European Business ReviewManaging your co‐creation mix: co‐creation ventures in distinctive contextsThorsten Roser Robert DeFillippi Alain Samson

Article information:To cite this document:Thorsten Roser Robert DeFillippi Alain Samson, (2013),"Managing your co#creation mix: co#creationventures in distinctive contexts", European Business Review, Vol. 25 Iss 1 pp. 20 - 41Permanent link to this document:http://dx.doi.org/10.1108/09555341311287727

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Managing your co-creation mix:co-creation ventures in distinctive

contextsThorsten Roser

Department of Social Psychology,London School of Economics and Political Science (LSE), London, UK

Robert DeFillippiDepartment of Strategy and International Business,Suffolk University, Boston, Massachusetts, USA, and

Alain SamsonDepartment of Management,

London School of Economics and Political Science (LSE), London, UK

Abstract

Purpose – The purpose of this paper is to make a contribution to co-creation theory by integratingconceptual insights from the management and marketing literatures that are both concerned withco-creation phenomena. It aims to develop a reference model for comparing how differentorganizations organize and manage their co-creation ventures. It also aims to apply the authors’framework to four distinct cases that illustrate the differences in co-creation practice within differentco-creation environments.

Design/methodology/approach – The authors compare four different companies based on caseprofiles. Each company is employing its own distinct approach to co-creating. The authors employ amethod mix including literature analysis, structured interviews, document and web site analysis, aswell as participation.

Findings – The reference model offers a set of useful dimensions for case-based inquiry. The casecomparisons show how firms may decide to systematise and manage a mix of co-creation activitieswithin B2B versus B2C contexts, utilising either crowd-sourced or non-crowd-sourced approaches.Further, the case comparisons suggest that there are less differences in B2B versus B2C co-creation ascompared with crowd-sourced versus non-crowd-sourced approaches. Ultimately, implementationdecisions in one dimension of co-creation design (e.g. whom to involve in co-creation) will affect otherdimensions of implementation and governance (e.g. how much intimacy) and thus how co-creationneeds to be managed.

Originality/value – The paper presents case comparisons utilising B2B versus B2C, as well ascrowd versus non-crowd-sourcing examples of co-creation and an original decision support frameworkfor assessing and comparing co-creation choices.

Keywords Decision support systems, Business performance, Value chain, Managing co-creation,Decision support framework, Contrasting case studies

Paper type Conceptual paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0955-534X.htm

The authors acknowledge the permission of Xerox Corporation to utilize insights into Xerox’sco-creation practices derived from interviews with Xerox executives as part of a case studyconducted by one of the authors.

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European Business ReviewVol. 25 No. 1, 2013pp. 20-41q Emerald Group Publishing Limited0955-534XDOI 10.1108/09555341311287727

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1. IntroductionBusinesses in today’s economy have to continuously reinvent themselves in order toadapt to complex and dynamic market realities. With greater interconnectedness andinterdependence of actors involved in the marketplace, value creation increasinglytakes place through networks and becomes less dependent on a firm’s (intended) valueproposition alone (Prahalad and Ramaswamy, 2004). As customers are demandinggreater levels of personalisation in their consumption experience (Prahalad andRamaswamy, 2000), firms have to re-assess their business model in order to becomemore responsive to consumer needs and demands (Sheth et al., 2000). Although the firmis no longer taking centre stage in all value creation, it is a catalyst through whichvalue creation can be enabled, shaped and accelerated (Sawhney et al., 2005).

Co-creation is advocated as a means to expand the innovation and value creationcapability of the firm, while nurturing customer relationships and lowering cost formarketing and research and development (R&D) (Sawhney et al., 2005; Prandelli et al.,2006; von Stamm, 2004). The benefits of co-creating value include better productquality (Fuller et al., 2007), greater customer satisfaction (Nambisan and Baron, 2007),as well as reduced risk for the firm (Maklan et al., 2008), specifically in relation to themarket entry of a new product or service.

Increased inter-connectivity with co-creators allows firms to generate and leveragea range of benefits which seem to cut both ways. While customers and other co-creatorsbenefit from greater personalisation and value as a result of co-creation processes,companies can build competitive advantage by turning just-in-time knowledgefrom co-creators into just-in-time learning for their organisation (Roser et al., 2009b).

As a consequence, more and more companies adopt strategies that allow them toco-create value with a range of stakeholders, including customers, in order to developfuture products and enhanced business models that improve an organisation’scompetitiveness and brand perception (Prahalad and Ramaswamy, 2004). There is,however, no one-size-fits-all approach to co-creation (Kohlbacher and Mukai, 2007) andorganisations need to decide on how they will implement and manage their specificco-creation activities. The question for most organisations is thus not whether theyshould co-create, but how they can best involve co-creators, as well as which availableapproaches and tools to use to govern their relationships.

Firms benefit from engaging in a range of co-creation activities across the valuechain, involving various touch-points and domains, rather than just one way ofco-creating value with a particular type of co-creator (Ramaswamy, 2009). In thispaper, we want to learn from a comparison of different approaches to co-creation andco-creator involvement across distinct business contexts that can help organisationsimplement and govern their unique mix of co-creation activities. More specifically, weare interested in business-to-business (B2B) versus business-to-consumer (B2C)co-creation, as well as examples leveraging crowd-sourced versus non-crowd-sourcedapproaches as these represent intrinsically different forms of co-creator engagement(Howe, 2006; Whitla, 2009).

Our work aims to show a range of distinct co-creation possibilities available todecision makers. The contexts we explore are indicative of the choices organisationsmay face when involving co-creators into the value chain. In addition, we want to learnfrom noteworthy differences when involving external stakeholders into a firm’sinnovation process. In doing so, we contribute to current debates on the concept

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of co-creation and how to manage co-creator involvement. More specifically, we want tolearn from case comparisons that can help firms better systematise and manageco-creation within different environments. To achieve these aims, our paper isstructured in the following way.

First, we will summarise the literature on co-creation and address the current conceptualdebate. This includes a section on comparing the B2B and B2C strands prevalent inthe co-creation literature. We believe this is important as these represent parallel streamsrooted in the strategic alliance literature in management and the relational literaturein marketing (which are now beginning to become conceptually intertwined) in orderto address co-creation from a more holistic and organisational perspective.

