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CO-CREATION IN SERVICE-BASED ORGANIZATIONS

embedding collaboration in new product development processes

Master thesis Joost de Boer BSc.

Student number 1517597

Master Business Administration, Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Supervisor II: Dr. M.M. Rietdijk

April 2011


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Voor degene met z’n mateloze trots

In z’n risicoloze hoge toren

Op z’n risicoloze hoge rots

Moet nu weten, zo zijn we niet geboren

Voor degene met de slapeloze nacht

Voor degene die ’t geluk niet kan beamen

Voor degene die niets doet, die alleen maar wacht

Moet nu weten, we zijn allemaal samen

Zing, vecht, huil, bid, lach, werk en bewonder

Vrij naar Ramses Shaffy (1971)

The photo on the front page of this thesis is used under Common Ground licence. It is called ‘The smile of a man with a wild fan base’ and

was taken by Ibrahim Iujaz and shared via Flickr (2011)

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Joost de Boer

Supervisor:

EXECUTIVE

Prof. Dr. T. Elfring

SUMMARY

Student number 1517597

Motivation: One of the concepts in innovation and marketing literature that has received an increasing amount

of attention in the past few years is co-­‐creation. Co-­‐creation can basically be described as something that

connects organizations and its stakeholders in a continuous dialogue about its products, services and

potentially everything it does, with the aim of creating a shared value.

Research design: Departing mainly from the open innovation and service-­‐dominant logic paradigms that

emphasize the involvement of external parties in innovation and marketing processes, this research focuses on

the use of co-­‐creation in new product development processes of service-­‐based organizations. By doing a

thorough research among five service-­‐based organizations in The Netherlands, a total number of fourteen

participants were interviewed, having a special interest in the purposes for the use of co-­‐creation, the internal

and external parties that are involved, and the types of co-­‐creation that are used during the three main phases

of the NPD-­‐process: idea generation, idea development and idea diffusion.

Findings: The combined findings of the literature review and the empirical research demonstrate that

organizations mainly use co-­‐creation for the purposes of innovation and marketing of new products and

services. During the NPD-­‐process, organizations mainly involve lead-­‐users, experts and thought leaders in the

phase of idea generation, and more mainstream customers later on in the process for testing and evaluation

purposes. The external parties that are involved can best be described as the collective group of ‘stakeholders’,

rather than solely ‘customers’ as mostly described in co-­‐creation literature.

Further, one new type of co-­‐creation was identified: internal co-­‐creation. Large organizations appeared to be

able to involve their own employees through the use of co-­‐creation for the purpose of innovation and process

improvement. Finally, a number of difficulties were found that organizations are likely to deal with when they

adopt co-­‐creation in their NPD-­‐processes: commitment (as a result of available time, budget and perceived

priority), the organizations’ culture and structure, environmental influences and communication.

Implications: This research provides managers with an overview of the types of co-­‐creation and for what

purpose and at what phase in the NPD-­‐process they may be used. In addition, it provides them with an

overview of the difficulties they may expect, and with the knowledge and caution that co-­‐creation may require

to be fully embedded in the organization in order to deliver the best results. Finally, it highlights the use of

internal co-­‐creation as a way to enhance cooperation inside the organization itself.

Future research: Two findings may be recommended to receive increased attention in the future. Firstly,

internal co-­‐creation and its use as a new way of co-­‐creation that allows organizations to increase collaboration

between employees. Secondly, open innovation and especially co-­‐creation faces the challenge to deal with

shared intellectual property in a digital age: when organizations and stakeholders are cooperating, new forms

of intellectual ownership are likely to be required.

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor:

TABLE

Prof. Dr. T. Elfring

OF CONTENTS

Joost de Boer

Student number 1517597

PREFACE

EXECUTIVE SUMMARY

TABLE OF CONTENTS

1. INTRODUCTION 6

OBJECTIVE AND RESEARCH QUESTION

7

THEORETICAL AND PRACTICAL RELEVANCE

8

RESEARCH DESIGN

10

2. CASE ANALYSIS 11

2.1 CO-­‐CREATION OF VALUE: A GENERAL INTRODUCTION 11

§ 2.1.1 | Co-­‐creation: a definition 12

2.2 THE PURPOSE AND USE OF CO-­‐CREATION 14

§ 2.2.1 | Co-­‐creation in marketing: the service-­‐dominant logic 14

§ 2.2.2 | Co-­‐creation in innovation: the open innovation paradigm 16

2.3 CO-­‐CREATION IN MARKETING AND INNOVATION PROCESSES 18

§ 2.3.1 | (Open) Stage-­‐gate model and the Innovation Value Chain 18

§ 2.3.2 | Involved parties in co-­‐creation 21

§ 2.3.3 | Types of co-­‐creation 23

2.4 TOWARDS EMPERICAL RESEARCH 26

3. METHODOLOGY 27

3.1 RESEARCH DESIGN 27

3.2 DATA COLLECTION 28

§ 3.2.1 | Sample selection 28

§ 3.2.2 | Selection criteria 29

§ 3.2.3 | Selected cases and sample characteristics 29

§ 3.2.4 | Data collection through semi-­‐structured interviews 31

3.3 OPERATIONAL DEFINITIONS 31

3.4 CREDIBILITY OF THE RESEARCH 32

3.5 DATA ANALYSIS 32

4. CASE ANALYSIS 33

4.1 CASE ANALYSIS 34

4.5 CROSS-­‐CASE ANALYSIS 54

5. DISCUSSION 64

5.1 PURPOSE OF CO-­‐CREATION 65

5.2 INVOLVEMENT OF INTERNAL AND EXTERNAL PARTIES 65

5.3 USED TYPES OF CO-­‐CREATION 67

5.4 CO-­‐CREATION IN THE NPD-­‐PROCESS 68

5.5 RESULTS AND MEASUREMENT 70

5.6 ENCOUNTERED DIFFICULTIES USING CO-­‐CREATION 71

6. CONCLUSION 72

6.1 CONCLUSION 72

6.2 THEORETICAL AND PRACTICAL IMPLICATIONS 73

6.3 LIMITATIONS 75

6.4 RECOMMENDATIONS FOR FUTURE RESEARCH 75

REFERENCES

APPENDIXES

APPENDIX A: OPERATIONAL DEFINITIONS*

Appendix B: Definition of co-­‐creation by interviewees

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

01

Supervisor:

INTRODUCTION

Prof. Dr. T. Elfring

Introduction

§ 1.1 | Objective and research question

§ 1.2 | Theoretical and practical relevance

§ 1.3 | Research design

Joost de Boer

Student number 1517597

“In the past few years, the ability to organize communities of Web participants to develop, market and support

products and services has moved from the margins of business practice to the mainstream” (Bughin, Chui et al.

2010). In August 2010, McKinsey Quarterly published an article called ‘Ten tech-­‐enabled business trends to

watch’ which describes recent technical developments and their impact on traditional business models.

Collaborative creation, in short co-­‐creation, is one of those developments that have received increased

attention during the past decade. It roughly describes the involvement of customers by organizations in the

process of developing, marketing and support of products and services.

The increasing popularity of co-­‐creation is -­‐ next to technological developments -­‐ largely the result of

‘dissatisfied consumers that want to interact with firms and thereby co-­‐create value’ (Prahalad and

Ramaswamy 2004b). In addition, an increasing number of articles in marketing and innovation literature have

been published that elaborate on the increasing use of customer involvement in value creating processes of

organizations. Within marketing and innovation fields, two important paradigms have risen that stimulate

organizations to source beyond their direct organizational boundaries: the service-­‐dominant logic and open

innovation

Both paradigms promote the involvement of customers in organizations, and co-­‐creation appears to have the

potential to function as a linking pin between the two worlds. It enables organizations to gather insights and

ideas from experienced users and experts, while at the same time creating leverage for new ideas in the

internal organization and shaping opportunities to develop those ideas together. However, Kristensson et al.

(2008) state that ‘co-­‐creation in terms of user involvement forces a rethink of much of the traditionally

accepted strategies when a company attempts to collect knowledge about customer value’. So apart from its

apparent benefits, co-­‐creation tends to affect the organizations’ strategy, questioning the traditionally

accepted strategies of product development and collecting customer insights.

Although the number of contributions to co-­‐creation literature has increased in line with its popularity, few

combined research has been done about where and when co-­‐creation can be used in the process of new

product development, and who should be involved in it. Adopting co-­‐creation may, along with a large list of

new value creating opportunities, also have a large impact on the way organizations shape their innovation and

marketing processes. Hence, this research aims to identify how co-­‐creation can be used in both marketing and

innovation processes to create value.

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

§ 1.1 OBJECTIVE AND RESEARCH QUESTION

Given the novelty of the concept, recent co-­‐creation research has primarily focused on explorative research

and theory building. The first conceptual models on co-­‐creating value that were built, presented potential

strategies for successful user involvement and exploring the benefits of co-­‐creation for both customers and

organizations (Kristensson, Johansson et al. 2008; Payne, Storbacka et al. 2008). Several types of customer

collaboration were identified (Pisano and Verganti 2008) as well as researches that focused on the question

whether co-­‐creation should be considered a ‘limited subset of digital media’, or as ‘something that extends

more generally and inclusively across the entire economy and culture’ (Potts, Hartley et al. 2008).

However, little research has been combining marketing and innovation processes, neither has there been made

consequent use of paradigms in both fields of interest such as the Service Dominant Logic and open innovation.

As a result, there is a gap in co-­‐creation literature in describing how co-­‐creation can best be used in the

different phases of value creation processes. Bendapudi & Leone (2003) made attempts to show that the

timing of customer involvement is important, and Nambisan & Nambisan (2009) elaborate that different types

of co-­‐creation have different levels of impact. However, this does not include the question of what types of co-­creation

can best be used during the specific phases of the value creation process.

In addition, there is lack of research describing which parties -­‐ inside and outside the organization -­‐ are

involved in the different phases of the (co-­‐created) value creation process. Thereby, co-­‐creation requires

cooperation with outside as well as with inside parties. Few is known about how this cooperation works, and

what possible problems occur when for instance marketing and innovation departments start cooperating

intensively with each other. Considering these gaps in co-­‐creation literature, this research departs from the

following research question:

“How is co-­‐creation used in the innovation and marketing New Product Development-­‐processes of

service-­‐based organizations?”

In addition, several sub questions have been formulated to underpin the research question:

1. What is considered as the ‘co-­‐creation of value’?

2. How are different types of co-­‐creation used for different purposes in the process?

a) For what purposes is co-­‐creation used in organizational processes?

b) What types of co-­‐creation are there?

3. Which parties are involved in co-­‐creation?

a) Who are involved from the inside of the organization?

b) Who are involved from outside the organization?

4. What are the encountered problems for co-­‐creation in these processes?

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

This research starts with a review of the available co-­‐creation literature, and is subsequently extended with

empirical research on co-­‐creation. Both theoretical and empirical results will be combined to provide an

answer to the research question, as shown by the proposed conceptual model in figure 1.1.

Figure 1.1 | Proposed conceptual model

Co-creation

Marketing

and

innovation

processes

New Product Development Process

Successful

products

and

services

§ 1.2 THEORETICAL AND PRACTICAL RELEVANCE

This research has the objective to make contributions to both theory and practice. This section therefore

discusses the theoretical and practical relevance of this research.

§ 1.2.1 | Theoretical relevance

Co-­‐creation is a concept that can be used by both product-­‐based as by service-­‐based organizations. But over

the past few decades, marketing theory and practice have evolved from a ‘goods’ dominant-­‐logic towards a

more ‘service’ dominant-­‐logic. Vargo & Lusch (Lusch, Vargo et al. 2007) mark that from the 1980’s ‘a dominant

logic begins to unify disparate literature streams in major areas such as customer and marketing orientation,

services marketing, relationship marketing, quality management, value and supply chain management,

resource management and network analysis’ (Vargo and Lusch 2004).

Similarly, in innovation theory has quite recently had contributions on the field of lead-­‐user innovation (von

Hippel 1986; von Hippel 2005), open innovation (Chesbrough 2003; Chesbrough 2006) and new product

development (Phillips, Neailey et al. 1999; Grönlund, Sjödin et al. 2010). These concepts have one thing in

common: they open up innovation processes and emphasize the importance of cooperation and sharing,

thereby deviating from traditional ‘closed’ innovation theories who prescribe that innovation is something that

is done from within.

Although these innovation and marketing theories have much in common, there have been done no attempts

yet to challenge the strategies that traditional innovation and marketing departments use. This research zooms

in on the process of new product development, thereby aiming to identify the moments that organizations

involve their customers by using co-­‐creation. Although previous research has identified several types of co-­creation

and opportunities for the use of co-­‐creation in general, no combined research has been done yet

describing what type of co-­‐creation is used in what type of the new product development process. In addition,

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

few is known about which internal and external parties are exactly involved during these particular phases in

the process. Considering the external parties that are involved, it might be that these are not just customers,

but also a more varied group of stakeholders. In addition, considering the involvement of internal parties, there

might be problems when cooperation between departments is intensified as the result of co-­‐creation. Finally,

when deploying co-­‐creation in the new product development process, problems may occur that were

previously unaccounted for. This research aims to map the problems that occur when using co-­‐creation in this

process.

§ 1.2.2 | Practical relevance

The practical relevance of this research lies in the direct extent of its theoretical relevance, and contributes in

four ways First, in June 2008, an article in McKinsey Quarterly’s noted that “…smart companies are now

beginning to encourage their customers to help them develop the products and services consumers really

want” (Bughin, Chui et al. 2008). Recognizing that organizations share a common struggle in using co-­‐creation

of value in their marketing and innovation processes, there appears to be a growing need for solutions on this

level. Although this research cannot provide an answer to all known matters and questions that are related to

co-­‐creation, it can make a start by indicating what type of co-­‐creation organizations may use in different phases

of their product or service development process.

Second, it is highly relevant to know exactly who to involve during these different phases. As Enkel et al. (2005)

noted, organizations should ‘involve customers as early as necessary, but as late as possible’. They also

conclude that by involving customers, organizations may at the same time put their intellectual property at

risk, and expose information that is sensitive to competitors. By indicating which customers are to be involved

in the different phases that co-­‐creation is used, organizations may limit the risk of unnecessary involvement of

customers at crucial stages of the process.

Third, the intensified cooperation between an organizations’ marketing and innovation departments as a result

of the use of co-­‐creation challenges the ways how organizations are structured. Referring to Goold &

Campbell’s specialist cultures (Goold and Campbell 2002), departments are sometimes consciously separated

from each other in order to reach greater performance. In the case of co-­‐creation, this might complicate the

cooperation between those departments and their interactions with externally involved parties. Problems that

were indicated during this research might be prevented by changing organizations’ structural design.

Finally, Kristensson et al. (2008) conclude their article by stating that managers in general face the challenge of

“discovering innovation opportunities which are not related to findings made in the R&D laboratory, but at

places far away from the company where, and when, ordinary people use certain services”. It will not be easy

for organizations that have previously operated using rather closed innovation departments to open up and to

involve customers. At the end of this research, several practical implications and recommendations will be

made, as well as the limitations and possible follow-­‐ups of this research.

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

§ 1.3 RESEARCH DESIGN

Serving the purpose of this research to provide an answer to the proposed research question, this research

largely consists out of four parts. The first part provides an overview of recent co-­‐creation literature and

related theories in Chapter 2, partially and temporally answering the sub questions by completing the

proposed conceptual model that was introduced in paragraph 1.1. Next, Chapter 3 functions as a link between

theory and practice, by discussing the research methodology that was used to collect empirical data.

The second part is the actual empirical section of this research: fourteen employees working at a total number

of five service-­‐based organizations were interviewed and asked for their experiences with co-­‐creation. This

way, an overview is created that shows how different organizations involve co-­‐creation in their product/service

development processes, and what problems they have encountered. By not only discussing each case on its

own, but also providing a cross-­‐case analysis of the results, the research also compares results among

organizations.

In the third part of this research, theory and practice meet as their results are compared. It will discuss the

implications that the empirical data of Chapter 4 appear to have on the theories that were identified earlier in

Chapter 2. Finally, Chapter 6 concludes the discussion of Chapter 5 with the results generated in Chapter 2 and

4, providing an answer to the research question and the sub questions that were stated in Chapter 1, and

additionally explains the theoretical and managerial implications of this research along with its limitations.

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

02

Supervisor:

CASE

Prof. Dr. T. Elfring

ANALYSIS

Introduction

§ 2.1 | Co-­‐creation of value: a general introduction

§ 2.2 | The purpose and use of co-­‐creation

§ 2.3 | Co-­‐creation in marketing and innovation processes

§ 2.4 | Towards empirical research

Joost de Boer

Student number 1517597

This chapter is the first step towards providing an answer on the question how co-­‐creation is used in innovation

and marketing processes of service-­‐based organizations, and is therefore divided into four paragraphs. It

therefore starts with a general introduction of the concept ‘co-­‐creation of value’, and a discussion about what

is considered to be co-­‐creation and what not. Next, the different purposes and use of co-­‐creation are explored

by discussing the relevant marketing and innovation theories that the concept relates to: open innovation and

the service dominant logic.

The third paragraph first discusses the different approaches to the shared marketing and innovation process of

new product development, while working towards an integrated process overview. The involved parties in co-­creation,

as well as the different types of co-­‐creation are treated subsequently with respect to their use in

different stages of new product development. It is argued that co-­‐creation can be used in multiple stages of the

joined marketing and innovation process, but that the way how co-­‐creation is used and the parties that are

involved may differ per stage.

Finally, an overview is made of the reviewed literature in this chapter, while visually underpinning these results

in the conceptual model. From here, empirical data will be gathered and analyzed to assess whether how co-­creation

can contribute to existing marketing and innovation processes.

§ 2.1 CO-CREATION OF VALUE: A GENERAL INTRODUCTION

An example: Wikipedia

§ 2.1.1 | Co-­‐creation: a definition

An example: Wikipedia

There is no better way to start a paragraph about the co-­‐creation of value, then by defining the concept by

using a co-­‐creation medium ‘avant la lettre’: Wikipedia. The Dutch Wikipedia page on ‘co-­‐creation’, defines it

as follows: “Co-­‐creation is a situation where an organization achieves value creation by cooperating with

consumers, end-­‐users or other stakeholders”. However, one of the well known problems with Wikipedia is that

it lacks accordance with relevant pages in other languages.

Hence, the English page of Wikipedia defines co-­‐creation as “a form of market or business strategy that

emphasizes the generation and ongoing realization of mutual firm-­‐customer value. It views markets as forums

for firms and active customers to share, combine and renew each other's resources and capabilities to create

value through new forms of interaction, service and learning mechanisms. It differs from the traditional active

firm -­‐ passive consumer market construct of the past.”

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Although the English definition is somewhat more extended than the Dutch definition, both definitions are in

accordance with each other. However, a little further on the Dutch Wikipedia site, there is a section called

‘Difference with related concepts’, that claims: “Co-­‐creation is often confused with co-­‐design. Co-­‐design is a

process where customers or end-­‐users are involved to develop new products or services in a customer oriented

way. The input of customers/end-­‐users in this process aims at value creation within an organization”.

The three subsections above allow us to draw a few conclusions already: (1) there is a variety of definitions on

co-­‐creation, but (2) co-­‐creation may largely be explained as the creation of value by stakeholders and

organizations in a cooperative process. In addition, these definitions show that (3) some co-­‐creation initiatives,

like Wikipedia, have important limits regarding the reliability of their input, and as a result (4) organizations

may expect that co-­‐creation will not be implemented easily, and that its results will not always be directly

profitable. For this research, the definitions Wikipedia provides are not very useful; however, they do offer

some clues where to start. This paragraph is about co-­‐creation: it discusses what it is, how it works and what

the current state of mind in co-­‐creation literature is.

§ 2.1.1 | Co-­‐creation: a definition

The ‘co’ in co-­‐creation stands for ‘collaborative’ -­‐ collaborative creation, that is. It is no coincidence that

Wikipedia in the previous example uses different definitions of co-­‐creation. Concepts like co-­‐production, co-­design,

customer innovation, lead user innovation and customizing are used interchangeably; the theoretical

landscape that describes co-­‐creation is fragmented as a result of the semantic discussions about what co-­creation

exactly is. This research makes no attempt to enter or to end this discussion; as the number of

concepts that relate to co-­‐creation seems to be endless and most concepts are not entirely mutually exclusive,

there is no use in trying to identify each of these concepts and to compare their differences. However, it is

useful to identify a number of criteria that can be used to embrace concepts that operate within the same area

of co-­‐creation, preventing this research from ending up in semantic discussions. To do this properly, a point of

departure is needed to identify such criteria.

A definition provided by Kristensson, Matthing and Johansson (2008) appears to be suitable. They define co-­creation

as “The involvement of the customer as an active collaborator right from the beginning of the

innovation process. In the process of co-­‐creation value, the customer may suggest innovative ideas for the

company’s forthcoming products or, alternatively, he or she might share consumption experience”. This

definition hands a number of leads that can be transformed into criteria: co-­‐creation is used from the

beginning of the innovation process (i.e. place in the process), by involving customers as an active collaborator

(i.e. whom are involved) to suggest ideas or share their consumption experiences (i.e. for what reason are the

whom involved).

C.K. Prahalad and V. Ramaswamy, two business scholars who popularized the term ‘co-­‐creation’ with their

book ‘The Future of Competition’ in 2004, define the concept of co-­‐creation as “a new approach to value

creation, based on an individual-­‐centered co-­‐creation of value between consumers and companies” (Prahalad &

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Ramaswamy, 2004b). In addition to Kristensson et al., they add the section ‘(new) approach to value creation’:

this appears to be the target of co-­‐creation (i.e. why is it done). They managed to make a comparison between

what, in their view, can be considered as co-­‐creation and what cannot; the result is plotted in table 2.1.

What co-creation is not

Customer focus

Customer is king or customer is always right

Delivering good customer service or pampering

the customer with lavish customer service

Mass customization of offerings that suit the

industry’s supply chain

Transfer of activities from the firm to the

customer as in self-­‐service

Customer as product manager or co-­‐designing

products and services

Product variety

Segment of one

Meticulous Market research

Staging experiences

Demand-­‐side innovation for new products and

services

Table 2.1 | The concept of co-creation

(Prahalad & Ramaswamy, 2004c).

