Don’t limit co-creation to just problem solving or new product definition; use it to define new markets to grow into- Tony Atti

DHL, the global market leader in logistics, is part of the world’s biggest mail and logistics services company Deutsche Post. DHL provide an excellent example of a company which are using co-creation (where the company and customers collaborate) to generate new business ideas. This is particularly evident in their recent Parcelcopter project. This short  video shows the essence of the Parcelcopter project. (DHL, 2017)

Customer Co-Creation: what is it?

The term co-creation was coined by Prahalad and Ramaswamy (2004) as ‘the joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context’. Basically, co-creation means the company and customer work together to, in this case, produce new ideas. This can have a number of benefits for a company, offering a new way to innovate and also boosting customer satisfaction. The more the customer feels that the company is listening to them, embracing and delivering their specific needs, the more the customer wants to be associated/engaged with this particular company.

How does DHL apply Customer Co-Creation?

DHL has used co-creation to improve supply chain logistics with its Parcelcopter project. DHL noticed that their customers wanted to help in rethinking about how to improve their supply chains and thus improve their business performance (customer value proposition). DHL set up some innovation centres and invited their customers to come and interact with DHL employees to share ideas with each other (key resource and process). From this collaboration, a number of new ideas have emerged, including the Parcelcopter. The Parcelcopter (see video for further explanation) is an idea to use drones for delivery, which could improve DHL services. (DHL, 2017)

How well has Customer Co-Creation worked for DHL?

In the beginning, the co-creation concept was received with skepticism, both internally and externally. Customers thought it was a clever marketing/sales technique. The company was forced to take a strong look at its own structure and processes. However, the result has been well worth it. With this structure, customers as well as DHL benefit from the co-creation in distinctive ways. Co-creation aims to improve customer satisfaction/engagement. The customer is better served in this structure. It also aims to produce new ideas whilst lowering research and development costs for the company. There is some evidence suggesting that customer satisfaction improved after they begun using co-creation. According to Forbes, DHL’s co-creation efforts resulted in customer satisfaction scores rising to over 80 percent and a higher level of customer retention (joint profitability). DHL’s co-creation scheme has also helped them to produce a lot of other new ideas beside the Parcelcopter. It is unclear whether it has also allowed them to reduce research and development costs. The institutional environment, in this case,  is less relevant because of the used co-creation platform (customers only interact with DHL employees to share ideas). The feasibility requirement is met, the co-creation concept is implemented and proved to be successful.

Implementing a customer co-creation practice as part of their broader innovation research work is shown as a successful idea. It could also be a useful consideration for other companies to follow the path of DHL.

 

Sources

Prahalad, C. K., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of interactive marketing, 18(3), 5-14.

 DHL.com (2017). Available at: http://www.dhl.com/en/press/releases/releases_2015/group/dpdhl_group_to_foster_global_growth_through_pioneering_innovation_approach.html. Accessed on 02/03/2017