Building on this review, we will assess the current debate and offer our own definitionof co-creation, which focuses on co-creation as a dynamic and interactive socialprocess between co-creators across and embedded within co-creation environments.

We then present a reference model on how co-creation activity can by synchronisedwith other value creating innovation processes, introducing six core dimensions andquestions required to govern co-creation ventures. We utilise these dimensions tocompare and assess four distinct co-creation case profiles in order to illustrate whatco-creation practices could be implemented, as well as the differences that may resultfrom the choices organisations face when deciding on their unique mix of activities.

Finally, we summarise and discuss our findings in the light of the currentresearch agenda, outlining future possibilities for using and further researching ourframework.

2. Co-creation as collaborative innovation process between stakeholdersAround the turn of the century, the marketing literature has noted a shift from atransactional to a collaboration-focused view of customer relations, where consumersincreasingly bring in their own competence through dialogue with companies(Prahalad and Ramaswamy, 2000; Sheth et al., 2000; Sawhney, 2002). In marketingtheory, these changes are part of a new logic for marketing outlined by Vargo andLusch (2004), in which value is no longer primarily determined when products (mainlytangible goods) are exchanged in the marketplace, but the logic of intangible servicesand the central role of knowledge. Goods are not just end products, but alsotransmitters of knowledge (an operant resource) or “intermediate products” that areused by customers (another operant resource) in a value creation process. One of thebasic premises of service dominant logic is that knowledge is a fundamental source ofcompetitive advantage.

Instead of the value or utility embedded in goods, the new logic focuses on theco-creation of values and relationships. People are no longer seen as buying eithergoods or services, but products that provide a service and value that depends oncustomer experience: value in use (Macdonald et al., 2011). The associated logic forbrands involves dynamic and social processes, in which all stakeholders are consideredoperant resources: “brand value is not only co-created through isolated, dyadicrelationships between firms and individual customers [. . .] it is also co-created throughnetwork relationships and social interactions among the ecosystem of all thestakeholders” (Merz et al., 2009, p. 338).

The co-creation of value occurs whenever stakeholders interact with companies orproducts and thereby have an active role in the shaping of their experience and

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ultimately value perception, ranging from co-conception and co-design to masscustomisation, co-production, co-promotion and co-distribution (Sheth and Uslay, 2007;Roser et al., 2009a, b).

Conceptually, co-creation processes can be viewed as the product of different strandsof thinking including marketing and management theory, as well as psychology,particularly considering techniques derived from creative play, group decision making,as well as innovation and knowledge processes (Roser et al., 2009b). Althoughco-creation often focuses on innovation or new product development (NPD) (Hoyer et al.,2010) with implications for customer relationship management (Maklan et al., 2008),more holistic approaches have expanded their meaning and practice to “customervalue-chain involvement” or CVCI (Mascarenhas et al., 2004).

However, all co-creation approaches share two main features:

(1) The expansion of organisational boundaries.

(2) The involvement of co-creators.

Co-creation as collaborative innovation (co-conception, co-design) with customers addsa third dimension: focus on co-creating new value(s) with users initiated by the firm(Roser et al., 2009a, b). Specifically, the latter is a means to achieve greater servicisationand to systematically enhance the firm’s business model (Vandermerwe andRada, 1988).

Taken together, we define co-creation as an interactive, creative and social processbetween stakeholders that is initiated by the firm at different stages of the valuecreation process. In this paper, we are more specifically interested in co-creationpractices relating to the early stages of a firm’s innovation process, i.e. NPD. In thoseprocesses, co-creation activities are a form of collaborative innovation and facilitatedsocial interaction involving employees, suppliers, consumers (or customers morespecifically) as well as value adding experiences. These creative collaboration processesmay take place between an organisation and a group or network of co-creators and areembedded within a particular value creation context and co-creation environment(Mitleton-Kelly, 2011). From a learning perspective, co-creating thus involves theiterative construction and deconstruction of knowledge and experience, leading to amutual learning process (Payne et al., 2008, 2009). Consequently, involving co-creatorsinto a company’s business processes impacts organisational learning and holds thepotential to trigger business transformation (Owen et al., 2008).

2.1 B2B versus B2C co-creationThe concept of organisational co-creation, more specifically, is discussed in twoparallel evolving bodies of literature. On the one hand, B2B co-creation is traditionallyrepresented by the strategic alliance literature in management (Doz and Hamel, 1998).On the other hand, B2C co-creation, is rooted in relational marketing theory(Maklan et al., 2008).

The B2B literature tends to focus on co-creation as co-innovation. This perspective onco-creation draws upon two distinct literature streams: supply chain innovation andstrategic alliance innovation. The supply chain co-creation stream focuses on verticalpartnerships between co-innovating vendors and their customers as a moreinterdependent and reciprocal value creation alternative to strategic outsourcing(Hoecht and Trott, 2006). Similarly, the strategic alliance literature considers co-creation

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in the context of fostering more collaborative and trust based modes of co-innovationbetween two or more autonomous firms that are working together in either acontractually based or equity based relationship (Doz and Hamel, 1998).

Another perspective on co-creation in management is the study of open innovation(Chesbrough, 2003). Open innovation is characterised by the use of purposive inflowsand outflows of knowledge to accelerate internal innovation, and expand the marketsfor external use of innovation, respectively. Open innovation assumes that firms canand should use external ideas as well as internal ideas, and internal and external pathsto market, as they look to advance their technology (Chesbrough et al., 2006).

In B2C, by contrast, one strand of the co-creation literature has traditionally focusedon customer relationship management, particularly specific forms of customerengagement to nurture customer satisfaction, as well as useful ways of obtainingcustomer feedback (Payne et al., 2008, 2009). Another area of the literature focuses onactive involvement of customers as decision helpers (Wikstrom, 1995; von Hippel,2005), inventors and problem solvers (e.g. in open innovation contests) and thusemphasises the search and selection of ideas, as well as the customisation of productsand experiences (Sawhney, 2002). With the possibilities brought about by new ICTs forbuilding online communities and web-based engagement platforms, organisations mayemploy a “process of outsourcing of activities [. . .] to an online community or[generally large] crowd”, an activity often referred to as crowd-sourcing (Whitla, 2009,p. 15; see also Howe, 2006).