What co-creation is

Co-­‐creation is about joint creation of value by the company and the

customer. It is not the firm trying to please the customer

Allowing the customer to co-­‐construct the service experience to suit

her context

Joint problem definition and problem solving

Creating an experience environment in which consumers can have

active dialogue and co-­‐construct personalized experiences; product

may be the same (e.g., Lego Mindstorms) but customers can

construct different experiences

Experience variety

Experience of one

Experiencing the business as consumers do in real time

Continuous dialogue

Co-­‐constructing personalized experiences

Innovating experience environments for new co-­‐creation

experiences

According to Prahalad & Ramaswamy, co-­‐creation is the result of dissatisfied consumers that want to interact

with firms and thereby co-­‐create value. Potts et al. (2008) add to this that co-­‐creation is not exactly a new

thing, but rather an “evolution of economic and cultural order to ‘account for consumers’ greater access to the

‘means of production’ through information and communication technologies”. They link it to situated creativity,

defining it as a feedback dynamic of creativity between production and consumption. The evolutionary

approach and the dissatisfaction argument mentioned above, are supported by other writers such as Malcom

Gladwell (The Tipping Point, (2000)) and Matt Mason (The Pirate’s Dilemma, (2008)) who recently published

about the way how youth culture and increase of technological developments result in increasingly critical

consumers that do not want to remain on the sideline: they want to participate.

As for organizations, the first reason to involve customers in their processes is that customers, being the users

of a product or service, have user experience. Therefore, they can have valuable insights and experiences that

might improve existing products, or lead to the development of new ones (Prahalad and Ramaswamy 2004b).

Second, as Payne et al. (2008) recall: ‘the suppliers’ motivation should be to improve these customer practices

in order to build value for the customer and a more valuable role for itself in the customer’s activities’. More

customer value would automatically lead to more satisfied consumers, which leads to more sales.

After this defining section of the concept co-­‐creation of value, it is useful to consider the purposes that co-­creation

is used for in organizations. This involves theories that are dominant in the fields where co-­‐creation

operates: mostly marketing and innovation. Therefore, the next paragraph provides an overview of the

emerging paradigms in marketing and innovation and how they relate to co-­‐creation. It appears that although

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

used by both marketing and innovation departments in organizations, there is still little known about the way

that co-­‐creation is used in a joined effort between the two.

§ 2.2 THE PURPOSE AND USE OF CO-CREATION

§ 2.2.1 | Co-­‐creation in marketing: the service-­‐dominant logic

§ 2.2.2 | Co-­‐creation in innovation: the open innovation paradigm

After the previous introductory paragraph, this section discusses the different purposes that co-­‐creation is

known to be used for. Nambisan & Nambisan (2009) argue that co-­‐creation generally can result in two

outcome categories. The first category relates to marketing and customer relationship management, where

they mostly emphasize that ‘consumer involvement in innovation and value creation can lead to enhanced

customer loyalty, customer satisfaction and customer quality perceptions’. Second, the outcomes of co-­creation

relate to the process of innovation: they provide examples of ‘enhancing innovativeness, appeal of

products and services and reduce time to market by partnering with customers in product development or

enhancement’.

This paragraph therefore provides a discussion focusing on two fields of attention: marketing and innovation

literature. An important paradigm in marketing literature is the service-­‐dominant logic (S-­‐D logic): one that

breaks with the product-­‐dominant focus of organizations and emphasizes the importance of involving

customers in development and marketing processes (Vargo and Lusch 2004). The application of co-­‐creation for

innovation purposes is also subject to the attention of many scholars. One of the emerging paradigms in the

field of innovation literature is that of open innovation, arguing that organizations should not only source for

new ideas inside, but also outside the boundaries of their organizations (Chesbrough 2003).

§ 2.2.1 | Co-­‐creation in marketing: the service-­‐dominant logic

Vargo & Lusch (2004) explore the possibilities for the S-­‐D logic in their article ‘Evolving to a new dominant logic

for marketing’. In their study on the evolvement of marketing literature during the past two centuries, they

discover a growing importance for marketing, which has its glory days in a traditional sense during the 1950’s –

1980’s. After this, marketing emerges more and more towards a more holistic paradigm that unifies “disparate

literature streams in major areas such as customer and market orientation, services marketing, relationship

marketing, quality management, value and supply chain management, resource management and network

analysis.”

Originating from marketing literature, the service-­‐dominant logic largely describes the transition from the

traditional goods-­‐dominant logic’s focus on ‘value in exchange’ towards a focus on ‘value in use’. This ‘value in

use’ paradigm is not only modern in its view of customers (i.e. as an operant, intangible resource), but also

stretches the idea of customer value creation by actually involving the customer in the process of creating

value. (Enkel, Kausch et al. 2005)

This kind of marketing asks for a different mind-­‐set. Instead of looking at a product or service and considering it

as ‘output’, the S-­‐D logic tends to look at a product or service as a step in a process towards customer value.

14


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Hence, the product or service is not any more the product or service that it used to be in terms of ‘end

product’, but the purpose of a product or service is here seen as something that functions in order to achieve a

certain amount of satisfaction.

Changing the paradigm of customer value creation starts with the understanding that according to the S-­‐D

logic, value creation is a continuous process rather than a production process that ends at the phase of ‘value

exchange’. Yet, Vargo & Lusch (2006) explicate, the S-­‐D logic does not neglect the importance of value in

exchange; however, they claim that ‘value in exchange’ exists only if ‘value in use’ occurs for the customer as

well. Further, the relationship between customer and organization is considered to be continuous, inviting both

to collaborate. Table 2.2 on the next page provides an overview of the fundamental differences between the

goods-­‐dominant and the service-­‐dominant logic (Vargo and Lusch 2004), which was adjusted to the concepts

used in this section.

Table 2.2 | Adjusted G-D and S-D logic conceptual transitions

Lusch & Vargo (2006)

Goods-­‐dominant logic

Service-­‐dominant logic

Focus Goods (operand) Service (operant)

Mode of exchange Products, Services Experiences

Satisfaction Feature/attribute Solution

Creating customer value Value-­‐added Co-­‐creation of value

Financial Profit maximization Financial feedback/learning

Remuneration Price Value proposition

Determining supply and demand Equilibrium systems Complex adaptive systems

Activities Supply chain Value creation network/constellation

Marketing Promotion Dialogue

Launch To market Market with

Orientation Product orientation Service orientation

From an S-­‐D logic point of view, co-­‐creation can also be seen as an important addition to customer relationship

management (CRM). In their article in the Harvard Business Review, Rust, Moorman and Bhalla (2010) propose

a shift in marketing departments from a focus on driving transactions towards the maximization of customer

lifetime value. They argue that organizations should consider ‘reinventing the marketing department as a

customer department’: replacing the Chief Marketing Officer for a Chief Customer Officer, placing customer

managers instead of traditional brand managers, integrating customer-­‐focused functions as ‘Customer

Relationship Management’, Market Research and Research and Development into a customer department, and

emphasizing the importance of customer services (Rust 2010). Their point of departure is that it is increasingly

important to focus on the retention of customers by offering them a maximized customer lifetime value (CLV)

instead of focusing on acquiring new customers.

Bendapudi and Leone (2003) suggest that organizations ‘may want to encourage participation in production by

customers who have a strong relationship with the firm’. In addition, Gummesson (2004) suggests the use of

Return on Relationship (RoR) as a measure instead of Return on Investment (RoI), defining RoR as ‘the long-­term

net financial outcome caused by the establishment and maintenance of individual customer

relationships’. Comparing these suggestions on the field of Customer Relationship Management and the

paradigm switches that are proposed by the Service-­‐Dominant Logic, they have one general thing in common: a

15


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

shift towards the involvement and retention of customers. As support for these developments is created by the

increase of technological ability to reach customers, CRM and S-­‐D Logic describe a potential new direction for

marketing processes and the departments that drive them, by involving the customer.

Co-­‐creation and the service-­‐dominant logic

One of the fundaments of the S-­‐D logic is the co-­‐creation of shared value. This assumes that value should be

created together with the customer in a collaborative process, and not created by the producer for the

customer. Cova and Salle (2008) based their model for involving customer network actors on the S-­‐D Logic;

Payne et al. (2008) cite Vargo & Lusch (2004a) while creating a conceptual framework for value co-­‐creation:

“The customer is always a co-­‐creator of value: there is no value until an offering is used -­‐ experience and

perception are essential to value determination”. However, when reaching toward a new, collaborative logic of

value creation and goal-­‐based satisfaction, the customer will have to get involved in the process. This does not

only imply involvement at the end of the line, but also from the very start of the value creation process: the

phase of innovation.

Consequent to this increasing customer involvement, scholars have linked S-­‐D logic with innovation processes

in organizations. Michel et al. (2008) elaborate on the fact that the traditional goods-­‐dominant logic falls short

to explain and understand many recent discontinuous innovations. Discontinuous innovations, or revolutionary

innovations, are innovations that have changed traditional markets and created new ones, supported by new

techniques like Web 2.0 and the rise of online social media (Albors, Ramos et al. 2008). This new type of

connection does not only connect customers with customers and organizations with other organizations, but

also provides opportunities for cross-­‐link communication.

But how do organizations that have always used a G-­‐D logic approach in their innovation processes adapt to

these changing circumstances? This cannot singularly be explained by the service-­‐dominant logic, which mostly

has a marketing focus – therefore, the use of co-­‐creation for (open) innovation purposes is discussed in the

next section.

§ 2.2.2 | Co-­‐creation in innovation: the open innovation paradigm

One of the current leading innovation paradigms is open innovation. Before clearly defining this paradigm, it is

useful to define what exactly is considered as ‘closed’ innovation. Closed innovation, or traditional innovation,

refers to a closed-­‐circuit model where internal research and development activities lead to internally

developed products that are then distributed by the same firm (Chesbrough 2006). Or as Grönlund et al. (2010)

define closed innovation: it is the development and marketing of new products that takes place within the

boundaries of the same firm. Resources are fed into a development funnel for inventions to appear in the end,

mostly without seriously considering alternative ideas from outside the organization.

Open innovation, however, intends to use a different perspective on innovation. The term ‘open innovation’

was coined by Henry Chesbrough (2003; 2006), defining it as a paradigm that “assumes that firms can and

should use external ideas as well as internal ideas, and internal and external paths to market, as they look to

advance technology”. Open innovation attempts to open up the traditional, closed circuit of research and

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

development (R&D) departments by suggesting that valuable ideas can be generated and used both inside and

outside a specific organization. In practice this means that not all good ideas come from inside the firm, and

neither should all good ideas that emerge from inside that firm be commercialized by that same firm

(Grönlund, Sjödin et al. 2010).

Further, open innovation assumes that internally developed ideas can be taken to the market and then be

applied in other organizations, enabling ideas that are of no direct value to the organization to generate value

either way (i.e. outbound open innovation). Accordingly, another characteristic is that it expects traditional

R&D departments also to identify, connect and leverage external knowledge as an important part of the

process of open innovation (i.e., inbound open innovation). External knowledge herein focuses on reconciling

“the individual inventor or high-­‐tech start-­‐up in Silicon Valley, to the research facilities of academic institutions,

to spin-­‐offs from large, established firms” (Chesbrough 2006).

Open innovation incorporates the business model as the source of both value creation and value capture. This

means that open innovation does not only considers the creation of value, but it also elaborates on capturing

value, making it worthwhile a serious consideration for organizations. The focus on both value creation and

value capturing originates partially from its emphasis on changing the traditional business model. Traditional

business models create value by “defining a series of activities from raw materials through to the final

customer that will yield a new product or service with value being added throughout the various activities”,

and capture value by “establishing a unique resource, asset or position within that series of activities, where

the firm enjoys a competitive advantage”(Chesbrough 2006b).

The open business model, as promoted by the open innovation paradigm, uses the division of innovation labor

to create value by leveraging many more ideas (internal as well as external ideas), and also attempts to capture

greater value by using a key asset, resource or position not only in the company’s own business, but also in

other companies’ businesses. In doing so, it advocates organizations to harness external parties in the process

of value creation (Chesbrough 2006b), as also displayed in figure 2.1.

Figure 2.1 | The Open Innovation Paradigm for Managing Industrial R&D (Chesbrough, 2006)

Research

Development

Boundary

of the firm

New

market

Research

projects

Current

market

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Open innovation thus provides us with a viewpoint that is little different from the service-­‐dominant logic. The

S-­‐D logic derives on the idea that an organization should use its customers in building certain customer value,

with the purpose of creating more loyal customers by offering better value propositions than its competitors

(Vargo and Lusch 2004). However, the open innovation paradigm also emphasizes the capturing of value by the

organization itself. So, instead of only implementing a logic wherein organizations involve the customer to

leverage many more ideas, open innovation also amplifies the capturing of value by using key assets, resources

or positions both inside and outside the company. This way, a paradigm arises where there is not only a focus

on generating ideas, but also on using generated ideas in a proper way both internally and externally.

§ 2.3 CO-CREATION IN MARKETING AND INNOVATION PROCESSES

§ 2.3.1 | Stage-­‐gate model and the new product development process

§ 2.3.2 | Involved parties in co-­‐creation

§ 2.3.3 | Types of co-­‐creation

Considering that co-­‐creation is mostly used for innovation and marketing purposes, it is necessary to identify

how co-­‐creation is exactly involved in its processes. Although the previous section mentioned that co-­‐creation

for example also can be used solely for the purpose of customer relationship management, the emphasis of

this research will be on the use of co-­‐creation in the process of new product development. New product

development (which may also concern the development of services) is mostly a joined process between

marketing and innovation, where at one point of the process there might be an emphasis on marketing and

vice versa (Grönlund, Sjödin et al. 2010). This section attempts to consider the process of new product

development (NPD) and to identify opportunities for the use of co-­‐creation within it.

§ 2.3.1 | (Open) Stage-­‐gate model and the Innovation Value Chain

Taking the service-­‐dominant logic and open innovation paradigms into account, marketing and innovation

literature appear to provide support for the use of co-­‐creation. However, they do not yet explain how it is used

during the process of new product development; the stage-­‐gate model does. This originally four-­‐staged

framework enables organizations to move from the stage of idea development to the launch of a product or

service, separating for 1) preliminary concept development, (2) design and development, (3) validation and (4)

In-­‐service product support. Each of these stages are separated by a gate, that is used as a review point of the

previous stage (Phillips, Neailey et al. 1999). Both marketing and innovation departments have their moments

of influence on the different phases of the development process.

However, the traditional Stage-­‐Gate presumes that a product or service is developed inside the organization

according to the insights of the R&D-­‐employees of the organization. Therefore, Grönlund et al. (2010)

introduced the open Stage-­‐Gate model that is more suitable for working in an open innovation environment.

The open Stage-­‐Gate model breaks with its closed predecessor by adopting inbound and outbound open

innovation activities into the traditional Stage-­‐Gate model. This has two important consequences: first, it

encourages managers during each stage to source both inside and outside the organization for opportunities

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

when sourcing for new ideas by providing a framework that not only accepts, but also explicitly promotes the

use of these opportunities in order to eventually generate higher revenues. Second, it has implications for the

gate processes: it provides an additional evaluation dimension within the traditional gate criteria for the review

and assessment of ideas generated in each stage.

This way, organizations are better able to use NPD as a tool for developing ideas that do not directly match the

core capabilities or business models of organizations, lowering the rate of failure and improving the chance of

finding a solution for expensive development paths. It therefore contributes to an organization’s NPD and open

innovating strategy, as explained in table 2.3.

Table 2.3 | Comparison between the Traditional and Open Stage-Gate Model

(Grönlund, Sjödin et al. 2010)

Dimension Traditional Stage-­‐Gate Model Open Stage-­‐Gate Model

Evaluation criteria Closed evaluation criteria Closed and open innovation evaluation criteria

Import of know-­‐how

and technology

Export of know-­‐how

and technology

Business model

considerations

Core capability

considerations

If at all, external know-­‐how and

technology are opportunistically

reviewed and accessed

Only internal paths to market are

assessed

Alignment between the NPD project

and the business model is considered

Fit between the NPD project and

current core capabilities is considered

External know-­‐how and technology are systematically

reviewed and assessed

Internal and external paths to market are thoroughly

assessed

Continuous assessment and evaluation of the business

model

Continuous assessment and evaluation of core

capabilities

However, in their article ‘The innovation value chain’, Hansen and Birkinshaw (2007) plead that there is no ‘one

size fits all’ solution for organizations to become more innovative. They argue that organizations who say to fail

to be innovative, should not try to adopt solutions that have worked for other organizations. Instead, they offer

a framework that helps organizations to consider and analyze their entire processes of innovation: the

innovation value chain. The innovation value chain distinguishes three phases during the innovation process:

idea generation, idea conversion and idea diffusion. Across these three phases, six tasks must be performed

that are of influence on the entire innovation value chain. A brief overview is provided in table 2.4: notice that

there are three phases, and the six distinct events during these phases, all have influence the innovating

capabilities of the firm.

Phase

Idea Generation

Idea Conversion

Idea diffusion

Table 2.4 | Schematic overview of the innovation value chain

(Hansen and Birkinshaw 2007)

Process

In-­‐house idea generation: creation within a unit

Cross-­‐pollination: collaboration across units

External sourcing: collaboration with parties from the outside

Selection: screening and initial funding

Development: movement from idea to first result

Spread of the idea: dissemination across the organization

Having weaknesses in each one of these phases or processes implicate a threat to the entire innovation

process. When a weak link is identified, organizations should focus on strengthening these weak links instead

of improving the innovation capabilities they already possess. Using the innovation value chain, organizations

can thus target their shortcomings and specifically concentrate on improving them. From a service-­‐dominant

19


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

logic, customer participation and co-­‐creation of value should be integrated in the innovation value chain, which

is done by the external sourcing.

Co-­‐creation and the processes of marketing and innovation

The open stage-­‐gate model and innovation value chain do however not yet explain on the use of co-­‐creation in

new product development processes; it is likely that this may differ dependent on the moment that an

organization chooses to involve the customer. As Bendapudi and Leone (2003) have already indicated, the

strength of the relationship between the organization and the involved customer, as well as the timing of

customer participation is of crucial influence to the co-­‐creation success.

Nambisan & Nambisan (2008) separate several customer roles in the process of innovation and value creation

in virtual customer environments: these roles can either be product ideation, product design and development,

product testing, product support, product marketing and the actual diffusion of new products and services

(Nambisan and Nambisan 2008). Although these roles are linked to a virtual customer environment, it can also

be argued that these roles may also be applied to non-­‐virtual, ‘offline’ value creation processes; however, this

lacks empirical evidence.

In table 2.5, the first four columns provide an overview of the discussed theories and perspectives on

innovation and marketing processes leading towards new product development. The fifth column merges these

different theories and perspectives into one integrated process view: a total number of three stages are

identified that integrate the shared agreements of the different models that were discussed above. These

stages, idea generation, idea development and idea diffusion simplify the previous models, while still

accounting for the different main events that occur during the process of new product development. Hence,

the integrated view will be used in this research as a reference framework for the use of co-­‐creation in

marketing and innovation processes for new product development.

Stage-­‐Gate Model

Philips et al. (1999)

Preliminary concept

development

Design and

development

Table 2.5 | Schematic comparison of the value creation process

Open Stage-­‐Gate

Model

Grönlund et al.

(2010)

Innovation value

chain

Hansen &

Birkinshaw (2007)

Customer roles in

virtual customer

environments

Nambisan &

Nambisan (2008)

Integrated process view

Define Idea generation Product ideation Idea generation

Design Idea conversion Product design

Product

development

Validation Validate Product testing

In-­‐service product

support

Idea diffusion

Product support

Product marketing

Product diffusion

Idea development

Idea diffusion

Considering the Service-­‐Dominant Logic that Vargo & Lusch (2004) introduced, the answer to the question

where and how customers should be involved in these processes is simple and complicated at the same time:

20


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

as early and as often as possible. Prahalad and Ramaswamy (2004b) add to this that co-­‐creation ‘demands that

both managers and consumers make the necessary adjustments’. Necessary adjustments involve, according to

them, investing in a continuous dialogue, that reach far more further than involvement at the point of

exchange (i.e. when a product is bought).

There are three important factors that are expected to determine the success of co-­‐creation in the NPD-­process:

the specific moment(s) in the process that co-­‐creation is used, the way it is used at that specific

moment and the internal and external parties that are involved. Bearing the integrated process view in mind,

this research aims at describing how co-­‐creation can successfully be used along the track of new product

development. The next two sections elaborate on the involvement of internal as well as external parties and

the different types of co-­‐creation that can be used during the process.

§ 2.3.2 | Involved parties in co-­‐creation

During the co-­‐creation process, there are two types of parties that are involved: parties from inside and from

outside the organization. Parties from inside the organization may contain employees and management, while

external parties refer to the involvement of customers and other stakeholders(Lusch and Vargo 2006). This

paragraph discusses the involvement of both internal and external parties, and in addition attempts to identify

what problems the involvement of these parties this might cause.

Involvement of internal parties

The previous paragraph shows that co-­‐creation is mostly used for the purpose of innovation and marketing.

These are often two separate departments inside organizations; marketing departments often tend to have a

more outward focus on customers, while innovation departments tend to focus on the actual development and

production of products and services. However, this sets two requirements that must be met, in order to make

successful use of co-­‐creation. First, it requires employees to have an outward focus in that they start

interacting with customers again (Vargo and Lusch 2004). Second, they must not only be able to interact and

cooperate with their customers, but also with the other employees and departments in their organization.

With the rise of paradigms like the service-­‐dominant logic and open innovation, organizations have increasingly

been encouraged to develop a view that focuses inside as well as outside the organization. A number of

scholars have written about the potential dangers of the not-­‐invented-­‐here syndrome, what causes

departments to “be openly or secretly against cooperation with customers, resenting all external ideas” (Enkel,

Kausch et al. 2005).

However, it may also be expected that the second requirement for successful co-­‐creation, the cooperation

between employees and departments inside the organization, will cause problems. Considering the use of co-­creation

in the process of innovation and/or marketing, employees of both, but certainly not only those

departments are assumed to be involved. Goold and Campbell (2002) discuss that as a result of specialist

cultures, departments that operate within the same organization might have different targets and

responsibilities. These different targets and responsibilities allow them to specialize and create a deep

understanding of for instance certain customer segments or products.

