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introduction to the co-creation paradigm
Propelled by advances in global communication and information technologies, the nature of interactions among individuals and their environments has been changing rapidly, driving an ongoing metamorphosis of value creation in business, economy, and society. The centrality of personal and collective agency with the advent of the Web and the progression of new mobile technologies has accelerated the generation of data through interactions, the communication and exchange of information, and the democratization of value creation.6 Individuals—whether customers, employees, suppliers, partners, ﬁnanciers, or citizens at large—are playing out their different interests from both within and outside of traditional enterprises. 7 Nongovernmental and social organizations are taking increasingly assertive roles vis-à-vis corporations. Citizens and communities are engaging local and national governments in the deliberation of policies and the delivery of services. In all these cases, individuals are attempting to push through previously impervious institutional boundaries to express their various demands and expectations. In other words, individuals as active stakeholders want to be more intensively engaged in value creation than ever before.8 What is the signiﬁcance of this new age of engagement? As depicted in Figure 1-1, a fundamental implication is that enterprises—whether private, public, or social sector enterprises and whether established or at the
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figu r e 1-1 Value creation as co-creation
while providing an interface for your running data. then a Nike SportBand. artifacts. and 3.10 cr e at ing va lu e toget h er t h rough e ngagem e n t pl at for ms In 2006. which also served as an interface for your runs. steps. a running experience platform. processes. just when your energy started to dip. then the sensor could be placed inside your shoe. If you didn’t listen to music during your runs. after your run. let us illustrate: 1.i n t roduc t ion to t h e co . and social sector enterprises have the potential to converge on matters of wealth.c r e at ion pa r a digm 3 start-up stage—must be architected as a nexus of engagement platforms. pace) while you—the “stakeholding individual” of your running experience— enjoyed your run. track your progress. with the data being wirelessly transmitted to and stored on the iPod. and society in ways we are only beginning to grasp. analyze your performance. and interfaces—can create value together with stakeholding individuals. Either way. distance. with the communications tagline “Get connected to your running experiences. all stakeholding individuals as co-creators. For example. how private. organizing human agency to create value with. how engagement platforms—assemblages of persons. public. you could go to the NikePlus website and perform many functions related to your running experience with both your own data and with a community of runners. economy. 2.indd 3 23/12/13 6:58 PM .9 Using two examples from the private sector. and wellbeing. while positively transforming business.. welfare. how enterprises as a nexus of engagement platforms can connect value creation opportunities with value-creating resources in new “win more–win more” ways.g. an armband introduced by Nike in June 2009. The combination of data and music also enabled you to pull up your personal motivating tunes. If you ran with the Apple iPod.”11 It consisted of a smart sensor that gathered data (e. and for. offered a combined sensor and data storage option. map your S6342 Ramaswamy. or Power Songs. Nike launched NikePlus. you could chart your run. an established enterprise (Nike) and a start-up (Local Motors).
marathon organizers or ﬁtness instructors). and between individuals and their trainers and coaches. civic. such as ﬁnd running buddies.g. The digitization of momentary analog data facilitates linkages between ofﬂine and online interactions.. but they also represent new value creation opportuni- S6342 Ramaswamy. all purposefully designed with the intent of generating running data-based outcomes of value to runners and other stakeholders both external and internal to the Nike enterprise (e. NikePlus is enveloped in a larger ecosystem of capabilities—a meshwork of social. or trainers. the voiceover of Olympic athletes through the Apple iPod that announces your progress and milestones achieved). share data with your family.4 i n t roduc t ion to t h e co .c r e at ion pa r a digm runs. Various domains of human experiences unfold as a function of the involvements of individuals in the environments afforded by NikePlus.g. during. The smart sensor was a required artifact to participate in an assemblage of other artifacts. which NikePlus links with. such as engaging with music or data while running (e.indd 4 23/12/13 6:58 PM . These RunReporters can potentially enhance the running environment of a particular runner in a marathon run or the experience of a spectator at the marathon event.g. and individuals in managerial functions at Nike). one can imagine Nike taking any of the environments afforded to runners and enabling connections to the environments of other stakeholders (e. and interfaces. the Nike RunReporter platform. as well as communities of runners in new roles. connect with running events that Nike and others organize. and natural communities whose capabilities can be leveraged as co-creative resources to afford new value creation possibilities. processes. The co-creative resource networks not only generate additional value from the perspective of runners (the traditional customer base of Nike Running). The ways in which individuals could affect their running environments— before. and after a run—are multiplied. business. You could also engage in a whole host of social interactions with other people that would not necessarily revolve around your running data. In extending the intentionalities of NikePlus engagements. Thus. coaches. and even invite and challenge other runners. or engage in conversations with other runners through the NikePlus-enabled community. attempts to engage nonprofessional runners who can report live from marathon running events (like citizen journalists)..12 For instance. persons. friends. between individuals and the community of runners. trainers.. coaches.
