Co-creation is a management initiative, or form of economic strategy , which deals with different parts together (for instance, a company and a group of customers), in a mutually valued outcome.  Co-creation brings together the unique blend of ideas from the viewers who are not the direct users of the product.
Co-created value in the form of personalized, unique experiences for the customer (value-in-use) and ongoing revenue, learning and enhanced market performance drivers for the firm (loyalty, relationships, customer word of mouth). Value is co-created with customers if and when a customer is able to personalize his or her experience using a firm’s product-service proposition – in the lifetime of its use – to a level that is best suited to get his or her job (s or more importantly, higher revenue / profitability and / or superior brand value / loyalty. 
Scholars CK Prahalad and Venkat Ramaswamy popularized the concept in their 2000 Harvard Business Review article, “Co-Opting Customer Competence.”  They Developed Their arguments further Top In Their book, published by the Harvard Business School Press , The Future of Competition , Where They offert examples Including Napster and Netflix showing That customers Would No. along be satisfied with making yes or no decisions is what a company offers. 
Within the study of Prahalad and Ramaswamy,  they defined co-creation as “The joint creation of value by the company and the customer; allowing the customer to co-construct the service experience to their context “(Prahalad and Ramaswamy, 2004, 8).
The process of Co-creation
The process of co-creation essentially involves 2 core steps:
- Contribution : Submission of contributions by the public to the firm
- Selection : Selection of the most promising and appealing contributions / submissions
Types of Co-creation
Depending on the degree of control, the co-creation may be broadly classified into 4 categories:
- Tinkering : Public exercises control over the contribution
- Submitting : Firm exercises complete control over both activities
- Co-designing : The exercises exercises control over the contribution activity
- Collaborating : Public exercises
Tinkering is a customer co-creation model, which is one of the most promising and successful contributions of the firm and finally the implementation of the contributions. For example, Little Big Planet , a puzzle platform video game by Sony Interactive Entertainment Allows the gamers to create Their Own levels in the game.The created levels can be shared with other Then gamers gold Submitted to Sony . Owning to this “Create and Share” feature, this game has the tagline ‘Play, Create, Share’.The most prominent contributions are incorporated into the final game and the contributors are rewarded.
In the case of submitting, the firm exercises control over the contribution activity by placing constraints on the basic design, contribution size etc. and also the selection activity by selecting the winning contributions.
Co-designing the contribution of constraints by the firm on the contribution and the contribution of the contributors themselves. For example, Local Motors employs the co-designing model of customer co-creation to develop its vehicles. In 2010, Local Motors developed a car named Rally Fighter in a record 18 months, which is about 5 times faster than what a conventional car manufacturing process takes.By empowering a community of over 2000 designers to submit their designs while still placing some constraints on the basic design, color schemes etc., Local Motors effectively used the co-designing model of customer co-creation.The winning designing (By Sangho Kim) was chosen by the design community by voting.
An interesting bit of trivia about Local Motors is that it does not have a design team. All the designing is done by the public itself.
Threadless, one of the leading T-shirt manufacturing brands in America also employs co-designing.
Also known as “open sourcing,” it is accessible to the public and is available to the public. Examples like, Mozilla Firefox , Apache and Linux are all based on collaboration.
The Art of Co-creation
The traditional company-centric view says: (1) the consumer is outside the domain of the value chain; (2) the enterprise controls where, when, and how value is added in the value chain; (3) value is created in a series of activities controlled by the enterprise before the point of purchase; (4) There is a single point of exchange where value is extracted from the customer for the enterprise. The consumer-centric view says: (1) the consumer is integral part of the system for value creation; (2) the consumer can influence where, when, and how value is generated; (3) the consumer need not respect industry boundaries in the search for value; (4) the consumer can compete with companies for value extraction; (5) There are multiple points of exchange where the consumer and the company can co-create value. In the customer-centric mass production and marketing of automobiles, for example, supplying raw materials, components, subcomponents, and systems to manufacturers, who creates value by assembling these inputs into vehicles. Consumers actively decide what to buy, but companies will decide what their choices will be. Cars are sold by the dealer acting as intermediaries for the automakers. For companies linking to this scenario, value creation is determined by extracting profit from end consumers. The Saturn Corporation, billing itself as “a different kind of car company,” has spurned the industry’s traditional ways. In 1985, when the General Motors Corporation launched Saturn, it created a “community.” Saturn works with its customers in the design, manufacturing, and sales processes, and it engages Saturn owners to help. Consumers think about the place of their life – how it fits their budget, their desire for comfort, their need for peace of mind, their aesthetics. Companies think about their competitive strategy and their operations – engineering, differentiation, logistics, pricing, and, above all, revenue and profit. Although these views of value do not clash, they are not irreconcilable. Saturn is a company trying to merge these two ways of looking at value. In the pages that follow, we present a framework – a new value creation paradigm – to suggest how can we understand more about the value of our products? Consumers think about the place of their life – how it fits their budget, their desire for comfort, their need for peace of mind, their aesthetics. Companies think about their competitive strategy and their operations – engineering, differentiation, logistics, pricing, and, above all, revenue and profit. Although these views of value do not clash, they are not irreconcilable. Saturn is a company trying to merge these two ways of looking at value. In the pages that follow, we present a framework – a new value creation paradigm – to suggest how can we understand more about the value of our products? Consumers think about the place of their life – how it fits their budget, their desire for comfort, their need for peace of mind, their aesthetics. Companies think about their competitive strategy and their operations – engineering, differentiation, logistics, pricing, and, above all, revenue and profit. Although these views of value do not clash, they are not irreconcilable. Saturn is a company trying to merge these two ways of looking at value. In the pages that follow, we present a framework – a new value creation paradigm – to suggest how can we understand more about the value of our products? Companies think about their competitive strategy and their operations – engineering, differentiation, logistics, pricing, and, above all, revenue and profit. Although these views of value do not clash, they are not irreconcilable. Saturn is a company trying to merge these two ways of looking at value. In the pages that follow, we present a framework – a new value creation paradigm – to suggest how can we understand more about the value of our products? Companies think about their competitive strategy and their operations – engineering, differentiation, logistics, pricing, and, above all, revenue and profit. Although these views of value do not clash, they are not irreconcilable. Saturn is a company trying to merge these two ways of looking at value. In the pages that follow, we present a framework – a new value creation paradigm – to suggest how can we understand more about the value of our products?
