinations of modules. Not every product or service is suitable for splitting into several modules. In that case the modules can also apply to for instance, the logistics or processes around the offering. The unbundling trend among the low cost carriers is an example of that.
Another goal, when defining the desired end-result, is to reach a certain level of collaboration. The proportion between in-house and externally co-created value, is crucial for the final success. The most advanced form of co-creation, in which customer experiences are co-created, can only be achieved by performance in personalization and collaboration. When a company does not take care of one of them, there will be a barrier that hinders full deployment.

Furthermore it is important to verify whether the outcome of an initiative meets the basic guidelines of co-creation, like:

· Does the collaboration offer more value than the individual contributors could have delivered themselves?

· Can the final result be characterized as ‘win-win’ or ‘pie-growing’? (None of the collaboration partners should win by damaging others.)

· Is the result a matter of value creation instead of value distribution?

The last, but not the least important topic relating to the outcome of the co-creation is about the impact on the organization as a whole. Even a co-creation pilot does have impact on back office processes. When an organization chooses to continue with co-creation as a central, strategic theme, it is inevitable that there will be significant changes in the corporate culture and several processes in the operating model. Co-creation is even a main driver in the transition to new business models.

Understanding needs as the main driver

How far beyond the hype are we with Co-Creation? To answer this question, we have launched the Global Co-Creation Survey 2010, asking top managers from the FEM500 business list to what extent co-creation is currently applied in their business, what results co-creation brings and what are their expectations of the future.

The survey shows that 70% of the respondents expect revenues from co-creation to rise in the coming years, indicating the opportunities and high expectations the respondents have of co-creation initiatives within their organization.

Although the respondents have high expectations from co-creation, only 25% indicate that they proactively and continuously involve customers in the design and development of new products or services. If most respondents expect increased revenues due to co-creation, why have only 25% started implementing it? Although there is a high level of willingness to co-create, organizations have to deal with barriers which place constraints on their ability to achieve their co-creation goals.

The main constraints that respondents identify are the urgency of pressing day to day business demands (36%) and lack of formal processes for co-creation (28%). This indicates that co-creation is not yet at the top of the management agenda, although the respondents do recognize the opportunities co-creation has to offer. To align co-creation and make it part of the day to day business successfully, organizations have to make dedicated choices and deploy a clear and focused co-creation strategy.

Drivers & results

The respondents indicated three main drivers for involving customers in their value creation: understanding new needs, increasing their competitive advantage and improving their customer loyalty. Although co-creation is currently often used as a marketing tool, these drivers show that co-creation is much more to the respondent than just a marketing tool. Its aim is to understand customers better and to develop services and products that fit their needs.

According to our respondents, involving customers really does result in meeting their needs; new products and services are for them the key result of customer involvement. It is however interesting that attracting new customers is only the fifth driver for co-creation, whereas it is the third highest result. We have seen this unexpected result before in our previous research ‘Co-Creation & Firm Performance’ (Arjan Tijmes, 2010). This research showed that whereas most organizations engage in co-creation to serve current customers better, it also resulted in new customers, even if this was not a goal in itself. This indicates that co-creation can have a snowball effect.

Managing the complexity of co-creation

In literature co-creation is often associated with collaborative Research & Development activities. This can extend from crowd-sourced idea generation to long term development communities. Also, customization of the final product by selecting a set of predefined modules or designs, can still be considered part of the development phase. In practice, and endorsed by our survey, we see most examples coming from companies that pilot co-creation merely owing to reputational motives. The launch of a rather superficial form of collaboration, meticulously controlled by the firm and supported by traditional mass communication, can result in the desired open brand image. One could wonder whether this can be considered as genuine co-creation. If you look at the three most important steps in the co-creation process - who creates, who selects and who benefits?- the effort-benefit balance of this kind of co-creation initiative, tends to be most beneficial for the firm. Therefore you could argue whether this is contributing to client loyalty, which is strongly connected to a ‘win-win’ outcome. Most of the time companies are not willing to change processes, because this also means a decrease of control.

Collaboration on the front-end always calls for a transformation of the back-office. The firm has to provide full transparency and has to share risks as well as profits.