in turn.c r e at ion pa r a digm 5 ties in of themselves. First. The new task for managers and employees. This. linked environments of interactions across the NikePlus extended engagement platform and the meshwork of communities enveloping it in S6342 Ramaswamy. led to the development of new assemblages coming together as the NikePlus Fuelband. For instance. as co-creators from within the Nike enterprise. Nike took advantage of the Apple iPhone’s built-in accelerometer and GPS to launch its NikePlus GPS app. This. drawing on other resources in the Nike enterprise ecosystem. through which developers in Apple’s ecosystem could provide applications.indd 5 23/12/13 6:58 PM . such as the ability for a trainer to interact with a group of runners and coach them both individually and as a group. a wristband that can be worn throughout the day. decision makers at Nike have to reﬂect on and use the insights gained to personally and collectively virtualize the co-creative capacities of Nike’s strategic architecture— multiple. NikeFuel evolved from the NikePlus engagement platform. by looking at NikePlus from a “trainer as customer” perspective. which helps you set active lifestyle goals and stay motivated throughout the day. Nike actively collaborated with Apple in integrating runner engagement with music and data through the iPod interface. the events that give rise to their life experiences through NikePlus. in turn. and what is meaningful to them. Thus. Nike has also leveraged the capabilities of partners into the Nike enterprise ecosystem. Nike was able to imagine new environments of interactions that connect with NikePlus. coaching. provided you did not mind running with your iPhone. led Nike to leverage meshworks of running. extending its value beyond running to other sports and making lifestyles as a whole more active. After Apple launched the iPhone in 2007. along with its App Store. This app could collect your running data without the need for a separate shoe/armband sensor. like a watch. and training communities to afford new environments of interactions and potentially new outcomes of value for all involved. The extended Nike Plus Fuelband keeps track of every step you take and every move you make and converts all your daily activities to a common metric called NikeFuel. Further. is to pay attention to the embeddedness of NikePlus in the daily experiences of individuals to not only gain a deeper understanding of the involvements of people but also of their contexts of engagements.i n t roduc t ion to t h e co .
13 Thus. the NikePlus ecosystem S6342 Ramaswamy. • • • • • • • • Most signiﬁcantly. engender stickier brand collateral. and through real-time analytics be able to co-create a running course that did not include high–pollen count areas. and enhance new sources of value creation advantage. foster private-public-social sector partnerships. For instance. combine that with open environmental data from your city. Nike can continuously identify and act upon new growth opportunities with its enhanced global capability ecosystem. if you were an urban NikePlus user with atmospheric sensitivities—for example. build deeper relationships and trust with the communities served and whose resources it depends on. experiment with new offerings quickly. the ultimate goal is to actualize new co-created outcomes that expand value for all participating individuals in win more–win more fashion.c r e at ion pa r a digm the ever-expanding Nike enterprise ecosystem. Nike’s engagement platforms. social community data. open public data. enable its extended enterprise ecosystem to: • learn directly from the interactions of its customers and other stakeholders. Nike’s extended enterprise ecosystem is a multiway learning engine. Besides attracting new adherents to the Nike brand through the largest community of individuals it has ever assembled. facilitating dialogue with and among stakeholder communities. It can enable the combining of consented individual private data. This opens up new avenues for innovation in the NikePlus ecosystem. allergic to pollen—you would be able to share ﬁtness and sensor data with others. generate new ideas rapidly.6 i n t roduc t ion to t h e co . leverage open and social resources.indd 6 23/12/13 6:58 PM . and other data sources. get direct input from individuals on their engagement preferences and connect with their experiences. and enterprise and network resources. ultimately.
