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Three ways companies can make co-creation pay off

Involving outsiders in the creative process of developing products and services is harder than it sounds. Here’s how leading companies do it.

December 2014 | byJacques Bughin (McKinsey & Company)

Ever since companies began using the web to solicit ideas from outsiders for enhancing services and developing products, the promise of co-creation has overshadowed its measurable impact. Studies have shown that the impact of co-creation—the act of bringing external parties, usually customers or suppliers, into a company’s creative process—on new product innovation is neither statistically significant nor economically relevant, nudging the likelihood of success up by a scrawny 4 percent.1While attempts to create products or services jointly may produce desirable side effects—in the form of reduced market-research costs or increased customer loyalty—the ultimate goal of bringing outstanding products to the market remains elusive.

While co-creation with customers has produced widely publicized successes at some brand-name companies, the challenges that practitioners must overcome to build and sustain a productive model of online collaboration have been minimized, if not ignored. That oversight should be corrected. Co-creation skills are an important capability for companies, requiring agile processes, quick test-and-learn cycles, and a deep understanding of customers. In fact, in contrast to the average practice, the masters of co-creation not only unlock value rapidly by delivering high-quality products and service innovation but also sustain that impact over time—all with little additional R&D overhead.

Last year, we studied more than 300 companies in three European countries and found that the best at co-creation excelled in three areas:

1. Target your co-creators

Our research found that while 90 percent of executives were eager to get consumers involved in co-creation, only 12 percent of Internet users had actually done so. In fact, only a quarter of consumers were even aware of the concept, while an additional 5 percent knew about co-creation but not how it actually worked. To overcome this issue, the best companies parse customer data to actively target co-creators and actively explain how to use their co-creation platform. They segment their audience and tailor marketing promotions to what appeals to users: for example, games, money, education, or pure peer recognition.

Since 2001, for example, P&G has successfully been bringing outsiders into its R&D process. As well as targeting them by motivation, the company has also targeted retirees with specific skill sets, including P&G’s own alumnae, as well as retired technical specialists at airline companies.2 P&G’s co-creation platform, Connect + Develop, has spawned dozens of products, boosted product development, and effectively doubled the number of employees engaged in R&D—without adding to payroll costs.

Implicit in this effort is getting to critical mass: without enough people, the chances of co-creation success drop. When Starbucks launched its My Starbucks Idea co-creation platform for customers, it understood from the start that it was critical to lure big numbers of participants—between 1,000 and 7,000 is an ideal number for one product.

An important element of successful recruiting is finding people who actually like your brand. Finding people on social media who not only “like” your brand but are also active promoters is a good place to start. In addition, the value benefit can increase. Our research shows that a brand’s market share is more than twice as correlated with those who are inclined to co-create with a brand than with those who only make positive comments on social media.

2. Find the motivation

Getting a critical mass of users to do more than drop by and glimpse an online co-creation platform can be daunting. Having clear navigation and communications is critical so that potential co-creators know what kind of help you’re looking for. Co-creation-savvy companies list their needs and organize them by category, mimicking online co-creation platforms such as O’Desk or Mechanical Turk.

Understanding and tapping into what motivates co-creators is critical for getting them to submit good ideas. Not surprisingly, one motivation is compensation. Heineken launched its co-creation platform in 2012, asking game lovers, beer drinkers, and environmentally conscious consumers for ideas that would make its packaging more sustainable.3 The winner, a German citizen, suggested a device (the Heineken-o-Mat) intended to turn recycling into a game and walked away with a $10,000 prize.

Yet interestingly, many people aren’t motivated to co-create purely by compensation. Our research on ten co-creation projects found that the largest percentage of participants (28 percent) was driven by curiosity and a desire to learn, followed closely by entertainment and social play (26 percent), and an interest in building skills (26 percent). Some 20 percent were driven by recognition and rewards.

Starbucks, for example, fostered an atmosphere that welcomed the opinions and reviews of customers, and provided a platform for them to connect with each other. By talking to each other and to the company, customers shared views on store design, in-store music, and corporate social responsibility initiatives. The most active of the 250,000 participants in the first two years4 received recognition on the site; some also got the ultimate reward of their idea being among the 300 that the company has implemented.

It’s important to bear in mind the segments of co-creators—such as gamers and social butterflies—and then design applications with them in mind. For example, creating a fun contest will draw game lovers. Building in a social component, such as a leader board for winning games, is also likely to entice people who want social recognition. But what really generates mass participation is when companies attract audiences to co-creation with multiple appeals. A contest to draw game lovers is also likely to entice people who want social recognition (by winning games), for example.

