[MUSIC] Okay, let's talk about some academic insights. The research on customer co-creation is quite new and still emerging, so there's a lot that we don't know yet about this new innovation technique. However, a number of key insights are starting to emerge. I'd like to discuss two particular studies, one that's a bit older that was conducted about a decade ago, and a more recent one. So the first study, and this is one of my favorite studies in this domain, is by Franke and Piller, it was published in the Journal of Product Innovation Management in 2004. In this study, the researchers conducted a series of experiments, which they asked participants to design their own watches. So they had tool kits in which these participants could create their own workable watches, that's pretty neat. And what they found was that the participants who made their own watches were willing to pay more for these watches, compared to participants in other condition for giving a professionally designed watch. And they also found, when another set of participants were given both sets of designs, they actually preferred the co-created watches and were willing to pay more for them. So the results of this study suggest that users are able to create attractive designs, and in addition, they'll pay more for the ability to do so, that's pretty neat. The second study that I like to talk about is a more recent study, it came out in 2015, by He and Yan in a journal called The Computer Journal. In this more recent study, the researchers actually conducted a blog mining study to examine how social media is used to engage customers in the co-creation process. And this study revealed that most co-creation activities are focused on the early stages of the product development process, most are focused on idea generation rather than further concept development or product launch. That's interesting. They also found that the very most successful firms are open and transparent about how they intend to use these contributions provided by their customers. So this suggests that in order to be successful in terms of employing co-creation, firms need to release some control and be less secretive about their product development activities. That's interesting insight as well. Now, given that we've talked about these academic insights and my own research on customer co-creation, let's talk about some practical recommendations. If you're a firm trying to engage in this this new form of innovation, what should you do? First of all, we have something called The Rule of 1. Now typically we see across most creative platforms, only about 1% of all submissions are useful and can be implemented. This is a very low percentage, so what this means in order for co-creation to work, you need lots of ideas. And need to provide incentives for many customers to contribute, and that's a problem for many platforms. Second of all, we find that authenticity is especially critical. Customers are much more likely to contribute their valuable time and energy to firms that have an authentic need for their help, rather than just trying to exploit them for commercial gain. For example, Linux and other types of open source software have a great deal of authenticity, because their very existence depends on the customer co-creation process. That's how they exist. We'll talk more about authenticity later on in this course. Third, something I call patches and badges. We all like to be rewarded for our efforts, we want to feel that our efforts matter. So customers who engage in co-creation are no exception to this policy. Most successful co-creation efforts award successful creators by not just financial rewards, but also through some visible symbol of recognition. So for example, NASA, which employs customer co-creation for its space program, rewards successful co-creators by giving them a special patch they can display on their clothing. In fact, NASA found that this patch was a much stronger motivator than financial rewards. And finally, don't be the bad guy. As noted earlier, one of the dangers of customer co-creation is a possibility of alienating customers by rejecting their contributions. One way to reduce this risk, is to engage your broader community to help evaluate and vote on these contributions. So for example, Dell's hosted customer co-creations on its website platform called idea storm, in which to improve its products and its offerings. So in this website, Dell actually engages its customer community to evaluate and vote on these ideas. Thus, Dell's customers who had their ideas rejected feel it's other customers who don't like their ideas, rather than Dell itself. This overview provided the foundations of customer co-creation, the essentials, what you need to know. If you'd like to take a deeper dive, please check the many links on our course website. In particular, I'd like to focus, or draw your attention, to two particular books. First of all, Collaboration and Co-Creation by my friend and colleague Gaurav Bhalla, this is a great book full of lots of practitioner examples of how firms use co-creation to enhance their business processes. If you're looking for something a bit more academic in nature, I'd like to recommend this book, Collaborating with Customers to Innovate by two professors, one from Northwestern University. And this book provides more of an academic insight, in terms of the foundations and the concepts involved in co-creation. I'd also like to hear your thoughts. If you're a firm, how can you engage in customer co-creation to enhance your innovation activities? If you're a consumer, do you do any of these things? Do you give firms ideas? If so, how? In our discussion forum on our course web page, you can provide your ideas. I look forward to reading them, thank you.