But does this matter?
Why should we have a theoretical discussion about what is ‘genuine’ co-creation? Is a superficial co-creation form endorsed with mass communication, like an idea competition, worth less than a small-but-deep open source development community? For a large company an idea competition or for instance customization, can help to experiment with customer collaboration and client centricity. You can compare it with ‘green’ environmental activities, at first used to manipulate the common corporate image, but nowadays integrated in core processes and part of the corporate strategy.

At the moment there are just a few examples of companies that adopted co-creation in multiple processes along the development and usage value chain. We expect this is not because of a clear strategy, but due to the lack of focus on
co-creation and internal competition with other priorities.

Superficial with mass vs. profound with a selection of people

Capgemini research has revealed new insights in the building of a strong co-creation strategy, by managing the complexity of co-creation, in order to ensure its success. Managers should make dedicated choices on the level of co-creation and the number of organizational functions involved.

Co-creation has the most impact on product and service innovation when the organization focuses on an organization-wide low level of co-creation (co-creation on many business levels but under strict control and with strict conditions), or when organizations engage in high level of co-creation and involve a small number of organizational functions (completely customizing one small part of their offering on which customers can co-create their experience). What both strategies have in common is that they both enable organizations to maintain control over their co-creation activities.

Always wondered how to get your customer in touch with your Brand DNA? Struggling not to tell them again what you stand for but to really let them feel it? Volvo’s marketing department in the Netherlands gives us a clear example how this can be done. Of course there are some down sides on this initiative which I will get to later, but the main idea is clear example of experience co-creation.

Click on the picture for a short animation

Most of the time co-creation is associated with cooperation during the development stage of products and services. Less attention is paid to co-creation in other stages of the value chain such as distribution, marketing and for instance recycling. This is a missed opportunity because once part of the value creation experience, customers would like to stay involved in other phases as long its relevant and has a balanced pay off.

So what’s the deal Volvo is offering? Let’s take out some facts first: in a radio commercial Volvo is offering their C30 for the reduced price of 20.900 Euro. But that’s just one part of the extraordinary deal: in return of this deduction you have to travel to the factory in Sweden to get the car yourself! Of course this trip is a well managed customer journey. You can expect to see Gothenburg, enjoy nice meals and poke around in the Volvo museum. This all comes to a climax in the Volvo Delivery Center, where clients face their brand new car and are instructed by a ‘delivery consultant’. And finally there is the pleasant drive home through Denmark, with your green-conscious mind strengthened knowing just to consume one tank of gasoline.

Wondering what Volvo drives to arrange it this way? Is it really originated by a smart business case? Like ‘We do not have to transport our car to you, so you get in return a better price and a nice experience.’ Unfortunately that’s not the case. If it would be the case, this would be a perfect example of co-creation in distribution, which is the basis of their Swedish blue and yellow neighbor.

Here is the counter side: the C30 isn’t born in Sweden, it actually leaves the assembly-line in a Belgium plant in Gent. The car is shipped to Sweden where it meets its new owner that just flew in and that owner drives back to nearly 100 kilometers of the car’s origin. This routine now catches some media attention because the eco-friendly C30 has an extra eco-footprint even before it is on the road.

You can argue about this eco-aspect of the deal, but for me it is a great example how to connect the customer to your brand DNA. It’s not just the car, it is the complete Swedish experience of quality design, food and service. Those elements become part of the brand image in a natural way because the interested clients want to have that piece of emotion attached to their car. They are searching for more than car functionality.

Volvo is just there. If this initiative would have a matching business case, clients cooperating to reduce transportation movements, helping Volvo to save money and giving them a reduction plus a nice brand journey in return, it would perfect.
 Let’s rethink your business. What elements in the value creation process can be shared with your clients? Are there smart distribution opportunities for your product, while raising the brand experience at the same time? I am sure we have discovered just a small part of all co-creation possibilities. For sure the consumer is ready to participate, so why wait? 