3. Focus on a sustainable payoff

For co-creation to pay off handsomely over time, companies must focus it on activities that deliver a sustainable competitive advantage.

That may be about being a price leader, a product innovator, or superior service provider. P&G has used co-creation to remain an innovator in household cleaning products. Ideas from its product-co-creation program have helped it turn its Febreze air-freshener brand into a fragrant frontrunner, with $1 billion in annual sales. Threadless, a company that manages and sells crowd-sourced tee shirt designs, built a sustainable model by producing high-quality shirts in limited quantities to create the sense of a premium brand.

Other companies have rightly rooted co-creation on creating a cost advantage. Take Chinese motorcycle maker Loncin. In the late 1990s, the firm needed to become more price competitive with Honda, Yamaha, and Suzuki in the Vietnamese market. Loncin brought suppliers rather than customers into its co-creation initiative and asked for ways to reduce the cost of manufacturing. The resulting ideas helped Loncin cut costs by more than 70 percent and gain 60 percent of the Vietnamese motorcycle market within four years. With strong capabilities in co-creation, Loncin since has branched out into engines and cars.

Similarly, Missha, a 14-year-old cosmetics retailer based in South Korea, turned to co-creation in the early 2000s to create a lower-priced yet attractive alternative in a market dominated by high-priced brands. Missha appealed to its suppliers to help reduce costs without stripping away valued capabilities. The feedback helped Missha more than double its market share in South Korea.

Co-creation is here to stay. For companies that figure out how to do it well, the rewards can be far greater than a more effective and efficient R&D organization. More important, it is a core capability for unleashing the vast ingenuity of outsiders on an organization’s biggest challenges.

About the author

Jacques Bughin is a director in McKinsey’s Brussels


How to Set Productive Collaboration into Action

Lisa Bodell in strategy & business, Oct 6, 2014

Collaboration is essential for long-term innovation. Working together and sharing information enables employees to draw on expertise from the entire organization, avoid costly mistakes, and ultimately achieve a collective goal.

Yet many of today’s large companies still operate as siloed structures. While cubicle farms give a sense of efficiency and hierarchy, they prevent cross-pollination and dialogue across the enterprise. By design, silos prevent information from flowing outward; they discourage people from seeking out new ways to collaborate and build better ideas.

Productive collaboration isn’t about exchanging cubicle farms or offices for an open-plan setting. Nor is it about adding another layer of tasks or meetings. It’s about pooling resources, forming alliances, and achieving common objectives together. It should fit naturally into employees’ workflow and streamline the process of getting projects to the finish line. If you’re striving to create a more collaborative workplace, follow these 11 guidelines.

1. Identify and include dissenters. Find employees with new perspectives and get them involved in creating better solutions. To achieve this, Southwest Airlines gathered workers from its in-flight, ground, maintenance, and dispatch operations for a cross-discipline brainstorm. Over a six-month period, teams met for 10 hours each week to figure out the highest-impact changes that could be made to its aircraft operations. Of the 100 ideas generated and ultimately sent to senior management for review, three resulted in sweeping operational changes. One solution dramatically reduces the number of aircraft “swaps,” which are disruptive events that occur when one aircraft has to be substituted for another during mechanical problems. Results like this are possible when employees who aren’t the usual suspects are included in the problem-solving process.

2. Staff projects with unlikely suspects. Teaming up people from unrelated departments and having them work in the same space increases opportunities for fresh ideas and connections. When BMW begins developing a new car, project team members in engineering, marketing, and sales, for example, are brought together from disparate locations to the company’s central research and innovation center. Close proximity hastens communications, prompts face-to-face meetings, and stimulates impromptu brainstorms.

3. Designate a “connector.” Break down silos between divisions by designating someone in your organization to act as the official connector. This individual will actively track innovation activities across departments and connect people whose experience or capability matches a project need.

4. Dedicate budgets to collaborative projects. Assigning funds for innovative and cooperative work is the ultimate indicator to employees that senior management is serious about prioritizing collaboration.

5. Implement a user-friendly collaboration platform. Enable secure communication, file sharing, and progress tracking across departments and geographies.

6. Create a peer-to-peer mentorship program. Pair individuals from different parts of the organization to serve as each other’s go-to person for idea generation, advice, and resources. At Intel, people are matched by their specific skills instead of their job title or years of service. It’s not uncommon to find a veteran executive assistant mentoring a newly promoted manager. Matchmaking and relationship building takes place through the company’s intranet and emails, enabling employees to share best practices quickly throughout the global organization. Written contracts and solid deadlines ensure that the program delivers tangible results.

