I think it is fair to say, the Internet is all about the customer. Think about the rapid advance of web personalization for the consumer. Google’s ad targeting based on your recent web activity. Amazon’s recommendation engine that offers products based on what you have bought, and what Amazon thinks you will buy. There have even been companies founded on the principle of outstanding customer service, like Zappos, whose mission statement is, “To provide the best customer service possible.”
And it seems like Zappos was on to something, evidenced by their $928M exit. Today, the customer is king, and all strategy needs to contribute to an optimal customer experience. Drop the ball with your customers, and they can now let you know via social media immediately. And while they are at it, they will let their friends know as well.
With this in mind, companies are especially mindful to create an exceptional value chain for their customers – every step of the way. From new product development, through marketing, sales, and service, organizations look to be unified, connected, and exceptional across the company. But as business units get larger and initiatives get more complex, communication begins to break down. Value creation starts to live within the silos of business units, with the hope that all activities align with the overall customer experience strategy.
This is where enterprise co-creation comes into play. Defined as a “management initiative that brings different parties together (company stakeholders, business partners, customers, etc.) in order to jointly produce a mutually valued outcome,” co-creation is an innovative way to create powerful strategic alignment.
According to a report released by PWC, authored by Doug Billings and Keith Katz, there are five principles of enterprise co-creation:
Co-creation, by design, is a collaborative endeavor. A real-world example of enterprise co-creation would be the rise of automobile customization online. In early 2010, BMW piloted an initiative to increase customized orders of their vehicles based on feedback from their US customers. Their “made-to-order” online purchase experience offered over 28,000 customization options to customers. Yes, this level of customization required significant changes to their manufacturing plants and processes, marketing, and sales efforts. But it’s what their customers wanted. And in the spirit of co-creation, BMW’s business units worked together to make it happen.
In 2010, BMW set an aggressive goal of having 40% of vehicle purchases be customized by the customer by 2015. Today, in 2015, 80% of the vehicles that BMW delivers are customized for the individual customer. They doubled their five year goal, and more than tripled their stock price over the same period.
As previously mentioned, enterprise co-creation is designed to create a mutually beneficial outcome for all involved parties. BMW did just that. When launching the co-creation endeavor in 2010, James O’Donnell, a senior executive of BMW’s US division, said, “I’m convinced it will give us a competitive advantage against Audi and Mercedes.”
Good thinking, and good execution, BMW. The results speak for themselves.