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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. 21
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
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