The four building blocks of interaction
Prahalad and Ramaswamy  suggests that in order to apply co-creation, the following should be prepared in advance.
|Dialogue||Interaction between customer||Two-way connection instead of one-way selling strategy|
|Access||Allow customer to access the data||Create value with customer; beyond traditional value chain process|
|Risk-benefit||To monitor risk and gaps between customer and firm||Share the risk of product development with guest communication (In later work of Ramaswamy,  this is replaced by “reflexivity”)|
|Transparency||Information among business is accessible||Information barriers should be eliminated to certain degree in order to gain trust from guest|
In their review of the literature on “customer participation in production”, Neeli Bendapudi and Robert P. Leone found that the first academic work dates back to 1979. 
From 1990 onwards, new themes are emerging: John Czepiel suggests that customer participation can lead to greater customer satisfaction.  Scott Kelley, James Donnelly, and Steven J. Skinner are dealing with productivity, and other approaches to quality, employee performance, and emotional responses. 
Richard Ramirez suggests that successful companies do not focus on themselves or even on the value-creating system. 
Michel, Vargo and Lusch recognize the influence of their co-production and co-creation: “his customer co-production mirrors the similar concept found in FP6”.  The authors suggest that Normann enriches the SD Logic particularly through his idea of ”density” of offerings.
In a letter to the editor of the Harvard Business Review in response to an article by Pine, Peppers and Roger, Michael Schrage argues that some kind of knowledge to the firm. 
Wikström sees the role of consumers changing. 
Firat, Fuat, Dholakia, and Venkatesh introduced the concept of customerization (which is a buyer-centric evolution of the mass-customization process) and stated that it enables consumers to serve as “the co-producer of the product and service offering”.  However, Bendapudi and Leone (2003) concluded in an empirical paper that “the assumption of greater customization under co-production can only when the customer has the expertise to craft a good or service to his or her liking”. 
As noted by Zwass in his 2010 taxonomy and review article on co-creation  , the term “co-creation” was initially framed by Dr. Ajit Kambil and his coauthors in two articles in 1996 and 1999. In ” Reinventing Value Proposals “(1996), Kambil, Ginsberg, and Bloch, illustrate how co-creation can be used as a strategy to transform value propositions working with customers or complementary resources  . In “Co-creation: A new source of value” (1999), Kambil, Friesen and Sundaram builds the concept of co-creation being a key source of value. utilizing this strategy  .
At the turn of the century, Prahalad and Ramaswamy (2000) popularized co-creation building on the prior work. 
In 2004, Prahalad and Ramaswamy.  At the same time, Vargo and Lush (2004) published on the service-dominant logic of marketing. The process of value creation is dealt with in FP6. Opposing the goods-dominant logic and the service-dominant logic, the authors state: “the customer is always a coproducer”. FP6 will be later (Vargo and Lush, 2006) altered in “the customer is always a co-creator”.
Prahalad commented on an issue of the Journal of Marketing on Vargo and Lusch’s FP6 and found that the authors did not go far enough. 
In the same book, Kalaignanam and Varadarajan (2006) also follow Prahalad’s comments and elaborate on the IT implications on co-production. As the authors put it “developments in information technology […] enable customers to create value by collaborating with the firm”. The contribution of the authors in this article is a conceptual model of the intensity of customer participation as a function of product characteristics, market and customer characteristics, firm characteristics. In their conclusions and directions for future research They are proposing to study supply-side issues and increasing participation, participation from the customers and the emergence of communities enable customers to interact, sometimes leading to new creations. Second they see the ” locus of innovation “third-party experience” and “third-party” or “third-party experience” is already mentioned by Bendapuli and Leone: “A customer who believes that he or she has the expertise and chooses to co-produce may be more likely to make self-attributions for success and failure than a customer who lacks the expertise. A customer who lacks the expertise but feels forced to co-produce […] may make more negative attributions about co-production “. Third, they may be asked if they are not successful in terms of satisfaction. The third issue is already mentioned by Bendapuli and Leone: “A customer who believes in self-attribution and success in self-attribution for success and failure. customer who lacks the expertise but feels forced to co-produce […] may make more negative attributions about co-production “. Third, they may be asked if they are not successful in terms of satisfaction. The third issue is already mentioned by Bendapuli and Leone: “A customer who believes in self-attribution and success in self-attribution for success and failure. customer who lacks the expertise but feels forced to co-produce […] may make more negative attributions about co-production “.
