Tag Archives: value co-creation

Articles

Value co-creation in health care – New patient centric approaches

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Though customer value co-creation is not a new concept, tracing back to the 1970s when it was first discussed in the business literature (Janamian et al., 2016), it might be surprising (and even shocking) to hear that it found its way into health care only recently. With more options and more information available online, patients took on an increasingly active role in their health and wellness (Elg et al., 2012). This changed the traditional view of many health care systems where consumers were seen as having a passive, receiving role (Nambisan & Nambisan, 2009). 

Consequently, today an increased focus is put on partnerships between the different participants within health systems, such as researchers, health care professionals, health care organizations and the consumer community. Especially online health communities have experienced growing popularity in recent years, both among patients and health care organizations. The advantage of these communities is that they often show strong identity-based as well as bond-based attachment between members resulting in very active groups that health care organizations try to tap into.

What are the benefits? 

For patients

  • improved health outcomes
  • increased trust in the health care system
  • reduced healthcare costs

For health care organizations

  • new innovative ideas
  • reduced cost and time to market
  • more positive perception

For the health system

  • increased efficiencies in health services
  • identification of improvement opportunities
  • reduced costs for the health system
  • increased patient satisfaction

How does it work in practice?

Nambisan and Nambisan (2009) developed a framework of consumer value co-creation in health care, differentiating between four different models. These models are resembled in the following matrix and are differentiated via two dimensions, the Nature of Leadership which can either be the consumer or the health care organization versus  the Nature of Knowledge activity, where they differentiate between knowledge creation and knowledge sharing.


Figure 1: Models of consumer value co-creation in health care (Nambisan & Nambisan, 2009)

Based on the framework we can classify existing practices based on their related consumer value co-creation model. A Partnership Model is characterized according to Nambisan and Nambisan (2009) by an online health community that participates in activities that are led by health care organizations to create new knowledge. An example are for instance online communities where organizations reach out to patients for clinical trials, for instance to understand the side effects of drugs. A global online health community that is especially active in this area is HealthUnlocked. The platform also enables peer support and allows users to see and contribute in over 700 health communities about specific health conditions. These communities are often run in partnership with established healthcare organizations (HealthUnlocked, 2019).


Figure 2: HealthUnlocked a social network hosting more than 700 health communities

In contrast to the previous model, Open-Source Models are characterized by consumer community led activities, sometimes also referred to as consumer centers of research (Nambisan & Nambisan, 2009). This kind of model might be especially valuable for people with rare disease that can then form communities with peers and experts and focus on the research of specific diseases. As the „crowd“ in these communities does not consist of experts, the value in insights might be limited though. Nevertheless, the social network project Panoply could be considered a successful model that started off as a relatively small open-source project which eventually resulted in a successful app that promotes well-being to combat depression (Rucker, 2017). 

Support Group Models are consumer community led forums for sharing consumers’ knowledge about a disease or treatment (Nambisan & Nambisan, 2009). Phoenix Helix is such a platform, that provides help and advice for people that suffer from auto-immune diseases (Phoenix Helix, 2019). Health care organizations could provide additional value in these communities for instance by offering complementary services or access to databases.

Finally, Diffusion Models are characterized by knowledge sharing activities initiated and led by health care organizations. These models have the potential advantage that they facilitate the diffusion of knowledge about an organizations existing or new product. Multinational pharmaceutical company GlaxoSmithKline used this model when it launched a new weight loss drug and invited 400 overweight men and women to share their experience in an online community (Nambisan & Nambisan, 2009). It should be noted however that diffusion could be both positive as well as negative.

Limitations

While the approaches discussed above can offer real value for patients, health care organizations and health system, there are some risks. In most of the above cases patient data is self reported and not always directly linked to medical records or clinical information which may result in invalid and biased data (Bhomwmick & Hribar, 2016). Moreover, some individuals in the community might be motivated by extrinsic rewards like glory or money and thus knowingly give wrong information to stick out. Furthermore, data published on online communities might be confidential and could expose very sensitive information (Bhowmick & Hribar, 2016). 

Conclusion

It is evident that online health communities can serve as valuable resources for patients as well as health care providers for value based co-creation in health care. Online health communities can positively effect efficiency, feasibility and speed of health research while engaging many customers (Bhomwick & Hribar, 2016). While focusing mainly on consumer value co-creation between the consumer and a single health care organization in this blogpost, it should be noted that health care organizations are increasingly putting efforts on working together on common ecosystem to drive digitalization and utility for the consumers, such as the platform established by Siemens Healthineers in 2017 (Siemens Healthineers, 2017). 

References

Bhowmick, A. & Hribar, C. (2016). Online Health Communities: A New Frontier in Health Research. Medium. Retrieved from https://medium.com/@abhowmick1/online-health-communities-a-new-frontier-in-health-research-71fb73edbea2.

Elg, M., Engström, J., Witell, L. & Poksinska, B. (2012). Co-creation and learning in health-care service development. Journal of Service Management, 23(3), pp.328-343.

HealthUnlocked. (2019). HealthUnlocked About Us. Retrieved from https://healthunlocked.com/about.

Janamian, T., Crossland, L. & Wells, L. (2016). On the road to value co-creation in health care: the role of consumers in defining the destination, planning the journey and sharing the drive. MJA, 204(7).

Nambisan, P. & Nambisan, S. (2009). Models of consumer value concretion in health care. Health Care Management Review, 34(4), pp.344-354.

Phoenix Helix (2019). Phoenix Helix. Retrieved from https://www.phoenixhelix.com 

Rucker, M. (2017). 5 Great Online Communities for Patients With Medical Conditions. Verywell Health. Retrieved from https://www.verywellhealth.com/great-online-communities-for-medical-patients-1739169. 

Siemens Healthineers (2017). Siemens Healthineers establishes global Digital Ecosystem to drive digitalization of healthcare. Retrieved from https://www.siemens.com/press/en/pressrelease/?press=/en/pressrelease/2017/healthineers/pr2017020180hcen.htm&content%5B%5D=HC.


Articles, Business Case

Engaging Generation Y to Co-Create through Mobile Technology

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In an increasingly more competitive product and service environment, the need to have an ongoing service innovation for companies in order to successfully compete in the market has never been bigger (Bugshan, 2014). A McKinsey report identifies several things to be the cause of this increasing pressure to innovate on service companies, such as big data and advanced analytics, the Internet of Things and the rise of the mobile internet with a skyrocketing offering for mobile self-service apps (Duncan, 2015). The last aspect might not simply be a cause for this effect, but it might also serve as a powerful tool that companies can utilize in their quest to increase co-innovation and value co-creation, especially when looking at the tech savvy Generation Y (born between 1980 and 1994). The work of Zhang, Lu and Kizilag (2017) is examining the motivations of this generation to increase their participation in value co-creation to make better products and services and for companies to remain competitive. Engaging this generation is very importance due to them being close to digital natives and representing a very sizable part of the overall population (22% in the US) (Schroeder, 2018). Even though the next Generation Z (1994 – today) is even more tech savvy, the are often not of age and are hence often not the customers of many products due to their young age.

