Extracted from Emerald Insight: Co-creating Value through customer’s experiences
By Venkat Ramaswamy
Venkat Ramaswamy, the co-author (with C.K. Prahalad) of The Future of Competition: Co-creating Unique Value with Customers (Harvard Business Press, 2004), is a Hallman Fellow and Professor of Marketing at the Ross School of Business, University of Michigan (venkatr@ umich.edu). His current book project (with Francis Gouillart) has the working title Co-creating Strategy: Building a Co-creative Organization to Generate New Strategic Capital through Valuable Engagement Experiences.
Customers have learned how to use these new tools to make their opinions and ideas heard and involve themselves in the value creation process. Seeing opportunity in this new environment, leading firms are responding by engaging their customers in the co-creation of value.
Co-creative interactions are an emerging strategy for value creation. By engaging with informed, connected, and networked customers around the globe, the shoe company Nike has found a new source of value. Whether as ‘‘single individuals,’’ or as members of global thematic communities, customers or other stakeholders now can and want to be involved with Nike in shaping outcomes of value. They do this by sharing their interactions and experiences – these range from their ideas about how to improve or customize products to their feelings when they use products.
NIKE USA Website
NIKE NEWS Website
During the 2006 World Cup, in partnership with Google, Nike set up a social networking website, Joga.com, that invited individuals to film their soccer skills, upload the videos that showcased their talent, and then have the network community comment on, rate and share the user-generated content.
The community was the judge of a winner every month. Joga.com invited individuals to create their own profiles and socially network with others. Joga.com was in effect a thematic community that enabled individuals to share personal and collective soccer experiences. With over one million fans participating in this innovative brand building effort, Nike had a unique opportunity to learn directly from its customers.
Sponsoring Street Soccer Competitions, creating a website that connected professional players with their fans, ‘‘Nike ID’’ website, the firm invited twenty purveyors of sneaker culture to compete in designing a new shoe for Nike. The firm structured the competition as if it were a reality show and then asked the Nike Internet community to vote on the best design. Besides these designs and Nike’s original new designs for the season, fans could go on the Nike ID site to personalize their own shoes from various styles and colors, including putting the flags of the countries they wanted to support on their shoes. Nike provided software tools for local soccer teams and professional leagues to co-design and customize the soccer shoe.
IMO,PURPOSE: To create value through experiences. Lending customers the power to influence the things that are to be used by them.
As it engages with its community of customers Nike can build its brand in unique ways. For example, Nike’s customers gain experiences of value to them through their participation and influence in the design process, by being a part of creating the product/service offering, by socially networking with people who share like-minded passion for the sport, and by reducing their risk of dissatisfaction.
Influencing the design of the product through Co-Creation
Taking this idea one step further, the Experience Co-Creation (ECC) process involves enabling co-creative interactions so that individuals can have meaningful and compelling engagement experiences. Either process requires some management guidelines based on enlightened self-interest.
To illustrate how an EEC initiative works in practice, consider the running shoe business of Nike. In May 2006, Nike launched the Nike þ (NikePlus) platform, a collaboration between Nike and Apple, consisting of an Apple iPod music player, a wireless device to connect the music player to running shoes, a pair of Nike shoes with a special pocket to accept the wireless device, and membership in the iTunes and Nike þ online communities (itunes.com and nikeplus.com). The Nike þ co-creation platform capitalizes on the connection between running and music. The combination of innovative, mobile technology, online communities and athletic gear expands the field for co-creation.
To manage the co-creation of value process in this market Nike uses guidelines based on the DART Model – dialogue, access, risk-return, and transparency – to establish best practices (see Exhibit 2). At Nike, these guidelines set the stage for high-quality co-creative interactions between individuals (runners); groups (teams of runners, running clubs); and organizations (Nike and Apple).
The DART co-creation model is designed to foster meaningful dialogue, for example, between the customer and the company. The Nike þ system encourages meaningful dialogues:
Between the runner and Nike.
Between the runner/listener and Apple. B Among runners.
Between runners and running experts.
Runners can engage in nearly real-time conversations online. Groups of runners can challenge one another and friends can cheer on each other as they make progress toward their goals and resolutions.
Transparency. The fourth guideline of the DART model of co-creation of value is transparency, in other words, shared information. Nike believes that runners need more insight into how they should train, what routes they should run, or what shoes might be best for their needs. Nike þ offers a wide range of information. By logging into the Nike þ website, runners can find out which routes are most popular, what distances and paces others are achieving, and how their progress compares. From the company’s standpoint, Nike þ allows Nike to know a lot about the individual runner. Many dedicated runners now record every run they make, their goals, the courses they run, the partners they run with, and, through the website blogs and discussions, their personal concerns and feelings about running. This input provides Nike with a goldmine of ideas for potential innovations.
By using the DART model to assess the effectiveness of interactions, firms can co-create mutual value continuously, even in existing engagement spaces. For example, runners using the Nike þ system have access to a host of new experiences: they can integrate two passions, music, and running; they can track runs with unparalleled precision; and they can take part inactive,new social network.Nike þ enhances runners’ enjoyment of the sport and increases their motivation. For Nike, the learning from these customer interactions creates new strategic capital. The company can now learn directly from the behavior of its customers, both from mining the data and from customers’ direct input on their preferences. Nike can build relationships and trust with the Nike þ community and experiment with new offerings, all the while enhancing its brand.
LINKS RELATED TO PROJECT:
- One generic set of product for all events; Where does the branding come in? How do I maintain each brand’s authenticity with temporary furniture and fixtures of a generic image?
- Using fun as a means to get to an outcome (interaction/outdoor activity): Can this way of engagement be the same across different brands? For example, to get a hotdog bun at Netflix event I have to crank a machine. To get a hotdog bun at Coachella I have to crank a machine as well. Similar acts. Similar outcome. Perhaps the way of cranking the machine at each machine is different –
- for Netflix, 2-Player Interaction Game > Generate kinetic energy > Cranks the machine > Players get hotdog bun
- For Coachella, 2-Player Interaction Game related to sound > Sound Sensors > Cranks the machine > Players get hotdog bun.
- Find more similarities and differences between pop-up event hosts.
HOW TO CREATE INTEREST?
Seize attention > Stimulate imagination
TRAITS OF INTERESTING THINGS
- Comprehensible materials
HOW TO CREATE INTEREST ?
- Hint to make sense of objects
- A gap in knowledge encourage curious questions; Need to eliminate the deprivation
DRAWINGS IN PROGRESS