A number of conceptual frameworks on collaborative innovation have combinedB2B and B2C stakeholders (Gloor and Cooper, 2007; Owen et al., 2008; Swink, 2006) andour research contributes to this work. “Swarm businesses” are a mix of crowd-sourcedB2B and B2C relationships that allow companies to work towards the collective interestof stakeholders, including employees, customers, suppliers, partners and evencompetitors (Gloor and Cooper, 2007). Swink (2006) argues that collaborative innovationcapability includes both structured (i.e. planned) and unstructured (i.e. organicand co-evolving) processes, where different collaborators fulfill different purposes invalue creation. Unstructured collaboration is more useful in early stages of NPD,whereas structured collaboration is more important in the later stages of the innovationprocess. This view is consistent with wisdom of crowd (Surowiecki, 2004) andcrowd-sourcing arguments (Howe, 2006; Whitla, 2009), as well as the view of managinginnovation as stage-gate process (Cooper, 1986).

Ultimately, collaborative innovation has been conceptualised as involving internaland external stakeholders, whose relationships have to be managed through properalignment, boundaries and commitment (Owen et al., 2008). Alignment entails asynchronisation of strategic visions and innovation goals, the implementation of whichfocuses on vertical and horizontal collaboration. Boundary management calls for anidentification of different partners for particular innovation purposes and themanagement of associated relationship through appropriate forums. As a result,extending enterprise boundaries requires different forms of governance in order to enableoptimal co-creator relationships. The extended enterprise needs to leverage well-definedboundaries and suitable approaches for different ways of co-creating (e.g. through jointventures, consortia or customer communities).

Finally, collaborative innovation also requires commitment towards transformationin order to create a collaborative culture (Owen et al., 2008). Leadership, communication

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and reinforcement, along with the development and ongoing tracking of key measures,institutionalised learning and knowledge management, can help companies achievethis goal.

However, since co-creation contexts can be highly diverse, managing co-creationrequires a way of intertwining co-creation activity with organisational processes thatfosters sensibly inter-locking behaviour between actors and organisation (Weick, 1979,1995). Hence, organisations need frameworks allowing them to govern their co-creationventures across distinctive contexts.

2.2 Assessing the current conceptual debate and research gapCo-creation is a young and exciting research discipline and managerial paradigm(Piller et al., 2010). The conceptual debate on co-creation, however, is still in its infancyand many aspects remain insufficiently understood (Hoyer et al., 2010). Recent discussionshave arrived at a point where the conceptual foundations are being investigatedin greater depth. Scholars are seeking to develop appropriate taxonomies aroundco-creation activity (O’Hern and Rindfleisch, 2009; Zwass, 2010), while identifyingtypologies to classify co-creation toolkits and methodological approaches (Piller et al.,2010). Ultimately, academic work focuses on developing a more coherent co-creationresearch agenda, as well as suggesting future research directions (Bogers et al., 2010).

Recent studies have cut across a wide spectrum of areas including industrydynamics, entrepreneurship, firm boundaries, innovation communities, measurement,and policy (Bogers et al., 2010). More specifically, the underlying argument foruser involvement is to use customers as a means to better develop and market productsthat are superior in meeting customer needs (Kristensson et al., 2004). The prevalentview is to involve co-creators as “helpers” for idea search and selection, while firmsmanage and control innovation (von Hippel, 2005). More interdependent andinterconnected views on the process co-creating value are beginning to emerge asscholars are asking “who creates value?” and “who co-creates?” (Gronroos, 2008, p. 298).

Although most research focuses on either B2B or B2C co-creation contexts,customer centric organisations are likely to engage in a mix of both B2B and B2Cco-creation activities, potentially involving both internal and external stakeholders ina variety of tasks (Gloor and Cooper, 2007; Owen et al., 2008). The choice of B2B versusB2C co-creation, however, is in part a strategic decision and B2B may involve differentchoices, relationships and forms of engagement than B2C type co-creation. Forexample, B2B co-creation is seen as a means to enabling “cross-fertilization andstimulation of ideas through shared knowledge and experience” (Swink, 2006, p. 38),while B2C co-creation typically focuses on how customers can be engaged in specificinnovation related tasks (von Hippel, 2005).

As both research streams continue to evolve in parallel with different motivationsand orientation, recent research is focusing on both B2B and B2C relationshipsinvolved in co-creating value, thereby addressing co-creation more holistically andfrom a more organisational perspective. Ultimately, this view also acknowledges thatco-creators may include stakeholders beyond customers or users, such as employees,customers, suppliers, partners and even competitors (Gloor and Cooper, 2007). Ourperspective on co-creation shares this multi-stakeholder perspective as a meansto accommodate a more holistic, yet differentiated approach to managing co-creatorinvolvement and value creation.

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3. The practice: challenges and choices in governing co-creation venturesCo-creating means extending the value chain (Helm and Jones, 2010). Hence, involvingco-creators leads to an expansion of organisational boundaries and managementof new and different relationships (Sawhney and Prandelli, 2000). In addition, firmsrequire a flexible yet systematic integration and alignment of processes and stakeholderactivities across business processes, particularly where customer encounters takeplace (Payne et al., 2008, 2009; Clarke and Nilsson, 2008).

Indeed, the challenge in building a more service oriented and customer centredbusiness model relates to the type of relationships and interactions to be utilised inco-creating value. Hence, organisations need to decide on how they can best involveco-creators and choose appropriate approaches and tools. With the possibilities broughtabout by new ICTs for building online communities and web-based engagementplatforms, organisations may employ a “process of outsourcing of activities [. . .] to anonline community or [generally large] crowd”, an activity often referred to ascrowd-sourcing (Whitla, 2009, p. 15; see also Howe, 2006).

Alternately, organisations may choose to limit their co-creation to a specific partner,whether a supplier or customer and this type of one to one co-creation is oftendescribed in terms of either outsourcing type relationships or strategic alliancerelationships. This one-to-one relationship parallels the distinction between a B2B(one-to-one) and B2C (one-to-many) business relationship. However, crowd-sourcing isprimarily a software enabled tool for soliciting engagement by a crowd and hencecrowd-sourcing may arise in either B2B or B2C contexts. Similarly, the use ofnon-crowd-sourced based tools for co-creation may arise in either B2B or B2C contexts.

