By Tim Ogilvie and Jeanne Liedtka
Want the biggest bang for your growth investment dollar? Dave Jarrett, a partner at the consulting firm Crowe Horwath, is happy to share his philosophy: involve the customer very early in the process. Here’s what Dave told us recently:
Our history before was we got a great idea, we built it, and then we went to the market and we tried to sell it. And you know what happens then—you get a lot of false starts. What we do now is bring together a group of people who are focused on a particular area, and we’ll go through a day or two process of trying to create a new opportunity that we could approach the market with, looking at things from different lenses and different ways. And then at the end of that, we story board and we take those concepts out to the potential clients and we ask them, “What do you think about this proposed solution?” I don’t want to call it a cartoon, but that’s kind of what it looks like.
Consultants are supposed to be experts, so this approach was not an instant hit with his partners.
When we started, Dave said, there were a lot of people who were not happy—they said you’re going to go out there and you’re going to sit down with these clients and they’re going to look at you like you’re wasting my time on this.
It didn’t help that the first group to go public with the approach was a coterie of bankers—both Crowe consultants and their clients. But to the amazement of all, the clients loved it:
They ate it up. They were all in, having a blast. We planned an hour for these meetings. Every one of them was taking two hours. And the guys who took them out were bankers on our staff; they’re not creative artists or anything.
What Is Customer Co-Creation?
Customer co-creation is the process of engaging a potential customer in the development of new business offerings. Using prototypes, customers explore alternative futures and actively shape win-win propositions. It involves putting some small experiments in front of potential customers, observing their reactions, and using the results to iterate your way to an improved offering. A typical co-creation phase might have three rounds, each successive round embodying the changes and improvements that emerged from the preceding round.
If you want your innovations to be meaningful to your customers, to be worth investing in both financially and psychologically, you need to invite them into your process. In our Six Sigma world, which values perfection and polish, we tend to get anxious about showing customers unfinished, unpolished “stuff.” Get over it. Innovation is about learning—and customers have the most to teach you. The sooner you get something in front of them that they can react to, the faster you’ll get to a differentiated value-added solution. And they will love being involved.
Customer co-creation is among the most value-enhancing, risk-reducing approaches to growth and innovation. Any time you introduce an unfamiliar concept, you can expect to get it mostly wrong. That is why co-creation, using low-cost, low-fidelity prototypes, is so essential to reducing the risks and improving the speed of successful innovation. Co-creation takes a week or two and costs four figures or less, whereas formal new product rollouts require months and cost six figures or more. For this reason, we view co-creation as one of the most significant ways to de-risk a growth project.
Tips for Getting Started
There is no rocket science to effective customer co-creation—just a few simple principles. These have to do with picking the right customers to invite to your play group, giving them something worth playing with, and listening attentively to their feedback. You may not have done this before, but, like Dave Jarrett, once you try it you will never go back to the old way.
1. Enroll customers who care about you (but not as much as they care about themselves): You need customers who are hungry for a solution and motivated to be completely candid.
2. Diversity = security: Enroll a diverse group of customers to help you co-create. There is a temptation to choose only target customers for co-creation, but you may be surprised to learn that non-target customers are just as keen for a concept. When P&G went to develop the cleaning system that became Swiffer, it worked with professional cleaning crews, stay-at-home moms, and residents of college fraternity houses (that team had courage!). All three groups contributed to the final version of Swiffer.
3. No-selling zone: Co-creation sessions are not sales calls for your solution. A rule of thumb is that the customer should do 80 percent of the talking. As Dave Jarrett explains: What the story board is really all about is not trying to sell you something; it’s simply trying to understand if we were to approach something, how would you recommend we approach it? What would be valuable to you?
4. Engage one customer at a time: This may seem inefficient—but remember that you are not going for a statistically significant sample size. You will learn so much more when there is no social pressure on the research subject—when they are alone with you and not influenced by others in the room expressing their opinions at the same time.