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Given the fact that co-­‐creation requires organizations to collaborate not only externally with parties from

outside the organization, but also with parties from inside the organization, this might cause a problem. During

this literature research, no articles were found that describe exactly which internal parties are involved, nor

how the existence of specialist cultures influences the process of co-­‐creation. As co-­‐creation probably most

benefits from a marketing and innovation process that in some way integrates knowledge of both marketeers

and innovators, it is relevant to know whether possible problems in cooperation between those departments

also influence the success of co-­‐creation.

Involvement of external parties

Almost all the articles that are written about co-­‐creation have a single focus on whom co-­‐creation actually

involves: the organization and the customer. Out of the thirteen articles describing co-­‐creation that were used

in this research, seven articles already referred directly to the customer or ‘customer value co-­‐creation’ directly

in the article’s title. The definitions that were introduced by Kristensson et al. (2008), Prahalad & Ramaswamy

(2004b) and Potts et al. (2008) in the previous section also directly link the customer to the use of co-­‐creation.

Nevertheless, it can be expected that not all customers are involved in the co-­‐creation of value. Obviously, the

first reason not to do this is that involving all customers directly in the process of innovation and marketing, will

cause these processes to become too large to manage properly. A form of selection is needed – but then, still:

which customers are allowed to participate in the process of co-­‐creation? It seems reasonable to expect that

organizations demand their participants to have a certain level of expertise or sensitivity over other customers

– criteria they can use to make a selection between their customers.

Von Hippel (1986, 2005) is one of the scholars that hands a lead for the process of involving expert customers

(so called ‘lead users’) in the processes of innovation. In his article on lead-­‐users as a source of novel product

concepts (1986), he defines lead users as users of a certain product or service that combine two characteristics:

“(1) they expect attractive innovation-­‐related benefits from a solution to their needs and so are motivated to

innovate, and (2) they experience needs for a given innovation earlier than the majority of the target market”.

From there, the use of -­‐ and interest in -­‐ lead-­‐users in innovation and development of new products has only

increased during the years (Herstatt and von Hippel 1992; Lilien, Morrison et al. 2002; Lüthje and Herstatt

2004; von Hippel 2005).

Obviously, there are certain conditions to lead-­‐user involvement in the innovation process to be met. Von

Hippel (1986) advises a four-­‐staged process for incorporating lead users into marketing research. These steps

are (1) identifying an important market or trend; (2) identify lead users who can lead that trend in terms of

experience and intensity of need; (3) analyze lead user need data; and (4) project lead user data onto the

general market of interest.

Even though the focus here was on marketing research, the four steps of the lead-­‐user method are also applied

in more recent research on the field of innovation, applying the lead-­‐user method as a NPD-­‐method that

enables organizations to directly involve customers in their innovation process (Herstatt and von Hippel 1992;

Lilien, Morrison et al. 2002; Lüthje and Herstatt 2004). In extend, it also emphasizes the involvement of

different groups of customers during the co-­‐creation process. Where the involvement of lead-­‐users appears to

22


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

be important in the early stages of trend identification and idea generation, the third and fourth steps require

the need of projection onto other customers. Thus, it can be argued that during the co-­‐creation process,

several ‘types’ of consumers are used – lead users and ‘average’ users. This idea will be extended in the next

section on the different types of co-­‐creation.

Although the involvement of users appears to be lucrative, scholars like Enkel et al. (2005) encourage

organizations to ‘involve customers as early as necessary, but as late as possible’, pointing at the risks of

customer integration. They wrote an article identifying the risks customer integration in organizational

processes brings. Without discussing these risks in detail, it is worthy to mention them: loss of knowhow

through disloyal customers, dependence on customer’s demands or personality, dependence on customers’

views, limitation to mere incremental innovation, serving a niche market only and misunderstandings between

customers and employees (Enkel, Kausch et al. 2005).

Before moving on to this paragraph, it is important to note that co-­‐creation does not necessarily limits itself to

involving just customers; it might be useful to involve other external parties as well. Payne, Storbacka and Frow

(2008) are the first to involve stakeholders in the co-­‐creation process. On their way to develop a conceptual

framework for the co-­‐creation of value, they distinguish three processes in their conceptual framework:

customer value-­‐creating processes, supplier value-­‐creating processes and encounter processes. They refer to

the supplier value-­‐creating processes as “the processes, resources and practices which the supplier uses to

manage its business and its relationships with customer and other relevant stakeholders”.

Payne et al. (2008) also imply that certain stakeholders may have a relevant contribution to the process of co-­creation;

in addition, Cova and Salle (2008) provide a process model to involve business-­‐to-­‐business customers

in supply networks to create value. Despite the fact that the gross of the available co-­‐creation literature almost

exclusively directs the role of ‘co-­‐creator’ to the customer, it can very well be argued that the scope of co-­creation

should be broadened by considering all stakeholders as potential co-­‐creators of value. This way, not

only customers but also other stakeholders, such as employees, suppliers and government agencies can

contribute in the co-­‐creation of value.

In short, during the co-­‐creation process both internal as external parties may be involved. First, internal parties

mostly consider employees from multiple departments (i.e. mostly innovation and marketing departments). It

can thereby be argued that as a result of specialist culture, the cooperation between those departments will

not come easy. Second, according to most recent literature, the involvement of external parties is mostly done

by involving customers -­‐ a collective term for lead-­‐users and ‘average’ users -­‐, but it is also argued that this

should use a more broader scope, by sourcing for involvement in the entire group of stakeholders of the

organization. The next section discusses the different types of co-­‐creation that might be used in the NPD-­process:

the specific involvement of parties appears to be crucial here.

§ 2.3.3 | Types of co-­‐creation

The sections above have described the purposes, use and involved parties in co-­‐creation. However, they do not

exactly explain how co-­‐creation can be used to create value. This section first considers a number of conditions

23


Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

that Prahalad and Ramaswamy (2004b) identified, which they found to be the fundamental requirements for

each type of co-­‐creation. Next, four types of co-­‐creation are introduced, which are defined using a number of

criteria.

For organizations to make effective use co-­‐creation, four ‘building blocks of co-­‐creation’ must be incorporated

in their organization. Prahalad and Ramaswamy identified these key concepts and integrated them into what

they call the DART-­‐Model. DART stands for Dialogue, Access, Risk-­‐Benefits and Transparency, but can merely be

considered to be building blocks than a model. The DART-­‐blocks are largely congruent with the issues that are

addressed in table 2.1 used in the previous section.

Dialogue is the first and most obvious concept: however, it means more than just listening to customers. The

word ‘dialogue’ presupposes a conversation between two equals: customer and organization therefore have to

be on the same level, allowing for shared learning and communication. Next, there is access: whenever an

organization wants to organize a dialogue, it has to provide the customer with information and tools, to allow a

dialogue: this is one important condition in order to come to a dialogue between equals.

There is also an ethical issue in co-­‐creation: when a customer is creating value together with a consumer, can

that customer also be held responsible for possible consequences of a certain product or service? Providing a

customer with the presumed risks and benefits of the product is therefore key to a good customer-­‐organization

relationship, and in line with the idea that customers in general are increasingly better informed and have a

more critical attitude towards organizations and their products. In line with risk-­‐benefit assessment,

transparency is also required. The traditional benefit of information asymmetry cannot longer be maintained,

the authors presume; organizations should therefore be transparent about their prices, costs, margins and the

previously mentioned things like information, risks and benefits (Prahalad and Ramaswamy 2004c).

As already implied in the previous sections, there is no ‘one way’ of co-­‐creation. It can be used in several ways,

largely depending on the organization’s characteristics, the environment it operates in and the people it invites

to participate. Pisano & Verganti (2008) managed to produce a framework that helps organizations to start

collaborating with their customers, departing from two dimensions: the level of openness and the type of

governance that should be used. They found that co-­‐creation can either be done in an open or closed way, by

enabling practically everyone to join the session, or by only inviting certain specific customers or experts.

Parallels can here obviously be seen with the lead-­‐user method (von Hippel 1986) that was discussed in the

previous paragraph, as this also requires a strict selection of the participants in the co-­‐creation process. Next,

the type of governance explains who defines the problem and chooses the solution. This can either be done in

a hierarchical or flat context, i.e. by the initiating organization or by every party that is participating in the

process.

In their White Paper ‘Co-­‐creation's 5 guiding principles’, co-­‐creation strategy consultant Fronteer Strategy

(2009) has crafted these dimensions into a useful tool, displayed in figure 2.2. The tool uses the levels of

openness of Pisano & Verganti and adds ownership of content instead of governance to define four types of co-­creation:

the crowd of people, club of experts, community of kindred spirits and the coalition of parties.

Changing governance for ownership is the result of the fact that ‘ownership’ directly shows who is owner of the

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

generated outcomes, i.e. who owns intellectual property. Hence, an explanation of these four types of co-­‐

creation is provided below, involving several of the characteristics of co-­‐creation as discussed above.

Figure 2.2 | Four types of co-creation

(Fronteer Strategy, 2009)

The names between parentheses are the names used in the article of Pisano & Verganti:

-­‐ Club of Experts (Elite Circle): uses a selection process to involve participants and lays the ownership by

the initiator, which often is the organization itself. Pisano & Verganti refer to ‘Elite Circle’ instead of

‘Club of Experts’, but their definition is largely the same: ‘one company selects the participants,

defines the problem and chooses the solutions’. Clubs of Experts usually involve lead-­‐users, expert or

thought leaders as participants, in relatively small, offline groups.

-­‐ Crowd of People (Innovation mall): in this type of co-­‐creation, practically anyone can join. However,

the ownership is still assigned to the initiator. The initiator defines the problem, but in this case,

practically anyone can propose solutions. This type of co-­‐creation is often referred to as

crowdsourcing, and benefits from the use of modern technologies like social media and online

platforms.

-­‐ Coalition of Parties (Consortium): here, the problem definition as well as the generated content or

solutions are shared between the initiators and the contributors (Pisano and Verganti 2008). However,

the participants to contribute in this type are still selected. Additionally, the outcomes can result in

cooperation between different organizations, leading for example to joint ventures or alliances.

-­‐ Community of Kindred Spirits (Innovation Community): enabling anyone to join in to work out and post

solutions, while all the involved contributors share ownership, this is the most open and accessible

type of co-­‐creation. Anybody can purpose problems and offer solutions, and is free to choose the

solutions that suits their party best (Pisano and Verganti 2008).

Although this framework clearly defines four types of co-­‐creation, it does not yet describe where in the process

of innovation or marketing these types are used. Considering the dimension of ‘openness’, it can already be

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Master thesis (in progress) Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

argued that during different moments in the process, different participants are involved. Hence, the

‘ownership’ dimension might also be influenced during different stages in the marketing/innovation process.

Therefore, one of the objectives of the empirical section of this research is to consider what types of co-­creation

appear to fit with what purpose/use in the marketing/innovation process. Before moving on to the

empirical section of this research, paragraph 2.4 provides a short wrap-­‐up of this chapter.

§ 2.4 TOWARDS EMPERICAL RESEARCH

The main objective of this chapter was to provide an overview of relevant theories in co-­‐creation literature that

explain for the use of co-­‐creation by marketing and innovation in the process of new product development. It

therefore started by identifying a number of criteria that separate co-­‐creation from other similar concepts that

also relate to the involvement of customers. It became clear that co-­‐creation (1) can be used from the

beginning of the innovation process by (2) involving customers as active collaborators to (3) suggest ideas or

share their consumption experiences as (4) a new way of value creation. In addition, it appeared to be highly

that both customer and organization benefit from the collaboration, not just one of those parties.

Next, discussing the service-­‐dominant logic and the open innovation paradigm, it appears that marketing and

innovation are the two main fields of operation for co-­‐creation. Hence, these two also largely influence and

partially overlap the process of new product development, suggesting opportunities for the use of co-­‐creation.

Three main stages forming the NPD-­‐process were identified: idea generation, idea development and idea

diffusion. However, there are three factors that have yet not been discussed within co-­‐creation literature

relating to its use in NPD-­‐processes: (1) the specific stages of the process where co-­‐creation can best be used,

(2) the parties that are involved in co-­‐creation at that specific moment and (3) what type of co-­‐creation is used.

It might also be expected that at a certain stage in the process, specific combinations of these three factors

may occur. For the purpose of the empirical section of this research in Chapter 4, the findings of this literature

review are summarized and applied into the proposed conceptual model illustrated in figure 2.3.

Figure 2.3 | Proposed conceptual model

Co-creation

Purpose/use

Involved parties

(internal/external)

Types of cocreation

(openness/

ownership)

Marketing

and

innovation

processes

New Product Development Process:

idea generation | idea development | idea diffusion

Successful

products

and

services

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Master thesis Business Administration, Specialization: Strategy & Organization

03

Supervisor:

METHODOLOGY

Prof. Dr. T. Elfring

Introduction

§ 3.1 | Research design

§ 3.2 | Data collection

§ 3.3 | Operational definitions

§ 3.4 | Credibility of the research

§ 3.5 | Data analysis

Joost de Boer

Student number 1517597

This chapter explains the steps that were taken towards the empirical section of this research. First, an

overview is provided of the research design: this is a short general section discussing the methodology that was

used during the research. Next, the way of data collection is explained, together with the criteria that were

used to select cases. In section three, definitions are operationalized to insure all measurements are

comparable and valid. Finally, the process of data analysis is clarified.

§ 3.1 RESEARCH DESIGN

Explorative research, using an embedded multiple case study

As already mentioned in the introductory chapter, this research aims to provide a clearer sense of how co-­creation

is used in marketing and innovation processes. Given the fact that co-­‐creation is a relatively new

concept in both marketing and innovation literature, this research has an exploratory nature: it aims to seek

new insights on the field of future innovation and marketing strategies, and the effects on an organization’s

strategy (Babbie 2004). The first part of this research has already passed the reader’s attention in the previous

chapter: the search for and review of available literature on this subject.

This chapter mostly explains the second part of the research, being the collection and processing of empirical

data. The advantage of an exploratory research is that it is flexible and adaptable to change: new insights or

viewpoints can quite easily be adopted in the research, without the risk of losing important information or

focus of the research itself (Saunders, Lewis et al. 2009). By using a case study research strategy, multiple cases

were selected to supply empirical data through semi-­‐structured interviews. As Yin (2003 in: Saunders, Lewis et

al. 2009) remarks, a multiple case study ‘allows a researcher to do research which involves an empirical

investigation of a particular contemporary phenomenon within its real life context using multiple sources of

evidence’. In addition, it is possible to compare findings between cases to allow one to make better

generalization of the data.

According to Yin, the researcher also has to consider the unit of analysis, i.e. as holistic or embedded. While a

holistic approach considers the organization as a whole, the embedded approach allows involving more units of

analysis. Taking in consideration that this research uses multiple cases, but also wants to differentiate for

different units within the cases/organizations itself, we can here say that this research uses an embedded case

study. This way, separate units inside the organization can be compared with each other; something that is

necessary in order to compare, for instance, different policies between marketing and innovation departments.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

§ 3.2 DATA COLLECTION

§ 3.2.1 | Sample selection

§ 3.2.2 | Selection criteria

§ 3.2.3 | Selected cases and sample characteristics

§ 3.2.4 | Data collection through semi-­‐structured interviews

This section explains all steps and choices relevant to data collection. First, an impression is given on how the

total sample population is generated, containing sampling techniques and total number of cases. Next,

selection criteria are framed that will include or exclude cases in the research. After providing an overview of

the selected cases and the characteristics of the sample population, the section ends with an explanation on

the semi-­‐structured interviews.

§ 3.2.1 | Sample selection

Given that this research is an embedded case study that uses multiple cases to acquire empirical data, two

selections must be made before a definitive composition of the sample population is possible. First to be

framed are the holistic selection criteria, which allow to select cases within a range of organizations. These

criteria are discriminating for certain organizational characteristics, such as their industry, nature (products vs.

services) and customers (business-­‐to-­‐business vs. business-­‐to-­‐customer). Next, criteria can be set to select

between the embedded cases within the organizations themselves: discriminating for departments, functions,

experience, and so on. Selections are thus made on two dimensions, while controlling for selection criteria

within the dimensions themselves: all equal cases (organization vs. organization, individual vs. individual) are

selected using the same selection criteria.

Before discussing these criteria, it is first important to decide whether a probability or an non-­‐probability

sampling technique will be used. Given that the research question and objectives of this research do not

require any statistical estimation of the population characteristics, non-­‐probability sampling techniques will be

used. This is in accordance with Eisenhardt’s (1989) theoretical sampling: cases are chosen to extend emergent

theory, and are therefore non-­‐randomly selected. There are two selection techniques that may be considered:

purposive sampling and snowball sampling. Purposive sampling allows working with relatively small, special

samples in interviews, while still allowing to keep a reasonable control over the sample contents. Snowball

sampling, in addition, helps the researcher to reach cases that are difficult to identify by making contact with

one or two cases and asking those cases to identify further cases (Saunders, Lewis et al. 2009).

Purposive sampling will therefore mostly be used to collect sample cases for this research. However, it could be

difficult to directly reach key persons within the embedded organizations themselves. Snowball sampling

might, in addition, provide a good way to reach important cases within the organizations by using first contacts

to penetrate deeper into the organization. The size of the total sample will mostly be determined on the

moment that data saturation takes place: when new cases provide few new insights, generation of samples is

stopped. According to Creswell (2007, in: Saunders, Lewis et al. 2009), the target within a relatively

heterogeneous population should contain 25 to 30 cases. Considering both the holistic as the embedded

nature of this research, the sample should include four to five organizations, with about four to five cases in

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

each organization itself. However, due to restrictions in both time and the availability of participants, some of

these cases will come short in this number, as explained further in section § 3.2.3.

§ 3.2.2 | Selection criteria

To make a proper selection between organizations that are relevant for this research and organizations that are

not, a fixed set of selection criteria has been determined. There are four conditions that an organization has to

comply with in order to get adopted in the data set. First, only cases of service-­‐based organizations are

selected: these organizations are mainly reliable on their innovation departments (instead of research and

development) in order to develop new services. Second, these service-­‐based organizations must have an

innovation and/or marketing department, and (1) have the ambition of adopting co-­‐creation in their

organization or (2) having already adopted co-­‐creation in their marketing and/or innovation strategies.

Third, there will be no discrimination based on the size of the organization: while small organizations might

indicate a higher potential in creativity, larger organizations might include large marketing and innovation

departments that both use co-­‐creation. Considering the exploratory nature of this research and given the fact

that all cases, small, middle and large firms, might provide interesting results, there is no discrimination on

organizational size. Also, subsidiaries of larger organizations can be included in the sample (Almeida and Phene

2004).

Fourth, to make sure generalization of data is possible, the focus of this research will be on organizations that

operate mostly in a business-­‐to-­‐consumer (B2C) context; however, organizations that do so in a business-­‐to-­business

(B2B) contexts will not necessarily be excluded. Organizations that use co-­‐creation as a bridge

between their marketing and innovation department and a consumer, will probably find more obstacles on

their way than organizations that interact with other businesses (Enkel, Kausch et al. 2005).

Next, criteria for individual case selection must be set. These criteria are applied when organizational cases are

identified, and individual samples must be picked. The focus of this research is to provide a clear picture of the

marketing and innovation departments of the organization using co-­‐creation; therefore, it will not only focus

on managers of the departments, but mainly on employees in general that are involved in co-­‐creation

processes. Co-­‐creation is something that is done by the entire department together with the consumer, so it is

important to also include employees.

§ 3.2.3 | Selected cases and sample characteristics

In line with the selection criteria and methods of sampling, five service-­‐based organizations were approached

for the empirical section of this research. This section offers an overview of these organizations, along with the

participants that were interviewed to gather empirical data. Due to corporate non-­‐disclosure policies, the

names of both the organizations and the interviewed employees are not to be mentioned in this research.

Instead of company names, companies have got assigned a letter (A to E) and a symbol that refers to the

industry they operate in. Next, the number of participants per organization is mentioned, as well as the context

in which they primarily operate: business-­‐to-­‐business (B2B) or business-­‐to-­‐customer (B2C). Some organizations

operate both in a B2B as in a B2C context: in this case, both are mentioned.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Company A:

Industry: Insurance | Context: B2C/B2B |Participants: 2 | Total number of employees: app. 20.000 |

Participants: Concept and Proposition Developer and Manager Innovations

Company A is a large insurance company in The Netherlands, and is part of a larger holding company that

employs over 20.000 persons in Europe. Focusing both on private and business customers, Company A offers a

diverse number of insurances and has started using co-­‐creation almost three years ago, increasing its use ever

since. Co-­‐creation is now standard procedure when new propositions or services are developed.

Company B:

Industry: Mobile Network operator | Context: B2C | Participants: 4 | Total number of employees: 35 |

Participants: Brand Manager, Manager Development, Manager Acquisition, Manager Communications

Company B is a daughter company of one of the largest telecommunications and ICT Service Providers in The

Netherlands. The company’s philosophy is that they want to stand next to their customers, and not above

them. They (co-­‐)created their own ‘Society’, formed by the organization’s customers and its employees.

Company C

Industry: Information Technologies | Context: B2B | Participants: 4 | Total number of employees: 12.000

Participants: Global Practice Manager, Product Manager Future Ready Workspaces, Vertical Market

Manager, Business Development Manager

Since 2007, Company C is a subsidiary of the same holding company as Company B, operating solely in a B2B

environment. It is the largest ICT-­‐service provider in the Benelux, providing organizations with workspaces,

connectivity solutions, datacenters and advisory. Despite that because of its B2B nature most products are

custom designed, participants said the organization started making use of co-­‐creation only two years ago.

Company D

Industry: Aviation | Context: B2C | Participants: 2 | Total number of employees: 32.000 |

Participants: Director Product Strategy, Director Business Innovation

Becoming one of the largest aviation companies in the world, Company D is a Dutch airline

operator that recently merged with a French aviation company. Company D has experience with several co-­creation

projects with their clients, as well with employees.

Company E

Industry: Internet | Context: B2C/B2B | Participants: 2 | Total number of employees: 200-­‐300 |

Participants: Product Manager, Online Marketeer

Being the third organization in this research that is a daughter corporation of the same

Telecommunications and ICT Service Provider, it is one of the first internet providers in The Netherlands, and is

still known for its premium quality and customer service. It offers both private and business customers

internet, Voice over IP solutions, mobile internet, and hosting solutions, and attempts to involve their

customers through co-­‐creation.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Although one of the criteria at the start of the sample selection was that organizations should have separated

marketing and innovation departments, it appeared during the research that this assumption turned out to be

wrong. Multiple organizations had a clear overlap between functions and departments, and it appeared that

some of them did not even have an actual – as what they would refer to as – ‘innovation’ department.