Why Y?

Why should companies focus on engaging Generation Y in value co-creation activities?

Generation Y is/has:

General facts given by Zhang et al (2017)

  • Tech savvy
  • Stable income
  • Entrepreneurial spirit
  • High degree of social interaction and belonging

Additional facts from a background paper by Halliday & Astafyeva (2014)

  • Drive for entertainment and experience (satisfied by chance to have an impact on a company’s value offering)
  • High need for self-actualization (fulfilled by creating their own version of a company’s product)
  • Prestige (gained due to positive exposure their idea gets if used by company)

The research explores how members of Generation Y can be engaged for co-creation through mobile technologies and what the antecedents of the adoption of mobile technology for co-creation are from innovation theory. Utilizing this can become a primary source of competitive advantage, such as in the case of Made.com an e-retail company that puts the decision of what goes from the drawing board into production in the customers hands and was able to grow by 37% in 2018 due to this co-creation strategy (Neerman, 2019).

To establish what influences the co-creation activities of Generation Y the authors use a diffusion of innovation (DOI) framework and analyze the influence of the technical, social and individual dimension on co-creation activities via mobile technology. The analysis of the responses of 689 Generation Y co-creators via mobile technologies revealed that the most important dimension for them is a social community where they are relying on an interpersonal and peer network and on informal communication with the company and other co-creators. The factors that were found to have a significant positive influence on mobile co-creation activities are visualized in Figure 1.

So what motivates Generation Y customers to engage in value co-creation via mobile apps?

Figure 1: Dimensions and factors having a positive impact on value co-creation by Generation Y, based on research of Zhang et. al. (2017)

Interpersonal networks are consisting of the social environment of a person and the findings suggest that the degree to which this network is present in a co-creation context increases the co-value creating activities due to the social response that the people get.

Peer networks within the DOI framework are examining the closeness of the relationships among co-creators and are contributing to co-creation. The better the relationship, the higher the likelihood to share information, increase interaction to co-create with others due to increased trust and willingness to accept other’s recommendations.

While peer networks create a closeness between different co-creators to share ideas, the research finds out that it is equally important to have a frequent and informal exchange of ideas between the potential co-creators and the company with whom they are engaging. Examples of such an informal communication existed at Lego, where customers were given the ability to interact with each other and Lego through the My Lego Network until 2015 (Fandom, 2019).

The individual dimension, in this study measured by the factor of consumer innovativeness, was found to have a positive impact on the contribution as well, showing that some factors might be beyond the influence of a company, should they try to use this research to build a co-creation strategy.

Interestingly out of the three proposed factors of the dimension of technology, only one (ease of use) was found to be important. Ease of use contributes to the co-creation activities of Generation Y due to its role as a facilitator of the adoption of new technologies, such as the applications that were in scope during this research.

How can companies better engage Generation Y?

To improve the engagement of Generation Y there are several useful findings from this research, that companies can utilize. Entrepreneurial spirit of the targeted customer and ease of use of the applications seem to be important enablers of co-innovation without customer engagement does not work. The real art of value co-creation lies in the building of social communities, were this research has provided very interesting further refinements along which a company can build the social environment to ensure a high degree of customer co-creation. To visualize the varying degree of how appealing online offerings are to generate value co-creation and how they can be improved based on this research, two companies LEGO and P&G will be examined.

P&G the Laggard (per Zhang et al):

  • Has an online offering for value co-creation called P&G Development & Connect
  • Gives the customer access to predefined areas where the company would like the customers to submit their ideas
  • Only one-way communication from the company to customer
  • No informal way of communication
  • No community building with regards to interpersonal networks or peer networks

Improve Generation Y-Activity by:

  • Allow customers to chat with the company in (interpersonal communication)
  • Build a community, where equal minded individuals can share and review ideas (peer and interpersonal network building)

LEGO (text book example (per Zhang et al)):

  • Has 6 different communities each serving a different segment (e.g. LEGO Mindstorms for older customers with tech affinity, LEGO Movie Maker for customers interested in directing and editing film, etc.)
  • These communities are separated to allow the peer groups to be even similar and foster social interaction, trust and collaboration
  • Customers can interact via Twitter and chat to get the thoughts of LEGO employees on their ideas
     

As can be seen by the two examples LEGO has built a very differentiated strategy for customers to interact with them, satisfying all the dimensions found by the research of Zhang et al (2017). P&G has some areas of improvement and it appears that this lag might be due to a focus on an older generation and hence the negligence of factors that are important for the engagement of Generation Y. Yet, as stated previously, even large and established cooperation can benefit from value co-creation from Generation Y and a first step towards this would be to consider the dimensions found by Zhang et al (2017).

Room for improvement

Even though this research provides a very interesting first starting point for academics and practitioners, it is of exploratory nature and has some weaknesses. The study was only conducted among value co-creators, so there is no distinction possible to non-creators. Further the dimensions are very broad and future research especially on the social dimension would be very interesting to fully understand the phenomenon that are taking place and gain insights that can be utilized by practitioners and academics alike.

References:

Bugshan, H. (2014). Co-innovation: The role of online communities. Journal of Strategic Marketing,23(2), 175-186. doi:10.1080/0965254x.2014.920905

Duncan, E. (2015, February). Service innovation in a digital world. Retrieved February 27, 2019, from https://www.mckinsey.com/business-functions/operations/our-insights/service-innovation-in-a-digital-world

Fandom. (2019). My LEGO Network. Retrieved February 28, 2019, from https://mylegonetwork.fandom.com/wiki/My_LEGO_Network

Halliday, S. V., & Astafyeva, A. (2014). Millennial cultural consumers: Co-creating value through brand communities. Arts Marketing: An International Journal, 4(1/2), 119-135. doi:10.1108/am-01-2014-0003

Neerman, P. (2019, February 08). Made.com grows by 37%: “We can afford to fail”. Retrieved February 27, 2019, from https://www.retaildetail.eu/en/news/furniture/madecom-grows-37-we-can-afford-fail

Schroeder, W. J. (2018). Generations X,Y, Z and the Others. Retrieved February 27, 2019, from http://socialmarketing.org/archives/generations-xy-z-and-the-others/

Zhang, T. C., Lu, C., & Kizildag, M. (2017). Engaging Generation Y to Co-Create Through Mobile Technology. International Journal of Electronic Commerce,21(4), 489-516. doi:10.1080/10864415.2016.1355639

Articles

Banking value creation

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The banking business has changed dramatically during the last decade. The development of new IT systems, mobile banking and other electronic banking services via multiple electronic channels has made it possible for the banking industry to create more and more value for their customers. The increasing diffusion of mobile phones and the banking applications is the basis of electronic banking nowadays and banks are competing to create the best value and services for their customers (Pousttchi and Schurig, 2004). Because, let’s be honest, if you want to switch to another bank, besides a couple of administration effort, you could easily do that. So, what’s holding you back?