Taken together, organisations are faced with the choice of utilising crowd-sourcedor non-crowd-sourced co-creation solutions, as well as deciding on the business context(B2B versus B2C) in which they want to co-create. Depending on the strategicorientations and co-creation aims firms may seek to foster different types of co-creatorrelationships or choose to implement a mix of co-creation ventures.

3.1 A reference model for synchronising co-creation onto the value chainIn order to illustrate co-creation choices and their inter-relationships, weidentified major managerial areas and developed six decision support questionsreflecting dimensions to consider when governing co-creation ventures. Thesedimensions were inductively derived from an extensive literature review (113 articles)focusing on practices associated with co-creation and stakeholder involvement (Roseret al., 2009b). In parallel to our own work, Ind et al. (2012, p. 153) have recently outlinedsimilar questions for co-creation practitioners as a tool “to encourage managers topause and reflect” before embarking on new or extending existing co-creation ventures.While such dimensions are high in content validity, they do not represent anexhaustive list of categories. They are, however, a useful reference point for in-depthresearch as they are indicative of the choices involved in designing co-creationventures:

. Co-creator type. Who will be involved?

. Purpose. Co-creating for what purpose?

. Locus. Where in the innovation process should it occur?

. Intimacy. How much involvement should there be?

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. Time. How long should co-creators be involved?

. Incentives. How should co-creators be motivated?

The above dimensions represent both managerial and theoretical themes of co-creationactivity. Similarly, recent work by Swink (2006), Gloor and Cooper (2007) and morespecifically Owen et al. (2008) all suggest a variety of dimensions that are useful ingoverning co-creation ventures and co-creator engagement. Within our referencemodel, we can use these questions as a decision template for “what if” explorations andto develop co-creation strategies, as well as to reflect on how we can sustainablyintegrate co-creation activity with other value creating business processes (Figure 1).

Our dimensions represent decision making areas any organisation would face whenimplementing and managing co-creation. In general, firms need to createmulti-dimensional environments which address and enable all inter-relateddimensions of co-creating at the same time (Mitleton-Kelly, 2011). Hence, firms maychoose to engage in a mix of co-creation activities across a variety of business contexts,complementing user co-creation.

Ultimately, our framework is intended to allow organisations to reflect on theinterdependence of choices as well as how co-creation can become a replicable andsustainable business process. By building on real world examples, we will demonstratehow firms choose to implement co-creation in different contexts and how they use andnurture various types of co-creator relationships. We do this to illustrate howmanagerial areas could be synchronised in order to enable and utilise co-creation indifferent contexts.

4. Illustrating the practice: governance in distinctive co-creation contextsUsing our six dimensions for co-creator involvement, we now examine four distinctcases illustrative of co-creation ventures. Our rationale for the typology of co-creationin Table I is based on our expectation that each of the four co-creation contextsprovide distinctive requirements for the governance of the co-creation process.

Figure 1.A reference model –

co-creation assynchronised onto the

value creating businessprocesses and embeddedin a dynamic co-creation

environment

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Governance refers to the formal and informal rules of exchange and the initiation,maintenance, and termination of relationship between two parties. Governance formsconsist of market, hierarchical, and relational approaches. Market governance isassociated with discrete types of exchange, hierarchical governance gives the right ofone party to impose conditions on another and relational or bilateral governance meansa more open-ended relationship (Heide, 1994).

When applied to co-creation, one can expect that co-creation ventures are governedby a variety of mechanisms that reflect each of the three forms of coordination in aparticular way.

First, there are the hierarchical structure of rules imposed by a governing authorityupon participants in co-creation. Examples of such hierarchic governance structuresmight include steering committees which establish both basic rules for co-creationbehaviour, establish metrics for measuring co-creation performance and allocateresources and provide rewards for performance. Hierarchical governance requires theacceptance of the legitimate authority of the rule maker. All co-creation ventures needto utilise these basic governing practices to some extent.

Second, market-based governance of co-creation refers to incentives rooted in thesupply and demand for interaction and transactions for which prices or explicit marketbased value may be determined. The posting of prizes for some co-creation offeringsrepresents a clear market governance practice. Presumably, the offering of a prize inthe form of specific compensation for a best solution offer sets in motion a competitivesupply of proposed solutions for the particular challenge posted by the offer supplier ortheir third party agent. Moreover, market based governance is based on voluntarytransactions between more or less anonymous parties.

Finally, relational governance refers to more trust based forms of interaction inwhich past prior experience shapes future expectations of cooperation. Co-creationrelies upon relational governance to the extent that co-creation parties perceivethemselves to share similar or compatible values such that they are intrinsicallymotivated to cooperate in co-creating value.

In reviewing the types of co-creation ventures included in Table I, one can thereforeposit the following distinctions in governing B2B versus B2C co-creation.

B2B co-creation ventures are more likely to emphasise hierarchical forms ofco-creation governance based on the need for hierarchical governance to align themultiple co-creating participants from both organisations. These types of co-creationventures are most likely to utilise steering committees with representatives from bothorganisations to co-create the rules that will govern their cooperation.

B2C co-creation activities are more likely to emphasise market-like forms ofco-creation governance because these ventures are creating a market for solutionsto specific co-creation challenges. Ultimately, this one-to-many co-creation relationship

Example B2B B2C

Crowd-sourced Crowd-sourced innovation challenges atInnocentive.com

Open innovation and NPD atQuirky.com

Non-crowd-sourced Co-innovation partnership at Xerox andP&G

XC90 customer involvement project atVolvo cars

Table I.Examples ofcrowd-sourced andnon-crowd-sourcedco-creation in B2B versusB2C contexts

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will require clear signalling of the price or market value of co-creation participation toa dispersed market place of anonymous potential co-creation suppliers.