Therefore, a selection was made mostly based on the availability of persons inside the organization that still

are, or have been involved with co-­‐creation projects in their organization.

§ 3.2.4 | Data collection through semi-­‐structured interviews

Having selected a sample of cases, data was collected using semi-­‐structured interviews: this technique

combines the advantages of both structured interviews (predetermined questions) and unstructured

interviews (ability to deviate between questions and to go in-­‐depth. Interviews can therefore be prepared in

advance, but the interviewer has the freedom to ask certain additional questions on certain topics. Given the

exploratory nature of this research, it allows one to go more in-­‐depth whenever something relevant comes up

in an interview (Saunders, Lewis et al. 2009).

Due to the fact that all the participants were Dutch of origin, all interviews were held, recorded and transcribed

in Dutch instead of English. All the questions that were used for the interviews were open-­‐ended; this way,

interviewees had the freedom and ability to tell everything they knew relating to the questions that they were

asked. To ensure that particular sections or answers would not go unnoticed, interviews were literally

transcribed. A copy of each finalized transcript was send to the participant to double-­‐check and for private

archiving. However, no changes have been made to its content whatsoever.

§ 3.3 OPERATIONAL DEFINITIONS

In the process of linking theory with practice, operational definitions are crucial. The literature and concepts

that were discussed in Chapter 2 first have to be operationalized in order to be measured in the field.

Operationalization is the process of transforming theoretical concepts and variables into testable and workable

indicators and questions, or “the translation of concepts into tangible indicators of their existence” (Saunders,

Lewis et al. 2009). Appendix A provides an overview of the theoretical concepts and the related indicators and

questions that were used in interviews.

Although the final list of interview questions consisted out of a relatively large number of questions, not all

questions were proposed to each participant. Dependent on both function and expertise of each participant,

some subjects were discussed more in detail than others – using the freedom that semi-­‐structured interviews

offers to the interviewer (Eisenhardt 1989). In addition, a number of general questions were asked to every

participant, relating not only to their background, but also to the type of co-­‐creation and the organization’s

openness to input from the outside.

Here for, participants were presented with an illustration similar to the four types of co-­‐creation of figure 2.2 in

Chapter 2. After having explained the difference between the two dimensions ownership and openness, they

were asked to indicate what kind of co-­‐creation their organization was using. This visual presentation proved to

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

be a useful way of gathering information about the used types of co-­‐creation. In addition, four questions

referred to the DART-­‐model’s building blocks of co-­‐creation, asking participants how they found their

organization scored on dialogue, access, risk-­‐benefit and transparency. Unfortunately, many of the participants

found it hard to answer these questions, which often resulted into misinterpretations. Therefore, the resulting

scores on the DART-­‐model will only be used for background purposes – no further analysis has been made

relying on these data.

§ 3.4 CREDIBILITY OF THE RESEARCH

In order to be able to generalize and draw proper conclusions on the findings presented in this research, the

validity and reliability of the research are crucial. Reliability concerns the “extent to which data collection

techniques will yield consistent findings” (Saunders, Lewis et al. 2009). Because of the exploratory nature of

this research, and the fact that semi-­‐structured interviews were used to collect data by asking participants for

their experiences and opinions, it is difficult to generalize the gathered data (Miller and Brewer 2003). At the

same time, its exploratory nature may also be considered to be a unique strength, as it collects data at multiple

organizations and leaves participants with much freedom to discuss their own views and experiences.

Validity refers to whether or not “findings are really about what they appear to be about”. Taking this into

account, the openness of the interviews allowed participants to emphasize what they found that was

important. In addition, several employees of the same organization were interviewed – this way, appealing

answers could be checked with other participants working in that same organization.

§ 3.5 DATA ANALYSIS

Once all data had been collected, recorded and transcribed, it had also to be analyzed. Rather than with

quantitative research where data mostly can be analyzed using statistical analysis, the qualitative data of this

research was analyzed using the Constant Comparative Method. The Constant Comparative Method (CCM) is

derived from Grounded Theory (Glaser and Strauss 1967; Eisenhardt 1989), and helps researchers to systemize

the analysis process and contributes in developing a theory that is grounded in the data. Boeije (2002)

managed to make a conveniently arranged overview of the process of categorizing, coding, delineating

categories and connecting them.

He identified different steps that can be taken in order to analyze all the collected data. In this research, first an

analysis is made of each single interview, summarizing it and making categories. Next, the interviews with

participants working in the same organization are compared, searching not only for organizational patterns but

also for possible differences between departments. Finally, the cases of the organizations themselves were

compared with each other, aiming to point out on the shared agreements and differences between cases for

the use of co-­‐creation.

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Master thesis Business Administration, Specialization: Strategy & Organization

04

Supervisor:

CASE

Prof. Dr. T. Elfring

ANALYSIS

Introduction

§ 4.1 | Case Analysis: Company A -­‐ E

§ 4.2 | Cross-­‐case analysis

Joost de Boer

Student number 1517597

This chapter presents the findings of the empirical research that was done among five service-­‐based

organizations in The Netherlands. A total number of fourteen semi-­‐structured, qualitative interviews were held

with employees working at these organizations. Starting with a within-­‐case analysis per organization, a

description and interpretation is made of how each organization uses co-­‐creation in their NPD-­‐process. Next,

all five organizations are compared with each other in a cross-­‐case analysis, using the conceptual model that

was proposed in Chapter 2 as a guiding line.

Definition of co-­‐creation

The interviewees defined co-­‐creation as follows: it is the “involvement of stakeholders at a certain moment in

time by creating a dialogue about organizational processes or topics together with the organization, in order to

create a shared added value”. Appendix B shows an overview of the different interviewees and how they

define co-­‐creation; this section shortly discusses their definitions and considerations when referring to co-­creation.


Some of the interviewees managed to give a definition of one or two sentences; others used a more

comprehensive explanation. It appeared that there is still a lot of discussion on what co-­‐creation exactly is,

what it should be used for and how it should be used, immediately highlighting the relevance of this research.

The first item of discussion was about the question of who to co-­‐create with. Is an organization only co-­‐creating

with its customers, or can it also be done with employees and other stakeholders? And having concluded with

who to co-­‐create, what should co-­‐creation be used for? Where one participant found its use to be in the

innovation of new products and the development of existing ones, others found that it could also be used

internally to start a dialogue between people inside the organization.

Agreement was found in the description that co-­‐creation stands for ‘doing something together’. However, the

question ‘together with whom?’ resulted in different answers. The interviewees of Company B immediately

and solely referred to ‘customers’ or ‘the target population’, as would Company E. Company A did the same,

however it also referred to the possibility of co-­‐creating internally by not involving customers, but employees.

Company C, which operates solely in a B2B-­‐environment, mostly referred to ‘external parties’, in a very broad

sense. They emphasized not only the co-­‐creation with direct customers, but also with the entire value chain of

the industries they and their customers were operating in. Company D, finally, widened the scope of co-­creation

to a maximum, by bringing in specialists and experts, as well as ‘the public’. For the purpose of this

analysis, it is sufficient to answer the who-­‐question in general with ‘stakeholders’.

In addition, a number of participants were asked whether they considered co-­‐creation as something new or as

something they or their organizations were already familiar with, such as focus groups. Most of them found

that the concept of cooperation and creation with customers, together with the organization, was something

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

that had been done for years. However, they distinguished two characteristics: first, co-­‐creation enabled them

to involve customers at an earlier stage in the process. Second, the use of new technologies, such as social

media and Web 2.0, provided organizations with a tool to start a dialogue with external parties in a total new

way.

Finally, when discussing what exactly could be co-­‐created, most participants would not go further than

speaking of ‘development of products and services’. From this perspective, there was no direct lead in how the

involved parties (the who) and the moment and topic of co-­‐creation (the what) should be translated into the

process of innovation through co-­‐creation. Participants referred differently to the moment in the development

process (‘every stadium of the process’) or its purpose (‘idea generation’ or ‘mainly for testing purposes’). This

will become clearer in the next paragraph, where the actual use of co-­‐creation in the organization is discussed..

§ 4.1 CASE ANALYSIS

§ 4.1.1 | Case analysis: Company A

Purpose of co-­‐creation

One of the interviewees in Company A indicated that one main of the reasons to

introduce co-­‐creation was to involve customers in the creation of new products, hoping

to create an internal basis of support for certain ideas. In addition, another interviewee

explained that it was also used to get closer in the minds of customers and to reconsider what Company A’s

added value is for its customers. For these reasons, customers were mostly involved in the organization’s

innovation process to generate ideas for new service propositions and to discover (new) business opportunities

for Company A. Here, co-­‐creation was often preceded by context mapping, a technique to that helps to ‘map’

the product context by researching its user-­‐context.

The exact focus and scope tended to change over several projects. Sometimes, a participant told, there were

greenfield-­‐like sessions, characterized by a very broad scope and little focus, leaving participants with much

freedom, but also few handles and direction on where to go to. Other sessions were led very specific by its

content, providing clear directions about the kind of solution that Company A was looking for: “having clear

directions brings the advantage of knowing what you will do and what you will not do during a session”. One

important similarity among the projects, is that complicated technical and legal problems are not used as input

for the co-­‐creation sessions: “some of these things are highly complex, and are therefore not interesting for co-­creational

purposes”.

After a period of trial and error, a participant remarks: “when it comes to clarity in the project, it is very

important to set concrete goals and to be specific in what we ask of the participants in a co-­‐creation session”.

But besides setting concrete goals and making sure the scope of the project is narrowed down to a workable

level, time pressure that comes with a co-­‐creation session (a co-­‐creation session normally only takes one day)

was also believed to increases productivity.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Involvement of internal and external parties

When it comes to co-­‐creation, multiple departments in Company A are involved. “The departments that are

normally assigned to co-­‐creation projects are marketing, sales and a technical department that arranges

portfolio’s and risk inspection”. As a result, information was distributed quite fragmented through the

organization. In order to solve this problem, Company A launched its ‘Concept and Proposition Development’-­‐

department (CPD) in January 2010. This department was charged with the initiation of co-­‐creation projects and

context mapping: when it comes to the development of new products or service propositions with customers,

the CPD-­‐department is the linking pin between the marketing and sales departments and the ‘fabric’ –

responsible for the actual development of new propositions. Co-­‐creation itself did not appear to be the reason

for the introduction of the new department in the organization: ‘co-­‐creation is one of the things we do, but the

introduction of this new department was a result of other departments that started to cooperate with each

other. You should see that apart from co-­‐creation’ an interviewee says.

Considering the involvement of external parties, this was mostly done by involving stakeholders such as

customers, potential customers and experts on the field of the involved topic. The results of concept mapping

sessions that were often held before co-­‐creation were thereby used as a starting point; co-­‐creation was used to

generate ideas, improvements and opportunities for the new product or service. The fact that mutual contact

between customer and employees is stimulated by co-­‐creation, appeared to be very important: ‘employees are

now more aware of for whom they are doing the things they do, in the way they do. They now ask themselves:

what do the numbers on my screen actually mean to the customer?”

Used types of co-­‐creation

Over the years, Company A has used three types of co-­‐creation: the Club of Experts, Coalition of Parties and

Crowd of People. Two of these (Club of Experts and Coalition of Parties) were used by Company A itself; one of

its sister organizations that is part of the same holding has involved stakeholders through the Crowd of People.

For the purpose of this research, the focus will be on the types of co-­‐creation used by Company A itself;

however, it is interesting to know that multiple organizations in the same holding use different types of co-­creation

– something that will return further on in this research. Company A used the ‘Coalition of Parties’ only

once, in a collaborative project with a Dutch consultancy firm. The aim of this project was to explore the

possibilities for a partnership between the two, but since this is the only ‘Coalition’-­‐project that has been used

(and is still in progress), there was no sufficient information to make an in-­‐depth analysis.

However, Company A has mostly used the ‘Club of Experts’ co-­‐creation type several times now to involve their

stakeholders to generate new ideas and to think of improvements and opportunities for new propositions. To

involve stakeholders and internal parties in this co-­‐creation project, its openness was limited to a select

number of people. In addition, Company A maintained the ownership of the content generated during the

session, although stakeholders would later be able to benefit from the new propositions as a customer. Figure

4.1 provides an overview of the purpose that co-­‐creation was used for by Company A, along with its scope, the

involved parties and used types of co-­‐creation.

35


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Figure 4.1 | Company A: purpose, scope, involved parties and types of co-creation

Crowd of People:

not used

Community of kindred spirits

not used

Openness

Club of Experts:

Purpose: Idea generation

Scope: varies dependent on project/session

Internal parties: Concept and Proposition

Development, marketing, sales, technical and legal

departments

External parties: customers, potential

customers and experts

Coalition of parties:

Purpose: sourcing for potential collaborative

Scope: explorative

Internal parties: Concept and Proposition

Development department

External parties: consultancy agency

Ownership

Co-­‐creation in the NPD-­‐process

Both interviewees indicated that Company A uses co-­‐creation mostly during the phase of idea generation. The

‘Club of Experts’ co-­‐creation projects involved small numbers of stakeholders who each had their own level of

expertise in relation to the product or service that was to be developed. This ‘tool-­‐like’ deployment of co-­creation

allows Company A to do a thorough research about the potential product and its background using

context mapping, before involving participants in a co-­‐creation session.

The selection of the generated ideas is mostly done by the management team, together with the concept and

proposition development department. Using a decision model, they decide whether an idea will be developed

or after the co-­‐creation session. Subsequently, the idea is picked up by a product manager who then develops

the product, and it is tested with customers again before releasing it. This meant, according to the developer,

that “After we’ve looked where the needs of our customers are and what they think about the terms and

conditions, we start to develop the project and test it with the target group”.

The development phase is mostly coordinated by the Concept and Proposition Development department, and

development is done inside the organization without the direct involvement of customers. This is a time

consuming process, but it is most of all risky in the sense that it may alienate from the original idea. According

to one of the interviewees, this is the result of what he refers to as the ‘waterfall method’: “People work in

steps to reach their targets, which is low risk but also low profile. I think it is better to do so using a more

‘designing’ method: by prototyping a number of the generated ideas, and continuously returning to the

customer to ask what he or she thinks of the concept during the entire process of product development. That is

the best way to involve stakeholders, by continuously asking them for their involvement and feedback”.

Considering the diffusion phase, this is not directly done with the customer. The feedback that is given to

stakeholders is still very little. “We know it is important to manage a good relationship with our customers by

constantly involving them. However, it appeared to be difficult to communicate this throughout the

organization. Most employees still say to a customer: “thank you for your trouble and your ideas, you can go

36


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

now.”– and that is their end of the story. But that is not how to manage a healthy relationship.” According to

the innovation manager, customers appreciate it to get involved: “and we should cherish that”. Both

participants also indicate that they want to keep contact with their stakeholders, but also find that something

like that takes a lot of time. Therefore, the feedback process to customers should be designed internally in

another way to improve this. Figure 4.2 shows an overview of the phases that co-­‐creation was used in the NPD-­process

in relation to the type of co-­‐creation.

Figure 4.2 | Company A: types of co-creation and purpose in the NPD-process

Idea Selection:

mangement/CPDdepartment

Context

mapping

Club of Experts:

Idea Generation

Internal development & diffusion phases

No co-creation used

Idea generation Idea development Idea diffusion

Results and measurement

Considering the result of its co-­‐creation projects, interviewees mentioned two tangible results: the first one

was an online platform that functions as an interactive question bank for entrepreneurs, the second an

information book for construction companies: here companies that were active in the construction business

could find answers to their questions. In addition, an intangible result, as an innovation manager recalls, is the

fact that the co-­‐creation projects resulted in more internal awareness and insights among employees about

who the customer is, and what its needs look like; something what he refers to as a benefit of co-­‐creation. “We

have shown that if you treat customers in another way by involving them, and show them you have put effort

in it to get a better understanding of what drives them, this has a positive effect on the organizations returns.

[…] But if you ask me: have you literally developed products or services that bring in more money, than I cannot

answer your question”.

Referring to the measurement of co-­‐creation, the concept and proposition developer responds: “We cannot

measure the results yet. The two tangible results prove that the concept had its returns; however, we do not

have a representative sample yet, which makes it impossible to measure the real (financial) success. We do not

build a business case around these co-­‐creation projects; it is a direction we have chosen to take, and perhaps in

a later stadium we can prove that that direction was the right one. In addition, we have multiple results from

co-­‐creation that are still being developed; it is important to have faith in the outcomes”.

Encountered difficulties using co-­‐creation

One of the most difficult things to overcome in the use of co-­‐creation was getting commitment and setting

priority throughout the organization: “People tend to think they can drop by for an hour or so, and thus do not

take the responsibility to be there the entire session in a dedicated way. Often, other employees say ‘You do it,

it’s your thing!’” Another problem that adds to this is that senior management is often too busy to be involved

37


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

for an entire day as a result of their workload. Co-­‐creation first had to prove its use in the organization before

its value is recognized.

Next to the problems of gaining commitment, it also appeared to be difficult to change the risk-­‐averse culture

an insurance company has that is needed to realize new concepts created together with customers: “There are

too many people in the stage-­‐gate decision process who all want to say something about the generated ideas

and their development. You need empathy and a good feeling of why ideas were generated in the first place,

and only the customer knows that.”

§ 4.1.2 | Case Analysis: Company B

Purpose of co-­‐creation

Co-­‐creation is an important factor in the ‘Society’ Company B wants to build. The first

participant, the company’s brand manager, almost immediately referred to co-­‐creation

as ‘a way of working’, and during the interviews it became more obvious why Company

B deployed co-­‐creation as a way of working rather than considering it as a tool. Company B has started using

co-­‐creation three years ago. Their key reasons to start using co-­‐creation were to (1) get a more authentic

brand, and (2) to offer propositions that directly satisfy their customers’ needs. Co-­‐creation projects are often

preceded by collecting marketing insights of the targeted population, resulting in setting the used scope for co-­creation.


Dependent on the phase of the NPD-­‐process, the scope and focus of co-­‐creation tends to be different.

Sometimes sessions are initiated as a greenfield, providing no to very little direction to participants, as an

acquisition manager explained: “I do believe that the more freedom we provide our participants with, the

wilder and the more innovative ideas we get in return. […] However, we sometimes do have to explain our

business model to the participants, which can take us half a day”.

At the same time, other sessions provide more clear direction to its participants, a manager development

recalls: “We often start by doing some desk research, collecting marketing insights of the target population. […]

This focuses on interpreting figures and scanning for trends, so we can provide direction to the target audience.

Imagine, for example, that we would ask our customers how their perfect contract would look like. We would

be getting answers like ‘give me something as cheap as possible’. So by providing them with clear directions,

we build useful sessions with our customers.”

Involvement of internal and external parties

Being organized as a matrix organization, Company B consists of four teams operating in three different

products or services categories: prepaid, postpaid and data. Company B’s Brand Manager is responsible for

coordinating the different projects, and functions as a linking pin between the different teams. Co-­‐creation can

be initiated by almost everyone in the organization who is responsible for product or service development. “It

also happens that there are multiple co-­‐creation sessions per week, initiated by different teams”, the

development manager recalls. This, however, is not considered as a problem, because often different concepts

for different products or services are being created.

38


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Almost all employees of Company B are involved in co-­‐creation whenever this appears to be relevant to his or

her work. In addition, salespersons are also involved in the co-­‐creation projects. They are believed to generate

important input, because they operate in the frontline every day. Salespersons are the face of Company B and

are constantly in contact with (potential) customer, knowing what customers want and perhaps equally

important: they know what will sell and what not. Because of their day-­‐to-­‐day involvement and contact with

customers, they are given the opportunity to translate customer input into ideas that are valuable to the

organization

However, co-­‐creation also provides Company B with difficulties considering internal cooperation, as it is

dependent on its larger holding organization for its technological resources. Therefore, it is also dependent on

the holding’s current technological capabilities. As Company B aims to continuously develop new products and

services that adapt to their ‘Society’s’ needs, it sometimes happens that the holding company cannot provide

them with the right technological solutions. “So then, we are somewhat forced to turn to third parties to

develop things for us. This however also has its disadvantages, as it can lead to proliferation in the systems we

use. So we are continuously looking for the right balance here. At the moment that the holding’s IT department

is able to deal in a more flexible way with our requirements, we can increase the development these specific

things in-­‐house”.

Referring to the involvement of external parties, Company B involves different parties for different purposes. It

aims at involving the ‘Society’ it has created as much as possible, at different phases of the NPD-­‐process. In

early phases often leading edge youngsters are asked for their contributions and ideas; later on in the process,

a more mainstream audience is involved. Next to involvement in the NPD-­‐process, this can for example also be

done when testing existing products or services, to make sure they are still interesting for the target

population.

Used types of co-­‐creation

Company B has, since it started using co-­‐creation three years ago, been using two types of co-­‐creation: the

Club of Experts and Crowd of People. As already indicated, it mostly involves leading edge youngsters, or lead

users, in the early phases of the NPD-­‐process. Leading edge youngsters are here used to generate new ideas on

future or existing products and services of Company B. In addition, when aiming at involving a larger number

and more mainstream kind of users for the purpose of testing new or existing ideas, products and services, a

Crowd of People is used.

When considering the openness of these types of co-­‐creation, the Club of Experts obviously consists of a group

of people that were selected on their ability to be in the lead of other, more mainstream users, anticipating on

their future trends and needs. In the Crowd of People, any customer of Company B is free to join and to

participate. Although these parties differ in the parties they involve, they both score the same on the axis of

ownership. All the generated content is the direct intellectual property of Company B – only later on in the

process, participants can use the outcome of co-­‐creation. Figure 4.3 provides an overview of the previous

section.

39


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Figure 4.3 | Company B: purpose, scope, involved parties and types of co-creation

Openness

Crowd of People:

Purpose: Testing, fine-tuning

Scope: Focused scope

Internal parties: Marketing, development,

communication

External parties: Mainstream youngsters,

customers

Club of Experts:

Purpose: Idea generation

Scope: Sometimes open, sometimes focussed

Internal parties: Marketing, development,

salespersons

External parties: Leading edge youngsters

Community of kindred spirits:

not used

Coalition of parties:

not used

Ownership

Co-­‐creation in the NPD-­‐process

The previous section already indicated that Company B uses co-­‐creation at multiple phases of the NPD-­‐process.