Banks allow their customers to check the balance and transactions of their accounts, pay invoices and transfer funds between accounts, make buy-and-sell orders for the stock exchange etc. etc. The understanding of service user behaviour is one of the most basic requisites of service development (Laukkanen & Lauronen, 2005). Customers views and needs are changing every day and if you look at service development, banks need to change as well. But the needs are unsure and short-timed and it is necessary for banks to develop knowledge of customer perspective about their online services. To develop this, banks need a deeper insight into aspects of consumer psychology and decision-making.

ING is, nowadays, one of the foreman’s as it comes to mobile banking service in the Netherlands. ‘’We create value by providing products and services that help people to improve their lives and fuel economic growth. ING’s purpose – empowering people to stay a step ahead in life and in business- is reflected in ING’s structure, strategy and in the values and behaviours we embrace’’, is one of their mission statements.  Specifically, ‘’ING creates value by helping our customers secure their financial futures, by supporting people when making life changing decisions, through seamless processing of transactions, and by empowering customers to have greater insight into their financial affairs.’’

Banking is a very personal data and ING needs to make sure that these data is handled with care. To use this data, ING tell us that it is in our best interests that transactions are processed correctly. Next to these transactions, by giving permission to their cookies, they can view our browsing behaviour and, via this way, ING can give us tailored information and special offers.

ING has formulated the following goals for using our data:
1. Improving customer service
2. Countering fraud and cybercrime
3. Operational excellence
4. Diminishing risks (e.g. reducing payment arrears)
5. Creating commercial opportunities.

This brings us back to the question: why would you stay at your bank? Me, as a customer of ING, am not looking at interest percentages or any financial reasons to stay at ING. I am looking at their service and the easiness of using their applications. Via this way, and looking at the efficiency criteria (CDCC,2017) by decreasing my effort and increasing my usage of their apps by all the new add-ons I cannot think of a reason to switch banks. By retaining their customers ING can use their data to keep improving their services and by this joint profitability customers will stay at ING. A good way of using your own consumers to create value.

 

 

Business Case, Videos

Brigade: Redefining Politics, Civic Engagement and Democracy?

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In today’s democracy, politicians have a tough time reaching millennials. In the same way as religion, Western politics currently faces difficulties to create affiliation with the latest generations. Especially, the themes of politics and voting have lost interest of the younger generations over time:

Continue reading Brigade: Redefining Politics, Civic Engagement and Democracy? →

Administrative, Articles, News

Grandma knows best: Online knowledge contribution

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Today, one of my group members stained my suede jacket with permanent marker whilst discussing our business idea. After panicking, the first thing I did is type the sentence “how to get ink out of suede” into Google. The pages I end up at are online communities, in which people share their experiences on the same problem and provide me with the knowledge I need to remove the stain. This example might sound very familiar to you: There are more than 2550 of such communities worldwide! These online knowledge sharing platforms provide a space for social interaction where individuals can obtain knowledge and feedback and exchange opinions on certain topics, such as stain removal.

Continue reading Grandma knows best: Online knowledge contribution →

Articles

Hello fellow Fonero, I’m going to use your Fon hotspot!

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Back in 2005 the Argentinian businessman Martin Varsavsky came back from a business trip to Japan. When entering his house he found a letter on his doorstep. It was not a “welcome home” letter but a bill from his telecom provider for €5000 for the use of mobile internet during his business trip abroad. As you can all imagine, Martin was not particularly happy. Having an entrepreneurial mindset he decided to find a solution for the costly use of mobile internet and founded a new company in 2006 called Fon (Fon.oeioei.nl, 2014)! Continue reading Hello fellow Fonero, I’m going to use your Fon hotspot! →

Articles

Crowd contesting for innovation in transportation

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There are number of ways how to induce innovation in the different fields. One of the interesting methods for generating new innovative ideas and approaches is crow contesting. Crowd contesting is an open contest that allows anyone to participate with his/her idea. To guarantee the outcome quality, a strict contest requirements and schedules has to be followed by every participating individual or team. To motivate participants for joining and actively devoting their effort, different types of incentives are used, such as monetary rewards, public recognition, and sponsorship funding offers. Furthermore, often times a passion in the particular field of contest is the main driver for participants. Crow contest is an efficient way of leveraging a power of competition to generate new ideas and approaches based on the theme of the contest.

Continue reading Crowd contesting for innovation in transportation →

Business Case

Why should companies use crowdweaving?

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Crowdweaving is a product from KLCommunications

First of all, it simply recognizes the fact your passionate customers remain a talented untapped resource for improving your ideation success rate. By allowing customers to help drive the process, companies will make better decisions. These decisions will both save and make more money for the company.

Continue reading Why should companies use crowdweaving? →

Business Case

Google & Facebook helping out Nepal.

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On the 25th of April 2015, Nepal was struck by the worst earthquake the country had seen within 80 years. Around 40 to 50 villages were (almost) completely destroyed, especially in the North-West of Kathmandu.

Currently, the amount of deaths counted is 7,040. However, the Nepalese prime minister Sushil Koraila has stated that this number will most probably rise above the 10.000 deaths. Besides this, thousands of people were hurt and the damage that the earthquake caused in general is enormous.`

The country is still looking for survivors of  the earthquake. In addition, the demand for food and hygiene is extremely high. There are a lot of victims with dirty wounds that got infected. Doctors and nurses are trying to reach the stricken areas, but a lot of them are hard to reach. Food preparation has become really hard through a shortage of pots and pans. However, the most urgent problem at this point is the lack of shelter. As lots of houses are destroyed most of the survivors currently live on the streets.

As this is a very serious natural disaster, people all over the world are joining forces to get Nepal the help they need as well as companies. Google and Facebook, two of the greatest information sources, are also showing their help, but in a different way.

Safety check

Facebook has come up with a “safety check” that the company had already presented last October however, it is only activated when an actual disaster occurs. People in the stricken area get a notification of Facebook, based on the location of their last log in, asking them if  they are safe. As soon as they have clicked on safe, all their Facebook friends will get to see a status update that will notify them that the person is safe. This is a new integrated tool of Facebook that involves the need of different users. On the one hand  it offers a form of relieve to family members and friends that hear the terrible news. On the other hand it is a fast way for the person in the disaster area to notify the people around them that they are safe.

Person Finder

Likewise, Google has made an effort to use its information source to help out the victims of Nepal. They activated their Person Finder. Through this webpage users can report if they are looking for someone or if they have information about the disaster area. Family and friends can for instance, render someone as missing by posting personal information about the missing person and for instance upload a picture. The search option is also available through text message. The search engine currently consists of 4800 cases.

Setback

A huge setback, in my opinion, for both integrated tools is the availability to internet. In the disaster area it is likely that after an earthquake smartphones broke down or internet connection or cell phone reception dropped out. In addition, Nepal is not a very wealthy country, which makes the access to Facebook less likely. This is why I wonder how successful these tools will be and what both companies will do to make access easier in such cases.

References:

http://www.nu.nl/dvn/4038036/we-weten-zware-aardbeving-in-nepal.html#aardbeving-nepal-29

http://www.ad.nl/ad/nl/1013/Buitenland/article/detail/3982865/2015/04/27/Facebooks-veiligheidscheck-actief-na-aardbeving-Nepal.dhtml

Business Case

“Style your Smart”: How a not so successful car brand learned us how to successfully generate ideas.