3 million runners. with over 900 million miles run. By the end of 2008. burning more than 14 billion calories. the beneﬁts of NikePlus included reducing the cost of marketing through the positive word-of-mouth created. Nike had sold over 1. We’re in the business of connecting with consumers.6 billion U. Nike’s nonmedia spending of $457. Nike’s share of the U. over 150 million miles had been uploaded by more than 1. running shoe market. People are coming into it on average three times a week.c r e at ion pa r a digm 7 boosts product sales and enhances returns through the increased motivation and involvement of individuals. president of the Nike brand.indd 7 23/12/13 6:58 PM . Trevor Edwards. despite a sluggish economy.3 million NikePlus iPod Sport Kits (at $29 apiece) and over 500. through NikePlus. with over 40 million miles run. With NikePlus.”15 Instead. compared with 47 percent in 2006. NikePlus is a very different way to connect with consumers. Nike’s marketing director.5 million.S. more than 7 million runners were participating in NikePlus.i n t roduc t ion to t h e co .S. Charlie Denson. By August 2009. “We’re not in the business of keeping the media companies alive. running shoe market had increased to 61 percent. Nike began making investments in extending the NikePlus platform further and enhancing its social media capabilities to enable runners to connect with one another and with Nike in new ways. Hence. remarked. and mitigating the risk of capital investment through enlightened experimentation because it could now pilot major investments through its extended ecosystem.9 million surpassed its traditional media spending of $220. Seeing the growth potential. the company shifted its spending away from traditional media like TV networks. runners had logged 100 million miles on NikePlus. By mid-2013. set a stretch goal in 2007 of having 15 percent of the world’s estimated 100 million runners participate in the NikePlus ecosystem.000 runners from more than 170 countries used the NikePlus website in just a year. By 2007. More than 600. sharing the risk of product-service development with partners by getting them to coinvest and participate. Nike’s managers and employees have coevolved their learning environments with customers and other platform S6342 Ramaswamy.000 NikePlus SportBands (at $59 apiece) and had captured 57 percent of the $3. By the end of 2007. By mid-2009. So we’re not having to go to them.14 The subsequent growth was relentless. For Nike.
color matching. Nike launched PHOTOiD. Nike attempts to connect better with NikeID platform users’ experiences of personalization. “The more we can open up NikePlus.8 i n t roduc t ion to t h e co . in partnership with Instagram. and data-driven insights. community. together with TechStars. Nike blazed new paths of transformative engagement by opening up the application programming interfaces of the NikePlus platform to other developers to expand the value frontier through new potential applications designed around the data generated through NikePlus.”18 Now. in early 2013. Further. The only reason to close it out is because you actually don’t believe that you have a strong enough product for others to want to take it and do good things with it. social sharing. selected athletes can engage with physical materials in crafting unique shoe designs. mentor-driven” experience through a network of resources that aims to foster innovation and build offerings that “inspire and assist people to live more active. We’re introducing a new chapter that will take the running experience to a new level in terms of connectivity. Its NikeID iPhone app now enables you to take a picture of an object in your favorite color and use the picture rather than the color wheel to specify colors. let us turn to the shoe itself—the traditional artifact designed. Through another engagement platform. developed.. continuously learning about what matters to them—for example. healthy lifestyles. one of Nike’s in-house shoe designers. you can start with a design from the community at large. Simultaneously. and offered by Nike through its conventional chain of enterprise activities. which enables you to take the captured moments of your life and commemorate them on your feet by applying colors from S6342 Ramaswamy. Ofﬂine. In early 2013. in New York and London). noted.”16 Further.g. vice president of Global Category Running. NikeID. Online. and play with colors and shapes.c r e at ion pa r a digm participants. with the intent of bringing together ten start-ups for an “immersive. at the NikeID Studio Live (e.”17 Indeed. Nike provides some of the tools it uses internally in its own product design and testing labs. In April 2013. Nike also launched a start-up Accelerator program. the Nike enterprise has now opened up the creative design of the shoe to customers and enthusiasts. as Stefan Olander.indd 8 23/12/13 6:58 PM . Nike’s global director of consumer connections. remarked. Jayme Martin. the better. or your own. “The NikePlus Running experience is one of the most personalized and motivational ways we serve the runner.
and offerings. The opening up of shoe design enhances the experience and accessibility not only to individuals but also to collectives like a school soccer team designing with a particular set of team colors. wear. its engagement platforms could be enhanced further to co-create better outcomes.indd 9 23/12/13 6:58 PM . the NikeID design engagement platform entails: • community relations with customers. For instance. inﬂuencers. invite others to comment on them.i n t roduc t ion to t h e co . NikeID is a product design platform involving not only users of shoes but design consultants. and product design concepts and custom artifacts such as a NikeID card and the Nike customized shoe itself as offerings. and facilitate the emergence of a unique shoe design for the team. enthusiasts. and spreading of design ideas. sharing. collecting. as well as people with product design responsibilities within Nike and partners such as R/GA. and fatigue on the shoes. These labs test friction. Google+. • • • join t va lu e cr e at ion based on sta k eholder e x per ie nces While Nike has innovated impressively in the ecosystem in which it participates. Nike recognizes that S6342 Ramaswamy. While lab tests are important for assessing technical performance. or purchase your personalized shoe to arrive within four weeks. Nike brings runners into its laboratories. Twitter. and decision supporters. the team-locker interface allows individuals to generate and share designs. both entail particular states of stakeholder relations. In the latter case. involving runners as in-house testers. product personalization decisions individually and consensus building decisions collectively (to design a team shoe). and back to Instagram. While NikeID engages a circle of stakeholders distinct from NikePlus.c r e at ion pa r a digm 9 the image to your favorite Nike Air Max shoe. Consider Nike’s wear-testing platform. You can then share your design through Facebook. Pinterest. decision making. a digital advertising agency. and they experiment with new materials. Tumblr. Nike has long involved runners in testing its products. where it assesses the functional performance of shoes. Thus. ideation. and designers (amateurs and professionals alike).
