The Co-creation Canvas: how to innovate with customers and business partnersMadanmohan Rao
The frameworks and examples in this book show how long-term co-creation advantage comes from an open culture and collaborative strategy that go beyond occasional partnerships.
The rise and success of companies like Netflix, Uber, Instagram, Google, IBM Watson, Amazon, Apple, and LEGO have shone the spotlight on innovation ecosystems. Engagements between large firms and nimble startups via accelerators, hackathons, competitions, and even outright acquisition are other new forms of co-creation.
Frameworks, steps and case studies of co-creation are highlighted in the book, Co-Create: How Your Business Will Profit from Innovative and Strategic Collaboration by David Nour.
In the foreword, marketing experts Don Peppers and Martha Rogers explain that the old model of guessing features, creating products and pushing them out for sale is being replaced by customers co-creating the product or service, as well as marketing and branding.
Savvy companies are enlisting customers as their collaborators and evangelists, and identifying opportunities for cross-selling. Co-creation is bottom-up, not just top-down management. Empowering customers yields more insights about their needs, they explain.
David Nour is the author of Relationship Economics, ConnectAbility, The Entrepreneur’s Guide to Raising Capital, and Return on Impact. He is Founder of the Nour Group; the company’s website has a number of downloadable tools such as the Co-Creation Canvas and Customer Experience Journey (showcased in this book review).
The author shows how co-creation should happen internally, across organisational silos – as well as externally between a company and its customer, business partners, industry members, investors and even media. Co-creation is a journey to a transformative business model and culture; it is more than a partnership, alliance, transaction or event.
I have summarised my key takeaways from the book in the following sections and in Table 1 (below). See also my reviews of the related books The Seven Principles of Complete Co-creation, The Power of Co-creation, Connecting the Dots, Connected by Design, and The AI Advantage.
The importance of co-creation
By creating a culture and strategy for shared interests, adaptive innovation naturally leads to growth and evolution. It leads to “market gravity” (which attracts a range of stakeholders to your business) and “brand influence” (intangible ability to compel certain behaviours from others). Long-term impacts are agile innovation beyond incrementalism.
Co-creation is based on relationship economics, where business success derives from relationship currency, relationship portfolios, and relationship capital. Such strategic relationships take respect, trust, intimacy and commitment to succeed, and should be carefully mapped, nurtured and harnessed.
For example, Netflix has a number of B2B co-creation strategies that power its B2C offerings. It has partnered with studios, directors and actors, and invested in media startups like Roku. Its apps have been added to a range of display devices.
LEGO’s Future Lab division taps co-creation by enlisting players as sources of new ideas, and partnering with external creative communities and outside organisations. For example, Chicago architect Adam Reed Tucker provided the suggestion for LEGO Architecture dedicated to great architectural masterpieces. LEGO partnered with MIT Media Lab to create Mindstorms Robotic Invention Systems. LEGO Ideas invites customers to suggest and vote on ideas; 10,000 votes are enough to trigger a systematic product study by the company.
Co-creation demands introspection and continuous listening, and can tap every interaction and relationship in a digitally disrupted world. A proper context provides meaning and direction to data insights.
Co-creation calls for comfort, lack of fear of failure, and performance excellence in dealing with different organisational cultures. Large organisations can work with nimbler players via accelerators, strategic investing, hackathons, competitions, and crowd platforms (see my framework in the article 15 innovation tips: how large corporations can successfully engage with startups).
For example, Under Armour aims to outperform Nike by creating new kinds of customer communities and by buying wearables startups; this helps generate a prolific stream of customer insights. IBM created the Watson Ecosystem programme and involved startups such as OpenTopic, StatSocial, Vennli and Macaw Speech.
The Uber model is now disrupting other industries such as couriers and food delivery. Warby Parker disrupted the eyewear industry dominated by Luxottica. However, companies like Polaroid and Blockbuster were not able to adapt to disruptive landscapes; others did not come up with sustainable models, such as eToys and Pets.
Deep introspection led Alan Mulally to trim and restructure Ford so that it could systematically focus its market approach; it was the single automaker in the Big Three to avoid bankruptcy. AT&T is shifting from landline to mobile as core; the workforce undergoes regular training to become more predictive of market needs.
2. Adaptive innovation
Innovative companies need to be agile, and respond to faint market signals by “listening louder” via signal scouts and customer conversations. This goes beyond market intelligence reports, and requires reading between the lines of early customer or partner conversations, or industry conference sessions.
An inner circle of trusted advisors also needs to be cultivated. “Conversations are the medium in which adaptive innovation grows best,” David explains.
Verification of facts and validation of assumptions should help void out the noise and anomaly from the signals. Innovative companies should be willing to fail early, fast, small and cheap, and progress through a cycle of “create, learn, repeat.” Pilots and prototypes help in this regard. “Version One is better than Version None,” the author jokes.
