Value co-creation and experience innovation

co-creation

Value co-creation and experience innovation

Have you ever stood in a hotel lobby and been approached with the question “May I help you?” Given the opportunity to improve this experience, what would you suggest?

In the hospitality industry, the Ritz-Carlton hotel has the reputation for developing supreme value in customer experience. Ritz-Carlton staff are motivated to create ongoing, memorable, and unique guest experiences. From their first day on the job, Ritz-Carlton staff are treated as customers, and, having experienced the “Wow” factor themselves, are able to measure their own ability to create the same exceptional feeling for guests.

Taking this a step further, companies across several industries are moving to models of service developed through qualitative customer experience research. Customer experiences of the product or service can be observed and analysed to determine what value they hold. While this interaction often leads to breakthrough ideas in product and service delivery excellence, this model basically treats the customer as passive.

In future, service and product innovation will rely on a more active customer. Experience innovation engages the customer in the design of their experience, capturing and responding to their preferences, creating greater value. In “The Future of Competition: Co-creating Unique Value with Customers”, Prahalad and Ramaswamy1 present the model of value co-creation where value is created jointly by the company and the consumer at points of interaction. Co-creation is the basis for providing unique value for each individual.

How does a business move from a model that creates value through the delivery of innovative products to a model of experience innovation and value co-creation? Technology can play a significant role.

For instance, value co-creation can be enhanced through telematics. Telematics provides the technology to change the experience for the customer by responding to how the consumer chooses to interact. The General Motors OnStar product, now installed in over 5 million top-end vehicles, helps customers to find their parked cars, navigate journeys, be Good Samaritans, make hands-free phone calls, drive safely and arrange assistance at service stations and venues on their journey. See: www.onstar.com.

In cyberspace, companies can use the information they collect through the online interaction to directly enhance customer experiences. The option to capture creative ideas has a new design playground here. Threadless (www.threadless.com) a tee shirt supplier, engages customers in design collaboration. In this online experience, tee shirts can be designed, redesigned, played with and shared as appropriate. For the customer, the design experience becomes part of the product and service delivery.

Many businesses have moved beyond the marketing push of banners and Flash ads to interact in social networks like flickr, Youtube, facebook, delicious, Twitter or LinkedIn. Some businesses are successfully engaging directly in communities of common interest, creating blogs to share knowledge and encourage open discussion of their services and products. Southwest Airlines is one, winning awards for its website blog www.blogsouthwest.com and talking about it on Twitter http://twitter.com/SouthwestAir.

When companies collaborate in cyberspace and engage customers in the co-creation experience, value increases exponentially. The technology in mirrored 3D worlds provides exciting opportunities for businesses to collaborate and develop value for the masses. For example, a team of Boston entrepreneurs engaged with several large retail companies to design Kinset (www.kinset.com), a virtual retail megaplex. Kinset gives customers a 3D online shopping experience. In this site the customer interaction defines their future shopping experiences.

Value co-creation is a future approach to designing competitive products and services – where customers design the experience as they interact with it. To remain competitive, companies must create value for the customer in a way that engages them, responds to their preferences to deliver a personalised experience “in the moment”.

First published: Product Development Management Association (PDMA) Auckland Chapter Newsletter 2010

1 Reference: The Future of Competition: Co-creating Unique Value with Customers, C.K. Prahalad and Venkat Ramaswamy, Harvard Business Press, 2004

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