7. Reward people for not doing things. Encourage teams to work smarter—not harder—by rewarding them for reducing unnecessary processes, reports, or paperwork . Originally started at Commerce Bank, which was then acquired by TD Bank in 2007, was an organization-wide “Kill a Stupid Rule” policy, designed to eradicate inefficiencies. This rule rewarded employees with a US$50 gift card for addressing a superfluous or problematic banking rule and coming up with a more customer-friendly solution. The bank actively encourages managers and tellers to submit their ideas through its intranet system.

“Encourage teams to work smarter—not harder—by rewarding them for not doing things.”

8. Compile quarterly “learning lists.” After every project, make a list of evident mistakes and lessons. Share the list across the organization every quarter to ensure the errors aren’t repeated.

9. Communicate breakthroughs. Showcase collaborative projects through your intranet, newsletter, and other internal channels to motivate and inspire employees.

10. Create a physical area for people to gather. Walls between cubicles hinder conversation, but a common space in the office encourages employees across roles and functions to interact.

11. Hire proven collaborators. Which qualities are lacking in your organization? Do you need more staff with interpersonal skills? More negotiators? Enthusiastic cooperators? Make a list of your needs and hire people who demonstrate these skills.

Knowing what you want to achieve through collaboration—whether it’s cost savings or faster prototyping, for example—will help you take a focused approach as you implement these guidelines. And as with any new initiative, measuring results requires benchmarks to compare against. Before beginning, you should be aware of hard metrics such as how long it currently takes to bring a product from concept to market, the present number of feedback loops, how much time is spent on customer support, and how much is lost through duplication of work.

Productive collaboration brings together knowledgeable individuals who can add value to other employees and the company as a whole. As collaboration gets underway, note softer metrics like the level of cross-functional participation on projects, and communication between departments and regions. As organizational silos open up, the opportunities for ideas to become actual solutions will increase.

For more information about increasing productivity and innovation in your own business, email us at and ask for our full “Collaboration Checklist,” which includes 23 tips on how to achieve successful collaboration.

Lisa Bodell

Lisa Bodell is the founder and CEO of futurethink and author of Kill the Company.


The World is My Coffee Shop

abundance300 years ago, during the Age of Enlightenment, the Coffee House became the center of innovation.

Back then, most people went from drinking beer to consuming coffee (i.e. from being tipsy to being wired) and ideas started exploding.

The details of this story are important (and fun) one for anyone passionate about innovation…

I wrote about this very phenomenon in Abundance, and offer the excerpt below.

Read, enjoy and pass it on to all the coffee-lovers (and innovators) in your life.

The World is My Coffee Shop, an excerpt from Abundance

In his excellent book Where Good Ideas Come From: The Natural History of Innovation, author Steven Johnson explores the impact of coffeehouses on the Enlightenment culture of the eighteenth century. “It’s no accident,” he says, “that the age of reason accompanies the rise of caffeinated beverages.” There are two main drivers at work here. The first is that before the discovery of coffee, much of the world was intoxicated much of the day. This was mostly a health issue. Water was too polluted to drink, so beer was the beverage of choice. In his New Yorker essay “Java Man,” Malcolm Gladwell explains it this way: “Until the eighteenth century, it must be remembered, many Westerners drank beer almost continuously, even beginning their day with something called ‘beer soup.’ Now they begin each day with a strong cup of coffee. One way to explain the industrial revolution is as the inevitable consequence of a world where people suddenly preferred being jittery to being drunk.”

But equally important to the Enlightenment was the coffeehouse as a hub for information sharing. These new establishments drew people from all walks of life. Suddenly the rabble could party alongside the royals, and this allowed all sorts of novel notions to begin to meet and mingle and, as Matt Ridley says, “have sex.” In his book London Coffee Houses, Bryant Lillywhite explains it this way:

The London coffee-houses provided a gathering place where, for a penny admission charge, any man who was reasonably dressed could smoke his long, clay pipe, sip a dish of coffee, read the newsletters of the day, or enter into conversation with other patrons. At the period when journalism was in its infancy and the postal system was unorganized and irregular, the coffee-house provided a centre of communication for news and information . . . Naturally, this dissemination of news led to the dissemination of ideas, and the coffee-house served as a forum for their discussion.