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Five years ago, when consumer co-creation was not yet the hot topic it is today, Smart launched a very successful co-creation contest. Do you still remember Smart? The little city-cars, which eventually were not the success that the company had hoped for. In 2010 they launched a co-creation contest in which consumers could participate and make a design for the Smart car. They did not only engage their consumers in making the best design, but also engaged their consumers in a little game so they could help decide which design was the best. This approach of gamification did not only help Smart to engage more customers in this co-creation process, but also led to high quality designs and have strengthen the bond between consumers and the brand Smart.

Schermafbeelding 2015-05-03 om 13.21.27

For companies co-creation has a lot of advantages.  Consumers create value for companies and products. Consumers express their needs, they help the company with (creative) ideas and companies can engage their consumers in deciding which product to launch next.  In February 2010, Smart launched the co-creation contest in which consumers could upload their design for the Smart car. The winner could win a monetary reward of $5000. They made an internet platform with a design tool so that even consumers with no experience in designing cars could participate. Besides that, they directly involved customers with the platform by allowing participants to comment on designs and rate different designs.  In only a few months, 10.000 members uploaded 50.000 designs to the website. There were 600.000 design evaluations and 27.000 comments.

Schermafbeelding 2015-05-03 om 13.23.46

Smart did not only engage their consumers in designing the Smart, but they also thought: Why not let our consumers choose which design they like the most? Unfortunately, these decision-making processes are often perceived as boring by the public. Therefore Smart decided to gamify this contest. Gamification is a way to make things like an idea generating contest more appealing for the public. Games are often perceived as fun so they are a good way to get more engagement from consumers.

After the expert jury filtered out most of the designs, Smart opened the Matching game. If a participant entered the matching game he/she was connected to a different participant. When the game started they were both shown a few designs. The players were then asked to click on the design of which they thought that their co-player would consider it as the best design. If they both choose the same design, they had a Match and they received points. Despite the fact that Smart never promised any reward for the amount of points a player received, in total 2000 games have been played. This led to the following winning design:

Schermafbeelding 2015-05-03 om 13.27.57

If we look at the statistics we can conclude that Smart launched a very successful co-creation contest which had a monetary reward of only $5000. Is the only trick they used to include gamification of the process? Or do you think that gamification is absolutely not a guarantee for succes?

References:
http://mercedes-benz-blog.blogspot.nl/2010/01/open-innovation-smart-launches-design.html
http://media.daimler.com/dcmedia/0-921-658944-1-1278743-1-0-1-0-0-0-0-0-0-1-0-0-0-0-0.html
http://www.smart-design-contest.com
http://www.autoblog.com/2010/01/06/daimler-encourages-you-to-design-your-own-smart-results-vary/

Business Case, Mini Cases

Two sides of the same coin: Co-creation in the videogame industry

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Value co-creation has started to spread more and more across various industries during the last decade. Media consumers have taken up the role of media producers, as firms give them the opportunity to design, produce or market content. And the game industry is no exception to this phenomenon.

Examples of games such as Spore and Little Big Planet, that rely heavily on user generated content, have introduced a new era for videogames, where the role of co-creative gamer is born (Banks & Potts, 2010). While many benefits may potentially be derived from this new trend, there are also dangers that might lead to utter failure. Two opposite case studies prove that it is not easy to find the keys to success.

Fury was an online game that was released in October 2007. During its development phase, the game looked quite promising. There were a lot of expert gamers that spent hours playing the open beta version, providing the designer company, Auran, with valuable feedback for improvement (Banks & Potts, 2010). In addition, since the game was used by some highly-ranked members of the online gaming community, many players were intrigued to try it out resulting in a form of online word-of-mouth marketing. The developers changed Fury quite a lot, always according to user feedback they were getting. However, in the end this advantage backfired. Upon the game’s release, the reviews were disappointing to say the least. Hardcore gamers, who spent hours providing input to improve the game, accused Auran that they released the game too early and did not take enough time to carefully implement most things discussed in the feedback. As a result, the gaming community turned its back on the project and Fury was shut down shortly after its release.

FuryGameLogo

Co-creation can indeed backfire…

Auran underestimated the consumers’ needs. As many expert gamers pointed out, they did not change some of the key aspects of the game simply because they did not want to. Introducing consumer value creation can disrupt some of the traditional models on which production in a certain industry is based (Banks & Potts, 2010). In this case, the expert producers disregarded the customers’ opinions and insisted on something that turned out to be unacceptable for the market. Nevertheless, there is always a way to find the right balance between company and consumer value creation. And the case of World of Warcraft makes a perfect example of this balance.

Blizzard is one of the largest gaming companies in the world. One of its biggest successes came with the release of the online game World of Warcraft, which is still the largest online game 10 years after its release with more than 10 million subscribers. But how did Blizzard use value co-creation effectively? Apart from the open beta version that was made available prior to the game’s release, the company made available, along with the full version of the game, a free API through which users could customize their user interface (Davidovici-Nora, 2009). Therefore, Blizzard put minimal effort in designing a simple and easy to use UI for casual gamers, while giving the opportunity to more hardcore consumers to enrich that UI according to their specific needs. They achieved this by creating add-ons that provided the original UI with additional functionalities. Users were also able to share their add-ons through the game’s online community. What Blizzard achieved, apart from minimum effort costs in interface design, was to keep the core of the game intact as the developers wanted it (Davidovici-Nora, 2009). But on the other hand, they empowered gamers by allowing them to create tools that would make their experience better.

fcd417c4-0738-4cc3-be5a-5c5cf8c8c54d

The opposite side of the coin: co-creation at its best!

The two case studies represent two different models of co-creation. On the one hand there is the use of open beta versions, which give the consumer the role of game tester and provide valuable feedback to the companies. In this more traditional model, co-creation happens before the marketing of the game (Davidovici-Nora, 2009). On the other hand, Blizzard used the API to allow gamers to create value even after the game’s marketing and to “pass on” to them the role of game developer, even to a certain extent. However, it was not this difference that determined the success or failure of the projects. Both cases show that value co-creation can be a powerful ally, but as companies give customers more power over their products, they need to take these newly forged relationships into account more seriously.

Hence, the gaming industry has reached an era where gamers are more useful than ever, as they do not purely consume but they are actively involved in game development. The lesson to be learned is that, as consumers gain more power over product creation, firms need to be ready to abandon some of the more traditional business models in order to make a successful transition into this new era of co-creation.

References:

Banks, John, and Jason Potts. “Co-creating games: a co-evolutionary analysis.” New Media & Society (2010).

Davidovici-Nora, Myriam. “The dynamics of co-creation in the video game industry: The case of world of warcraft.” Communications & Strategies 73 (2009): 43.

Jenkins, Henry. “Why Co-Creation Matters: An Interview with John Banks.” Henryjenkins.org (2014)

Business Case

Will Popcorn Time survive the war?