5. Offer a small menu of choices: Presenting a single concept, well considered, defies the purpose of co-creation. Typically, you want to give customers two or three options and invite them to begin exploring one they are drawn to. Maybe they can move on to a second one, if time allows. Simply learning that your favorite concept is not the one customer’s choose first can be important.
Be sure to include choices you think people will not select. The best firms test concepts they suspect are too extreme or too tame, just to locate their customers’ novelty threshold. Sometimes customers will surprise you. The managers who oversaw the Google Gmail alpha test predicted it would come across as too intrusive (a software algorithm reads your private e-mail and serves you targeted ads?). But they tested it anyway, and it became a smash success.
6. Provide visual stimulus—but leave it rough: If you want people to walk with you into a possible future, you need to help them see it. But nothing fancy at this stage—quick sketches or posters are all you need. You want to keep the visually fidelity low in the early iterations to reinforce your willingness to modify the solution on the basis of their input. Make your prototype too polished and they may feel the right answer is, “Looks great!”
Leaving parts of the concept incomplete is a great way to elicit the customer’s creativity and competence. Even if you know how your firm will want to fill in the blank spaces, it can be illuminating to see what customers come up with.
7. Help customers communicate visually: Providing simple, visual ways for customers to express their choices helps them tap into their true preferences rather than telling you what they think you want to hear. Dave Jarrett invited customer to add green or red Post-It notes to denote the elements they liked or disliked. Leaving empty speech bubbles over a character in a storyboard is another way to elicit their choices.
8. Leave time for discussion: In co-creation, the discussion is more important than the actual choices customers make. Sometimes, we film the research subjects’ faces so we can note when they make a choice they don’t really believe in. These areas of dissonance often are signaled through clarifying questions, as well as facial expressions. Answer questions with questions (within reason); if the research subject says, “How would private information be handled?” the best response is, “How would you prefer it to be handled?”
9. Provide timely feedback: Customers don’t care if the visualization is low fidelity or if the idea is embryonic and half-baked, but they do want to know you used their input to refine it. So let them know what you did with their input. That is part of the co-creation contract.
Despite its merits, co-creation is a term that may be unfamiliar to senior leaders and can be off-putting. Just call it “getting the voice of the customer” when you describe it to your senior leadership team. Or else do it under the veil of darkness. But by all means, employ customer co-creation on every growth project as the key method to understand what will work in the market.
Tim Ogilvie and Jeanne Liedtka are the authors of “Designing for Growth—Customer Co-Creation: How to Enroll Target Users to Make Your Work Easier.” For more information, visit http://designingforgrowthbook.com/. To purchase the book, visit http://www.amazon.com/Designing-Growth-Thinking-Managers-Publishing/dp/0231158386.
Tim Ogilvie is the CEO of Peer Insight, an innovation strategy consultancy, where he has made contributions to the emerging disciplines of service innovation, customer experience design, and business model exploration. In 2007, he co-authored “Seizing the White Space: Innovative Service Concepts in the United States,” published by Tekes, the Finnish funding agency for R&D. This publication established the precepts for service innovation that are being embraced by public policy makers and private firms in the European Union. Ogilvie is a visiting lecturer at the University of Virginia’s Darden School of Business.
Jeanne Liedtka is a member of the Strategy, Ethics, and Entrepreneurship area at the University of Virginia’s Darden School of Business, where she has taught since 1989. Formerly the executive director of the school’s Batten Institute, a foundation established to develop thought leadership in the fields of entrepreneurship and Innovation, Liedtka also served as chief learning officer for the United Technologies Corporation (UTC) and as the associate dean of the MBA program at Darden. Liedtka’s previous book, “The Catalyst: How You Can Become an Extraordinary Growth Leader” (Crown Business, 2009), is based on a three-year Batten Institute study of operating managers who excelled at producing revenue growth in mature organizations.
