A few years ago, one word was on every manager’s lips: co-creation. This approach complemented the range of market research tools and aimed to develop new products with customers. Some companies threw themselves headlong into operations that were as much about communication as marketing. We must ask ourselves whether the active participation of customers in developing new products and services is still desirable. In this article, we conclude several co-creation initiatives and place customer participation within a global approach to market research.
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Key ideas in 30 seconds
- Active customer participation in the ex-nihilo development of a product or service is still rare. It is most often used in the case of design thinking.
- The results of online co-creation initiatives are not necessarily positive regarding disruptive product creation.
- The active participation of customers can make sense:
- to assess the suitability of an existing product/service for a new market segment. Qualitative methods (interviews, focus groups) are ideal in this case.
- at the end of development to detect potential defects in a prototype. In this case, it is useful to mobilize many users and gather their opinions through a quantitative online survey.
Co-creation platforms: How do things stand?
Platforms have emerged to make co-creation possible at a lower cost. Yet, co-creation was anything but new. Eric Von Hippel, currently a professor at MIT, had already involved business users in his “lead-user” method of developing new products in the 1980s and 1990s.
In 2011, Starbucks launched its MyStarbucksIdea co-creation platform. This initiative saw 150 ideas implemented out of 116100 submissions. Despite the operational failure, it was a great communications success. The ideas were far from revolutionary. Here are just a few: proposing a caramel waffle with coffee, offering a vegetarian takeaway, a mobile payment terminal for Android, a new zero-calorie tea in a bottle, etc. 48 people were working full-time on this program, and I calculated at the time that each idea implemented cost $12,249 in staff costs to manage the co-creation platform.
It took Netflix 3 years to find a winner for its best recommendation algorithm contest. This competition between geeks finally delivered a solution that could not be implemented. Yet, once again, this contest was a model of communication and made Netflix one of the most attractive technology companies. It was also the only profitable streaming company, which gives it a real advantage in terms of pricing (this is what we call “pricing power”).
With so much collective intelligence, how is it still possible to fail?
Many companies need help collaborating with their customers. Using collective intelligence is a challenge for most companies. This is hardly surprising, given that getting employees to collaborate already takes a great deal of effort. But think about collaborating with customers! Even the least customer-centric companies need help.
Overall, research shows that the limitations of collaborating with customers on new product development are as follows:
- lack of creative ideas
- inability to clearly articulate needs
- the need for alignment between management/company objectives and customer interests.
More specifically, 4 factors have been put forward that explain the link between customer involvement and co-developed product performance (Chang and Taylor 2016):
- contextual factors
- how customers participate
- relational factors
- organizational factors
Of course, methods such as design thinking exist to provide a rigorous framework for the co-creation process. However, no matter how tightly framed the process, the results of the exercise may not correspond to the company’s objectives. It’s important to realize that a considerable proportion of the market research is aimed primarily at reassuring the company about a direction already taken. It’s paradoxical, but it’s true.
When should you collaborate with customers?
It may seem counter-intuitive, but low-tech industries benefit most from a collaborative approach to product innovation. In any case, they benefit more than companies active in high-tech (Chang and Taylor 2016).
Regarding timing, assessing the right moment to collaborate with customers is important. Here again, scientific research has shown that the benefits of a collaborative approach are highest in the initial phase (“ideation”) or at the end of a new product’s development. Involving customers during development is detrimental to performance.
This brings us to market research methodology and the place of ideation in the overall process.
When should you actively involve customers in your market research?
The market research methodology we have developed (see infographic above) follows the advice of scientific research when it comes to involving customers. In most cases, this initial involvement will not be useful. There are two main types of market research. The first accounts for around 2% of the requests we receive in our market research department. The second accounts for 98% of all requests.
The rarest case: at the start of the development process
In rare cases, market research can be described as “starting from scratch.” When a company wants to revolutionize its field and create a new customer experience, for example, it may explore all possible avenues without considering what already exists. In this case, adopting a participative approach with customers can generate innovative ideas. A “design thinking” approach can help structure this creative process.
The most common case: at the end of development
The most common case, however, is the collection of customer feedback based on a real product or service. The aim of this type of market research may be to:
- check the suitability of a product/service for a new market (new segment, new foreign market)
- improve an existing product by identifying its weaknesses
- improve a prototype before launching it on the market
Traditional market research tools (qualitative interviews, focus groups, online surveys) can then be used, alone or in combination, to meet customer requirements.
In conclusion, co-creation is synonymous with customers’ active participation in the ex-nihilo development of products and services. Online co-creation platforms have proved to be excellent marketing tools, but their track record in innovative product creation is open to question. Nevertheless, the active participation of customers can be necessary in 2 situations:
- to invent a new product/service through design thinking
- to give their opinion on an already-developed product/service or prototype
Posted in Research.