Dear Reader,
Some of you have read this blog frequently. My goal was to use it during my graduation project and to let you experience the new knowledge that has been gathered. Now, some time after graduation, and as a young professional, I have a new blog. This blog will go one step further and tries to connect innovators all over the world to think about problems or ideas in the changing environment we are living in. Please go to: Daniëlgiesen.com and read, discuss, or post your own innovations!
Thursday, January 7, 2010
Tuesday, September 30, 2008
The Impact of Co-creation on Business Models: The Research
Organizations feel changes in their business because the business landscape changes. Organizations should search for new opportunities in markets and technologies in order to build new products. Yet it is for organizations undoable to achieve this alone since business customers demand personalized and well-suited products. Therefore, there is an increased attention on cooperations with customers as well as suppliers, which can add value in New Product Development (NPD). This kind of collaboration, also called co-creation, is outlined in this research. I see co-creation as an active and direct collaboration between two financially independent companies, a customer and a supplier, that together co-create a NPD project. The ability of organizations to select and develop co-creation relations is highly important in terms of competitive advantage. Consequently, it is critical to drive much more significant levels of partner integration and intimacy into stages of NPD. However, this implies a major influence on the organization, in terms of their business model. Therefore, an organization must consider in what way it executes the co-creation process. The selection of a co-creation partner and the choice for a specific structure are decisive factors to determine the impact of a co-creation relation on the organization’s business model. One can imagine that selection of a partner and the structuring of a co-creation relation are different in various stages of NPD, since every stage has its own activities and needs.
It is found that:
In the early stages of NPD, organizations search for more alignment in the selection of a partner since these partners are involved in more stages of the NPD process and will have more activities. This higher degree of alignment causes that organizations structure their co-creation relations with a higher level of interdependence. These co-creation relations result in large changes in an organization’s business model or in new business models.
In the development stages of NPD, organizations search for a medium degree of alignment in the selection of a partner. This medium level of alignment causes that organizations structure their co-creation relation with a medium level of interdependence. These co-creation relations result in medium changes in an organization’s business model, especially within the resources part.
In the later stages of NPD (commercialization), organizations search for a lower degree of alignment in the selection of a partner, since these partners are involved in less stages of the NPD process, and will have fewer activities. This lower degree of alignment causes that organizations structure their co-creation relation with a low level of interdependence. These co-creation relations result in small changes in an organization’s business model, especially within the customer part.
It must be noted that in principle alignment in the selection of a co-creation partner should be the same as in the latter stages. Yet partners that are involved in the early stages of NPD are generally involved longer in the NPD process compared to partner that are involved in the latter stages. Moreover, in the early stages, investments are made, and there is a lot of uncertainty regarding the final product. Therefore, organizations search for more alignment in these early stages.
Results
Organizations, which co-create in the early phases of NPD use more dimensions of alignment compared to organizations that co-create in the later phases of NPD. Organizations align in every stage of NPD on technological dimensions. When the co-creation starts in the middle stages of NPD (development), organizations also consider the strategical alignment dimensions. Furthermore, organizations that start co-creations in the early phases of NPD, try to align with partners on relational dimensions. Relational dimensions are mostly used when a long-term relationship is pursued. The degree of alignment decreases as the NPD process progresses. Thus, the degree of alignment is higher in the early stages of NPD compared to the later stages of NPD. One must consider that when there already is a relationship between partners, this is a determining factor. Co-creation relations with a higher level of interdependence between partners start earlier in the NPD process. Co-creation relations with a medium level of interdependence are used in the middle stages of NPD and co-creation relations with a lower level of interdependence between partners are used in the later stages of NPD. Organizations with a low level of interdependence have selected their partners mainly on technological alignment dimensions. Organizations with a medium level of interdependence have selected their partners on technological and strategical dimensions, and organizations with a high level of interdependence have selected their partners on technological, strategical, and relational alignment dimensions. The changes in an organization’s business model become less when a co-creation relation starts later in the NPD process. When a project is only in the early stages of NPD, it is very difficult to determine the definite business model. Therefore, it is needed to research NPD projects afterwards, which means that all the stages have been executed. A higher degree of alignment leads to a larger change in an organization’s business model. Yet preconditions such as the type of partner and the way in which the co-creation relation originates should be considered. A higher level of interdependence leads to a higher change in an organization’s business model. Yet preconditions such as the finalization of the NPD process should be considered.