This week the first Shaking Up the Value Chain presentation and workshop have been organized as part of Capgemini’s Multi Channel Retailing evening sessions. The evening started with a presentation of the ‘Shaking Up’ concept and during the second half all participants joined one of the interactive break-outs. The challenging assignment consisted of three questions: pick an Industry familiar to the group, draw the value chain according the new Shaking Up the Value Chain modeling method and finally come up with a plan to optimize the position of the ‘sqeezed brand’.

Good Shaking Up experience for all participants…

In the feedback round at the end of the evening the participants returned they liked the workshop because working with their own examples made the Shaking Up the Value Chain concept concrete and very clear. Because of the success of the evening this will certainly not be the last presentation and workshop, so keep track of the notifications on this website or leave a message so we can inform you about our upcoming activities.

…and you missed it, but it is not too late!

Missed this evening but interested in our unique Shaking Up Method®? Want to learn more about Margin Flow Modeling® or about the ‘Sleeping brand’, the ‘Brand Node’ and the ‘Margin Monopolist’? We are glad to elaborate with you or your company on your value chain position and our innovative three step approach to revaluate the brand. Feel free to leave us a message!

]]> http://www.shakingupthevaluechain.com/2009/04/fruitful-co-creation-during-the-first-shaking-up-the-value-chain-evening/feed/ http://www.shakingupthevaluechain.com/2009/01/five-inspiring-business-model-innovations-in-the-telecommunication-industry/ http://www.shakingupthevaluechain.com/2009/01/five-inspiring-business-model-innovations-in-the-telecommunication-industry/#comments Sat, 17 Jan 2009 13:30:52 +0000 Eric Bun http://www.shakingupthevaluechain.com/?p=139 Business Model Innovation, the most bare form of innovation by totally changing the business model of a company. Several Telco’s have changed their business model radically, some just recently, but why? Because the traditional telecom business models are facing some unprecedented challenges due to the globalisation and rapid development of the internet. Telco’s are not guaranteed of incoming revenues solely by setting up a network anymore. The need for radical changes in their business models has increased dramatically. Please get inspired with five really interesting business model innovations* in the telecom industry.

1. Customer relationship - Outsourcing the unexpected: Bharti Airtel Business Model Innovation

Bharti Airtel, India’s leading mobile telecom service provider, managed to increase their subscription base from 8.2 million in 2004 to 27 million in 2006. In 2007, Bharti announced that they have even crossed the 50 million customer mark within 143 months of start of operation. They recognised the need for a better customer relationship, growing revenue stream and, at the same time, decreasing operational cost. In order to do so, they did the unexpected and outsourced the IT and networking services while staying purely focused on marketing, sales and distribution.

In 2007, Bharti crossed the 50 million customer mark within 143 months of start of operation

Number 1 in this list of inspiring business models because of Bharti’s strong vision on reaching customers by effective marketing and sales methods rather then by a technology push from the IT and networking services.

2. Revenue streams - Standing on the shoulders of the advertisers: Blyk’s Business Model Innovation

Blyk is a Finnish MVNO (mobile virtual network operator) operating in the UK and offers free mobile telephony to the youth till the age of 24. Blyk offers their customers (or maybe I have to call them just joiners ;)) 217 texts and 43 minutes for free each month. The minutes are paid by advertisers and are aligned with the extensive personal profiles completed by the subscribers in advance. This increases advertisers rate of convergence enormously and saves some boring ads on the mobile phones for the customers. It is a business model driven by advertisers (watch this video of Blyk).

Number 2 in this list of inspiring business model innovations because of the braveness of Blyk to offer real free communications for a strong niche market.

3. Customer segments - Cultivating emerging markets: Tencent’s Business Model Innovation

Telco’s in emerging market are known to deliver the best shareholders’ value by their high performance and low operating costs. However, contradictory to what many people think it is rather uneasy to deploy new innovative business models in emerging markets. First reason is the greenfield situation where all competitors have exactly the same entry levels, the need for innovative value differentiator are even higher to earn that unique customer segment. Secondly, Telco’s in emerging markets have an even higher urge to deploy a business model which runs on very small operational costs, again due to the highly competitive greenfield situation.