In the idea generation phase, lead users are involved in a Club of Experts to think of new products, services and

concepts. To make sure that ideas generated by lead-­‐users also match the needs of non-­‐lead users, its

outcomes are combined with market research and also tested by the Crowd of People. Before continuing to the

development phase, Company B selects generated ideas using two selection criteria.

First, before co-­‐creation sessions are initiated, a set of benchmarks is determined that the outcomes will have

to meet, independent from the content of the idea itself. ”It starts with benchmarks, while at the same time

providing enough freedom to develop new ideas”, the development manager says. Secondly, Company B every

year states an OGSMT (Objectives, Goals, Strategy, Measurement and Tactics) that withholds the entire

strategy for a year, on a single page. Each year, the OGSMT holds five strategies. When the outcome of a co-­creation

session provided completely new ideas which were not anticipated, the ideas are tested by Company

B’s mission, positioning and brand values, along with its OGSMT; if there is no match, than an idea will simply

not be realized.

Next, Company B’s customers are involved at different moments in the development phase. For instance,

concepts are tested during the stage of development by making prototypes of services available in an online

test environment for customers: “It is a continuous process, where we have to make sure that everyone can

think along, without losing an eye on the business case”. However, the actual development of the ideas is still

done by Company B itself. The proposition manager explains: “We are inspired by the customer, but we also

have ideas of our own. So we use the input of our customers, but at the same time we make sure that a new

service or proposition has the flavor we want it to have”.

Finally, in the idea diffusion phase, co-­‐creation is also used to involve customers in the development of

communication campaigns. This is mostly done with a ‘Crowd of People’ – be it that access and participation is

40


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

preserved to customers only. For one, this involves the organization of castings where customers can become

‘the face of Company B’ in national ad campaigns. Further, customers are offered access to sneak previews of

new advertisement campaigns and asked for their opinion. As the communications manager recalls: “At the

moment that our audience really does not like a concept or commercial, it’s off the table and we design a new

one. That has happened before’.

Regarding the feedback that is provided to the participants of co-­‐creation sessions, Company B’s employees

indicate that they do not directly involve the participants in the entire process. “Most of the time we thank

them, and go on. Sometimes they are rewarded by tickets for a launch party or something, but that is

dependent on the content they provided us with.” However, participants are paid for their time if they

participate in for example a ‘Club of Experts’. “But we do not pay people who provide us with feedback online –

and we don’t have to. Most of our customers just think it is cool to provide us with their feedback, and do not

directly expect something in return”. Table 4.4 illustrates how Company B involved their customers through

co-­‐creation during the phases of the NPD process.

Figure 4.4 | Company B: types of co-creation and purpose in the NPD-process

Idea Selection:

Predefined benchmarks/

OGSMT

Crowd of People:

Testing/evaluation

Market

research

Club of Experts:

Idea Generation

Internal development

No co-creation used

Crowd of People:

Testing campaigns

Idea generation Idea development Idea diffusion

Results and measurement

Dependent on the type and scope of co-­‐creation that was used, participants contributed in introducing

completely new ideas – some of the online services Company B offers its clients were the direct result of co-­creation

– but also in finding (critical) feedback and insights on both new and existing services and

propositions. This is probably the result of having realistic expectations, and providing a clear focus and scope

to the participants. However, the communications manager admits there is a need to be more consequent in

the use of co-­‐creation. “We have had co-­‐creation sessions where we came up with good results, but then we

failed to apply them in our business. Now, two years later, we see that these ideas have been lying around,

without anyone picking them up. So we should be more consequent in using the results.”

The measurement of results is not done by directly attempting to build a business case around ideas: “Co-­creation

is our way of working; we get targets and objectives, and we measure them by using KPI’s (Key

Performance Indicators). Co-­‐creation is our way to get there, and as long as it helps us in reaching our goal of

becoming a more social brand, we will use it in our strategy” the brand manager explains. This especially

counts for positioning of services or strategic plans, according to the manager acquisition, “But we of course

also still have to earn money”.

41


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Encountered difficulties using co-­‐creation

Not everything is always co-­‐created in Company B. During the interviews done for this research, it appeared

that in some situations, customers are more or less explicitly not involved in decision-­‐making processes. For

one, this is due to the fact that the mobile operator market is heavy competitive. Therefore, not everything can

be shared with customers. Using non-­‐disclosure agreements can sometimes solve this, but that is not always

sufficient. The brand manager explains: “In the past year, we have been copied multiple times, within the

period of a couple of weeks after the launch of a new product or service. The market is watching us, and

competitors are jealous about the freedom we have within this brand. […] So that is why we cannot be

completely open, yet”.

Second, it appeared that when sales tend to decline and/or Company B has to respond quickly to

environmental developments, there is few to no time to consult customers. When business is declining, tough

decisions will have to be made in order to survive. Despite the fact that customers normally are involved in

multiple processes, it is a time consuming process. This also does not hold on when Company A has to respond

to actions of competitors. A manager explains: “I think you can say that the more time pressure there is, the

less time there is to co-­‐create”. She continues: “I think that we are doing co-­‐creation 0.1. When considering the

way we collect insights from our customers, what should be the basis of marketing, we are now at co-­‐creation

1.0 or perhaps co-­‐creation 1.5. Beyond this marketing scope, we also still involve our customers in the things

we do, but not on a day-­‐to-­‐day basis. That is why I say we are doing co-­‐creation 0.1. It’s our challenge to

become more proactive in order to reach co-­‐creation the level of 1.0.”

§ 4.1.2 | Case Analysis: Company C

Purpose of co-­‐creation

As a result of its B2B nature, Company C has always been working closely together with

its clients, offering customized ICT-­‐solutions that meet the diverse criteria that differ

per client. However, the interviewees indicated that Company C has explicitly started

using co-­‐creation about two years ago. Its reasons to start with co-­‐creation were (1) increasing their innovation

speed, (2) creating new ideas and getting a broader perspective by involving other people and (3) creating a

more innovative image towards their customers.

Company C has organized three co-­‐creation projects, each spread out over a period of a few months. These

projects started with an internal session, where employees that were descended from different departments of

the organization were brought together to identify a number of themes. These themes were concretized, and –

dependent on its context – experts from inside and outside the organization were involved to co-­‐create the

themes into useful concepts.

42


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Involvement of internal and external parties

The co-­‐creation projects involved employees from different departments: IT, HR, controlling or marketing, and

of almost every business line in the organization – although the latter is dependent on the content of the

session. The interviewees do not see the need for changes in the way that different departments work together

in order to make co-­‐creation work, although one of the positive consequences of co-­‐creation is that it brings

together people from different departments. “But it should not be co-­‐creation that brings people together and

makes them talk. People should communicate more easily by themselves in the organization, but you do not

need co-­‐creation for that”, a manager says.

Considering which employees are involved from those departments another manager adds, “The department

itself appoints its delegates for the session. But more than often a department has people who I know are

more innovating than the ones that are delegated. So I think we need another way of selecting those people. It

has become some honorary thing to participate in co-­‐creation, while it should be about whom is the most

suited to participate.” Consensus among interviewees is found in that there should be clear criteria describing

who exactly should be involved in the sessions.

The externally involved parties consist mostly out of experts on specific fields. A business development

manager explains: “We involve people who might be of a certain added value to the project, but we already

determined what the concepts would look like before involving externals. We often involve clients or

companies at a much later stadium, while we perhaps could have involved them earlier”. Although some of

those experts might be working for a client of Company C, the interviewees feel that clients should be involved

more explicitly . The manager future ready workplaces explains: “We have never really involved our clients in a

co-­‐creation session” -­‐ it appeared that most of the time, experts and thought leaders are the ones that are

involved.

Used types of co-­‐creation

The interviewees indicated that Company C uses two types of co-­‐creation: the ‘Club of Experts’ and the

‘Coalition of Parties’. A global practice manager described this as follows: “We are somewhere at the boundary

between ‘Club of Experts’ and ‘Coalition of Parties’. We have a strong initiator role, but we also involve parties

from the outside to develop services together […] We are embedded in an eco-­‐system where partner

management gets increasingly important. It’s about interconnecting parties, and that also includes sharing

some of your IP (Intellectual Property).”

Where formally the most contact between Company C and its clients was based on offering solutions for a

single client, the ‘Club of Experts’ allows Company C to involve multiple clients, and connect them with external

experts and its own employees. This way, they are able to combine diverse customer experiences with the

expertise of experts from inside and outside the company. An example of these subjects might be what is

referred to as ‘the new working’ (Het Nieuwe Werken) – a concept that has increased in popularity in many

large organizations in the past few years. This exceeds the level of a single client, and the combined

perspectives that ‘Club of Experts’ tends to offer is an interesting solution to this. In addition, the Club of

Experts an also be used to leverage these combined perspectives towards suppliers.

43


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

In addition, the combination of the ‘Club of Experts’ and the ‘Coalition of Parties’ does not appear to be

coincidental. Both types use a select group of participants, but differ on the ownership of the generated

content. Company C has “changed its direction toward the role of aggregator”, a manager recalls, emphasizing

the importance of cooperation with suppliers and other companies. Where the ownership of generated

content with the ‘Club of Expert’ is assigned to Company C, the ‘Coalition of Parties’ presumes that the

ownership is shared between parties. This allows building important partnerships, as a vertical market manager

explains: “We have, for instance, previously worked together with banks, seeking for opportunities to reinforce

one other”. Figure 4.5 illustrates how the involvement of internal and external parties contributed to different

types of co-­‐creation for different purposes.

Figure 4.5 | Company C: purpose, scope, involved parties and types of co-creation

Crowd of People:

not used

Community of Kindred Spirits:

not used

Openness

Club of Experts:

Purpose: Idea generation

Scope: Focussed, internally prepared

Internal: IT, HR, Controlling, Marketing, relevant

departments

External: Experts, thought leaders

Coalition of Parties:

Purpose: Seeking new partnerships/alliances

Scope: Open, explorative

Internal: Relevant departments (higher

management)

External: Other organizations

Ownership

Co-­‐creation in the NPD-­‐Process

Before involving external parties in the idea generation phase, a group of employees of Company C were

brought together to identify a set of themes that would function as the scope of the co-­‐creation session. So,

before involving any external participants at all, certain criteria for products or service to be generated were

set already. In the case of the Club of Experts, the involved externals were invited to generate new ideas and

concepts that would fit within these themes; the Coalition of Parties tended to be used somewhat more to

explore possibilities of partnerships between organizations and are therefore less easily directed to a specific

NPD-­‐phase.

A part of the selection of generated ideas is partially already done before the actual co-­‐creation session has

started, when employees of Company C determine a number of themes that will be used in the co-­‐creation

sessions itself: “And that way, we already send our stakeholders in a certain direction. That way, we will never

generate ideas that are completely out of the box. Why send a party off with a solution, while there are

multiple solutions?” Often co-­‐creation sessions in Company C have often been framed in a way that the

44


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

selection criteria have already been used before the session has stated. This has the benefit that sessions are

often designed around a certain business line in Company C. However, when an idea has no direct match with a

business line, it is difficult to implement it somewhere else in the organization. Hence, according to multiple

interviewees, that is at this moment the only way to develop an idea in Company C.

This problem becomes more clear in the development phase: if an idea does not fit in a business line, no one

takes responsibility for it; the same thing happens when there is no clear business case for the idea itself. As an

interviewee explains: “Who are going to develop it? Everyone is busy! And what about our budgets? Because

we will have to make investments, but who will invest in something new that is not considered their

responsibility?” Secondly, the development process of co-­‐creation generated ideas is no different than the

development process of ideas that were not generated through co-­‐creation. “Internally, organizations are often

slow as a result of regulations; but why should this be different when using co-­‐creation? It is not that we

measure with two sizes, or that co-­‐creation is that much better than other idea generation techniques.”

The diffusion of generated ideas does neither directly involve external parties. This probably also the result of

the shortcoming of feedback to externals provided by Company C: interviewees indicate it has a lot to improve.

“Stakeholders are highly positive and enthusiastic when they are involved in co-­‐creation sessions. However,

they are not satisfied with the follow-­‐up. For instance, we do not communicate which of the generated ideas

are going to be developed. A number of the participants in the co-­‐creation sessions are people from our own

personal networks, and through this way I know that our follow-­‐up is not sufficient”. The product manager

FRW adds to this: “the follow-­‐up of ideas itself is slow. Not only our communication, but it also lacks in

realization. We have already told our customers that we have a new service or product coming, but then it can

still take us one or two years to realize it, because of slow organizational processes”. The use of co-­‐creation

throughout Company C’s NPD-­‐process is illustrated by figure 4.6.

Figure 4.6 | Company C: types of co-creation and purpose in the NPD-process

Idea Selection:

Match with defined

themes / business line

Themes

defined by

employees

Club of Experts:

Idea Generation

Internal development

No co-creation used

Idea generation Idea development Idea diffusion

Results and measurement

Although one of them mentioned that “We have not invented our Nespresso yet”, the interviewees do indicate

that co-­‐creation offered some results to the organization. First, the global practice manager mentioned that co-­creation

appeared to be a useful way to structure and leverage ideas. Most of the time, the ideas were not

completely new, but co-­‐creation functioned as a vehicle to conceptualize the ideas, and to bring them under

the attention of the senior management. “No one really ever took the effort to write down what the concept

45


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

would look like, and to bring that concept to the management. And that is where co-­‐creation has contributed

in”. Next, participants also feel that co-­‐creation contributed in boosting the innovative image of Company C.

When looking how the results of co-­‐creation were measured, participants indicated that Company C would

build a business case around generated ideas. “We know what a certain idea will bring us: we simply indicate

how much of the products or services we expect to sell, and calculate our revenues. This also includes looking

at how much margin we have got, and within how much time we will regain our investments”. For Company C,

it is obligatory to know what the turnover of a development of a product or service will be. “We do not take

risks here; At Google, for instance, they don’t build business cases: they have an idea, develop it, and

eventually see how it turns out. We can’t do that, we are operating in such a competitive environment. We just

can’t generate a hundred ideas, of which ten will eventually be successful, like Google does”.

Encountered difficulties using co-­‐creation

The participants think that external parties should be involved earlier in the process of co-­‐creation: “We now

tend to first think themes out for ourselves, and after that we involve other parties. Of course, this works well

in order to set a certain direction, but perhaps we should consider involving those parties at the very start. We

now start co-­‐creating by shooting with a bullet, while we perhaps should be shooting with hail first, to generate

new ideas”. In addition, although some of the involved experts might be working for a client of Company C,

clients should be involved more explicitly.

There also appears to be a need for a more structural internal co-­‐creation project. “Knowledge is power. What

we still see here, as in many other companies, is that people inside the organization tend to keep their ideas to

their selves. We need to break with this idea”, the vertical market manager says. Internal co-­‐creation might be

a very suitable way to do this, also considering the size of the organization; but it needs to be embedded in the

organizational structure and culture. She continues: “A field engineer can have a very good vision on how to

solve certain problems, for instance. We have so much internal expertise; we just have to find a way to use it”.

Finally, the development of generated ideas tends to get stuck between business lines. “You can only consider

yourself to be innovative when you realize the ideas you have. But that is the problem: there is not enough

speed to realize these ideas. When you throw a new idea back into an old organization, there is no match. The

problem is that innovation simply is not in our DNA.” The delay in the development of generated ideas as a

result of internal regulations and procedures, can according to the interviewees be overcome by developing it

elsewhere, referring to the use of incubators. Once found feasible, ideas should be developed outside the

organization. According to the participants, this can either be done in a corporate venture, or in an institute

that looks more like an incubator. “If you particularize the process of idea generation/innovation, then you

should also particularize the process of realization, one way or another”.

46


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

§ 4.1.1 | Case analysis: Company D

Purpose of co-­‐creation

Company D initially started using co-­‐creation for three reasons: (1) seeing things

differently than from the operational perspective, (2) getting a more direct input from

stakeholders and (3) exploring possible partnerships. The director product

management explains: “We (Company D’s employees) all tend to think we know exactly what the customer

wants, given the fact that all of us fly frequently; so that is normal, I think. But we translate our experiences all

into paperwork, into business cases, and we tend to lose some of our sharpness along the way. […] Therefore, I

think co-­‐creation is a good way to get the direct input of customers”. In addition, they were sourcing for a way

to include the input of (directly) involved stakeholders, enabling them to share their ideas and experiences. An

example here can be found in the co-­‐creation with own employees: “Sometimes, organizations take on such

proportions that they can use co-­‐creation inside their own organization”. Here, co-­‐creation was used to involve

employees from the Ground Services department to source for their input on how to improve processes. The

Ground Services department consists of about five thousand employees, and it wanted to include their

employee input in their operations.

Company D also aimed at co-­‐creating with other organizations with the purpose of in-­‐depth exploration of

opportunities for cooperation. The director business innovation gave the example of the sessions with a large

Dutch chemical factory: “We found out, that when we looked at our supply chain, we indirectly dealt with this

company considering multiple products we use: products that represented a large sum of money and had a

large impact on our business. So then, we had some sessions to explore whether there were opportunities to

cooperate in a more efficient way, possibly cutting out one or two chains that separated us throughout the

value chain.”

Involvement of internal and external parties

Obviously, employees were involved in the internal co-­‐creation project. However, this project also had to be

initiated and led by people inside the organization. An interviewee explains: “First, we needed a project leader

– someone who arranges the IT infrastructure. Then, we needed someone of the HR department to take care

of all the employee related issues. And finally, you need all the business owners on whom the project might

have impact. If you add all these people and departments together, it becomes a project within a company like

other projects in a company; one where everyone has a certain function or role, and agreements are made.”

Regarding to other co-­‐creation projects in general, the director product strategy concludes that “it’s a role-­‐play

between different departments, and you have to be suitable as an organization to organize that. You have to

have a certain internal modes wherein several parties are held together, to make sure that there is a certain

basis of support”. The interviewees were both employed at different departments: innovation and marketing.

As the direct product strategy indicates, although there is a certain overlap, they have different roles inside the

organization: “It is not only marketing what we do here. We focus on different things, on different terms: you

can roughly state that marketing focuses on the business within the period of a year, and we tend to look at

47


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

the long term. Each of us has their own competences and responsibilities. However, it is crucial that we start to

correspond and cooperate at the right moment – and that moment is different per situation.

This also included the projects that were used to involve a smaller number of external people, where the

emphasis was more on customers’ experiences and ideas to improve existing services or develop new ones.

Here, lead users were involved to not only share their experiences (almost every body has experience with

flying), but also their ideas as a thought leader in near-­‐by fields of industry.

Used types of co-­‐creation

To organize these co-­‐creation projects properly, Company D uses three types of co-­‐creation: the ‘Crowd of

People’, ‘Club of Experts’ and ‘Coalition of Parties’. These types are all used for different purposes and different

kinds of processes. The ‘Crowd of People’ was used for two purposes: first of all for the internal co-­‐creation

project that was done together with the employees of Ground Services. Another way that Company D used the

‘Crowd of People’ co-­‐creation type was by involving their customers to an online platform. They built a

community platform for heavy users – frequent flyers – where they could post their ideas and experiences, and

discuss the ones of others. At the same time, this was administered by employees of Company D, who also

participated in discussions and sourced for new ideas on the platform. The platform was also used to discuss

new or existing business propositions. Finally, the Club of Experts was used to involve not only heavy users, but

also experts and thought leaders in their NPD-­‐process.

Considering the openness of the projects, Company D both used types that required selection of participants as

well as the Crowd of People that accounted for the use with large groups of customers. Although the internal

co-­‐creation session was accessible only for employees of Ground Services, it had this much participants that it

can be seen as the Crowd of People. The ownership of the generated content mostly benefited Company D,

although its cooperation’s with other organizations had the purpose of delivering shared results. Figure 4.7

shows an overview of the used types of co-­‐creation, in combination with the involved parties and its purpose.

Figure 4.7 | Company D: purpose, scope, involved parties and types of co-creation

Openness

Crowd of People:

Purpose:(1) Idea generation / (2) process

improvement

Scope: (1) Open / (2) focused

Internal: (1) Marketing and innovation

(2) Ground Services staff, HR, innovation

External: (1) Heavy users

Club of Experts:

Purpose: Idea generation

Scope: Open

Internal: Marketing, innovation

External: Heavy users, experts, thought leaders

Community of Kindred Spirits:

not used

Coalition of Parties:

Purpose: Seeking new partnerships/alliances

within value chain

Scope: Open, explorative

Internal: Innovation

External: Other organizations in the value chain

Ownership

48


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Co-­‐creation in the NPD-­‐process

The projects that the Club of Experts and Crowd of People were initiated to source for experiences and new

ideas can mostly be redirected to the idea generation phase. In addition, also the Coalition of People was used

to seek opportunities for possible cooperation between Company D and other organizations. For the selection

of these generated ideas, several criteria were used. First, an idea was tested on its ‘fit’ with Company D: this

was done to see whether it was close to Company D’s core business or not, as this gave a good indication on

how easy the idea could be implemented in the existing organization. Also the content of the generated ideas

appeared an important factor: “sometimes, it might be as easy as just turning a switch, and other ideas have

more impact and therefore require more efforts.”

Next, when the choice was to develop an idea inside the organization, the next question would be whether it

would fit in one of the existing departments or that it needed a department on its own; this is of course

dependent on the available competences and the expected impact an idea would have on the other

businesses. When an idea was placed outside the organization, this involved a search for possible partner

organizations. But, as the director business innovation explained: “These are of course beautiful models, who

are theoretically valid, but in practice things just might go different than expected. It is dependent on many

coincidences”.

Considering the feedback that is provided to the stakeholders who participated in co-­‐creation projects, the

interviewees are kind of proud: “We have a tight connection between the sessions and the process afterwards.

During the projects themselves, we already respond on ideas and indicate what we think of them by coding

them with a certain color. After the projects, we often involve a group of people who were actively

participating and bringing good ideas, by inviting them for an offline session, some sort of brainstorm. So we

are quite involved in providing feedback and involving participants afterwards”, the director business

innovation explains.

Regarding the use of the Crowd of People for the purpose of internal co-­‐creation, it is more difficult to redirect

it to a certain phase in the NPD-­‐process. Mostly because it had the purpose of process improvement, there was

no obvious NPD-­‐phase it could be placed in. Figure 4.8 illustrates the use of different types of co-­‐creation, not

directly placing the use of co-­‐creation for internal sourcing in any of the phases.

