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.

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!

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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.

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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.