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In one of my previous post I elaborated on the success of user-generated products/ services and concluded that user-generated products outperform designer generated products on almost every performance metric within the first 3 years (Nishikawa et al., 2012).

Popcorn Time is a good example of such success stories. This platform is an illegal video streaming service that gained allots popularity in a really short time. By the end of 2014 it was known that approximately 1.3 million devices in the Netherlands had the software installed and that this amount was rising by around 15000 on a daily basis. It’s a software on which you can search for the film or series that you want and thereafter stream it while it’s downloading. As it appears, the team behind Popcorn Time consists of a set of developers who work partly together on developing the software.
Another success criterion of this application is that they are trying to guarantee the security and privacy issues of the customers. This is also one of the main discussed topics we had during the lectures. They use the so called “Kebrum”, which ensures that their users can stream videos anonymous without being tracked. They claim that they are constantly working on updates to keep their identity and the identity of the users private.
Additional features as chrome cast are also part of the things that Popcorn Time offers. Moreover, almost all the series and movies have optional subtitles.

Popcorn Time places great emphasis on the value co-creation of their system. This last is seen on every description and facts that has to do with the platform. The next picture is just an example of how they describe themselves on the “about” section of the software. popcorn time about They want to make it very clear that they are an open source project.

They are still having massive competition with streaming services like Netflix, but it’s clear that the huge supply from the illegal platform are way above the legal streaming service. The interface is considered as almost identical of the one from Netflix. The next picture shows their interface and how they integrated the ratings from IMDb into their platform. screen tracers

Although this goods point, there are still many risks, for example that the software is taken out  from the net or that the Kebrum leaks all the ip-address from the users. The original Popcorn Time couldn’t handle the amount of risk they were facing and closed the application and then made it an open source in 2014. Since then there are different versions of the application f which the most popular is the Popcorn Time. There is also the Time4Popcorn, Flixtor and Zona: the Russian version. There are people in Germany who received penalties for using the software. The legal (property right) organizations in the Netherlands are not so advanced yet and to our known are not following the users (community). Mostly they are doing research behind the “big boys”, the Popcorn Team.

Now that we have read how good and how bad the Popcorn Time is and what are its potentials. Do you think that this platform will survive the war against the law? Do you think that competition from example Netflix will be able to keep on the track with the Popcorn Time platform?

References

Nishikawa, H., Schreier, M., & Ogawa, S. (2012). User-generated versus designer-generated products: A performance assessment at Muji, International Journal of Research in Marketing, 30, 160–167.

http://www.volkskrant.nl/tech/waarom-netflix-hollywood-en-hilversum-bibberen-voor-popcorn-time~a3838504/

http://www.androidplanet.nl/nieuws/popcorn-time-populair/

http://www.nu.nl/internet/3797052/vijf-vragen-illegale-streamingdienst-popcorn-time.html

http://www.nu.nl/internet/3726691/illegale-videostreamingdienst-popcorn-time-sluit-deuren.html

Mini Cases

From social media business to social business; introducing KLM’s Meet & Seat initiative

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The Dutch aviation giant KLM is well known for their interaction with customers on social media platforms. With swift and often humorous responses they – quite literally- manage to help customers along their journey. However, next to being activing on social media, KLM has been increasingly eager to change into a social business as a whole. The Meet & Seat initiative was the first step in doing so, allowing for collaboration and co-creation with its customers.

KLM’s Meet & Seat allows passengers to choose who they will be sitting next to. Passengers can view other passenger’s Facebook and/or LinkedIn profile details before departure. Meet & Seat can aid in finding interesting people who will be on the same KLM flight. This can be people who work in the same business as you, or people that go to the same event as you at your destination. Although not everything can be extracted from a Facebook or LinkedIn profile, it does empower passengers and gives them the opportunity to make their trip more enjoyable.

Meet & Seat is integrated in the standard booking process. To date, it is only available for those who travel alone, as it would be too complicated to move entire families and account for different interests. Using Meet & Seat involves three steps:

1. First, you will be given the option to link your Facebook or LinkedIn profile. You can select yourself what information you want to make public. In addition, you will be asked what languages you speak to ensure you can indeed communicate with your desired fellow passenger.

2. Next, you will be presented the occupancy map of the plane; here you can see which passengers have linked their social media profile to their booking. You can here check who they are with what purpose they are travelling.

3. You choose your seat. If you happen to find an interesting person it is optional to already establish contact via Facebook or LinkedIn.

klm

Initially, the Meet & Seat initiative raised some eyebrows with regard to privacy concerns. In the current era in which personal information is more valuable than ever, people questioned the motives of KLM for introducing Meet & Seat. To tackle this, KLM has stated on their website that profile details will not be used for other purposes than Meet & Great. In addition, KLM’s default option is that an individual does not take part in the Meet & Seat experience.

What do you think of KLM”s Meet & Seat? Would you be eager to try it, or would your perhaps use it to Seek & Avoid rather than to Meet & Seat? Or, alternatively, could this turn into a new dating platform? I am particularly interested if KLM upholds its promise not to use personal information for purposes other than Meet & Great. Lastly, it is interesting how KLM’s Meet & Seat initiative stacks up against other applications such as WorldMate. WorldMate is an existing mobile application that offers a Meet & Greet-like function together with itinerary assistance as well as hotel recommendations.

Borgman, H. (2013). Is this seat taken? Retrieved from https://2f2230d38a8e616d5a4c-4d06f61946ea322463c1f7bf12b26a1d.ssl.cf3.rackcdn.com/file_versions/29800/original/5fbc63f2dcf667a8155a29a3ab32dc3892332fcdce00b2fe69b988f2051d656f.pdf

https://www.klm.com/travel/gb_en/prepare_for_travel/on_board/your_seat_on_board/meet_and_seat.htm

https://www.worldmate.com/

Business Case

A new era in market research?

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Technology has allowed us to stay in contact with each other 24 hours a day. At any point in time you can use email, Whatsapp and an endless amount of social media to get in touch with your friends and family. It takes almost no effort and it allows you to have a response within seconds. In the field of market research, the technology that allows fast communication is for a big part yet undiscovered. Something almost all of the market research tools (e.g. surveys, focus groups, telephone interviews, etc.) have in common is that it costs a lot of time, effort and money. One simple but very clever app might change the area of market research completely.

The app Upinion allows companies to do their market research completely differently compared to how they did it before. Upinion allows companies to ask real-time questions towards their customers using mobile technology. It works really simple: A company creates a specific marketing related question in the Upinion app. Then the question is send to all the relevant and targeted consumers which make use of the app. They fill in their answer and send it back, through the app, towards the company. All the results are then automatically collected and statistics and reports can be created within minutes after the company asked the question. It is also possible to set very detailed filters so that companies can specifically reach the people who belong to the research target group. So the market research turned from a multiple days or even multiple weeks process into a several minute process, all with the help of modern-day technology and this clever app! Intensive market research is not something just for the big companies with large marketing budgets, even small and local companies can easily receive interesting and useful information through this app.