Figure 4.8 | Company D: types of co-creation and purpose in the NPD-process

Crowd of People

Idea Generation

Idea Selection:

Fit with business/

departments

Crowd of People

Process improvement

Topic

defined by

employees

Club of Experts:

Idea Generation

Internal development

No co-creation used

Idea generation Idea development Idea diffusion

49


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Results and measurement

The director product strategy claimed that one of the most interesting results of co-­‐creation appeared to be its

function as an “eye opener that directly drew our attention to reconsider what we were doing”. In addition,

one of the outcomes of the internal co-­‐creation project was related to improving the departure gate: the

employees from Ground Services generated a great deal of ideas on how the gate of the future should look

like. Further, several process improvements were made, thanks to the ideas that were generated in co-­‐creation

sessions. Unfortunately, the director business innovation adds, “Considering the Ground Services project, I am

referring to the past because we have stopped the project. Huge cuts had to be made across the entire

organization, of which Ground Services was one. That is unfortunate, but no matter how good the generated

ideas are, it is considered as ‘cash out’ at a certain moment”.

There were two ways of measuring the results of co-­‐creation. The first one was the degree of participation:

“Reports were made on how many participants would sign up for the online platforms, and how many people

actually contributed to the platform; the number of participants is an important indicator of customer loyalty”.

The other way to measure the results of co-­‐creation was by involving employees of the controlling department.

They would then estimate what the actual revenues would be of certain generated ideas once they would have

been developed and implemented. This was of course an estimation, but it also provided involved decision

makers with a more substantial idea of the achieved results of co-­‐creation would look like.

Encountered difficulties using co-­‐creation

One of the difficulties while using co-­‐creation was the nature of Company D’s existence. Being an airliner,

margins are relatively low which results in a day-­‐to-­‐day focus. Because: flights and production will always

continue, even when not all the seats in the plane are booked. Therefore, the operations perspective is highly

important: “We are a highly operational company, so if we would only be looking at things that will matter in

2020, we would have gone out of business already.” Why this results in a possible problem, is filled in by his

colleague in charge with product strategy: “Co-­‐creation tends to focus more on what we will be doing

tomorrow, than what we are doing today. However, its strength is that if you do it right you immediately create

commitment between the operations and commercial departments.” However, the director business

innovation warns that in unstable times, innovation projects are always under pressure: “We have had times

when we were losing money, about 1,5 billion. At that moment, you have to do something in order to survive;

no matter what the results of co-­‐creation or innovation projects are”.

§ 4.1.1 | Case analysis: Company E

Purpose of co-­‐creation

Company E uses co-­‐creation for two purposes: the first is to reestablish the

involvedness and contact with its customers, and second to generate new

products/services and improve existing ones. As the online marketeer explains: “We

started this out of interest in with our customers. When we started the company

seventeen years ago, our clients were exactly the same as the people that were working at our company. But

that tended to change over the years: we managed to keep in touch with a share of our customers, but not

50


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

with all of them. Therefore, we started using co-­‐creation”. “It is also turned out to be a very good way to

receive confirmation from customers about taking the right direction – or not. It allows us to fine-­‐tune our

services, which is highly valuable”, the product manager adds.

Company E built an online platform that is open to any of its customers where they can post their own ideas

and share their experiences with other participants and with the employees of Company E. In addition,

Company E also posts questions relating to several themes on the platform, asking the opinion of their

customers. . “However”, the online marketeer says, “we are going to change this for the coming year. We now

have a relatively open platform, where we as employees are always active, and we noticed that we cannot

handle all the input. It simply takes too much time to answer all the questions we are receiving now. We are

therefore going to change this by setting a new theme each month or quarter with the start of the new year.”

Involvement of internal and external parties

“Introducing the platform was not all that troubling, from an organizational perspective”, the product manager

tells. “But the follow up, the internal organization of the project, that is difficult. How do you keep everyone

who participates motivated? How do we make sure that everybody keeps giving useful answers, how do we set

the right themes and stories? That’s quite a challenge…” Company E now has about 30 to 35 employees from

multiple departments that are involved in the co-­‐creation project. The platform’s team consists of people that

are descent from the marketing department, people from customer care, their helpdesk, public affairs and

people from the technical staff. The product manager and the online marketeer who were interviewed for this

research indicate that they are the two persons who are in the lead of the project. “We don’t do it on a fulltime

basis, but we do notice that we are short on staff”. This shortage on staff came unexpected, according to both

participants.

A moderator on the platform decides what questions go to which department. No real changes had to be made

as a result of co-­‐creation between the departments. “Our internal communication was already above average,

and it might have got even slightly better. But it’s too much to call that a direct result of co-­‐creation. […] There

were no rigorous changes as a result of co-­‐creation. There has been a growing number of cooperation between

departments, but I think that is simply our culture and the structure of our organization” the product manager

explains. Company E holds a weekly meeting for the employees that are directly involved in the co-­‐creation

project to discuss its progress. Considering the parties that were involved externally, these are all Company E’s

consumers – no selection was made here.

Used types of co-­‐creation

The interviewees said to use only one of the four types of co-­‐creation: ‘Crowd of People’. In a period of about

two years, Company E prepared itself for co-­‐creating with its customers by building an online platform. The

platform is open to any of its customers, a product manager explains: “We started by sending 50.000 of our

clients a postcard, asking them if they wanted to join us to think about our products and ways to improve our

service -­‐ about 2200 joined the platform, and each week we have about 40 new participants who join us.”

51


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Although the platform was open to every customer of Company E, the ownership of the results was directed

immediately to the organization itself. Participants of the platform knew that they would not receive any direct

reward for their efforts, but the interviewees felt that it was sometimes difficult to explain to customers that

not every idea that was put on the platform, was also going to be realized: “They often think that when we’ve

said to bring one of the ideas to life, it will be working within a week, or within a few months. That is not always

possible, and that is sometimes hard to explain”. Figure 4.9 summarizes the results of this section.

Figure 4.9 | Company E: purpose, scope, involved parties and types of co-creation

Openness

Crowd of People:

Purpose: Testing new and existing services/

generating new ideas

Scope: Fixed/open

Internal: Marketing, customer care, helpdesk,

public affairs, technical staff

External: All customers

Community of Kindred Spirits:

not used

Club of Experts:

not used

Coalition of Parties:

not used

Ownership

Co-­‐creation in the NPD-­‐process

Company E introduced the platform they use for the purpose of reestablishing the involvedness and contact

with their customers, to improve existing products/services and to generate new ones. Considering the NPD-­process,

two phases can be identified where co-­‐creation contributes to Company E’s purposes. First, it can be

used during the phase of idea generation: new ideas can easily be brought under the attention of Company E’s

employees, and can at the same time be discussed by participants on the platform. Second, the platform can

also be used during the development phase to test new and existing propositions.

There are multiple criteria that are used to select ideas that are a result of co-­‐creation. A selection of these

criteria is provided by the online marketeer: the fit with Company E, the number of customers that will use it,

the match with the company’s core values and what the expected returns will be. Next, an important criterion

is the available capacity inside the organization, or in other words: are there people enough to realize the idea.

”I think that if you are seriously setting up a co-­‐creation platform, that you should sell ‘no’ to sixty to seventy

percent of the ideas. Just because of the simple fact that customers are highly demanding, and also expect

things to be customized to their needs”. Finally, as already mentioned at the measurement of results-­‐section,

ideas are discussed with the management team; that is the moment where the decision is made to continue

with an idea or not.

52


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Whenever Company E adopts an idea it is developed inside the organization. However, the online marketeer

adds that this is also an important and distinct part of co-­‐creation: “in the most ideal case, we start with an

insight, and then we develop a concept around it. Then, we check with customers whether it is something they

like, and if necessary, we improve the product or service until it is suitable for release”. Company E appeared to

provide their stakeholders with extended feedback. “When co-­‐creating with a customer, I also expect that we

provide something in return to a customer. Not in the sense of giving presents or something like that, but by

providing insights of Company E. […] What we give them in return, is that we provide them with an impression

of how our organization works, and most of our customers find this already very valuable […] And we also let

them know what happens to their ideas. So it is the fact that customers have a good relationship with our

organization, what gives them a good feeling”. There are no financial compensations or whatsoever, and

sometimes an answer to an idea might also just mean ‘no’, the online marketeer explains: “We just have to be

honest, and I think that is one of the core concepts in co-­‐creation: being transparent”. Explaining what ideas

are useful and what ideas are less useful appears also to be important. Figure 4.10 illustrates how the platform

that is used by Company E contributes in its NPD-­‐process.

Figure 4.10 | Company E: types of co-creation and purpose in the NPD-process

Idea Selection:

Management team/

involved employees

Themes

Crowd of People:

Idea Generation

Developed

internally

Crowd of People:

Testing/Feedback

Idea generation Idea development Idea diffusion

Results and measurement

The participants honestly indicated that they had expected more concrete results, in terms of ideas they had

not thought of themselves at the moment that the project started. This, however, was not the case: there were

some new ideas that were the result of co-­‐creation, but not as rigorous they would have expected in advance.

An online helpdesk chat, adjusted invoices and ideas to reward loyal customers were among the results. On the

other hand, they did manage to create a better relationship with the customer, as the product manager

explains: “You don’t hear too many people about it, but co-­‐creation proved to be a very good PR-­‐tool. It

improves customer loyalty. Starting by saying, “I want to improve my services”, companies suddenly found

themselves improving the relationship with their customers”. The online marketeer also mentioned that

although the generated ideas were not revolutionary, and often already discussed in the organization before

the co-­‐creation project started, co-­‐creation helped in giving a higher priority to certain ideas.

Looking at the measurement of the returns of co-­‐creation, the product manager explained: “We have multiple

themes, and customers can introduce their own ideas as well. Once a month, we have a meeting with the

management team, where we discuss the best ideas customers provided us with. During that same meeting

the decision is made to develop a number of those ideas – or not. So our MT knows every month what ideas

53


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

are being generated, and what the current situation is. And one thing that also helps is that we have positive

results – but the most important thing is that we gain commitment in the MT to continue the project.” He

added that it is also possible to build business cases around ideas, but that it takes time to measure these

results. For example, the idea of an online helpdesk chat had to be developed, to be implemented, and only

after a couple of months, results can be measured by looking at a decrease in traffic of the telephone-­‐based

helpdesk, the generated costs and accomplished savings.

Encountered difficulties using co-­‐creation

The interviewees indicated three difficulties since Company E has started using co-­‐creation. First, it appeared

that customers sometimes expect their ideas to get realized right away – something that is not always possible

when the people who are dedicated to the development of products and services also have other tasks and

priorities. Second, Company E started the project mainly with the purpose of improving their services – but

customers often interpret this as that Company E wants them to think of new services: “with this project, we

aim at improving our services. Customers mostly want to talk about product development; they want to

participate in designing new products, and develop new things. The problem is, that at this moment, we just

are not ready to do this yet”, the online marketeer indicates.

Although the problems that are stated above should be solvable by improving the communication towards

customers, both interviewees also indicate that they simply not have enough people available to moderate all

the answers. Available time and commitment are considered crucial for the success of co-­‐creation.

§ 4.2 CROSS-CASE ANALYSIS

Using the same constructs as for the within-­‐case analysis, a cross-­‐case analysis is made involving all five

organizations. This paragraph therefore analyzes, describes and interprets both the differences and the shared

agreements between organizations in their use of co-­‐creation. After a short discussion of the results across the

organizations and the results that stand out

Purpose and scope of co-­‐creation

During the within-­‐case analysis, almost all organizations were found to have initiated more than one co-­creation

project; Company E was the only organization that focused on a single co-­‐creation project. Two kinds

of purposes could be distinguished: overall purposes -­‐ such as reestablishing the connection with the consumer

or increasing the speed of innovation -­‐ and project-­‐specific purposes that were of special interest to this

research. One of the things that immediately stood out in the collected data is that all the organizations use co-­creation

– although not always for a primary purpose – for what they refer to as ‘idea generation’. In addition,

two organizations used co-­‐creation to test new concepts that had been developed inside the organization,

and/or to test existing products or services with its target population. Further, co-­‐creation is also quite often

used by organizations to explore the possibilities for new strategic alliances or partnerships.

54


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

One organization, Company D, used co-­‐creation for a purpose that came quite unexpected at the beginning of

this empirical research: internal co-­‐creation. Where most organizations used co-­‐creation for idea generation or

testing purposes, Company D used it to consult its Ground Service employees by involving them in an online

platform. Although one of the interviewees working at Company C mentioned the possibility to use co-­‐creation

as a way to stimulate innovation and process improvement from within the organization, Company D can be

said to take in a quite unique position in the sample population. As one of its employees mentioned:

“Sometimes, organizations take on such proportions that they can use crowd sourcing inside their own

organization”.

Considering the scope that was used in co-­‐creation projects, this appears to be rather open at the stage of idea

generation, and tends to become more focused once co-­‐creation is used for testing purposes. This can be

explained by marking that setting few boundaries might increase creativity among the participants, while at the

same time providing little or more direction may also help not to wander from its original topic. Hence, when

using co-­‐creation for testing purposes, projects will automatically be provided with a more focused scope, as

there already is some sort of developed concept or prototype.

Involvement of internal and external parties

All initiated projects – except the internal co-­‐creation project of Company D – involved both internal and

external parties. Considering the involvement of internal parties, the marketing department was a constant

factor among all involved organizations: each organization involved its marketing department in at least one of

its co-­‐creation projects. The projects that did not involve the marketing department were often the ones that

had the purpose of testing or seeking new strategic alliances/partnerships. In addition, next to marketing

departments, innovation and development departments also turned out to be internal parties that were

involved frequently in co-­‐creation projects. Although an overlap in tasks between the marketing and innovation

department was expected, they often appeared to have quite different tasks – and at the moments that an

overlap between the two was indicated, this did not directly appear to be responsible for struggles between

them.

The involvement of other internal parties was often dependent on the context of the co-­‐creation project. It

appeared that not just every department/party inside an organization is involved in co-­‐creation – there has to

be a clear link between the content of the project and the tasks of the related department. Company A was the

only organization that had a specific department that was specifically charged with the initiation and process

management of co-­‐creation projects – along with other innovation projects that were initiated in the

organization.

When comparing the involvement of external parties between the organizations, most of the organizations

turned out to involve specific topic experts and/or thought leaders when co-­‐creation projects had the purpose

of idea generation. In addition, most of the organizations also involve lead-­‐users in their projects when

sourcing for new ideas – and often, these lead-­‐users also turned out to be experts in a certain way. An example

can be found at Company D: many of its involved topic experts were also people who happened to fly quite

often -­‐ attributing them with the role of heavy users at the same time.

55


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Projects that were initiated for testing purposes often involved larger, more mainstream groups of users. No

direct expertise on a certain topic or whatsoever was asked in a number of projects that had the purpose of

testing new or existing products or services. The Internet and new forms of (digital) media appeared to play an

important role here, making it rather easy for organizations to reach a large number of their customers. Finally,

parties that were involved when seeking for new alliances or partnerships turned, both internally and

externally, to be employed at higher management levels. Unfortunately, few information about these projects

was available – most probably as a result of its potential strategic impact.

Used types of co-­‐creation

When comparing the different types of co-­‐creation that were used by the organizations, it immediately

signifies that none of the participating organizations appeared to make use of the ‘Community of Kindred

Spirits’, as illustrated in figure 4.11. Considering the fact that this type of co-­‐creation is both open for anyone to

join, and that its content is open for anyone to own, it may be that it is not directly suited for commercial

activities. However, looking at the popularity of open source software -­‐ one of the best examples of a

successful ‘Community of Kindred Spirits’ -­‐ there seems to be a clear potential for this kind of co-­‐creation.

Almost all involved organizations use more than one type of co-­‐creation. Although different types of co-­creation

are often not used at the same time, they do appear to be used during the same project.

Organizations mostly start co-­‐creation projects by using the Club of Experts, moving towards the Crowd of

People as the project develops into another stage. It is therein noticeable that although the level of openness

tends to change – during the project, often more external parties get involved (or at least on a less selective

basis) – the level of ownership remains the same. So, organizations do involve external parties in their NPD-­processes,

but at the same time protect their (newly gained) intellectual property by directly assigning its

ownership to them selves.

The ‘Club of Experts’ appears to be the most popular type of co-­‐creation and is used by four organizations, all

with the purpose of idea generation. Organizations appear to see a good combination in the generation of

ideas with relatively small external parties consisting out of topic experts, thought leaders and lead-­‐users. This

may be combined with the ownership that remains preserved to the initiating party (i.e. the organization):

every idea that results from the project, it will be the intellectual property of the organization, making the Club

of Experts an interesting type of co-­‐creation for the purpose of idea generation.

Another popular type is the Crowd of People: three organizations indicated that they use or have used the

project. While mostly used for testing purposes, the Crowd of People also seems to have the clear potential of

functioning as a platform for internal co-­‐creation projects. The Internet can be considered to be a highly

important factor in its success, allowing organizations to connect with large groups of customers and/or

employees.

The Coalition of Parties was mostly used by relatively large organizations to seek for new alliances or

partnerships. In two cases, Company C and Company D, it concerned projects that attempted to seek alliances

or partnerships throughout their own value chain. Co-­‐creation was here used to explore the possibilities for

potential collaboration – either with direct suppliers (Company C) or with indirect suppliers (Company D). In

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

addition, it might also be used to seek for partnerships in fields where cooperation between two organizations

might not be as obvious (Company A).

Figure 4.11 | Types of co-creation among involved organizations

Crowd of People

Community of Kindred Spirits

!

!

!

Openness

Club of Experts

Coalition of Parties

! !

!

!

!

!

!

Ownership

Co-­‐creation in the NPD-­‐process

Figure 4.12 on the next page shows a comparison of the different NPD-­‐processes in the involved organizations.

As already discussed in the previous sections, it immediately points out that all the organizations tend to use

co-­‐creation for the purpose of idea generation. However, this illustration also shows that all the involved

organizations tend to do a form of research in the stage before involving external parties by using co-­‐creation.

This form of early research can be done in the way that Company A does, by using context mapping, or for

example by letting a relatively small number of involved employees define a set of themes like in Company C. In

either case, it may be clear that no organization uses co-­‐creation with the scope of an entire greenfield by

leaving the involved parties completely free in which direction they take.

Next, all the involved organizations appeared to make a thorough selection of the generated ideas after the

idea generation-­‐phase. The exact way that these selections were made differs per organization: some use very

tangible criteria such as predefined benchmarks, and others use a somewhat more ‘gut feeling’ approach. The

importance of a clear scope for co-­‐creation projects becomes more obvious when seeking for selection criteria

and ways to communicate the follow-­‐up of generated ideas towards participants of co-­‐creation sessions.

Considering the development phase, what immediately meets the eye is that most of the actual development

of products and services is done internally – behind closed doors and without directly involving any external

parties by using co-­‐creation. There were no clear indications why the development of ‘openly’ generated ideas

was done without direct involvement of the involved external participants. One of the possible reasons could

be the lack of knowhow of externals or an organizations refusal to share information that is sensitive to

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

competition. Nevertheless, later on in the development phase of some organizations external parties were

involved for testing purposes, using the Crowd of People in an online environment.

Figure 4.12 | Overview of NPD-processes Company A-E

Idea Selection:

mangement/CPDdepartment

!

Context

mapping

Club of Experts:

Idea Generation

Internal development & diffusion phases

No co-creation used

Idea generation Idea development Idea diffusion

Idea Selection:

Predefined benchmarks/

OGSMT

Crowd of People:

Testing/evaluation

!

Market

research

Club of Experts:

Idea Generation

Internal development

No co-creation used

Crowd of People:

Testing campaigns

Idea generation Idea development Idea diffusion

Idea Selection:

Match with defined

themes / business line

!

Themes

defined by

employees

Club of Experts:

Idea Generation

Internal development

No co-creation used

Idea generation Idea development Idea diffusion

Crowd of People

Idea Generation

Idea Selection:

Fit with business/

departments

Crowd of People

Process improvement

!

Topic

defined by

employees

Club of Experts:

Idea Generation

Internal development

No co-creation used

Idea generation Idea development Idea diffusion

Idea Selection:

Management team/

involved employees

!

Themes

Crowd of People:

Idea Generation

Developed

internally

Crowd of People:

Testing/Feedback

Idea generation Idea development Idea diffusion

Noticeably, co-­‐creation was only once used in the idea diffusion phase. Although it might be expected that

marketing departments would find opportunities in using external parties for the diffusion of newly developed

products and services, only Company B actively involved their customers when planning and designing their

marketing campaign.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Regarding to the feedback that was provided to parties that were actively involved in a co-­‐creation project, the

results were dichotomous. One part of the organizations would ‘thank the participant for his or her

contribution’ and would then move on in the process without further directly involving the customer. Another

way of providing feedback was seen at Company D, where the involved interviewees were kind of proud about

the way that participants received feedback and were involved afterwards. Considering the other interviewees,

many of them saw plenty room of opportunity for (in their eyes necessary) improvements on the way their

organization provided feedback to participants. As one of the interviewees of Company A mentioned: “We

should cherish that our customers want to be involved in our organization”.

Considering the entire NPD-­‐process, some interviewees initiated the idea for installing something that might be

referred to as ‘Co-­‐creation Councils’, consisting of both internal and external parties of the organization. These

councils should then be assigned with the budgets and time to constitute a core team of people to select and

develop the co-­‐created ideas outside the organization. This would then either be done by setting up incubator

programs or by creating more traditional settings like corporate ventures. In addition, these would then also

have to deal with the time-­‐to-­‐time evaluation of the development process, measuring and testing its progress

and content.

Results and measurement

Discussing the results of co-­‐creation, it quickly appeared that only few projects really delivered in terms of new

products. Considering the fact that many of the co-­‐creation projects were initiated for idea generation, the lack

of results in terms of new products or services might imply that many of these co-­‐creation projects failed.

However, most interviewees explained that co-­‐creation had contributed to the organization and their new

product development processes in another way than simply by delivering complete products or services.

Although new ideas were in fact generated during co-­‐creation projects, these were often ideas that had earlier

already been thought of by employees of the organization. Nevertheless, multiple interviewees indicated that

because of the increased priority that was given to co-­‐creation projects and their outcomes by higher

management levels, co-­‐creation functioned as a wheelbarrow for ideas, leveraging them towards a new level.

In addition, customers were found to provide useful feedback on new ideas and on products or services that

already existed.

Next to these product-­‐related results, co-­‐creation also proved to be a new way of communicating between the

organizations and its stakeholders. Several interviewees indicated that they felt co-­‐creation ‘shook up’ the

organization, directly involving employees with the people they really work for: their customers. In addition,

co-­‐creation appeared to be a strong PR-­‐tool, enhancing the relationship between the organization and its

customers.

