Each year businesses spend an aggregate of $40B on market research. This is largely in an effort to mine new insights about customers' unmet needs, or to test out new ideas to see if a large enough segment of their customers (or of the general population) will react positively to them.
Businesses have begun to realize however that rather than — or in some cases, in addition to — spending millions each year on conducting market research in a simulated or hypothesized manner, they can often get better insights, and at less cost, by engaging customers directly in a co-creative process. When done properly, this can produce extremely useful outcomes. But to make the process work, there are several important considerations that have to be taken into account, primarily around the specific steps to be used in a B2B versus B2C scenario.
In a B2B scenario, the business can often set up a special co-creation laboratory in which they have customers' staff come in and operate test benches of their own systems, trying out numerous different configurations with the business' products. An excellent example of this is the HP Moonshot Discovery Lab (replicated in Houston, Grenoble, Bangalore, and Singapore). These labs are equipped with the devices and connectivity that enable innovative experimentation, as reflected in this video. B2B co-creation labs work best when similar peers are able to engage with one another, such as Designers with Designers or Engineers with Engineers, as shown in this example with HP.
In a B2C scenario, the business can once again set up a special laboratory — often part of a larger User Research lab within an overall Innovation Lab. Here, Designers and Researchers can engage directly with would-be customers to explore certain problem spaces and their corresponding solution spaces. The business must be careful however to not let these turn into 1970s–esque focus groups where customers are asked about solution spaces for which they have no context (which almost always leads down a wrong path). Thus on one hand, Researchers can use this exercise as simply a means of observing how customers go about thinking about their challenges and the associated problem / solution space, so as to develop an empathic understanding of their needs, values, motivations, and priorities (from which they would then conceive the solution). On the other hand, Researchers can in fact have customers directly lead the design of a final solution, but in so doing they must be very careful to ensure there are solid fundamentals behind the framing / conceptualization of the problem being addressed, as well as the solution taking shape — is the real problem being tackled, and does this solution in fact solve that problem? This is where lead users can often prove helpful.
There are several different forms of B2C co-creation, including open crowdsourcing, co-creation workshops, open-source software code, mass customization, and customer-generated content. A classic example of the workshop approach was Heineken's 2012 Heineken Open Design Exploration Edition 1: The Club, which engaged designers from all over the world with a panel of 100 veteran clubbers to conceive a progressive pop-up club in Milan intended to be representative of the next generation of clubs. A classic example of open crowdsourcing has been Cisco's iPrize competition, aimed at finding the next billion-dollar business ideas — a venue that has led to such winning ideas as a sensor-enabled smart-electricity grid and others. Linux and Firefox have been well-known examples of open-source code, while NikeID is a well-known example of mass customization. Examples of customer-generated content have included Domino's Pizza Mogul platform that lets customers create and sell unique recipes through the Dominos franchise, and the LEGO IDEAS platform that allows customers to vote on one another's designs, with the winning designs sometimes becoming real products. This is not even to mention customer-generated content platforms like YouTube, Medium, and SlideShare.
Customer co-creation is a powerful emerging method for lean and frugal innovation. It allows businesses to uncover numerous insights about their customers and those customers' problem needs, usually in a faster, easier, and less expensive way than does traditional market research. It also tends to yield more direct and reliable insights than does indirect market research. Over the last several years countless companies and brands have begun making effective use of customer co-creation, including such well-known brands as DHL, DeWalt, Coca-Cola, Samsung, BMW, MTV, E.ON, Manchester City FC, Tata Group, and hundreds more. Many businesses can thus benefit from this method, and should give serious consideration to setting up a customer co-creation practice in the context of their broader innovation research work.