However, both types of co-creation ventures are likely to supplement theirhierarchic and/or market based governance arrangements by investing in the mutualidentification of co-creation participants with each other’s shared values (relationalgovernance). It is this identification of co-creation parties with each other and theirintrinsic motivation to engage with each other that complements more extrinsiccalculations of the costs and benefits of collaboration in co-creating value. Davis et al.(1992, p. 1112) define extrinsic motivation as “the performance of an activity becauseit is perceived to be instrumental in achieving valued outcomes that are distinct fromthe activity itself”, while intrinsic motivation refers to “the performance of an activityfor no apparent reinforcement other than the process of performing the activity per se”.Research by Fuller (2006) suggests that intrinsic motivations among consumers aresignificant predictors of co-creation interest, while extrinsic motivation are associatedwith potential endurance in the form of intended frequency of co-creation participation.Unlike reward-oriented consumers, most participants in online co-creation aremotivated by intangible rewards, such as feedback, recognition and the interactionexperience itself (Fuller, 2010).

A second set of governance distinctions follow from our inspection of crowd versusnon-crowd-sourced co-creation. Crowd-source based co-creation is more likely toinclude market based governance because of the relative anonymity of solutionsuppliers who transact with the agent offering the co-creation challenge.Non-crowd-source based co-creation is more likely to emphasise shared values andidentification of the co-creating parties with each other’s mutual interests incooperation. However, our expectation is that all co-creation ventures involve a mix ofgovernance forms and that differences between co-creation ventures may be matters ofdegree rather than all or nothing choices of specific governance mechanisms.

4.1 Method of case comparisonBuilding on Yin (1993) we use case based inquiry to illustrate the choices potentiallyfacing other organisations engaging in these types of co-creation projects. This isparticularly appropriate when, the analytic goal is to relate a narrow range ofphenomena to a broader context. We see our work as a first step in building thefoundation of a more exhaustive meta-analysis using case study evidence that willcontribute to our cumulative knowledge about organising co-creation ventures andmanaging co-creation inside the organisation. Furthermore, our approach allows us todevelop insights from contrasting and comparing aspects inherent in distinct and moreor less prototypical co-creation contexts.

Co-creation case profiles. DeFillippi et al. (2011) provide an in-depth study of theXerox/P&G co-innovation partnership in the context of B2B co-creation and printsolutions and services. Xerox received a $140 million five-year service contract in early2009 to manage all of Proctor and Gamble’s print services. This partnership requiredboth companies to become much more engaged in sharing their technology andbusiness process knowledge and capabilities in order to co-create innovative printservice solutions that neither company could create on its own. Senior executives fromboth companies coordinated a portfolio of co-creation activities in which Xeroxtechnologists worked with P&G consumer unit managers to address a variety of

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innovative solutions aiming to cut P&G’s print power usage by 30 percent and P&G’spaper consumption by 20 percent to 30 percent. Xerox’s Global Services developed anddelivered an enterprise-wide strategy to free up hundreds of minutes of time annuallyfor each of P&G’s 170,000 employees worldwide and Xerox also provided on-sitetraining to help P&G’s employees manage the new print environment.

Dahlsten’s (2004) outline of customer involvement in the XC90 project at Volvo Carsis one of the few well documented examples in the literature of B2C co-creation basedon dyadic and face-to-face costumer involvement in the automotive industry. Therationale behind the Volvo XC90 customer involvement project was, first, to provideproject management team with a common understanding of the target customer in acost-effective way. Second, the aim was to give the firm contextual information to NDPdecision-making. Third, it was done to refine and improve the market offer for theirtarget customer, Californian housewives. Fourth, it aimed to foster tacit design bycustomer presence, i.e. elucidate customer knowing and experiencing while identifyingand validating design preferences backed up by market know-how and target groupresearch. Finally, the project sought to complement conventional market researchactivities, as well as product innovation.

Innocentive Inc. calls itself an “open innovation” company using principles ofcrowd-sourcing and prize competition to help solve complex R&D problems for itsclients in a broad range of scientific and business domains. Their innovation challengesare an illustrative approach to organisational problem solving using an external crowdof experts and problem solvers. In the Innocentive nomenclature, a challenge is awell-formed problem whose solution has value to a company. The customer forInnocentive is typically an organisation facing a scientific, technical, business ororganisational challenge for which internal searches for solutions have not produced anoptimal solution. The customer contracts with Innocentive to receive assistance incrafting an appropriately designed challenge to post on Innocentive’s web site.Innocentive provides the technology platform and access to its global solver communityand also manages IP issues related to challenges and solver solution proposals.Moreover, Innocentive provides its solver community with guidance on how to improveits solution offerings by feedback on previous solver offerings and general guidancefrom its blog postings to the solver community.

Quirky Inc. is an innovation and design agency that has created a business modelaround collaborating with inventive people contributing new product ideas from awide spectrum. Their approach is less conventional as it mixes aspects of openinnovation with crowd-sourcing and customer co-creation (Piller et al., 2012). Theco-creation objective at Quirky is to involve an inventive crowd in NPD andcommercialisation from idea with sketches to the finished product, while tapping intothe in-use experience and diverse knowledge base of their web site members. On theone hand, the company helps commercialise their web site member’s new productideas. On the other hand, the web site attracts a large community of inventorsproviding them with continuous supply of pipeline ideas. In addition, Quirky leveragetheir innovation and design expertise with a co-creation adapted stage-gate process tofoster an accelerated and controlled ideation process.

Taken together, we utilise those specific examples because, first, we have asufficient amount of information available about them and, second, they representrelatively prototypical approaches to involving co-creators, while being intrinsically

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different examples of B2B versus B2C as well as crowd-orientated choices ofco-creating value. Our case analyses will then show how organisations address typicalchallenges associated with co-creation implementation.

A limitation of our approach is that we are not able to illustrate the co-creationdesign of every available model of co-creation (Zwass, 2010). However, the cases wehave selected represent widely populated and significant models of co-creation withinthe B2B and B2C contexts.

4.2 Examining differences in co-creation design and stakeholder engagementBuilding on our set of questions, we now examine the pattern of similarities anddifferences in the above case profiles. We do this to discern what are important differencesin co-creation design as well as the choices associated with the type of co-creationimplementation model (i.e. crowd or non-crowd-based) and/or co-creation context (i.e. B2Bversus B2C) (Figure 2).