The actual measurement of the results of co-­‐creation was more difficult than just telling what is results were. It

is quite difficult to express the monetary value of new (unrealized) ideas, useful feedback and enhanced

customer relations that were the result of co-­‐creation. Organizations appeared to deal with this differently.

Where some of them were actually still seeking for ways to measure results in terms of ‘return on investment’

by for example calculating what an ideas’ potential model would look like, other organizations made sure that

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

the results of the co-­‐creation projects were distributed throughout the organization, automatically creating

some form of supportive basis for its use.

It can also be said that different types of co-­‐creation also have a different type of measurability. Where the

Club of Experts -­‐mostly used for idea generation – has a quite difficult measurability of results, the Crowd of

People can for example more easily be measured by looking at its degree of participation. In either way,

interviewees also indicated that there were still ideas resulting of co-­‐creation projects that yet remained

undeveloped – highlighting its potential for the long term.

Encountered difficulties using co-­‐creation

Before, during and after the NPD-­‐process, there were several difficulties organizations encountered when using

co-­‐creation. Although not all of these difficulties could directly be found at every organization, it may be

expected that they are applicable on multiple organizations. In total, seven difficulties were identified that

organizations might face when using co-­‐creation as illustrated by figure 4.13.

• Commitment -­‐ three factors can be distinguished that strongly affect the level of commitment co-­creation

projects can expect to receive: available budget, available time and the priority that is given

to the project.

First, the availability of time employees have for participation and dedication to co-­‐creation projects

can be separated in two types: the individual available time of each employee to be involved in the co-­creation

project, and the available time during the process to involve external parties. Co-­‐creation

cannot be done instantly or as something that is done in spare hours.

Second, the available budget plays a crucial role. During the research, it appeared that when an

organization suffers under financial stress, innovation projects – and among them co-­‐creation – are

under high pressure of cutting losses.

Third, the level of priority that is given to the project by both employees and higher management

levels, is relevant for its success. Especially when generated ideas do not directly fit in a certain

business line, it still requires the responsibility and dedication of employees and management. As one

of the interviewees remarked: “I think that co-­‐creation should be implemented both top-­‐down and

bottom-­‐up to become a real success”.

• Organizational culture – even though the organizational culture will be one of the toughest things in

the organization to change, it is crucial that it embraces co-­‐creation. Although co-­‐creation is largely

influenced by other factors such as available time and available budget, co-­‐creation must be

embedded in -­‐ as what some interviewees referred to as -­‐ ‘the way of working’ – rather than

considering it as another tool.

• Organizational structure – co-­‐creation requires flexibility and anticipation for the future. Most of the

larger -­‐and therefore often more hierarchical designed – organizations found it more difficult to

translate co-­‐created ideas into successful services.

• External influences – the external environment of organizations appeared to be an important predictor

for possible problems. Organizations that felt to be under high environmental pressure as a result of

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

intense competition, found themselves to be more defensive to everyone in the outside world,

including external parties that are involved in co-­‐creation.

• Communication – although it may seem easy, the communication towards both employees and

customers or other involved external parties is crucial. It can function as a glue in organizations to

communicate successes of co-­‐creation, to keep both employees and externals committed to the

organization.

Figure 4.13 | Encountered difficulties using co-creation

Communication

Commitment requires

available...

Organizational structure

Time

Budget

Priority

Organizational culture

Environmental influences

Table 4.1 on the next pages summarizes the results found in this cross-­‐case analysis. After the analysis,

description and interpretation of the collected empirical data in this chapter, Chapter 5 will be to compare

these empirical results with the theoretical findings of the literature review in Chapter 2.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Table 4.1

Company

A

Company

B

Company

C

Purpose of co-­creation


Idea generation

Searching for

potential

collaboration

Idea Generation

Testing/Fine-­‐tuning

products/services

Project scope

Varies

dependent on

project/session

Explorative

Sometimes

open,

sometimes

focused

Focused

Involved internal

parties

Concept and

Proposition

Development,

marketing, sales,

technical and legal

departments

Concept and

Proposition

Development

department

Marketing,

development,

salespersons

Marketing,

development,

communication

Testing campaigns Focused Marketing,

communication

Idea Generation

Seeking new

partnerships/alliance

s

Focused,

internally

prepared

Open,

explorative

IT, HR, Controlling,

Marketing, relevant

departments

Relevant

departments (higher

management)

Involved

external parties

Customers,

potential

customers and

experts

Consultancy

agency

Leading edge

youngsters

Mainstream

youngsters,

customers

Mainstream

youngsters,

customers

Experts,

thought leaders

Other

organizations

Used types of co-­creation


Club of Experts

Coalition of Parties

Club of Experts

Crowd of People

Crowd of People

Club of Experts

Coalition of Parties

Co-­‐creation

in the NPD-­process


Idea

generation

phase

Idea

generation

phase

Idea

Development

phase

Idea diffusion

phase

Idea

generation

phase

Results and

measurement

Two concrete results +

new customer insights.

No financial

measurement possible

-­‐

New ideas, some new

products. Measurement

through KPI’s

Critical feedback

Critical feedback

Leverages ideas, more

innovative image.

Measurement: business

models

-­‐

Encountered difficulties

using co-­‐creation

Getting commitment,

setting priority and dealing

with company culture

Budgets, timepressure,

competition sensitive

information, working

towards constant

involvement of customers

Early involvement is

difficult, culture (knowledge

sharing not promoted) ,

problem with realization of

ideas

62


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Table

4.13

Company

D

Purpose of co-­creation


Project scope

Involved internal

parties

Idea Generation Open Marketing,

innovation

Idea Generation Open Marketing,

innovation

Process

improvement

Focused

Ground Services

staff, innovation, HR

Involved

external parties

Heavy users,

experts,

thought leaders

Used types of co-­creation


Club of Experts

Co-­‐creation

in the NPD-­process


Idea

generation

phase

Heavy users Crowd of People Idea

generation

phase

Results and

measurement

Eye opener.

Measurement through

degree of

participation/controllers

New ideas

-­‐ Crowd of People New ideas

Encountered difficulties

using co-­‐creation

Focus on operations,

available budgets

Company

E

Seeking new

alliances within value

chain

Testing new and

existing services/Idea

generation (Crowd of

People)

Open,

explorative

Fixed

(themes)/open

Innovation

Marketing,

customer care,

helpdesk, public

affairs, technical

staff

Other

organizations in

the value chain

Coalition of Parties

All customers Crowd of People Idea

generation

phase/idea

development

phase

Good PR tool, improved

customer relationship.

Measurement by MT

and involved employees

Communication through

customers, available

people, available time

63


Master thesis Business Administration, Specialization: Strategy & Organization

05

Supervisor:

DISCUSSION

Prof. Dr. T. Elfring

Introduction

§ 5.1 | Purpose of co-­‐creation

§ 5.2 | Involvement of internal and external parties

§ 5.3 | Used types of co-­‐creation

§ 5.4 | Co-­‐creation in the NPD-­‐process

§ 5.5 | Results and measurement

§ 5.6 | Encountered difficulties using co-­‐creation

Joost de Boer

Student number 1517597

After discussing each individual case by analyzing the interviews with the involved participants and a cross-­analysis

between the involved organizations, this chapter discusses and interprets the empirical results of

Chapter 4 together with the theoretical findings of the literature review in Chapter 2 by focusing on their main

agreements and difficulties. Chapter 2 and Chapter 4 both started with a definition of co-­‐creation – one

drawing on theoretical data, the other on an empirical discussion. Hence, this chapter starts with a short

discussion of these different definitions of co-­‐creation, and how they complement each other.

In Chapter 2, first a number of criteria were defined that differ co-­‐creation from other concepts: (1) the place in

the process, (2) the involved parties, (3) the reasons to involve those parties and (4) its purpose. It became

clear that according to scholars, co-­‐creation is used from the beginning of the innovation process by involving

customers as an active collaborator to suggest ideas and or/share their consumption experiences. In addition,

co-­‐creation was mostly considered as a feedback dynamic of creativity between producers and customers.

Next, in Chapter 4 the definitions provided by interviewees were discussed, resulting in the following

description: co-­‐creation is the “involvement of stakeholders at a certain moment in time by creating a dialogue

about organizational processes or topics together with the organization, in order to create a shared added

value”.

When comparing both definitions, a number of differences are noticeable. First, regarding to the place in the

process that co-­‐creation is used, Kristensson et al. (2008) refer to the beginning of the innovation process, as

interviewees talk about ‘a certain moment in time’ – allowing co-­‐creation to be introduced at any given stage in

the innovation process. Next, referring to the parties that are involved, the empirical data broadens the

theoretical scope by not just involving customers, but stakeholders in co-­‐creation-­‐ along with people in the

organization. Finally, the reasons for involvement are according to the interviewees ‘to create a shared added

value, by creating a dialogue between different parties’ – here, Potts et al. (2008) refer to its use as a feedback

dynamic of creativity between producers and customers.

Although there appear to be differences in the views that interviewees and scholars embrace, they do not

directly exclude one another. It is rather the level of interpretation and value that is imputed to co-­‐creation

that eventually explain for its use. The technological developments that increased over time allow

organizations even more to do so. Integrating all these findings, a general concept called co-­‐creation arises.

Therefore, it is probably best not to let semantic discussions dominate the research on co-­‐creation. The

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

equivalent, collaborative nature between organizations and their stakeholders, their pursuit for shared value,

along with the multi-­‐sided applicability in the innovation process are mostly distinctive factors when comparing

it with other and earlier forms of collaboration and customer involvement.

§ 5.1 PURPOSE OF CO-CREATION

Key findings: two new purposes were identified that were not yet mentioned in co-­‐creation literature: the

sourcing for potential alliances inside and outside the value chain, and the internal use of co-­‐creation among

employees.

Considering the purpose of co-­‐creation and its use within organizations, the literature in Chapter 2 refers to

two fields: marketing and innovation. Two emerging paradigms were found that elaborate for its use:

marketing literature uses the service-­‐dominant logic (Vargo & Lusch, 2004), while innovation literature

emphasizes its use from the perspective of open innovation (Chesbrough, 2003). The empirical research found

support for the use of co-­‐creation by organizations for both these purposes; however, two additional purposes

were found in the empirical research that had not been mentioned in literature on marketing, innovation or co-­creation

itself.

Firstly, the three largest organizations in the research used the Coalition of Parties in to search for potential

strategic alliances or partnerships with other organizations both inside and outside their direct value chain.

Although the involved participants referred to this as co-­‐creation, the sourcing for potential partnerships with

other organizations shows many similarities with concepts such as joint venturing and strategic alliances that

are broadly discussed in existing management literature. Further research should point out whether the use of

this form of co-­‐creation really is different from traditional joint venture and alliance literature, or that it is just

another name for something that has been around for a long time.

Secondly, co-­‐creation was also used by one organization to improve its operational processes together with its

employees. Interviewees argued that when organizations become larger, it becomes possible to use co-­creation

as a way of collaboration inside the organization. In addition, other organizations also mentioned this

potential use, but had not been using it themselves. Although the available literature did not mention the use

of co-­‐creation for internal purposes such as process improvement, it can be argued that the sense of dialogue

and the use of online tools makes co-­‐creation a highly suitable way for collaborative creation in the

organization itself. Here again, additional research is needed to explore the opportunities of using co-­‐creation

for this purpose.

§ 5.2 INVOLVEMENT OF INTERNAL AND EXTERNAL PARTIES

Key findings: although difficulties in cooperation between different departments inside the organization were

expected, almost none were found. However, there did appear to be problems when responsibility had to be

65


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

taken in the further development of co-­‐created concepts. Next, when considering the parties that are involved in

co-­‐creation, it became clear that it is better to speak of ‘stakeholders’ rather than just ‘customers’.

Internal parties: difficulties in realization, not in collaboration

Based on the results of the literature review: (1) the internally involved parties were expected to be mostly the

marketing-­‐ and innovation departments of organizations, and (2) the existence of specialist cultures (Goold &

Campbell, 2002) among those departments was expected to provide difficulties, as each department in an

organization has its own expertise, responsibilities and focus.

When comparing the results of the literature review with the empirical findings, firstly, marketing and

innovation departments indeed proved to be the parties that were internally most involved in co-­‐creation

processes. However, often other departments would be involved as well – mostly departments that had a clear

affinity with the involved topic of the co-­‐creation project. Although expected, there were no direct signals of

problems in the cooperation between the departments. Often, marketing and innovation would have their own

scope and responsibilities without directly experiencing difficulties.

However, it was found that in several organizations problems rose after the use of co-­‐creation: once co-­‐created

ideas or concepts had to be developed, it was often not clear who, or which department, would be responsible

for the development of the generated content. Especially when generated ideas did not directly fit into one of

the existing business lines of the organization, there would be no direct party taking the responsibility and the

risks of developing one of the generated ideas – eventually leaving the idea for what it was. Although this

problem was not directly accounted for in co-­‐creation literature, the open innovation paradigm argues that

organizations should consider to spin-­‐off ideas whenever there is no direct fit or support from within the

organizations and/or its core capabilities. Other solutions may be found in making the involved parties (both

internal and external) in the co-­‐creation project directly responsible for the development of the generated

outcomes.

External parties: stakeholders rather than customers

Referring to the external involved parties, scholars mostly elaborated on the involvement of lead-­‐users in co-­creation

processes, later complemented by ‘average’ users to evaluate and test the ideas that were generated

by lead-­‐users. Only few other scholars spoke about stakeholders instead of merely referring to customers.

When analyzing the empirical data, it appeared that most organizations indeed involved lead-­‐users in their co-­creation

projects – however, these lead-­‐users were most of the time involved together with topic experts and

thought leaders. The ‘average’ or ‘mainstream’ consumers that in literature were dictated the role of testing

and evaluating, sometimes also appeared to be used to generate new ideas: it signals an overlap between lead-­users

and ‘mainstream’ customers and their role in the co-­‐creation process. This is different from Von Hippel’s

(1986) assumption that mainstream customers are singularly involved for analyzing and testing purposes, and

can most probably be explained by the technological developments that allow initiators to process and select a

larger number of generated ideas.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Referring to the involvement of not just customers but mostly stakeholders in co-­‐creation projects, it was

already shortly discussed that some organizations mentioned the involvement of employees in co-­‐creation

projects instead of customers. In addition, co-­‐creation was also used to source for potential collaborative

opportunities with other organizations inside and outside the value chain, mostly involving higher management

levels. Hence, where most of the theory only refers to the involvement of customers in co-­‐creation projects, it

can now be stated that it is better to refer to the involvement of ‘stakeholders’. Considering the importance of

dialogue in the concept of co-­‐creation and the multiple purposes it can be used for, co-­‐creation allows

organizations to involve far more parties than just customers.

§ 5.3 USED TYPES OF CO-CREATION

Key findings: no use was made of the Community of Kindred Spirits. In addition, one new type of co-­‐creation

was identified unexpectedly: internal co-­‐creation.

Co-­‐creation literature roughly distinguishes two dimensions that can be used to differentiate between different

types of co-­‐creation: openness and ownership. While the ‘openness’ describes the level of accessibility of the

project for participants (selection vs. no or few selection), the ‘ownership’ dimension refers to the ownership of

the content and the intellectual property that was generated in the co-­‐creation project. Four types of co-­creation

were identified: Club of Experts, Crowd of People, Coalition of Parties and the Community of Kindred

Spirits. Combined with the empirical results, two interesting observations can be made.

First, the empirical research showed that the ‘Community of Kindred Spirits’ was not used by any organization.

It may be assumed that this type of co-­‐creation is mostly suitable for non-­‐profit purposes such as open source

software. These communities are open to anyone, and its generated content is owned by anyone, making it

less attractive for commercial activities. However, it might also prove to be an opportunity for organizations to

engage in a dialogue or cooperation with other parties beyond their direct interests, discussing topics like

sustainability.

Second, although the four types proved to be able to distinguish different types out of several co-­‐creation

projects, there also appeared to be a shortcoming in the model: the use of co-­‐creation for internal purposes

was not explicitly mentioned at all. It might be that this kind of co-­‐creation proves to be a good example of the

Community of Kindred Spirits, as it is open to and owned by everyone in the same organization. However,

several other types of co-­‐creation might also be used for internal co-­‐creation, such as the Club of Experts or the

Crowd of People.

Herein, two perspectives can be identified: one that accounts for a hybrid form of internal co-­‐creation –

allowing for the use of all four types while emphasizing that there is no difference between co-­‐creation for

internal or ‘external’ purposes. The second scenario then holds that internal co-­‐creation is a new, unique type

that should be used different from the other four types that organizations are already familiar with. Either way,

it is a subject that should receive increased attention as multiple interviewees praised the connective and

collaborative nature of co-­‐creation.

67


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

§ 5.4 CO-CREATION IN THE NPD-PROCESS

Comparing the results of the literature review and the empirical section of this research, it appeared that the

use of co-­‐creation affected the traditional new product development process. The main differences between

theory and practice of each specific phase in the NPD-­‐process are presented here, along with an overview of

the potential influences the introduction of co-­‐creation might have.

Idea generation phase: choosing for an open or narrow scope

Considering the use of co-­‐creation in the idea generation process, organizations aimed to involve external

parties, mostly in the form of topic experts and lead users. Enkel et al. (2005) mentioned however that

considering the involvements of customers, organizations should “involve customers as early as necessary, but

as late as possible”, pointing at the potential risks of customer involvement. Before involving any other external

parties, organizations often did thorough market research, not only by using traditional market research

methods, but also by using new methods such as context mapping in order to set a certain scope for co-­creation

projects.

One important thing that was found during the stage of idea generation, was the scope that projects were

initiated with. Some organizations aimed at using idea generation as a greenfield, providing none to few

directions to the external involved parties; others made sure that initiated projects had a clear scope for the

participants, pointing them in a certain direction. Hence, there is a trade-­‐off to be made between ensuring

creativity and the direct usability of generated ideas. No direct clues were found in the involved literature that

explicitly discussed the decision for using an open or narrow scope in this phase. Therefore, one of the

contributions of this research in the phase of idea generation is that it is not only important when external

parties are involved, but also to consider the degree of freedom they are left with during their involvement.

Selection of ideas: making inbound and outbound innovation decisions together with externals

Deriving from the open innovation paradigm, organizations are encouraged to engage themselves in a

continuous process of sourcing for both inbound and outbound opportunities (Chesbrough, 2003; Grönlund,

2010); this also includes the selection of generated ideas. However, almost none of the involved organizations

were found to make a deliberate consideration whether ideas should be developed internally or externally. It

can here be said that the open innovation literature here is ahead of what is actually done in practice.

In addition, organizations more or less internally evaluated and selected the input retrieved from the co-­created

idea generation phase, without the involvement of externals. Organizations here often chose ideas

that had the highest potential to become a success on the market once introduced, as they are aware how well

an idea matches the organizations capabilities, ignoring ideas that have great potential but are more complex

to realize. Organizations might consider involving external parties in this selection process, but will then also

face the challenge of providing these parties access to information in order to improve their quality of decision-­making

(Prahalad & Ramaswamy, 2004b).

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Idea development phase: development often largely remains a ‘black box’

The actual development of ideas that were co-­‐created in the previous phase still remains something that is

strictly done by people inside the organization – without the involvement of externals. Although this can be

defended referring to the complexity of the product or service and the knowhow that is needed in order to

develop an idea, this also carries the risk of alienating from the original co-­‐created idea. According to the

literature review, scholars mention the involvement of external parties in the development phase, but do not

emphasize its importance. In contrary, scholars underwriting the service-­‐dominant logic refer to a continuous

process of customer involvement, including during the development phase.

Further on in the development phase, co-­‐creation was often used as a way to test or evaluate the developed

idea. Hereby, often by using the Crowd of People, more ‘mainstream’ customers were involved in a more

mature phase of the development process. Using the feedback of these externals, the concept could be

adjusted and tweaked, until it met the expectations of its audience – which is largely in correspondence with

co-­‐creation and lead-­‐user theory (Nambisan & Nambisan, 2008; Von Hippel, 1986). It should here, however, be

noted that involving external parties earlier in the development phase might lead to fewer necessary

adaptations in the tested product.

Idea diffusion phase: lack of use of relationship with the customer

In the theoretical section, it was argued by Rust et al. (2010) that organizations should shift their focus from

being transaction driven towards customer lifetime value. In addition, customers who are involved with the

organization and its products or services are expected to become more loyal to the organization. The service-­dominant

logic emphasizes the dialogue and ‘market with’ instead of promotion and ‘to market’ when

launching a product (Vargo & Lusch, 2006).

Although the involved organizations mentioned to use co-­‐creation with the overall-­‐purpose of getting a better

relationship with their customers, only one organization involved its customers in the idea diffusion phase. All

the organizations mentioned that their customers were pleased to co-­‐create together with the organization,

but also indicated that the feedback that was provided to their external participants at the end of the co-­creation

project left room for improvement. Considering this difference between theory and practice, it may be

expected that the improved relationship between the organization and its customers result in a higher loyalty

and involvement with products once they are ready for diffusion – emphasizing the potential benefit for

organizations when involving external parties within their marketing process.

The adoption of co-­‐creation in the NPD-­‐process requires a change in the status quo of traditional innovation

and marketing processes. Involving external parties has an impact on the way things are done in the

organizations, and on the way decisions are made. Figure 5.1 summarizes the findings of this paragraph,

indicating the impact that co-­‐creation has during the multiple phases of the NPD-­‐process.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Figure 5.1 | Potential impacts on traditional NPD-processes

Preparing for customer

involvement:

- market research

- context mapping

- other techniques

Choosing open/

narrow scope in cocreation

projects

Selection of ideas:

- inbound and outbound

decisions

- involving external

parties in decision

making

Opening up the ‘black box’ of

idea development

Embracing marketing

opportunities by

involving customers in

product launch/

marketing

Idea generation Idea development Idea diffusion

§ 5.5 RESULTS AND MEASUREMENT

Key findings: low measureability complicates the usability of co-­‐creation

Obviously, there were no theoretical foundations considering the exact results of co-­‐creation. The

organizations involved in the empirical section of this research indicated that co-­‐creation resulted in a small

number of new products or services. In addition, interviewees mostly mentioned the positive effects co-­creation

had on the relationship between the organization and its customers, and the increased awareness of

employees in the organization by bringing them closer to the customer and their needs.