Consequences & Further Research
There is a relation visible between the stage of NPD in which the co-creation takes place, the dimensions and degree of alignment used to select a partner, and the interdependence in the co-creation structure. It should be interesting to research this further by examining whether different alignment dimensions are used in specific stages of NPD and specific co-creation structures.
It should be interesting to research the patterns found in relation to the success of the co-creation relation. Further research should investigate when a co-creation is considered as successful, how this can be measured, and which co-creation pattern leads to success.
The research indicated that changes in a business model on company level do not necessarily mean that the impact on an organization is high. In addition, changes in project’s business model can affect the organization considerably. It should be interesting to research what factors are important in determining the influence of business model changes on the organization, given the level of the business model.
The patterns found in this research are generalizable over the Dutch manufacturing industry. In further research, it should be interesting to test this pattern on general applicability in the manufacturing industry.
The conducted research described in this report 7 case studies of Dutch organizations and their co-creation relation in the manufacturing industry. All these organizations are originated in the Netherlands. An implication is that the conclusions are only valid for the Dutch manufacturing industry and not for the global manufacturing industry. For general relevance, further research in this industry should be conducted.
It is found that:
In the early stages of NPD, organizations search for more alignment in the selection of a partner since these partners are involved in more stages of the NPD process and will have more activities. This higher degree of alignment causes that organizations structure their co-creation relations with a higher level of interdependence. These co-creation relations result in large changes in an organization’s business model or in new business models.
In the development stages of NPD, organizations search for a medium degree of alignment in the selection of a partner. This medium level of alignment causes that organizations structure their co-creation relation with a medium level of interdependence. These co-creation relations result in medium changes in an organization’s business model, especially within the resources part.
In the later stages of NPD (commercialization), organizations search for a lower degree of alignment in the selection of a partner, since these partners are involved in less stages of the NPD process, and will have fewer activities. This lower degree of alignment causes that organizations structure their co-creation relation with a low level of interdependence. These co-creation relations result in small changes in an organization’s business model, especially within the customer part.
It must be noted that in principle alignment in the selection of a co-creation partner should be the same as in the latter stages. Yet partners that are involved in the early stages of NPD are generally involved longer in the NPD process compared to partner that are involved in the latter stages. Moreover, in the early stages, investments are made, and there is a lot of uncertainty regarding the final product. Therefore, organizations search for more alignment in these early stages.
Results
Organizations, which co-create in the early phases of NPD use more dimensions of alignment compared to organizations that co-create in the later phases of NPD. Organizations align in every stage of NPD on technological dimensions. When the co-creation starts in the middle stages of NPD (development), organizations also consider the strategical alignment dimensions. Furthermore, organizations that start co-creations in the early phases of NPD, try to align with partners on relational dimensions. Relational dimensions are mostly used when a long-term relationship is pursued. The degree of alignment decreases as the NPD process progresses. Thus, the degree of alignment is higher in the early stages of NPD compared to the later stages of NPD. One must consider that when there already is a relationship between partners, this is a determining factor. Co-creation relations with a higher level of interdependence between partners start earlier in the NPD process. Co-creation relations with a medium level of interdependence are used in the middle stages of NPD and co-creation relations with a lower level of interdependence between partners are used in the later stages of NPD. Organizations with a low level of interdependence have selected their partners mainly on technological alignment dimensions. Organizations with a medium level of interdependence have selected their partners on technological and strategical dimensions, and organizations with a high level of interdependence have selected their partners on technological, strategical, and relational alignment dimensions. The changes in an organization’s business model become less when a co-creation relation starts later in the NPD process. When a project is only in the early stages of NPD, it is very difficult to determine the definite business model. Therefore, it is needed to research NPD projects afterwards, which means that all the stages have been executed. A higher degree of alignment leads to a larger change in an organization’s business model. Yet preconditions such as the type of partner and the way in which the co-creation relation originates should be considered. A higher level of interdependence leads to a higher change in an organization’s business model. Yet preconditions such as the finalization of the NPD process should be considered.