Co-creator type: who will be involved? In the Xerox/P&G partnership, co-creationinvolved multiple strategic clients of Xerox from P&G’s Global Services and customerfacing operating units working primarily with Xerox technologists. In the VolvoXC90 customer involvement project, the co-creators were made up of lead users(von Hippel, 1986) selected by the Volvo facilitator. Here they are represented by affluentprofessional women who were car owners and likely to make independent decisionsregarding the purchase of a vehicle. For Innocentive, co-creation typically involves theparticipation of their B2B customers (called seekers) who post their challenges forsolutions proposed by Innocentive’s global network of volunteer problem solvers.Hence, in Innocentive’s engagement approach seekers are defined as customers lookingfor solutions relating to a particular knowledge request (challenge), while solvers are

Figure 2.Differences in co-creation

choices across B2B andB2C contexts using

crowd-sourced (green) andnon-crowd-sourced (red)

approaches

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experts of their member base who provide this solution in competition with othersolvers. At Quirky.com, “anyone with a good idea” could sign up to their web site andsubmit new product ideas. Hence, their members fulfil multiple tasks acting as ideators(i.e. creators of ideas), helpers or users across different stages of co-creation process. Thismeans users of Quirky.com either get involved by proposing new product ideas to theuser community or they act as users supporting the further development and maturationof an idea until it is taken to market.

In comparing these four cases, the following patterns may be observed in termsof who is involved in co-creation:

. The crowd-sourcing based co-innovation practices (Innocentive and Quirky)appear to involve not only the larger number of co-creators, but also a greatervariety of participants relative to non-crowd-sourced B2B and B2C cases. This isconsistent with the overall philosophy of crowd-based technologies and practicesfor tapping into the so-called wisdom of crowds (when the aggregation ofa group’s opinions is more accurate than that of an expert individual (Surowiecki,2004): the larger and more diverse the crowd accessed, the faster the generationof solutions and the more wide ranging the number of solutions proposed will be.This wisdom of crowd size and diversity is seen as a means to offset the localsearch biases of solution searches undertaken by a smaller number of insideorganisation participants.

. The non-crowd-based B2B and B2C co-creation approaches appeared to makedifferent trade-offs in their selection of participants. The Volvo B2C projectseemed to focus on a more narrowly defined set of customers to help Volvo betterunderstand their needs and to involve them in co-creating a more attractiveautomotive offering for their market niche. The Xerox P&G co-creationpartnership, by contrast, appeared to focus more on involving representativesfrom diverse operating units of P&G. This focus produced a wider range ofco-creation projects serving a greater variety of business customer needs ratherthan one specific market niche.

Purpose: co-creating for what purpose? Xerox’s co-innovation partnership was focusedon creating and coordinating a technologically diverse portfolio of co-innovationinitiatives that utilised Xerox’s technology platform and engineering capabilities andfostered a strategic relationship with P&G and an associated long term revenue streambased on the portfolio of service solutions forthcoming from the co-creation projectportfolio. The rationale behind the Volvo XC90 customer involvement co-creationproject was to validate and improve Volvo’s offerings that targeted affluentprofessional women drivers. Innocentive’s co-creation contests are primarily focusedon problem solving contributions from its online community. The purpose at Quirky isto involve an inventive crowd in NPD and commercialisation from idea with sketchesto the finished product, while tapping into the in-use experience and diverse knowledgebase of their web site members. They use their members to search for new productideas, develop new products, buy the products they develop and generate buzz aboutthe products being made.

In comparing these four cases, the following patterns are observed in the motivationsand purposes of these co-creation practices:

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. The common motivations for participating in the Innocentive B2B and QuirkyB2C co-creation business models are rooted in claims of crowd-sourcingadvocates for the wisdom of crowds described previously. These include theincentives by both Innocentive’s clients and Quirky to access relatively quicklyand at relatively low cost a diverse array of innovation inputs not available frominternal sources of expertise.

. A significant difference between Innocentive and Quirky crowd-sourcing practicesarises from the business models utilised by these firms. Innocentive simply acts as abroker between a crowd of smart people and firms who have a need to solve aparticular problem. Quirky, on the other hand, uses its web site members to invent,develop, advertise and buy the products made by Quirky.com members, intertwiningelements of crowd-sourcing with open innovation and lead-user co-creation(Piller et al., 2012). In this sense, Quirky’s business model is more elaborated as itprovides accelerated ideation with potentially unlimited business growth.

. The non-crowd-sourced co-creation cases differ from their crowd-sourced casesin that the motivations for participation appear to be more longer term andstrategic than the more transactionally discrete contracting associated with acrowd-sourcing project. The relationship between Volvo and Xerox is defined bytheir strategic motivation to engage in a long term customer relationship thatwill extend beyond the duration of any specific co-creation project. Quirky’sbusiness model is to attract and keep as many innovating members engagedwith their web site as possible in order to benefit from a continuous supply ofnew product ideas, while gradually expanding their product portfolio. Hence,their motivations for membership and customer engagement are more long termthan the discrete challenge solutions offered by Innocentive.

Locus: where in the innovation process? In the Xerox/P&G co-innovation partnership,there are multiple levels of partner participation across the entire R&D cycle, startingwith idea generation through to solution execution. In the Volvo XC90 project,customers are also involved across the entire product development process, fromconcept to design to the finished end-product. However, the touch-points forinvolvement are specifically selected across R&D stages. At Innocentive, there is alsoselected R&D stage involvement, primarily front end problem solving depending onthe type of innovation challenge.

At Quirky Inc. inventors are supported from idea with sketches to finished product.In addition, the Quirky team supports their member with design, manufacturing,distribution and sales. As such, their members engage in both, front end ideation andmarketing dissemination activities, while Quirky itself is responsible for productbranding and distribution, including which products are taken to market.

In comparing the four cases, the following patterns may be observed in where in theinnovation process the co-creation projects are involved:

. In principle, three of the four co-creation cases (excluding Innocentive) seem toaddress the full range of the innovation process from ideation tocommercialisation.

. Innocentive appears to be less involved in the commercialisation of solutions thanthe other three co-creation practices, in part because its business model seems

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more exclusively focused on search and selection of ideas, using crowd-sourcingfor the identification of prospective solutions.