Considering the measurement and measurability of co-­‐creation, some organizations would attempt to measure

its results by estimating how the business case of newly generated ideas would look like; others would use a

more ‘soft’ approach of measuring ideas. In the theoretical section of this research, Gummesson (2004) plead

for the use of ‘Return on Relationship’ (RoR) as a result for the measure ‘Return on Investment’ (RoI). No

indications were found for its use yet – if organizations manage to craft this RoR into a tool that makes accurate

predictions of the returns of co-­‐creation, it might actually have a potential for marketing and innovation

departments.

However, until this far there are no known revolutionary products or services that were the direct result of co-­creation.

Although co-­‐creation may have already resulted in an improved relationship with the customer,

helped to raise new and usable insights in customers’ needs, and might also have actually brought new

products or services, organizations are still commercial institutions. Taking the potential efforts and costs when

seriously aiming to adopt co-­‐creation in the organization’s processes as illustrated in the previous sections,

critical notes should be placed at the costs that co-­‐creation brings when compared with the benefits.

On the contrary, co-­‐creation will require certain changes in the organization to work properly. In order to have

a useful discussion on the costs and benefits of co-­‐creation, clear methods of measurement will have to be

developed. In this case, it probably requires a special, adopted chicken to produce golden eggs. The next

paragraph discusses the problems organizations encountered in their use of co-­‐creation.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

§ 5.6 ENCOUNTERED DIFFICULTIES USING CO-CREATION

Although the previous paragraphs of this chapter have already indicated several difficulties that organizations

encountered during their use of co-­‐creation, there appeared to be certain difficulties that could not directly be

directed to a particular phase in the process. No direct links were found between the difficulties that were

encountered in practice and the ones used in the literature, but it can be expected that almost all organizations

using co-­‐creation will find these difficulties on their path. Chapter 4 already identified seven difficulties:

availability of time, budget constraints, organizational culture, organizational structure, commitment, external

influences and communication.

One important problem that is discussed in the literature is the not-­‐invented-­‐here syndrome; this describes the

risk of ideas from the outside being rejected by people inside the organization. Although none of the empirical

research directly indicated problems relating to the NIH-­‐syndrome, a connection here can be seen with the

problem when co-­‐created ideas do not directly fit into the business line. This shows that the culture in

organizations may highly be related to the amount of commitment that is given to co-­‐creation. Hence, future

research should find out how these encountered difficulties exactly relate to co-­‐creation, in what way they are

specifically related to co-­‐creation and how they can be overcome.

Drawing from the main theoretical and empirical results of this research, this chapter discussed the most

important empirical findings and how they relate to theory that was used in the literature review of Chapter 2.

The next chapter, Chapter 6, concludes this research by providing an answer to the research question and the

stated sub questions, and explaining for the implications, limitations and recommendations for future research.

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Master thesis Business Administration, Specialization: Strategy & Organization

06

Supervisor:

CONCLUSION

Prof. Dr. T. Elfring

Introduction

§ 6.1 | Conclusion

§ 6.2 | Practical and theoretical implications

§ 6.3 | Limitations

§ 6.4 | Recommendations for future research

Joost de Boer

Student number 1517597

After the literature review, an empirical case study and a discussion where both theory and practice were

compared, this chapter offers the concluding remarks of this research. After presenting the conclusions, the

practical and theoretical implications of this research are discussed. Next, the limitations and

recommendations for future research are presented.

§ 6.1 CONCLUSION

This research was initiated from the observation that co-­‐creation has received an increased amount of

attention in the past few years. However, it was found that although despite its increased popularity, still few

was known about the possible implications co-­‐creation would have on the way that organizations shape their

innovation and marketing processes. Being especially interested in the use of co-­‐creation in the process of new

product development, this research aimed to find out at what moment and for what purpose different types of

co-­‐creation were used, and which parties would be involved in each phase of the NPD-­‐process.

Therefore, the following research question was formulated:

“How is co-­‐creation used in the innovation and marketing New Product Development-­‐processes of

service-­‐based organizations?”

First, it appeared that there is no single or ‘right’ definition of co-­‐creation. Almost every person will describe

the concept differently; something that has a direct effect on the way that co-­‐creation is used. A number of

indicators were identified that distinguish co-­‐creation from other relating concepts in combination with the

process of new product development: the purpose of the project, the parties that are involved, the type of co-­creation

that is used and finally also the place in the NPD-­‐process. These indicators are on their turn strongly

dependent on the way that organizations choose to use them.

Considering the reasons that made organizations to adopt co-­‐creation in their organizations, it appeared that

this was mostly done for the purposes of idea generation (early in the NPD-­‐process) and for testing/evaluation

(further on in the NPD-­‐process). In addition, the main reasons for organizations to start co-­‐creating with their

customers was to increase their relationship and to get better insights of customers actual needs. Another

reason also appeared to become more innovative, or at least to create a more innovative image.

Regarding to the involvement of parties in co-­‐creation projects, a separation could be made between parties

inside and outside the boundaries of the organization. The internally involved parties often consisted of

employees from the marketing and innovation department, although other departments that had affinity with

the topic of the project would often also be involved. Even though it was expected that the cooperation

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

between different departments would experience difficulties as a result of the intense cooperation co-­‐creation

demands, none of the interviewees indicated real problems here. However, the transition from ideas to the

development of concepts turned out to be a crucial point; newly generated ideas had to match certain

business-­‐line criteria in order to get adopted in a specific business line – otherwise, none of the involved

departments would not feel responsible for its development.

Considering the involvement of external parties, organizations often involved lead-­‐users, topic experts and

thought leaders in the idea generation process. In addition, the more ‘mainstream’ customer would be

involved for testing and/or evaluation purposes. Organizations did not limit themselves by just involving

customers: a large share of them focused on involving ‘stakeholders’ instead. Stakeholders could hereby mean

anyone who has any relation with the organization, from employees to people from the government.

Four types of co-­‐creation can be distinguished: Club of Experts, Crowd of People, Coalition of Parties and the

Community of Kindred Spirits. These four types were distinguished using two dimensions: openness and

ownership. Openness refers to the accessibility of the co-­‐creation projects (i.e. who are asked to participate),

where ownership refers to the party that was assigned the ownership of the generated content (i.e. just the

initiator or also the other participants). Next to the purposes of idea generation and testing/evaluation, co-­creation

appeared also to be used to source for new (strategic) alliances and partnerships inside and outside

the value chain, and for internal co-­‐creation, where employees rather than external parties were involved.

Combining the purposes of co-­‐creation with the types that were used, it became clear that when co-­‐creation is

used for idea generation, this is mostly done using the Club of Experts. In addition, when aiming to involve

external parties mostly for the purpose of testing or evaluating new and/or existing products and/or services,

organizations used the Crowd of People – the Coalition of Parties was used for exploring the possibilities for

future alliances and partnerships. Hence, internal co-­‐creation was found to use multiple types of co-­‐creation,

although it can also be argued that this is a new, fifth type not directly fitting the openness/ownership criteria.

During the entire empirical research, several problems and difficulties were found that organizations

encountered in their use of co-­‐creation. These difficulties mainly considered gaining commitment form

employees and management – mostly influenced by the available time, budget and priority for the use of co-­creation.

In addition, the organizations’ culture and structure were found to play an important role, mostly

starting at the phase of idea development. External influences such as nature of the industry of the

organization also may be an indicator for the difficulty of using co-­‐creation. Finally, communication appeared to

play a crucial role in the process: no matter what the outcomes of co-­‐creation are, it is of the highest

importance to communicate them – both inside and outside the company.

§ 6.2 THEORETICAL AND PRACTICAL IMPLICATIONS

Theoretical implications

The findings presented in this research have several theoretical implications. First, it is one of the first to

combine marketing and innovation theories by integrating them into the process of New Product

Development. The two main paradigms that were addressed, open innovation and the service-­‐dominant logic,

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

were used to investigate the use of co-­‐creation in organizations. It proved that these paradigms both provide

powerful perspectives in the use of co-­‐creation in the process of New Product Development. Considering the

collaborative nature of co-­‐creation, marketing and innovation departments in organizations appear to have

both a unique role in the process and at the same time also multiple overlaps.

Next, a combination has been made between the purposes of co-­‐creation, the involved internal and external

parties and the types of co-­‐creation that are used by organizations. It became clearer that each type of co-­creation

suits different purposes, and in its turn involves different parties. Although these three factors are not

new to co-­‐creation literature, the combination of the three is. Apparently, there is not just one definition of co-­creation

that explains for its use in organizations: it is dependent on how these multiple factors are filled in by

the organization during the process. One other important finding was that organizations also make use of co-­creation

internally, as a way to involve their employees in the processes of the organization itself.

After identifying these three factors of importance, it became possible to make an outline of the NPD-­‐process,

using the (open) stage-­‐gate model that has been of use by organizations for a long time now. By using three

separate phases in the NPD-­‐process, idea generation, idea development and idea diffusion, it became possible

to illustrate the different ways that different types of co-­‐creation are used.

The strength of the integrated view of co-­‐creation in the NPD-­‐process is that it became apparent that using co-­creation

in a serious way does not come easy. Where organizations might already find difficulties when using

open innovation as a new way of sourcing for new or improved capabilities, co-­‐creation adds a few more

difficulties by not just suggesting organizations to look outside, but also to bring the outside in. It appeared that

organizations have a certain organizational comfort zone, suggesting the incremental nature of integrating co-­creation

in organizations. Finally, seven difficulties were identified that had not been directly related to the use

of co-­‐creation: available time, budget constrains, organizational culture, commitment, external influences and

communication.

Practical implications

Next to the theoretical implications, this research also has a number of implications on a more practical level.

First, it showed that there are numerous factors to account for and to deal with when organizations start using

co-­‐creation. This research may contribute to managers that are struggling with issues such as how to start co-­creating,

who to involve, and what type of co-­‐creation to choose from. The results of both the theoretical and

especially the empirical section of the research provide managers with an overview with the different options

they will have to choose from.

However, the list of offered options is not complete at all – as already indicated, there is a numerous amount of

things that have to be taken into account when adopting co-­‐creation. It basically starts with knowing what you

want: setting a clear target and providing clear scope and focus to the co-­‐creation project is probably the most

important first step. When doing this in a realistic and well over thought way prevents organizations from

having measurement problems and being disappointed in the results of co-­‐creation. Having realistic

expectations and not being afraid to engage a dialogue with whomever outside the organization are key for the

success of co-­‐creation.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Next, this research identified several difficulties other organizations found on their way when embedding co-­creation

in their NPD-­‐processes. These difficulties should, however, not be considered as problems that cannot

be overcome, but rather as opportunities. Knowing that these problems may arise, managers may actually be

prepared when adopting co-­‐creation, lowering the possibility of failure of co-­‐creation. Finally, one of the

interviewees might have said it in the most striking way possible: “just do it: you will only learn if you try”.

§ 6.3 LIMITATIONS

Although this research was designed in such a way that the research results would be both reliable and valid,

there are a few limitations that should be mentioned. Firstly, the empirical research focused mainly on service-­based

organizations. Therefore, the results may not be generalized for all organizations; future research should

point out what possible differences there are between service-­‐based and product-­‐based organizations

considering the use of co-­‐creation.

Secondly, the research only involved employees of the involved organizations. None of their external

participants were interviewed, although the experiences of external involved parties are even important as the

experiences of internal involved parties. In addition, no data was available about what effect the use of co-­creation

actually had on the relationship between customers and the organizations. Such data may be collected

by quantitatively analyzing customer satisfaction research and/or by involving methods such as the Net

Promotor Score (NPS).

Thirdly, it was mostly top management that appeared to be responsible for sourcing potential strategic

alliances or partnerships using the Coalition of Parties. Although several managers of these organizations were

interviewed, this type of co-­‐creation should probably be investigated by adding interviews with top

management. In addition, the other types of co-­‐creation also implied to involve different departments,

dependent on the topic of the project. No employees of other departments were interviewed in this research,

leaving this an unexplored field of attention.

§ 6.4 RECOMMENDATIONS FOR FUTURE RESEARCH

Throughout this research, several fields in co-­‐creation literature were found to be unexplored – mostly as a

result of the fact that co-­‐creation is a relatively new topic in marketing and innovation literature. Hence,

several recommendations were identified that deserve more attention. Firstly, one of the findings was the use

of internal co-­‐creation. This field yet remains unexplored, and might future as an emerging method for

communication, value creation and process improvement in especially large organizations.

Next, the size of organizations may also have an effect on the use of co-­‐creation. Not only when exploring the

potential of internal co-­‐creation, but also the different ways of using co-­‐creation may be largely influenced by

the number of employees and the number of counties an organization operates in. As small organizations

might have shorter lines of communication, this might also imply the ability to act more dynamically to ideas

that are generated inside and outside the organization.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

In accordance with the size of organizations, one of the implications found was that co-­‐creation needs to be

embedded in organizations in order to function properly. One of the problems that emerged during the process

was the ability of organizations to develop co-­‐created ideas that do not directly match the core capabilities of

the organization, and therefore tend to remain unused. The use of corporate venturing and incubators that

stimulate organizational intrapreneurship and development of new ideas may prove to be a good solution in

working around organizational cultures and risk-­‐averse management.

Finally, the issue of intellectual property in combination with open innovation and especially co-­‐creation are a

field that are in a high need of attention. During the research, organizations were found to be somewhat

protective considering sharing information, and involving external parties in their innovation process. The

question assigning the ownership of co-­‐created ideas is one that will not be answered quickly. Yet, it is a crucial

part of the co-­‐creation process and touches the very fundaments of the organization and its innovation

strategies.

For now, these recommendations form the end of this research. New solutions will have to be found in order to

stretch the organizational comfort zone towards a level that allows for better interaction between

organizations and its stakeholders. Along the way of industrialization and mass production, organizations may

have lost a little bit of their sense of dialogue with the customer. Co-­‐creation may just provide the way to

rediscover the importance of simple communication between people and organizations, assisted by

technological possibilities that make it increasingly easier to create a dialogue to share experiences and ideas. A

hint for the fundamental first step in this direction is provided by Gilberto Gil, a musician and former Minister

of Culture of Brazil: “Sharing is the nature of creation”.

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor:

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made of?’ www.fronteerstrategy.com

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor:

APPENDIXES

Prof. Dr. T. Elfring

Appendix A: Operational definitions

Appendix B: Definition of co-­‐creation by interviewees

Joost de Boer

Student number 1517597

APPENDIX A: OPERATIONAL DEFINITIONS*

Concept

General Background

Co-­‐creation in general

Purpose/use of co-­creation


Involved interal parties

Question

Wat is uw functieomschrijving?

Hoe lang werkt u al bij deze organisatie? Op welke afdelingen hebt u gewerkt?

Vindt u dat de organisatie waarvoor u werkt dynamisch is? Waar blijkt dat uit?

Hoe wordt er binnen de organisatie omgegaan met nieuwe initiatieven?

Zijn er fondsen/budgetten beschikbaar voor het ontwikkelen van nieuwe ideeën?

Zijn er bepaalde factoren binnen de organisatie die het gebruik of de implementatie van co-­creatie

op de een of andere manier beïnvloeden?

Hoe wordt het initiëren van nieuwe ideeën binnen de organisatie gewaardeerd?

Hoe worden nieuwe ideeën in de organisatie verspreid, en hoe wordt er draagvlak voor

gezocht?

Wat verstaat u onder co-­‐creatie?

Hoe kan co-­‐creatie het beste binnen uw organisatie georganiseerd worden?

Kunt u enkele voorbeelden geven van situaties waarin goede ideeën het resultaat waren van co-­creatie,

en wat is hiermee gedaan?

Zijn de uiteindelijke resultaten van een co-­‐creatieproces ook wel eens tegengevallen?

Hoe worden de resultaten van co-­‐creatie in de organisatie gemeten? Waarin worden deze

uitgedrukt?

Hoe bent u binnen de organisatie begonnen met co-­‐creatie? Anders gezegd: bent u zelf met een

co-­‐creatie project begonnen, of hebt u daar hulp bij gehad?

Wat waren de voornaamste redenen om te beginnen met co-­‐creatie? Waarom waren deze

redenen vooral geschikt om op te lossen door middel van co-­‐creatie?

Welke verwachtingen zijn/waren er binnen de organisatie over de resultaten van co-­‐creatie?

Waarin wordt de unieke kracht/waarde van co-­‐creatie verwacht?

Verwacht u dat co-­‐creatie belangrijker wordt als manier van werken binnen een organisatie?

Waarom wel/niet?

Vanuit wie/waar binnen de organisatie kwam de vraag naar co-­‐creatie?

Welke afdelingen binnen de organisatie zijn vooral betrokken bij co-­‐creatieprojecten? Waarom

juist die afdelingen?

Hoe zien die afdelingen eruit? Hierbij denkende aan het aantal personen dat werkzaam is per

afdeling, waar die zich mee bezig houden en wat de unieke rol van de afdeling binnen de

organisatie in zijn geheel is?

Zijn er nog andere afdelingen die niet direct betrokken zijn bij co-­‐creatie, maar hier wel invloed

op uitoefenen?

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Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Indien niet genoemd: wat zijn de rollen van de innovatie en marketingafdeling hierin?

Hoe ziet u de betrokken afdelingen in de toekomst functioneren? Blijven die gescheiden, of

gaan die meer samenwerken? Wat is hiervoor nodig?

Involved external

parties

Types of co-­‐creation

Impediments, changes

or problems in the

organization

Staat de organisatie open voor initiatieven van buitenaf, bijvoorbeeld die van haar klanten of

experts?

In hoeverre wordt de input van een stakeholder serieus genomen?

Hoe staat u tegenover directe samenwerking met stakeholders? En tot op welke hoogte?

Wat zijn de gevolgen geweest van het betrekken van stakeholders bij bepaalde processen in de

organisatie? Zijn er dingen veranderd?

Wat vinden stakeholders ervan om betrokken te worden? Draagt het bij aan meer waarde voor

die klant, bijvoorbeeld in betere relatie?

In hoeverre en hoe werkten verschillende afdelingen (die hierboven genoemd zijn) samen

voordat co-­‐creatie in de organisatie werd toegepast? Hoe verliep deze samenwerking?

Is er een beleid in de organisatie om samenwerking tussen afdelingen te bevorderen? Waarom

wel/niet? Hoe gaat dit in zijn werk? Hoe zou u dit het liefst zien?

Is de samenwerking tussen deze afdelingen veranderd als gevolg van het toepassen van co-­creatie?


In hoeverre maakt uw organisatie op dit moment gebruik van co-­‐creatie? In welke vorm doet de

organisatie dit?

Hoe vind u dat de organisatie scoort op de punten van het DART-­‐Model: Dialogue, Access, Risk

and benefit en Transparency?

Zijn er problemen die u tegenkomt bij het samenwerken tussen de afdelingen? Zo ja, welke en

waar ligt dat aan? Hoe worden deze problemen opgelost?

Wat zou u in de organisatie willen veranderen om samenwerking tussen afdelingen te

bevorderen en/of te verbeteren? Welke rol zou co-­‐creatie hierin kunnen spelen?

Hebben de diverse afdelingen een verschillende kijk op co-­‐creatie? Zo ja: waardoor komt dat?

Hebben ze een ander doel voor ogen?

Zijn er sinds de implementatie van co-­‐creatie dingen binnen de organisatie veranderd die vooraf

niet verwacht waren te veranderen (neveneffecten)?

Zijn er bepaalde wijzigingen in de organisatie doorgevoerd om co-­‐creatie mogelijk te maken?

* NOTE: the sequence of questions as shown in this table is not necessarly the same as the sequence of the questions

that were asked during interviews.

81


Master thesis Business Administration, Specialization: Strategy & Organization

Supervisor: Prof. Dr. T. Elfring

Joost de Boer

Student number 1517597

Appendix B: Definition of co-creation by interviewees

Participant Who to co-­‐create with? Where should it be

used for?

A01. Customers or employees New products/Inside

the organization

A02. Customers, employees Getting closer to the

customer

C01. External parties Innovating new-­‐ and

improving existing

products

C02. Other people, in the broadest

sense.

C03. Companies, communities or

people

C04. Internally with employees,

externally with customers.

The entire value chain of an

industry

Creation

something

Products, services

of

Creating new ideas

or concepts, thinking

out of the box

Essence

Thinking about what the organization can improve, together with

the customer. And as far as I see, if there has to change something

inside the organization, it can also be done with employees. But

until now, I mostly consider co-­‐creation as what we do together

with the customer.

We have always done it, since 1900. But we’ve lost it along the way.

People get a lot of money out of it by calling it a hype. The only

hype are the technological developments; but the phenomena of

developing something together is as old as the way to Rome. It’s

just common sence.

Co-­‐creation is all innovation that is not done in a regular way. And

the regular way is: innovation with supplying partners, innovations

that are demanded by our customers, and our internal delivery

processes. The rest of it is co-­‐creation.

It’s in our nature to find out things for ourselves; something that is

found by another person is often not enough. What I understand by

co-­‐creation is that you create something new together.

Developing something together. But not anymore from the internal

organization; it’s not inside-­‐out anymore, it’s outside-­‐in.

The beauty of internal co-­‐creation is that it involves multiple

departments or divisions, and allows them to think out of the box.

But it can also be used to start a dialogue together with other

companies, making a value chain analysis and create new concepts

or ideas.

B01. Customer Continuous dialogue Getting to something, together with your consumer. Step 1 is to

start doing something together with your consumer, how you do it

is step 2.

B02. Target population Every stadium of the

production process

B03. Customers Developing products

or services

Determining a product for and together with its target population,

and bringing that product to the market.

Developing products or services together with customers. But also

commercials and other things.

B04. Target population Developing products Developing the product together with the brand and the target

population

D01. Customers or external parties Developing

propositions

D02. Customers, suppliers,

employees, specialists and the

public

Developing

something

E01. Customers Developing products

and services

E02. Customers and people from

within the organization

Developing and

testing services and

products, seeking for

possible

improvements

Development of certain product propositions, together with

customers or externals

It is a fashionably term for something we have been doing for years

already. However, web 2.0 enables us to do new things. – We also

have a public function, and co-­‐creation improves our dialogue with

potential customers.

Customers provide us with useful information, but we also have to

provide customers with our insights and information in return.

An online platform that enables organizations to interact with their

customers, and to have a discussion about the organization and its

products or services.

Appendix II:

Definition of

co-­‐creation

by

interviewees

82

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