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.