Consequences & Further Research
There is a relation visible between the stage of NPD in which the co-creation takes place, the dimensions and degree of alignment used to select a partner, and the interdependence in the co-creation structure. It should be interesting to research this further by examining whether different alignment dimensions are used in specific stages of NPD and specific co-creation structures.
It should be interesting to research the patterns found in relation to the success of the co-creation relation. Further research should investigate when a co-creation is considered as successful, how this can be measured, and which co-creation pattern leads to success.
The research indicated that changes in a business model on company level do not necessarily mean that the impact on an organization is high. In addition, changes in project’s business model can affect the organization considerably. It should be interesting to research what factors are important in determining the influence of business model changes on the organization, given the level of the business model.
The patterns found in this research are generalizable over the Dutch manufacturing industry. In further research, it should be interesting to test this pattern on general applicability in the manufacturing industry.
The conducted research described in this report 7 case studies of Dutch organizations and their co-creation relation in the manufacturing industry. All these organizations are originated in the Netherlands. An implication is that the conclusions are only valid for the Dutch manufacturing industry and not for the global manufacturing industry. For general relevance, further research in this industry should be conducted.
Sunday, May 25, 2008
Business Transformation
One thing I experienced the last couple of weeks is that it is pretty damn difficult to build an excellent research. When I talk with other people about co-creation, innovation, and new business models, their ears start to flap. Of course, my cluster mates are also working in this area, but outside our team it is not easy to make clear what is meant by these concepts. They are new and not always understood. Well, this is already a good reason to perform this research. Fortunately, I have the ability at Capgemini to meet people, who do know something about these concepts. An interesting conversation did take place with Ron Tolido, Chief Technology Officer at Capgemini the Netherlands. With him, I discussed my research and we talked about the broader perspective in which my research must be placed.In actual fact, it is not strange to think about the concepts discussed. As Andy Mulholland et al. describe in their book ‘Mashup Corporations’, Service Oriented Architecture (SOA) enables a way to expand the reach of the company by allowing services to define and transform relationships. SOA can thus be seen as an enabling technology. It can enhance the relationship of a company with its customers. The basic assumption in my research is that companies are able to bring customers closer to the core business processes. In this way, so-called ‘pioneers’ are able to co-create value for and with customers. Companies like Google or Amazon.com are good examples of companies, which enabled the assembly of simple applications (‘mashups’) for innovative thinkers. So-called ‘lead users’ brought together in communities are able to come up with new ideas and solutions for companies, so that these companies can better serve customers or address new customers.
Of course, this has implications on the products or services that appear to customers, partners or competitors. Some of the co-creations create markets that not existed before or change the role the company plays in the value chain. Consequently, this leads to business model innovations. Companies can build stronger business models if they assess their own capabilities and the context for a co-creation. Chesbrough, famous from his book ‘Open Innovation’, argues that business model innovation is vital to sustain Open Innovation (Chesbrough & Schwartz, 2007, HBR). The innovations depend on the context for the relation between company and co-creation partner. Important hereby is to define the business objectives for partnering and align business models.
It appears that my research is not falling from the sky. Despite the fact that most companies (especially in the manufacturing sector) do not think about transforming because their business generates enough value, they have to due to changing relations in the business eco-system, new demands from customers, and to seek a solution for decreased margins. Companies must take the time to express their business model and try to understand business models of others. In line with Chesbrough, I argue that business model assessment of both your own business model and of others is critical for co-creation.
Tuesday, May 20, 2008
The Search for Companies...
