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Social Innovation

A sector-by-sector view of co-creation

Hitachi's recently released report on the state of co-creation in Europe, ‘Co-creating the future', established that across the continent, more and more companies are using co-creation as a tool for innovation. Our survey shows that it's an ideal way to work on complex projects at the intersection of business and society, such as smart city projects, but equally for complex product creation efforts like connected cars. But beyond these projects, how do the different sectors we surveyed view co-creation? How do they differ in their views of its benefits, and the challenges in implementing it?

Attitudes to co-creation

Although the overall opinion of co-creation is positive across sectors, some are clearly more enthusiastic about the benefits it can bring than others. For example, while 49 percent of energy sector respondents and 48 percent of transport sector respondents say that co-creation has transformed their approach to innovation, healthcare (55 percent) and infrastructure (57 percent) respondents seem more convinced, and a massive 83 percent of automotive sector respondents say co-creation has been transformative to them. Many car manufacturers have adopted co-creative ways of working into their standard innovation processes. Audi, for example, now conducts regular ‘virtual lab' sessions, which are used to bring customers into the design process of new car components, such as an improved in-car entertainment system.

The varying levels of enthusiasm for co-creation could be explained by how integrated co-creation processes are in these sectors. For example, 78 percent of energy sector respondents say that co-creation has been discussed in their companies as an innovation tool, and the most common stage of development for co-creation in the energy sector is the rollout phase, with 24 percent of respondents saying they were at this stage.

Compare this to the automotive sector, where a third (33 percent) are already testing co-creation in pilot phase projects, 29 percent have rolled co-creation out across certain departments and regions, and almost one in five (19 percent) say it is being rolled out across the whole company. Indeed, 96 percent of automotive sector respondents say that co-creation has been discussed by their company at some stage. The adoption level of co-creation across the business certainly seems to be correlated to how transformative it has been for the sector.

Why co-create?

Our survey identified two key drivers for co-creation: to reduce the cost of developing new products and services, and to create more successful ones from scratch. Again, automotive is advanced here, with a third (67 percent) of auto respondents saying they had used co-creation to reduce development costs, and nearly four out of five (79 percent) saying they had used co-creation to develop more successful products and services – Audi's co-created in-car entertainment system above being a great example of improving an existing component by bringing customers into the design process.

However, the benefits of co-creation are being felt in other sectors too: for example, nearly half of energy sector (46 percent), healthcare (49 percent), transport (47 percent) respondents say that co-creation helps them to reduce product and service development costs – presumably by crafting products and services that are perfectly tailored to demand. This is reinforced by the fact that over half of respondents in all sectors say that it has led to the development of more successful products and services.

Measuring impact

Looking at what methods different sectors use to measure the impact of co-creation projects gives some insight into the motivations for why they are adopting it in the first place. For example, auto respondents primarily measure the success of co-creation by how effective it is at problem solving issues with existing products – therefore, it's fairly safe to assume from this that the primary goal of using co-creation for auto companies is problem solving.

This is also one of the most common methods for assessing value that is used by infrastructure and city planning respondents. However, another measure is just as regularly used by this sector: the increased social impact of the project they are working on. This makes sense, coming from a sector that is now increasingly engaged on projects that pull multiple areas of expertise together on large-scale city planning projects. Singapore's Smart Nation initiative, for example, has a wide-ranging set of objectives focused on improving health, living, mobility and services across the city – clearly, improving the lives of citizens is hard-wired into the objectives of a project such as this.

Energy sector respondents say that their primary method for measuring the impact of co-creation is looking at the number of new products where other parties have been involved in development – giving an indication that the primary goal for energy companies when employing co-creation is in the design of new products and services with partners.

A key challenge for the energy sector today is moving to a sustainable low-carbon generation model, and many new products and services are being designed to help utilities and governments achieve their carbon reduction ambitions. The scope of such projects can be huge, encompassing not only the design and implementation of new, low carbon generation capacity, but also spreading to the design of large buildings that have power-saving technologies baked in from the design phase, and IT systems that help gauge demand. Co-creation is perfectly suited for such complex objectives.

Who gets involved with co-creation?

Customers and employees were at the top of the list of regular co-creation partners for all sectors. This should come as no surprise: gauging customer reaction is key to the development of any product or service, so involving them in the creation or improvement phase is a great idea for addressing customer needs. And employees, who are involved in the creation process by default, will often have brilliant ideas for how to improve existing products, or have insight into how to use existing infrastructure to create new ones. Tapping into this can prove valuable. Indeed, Whirlpool has recently implemented a technology platform that allows employees to submit innovation ideas – and since its introduction, sales values have gone from a 2 percent annual decline to 2 percent growth.

Respondents across energy, healthcare, automotive and infrastructure said that they were least likely to co-create with direct competitors. While this may not be a common occurrence, it can and does happen – particularly on large or complex projects, where competitors are contracted for different services but end up in the same room, working on the same project. Making sure that companies have established processes to deal with this is critical, as data sharing and IP issues will be even more challenging in such circumstances.

Co-creation goes mainstream

Our results show that even those sectors where co-creation isn't yet a core tool see the benefits it can bring. The barriers to adopting co-creation as a way to innovate, such as data privacy and IP challenges, are surmountable if tackled the right way, and discussed with partners in the development phase of projects. Building the right culture is more of a long-term challenge, but across all the sectors covered in our survey, those that agree that they have a culture conducive to co-creation sits between 47 percent and 66 percent. Clearly, the challenges around co-creation are common across sectors, suggesting that best practices from other industries should prove valuable in overcoming them.

By finding ways to measure the impact of co-creation on their businesses that align with their goals for using it, organizations can start to see the returns it can bring on their projects. This can then help with internal sell-in, and help to build a culture that encourages collaboration.

Although sectors that rely on working collaboratively with multiple parties – such as auto manufacturers – have been using co-creation out of necessity for some time now, for other sectors, co-creation may not be such a natural fit. But our survey shows that once they recognize and address the challenges, the benefits are there for the taking.

the Future

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