But researchers in recent years have recognized that the coffeeshop phenomenon is actually just a mirror of what occurs within cities. Two-thirds of all growth takes place in cities because, by simple fact of population density, our urban spaces are perfect innovation labs. The modern metropolis is jam-packed. People are living atop one another; their ideas are as well. So notions bump into hunches bump into offhanded comments bump into concrete theories bump into absolute madness, and the results pave the way forward. And the more complicated, multilingual, multicultural, wildly diverse the city, the greater its output of new ideas. “What drives a city’s innovation engine, then — and thus its wealth engine — is its multitude of differences,” says Stewart Brand. In fact, Santa Fe Institute, physicist Geoffrey West found that when a city’s population doubles, there is a 15 percent increase in income, wealth, and innovation. (He measured innovation by counting the number of new patents.)

But just as the coffeehouse is a pale comparison to the city; the city is a pale comparison to the World Wide Web. The net is allowing us to turn ourselves into a giant, collective meta-intelligence. And this meta-intelligence continues to grow as more and more people come online. Think about this for a moment: by 2020, nearly three billion people will be added to the Internet’s community. That’s three billion new minds about to join the global brain. The world is going to gain access to intelligence, wisdom, creativity, insight, and experiences that have, until very recently, been permanently out of reach.

The upside of this surge is immeasurable. Never before in history has the global marketplace touched so many consumers and provided access to so many producers. The opportunities for collaborative thinking are also growing exponentially, and since progress is cumulative, the resulting innovations are going to grow exponentially as well. For the first time ever, the rising billion will have the remarkable power to identify, solve, and implement their own abundance solutions. And thanks to the net, those solutions aren’t going to stay balkanized in the developing world.

Perhaps most importantly, the developing world is the perfect incubator for the technologies that are the keys to sustainable growth. “Indeed,” writes Stuart Hart, “new technologies — including renewable energy, distributed generation, biomaterials, point-of-use water purification, wireless information technologies, sustainable agriculture, and nanotechnology — could hold the keys to addressing environmental challenges from the top to the base of the economic pyramid.”

However, he adds, “Because green technologies are frequently ‘disruptive’ in character (that is, they threaten incumbents in existing markets), the BoP may be the most appropriate socioeconomic segment upon which to focus initial commercialization attention . . . If such a strategy were widely embraced, the developing economies of the world become the breeding ground for tomorrow’s sustainable industries and companies, with the benefits — both economic and environmental — ultimately ‘trickling up’ to the wealthy at the top of the pyramid.”

Thus this influx of intellect from the rising billion may turn out to be the saving grace of the entire planet. Please, please, please, let the bootstrapping begin.

~ Curated by The Marketing Curator and TME Pass The Idea (


Create Collaboration With The Right Incentives

“the people rewarded for individual performance shared information least; the people rewarded for team performance shared more; and the people rewarded for company performance shared most.”

Posted by Keith Sawyer in New research.

June 9, 2014

I just read some fascinating research by Marshall W. Van Alstyne in Harvard Business Review. The figure below shows a network of high collaboration on the left, and a network of much lower collaboration on the right. The explanation turns out to be simple: it’s caused by two very different incentive systems. Alstyne found that “the people rewarded for individual performance shared information least; the people rewarded for team performance shared more; and the people rewarded for company performance shared most.” In the figure, each connecting line indicates email traffic between two people. Thicker lines correspond to a greater volume of email. As Alstyne explains it, the reasons are pretty simple: it reflects each person’s self interest, aligning with the different incentive systems. If your compensation is linked to the performance of everyone else, then you benefit from sharing and helping others. If your compensation is linked to your own performance, relative to others, then you’re likely to “hoard” information to maximize your own performance (and to undermine that of others).

This aligns with my own study of W. L. Gore, as I wrote about in my book Group Genius. At Gore, everyone at the company receives the same profit sharing percentage; no one gets profit sharing directly from their own projects and successes. When I asked CEO Terry Kelly why, she said it’s because it encourages a culture of collaboration. She said, “at Gore, you can pick up the phone and call anyone in the company to ask for help, and they will take that call.” And imagine the alternative: with individual rewards, why would you take a phone call from someone in a different division, who you’ve never met? It’s just going to slow you down in your progress on your own work.








About Keith Sawyer

Dr. R. Keith Sawyer is the Morgan Distinguished Professor in Educational Innovations at the University of North Carolina in Chapel Hill. He is one of the country’s leading scientific experts on creativity. His 2007 book GROUP GENIUS shows us how to be more creative in collaborative group settings, how to change our organizations for the better, and how to tap into our own reserves of creativity. His 2013 book ZIG ZAG identifies the 8 stages of the creative process, and contains over 100 techniques to enhance your personal creativity.


~ Curated by The Marketing Curator and TME Pass The Idea