Dear people,
The search for companies has started. Yet it is pretty difficult to get interesting cases. Therefore, I made a presentation (unfortunately it is in Dutch), which can trigger companies to join my research as a case. Of course, I am open for suggestions and enrolment via this blog.
If you know companies, which co-create with business customers in their new product development, please feel free to contact me!
The search for companies has started. Yet it is pretty difficult to get interesting cases. Therefore, I made a presentation (unfortunately it is in Dutch), which can trigger companies to join my research as a case. Of course, I am open for suggestions and enrolment via this blog.
If you know companies, which co-create with business customers in their new product development, please feel free to contact me!
Successful Co-creation
As we all know, measuring success of something is not easy, especially when it concerns a concept like co-creation. Every company determines the successes in its own way, and probably goes for its own success in terms of financial performance. Yet co-creation requires a different point of view. Therefore, my research concerns the influence of the partner selection and business model innovation on the co-creation's success. The presentation below gives an outline of these concepts and their relations.
Research Outline
Background
During the course of my study Business Administration, I developed interests and skills in innovation management. More and more, my attention was fixed on this interesting subject. The logical continuation was a Bachelor thesis in line with this interest. In Lisbon, Portugal, I had the chance to work on a research developed by myself within the ‘Patterns in New Product Development’ project. The supplier involvement in NPD was researched within the Portuguese automotive industry. I noticed that the collaboration between first-tier and second-tier suppliers is very important in the automotive industry especially to overcome problems in the integration between R&D and manufacturing. Yet it appeared that most companies are not ready for these intensive forms of working together despite the fact that the automotive industry requires an integrated supply chain (Giesen, 2007).
Research
Nowadays, working together becomes more and more important, not only in the automotive industry but also in other industries and with other actors. In innovation, the paradigm changed from closed to open (Chesbrough, 2006). Open Innovation is suggesting that an organization is not able to do everything itself and is depending on other actors to get things done. It refers to the open boundaries of the organization in order to achieve innovation. This implies that an organization must collaborate with others to achieve their goals in an effective and efficient way. Much of the collaborative innovation was emphasized backwards through supplier integration. Companies focused on improving interaction with internal cross-functional and external suppliers. Yet there is a need for an increased level of emphasis on customers. Customers’ unique insights into needs, desires, constraints, and pain points have become more important due to their increased knowledge and experience. Consequently, it is critical to drive much more significant levels of customer integration and intimacy into the New Product Development (NPD) process. Working together with customers is also known as co-creation. I define co-creation as a NPD-project that involves two financially independent companies, a customer and a supplier, which both actively and directly cooperate within the process of New Product Development (from idea generation to commercialization), regardless of the degree of formality of this cooperation. Business models of projects or business units change when customers/users are motivated to contribute to the company’s value proposition. Customers can for example enhance the core capabilities of an organization or can offer access to new distribution channels. This leads to changes in the business model, whether expected or unexpected. Sometimes it leads to new business models that are co-created between company and customer. Companies choose or select customers that connect and enhance the company’s business model. The question rises what the criteria are to select such a customer in order to co-create value for NPD. One can imagine that when the customer’s competences suit the company’s objectives of the co-creation, this should lead to a successful co-creation. However, successful co-creation also depends on innovations in the business model in favor of the co-creation. When the business model is not open to co-creation, the customer cannot connect and add its value in a proper way. Consequently, there is a relation between the co-creation partner (a business customer), the company’s business model, and the success of co-creation.
Relevance
This combination of an in-dept research on co-creation and business models is new in academic research. Several attempts have been made in e-business industries, yet these were focused mostly on the consumer market. Moreover, research has been particularly vague about co-creation and business models. Consequently, it is important to shape and give an understanding of the combination of co-creation and business models. In a practical sense, clients of Capgemini Business Innovation Consulting deal with questions concerning co-creation with business customers in NPD and their effects on business models. For that reason, the outcomes of the research have a practical purpose in a sense that it extents the service offerings of Capgemini Business Innovation Consulting with which they support clients. This research explores what the factors are for a successful match between the co-creation partner and the company’s business model, and if this leads to successful co-creation.
