All posts by 345791wv

How Co-Creation Complements Internal R&D Activities and Drives Innovation: The Nivea Case

April 21, 2015 345791wv Leave a comment

You might have heard of Nivea’s new product: Nivea Invisible for Black and White (check out all the available products: http://www.en.nivea-me.com/products/Deodorants/black-and-white). This ‘revolutionary’ new deodorant is Nivea’s latest co-created product.

Throughout the development process of the deodorant, Nivea has worked with consumers, not against or separate from them. This case is a nice demonstration of how co-creation can become a valuable part of a business’s innovation strategy.

Co-creation process

Source: SlideShare (2015)

The figure shows how Nivea enabled customer empowerment in the development of the deodorant. In addition to the figure, I would argue that there is also a step 0, which is the problem discovery phase, applicable for both the consumer (discover your own need) as well as Nivea (hunt up the customer need and set up the co-creation program). Stage 0 forms the basis for step 1, which is more the translation of consumer needs into user solutions (thus assuming that a consumer knows his/her needs).

The co-creation program shows a niceand Nivea, where the consumer is involved in the new product development. This involvement leads then to the development of better products and at the same time reduction of costs and risks in general if customers in a given domain are willing and able to deliver valuable input. This effect is also amplified because the Internet allows companies to build strong online communities through which Nivea can listen to and integrate thousands of customers from all over the world.

What Can We Learn From Nivea’s Co-Creation Program?

Looking at how co-creation can shape an organization’s internal processes and can foster innovation, it is important to note that much of the value lies in the co-creation process, rather than the end results. When companies aim to integrate co-creation ambitions, they should set up strong team-based responsibilities and metrics for the process instead of the outcomes. Moreover, incentives tied to both the process and the results should then foster innovation through trial and error. Co-creation is not necessarily the best way of product development, but it surely adds value in many ways, most of them tied the process in which consumers are involved in the product development:

Better advertising interpretation
Consumers’ understanding of the companies’ decision making
Identifying lead users to influence the online communities
Products that better reflect consumer needs
Increasing (post) word-of-mouth

In the case of Nivea, consumers had full empowerment. In both the generation of ideas and solutions as well as the selection of the best ideas, consumers were put in charge. Additionally, consumers were given the opportunity to provide improvements of the ideas and raise questions or concerns about the ideas. From a methodological perspective co-creation with consumers proved to be most effective when qualitative and quantitative techniques are applied in alternating sessions for ideation and for evaluation and selection.

Key Take-Away

In the end, co-creation needs to be considered as a programmatic approach that aligns internal R&D capabilities and external knowledge and creativity beyond single projects.

References

http://blog.hbs.edu/dighbs/some-thoughts-on-netnography-and-digital-co-creation/

http://www.ideaconnection.com/open-innovation-success/Nivea-Co-Creates-with-the-Crowd-to-Eliminate-Stain-Pr-00365.html

http://www.slideshare.net/HYVE/2011-0228-nivea-invisible-for-black-white-deodorant

http://www.michaelbartl.com/article/getting-closer-to-the-consumer-how-nivea-co-creates-new-products/

Articles, Opinion

What Drives Consumers To Spread Electronic Word Of Mouth In Online Consumer-Opinion Platforms?

April 16, 2015 345791wv Leave a comment

Introduction

The advancement of the Internet allows everyone to share opinions and experiences related to products with complete strangers. Electronic Word of Mouth (eWOM) is a relative new concept but already highlights an increasing importance in shaping consumer purchase behaviour. There has been a lot of research on the effectiveness of eWOM, but little attention has been given to why consumers spread positive eWOM.

Difference WOM and eWOM

eWOM differs from traditional word-of-mouth (WOM) in many ways. For example, eWOM involves multi-way exchanges of information in asynchronous mode and various technologies. Other examples are that eWOM is more accessible and measurable than traditional WOM. The measurement of eWOM is made possible due to advanced technologies and increased quantities of eWOM. A good example of a company that still relies on traditional WOM is BzzAgent (https://www.bzzagent.com/). A good industry where eWOM becomes increasingly important is healthcare.

Theoretical Insights and Practical Relevance

The authors find four perspectives that explain why consumers spread eWOM in online consumer-opinion platforms, based on the social psychology literature: egoism, collectivism, altruism and principlism. In short, egoism refers to serving the public good to benefit oneself. Collectivism means serving the public good to benefit a group. Altruism refers to serving the public good to benefit one or more others. Lastly, principlism refers to serving the public good to uphold a principle (typically a moral principle). An additional variable that is taken in their conceptual model is knowledge self-efficacy, which is a personal judgement of one’s capability to execute actions required for designated types of performances. The last hypotheses is then stated as ‘the higher the knowledge self-efficacy, the higher the tendency to spread eWOM’.