Intimacy: how much involvement should there be? Intimacy relates to frequency andintensity of involvement. At Xerox/P&G intimacy and commitment is high,comprising an annual meeting of two company CEOs, as well as quarterly meetingsof innovation council of executive managers that decide on project portfolio andauthorise resources and monitor project progress and assess the overall quality of thecollaborative relationship between the two companies. Additionally, discreteXerox/P&G co-creation project teams interact virtually on a weekly basis by phoneand more frequently online as needed.

In the case of Volvo, intensity of involvement ranges from general customer inputvia feedback on specific issues, extensive consultation with customers to full customerrepresentation in the project. Interaction is normally more intense during early and latestages of development. Considering lower strategic significance of customerinvolvement in the Volvo case, as well as lower levels of commitment towards thecustomer group involved, we would thus assume intimacy in similar cases rangingfrom medium to high levels.

At Innoventive, seeker involvement focuses on framing the challenge(in consultation with Innocentive staff) and evaluating the solutions coming fromthe Seeker community. Solver involvement focuses on scanning the Innocentive website for interesting challenges and creating a proposed solution to the challengeselected by the solver. As both solvers and seekers remain anonymous, the level ofintimacy in this co-creation relationship is low.

At Quirky, the several stages of NPD idea submission, community curation, productevaluation, research, design, branding, engineering and finalisation are allowing thefirm to tightly control and shape participation and involvement of their users. Quirky’sinnovation process utilises a very wide open idea and member search filter which isthen followed by a more tightly managed stage-gate process. Here, degree of intimacyachieved depends on type of member and the location in the co-creation process atwhich engagement takes place. For example, Quirky interacts with inventors morepersonally at later stages in the product to market process. We would thus considerintimacy to range from low to medium.

In comparing these four cases, the following patterns may be observed in theamount of customer involvement in co-creation:

. Both Volvo and Xerox-P&G appear to demand more intense co-creator involvement,specifically in the front end of their innovation process. This is a pattern typicallyfound in B2B co-production consultancy interactions (Ordanini et al., 2010).

. Innocentive typically involves their customer in the pre-innovation phase ofposting their challenge and in the evaluation of offered solutions. These stagesstill seem to be more in the front end of the innovation process rather than in thelater stages of solution implementation. However, considering the anonymity ofthe problem solvers (and seekers), a pattern which may be typical for othercrowd-based problem solving practices, intimacy is lower than the interactionsof co-creators in non-crowd-sourced contexts.

. Data on Quirky is insufficient to fully determine how deep and intense userinvolvement is during later stages in the process. This may largely depend on the

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products invented. However, inventors and the Quirky employees seem tointeract more personally during later stages of product development (e.g. usingvideo-conferencing tools, as well as meetings).

Time: how long should co-creators be involved? The Xerox/P&G initial contract isa five-year commitment and thus long term. No information is available on the timetables for projects in development, but one indicator is that the earliest announcedco-innovation project offerings to the marketplace were within one year of the formationof the Innovation Council.

In Volvo’s co-design project, involvement is sequential (underpinned by in-depthmarket research), ranging from first stages of NPD to experiencing the finishedproduct (Dahlsten, 2004). The duration of the co-creation project was at a medium level,i.e. shorter than in Xerox/P&G, but longer than Innocentive and Quirky. In total, foursessions took place from the development phase until the car’s market release.

At Innocentive, there is no standardised duration for challenges, but in generalideation challenges are shorter term than theoretical challenges and reduced to practicechallenges typically have the longest deadlines of all three types of challenges due tothe more time consuming data requirements in these challenges.

The participation of a Quirky.com member is when and for as long as they desire.Members can sign up for free to the community and will collect royalties for as longas their co-designed products sell. However, specific product developmentcrowd-sourcing projects can be completed (from ideation to commercialisation) inless than a month depending upon the complexity of the product. Engagement maythus range from short to medium term.

Our findings from these cases suggest the following pattern:. Xerox P&G co-creation partnership appears to have the longest time

commitment to the partnership but individual projects may vary in their timerequirements from under a year to longer than a year. The Volvo co-creationproject data suggests it has the second longest duration due to the involvementof customers from first stages of NPD to experiencing the finished product.

. Crowd-sourced co-creation projects typically have somewhat shorter durationsfor customer involvement. We have seen Quirky ideas that were turned intoproducts and taken to market in a matter of weeks or months. Innocentiveprobably have similar time horizons for the crowd-source phases of theirco-creation projects.

Incentives: how should co-creators be motivated? P&G and Xerox co-created scorecardsfor monitoring project and collaboration relationship success. At P&G, project successwas measured by the achievement of cost goals (see case for evidence of cost savings)sustainability goals (cost based as well as positive environmental image) and mobilitygoals (efficiency and effectiveness of making lives of mobile workers easier and moreproductive).

At Volvo, the participants were given $50.00 for each meeting to reimburse theirtime and travel cost. According to the participants, they mostly gained social valuederived from sessions while being given the opportunity to be heard by the firm,which made them feel specially selected: “I’m impressed [. . .] they really did listento us” (Dahlsten, 2004, p. 145).

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Innocentive, by contrast, receives from each solver a fixed fee for each challengeposted and a percentage of each prize awarded to accepted solutions, while for thesolvers there are some intangible benefits of being associated with working onimportant challenges for important clients and the possibility of receiving a cashprize should their solution be selected by Innocentive’s client (the seeker) forimplementation.

The Quirky incentives are primarily financial rewards, as well as being able todevelop an idea to the finished product; being able to rapidly invent and to sell itthrough Quirky’s online shop (physical store network planned), as well as throughselected retailers. However, inventors are charged an initial fee for submitting an idea.The idea submission fee at the time of our research is 10 USD and then 30 percent of therevenue of the product is distributed between inventor and the community/projectparticipants (based on a special algorithm to all contributors of a project/product).

