Is Product Co-Creation The Most Democratic Form of Business?

I’m not sure if it’s democracy, so much as a strange off-shoot of a socialist ideology where people create what they want, and then the masses decide what is “good” or not. It’s more of a combination of democracy and socialism? I don’t really know, honestly. I’m no political science major. I only know what the internet tells me (kidding!). To get back on subject though, product co-creation is easily one of the best systems for businesses, especially online retailers and start-ups.

Let’s start with some of the reasons why it’s amazing for business:

1) Consumers can create something that they want

2) Reduces cost for the business

3) Builds relationships with customers

Those are some pretty great reasons as to why your business should use co-creation in it’s development process. THE END </blog>

wiping hands

I’m out

Just kidding (such a jokester). I’ll go into detail as to why all of the reasons above are good for businesses, and even some techniques for getting consumers to participate more often in creating products.

So, why is the first reason (letting customers create something that they want, in case you forgot already) so important? Well for one, it is a way of knowing that what you put out as a product will more or less be positively received. Why is that? Because the people who will be buying the product, created it. So, unless they intentionally made something that they wouldn’t want to buy (which would be very strange), you know you’ll at least be able to sell to your core audience. This is also able to satisfy some of reasons as to why customers feel the need to co-create something for a company.

There are four main motivators as to why customers want to create (or at least help create) a product. These motivators are financially, socially, technologically, and psychologically based. Allowing customers to create something that they want helps fulfill the social and psychological motivations. Social motivations include being seen as a “good citizen” and being rewarded for making something that others also enjoy. A really good example of this is Threadless.com.

Artists can submit ideas for T-shirt designs, which are then voted on by the community. If the shirt receives enough votes, then it is available for purchase the next week. Each shirt has a week to be voted on, and is compared against other shirts submitted that week. If the artist “wins” they are given rights to their design, and I believe there is a monetary prize (fulfilling the financial motivations as well). But, let’s just focus on the users who only vote on the designs.

If they like a shirt, they are able to vote for it, right? As you vote on different designs, your profile is updated to reflect you average rating (it’s a 1-5 scale), and the really cool part of it is there is a section that shows how many designs you voted in actually get printed. There is also a pretty basic community function integrated with the site, so you can see what others users are voting on. You can also follow designers you like, and other users who might have similar preferences as you.

friend

And then you will be best friends forever

The more active members obviously have a greater sense of fulfillment because they are more likely to have helped get more shirts printed. This is sliding into the psychological factors. By helping designers get their name out in the public the users are helping new designers and artists get a foot-hold in a pretty tough industry. This is a very strong motivator, especially in Threadless’ target market (not to assume, but it’s mainly hipsters).

What about the second reason why co-creation is a good tool for companies (reducing costs for companies)? Well, as you can imagine, having customers generate ideas for your company is a a pretty low-cost way to come up with new ideas. This is because you are pretty much “employing” people to do some of the harder work for you.

While you may offer fiscal rewards (see above), these are generally much less than what you would normally pay an employee to come up with the same ideas. And yes, there may be sites such as InnoCentive that pay larger amount of money for solutions to problems, but again, in the long run, these costs are generally less than what the company would normally pay a team to figure out. By using an outside source (usually people with little/no experience in the field), they are able to come up with new ideas that they normally would not have thought of.

The third and final reason why having customers come up with ideas for your company is because it help build relationships. How does this happen? For one, if a company runs a forum on their site, they can engage with their customers (usually the more loyal ones participate), and they are  able to take in their ideas for new products, or how to improve existing ones. This helps satisfy the technological motivation.

Technological/knowledge motivation is derived from the customers learning about new products and giving their input about them. This is especially useful for attracting customers who have a “high need for cognition” meaning they like to learn about products and have lots of information about something before they decide to finally buy something.

Another reason why co-creation help build relationship is because it fosters a community of users who are being heard by the company. A really good example of this is MyStarbucksIdea.com (yes I know I’ve reference this website probably three other times in this blog, but hey, it’s a good idea). By having customers create ideas that can eventually be implemented by the company, users are more likely to go to the store and buy what they “made”.

The relationship that they have with the company is pretty strong because it is built on the company taking their ideas into consideration. By being a company that listens to your customers and takes their ideas into consideration, you are creating a relationship that is based on mutual respect.

Don’t get me wrong, there are some issues with co-creation, the biggest one being a reduction in control the company has. Mountain Dew found that out the hard way (language warning). However, incidents such as what Mountain Dew faced are not common enough to be a pressing issue for companies. And despite the media coverage, the company did have the final say and did not allow any of the suggested names to go on the market (I hope…). In the end, the biggest resource that will be wasted for the company is time, since they are going to have to take down the site or whatever the medium is for the contest.

curses

Curse you internet trolls!

Overall, I would say that product co-creation is a win-win for customers and companies. Customers get to see products that they want, and companies save time and money (assuming no pranksters get a hold of your project). Also, with sites like Quirky and Kickstarter gaining popularity, consumer created products will become a much more prevalent segment of the retail marketplace.

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