more meaningful dialogue with individual testers and potentially among a community of testers. allowing Nike to capture customers’ experiences with its shoes. Such a dialogue would have signiﬁcant strategic value.c r e at ion pa r a digm they provide only limited data on what really counts: the actual experiences afforded by interactions between the runner’s body. and the shoe. these interactions between Nike and product testers have rarely been co-creative.” as this real-world testing is called. exchanging impressions as a group and codesigning the shoe with a considerably richer and broader set of inputs. test them in the natural environment in which they run. Yet.10 i n t roduc t ion to t h e co . “Wear testing. centered on the human experiences of individual testers. designers. and send back their comments. with experiential learning. The feedback is given through a website that creates a direct line of communication between the testers and Nike’s shoe designers.indd 10 23/12/13 6:58 PM . and manufacturing associates who evaluate features and determine their additional value to the ﬁnal product. and their passion for Nike can be infectious. removes the “lab rat” aspect of product testing. with issues originating from the community. and rapidly created knowledge generating additional enterprise and stakeholder value—internally for Nike analysts and designers and externally for customers. realtime insights. as evidenced by the high demand to become a Nike product tester (visible in many comments on the Web). blood. So Nike also sends shoes to a subset of self-selecting runners. Wear testers have traditionally been viewed as passive sources of data to be analyzed by the “shoe experts”—product development teams consisting of analysts. and perspiration of real people who are running in real weather and under real road/trail conditions. Comments posted on websites and online forums that provide unsolicited feedback on new shoes hitting the market suggest that wear testers have very different opinions from those of shoe experts. The dialogue would be decentered across space and time. Many wear testers do want to help Nike. Envision wear testers working as a community with Nike’s in-house designers. the running environment. The generation of such highly contextualized information on interactions requires having access to the ﬂesh. This interaction has great value for both Nike and the testers. who are asked to wear the shoes. product managers. Nike can encourage richer. S6342 Ramaswamy.
and expertise is necessary for wear testers to evaluate shoes and participate effectively in a two-way conversation. Nevertheless. including other testers. Nike could do a foot scan—say. thus.indd 11 23/12/13 6:58 PM . Wear testers are not typically trained in shoe design and development and thus do not know the lingo of shoe design.c r e at ion pa r a digm 11 Nike wear testers typically do not have much transparency into how the data they collectively generate is used by Nike to (re)design shoes. a future customer considering that same type of customization could beneﬁt from knowing the tester’s experience. manage their own assessment of risks versus rewards in engaging with Nike (based on why and how Nike makes certain decisions) to create mutual value. Moreover. This precaution may be to prevent leakage of information to competitors. For instance. For example. Any attempts to make interactions more co-creative must also facilitate reﬂexivity—that is. In fact. some wear testers have a lot of expertise on the particular features they have designed. some wear testers modify their shoes to better match their feet or performance needs. Wear testers’ evaluations could even be made visible to consumers after the launch of the new product. a person wearing orthopedic supports may remove the insoles of a shoe. individuals being able to “feed back into” the causeeffect engagement loops in the platforms. S6342 Ramaswamy. foot scans could become another channel of interaction between the enterprise and the wear testers. providing “feedback on the feedback” would deepen the conversation about the product. and their changes could be posted for other testers to see. tools. if a wear tester tested a custom option. wear testers are typically forbidden from discussing the shoes they are testing with anyone. Nike could eventually leverage these capabilities in designing shoes customized for personal ﬁt. How is the observed wear to be interpreted by the analyst? For instance. For instance. Nike could ask wear testers to identify when they modiﬁed a shoe and why. at selected store locations or through mobile smartphones—to get an exact match of the wear tester’s foot. Access to domain knowledge. Wear testers can become frustrated when trying to communicate their evaluation of the shoes to Nike in a way that is not only meaningful to testers but to analysts and designers as well. Testers and consumers alike could.i n t roduc t ion to t h e co .