Focus
The co-creation process consists of several events: the decision to start/enter a co-creation, the choice for an appropriate partner, the choice of structure for the co-creation, and dynamic evolution of the co-creation (over time). As the requirements of the co-creation align with the characteristics of a specific partner, it is assumed that companies can determine success in a co-creation by focusing on the selection for an appropriate partner. Customers are selected on specific characteristics, which the company needs in NPD. These characteristics, or competences, consist of which value the business customer (hereafter customer) creates, what the benefit is of the co-creation, what kind of knowledge the customer has, how interaction and involvement progresses, and what kind of network competences the customer has. These characteristics form the core capabilities and value configuration of the customer’s business model. This implies that business models of customer and company must be aligned. Yet alignment of business models results in changes or innovations on the building blocks, which benefits the co-creation. This study of well-established organizations, which are clients of Capgemini, researches first of all the influence of partner selection on co-creation success, and the influence of business model innovation on co-creation success.
During the course of my study Business Administration, I developed interests and skills in innovation management. More and more, my attention was fixed on this interesting subject. The logical continuation was a Bachelor thesis in line with this interest. In Lisbon, Portugal, I had the chance to work on a research developed by myself within the ‘Patterns in New Product Development’ project. The supplier involvement in NPD was researched within the Portuguese automotive industry. I noticed that the collaboration between first-tier and second-tier suppliers is very important in the automotive industry especially to overcome problems in the integration between R&D and manufacturing. Yet it appeared that most companies are not ready for these intensive forms of working together despite the fact that the automotive industry requires an integrated supply chain (Giesen, 2007).
Research
Nowadays, working together becomes more and more important, not only in the automotive industry but also in other industries and with other actors. In innovation, the paradigm changed from closed to open (Chesbrough, 2006). Open Innovation is suggesting that an organization is not able to do everything itself and is depending on other actors to get things done. It refers to the open boundaries of the organization in order to achieve innovation. This implies that an organization must collaborate with others to achieve their goals in an effective and efficient way. Much of the collaborative innovation was emphasized backwards through supplier integration. Companies focused on improving interaction with internal cross-functional and external suppliers. Yet there is a need for an increased level of emphasis on customers. Customers’ unique insights into needs, desires, constraints, and pain points have become more important due to their increased knowledge and experience. Consequently, it is critical to drive much more significant levels of customer integration and intimacy into the New Product Development (NPD) process. Working together with customers is also known as co-creation. I define co-creation as a NPD-project that involves two financially independent companies, a customer and a supplier, which both actively and directly cooperate within the process of New Product Development (from idea generation to commercialization), regardless of the degree of formality of this cooperation. Business models of projects or business units change when customers/users are motivated to contribute to the company’s value proposition. Customers can for example enhance the core capabilities of an organization or can offer access to new distribution channels. This leads to changes in the business model, whether expected or unexpected. Sometimes it leads to new business models that are co-created between company and customer. Companies choose or select customers that connect and enhance the company’s business model. The question rises what the criteria are to select such a customer in order to co-create value for NPD. One can imagine that when the customer’s competences suit the company’s objectives of the co-creation, this should lead to a successful co-creation. However, successful co-creation also depends on innovations in the business model in favor of the co-creation. When the business model is not open to co-creation, the customer cannot connect and add its value in a proper way. Consequently, there is a relation between the co-creation partner (a business customer), the company’s business model, and the success of co-creation.
Relevance
This combination of an in-dept research on co-creation and business models is new in academic research. Several attempts have been made in e-business industries, yet these were focused mostly on the consumer market. Moreover, research has been particularly vague about co-creation and business models. Consequently, it is important to shape and give an understanding of the combination of co-creation and business models. In a practical sense, clients of Capgemini Business Innovation Consulting deal with questions concerning co-creation with business customers in NPD and their effects on business models. For that reason, the outcomes of the research have a practical purpose in a sense that it extents the service offerings of Capgemini Business Innovation Consulting with which they support clients. This research explores what the factors are for a successful match between the co-creation partner and the company’s business model, and if this leads to successful co-creation.