Tencent’s numbers are outstanding with 580 million registered users whereof 280 million active on a very frequent basis. In the feastdays of Tencent their service was used by 29 million users per day.

The 3rd award in inspiring business model innovations in the telecom goes to a unique business model which has been set up by Tencent (China) in the emerging markets. Tencent deploys a unique business model combining both telecom services and gaming. They offer their own communication, instant messaging (IM) service named ‘QQ‘ which is based on the popular IM-service of the mid ninetees ICQ. QQ holds room for popular chatrooms, personal avatars, games, internet storage, and internet dating services. Most of the services are free and therefore very popular among the youth. By the way, next to the popular QQ IM service, Tencent also offers a tailored office (TM) and enterprise edition (RTX) or their instant messaging service.

Number 3 in this list of inspiring business model innovations because of very successful mix of gaming and telecom service meeting the needs of the youth in emerging markets.

4. Core capabilities - Leveraging the knowledge of the crowd: Iliad’s Open Source Freebox Business Model Innovation

In France, Iliad with their subsidary French ISP ‘Free‘ had shaken up the telecom business by bringing free internet television to the end consumer. They developed their own ‘freebox’ - an internet television set-top box for households - which is based on the open source Linux software. It is believed that Free was the first ISP that rolled out a triply play strategy and the company is therefore recognised as one of the most important innovation drivers in France. Besides the unique open source based core capabilities, the company gets credits for their strong pricing strategy. It is still maintaining their initial price of 29.99 euros per month for the set-top box. Free has continously added new services and features to their box without making compromised on their consumer price.

Number 4 in this list of inspiring business model innovations due to Free’s power to utilise free available open source software in order to shake up the estabilished telecom industry unprecendedtly till today.

5. Partner network - Creating a community of ‘Foneros’: Fon’s Business Model Innovation

The spanish ISP Fon encourage wireless internet users to share their bandwidth for the community. Consumers who share their wifi get access to all other wifi access points in the community all over the world. The wifi-sharing community, named ‘Foneros’ shares in the revenues stream which is gained by the non-foneros who pay a small fee for accessing the network. The Fon start-up was a great success and the founder Martín Varsavsky raised 18 million in the first finance equity round in 2006. Major companies invested including Google, Skype and several equity investment firms. The innovative and largely used business model was upgraded in 2007 when BT and FON announced that they integrated BT’s UK wireless network with Fon, enabling an even greater wireless coverage for the Foneros.

The wifi-sharing community gets paid by users that pay a small fee for accessing the network.

Number 5 in this list of inspiring business model innovations due to the shown power of Martin Varsavsky’s business model along with a community initiative all over the world.

Five Inspiring Business Model Innovation in the Telecom

….when have you planned to innovate your business model?

* In fact, business model innovation focus on the transformation of business to reposition the business or to grow in new markets. The five inspiring examples describes not the full business model innovations. I focussed solely on the business building blocks that changed the most as you can see in the image. Moreover, succesfull business model innovations are mostly companied with a maximum of two changed building blocks; bringing focus in your business model innovation makes success.

Last week, a local Dutch political party proposed a small emendation to a policy plan “Youth and alcohol, 2008″. Nothing extraordinary, you probably think. However, this particular addition caused a tide of media attention uncommon for such a local plan. The party suggested to distribute chocolate bars to the nightlife in order to keep them patient and avoid violence. “This is another, complementary action besides all existing controlling measures. Chocolate bars possess a small ingredient which makes people relax…”, says Gerben Hoogterp - the councilor of the party. The effect on society? A twofold reaction. The first group takes a rather sober, neutral point of view and argue whether chocolate is able to chill people down. The second group embraces the idea and consider it as an new opportunity to raise awareness for the society issues with nightlife, alcohol and violence. I’ll describe how you can use the next web to engage these two groups.Regardless of who is right or wrong, I think the initiative should be able to have a huge impact on the society as long as you engage the heart of the society and enable them to hijack it. Make the youth the ‘owner’ of the idea and do not enforce it as a political leader. A profound brand hijacking strategy, new communication means and innovative way of thinking will mobilize the youth shortly.