Sales associates can stop any time in the middle of a module and restart where they left off. which also includes other associates in the store. SKU features user-friendly navigation. with the various sports laid out like a colorful “underground” public transportation map (think London Tube or Paris Metro).c r e at ion pa r a digm Thus. from product development to marketing and other functions associated with Nike Wear Testing.indd 12 23/12/13 6:58 PM . While the sales associate is the ostensible focus of the SKU platform. Called Nike SKU (Sports Knowledge Underground). and Nike to create the learning agenda together. SKU also encourages the sales associates to correlate their skills levels with the amount of S6342 Ramaswamy. and competitive advantage—by Nike’s internal groups capitalizing on experiential learning. dialogue. Store owners can customize SKU to the speciﬁcs of their store by choosing only those modules pertaining to sports for which they carry the Nike line. For instance. which is well suited to the busy schedules of salespeople and the short attention spans of the young people who comprise most of the sales force in stores. Each module requires three to ﬁve minutes to complete. one of Nike’s challenges is that it does not directly manage the quality of end customer experiences at the thousands of retail stores worldwide that carry Nike shoes. and knowledge. evolv ing e ngagem e n t pl at for ms ev ery w h er e in t h e e n t er pr ise ecosyst em Engagement platforms can evolve anywhere in the ecosystem in which an enterprise operates. So the company developed an online training platform to engage retail salespeople.12 i n t roduc t ion to t h e co . They can ensure that sales associates complete certain modules by a certain time. store owners also actively participate as stakeholders by being in the associates’ learning environment. when it comes to retail sales. apparel. and equipment play in those sports. the store manager. value creation. this sales training platform gives sales associates access to a series of self-learning tools that they can use at their leisure to develop an in-depth knowledge of different sports and the roles that Nike shoes. access. and reﬂexivity build on one another in the co-conﬁguration of co-creation experiences. transparency. The value to Nike goes beyond economic outcomes to the ongoing generation of new strategic capital—sources of innovation. insights. Nike SKU allows the store sales associate.
Nike aims to use sports as a way to accelerate development and drive social change through partnerships with Ashoka (a social organization in the citizen sector) and its Changemakers platform. even signing onto the Global Compact and using a “triple bottom line” approach that supplements its economic bottom line with explicit social and environmental responsibilities. and other factors that contribute to overall sales performance.i n t roduc t ion to t h e co . Nike demonstrated an increase in product sell-through of about 4 percent in pilot tests in 2007 of samestore comparisons with and without SKU. Nike and Ashoka have jointly hosted GameChanger competitions to ﬁnd innovative solutions and catalyze a community of Changemakers around the world. Through such partnerships. they have sought solutions for using soccer as a mechanism for social change. said in 2010: In the early days. It has since actively addressed these issues. but we ﬁnally ﬁgured out that we could apply our two core competencies—design and innovation—to bring about S6342 Ramaswamy. a consumer products company. Through an open call to all types of individuals and organizations (charitable organizations.c r e at ion pa r a digm 13 their sales. We are. Store associates can learn more rapidly from other associates through collaborative communication tools that foster social interaction. In the past. As Mark Parker. It took us a while. and ads and events. our “systems” consisted of only those things that helped us build better shoes and shirts. the customer satisfaction these sales generate. Nike is attempting to mesh together co-creative capacities of social and civic communities with those of its business communities. or public entities). Nike beneﬁts from sales associates developing their skills and by stores increasing their sales and customer satisfaction. private companies. CEO of Nike. Nike has been subject to allegations and the activism of human rights stakeholders with respect to child labor in its manufacturing operations. For instance. Going beyond product sales. This social change platform seeks to recruit societal stakeholders using sports as an instrument of social change. after all.indd 13 23/12/13 6:58 PM . In-depth training through dialogue and transparency is ever more crucial in a new world of retail engagement in which customers (users and enthusiasts) are often more informed and passionate about a sport than the retail salesperson.
harnessing ideas and insights (e.14 i n t roduc t ion to t h e co .g. encouraging entrepreneurship and decision making (e. facilitating training and marketing (e. and social change. intensiﬁed and enacted through platforms of engagements. S6342 Ramaswamy..indd 14 23/12/13 6:58 PM . and socially. we willingly gave up old ideas to shift our thinking toward a better.g. We saw that doing the right thing was good for business today—and would be an engine for our growth in the near future. Co-creation is joint creation and evolution of value with stakeholding individuals. NikePlus). labor. Nike Retail Stores). virtualized and emergent from ecosystems of capabilities.. Nike Accelerator). NikeID)..g. We opened the aperture of our lens and discovered our potential to have a positive inﬂuence on waste reduction.. expanding wealth-welfare-wellbeing. and expanding the circle of value creation stakeholders (e. let us now summarize the shift in thinking to value creation as a co-creation.g. smarter. Nike-Ashoka Changemakers). and actualized and embodied in domains of experiences.cr e at ion Now that we have seen how co-creation functions in the Nike enterprise ecosystem. managing natural resources.19 In summary.c r e at ion pa r a digm environmental.g. faster and ultimately more sustainable future—ﬁnancially. • • • • • t h e shif t in t hink ing to va lu e cr e at ion as a co . NikePlus. environmentally.g. and renewable energy and factory conditions. enabling the design of offerings (e. NikeID). climate change. With each new discovery and partnership. engagement platforms can be everywhere in the ecosystem in which the enterprise operates. Nike SKU).g. designed for varying purposes: • • as offerings themselves (e.. supporting the delivery of offerings (e...