Focus
The co-creation process consists of several events: the decision to start/enter a co-creation, the choice for an appropriate partner, the choice of structure for the co-creation, and dynamic evolution of the co-creation (over time). As the requirements of the co-creation align with the characteristics of a specific partner, it is assumed that companies can determine success in a co-creation by focusing on the selection for an appropriate partner. Customers are selected on specific characteristics, which the company needs in NPD. These characteristics, or competences, consist of which value the business customer (hereafter customer) creates, what the benefit is of the co-creation, what kind of knowledge the customer has, how interaction and involvement progresses, and what kind of network competences the customer has. These characteristics form the core capabilities and value configuration of the customer’s business model. This implies that business models of customer and company must be aligned. Yet alignment of business models results in changes or innovations on the building blocks, which benefits the co-creation. This study of well-established organizations, which are clients of Capgemini, researches first of all the influence of partner selection on co-creation success, and the influence of business model innovation on co-creation success.
Tuesday, February 26, 2008
Sunday, January 27, 2008
Starting the research
Dear people!
Welcome to my blog! It will concern my graduation study at a large consultancy firm, Capgemini, in the Netherlands. I will keep you informed through this blog about the progress I make, and I would like to invite YOU to give comments, useful inputs and discussion subjects. This can really help my knowledge and experiences concerning the subject of co-creation. So please feel free to bring the co-creation and innovation concept to a higher level!
Today’s business is asking for new sources of innovation and creativity. On macro, meso, as well as micro level, there are distinct trends of value creation through co-creation. Organizations need to anticipate, rather than be reactive. Interactions with customers and other partners in networks become more important. In B2C environments, companies are aware of the need for personalized value. This is clearly not (always) the case in B2B environments.
An interview with Philips Design pointed out that co-creation is an egalitarian connection between a supplier and customer, where the business becomes democratized. Co-creation is a way to new value chains, and it will change the relations between companies. What is essential in co-creation is that a company involves (in a new, innovative way) people equally, which results in a win-win situation: the dialogue with these people is set up to increase value.
The Business Innovation team of Capgemini found out that their clients do not have the awareness, knowledge, ideas to set-up, and execute co-creation. Companies are mostly put off by co-creation, because of the unforeseen organizational hurdles in enabling co-creation. Capgemini Business Innovation would like to advice and support companies by providing insights into the co-creation process and its consequences so that companies are better able to co-create in order to increase business performance.
In this new form of ‘working together’, a new value chain becomes reality, where B2B and B2C do not exist anymore. Instead, a continuum, which alternates companies and customers, will form the value chain. Yet the first matter of importance is the common interest of a company and its actor to create value. Therefore, the question rises how companies think about co-creation; what it is that companies put off on co-creation and what are the organizational hurdles. Thus, we want to know how co-creation can be enabled. Through lots of literature on collaboration/cooperation, innovation management, and case studies at large Dutch companies, I will try to give 'roadmap to co-creation'.
As a student in Business Administration specialized in Innovation Management at the University of Twente, the Netherlands, I have acquired lots of knowledge during my study concerning Innovation Management. My Bachelor Thesis, which was performed in Lisbon, Portugal, focused on the organization of innovation in the automotive industry. The involvement and integration of suppliers (inter-company co-creation) in new product development was studied. With the work of this Master Thesis, I acquire more knowledge and experiences. I have the opportunity to develop myself in the scientific and consultancy environment. The goal is to work as good as possible on this research to become a Master of Science. Furthermore, it will be the goal to work on this subject after studying in order to shape the co-creation concept.
Next time, I will give a more specific understanding of this research and will explain how I think to make companies aware of the need for co-creation.
Ciao,
Daniël
Subscribe to:
Posts (Atom)