So what’s in it for customers?
Customers get tired from traditional marketing research tools. “Can you please fill in this survey?”, “Can I ask you a few questions?”, consumers are asked these questions quite often in either supermarkets or through the telephone. In my experience, 9 out of 10 people do not want to answer these questions because it costs them valuable time and they do not get anything in return. With Upinion that seems to be completely different. Only people who installed the app receive questions, and by installing the app, people already give away that they are willing to contribute to market research. But the most interesting part of this app in my opinion is that people who provide answers, in return receive credits and vouchers which they can spend at the brands they just answered a question from. In this way, companies not only receive useful market data, but they can also increase their sales by attracting additional customers through these offers.

So both sides of the market have benefit from the Upinion app. Consumers can receive credits and nice discounts and companies receive fast and real-time data, and additionally they attract additional customers. I think this app is a form of real-time crowdsourcing in the field of marketing and it therefore elaborates on the trend of consumer value creation. I am really curious about how the app works so I will start using it right away, what about you?

Sources:
https://vimeo.com/85184656, Retrieved April 27, 2015
https://itunes.apple.com/nl/app/upinion/id691974292?mt=8, Retrieved April 27, 2015
https://upinion.com/nl, Retrieved April 27, 2015

Articles

Create Your Own Chocolate

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“Customized Chocolate Bars Like No Other”

Have you ever wanted to create your own chocolate bar? Chocri is the worlds first company which allows comsumers to create their own chocolate bar by allowing users to choose from four bases and over 100 toppings. When you read this, you probably think: “I could make that! What is so special about it?” However, most of us can probably not even be bothered to actual create chocolate bars due to the time and effort it takes. This is the unique aspect of Chocri, it makes the process of creating your own chocolate bars fun! Chocri was founded in Berlin, Germany in 2008 by Franz Duge and Michael Bruck and it has been a very successful example is mass customization. In essence, Chocri is an online configurator where customers can design their own chocolate bar which is then produced by Chocri with techniques and costs comparable to mass production.

According to Chocri, the combination of 4 bases and more than 100 topics allows for more than 27 billion combinations. The configuration process of Chocri chocolate bars encompasses the several steps. First, customers have to choose the base of the chocolate bar (dark chocolate, milk chocolate, white chocolate or a combination of the three). Second, customers can add up to five topics. There are six different topping categories: fruit, spices, nuts, confections, decor and grains. In addition, Chocri sometines also includes seasonal categories.

The step of choosing toppings is probably a step which a lot of (creative) people will enjoy as it allows customers to explore their creativity. The pictures of the toppings is shown together with the chocolate base to allow the users to see how the final product will look like. This is an important feature for customers creating a present as it shows how good or bad the final product will look like. In addition, clicking on the names of the toppings provides customers with educational and entertaining descriptions (which might inspire customers for the name of their chocolate bar).

However, research has shown that  too much choice can be demotivating. Barry Schwartz (2004) has written a book which is focused on the Paradox of Choice: Why More is Less. In the book, Schwartz argues that eliminating consumer choices can greatly reduce anxiety for shoppers.

Autonomy and Freedom of choice are critical to ourwell being, and choice is critical to freedom and autonomy. Nonetheless, though modern Americans have more choice than any group of people ever has before, and thus, presumably, more freedom and autonomy, we don’t seem to be benefiting from it psychologically.

(Schwartz, 2004)

In the context of Chocri, 27 billion combinations may be too much to handle and it may take the fun out of the configuration process. Moreover, some people need to get inspired first as they find it too difficult to create something from scratch. Therefore, Chocri has a page of recommended creations and top five bar names of the week listed on their blog. Not only can this recommendation page reduce anxiety and inspire less-creative people, it can also form a rewarding prospect for other customers as they see their creations being promoted by Chocri to other people. Recognition is a very powerful reward and can actually be more rewarding than monetary rewards as recognition directly caters to someone intrinsic motivations rather than someone’s extrinsic motivations.

After customers have created their chocolate bars, customers can choose a name for their chocolate bars and have the chocolate bars delivered to their home address. The price range of creating a chocolate bar is between $10 and $15 depending on the chosen toppings. The chocolate bars are delivered in beautiful red boxes which appears to be very professional and maybe even look too good to be opened. Moreover, the bars themselves look very professional. The toppings will be arranged beautifully by Chocri and not just randomly put on the chocolate bars with adds to professional look of the chocolate bar. The boxes also have a code on the etiquette which allows you (or your friends) to re-order your creation.

In sum, Chocri is successful and delicious example of co-creation.

Sources:

http://www.createyourownchocolate.com

http://en.wikipedia.org/wiki/The_Paradox_of_Choice

Schwarz, B. (2004). The Paradox of Choice. Harper Perennial, 2004, paperback (ISBN 0060005688)

Business Case

An alternative to e-mail to improve business productivity

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Do we wast too much time on e-mail? Slack can be a solution

Nowadays, a variety of “communication media” on the market pretend to make us more productive. Instead, communication media like Facebook, Twitter, and last but not least e-mail, lead to a productivity-killing communication overload with all its consequences (1).

Research undertaken by McKinsey showed that high-skilled knowledge workers spend on average 28% of their time on managing e-mail. Another 14% of their workweek is spent on ‘communicating and collaborating internally’ (2). Furthermore, research by Gloria Mark, professor of informatics at the university of California, showed that office workers are interrupted approximately every three minutes, where it can take more than 20 minutes before one returns to the original task (3). It goes without saying that increasing the productivity of social technologies, can result in considerable time savings and thus value.

In mid-2013, Flickr co-founder Stewart Butterfield launched a new workplace and collaboration tool called Slack (4). Not coincidentally, Butterfield and his colleagues intended to eliminate the necessity of e-mail as primary communication tool within organization. Slack offers a SaaS-based communication platform that enables employees to communicate through private groups, as well as chat rooms organized by topics and direct messaging (5). The content in the tool is archived (including e.g. Google Drive and Dropbox integrations) and can easily be accessed through several devices and operating systems. Slack for instance provides applications for Mac, iOS, Android and Windows.

All this sounds promising, but does Slack work? If we solely look at the market, one would be inclined to say yes. Shortly after the launch of the start-up, Slack entered the unicorn club – a select group of start-ups that soared to a $1 billion-plus valuation (5). Moreover, last week Slack confirmed that another round of funding raised $160 million, leading to a total valuation of $2.8 billion.

With its 750.000 daily users and customers including renowned companies like The New York Times, Adobe, HBO, PayPal, and the US State Department, Slack seems to work indeed. In contrary to communication media like e-mail, Slack’s technology appears to better fit employees’ tasks resulting in a better task–technology fit – “the degree to which a technology assists an individual in his or her portfolio of tasks” (Goodhue & Thompson, 1995, p. 216) (6).

Perhaps you might get a little too rosy picture of Slack. Of course the $2.8 billion valued startup looks very promising. Market insiders however expect that such a high valuation is not sustainable in the long run, simply because the fact that there are several other high-quality startups providing business collaboration software as well (e.g. HipChat, Yammer) (5).

