Synergise IT

Co-creation, peer production or open innovation, whatever you call it, its pretty much the same thing - Getting your customers and community to provide feedback and spend time exploring and innovating new/existing products/services for your benefit.

McKinsey & Company released a new paper on The next step in open innovation and it talks about co-creation, how organisations can win from it, what are the hurdles and discussed about many case studies like Lego, Boeing, Threadless and Peugeot.

There are three ways to win with co-creation according to McKinsey
1) Capturing value from the co-create product - Well, Lego reap much benefits by talking to and understanding their die-hard fans. Watch this video.

2) Capture value by providing complementary product or service - Red Hat sells technology services to uses of Linux. IBM also invested a substantial amount of money and time in the open source community (Linux) and installs its software on their servers and sell it as a package.

3) Benefit indirectly from the co-creation process, for example, through an enhanced brand or strategic position. McKinsey did not give any example on this but I believe this is more from the marketing perspective where people start playing around with your product and learn more about it, the brand image becomes better(??) Do I make sense here?

There are hurdles as well according to McKinsey.
1) Attracting and motivating co-creators. This is simple - you need to squeeze time out of the right people to contribute to your organisation for free or for a small price/incentive.

2) Structuring the problems for participation. I totally believe that for co-creation to happen, a big problem must be broken down into bite size portions and people can take one portion each and explore/innovate on it.

3) Governance mechanisms to facilitate co-creation - well we have rules and guidelines in almost all aspects of life. Co-creation shall be the same.

4) Maintaining quality - There are two ways to look at quality within an open environment. a) the team is only as strong as its weakest link or b) look at the quality of Linux and Wikipedia when the critical mass is achieved. I believe for the success of an open innovation program, critical mass is absolutely important. Look at Marketocracy its almost a open source mutual fund and its Marketocracy Masters 100 Fund Received 5-Star rating from Morningstar in May 2008. That’s achievable by the 55,000 strong community they have.