Companies must boost their creative capital for ideas and testing. “Too often, small minds squash big ideas,” David laments. There should be bold thinking that is unafraid of retribution, or willing to take prudent risks within a margin of safety.
“Spend time watching people who live and breathe agility,” the author advises. In addition to safer approaches, there should also be a small corporate equivalent of “mad money.”
Customer segmentation should be needs-based, and not just on demographics or characteristics. Customer touch-points should be transformed into data-gathering engines, and future or unarticulated needs should be anticipated based on trends, emotions, motivations and behaviours. Enterprise evangelists should be rewarded for their win-win behaviour.
For example, Adidas asked for new ideas internally, and came up with Avenue A, a subscription package described as a ‘Netflix for runners.’ This involved going out of its comfort zone and into curated and co-branded merchandising. Adidas also has a Shark Tank-like programme with external support, for choosing internal ideas.
Robotics startup QBotix came up with innovative solar tracking technology, but failed to factor in the comfort levels that large utility companies had with traditional technology.
Participation in cross-industry consortia also helps. For example, changes in designs of TV remotes are only incremental changes; voice-based command recognition was coordinated by DARPA along with a number of universities and corporates.
3. Strategic relationships
Creation of the brand narrative has moved beyond the marketing function to include customers, employees and stakeholders. Customers are moving away from push models to embrace pull functionality instead, for personalised experiences. Pitches need to be replaced with genuine dialogue.
Partner proliferation opens up new avenues for B2B co-creation partnerships as well. Internally, all functions can help in co-creation, eg. sales should focus on deepening existing relationships rather than only on acquiring new ones.
Instagram has cultivated influential relationships with leaders in the fashion industry and art community, thus becoming a powerful curator and tastemaker. Patagonia encourages its customers to first look at buying used Patagonia items before choosing new ones; it also encourages buyers to resell used items through eBay rather than dispose of them.
Office-cleaning company Managed by Q hires the most effective and engaged employees; their outstanding performance and resultant customer loyalty obviates the need for expensive advertising. Even companies like Kinkaraco Green Burial Shrouds have adapted to changing customer needs by using natural-dyed fabrics, organic substances, and bio-degradable handles.
Hilton launched a ‘campus conversations’ campaign to involve potential student recruits right from freshman year, via branded campus maps, campus ambassador programmes, internships, apps, and events like a Hospitality Olympics.
KPMG used visual storytelling to describe its anti-bribery and corruption practice, thus helping companies understand issues like compliance and facilitating deeper conversations. ThyssenKrupp used co-creation between its field workers and factories to present a unified view to customers; communications are made smoother via regular meetings, newsletters, and apps.
4. The Customer Experience Journey
Instead of one-way funnels of customer mapping, the author recommends mapping the customer experience journey into a spiral of six stages: evaluating options, discovery process, consideration of criteria, evaluation of alternatives, purchase, and use (see figure below).
Satisfied customers and repeat customers can be introduced to prospective customers, thus helping peer endorsements. Customer advisory boards and annual customer summits are also useful forums in this regard. Personal connections are valuable as well, over and above professional interactions.
Testimonials and other content artifacts can provide narrative scaffolding to increase mindshare. Changes in market conditions should not be neglected, and should lead to new offerings. “Success can also be quicksand in the making,” the author cautions; new business models may be needed as a response.
For example, healthcare organisation Intalere uses a combination of data tools, opinion leader engagement, success stories, and better purchasing processes for its group-purchasing members.
5. Provocative and purposeful leadership
Many projects these days are completed by a company’s full-time staff engaging with a shifting network of free agents, as in the movie industry. The stable core of a company needs to work with a “vast, flexible ring of gig workers.” Teaming up with co-branding partners, brand ambassadors and local influencers also opens up new ways of thinking and working.
Managing knowledge workers calls for different strategies than industrial-era workforces. In the open-talent economy, knowledge is the chief competitive advantage, the author explains.
Talent marketplaces like UpWork, Freelance, PeoplePerHour, TaskRabbit, and Guru facilitate such flexible configurations. LEGO successfully taps the distributed talent model. Health Care REIT turns to MATTER healthcare incubator for new patient care solutions.
TravelPort launched the TravelPort Labs Accelerator to improve the quality and speed of new idea generation. “What you get from your internal programme tends to be 80-90 percent incremental, only 10-20 percent innovative,” according to Nathan Robbin, senior director of product innovation. Only startups can think of and pursue disruptive approaches.
From startups, large firms can learn to move fast and treat failures as experimental learnings. From large firms, startups can get direct introductions to senior leaders, and quickly learn the complexities of large industries. Large firms can acquire the startups; and overall, the entire industry gains through innovation.
One of the rewards of co-creation is the formation of enterprise evangelists, whose positive, constructive and impactful passion can rope in new customers, employees, investors and even media coverage. “Leaders regularly undervalue passion as an asset,” the author laments.