I believe that the latter hypotheses is most interesting because it can be, more than the other perspectives, influenced by companies. The challenge for companies is to provide a broad variety of product related information and interact with consumers. This should increase consumers’ level of expertise and mastery of experiences, thus increasing self-efficacy and the motivation to provide eWOM, which in the end can increase purchase intentions. I’d like to hear your opinion on this!

The statistical results show that sense of belonging (construct of collectivism), reputation (construct of egoism) and enjoyment of helping (construct of altruism) have significant effects. Sense of belonging had the most impact on consumers’ eWOM intention. Thus, for companies it is important to take into account social factors to affect consumers’ eWOM intention. When companies foster this, consumers can benefit from the community, which help them with their purchase decisions.

Source: Cheung & Lee (2012)

Conclusion and Further Reading

Though there are some significant findings that open up possibilities for companies to actively affect consumers’ eWOM intention, it should be noted that there are still other constructs that need to be taken into account (for example, rewards, costs and social influence) as well as the exploration of motives that drive users to spread negative eWOM. An interesting paper (for further reading) from Willemsen (2013) highlights the challenges of eWOM, as a consumer decision aid, from two perspectives, namely the consumer perspective and the company perspective.

References:

Cheung, C.M.K., Lee, M.K.O. (2012) ‘What Drives Consumers To Spread Electronic Word Of Mouth In Online Consumer-Opinion Platforms, Decision Support Systems, vol. 53 (1): pp. 218-225.

Willemsen (2013) ‘Electronic Word of Mouth: Challenges for Consumers and Companies’, retrieved from: http://www.uva.nl/binaries/content/assets/uva/en/research/phd/summaries/2013/06/summary-willemsen.pdf

Business Case

Is Exact A Co-Creating Company?

April 5, 2015 345791wv Leave a comment

Introduction

Since 1984, Exact has developed innovative software solutions for about 200,000 businesses worldwide and this number is still growing. Exact explicitly states that it wants to serve the entrepreneurial businesses with information technology by delivering sophisticated business software solutions and high quality services. But how does the company involve their customers in delivering these software solutions and is simultaneously able to offer high quality services? More important: what are the future implications for the company in their co-creation attempt with its customers.

Exact Business Model

The business model of Exact is based on a software-as-a-service model and allows customers access to the services provided by the company, in exchange for a monthly subscription fee. Customers are classified in light, medium and heavy users and pay an additional charge as usage of the services increases. Thus, Exact has evolved its services from a traditional Application Services Provider (ASP) model to a SaaS model where it is also important to note that the company is increasingly investing in cloud computing. This is because the dynamics of cloud computing are different and necessary changes can be implemented more quickly in favour of all customers.

How Exact Co-Creates With Its Customers

Especially in the service offerings to customers, Exact pursues to join forces with its customers. As customers use the service management solution, they provide user feedback that the company uses to improve its service offerings. The growing number of users using the service management solution shows that customers can help improving the quality of the offered services by providing feedback. Exact on their turn answers on the needs of customers by implementing incremental innovations in the service offerings. Thus, Exact is building on the modernized concept of Prosumerise, which is known as the joint responsibility of consumers, professionals and enterprises to improve and transform services.

Is There More Potential?

It is interesting to see that Exact has already taken a small step with this co-creation project to let customer participate in the improvements and further developments of the service management solution. However, critical for the success of their co-creation strategy is that Exact should encourage customers to provide feedback and suggestions which helps tie them more closely to Exact its services (Merlo et al., 2014). This results in better co-creation by increasing customer participation. According to Brunoe et al. (2014), Exact should benefit from innovation success, reputational results and organizational results, compared to non-creators. As Exact is still heavily investing in cloud computing, financial results cannot yet be seen. To cope with future uncertainty on co-creation, Exact should follow the recommendations from Gustafsson et al. (2012). They suggest that in this case, Exact should continue to combine co-creation and innovation using incremental innovations in their service management solution and dialogue with the customer. Opening up the dialogue with customer also results in better understanding the customer needs. Also, it is important to treat customers as equal partners and create a feeling of joint responsibility. Summing up, Exact is on the right way to become a co-creating company!

References

IEEE (2007) “The Business Model of “Software-As-A-Service”, retrieved from: http://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=4278733&url=http%3A%2F%2Fieeexplore.ieee.org%2Fxpls%2Fabs_all.jsp%3Farnumber%3D4278733, viewed on 3^rd April, 2015.

Exact Introduces Newly Flexible Delivery Model (2014), retrieved from: http://www.exact.nl/over-exact/publicaties/persberichten/3533-exact-introduceert-nieuwe-flexibel-opgezette-leveringsmodellen, viewed on 4^th April 2015.

Brokaw, L. (2014) ‘The Big Upside of Customer Participation’, retrieved from: http://sloanreview.mit.edu/article/the-big-upside-of-customer-participation/, viewed on 4^th April 2015.

Gustafsson, A., Kristensson, P., Witell, L. (2012) ‘Customer Co-Creation In Service Innovation: A Matter Of Communication?’, Journal of Service Management, (23), 3, 311- 327.