Co-creation

Co-creation is a management initiative, or form of economic strategy, that brings different parties together (for instance, a company and a group of customers), in order to jointly produce a mutually valued outcome. Co-creation brings the unique blend of ideas from direct customers or viewers (who are not the direct users of the product)which in turn gives a plethora of new ideas to the organisation.

Co-created value arises in the form of personalized, unique experiences for the customer (value-in-use) and ongoing revenue, learning and enhanced market performance drivers for the firm (loyalty, relationships, customer word of mouth). Value is co-created with customers if and when a customer is able to personalize his or her experience using a firm's product-service proposition – in the lifetime of its use – to a level that is best suited to get his or her job(s) or tasks done and which allows the firm to derive greater value from its product-service investment in the form of new knowledge, higher revenues/profitability and/or superior brand value/loyalty.

Scholars C. K. Prahalad and Venkat Ramaswamy popularized the concept in their 2000 Harvard Business Review article, "Co-Opting Customer Competence". They developed their arguments further in their book, published by the Harvard Business School Press, The Future of Competition, where they offered examples including Napster and Netflix showing that customers would no longer be satisfied with making yes or no decisions on what a company offers.

Within the study of Prahalad and Ramaswamy, they defined co-creation as “The joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to suit their context” (Prahalad and Ramaswamy, 2004, p. 8).

Prahalad and Ramaswamy suggested that in order to apply co-creation, the following fundamental requirements should be prepared in advance.

In their review of the literature on "customer participation in production", Neeli Bendapudi and Robert P. Leone found that the first academic work dates back to 1979.

From 1990 onwards, new themes are emerging: John Czepiel suggests that customer's participation may lead to greater customer's satisfaction. Scott Kelley, James Donnelly and Steven J. Skinner are dealing with productivity but suggest other ways to look at customer participation: quality, employee's performance, and emotional responses.

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