Even though Slack might not become a big monopolist in the business communication/collaboration-tool market, an overall trend in which companies try to tackle unproductive communication overload, can be seen. One thing is for sure, by reconsidering communication and embracing collaboration tools like Slack, companies can save themselves a lot of time and money.

  1. http://www.forbes.com/sites/groupthink/2014/05/29/email-overload-is-costing-you-billions-heres-how-to-crush-it/
  2. http://www.mckinsey.com/insights/high_tech_telecoms_internet/the_social_economy
  3. http://www.wsj.com/news/articles/SB10001424127887324339204578173252223022388?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424127887324339204578173252223022388.html
  4. http://techcrunch.com/2015/04/16/used-daily-by-750k-workers-slack-raises-160m-to-value-collaboration-startup-at-2-8b/#.kdu0ca:khwv
  5. http://cio.nl/software/85983-waarom-duikt-iedereen-op-slack
  6. Goodhue, D. L., & Thompson, R. L. (1995). Task–technology fit and individual performance. MIS Quarterly, 19, 213–236.
  7. Header image: http://allthingsd.com/20130814/flickr-co-founder-stewart-butterfield-turns-to-workplace-communication-tools-with-slack/
Articles, Business Case

IS CUSTOMERS PARTICIPATION INCREASING EMPLOYEES’ STRESS?

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Last year I decided to invest on a financial product. I wanted to put in practice some of the finance concepts that I was learning on my masters, so I wasn’t looking for a standardize investment product. However, given my limited knowledge about financial markets and services, I needed professional guidance. Increasingly, firms are viewed as facilitators of the value co-creation process rather than as producers of standardized value (Payne, Storbacka, and Frow 2008), so I contacted my bank and met with an asset manager. Together we setup a portfolio taking into account my profitability and risk goals. I was very satisfied with this service, in part because I had a voice on the portfolio composition, but what about the manager?

I was satisfied to participate in the process of creating the portfolio because I had more control over the product and the outcome met my personal goals and needs. However, this implied that the manager had less power over the portfolio composition and more input uncertainty. In fact, customers’ increased involvement in the service process may shift more power from employees to customers, and thereby increase employee workloads and role conflict (Hsieh, Yen, and Chin 2004; Kelley, Donnelly, and Skinner 1990). Customer participation can increase task difficulty for employees, leading to role ambiguity (Larsson and Bowen 1989) and ultimately job dissatisfaction. So did I increase the asset manager’s job stress?

According to the research study “Is Customer Participation in Value Creation a Double-Edged Sword? Evidence from Professional Financial Services Across Cultures”, (Kimmy Wa Chan, et al.) the answer highly depends on the cultural values of the employee and the customer.

The study analyzed (1) how customer participation drives performance outcomes (e.g. employee’s job stress) through the creation of economic and relational values and (2) how it differs across different cultures. The study used data collected from 349 pairs of customers and service employees in two national groups (Hong Kong and the United States) of a global financial institution.

Conceptual framework
Proposed conceptual framework

Customer Participation can drive service outcomes through the creation of either economic values (the benefit and cost outcomes of the portfolio co-created) or relational values (the emotional bonds between the asset manager and me) for both customers and service employees.

In order to understand how participants’ cultural differences have an impact on the effects of customer participation on value creation, the study analyzed three cultural value orientations: individualism, collectivism and power distance (Hofstede 1980).

The table above explains these cultural values orientations and shows countries in which they are verified.

Hofstede's cultural dimensions
Hofstede’s cultural dimensions

Customer participation may be a double-edged sword. If customers have high collectivist and power distance value orientations, they perceive less economic value and are able to enhance employee’s job satisfaction, through the creation of relational value. However if otherwise they are highly individualists or with a lower power distance value orientation, customer participation can indeed increase employees’ job stress.

Given the increasing globalization of markets, it could be worthwhile to match customers and employees by their cultural values, in order to maximize the benefits and minimize the costs of customer participation.

References

Kimmy Wa Chan, Chi Kin (Bennett) Yim, & Simon S.K. Lam (2010), “Is Customer Participation in Value Creation a Double-Edged Sword? Evidence from Professional Financial Services Across Cultures”, Journal of Marketing, Vol. 74 (May 2010), 48–64

Guerrier, Yvonne and Amel S. Adib (2000), “‘No, We Don’t Provide That Service:’ The Hararssment of Hotel Employees by Customers,” Work Employment Society, 14 (4), 689–704.

Hofstede, Geert H. (1980), Culture’s Consequences: International Differences in Work-Related Values. Newbury Park, CA: Sage Publications.

Hsieh, An T., Chang H. Yen, and Ko C. Chin (2004), “Participative Customers as Partial Employees and Service Provider Work- load,” International Journal of Service Industry Management, 15 (2), 187–99.

Kelley, Scott W., James H. Donnelly Jr., and Steven J. Skinner (1990), “Customer Participation in Service Production and Delivery,” Journal of Retailing, 66 (Fall), 315–35.

Payne, Adrian F., Kaj Storbacka, and Pennie Frow (2008), “Managing the Co-Creation of Value,” Journal of the Academy of Marketing Science, 36 (1), 83–96.

 

 

 

Business Case, Opinion

Exploring Paris the Dutch way

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Lately, I made a four-day trip to Paris with the intention to explore this beautiful city and the many highlights it offers. As you may know, it is a terrible job to explore the city by car. The traffic is busy, the stereotype Parisian drives like a retard, and moreover parking spaces are scarce and pretty expensive (1).

The public transport on the other hand, is a wise alternative for tourists. With its 14 metro lines, 8 RER lines, and more than 50 bus lines (2), Paris has a renown public transport system (3). A day ticket for zone one and two (covering the whole city centre) will cost you 7 euros and allows you to make use of all three transportation facilities.

Knowing these facts, I decided to stall my car at the hotel’s parking lot and make use of the public transport.

On the first day of my stay, I swiftly noticed an abundance of grey bikes throughout the city. As a bicycle loving Dutchman, I was curious about the ins and outs of these funnily looking bikes called Vélib’ (Velo Libre, ‘free bike’) and subsequently obtained information at the tourist office.

The Vélib’ is a self-service bike rental initiative by the municipality of Paris, launched in 2007 (4). More than 20.000 bikes are scattered throughout the city, distributed over approximately 1500 different bike stations (5). To access this service, customers can buy a 1-day (€1.70) or 7-day (€8) subscription at any of the stations through a terminal or via the web (4). With this subscription you are allowed to pick up and return bikes at all Vélib’ stations throughout Paris (see figure 1).

velib_station_map

Figure 1 – Vélib’ stations (purple dots)

Is it that simple and cheap? Yes and no. Firstly, €150 has to be paid as bail (all transactions are by credit card and the bail is immediately returned afterwards) before the service can be accessed so that people actually return the bicycles (institutional arrangement). Furthermore, the first 30 minutes of each trip are free. After that, the usage is subjected to exponentially rising costs (see figure 2) to prevent people from occupying the same bike for a long period of time (6).