Let’s discuss some chemicals first

The sugar in chocolate bars sparks the release of several nerve chemicals (including Endorphin) which result in a sense of well-being. Furthermore, it contains phenylethylamine, or PEA, which gives you the feeling similar to when you’re in love. (Elizabeth Somer- Why do I crave chocolate?). Therefore, there might be some relation between feeling ‘relaxed’ and eating chocolate. However this effect is not yet scientifically proven for human beings. Regardless of this, people enjoy eating chocolate and whether or not it stimulates an easy feeling, the political party endorse it as a effective method in mitigating collateral damage (e.g. violence, vandalism and even sexual assaults) of the nightlife.

Shaping the idea, raise the potential, ENABLE A BRAND HIJACK

I already mentioned it, the new measure might be very effective on the condition that it is well-executed and in line with the youths and their social environment.

RAISE AWARENESS

Before I describe the first essential component in enabling a brand hijack, you have (I know it is hard, but you have to!) watch the following video.
[youtube:http://www.youtube.com/watch?v=8J5a03iKrlc]

Did you bear to watch to it until the end? This video illustrates the notion of fear induction (as mentioned by Jean Pierre Ranschaert and Mieke Schevelenbos). The effect of fear induction is enormous, according to Jean “the viral effect seems big: over 110,000 views and 130 ratings in under two weeks [...] fear induction only produces short term effects, while real awareness raising campaigns need building up over time” which emphasize the power of such a video.

Considering the topic of violence and vandalism, it wouldn’t be that hard to produce a similar video for this purpose. Besides the lower costs, the likelihood of raising awareness at the right folks is higher by distributing it via video platforms as YouTube and social networks. For certain if you consider the ‘viral effect’ of it.

CONNECT

After awareness has been increased, opportunities are created to really connect to your target group (for now, let them simply define as ‘the outgoing youth’). And a chocolate bar has just much more potential to create a real connection over other means including standard leaflets and TV campaigns (let even alone fines!). Connect to the youth with a bar that is branded in a way that aligns with them. Empower their feelings. Not just simply distribute bars, but enrich it with an experience. The energy drink Red Bull is also not just an energy drink. It comes with an experience of boosting energy. Giving your wings in times you need them. A well-branded chocolate bar which embraces the experience of relaxing, encouraging love and peace has similar potentials as the Red Bull experience. Aligning the brand to the experience is only possible if you are really connected to the outgoing youth.

ENGAGE

Finally, a well branded chocolate bar should engage the target group and empower them to shape the experience further. A well tailored co-creation platform could enable the youth the think with and co-create this experience. There is a wide range of opportunities for such a platform, such as giving the youth the ability to co-create a public campaign. Let them suggest how to enhance the experience. Where should the chocolate bars be distributed? And co-creating the translation of the experience to other environments (think of the Red Bull Air races)?

Plenty of opportunities to enrich such a political initiative. Just do it!

&

Tension in the Value Chain

In fact, the aviation industry offers a very complex value chain. Luckily you often do not notice this at all, a few companies will represent a specific part of the chain. You can think of the travel agency, the airport, the airliner, the accommodation and additional services like an airport shuttle or meeting facilities. On the surface it looks like they are all cooperating happily together, offering you that pleasant trip. But there is something important going on in aviation. Right now, all parties are cooking up plans to conquer a bigger share of the pie. They are stretching their activities, trespassing their neighbor’s clearly marked business area.
So, who has the best cards to decide on the new business domain borders?

The most important trend in aviation: ancillary revenues

Companies are fighting for new profit centers. Kerosene prices force airliners to rethink the flight schedule; parking a plane can be an economically right decision. The auction pricing model has become quite common and cost cutting by skipping on board services reached its boundaries. The new promise in aviation is called ‘ancillary revenues’. Meaning getting money out of almost everything except flying. Off course additional services and products exist already for a long time now. But given the new economic context they gain extra attention by airports, airliners and every other company linked to the travel value chain. Basically there are two things to do: A. find new profitable and differentiating ancillary products and B. fight for the client’s favour to become the supplier of the new proposition. This will lead to the following questions:

1. How to invent , develop and market compelling additional products and services?
2. How to become the most favorable supplier of the new proposition, being number one within the ‘evoked set’?