All stakeholders represent a resource and opportunity base. or allowing customers more variety in customizing products and services from an enterprise menu. if we represent organizations with the color blue and stakeholders with the color yellow. and open innovation. stakeholder value comes before enterprise value. enterprise value comes S6342 Ramaswamy.c r e at ion pa r a digm 15 The co-creation-based view of value creation views organizations as creating value together with stakeholding individuals. In co-creation. co-creation is both the means and the end. both of which yield the color green—the color of co-creation. There are potentially inﬁnite opportunities of joint value creation. consolidation of gains. from consumers to employees at all levels. with its continual friction between collaboration and competition in co-creation can be a source of competitive advantage.20 Returning to Figure 1-1. In contrast. Value creation strategies today call for a new spirit of discovery. as it were. and further exploration. As depicted in Figure 1-1. connecting them with appropriate value creating resources. as is implied more often in the popular parlance of co-creation.indd 15 23/12/13 6:58 PM .21 The mixing of blue into yellow is a very important distinction. Managing the infrastructure of the ecosystem. Individuals in their role as managers must rethink the nature of both resources and opportunities. because this represents bringing organizational capabilities to bear in creating a platform that opens up stakeholder activities to co-creation. is about extending the enterprise resource base through practices such as crowdsourcing. then co-creation can occur in two fundamental ways: by mixing yellow into blue and/or mixing blue into yellow. as it were. the mixing of yellow into blue. requires managers to explicitly consider ways in which they can navigate risk-reward relationships in networks. strategy is not a game with knowable rules and ﬁnite options. In other words. and stakeholder knowledge and skills at large. In these cases.22 tapping into user communities and social networking among customers for outbound marketing and sales activities of enterprises.i n t roduc t ion to t h e co . The goal of the strategist is to effectively navigate through the fog of value creation opportunities. Gaining privileged and timely access to these resources and opportunities. they are also partners with all other stakeholders. analysis. involving experimentation. mass collaboration. continuously evolving in a virtuous cycle of “win more–win more” outcomes. locus of competence. and how access to competence is developed.
engaging stakeholders personally and collectively in creating value together and expanding how the enterprise connects value creation opportunities with resources. which afford environments of interactions to intensify co-creating actions and generate mutually valuable outcomes. Rather. and natural communities in which individuals are embedded to virtualize new co-creative capacities of value creation. In both cases. building e n t er pr ises as a n e x us of co . recognizing that actualized value is subjective and varies as a function of individuated experiences of co-created outcomes.indd 16 23/12/13 6:58 PM .16 i n t roduc t ion to t h e co . public. bringing yellow into blue is about “bringing the outside in”—that is. As we expound in detail in this book. Bringing blue into yellow is about “bringing the inside out”—that is. 3. bringing stakeholders and their capabilities into the enterprise activities of value creation. civic. leveraging the capabilities of meshworks of social. The metaphor of “color-mixing” is important because co-creation goes beyond bringing pieces together as many cooperative (i. building ecosystems of capabilities together with other private. as does the yellow. the co-creation paradigm requires a shift in our thinking to: 1.e. “cocreation” essentially represents a transformation on both the blue and the yellow sides: the blue turns green. as it were. this requires engagement platforms. and 5. processes. From the perspective of the blue side. 2. business..cr e at ion pl at for ms of e ngagem e n ts As should be evident by now..c r e at ion pa r a digm before stakeholder value. and social sector enterprises to expand wealth-welfare-wellbeing in the economy and in society as a whole. as the S6342 Ramaswamy. and artifacts. 4. But the green still has blue and yellow side capacities inside of it. Rather. “co”-operating) or even collaborative (i. bringing enterprises and their capabilities into the stakeholders’ activities of value creation. interfaces.e. enterprises are no longer just a conventional chain of activities (nor are ﬁrms just a nexus of contracts). “co”-laboring) efforts tend to be. conceiving platforms of engagements as purposefully designed assemblages of persons.
