Engaging with customers in the
creation of new products and services is now of paramount importance for firms.
Such a revolutionary approach can shorten the time to market and ensure a
better fit between a company’s offer and market needs, two of today’s strategic
imperatives to survive in progressively more competitive environments. In order
to derive insights from customers, firms are experimenting with innovative
organisational solutions: amongst them the use of living labs is increasingly
capturing the interest of managers.
Success stories of co-creation are
emerging across various industries, and involve both small and large firms.
Organisations that are embracing this approach outperform the market, develop
better products and place them faster onto shelves, provide superior service,
and build deeper, more loyal relationships with their customers. For example,
LEGO employs co-creation to successfully engage many of their adult customers
in the design process of new products. Peter Espersen, head of global community
co-creation at Lego explains “We have learned some big lessons. First, that
creativity has almost no boundaries; people can do amazing things. Second, we
can’t always predict what consumers want. [..] When you combine the idea of
Lego with another strong community, and a fun one, that is rocket fuel in the
engine - it really works.”
In spite of the term co-creation being now
widely used, all co-creation is not the same. The catch-all term has meant that
everything from crowd-sourced marketing ideas to general collaboration has been
labelled as co-creation. This led many organisations to believe that they have
practiced co-creation, when they actually have experienced a tactical (and
often far less value adding) interpretation of the practice. Co-creation is not
a tactical marketing method, nor is it just a synonym for collaboration. It is
a way of innovating that can truly revolutionise how organisations work and
address customers’ unmet needs. So what
is co-creation exactly? Co-creation refers to
collective creativity that results in something that is not known in advance. In essence it is the idea that
organisations can be more successful by innovating with customer rather than
for customer. In its purest form, co-creation suggests that customers are no
longer at the end of the value chain, but take up a key role in the process of
value creation.
In order to engage with customers in
the co-creation process, the use of living labs has emerged as a new way to
sustain competitive advantage. Living labs are open innovation platforms that enable
systematic customer co-creation whilst integrating
research and innovation processes in real
life settings. One example is JOSEPHS – a living lab located in the town
centre of Nuremberg in Germany. JOSEPHS offers an open innovation space where
five companies display their product and service innovations for three months
under one theme. This space is open to the public. JOSEPHS as facilitator
encourages customers to try out products and services and then give feedback.
However, the understanding of
how the co-creation process can be best facilitated is limited. To
support managers pursuing this strategy and engage in a vibrant and growing
academic debate, we conducted a study to identify factors that are critical to successful co-creation in living labs. The case
JOSEPHS has been chosen for this study due to its set-up as a continuous
platform for interactive innovation. The
outcomes of this research are available through our webinar or monthly Cambridge Service Alliance paper, and as a podcast.