A comparison of the incentives operating across the four co-creation cases suggestthe following patterns with respect to these motivations:

. At Volvo, intrinsic incentives seemed to play a greater role in participation thanextrinsic ones. Compared to the other cases, Quirky seems to emphasise extrinsicincentives the most, although intrinsic rewards may be associated withparticipating and competing with others in NDP. Insofar as the vast majority ofInnocentive participants (the solver community) receive no compensation,it would appear that extrinsic motivations need to be subordinated to intrinsicinterest in the challenges they choose to voluntarily work on. However, some ofthe challenges do have six figure prizes, so extrinsic motivations might be a moreimportant source of motivation for some challenges, similar to any competitivetournament offering a cash prize to the winner. Incentives can thus becharacterised by both extrinsic and intrinsic elements. Considering Xerox/P&Gjoint motivation to reduce the impact of their product on the environment, as wellas their strategic interest in their business relationship, we see both intrinsic andextrinsic incentives at work.

. All four co-creation practices rely on the intrinsic motives of the co-creatorsinvolved and that participation is meaningful to them. Overall, it appears thatintrinsic motivations are more determinative than extrinsic motivations inengaging customers and other participants in these co-creation ventures.

5. Discussion and outlookCo-creation is a wider and long term business philosophy in relation to value creationand brand management. In practice, firms utilise a portfolio of (often interconnected)co-creation initiatives or projects. However, every co-creation approach is specific in itsaim to enhance a firm’s business model. Over time, the portfolio of co-creation activitiesbecomes indicative of a firm’s implementation of their value creation philosophy whichcontributes to the long term value creation mechanisms of a firm’s business model,such as by offering co-creation choices to customers online.

As our initial literature review suggested co-creation involves:. the expansion of organisational boundaries;. the involvement of co-creators; and. co-creating new value(s) based on co-creator involvement initiated by the firm.

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Our case based conceptual research allows us to group findings on a macro level bycontrasting commonalities versus differences according to a set of six dimensionspreviously derived from reviewing cases documented in the literature. In addition, ourwork provides us with a decision making framework for co-creation management.

The four co-creation cases discussed in this paper suggest different mixes ofgovernance arrangements, even though the distinctions are not as stark as previouslyanticipated from governance theory (Heide, 1994; Ouchi, 1980). A comparison of B2Bversus B2C co-creation reveals less systematic differences in governance processesthan the distinction between crowd-sourced versus non-crowd-sourced co-creativepractice, where the crowd-sourced co-creation illustrative cases appear to be shorter induration, less intimate, more transactionally discrete and more extrinsically motivatedthan our non-crowd-sourced cases. This pattern is consistent with our expectation thatcrowd-source based co-creation practices rely to a greater extent on market-basedgovernance processes than non crowd-source based co-creation practices, which rely toa greater extent on a mix of hierarchical and relational governance arrangements.

The four illustrative cases discussed in this paper suggest that co-creationrelationships take on a different character and have different managerial implicationswhen engaging crowds in contrast to smaller groups of co-creators. Overall, we foundmore differences than similarities across the four cases compared. This may not besurprising considering that we purposefully selected co-creation ventures based ontheir distinct co-creation practices. However, we did find some commonalities andinter-dependencies across all four examples.

We observed that the purpose of involving co-creators may determine otherdimensions of a co-creation project and consequently how co-creation needs to bemanaged. Hence, decisions made in the design stages of a co-creation project willimpact the possibilities that can be achieved by co-creation.

Consistent with the B2C co-creation literature (Payne et al., 2008), our findingssuggest that involving external crowds in the co-creation process is a means to useco-creators, such as customers or experts, as helpers for front-end ideation or searchand selection of ideas (von Hippel, 2005). Our Quirky example has shown that this canbe expanded on by employing the users of a product as marketers for advocacy andbrand promotion (Piller et al., 2012).

Quirky’s example also shows that mixing front-end and back-end involvement ofcrowds with more intimate engagement of idea creators can enable firms to make useof co-creator relationships in multiple ways, depending on where in the innovationprocess the specific involvement takes place. In fact, the purpose of involvement andconsequently relationship with co-creators can change with the specific tasks thatactors fulfil across particular value creation processes (Owen et al., 2008). In addition,our comparisons have shown co-creators can be used more than once in the valuecreation process and for more than just one task. This also accounts for dyadicrelationships. The Volvo project shows a similar pattern, although co-creatorinteraction there was more controlled and less frequent than in Quirky’s case.

Ultimately, extrinsic and intrinsic incentives both play important but different roles inco-creation (Fuller, 2006, 2010). On the one hand, our observed pattern suggeststhat intrinsic rewards are needed to render co-creation activity meaningful in our B2Bcontexts (e.g. Volvo, Xerox/P&G). On the other hand, extrinsic rewards can be a means tofoster competition among co-creators in the B2C contexts (e.g. Quirky and Innocentive).

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Based on our comparisons, it is difficult to hypothesise about the relative importance ofdifferent types of motives and incentives. However, the pattern we observed indicates thattheir importance depends on context and where in the innovation process co-creation takesplace. For example, competing for ideas and a cash price may be a good incentive to fosterfaster and better front-end ideation, whereas later stages of innovation, such ascustomisation and commercialisation, may require participants to be more intrinsicallymotivated.

Taken together, our examples reflect how four different companies have chosen toco-create and engage with co-creators. Our findings are illustrative of differentpractices rather than generalisable across co-creation projects, but these findings cancontribute to the conceptual debate by outlining plausible hypotheses. More in-depthcomparative research and case study work is needed to establish the validity of ourcategories and dimensions. As such, we see our paper as a first step in developing amore robust framework and a means to develop and test further hypotheses for eachdimension of the co-creation mix quadrants.

In conclusion, developing our co-creation framework allowed us to gain a rich set ofpossible hypotheses corresponding with different co-creation contexts. Specifically,that choices in one dimension of co-creation design (e.g. whom to involve) will affectother aspects of the co-creation process and relationship with co-creators (e.g. howintimate the relationships will be and for how long co-creators should be involved,contributing to which innovation tasks, etc.). Hence, we would welcome and encouragemore comparative research that builds on, uses and tests our categories, as well as thedevelopment of further hypotheses for each quadrant in our framework. Until then, weencourage practitioners to use the framework for assessing and implementing theirco-creation mix.

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Corresponding authorThorsten Roser can be contacted at: t.roser@lse.ac.uk

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