We illustrate how with the power of the Web any enterprise can now architect itself to access open and social network resources globally and turn ﬁxed costs into variable ones that can be scaled up or down. and maintenance.24 Local Motors begins with a new view of how to leverage global resources on the one hand and a blank slate for the design.indd 17 23/12/13 6:58 PM . enterprises are now a nexus of co-creation platforms of engagements through which individuals exercise their agency in creating value together based on individual human experiences. exploring how it has designed its entire organizational form this way—from the design and development of automotive vehicles to their modiﬁcation. It has parceled out some elements of its value creation system to a S6342 Ramaswamy.c r e at ion pa r a digm 17 figu r e 1-2 From conventional enterprises to co-creative enterprises Nike example suggests. enterprises like this one must compel co-creating agents to engage and intensify value through purposefully designed engagement platforms.i n t roduc t ion to t h e co .23 With this new vision of organization life in mind. and postdelivery platforms of engagements on the other. delivery. development. resulting in much lower capital intensity and better risk-reward relationships. let us turn to the example of Local Motors. Leaner and more ﬂexible than their industrial era counterparts. building. manufacturing. as summarized in Figure 1-2.
it must also rely on an enterprise network of partners like Dassault Systèmes. it uses an open supply chain platform where any supplier of components. an automotive product design platform that involves a community of over 5. with Local Motors providing the training. Together. or subassemblies can participate as the manufacture of the chosen design is settled upon. You can share the car-building experience live with other participants. operators. While Local Motors relies on an open and social network of global resources. and communities of truck drivers on the one hand and increasingly sophisticated software. parts. Moreover. where the conventional “aftermarket” is now an open “in-market” where anybody can offer accessories for a particular automobile for which component data are available to all. one of the global enterprise leaders in design tools and a key partner and stakeholder in Local Motors’ capability ecosystem. and postdelivery activities. Local Motors. these components offer new sources of agency and experience-centric opportunities for value creation. Once a winning design is chosen. the automobile itself can be seen as a product-service offering platform of engagements involving ﬂeet owners. and it has acted as a nodal enterprise in the ecosystem by providing intellectual leadership and by linking together platforms of engagements for design and development. and remote interfaces on the other. and support as you build the car over two three-day weekends. delivery. The integration of platforms into the ﬁrm’s boundaries is a function of the unique arrangement that the ﬁrm can co-create with its stakeholders through the global use of resources.indd 18 23/12/13 6:58 PM . Then there is the micro-factory with a car-building platform.c r e at ion pa r a digm portfolio of partners. The strategic architecture of the Local Motors enterprise entails. where you are the lead builder. however.18 i n t roduc t ion to t h e co . As communications and information technologies advance. embedded intelligence. for example. knowledge.000 (amateur) designers worldwide who participate in its periodic design contests for a new car model. As a buyer of the car. tools. Dassault Systèmes offers platforms for enabling better design engagement through 3D S6342 Ramaswamy. and skills all along the activity chain. you can choose a custom car skin and personalize accessories to your taste from an online website. fabricates only the composite frames in a local micro-factory in which the car is built. while controlling core elements of manufacturing.
c r e at ion pa r a digm 19 visualization.25 While rhizomatic organizational forms similar to Local Motors are spreading. Thus. and engage in interactions of value to them. Dassault Systèmes software tools consisted of 3D design objects in a project ignition kit. simulation. and give feedback. For example.indd 19 23/12/13 6:58 PM . a city. but rather BMW sought to take BMW’s Ultimate Driving Machine beyond working for the driver and passenger. and in which it participates. in the fall of 2012. computer-simulated testing and analysis. and the world at large. This was not a new vehicle design competition. packaging and component designs. individually and socially. the U.000 designers and enthusiasts in the Local Motors community participated in this combat-support vehicle design challenge. which is integrated into the Local Motors platform. established enterprises are embracing the essence of such enterprise ecosystems. empowering individuals to share their ideas. an established enterprise. Local Motors leverages capabilities in the meshwork of communities in which it is enveloped. and prototyping tools. participants can visualize and explore new products. it aimed to stimulate new ideas in developing a city car for the year 2025. even indirectly. incorporating and discussing novel concepts and ideas from peers. Through its Web browser– based. BMW. The Local Motors example suggests how new engagement models can be designed all across the value chain of enterprise activities using engagement platforms as the very basis of enterprise value creation.S. teamed up with Local Motors to put on the BMW “Urban Driving Experience Challenge” through the Local Forge platform. with more than 150 validated design entries. “to beneﬁt an area. a community. In an interesting twist. Conducted by Local Motors through its design community. vote on designs.i n t roduc t ion to t h e co . at the same time. collaborative design platform. and tools to simulate the experience of the product—not to mention online and social media integration to foster intensive product design engagement. government used the Local Forge engagement platform (provided by Local Motors as a separate service offering in and of itself) to co-create a military vehicle design concept that could support two types of missions: combat reconnaissance and combat delivery-evacuation. The software and interfaces enable more effective social product development. More than 12. tools for storing and managing design data.” According S6342 Ramaswamy.