In the early 2000s, consultants and companies deployed co-creation as a tool for contracting customers in product design. Examples include Nike giving customers online tools to design sneakers Their Own. At MacWorldconference in 2007, Sam Lucente , the legendary design and innovation guru at Hewlett-Packard , described his epiphany as designers, using their brilliance and magic. They are no longer in the business of product and service design, he stated; they are really in the business of customer co-creation. 
During the mid-2000s, co-creation est devenu a driving concept in social media and marketing techniques, companies Where Such As Converse Persuaded wide numbers of ict MOST passionate customers to create Their Own video advertisements for the product. The Web 2.0 phenomenon encompassed many forms of co-creation marketing, as social and consumer communities became “ambassadors”, ” buzz agents “, ” smart mobs “, and “participants” transforming the product experience. Other examples of co-creation can be found in arts. 
Digital era: types of customer co-creation
According to Arin Rindfleisch and his former doctoral student, Matt O’Hearn, customer co-creation was categorized into four different types based on a two-by-two matrix. It was based on two key steps in the customer co-creation process.The X axis had the contribution step towards the idea creation / suggestion. And each of this axis had both a high and a low degree of customer control over each process. Under contribution, the first box was fixed, which means that the customer has very little control over the contribution process and the firm will fix the types of contribution that it wants. On selection, under the firm-led process, it is largely the firm that makes the selection activity and the firm pick the winning submissions. In the customer-led category,
Thus defining the oven types of customer co-creation as below:
- Submission – This section has the least contribution in terms of the submission of the customer and has a high degree of firm-selection in the limited ideas proposed by the customer.
- Tinkering – a unique type of co-creation where the customer comes up with a variety of ideas for the organization, which is defined by multiple parameters of the firm. In tinkering, the firm usually releases a final product (eg Little Big Planet video games by Sony). Although the users create the platform, the firm decides which ones get published and distributed.
- Collaborative – a mix of leveraging both the firm and users with the final idea. The customer has full liberty to suggest the idea and the idea of the combined efforts of the firm. Eg Apache Server is a completely open source tool available on the web for all customers.
- Co-designing – the customer approach to the customer. Any community forum where the customer has to give advice to the company, etc., whereas the final idea is selected by the community. eg Threadless-where customer designs the T-shirt with his own innovation and idea, the customer restricts the customer to design only T-shirts and the final selection is done by the firm itself, move forward.
During the mid-2000s, these innovations in customer engagement and collaboration have been expanded and integrated into global economic trends, including the co-created development of products and services. Authors published bestselling books developing theories influenced by “co-creation” and customer collaboration. Major concepts included crowdsourcing , coined by Jeff Howe in a June 2006 Wired magazine article,  open innovation , promoted by Henry Chesbrough ,  a professor and executive director at the Garwood Center for Corporate Innovation at Berkeley , and consultant Don Tapscott ‘s and Anthony D. Williams ‘ sWikinomics: How Mass Collaboration Changes Everything ,  a book that popularized the concept of corporations using mass collaboration and open source innovation.
Of this rapid morphing of co-creation, Ramaswamy and his co-author Francis Gouillart wrote: “Through their interactions with thousands of managers globally who had begun experimenting with co-creation, they discovered that and its customers of the entire network of suppliers, partners, and employees, in a continuous development of new experiences with individuals. ” 
The rise of customer co-creation
The rise of co-creation could be attributed to two distinct issues as suggested by O’hern & Rindfleisch (2010). 
- The information asymmetry between customer and capability
- Customer empowerment
- The advent and widespread application of digital technology
Successful co-creation requires two key steps. 
The contribution of ideas: A firm must convince its customers to submit their ideas (ie, to contribute). However, receiving contribution is actually quite difficult. Unless customers are incentivized in an attractive way they are reluctant to participate and benefit the company. As a result, most co-creation efforts fail because they do not get many submissions.
Selecting the viable ideas: The most profitable, viable and implementable ones. The challenge of the process is that it is not very useful, impractical and difficult to implement. Firms have to deal with each other in the process of doing business. They do not want to reject customer submissions and risk of alienating them which eventually leads to customer disengagement.
Although co-creation is an excellent activity to gather many and different ideas from the customers,
- Pareto principle-Selection of the ideas from multiple redundant ideas submitted. Only 20% of the submitted ideas
- Risk in losing out on the brand image – if the ideas highlight more on the negative scenarios of the firm’s products or services.
- Marketing mix
- Service-dominant logic
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