“Products that create evangelists are marketing hacks that can elevate a brand far above competitors,” the author explains. Such passionate people should be led with direction, specificity and outcome focus. Evangelists should be respected, credible, trustworthy, and good in storytelling and conversations about the product.
Private equity firm Ipreo leverages a triangle of strategy, culture and talent. Prospective recruits are required to submit a five-minute video instead of a resume. Knowledge management is promoted through the Project Praxis repository, communities of practice, and the Ipreo Academy. Employees set three professional, two personal, and one values-based objective.
6. The spiral of growth
Instead of lagging indicators of past performance (for example, NPS), the author advocates focusing on leading drivers focusing on customer intent, such as sentiment, reputation, and engagement. Other drivers are buying-cycle alignment and high-performing employees.
Evolutionary dashboards should frame the right set of metrics, which lead to actionable insights. They should spur investigation into unusual behaviour right down to the level of individual customers and competitors.
For example, Rent the Runway got great PR during its launch, but realised that the real focus should have been on having basic stock and right sizes available in time. Proper relationships with designers had to be nurtured, along with rigorous analytics on supply and delivery.
Waze co-creates accurate driving information through real-time inputs from drivers. ThyssenKrupp’s indicators reflect current number of reported incidents, and how long they have been unresolved.
Barclays Bank used sentiment analysis to uncover a new group of payment app users: parents wanting to transfer funds to their minor children. Best Buy created the online Best Buy Community, where customers can talk to one another, pose questions, and rate replies – thus revealing opportunities for the company to provide new solutions, and also increasing its reputation in the process. “In the digital word, reputation is oxygen,” the author explains.
Innovative companies need to address existing and impending needs of customers, and even spur created needs. “Created needs are where legends are born,” the author explains, pointing to smartphones, same-day delivery, YouTube, and even cronuts as examples. This calls for deep understanding of customer experiences and daily struggles.
Forward-looking companies need to be so focused on talent that they can even create new roles for outstanding employees, or invite them to create these roles. They should also proactively and strategically harness SMAC technologies (social, mobile, analytics, cloud). This involves roles beyond the CIO, and should involve information architects and even insight architects.
For example, Walmart and Procter & Gamble shared supply chain data to forecast replenishment, increase sales, and reduce excess inventory.
7. Creating exceptional experiences and organisations
“Today, customer expectations are rising faster than ever before,” the author observes. “We are becoming experience snobs,” he jokes. “You have to find ways to immerse yourself in a customer’s experience, feel its ebb and flow, its heartbeat,” the author urges. Hand-off points between company functions and departments should be seamless.
Companies have to take on additional roles like curation, on sites such as Gilt, Reddit, LifeHacker, CMO, and MonkeyCage. Catapult’s wearable technology “takes the lab to the athlete” and provides an analytics platform to measure performance and track body condition.
Rent the Runway’s Unlimited option has “Netflixed the clothing space,” according to the author; Conde Nast as a partner has subsidised employee subscriptions to the programme. Richard Branson attributes his airline’s success to happy and proud employees.
AG Lafley, chairman of P&G, goes for shopping with a local mother when he visits new cities, so that he better understands shoppers’ needs. The company has partnered with Amazon to launch the Dash Button, a WiFi device for one-click shipping of products.
Cognitive technologies (AI) help listen louder and react in an agile manner. They generate usable data at scale in an unobtrusive manner, visualise patterns and insights, learn on their own, and respond in real-time. Care should be taken, however, to address issues of trust, privacy and ethics.
The alphabet, printing press, internet and cognitive computing are the four biggest knowledge innovations, according to Manoj Saxena, chairman of Cognitive Scale and founder of The Entrepreneurs Fund IV, focusing on AI.
A number of startups are active in this space, such as AlchemyAPI (intent mining), FluidXPS (personal shopper for North Face), x.ai (scheduling meetings), and Cognitive Spark (understand declared, observed and inferred behaviours).
J.Walter Thompson takes knowledge management to a higher level using introNetworks to analyse employee queries to its portal and identify question trends, categories and insightful employees. This can help identify the right people for various projects and tasks.
The Co-creation Canvas
All these steps come together in the Co-creation Canvas (see below), a mapping tool to help companies set a common mission, share market trends and insights, spell out strategic priorities, and identify gaps which can be filled by each other’s strengths or through collaboration. (See also related tools such as the Consumer Trend Canvas and YourStory’s Changemaker Story Canvas.)
Subsequent steps for co-creation are identifying resources, time-frames, communication preferences, and metrics. Having a skillful facilitator helps this process of co-creation. Success factors are involvement of smart thinkers and practical doers, role clarity, and long-term commitment. Gamification and use of visual communication tools also help.
In sum, the book provides a useful perspective on the importance of co-creation in a rapidly changing and inter-connected world, where consumers and employees are more informed and empowered than ever before.