ranging from electric energy storage on board.26 It is worth emphasizing that an engagement platform is only as good as the engagement design of its constitutive components. A highly advanced CAD tool might suppress inclusivity of designer talent and also result in fewer technically desirable offerings. special CAD tools and software assets had to be developed to enable the integration of an aluminum cab and to meet other required design restrictions. Consider brieﬂy the Peterbilt enterprise. drive information sharing between cars. BMW focused on a set of speciﬁc available resources for the challenge. was to “transform the car into a value-adding socially responsible machine that contributes to our global wellbeing. the goal was to use the Local Motors crowdsourcing platform to design a BMW product that would act as an engagement platform itself. The same holds true for Local Motors. bringing in stakeholders who would otherwise not have been engaged. while Local Motors relies on a crowdsourced design engagement platform that taps into an open. as we saw in the Nike example. global pool of automotive design talent. the competition gave its community “the opportunity to identify and design premium vehicle features and functions that enhance the urban driving experience of the future. an application runtime for connected apps and functionalities within the car. For instance.” The objective of the challenge. multiple sensors (such as onboard camera. which posed a challenge to redesign its Class 8 RIG truck on the Local Motors platform. radar. people. and the city. and interfaces to access car functionalities from the outside world. according to BMW. the interfaces. augmented reality in the car.20 i n t roduc t ion to t h e co . neighbors. semiautomated driving functionalities. infrastructure. artifacts. S6342 Ramaswamy. ultrasonic. and laser).c r e at ion pa r a digm to Local Motors. highly connected telecom and cloud services. Local Motors continues to overcome resistance posed by internal development teams in client organizations.indd 20 23/12/13 6:58 PM . given varying expectations and goals.” Doing good in the context of urban environments was the binding theme for the challenge. Different individuals within the client organization and different clients have different intentionalities. and processes that underlie this engagement platform must be purposefully designed to actualize value to all co-creating stakeholders. In short. windows as display screens. Local Motors also needed to understand the intentionalities of participating individuals to foster creativity in a directed way. Thus. To ensure inclusivity.
how they organize. this may require training and mentoring to guide the behavioral transformation that the Local Motors platform requires. and for. Coase argued that a given ﬁrm would tend to expand its boundary until the cost of organizing within becomes equal to the cost of going to the marketplace. all participating individuals. as in the Local Motors example. have emerged to further lower the transactions costs (e. their boundaries.c r e at ion pa r a digm 21 who may not view the incursion of Local Motors onto their turf favorably. contracting.”29 Online marketplace ﬁrms (e. assets. and tools to facilitate discovery internally and externally. and coordination) of buying and selling goods and services.30 Further.28 Simultaneously.g. search.27 st r at egy a nd co . The concept of the co-creative enterprise as a nexus of engagement platforms that co-creates value together with stakeholders is all about connecting these new expansive resource and opportunity spaces.indd 21 23/12/13 6:58 PM .. Thanks to the Internet. the goal of the assemblage system is to ultimately transform value with. enterprises can now tap into new sources of value based on individualized human experiences through platform-based product-service offerings. Amazon). including new workﬂows that involve thinking about design briefs. This may require a new type of design environment and organizational adjustment to the change. In doing so. Simultaneously. new ﬁrms have emerged all along the traditional value chain that make it efﬁcient for other ﬁrms to outsource business processes to the market. Nobel laureate Ronald Coase famously argued in the 1930s that ﬁrms exist because of some market failure or a “cost to using the price mechanism. as organizational forms. This transaction cost–based view of the ﬁrm can be applied along every step of the chain of activities from conceiving to producing to delivering goods and services. which strategically blend the market with the boundary of the ﬁrm. why they exist. and how they collaborate and compete in heterogeneous ways.31 S6342 Ramaswamy.cr e at ion t hink ing Following the illustrative examples of Nike and Local Motors. it expands the frontiers of the very concept of enterprises.g. new organizational forms have emerged. In turn.i n t roduc t ion to t h e co . After all.. enterprises can now tap into talent and competencies anywhere in the world through platforms for mass collaboration and open innovation.
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