Schermafbeelding 2015-04-17 om 15.41.58

Figure 2 – tariffs 

Besides their predilection for bikes, Dutch people are known for their parsimony and so was I. Knowing that the first 30 minutes of a bike ride are free, I always made sure I returned or swapped my bike in time. For me, this was not a problem at all since Vélib’ stations are nearly at every corner of a street and I like to alternate the bikerides with walking and/or sightseeing.

In my opinion, the Vélib’ initiative is an easy and cheap way to explore the city of Paris and moreover cities in general. I had a great day making use of a dozen of bicycles and it took me only €1.70. Travelling by bike prevents you from getting exhausted of walking distances that are a little too long. Besides, you see a lot more of the city as opposed to traveling by (underground) public transport.

  1. http://www.youropi.com/nl/parijs/article/reisinformatie-43-106
  2. http://www.ratp.fr/en/ratp/c_21879/visiting-paris/
  3. http://www.tripadvisor.com/Travel-g187147-s303/Paris:France:Public.Transportation.html
  4. http://en.velib.paris.fr/How-it-works/Bikes
  5. http://www.lonelyplanet.com/france/paris/activities/cycling/velib
  6. http://en.velib.paris.fr/How-it-works/Use-Velib
  7. Header image: http://citiesnext.com/project/velib-bikes/
  8. Figure 1: http://parismap360.com/en/paris-bike-map#.VTEM4bpV504
  9. Figure 2: http://en.wikipedia.org/wiki/Vélib’
Articles, Business Case

User-driven firms vs. Designer-driven firms. Which products do consumers prefer and why?

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Over the past years, researchers have identified a new role that users can fulfil in the value creation process of firms. User-driven designs have proven to be strategically effective in many different industries. Examples are Apache (software), Quirky (household products), Muji (furniture) and Threadless (apparel). User-driven design can be defined by an innovative approach in which organizations encourage their user communities in generating ideas for innovative products. In this way the users take the lead in the design process by submitting ideas based on their wishes and needs. This is an easy and effective way for the company to involve users and might be more successful since, the real time needs of the consumers are taken into account.

The article by Dahl, Fuchs and Schreier (2014) focuses on the impact of this innovative strategy on non-participating, observing users. The study has found that the implications of this effect can differ. Therefore the authors tried to investigate why and when consumers actually prefer products of user-driven firms in order to provide more insight for user-driven markets.

Three experimental studies conducted in this research have resulted in interesting findings. First of all, non-participating, observing consumers tend to buy user-generated products rather than products from designer-driven firms. This preference can be explained by social identification. The fact that consumers are also users and their social identities tend to connect to the user-designers. They feel empowered in the process of being involved in generating designs.

Secondly, after further investigation the authors came to find that the social identification account can predict when the aforementioned effect does not materialize. For instance, it appears that when consumers feel dissimilar to participating users, the effect diminishes. The study has proven that consumers feel dissimilar based on significant demographics (i.e. gender) or when they feel that they do not belong to the social group of participating users (i.e. non-experts). Another case in which the aforementioned effect diminishes is if the user-driven firm decides to be selective in participation. Meaning, the firm does not allow every user to participate in the idea generation process, but just a selective group of users. This can lead to a feeling of isolation or social exclusion for observing consumers.

What I find striking in this research is the fact that observing, non-participating users do prefer user-generated products, while they were never involved in the process. I would understand such an effect if the consumer participated in the process. However, in this case the product designed by the firm itself could be way better since the wishes of the observing consumer were not taken into account at all. Meaning, because the observing consumers know that the products are user-generated they would rather buy that product, because of social identification. During the research they were informed about the production situation and I think they would therefore go for the ideal situation based on social identification. Therefore I cannot help but wonder, would the findings still be the same if the consumer did not know if the product was from a user-driven firm or designer-driven firm?

Source: Dahl, D. W., Fuchs, C., & Schreier, M. (2014). Why and When Consumers Prefer Products of User-Driven Firms: A Social Identification Account.Management Science.

News

What’s New from Amazon?

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“Selling services on Amazon : reach customers in your neighbourhood and grow your business”

Amazon Dash Button : “everything’s at the touch of a button”

What at first was an online bookstore now becomes one of the biggest online retailers worldwide. Amazon sells pretty much everything, from home appliances to clothing and even groceries. Its business model enables users to be actively involved by allowing them to act as buyers as well as sellers. Buyers are also encouraged to review sellers and share their experiences to build trust among each others. These involvements lead to users as co-creators of value. According to Saarijärvi et al (2013), value co-creation offers opportunities in identifying new ways to support either the customer’s or the firm’s value-creating processes. This business concept allows Amazon to capture greater value than it could have independently.

Being an e-commerce site leader doesn’t stop Amazon to grow its business. Based on The Economist (2015), on March 30th it announced Amazon Home Services which sells services. This service has a trial version called Amazon Local Services, which has been testing in some American cities since late 2014. So how does it work? Customers in several cities in the United States can search for the services they need and purchase it or submit a custom request on Amazon.com. There would be builders, plumbers, mechanics, and even music teachers offering their services to customers in their neighbourhood. To simplify the transaction, standard services have set prices up front while custom services can be requested (Amazon, 2015).

This service is a smart move from Amazon (if it succeeds), it offers convenience for customers as they will be able to locate nearby builders, plumbers, or any other services available in the website. Customers can purchase a service while shopping for products related to it, therefore Amazon encourages people to buy products (i.e. home appliances) from them as customers can simply have it installed too through the service. Not only that, the services providers also gain benefits from this, as Amazon takes care of the payment process while also exposed them to potential customers through the website and also provides them with easy-to-use tools.

Youtube : “Introducing Amazon Home Services”

As if the Amazon Home Services announcement is not enough, the firm has another news this week. It introduced Amazon’s “Dash” buttons, wireless-connected buttons for members of its Prime scheme branded (The Economist, 2015). The idea is consumers have these buttons in their homes and they can simply press it whenever they need certain household items. By pressing the button, an order of those certain items will be placed on Amazon.com then delivered to the customer’s home. People always keep trying to find new ways to make their life easier and this button is certainly attempting to do so. Though it seems easier to simply push a button rather than actually order an item online, which might required more than a couple of minutes, I have my doubts in this “smart” buttons. People obviously have lots of household items, not just a thing or two, and though it’s still not very clear about the technical of these buttons, I think people wouldn’t want to have lots of buttons in their homes for each of their items. And also, since it is a button, it would be small and people could easily forget where they put it and lose it. It would be even trickier for people who have kids at home. That being said, I don’t think these buttons would be practical to use.amazon dash buttons

(The Economist, 2015)

References

Saarijärvi, H., Kannan, P., and Kuusela, H. (2013). ‘Value co-creation : theoretical approaches and practical implications‘, European Business Review, 25(1), pp.6-19.

http://www.economist.com/news/business-and-finance/21647715-connected-devices-home-are-becoming-more-widespread-sensors-and-sensibility

http://www.economist.com/news/business-and-finance/21647529-americas-biggest-online-retailer-attempts-take-another-slice-demand-economy-books

http://services.amazon.com/selling-services/benefits.htm?ld=NSGoogleAS