When you consider to answer those questions separately you might become disappointed. Why take the risk and costs inventing and developing products and services for end consumers, while you are not sure the client will purchase it? Market research is capturing client desires, often totally different of real consumptive behavior. Besides this, you are always to late because you start the development process at the moment the client states this need as being most important. By the time the product or service is available the world has changed, consumer desires are modified and the competitor comes up with exactly the same for even better prices.
‘Okay, in that case we do not compete on innovation power, but we launch best in class marketing.’ Good try, but what is the competition doing? Selling that commodity service just labeled with another flashy brand? When the client does not have a historic connection with your brand, a reason to switch supplier is hard to find. In addition to this, the client is less willing to listing to convincing arguments due to the commercial information overload.

It may sound strange, but there is one solution available covering the two topics at the same time.

Shake Up the Value Chain: set up direct end-user interaction, claim your added value and become most relevant.

Involving the client in product & service development, from idea phase to commercialization phase, has many advantages. The chance a consumer will buy a co-developed product is extraordinary realistic and it is quite usual the consumer will become a brand advocate. After the period of product and service development there is less urgency to reach out for traditional marketing methods. There is no gap to close with marketing, because you and your client already know the proposition is unique and relevant. And you will be the fastest supplier of a specific solution, because of the continuing dialogue with the end-user.
Of course this sound interesting, but why would the end-consumer decide to co-create especially with you? Maybe your company is just a small part in the chain; invisible because you are hidden behind a well known consumer brand. This is no excuse. You could be the first company that opens-up for real customer interaction. You can ask for ideas and improvements and you will receive ideas from interested prosumers, as long the topic is relevant. The ‘Shaking Up the Value Chain’ approach is split into three manageable steps to set up and maintain this end-user connection.
With every single moment of client interaction the perceived added value of your brand is strengthened. Your brand will become an unique selling argument, also used by other chain players.
In fact the value chain will become a value network with your company positioned as most relevant for the end-consumer.

I believe that social innovation platforms are doomed within organizational context. Why? The social aspect is still lacking and I’m quite sure about that. I noticed it in my daily operations and cases I’m involved in, and in my master thesis prior to my work as a consultant. In any case an organization wants to build a new platform that has to foster innovation, it seems that they continuously simply forget the social aspect of it. You cannot simply build an advanced technological platform and deploy it within you organization. Real innovation is fostered by people’s intrinsic values, organizational culture and rewarding mechanisms.

In most cases, the lack of use of an innovation platform is reproached to the effectiveness of internal marketing and promotion campaigns. But the real cause of the of the non-popularity goes far beyond that plain observation. An organization that want to foster innovation has to focus on the social issues, an technological platform should be given less priority.

Everybody entrepreneur

Three reasons why to focus on the social aspects and build a platform later on. First of all, is your organizational culture really that innovative? What kind of people do you recruit and employ? Are they open and willing to show entrepreneurship. Is entrepreneurship something that you call important, or is innovation something that is really deep-rooted in the whole corporate culture? Nedap is a good example of an organization that embeds innovation in the whole corporate culture. People in their company are really encouraged to show entrepreneurship. Nedap even does not use any grades for their employees and each employee is simply, yet clearly, called ‘entrepreneur’. Even the business cards don’t show any degree and just simply state the name and ‘entrepreneur’.

Start rewarding

Rewarding mechanisms are also still underexposed in most organizations. However, people simply won’t come up with new innovations if they know they probably don’t get any reward for it. They might do it for the first time, but certainly not for the second time. Unfortunately, most organization experience difficulties with redefining their embedded archaic metrics upon employees are rewarded. I do recommend a combination of short and long term metrics. Short term metrics focus on the added value on the short term, for instance in existing projects. Long term metrics focus on the result of innovation in the long run and measure the effect on business revenues. After all, only innovative organizations are able to increase business revenues year after year.

We really have to incorporate social issues in order to make social innovation work!