Managing Co‐creation Design: A Strategic Approach to Innovation
| Published date | 01 July 2015 |
| Author | Kaj Storbacka,Pennie Frow,Suvi Nenonen,Adrian Payne |
| DOI | http://doi.org/10.1111/1467-8551.12087 |
| Date | 01 July 2015 |
British Journal of Management, Vol. 26, 463–483 (2015)
DOI: 10.1111/1467-8551.12087
Managing Co-creation Design: A Strategic
Approach to Innovation
Pennie Frow, Suvi Nenonen1, Adrian Payne2and Kaj Storbacka1
Discipline of Marketing, University of Sydney, Sydney, New South Wales, Australia, 1University of
Auckland Business School, Auckland, New Zealand, and 2School of Marketing, University of New South
Wales, Quadrangle Building, UNSW Sydney, New South Wales 2052, Australia
Corresponding author email: a.payne@unsw.edu.au
Co-creation offers firms and their network of actors significant opportunities for inno-
vation, as each actor offers access to new resources through a process of resource
integration. However, despite the significant advantages that co-creation can offer, there
is surprisingly little research providing a strategic approach for identifying the most
advantageous co-creation opportunities, especially when many possible options are avail-
able. Recently, scholars have called for research that develops tools and processes related
to co-creation. This study addresses these priorities, making two contributions. First, in
contrast to previous work considering co-creation more generally, or focusing on one
specific form only, e.g. co-production, this paper offers a detailed and granular approach
to co-creation design. A co-creation design framework is developed, which incorporates
multiple design dimensions and categories that can reveal new co-creation opportunities.
Second, the research extends the application of a design approach, specifically within the
context of co-creative activities. The authors use field-based research with senior execu-
tives to develop a framework that includes key co-creation design elements. A morpho-
logical approach is used to explore how a lead firm can identify attractive co-creation
opportunities. An innovation solution in one organization provides an illustration of how
the co-creation design framework can be applied.
Introduction
Co-creation offers significant potential for man-
agers wishing to improve their innovation capa-
bilities. From an organization’s perspective,
co-creation can enhance its innovation processes
(Nambisan, 2002) and is the key to unlocking new
sources of competitive advantage (Prahalad and
Ramaswamy, 2004). Lee, Olson and Trimi (2012)
undertake a broad coverage of co-creation and
co-innovation, highlighting the importance of
engagement, co-creation and creating compelling
experiences in value creation. From a customer’s
perspective, interaction with a firm allows
co-creation of their consumption experiences
(O’Cass and Ngo, 2011), enhancing customers’
brand experiences (Nysveen, Pedersen and Skard,
2012) and strengthening valued relationships
(Payne and Holt, 2001).
Co-creation benefits include: enhanced engage-
ment of employees (Hatch and Schultz, 2010); better
supply chain integration (Jüttner, Christopher and
Godsell, 2010); improved shareholder commitment
(Madden, Fehle and Fournier, 2006); and knowledge
sharing with competitors (Kohlbacher, 2007), which
occurs especially in ‘co-opetitive’ contexts, providing
major benefits, but also creating risks (Ilvonen and
Vuori, 2013). Scholars agree that co-creation
research is important, especially in investigating how
co-creation offers new opportunities for enterprises
(e.g. McColl-Kennedy et al., 2009; Prahalad and
Ramaswamy, 2004).
Despite growing interest in co-creation, schol-
ars call for more work in this important area of
© 2015 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
research. A recent article in BJM suggested that
the literature ignores studies that ‘enable’ or
‘build in’ aspects of co-creation to the service
delivery process (Osborne and Strokosch, 2013),
advocating a ‘design’ imperative (Pacenti and
Sangiorgi, 2010). Barczak (2012) highlights the
need for research on ‘What tools and processes
enable effective cocreation’ (p. 356), encouraging
work on practices for collaborating with partners.
Similarly, the Marketing Science Institute (MSI)
(2014, p. 11) highlights the need to identify ‘What
is the value of alternative sources of insight gen-
eration to drive innovation’ in co-creation and
‘How can design be infused in product and service
development?’ Scholars recognize the substantial
advantages that co-creation can offer, yet there is
little research that addresses ‘How firms can pur-
posefully identify co-creation opportunities’.
Recent work considers the co-creation process
(Hoyer et al., 2010; Payne, Storbacka and Frow,
2008; Prahalad and Ramaswamy, 2004), but this
work does not offer a detailed exploration of the
specific dimensions and categories that are impor-
tant in co-creation design.
In this paper, we adopt the definition of
co-creation advanced by Perks, Gruber and
Edvardsson (2012): ‘Co-creation involves the joint
creation of value by the firm and its network of
various entities (such as customers, suppliers and
distributors) termed here actors. Innovations are
thus the outcomes of behaviors and interactions
between individuals and organizations’ (p. 935).
These authors note that innovation is a valuable
potential outcome of the interactions and encoun-
ters with actors involved in co-creation. However,
other valuable outcomes, such as enhanced cus-
tomer insights through knowledge sharing (e.g.
Schreier, Fuchs and Dahl, 2012), are also possible.
Co-creation design is a purposive process that
can be viewed as being distinct from other related
concepts, including: the outcome of routine joint
value creation (Vargo and Lusch, 2004, 2008);
open innovation (Chesbrough, 2003); crowd-
sourcing that focuses on sharing innovative ideas
(Howe, 2009); and prosumption that focuses on
the production of the core product (Tapscott and
Williams, 2008). We view co-creation as a particu-
lar form of open innovation, concurring with
Barczak (2012) and Van Stiphout (2010), who list
co-creation as a category within open innovation.
This paper examines co-creation from a design
perspective. Recent discussion of design thinking
argues for bringing together designers’ principles,
approaches, methods and tools to assist in
problem-solving (Brown, 2008). This human-
centred approach relies upon learning through
experimentation and is particularly suited to the
design of innovations (Liedtka, 2014). This paper
develops a strategic framework for co-creation
design, exploring how a design approach can
assist a firm with identifying new co-creation
opportunities. In common with recent work on
co-creation (Payne, Storbacka and Frow, 2008;
Perks, Gruber and Edvardsson, 2012), the per-
spective of the lead firm within a network is
adopted.
This research makes two important theoretical
contributions: first, it provides a detailed, granu-
lar perspective of co-creation; and, second, it
adopts a design approach to assist in identifying
new co-creation opportunities. These contribu-
tions address significant deficiencies in current
knowledge: specifically, how can a firm integrate
specific resources of selected actors with its own
resources, and design new co-creation initiatives?
Resource integration involves a process of
ongoing combination of resources by actors
(resource integrators) in co-creating value
(Kleinaltenkamp et al., 2012; Vargo and Lusch,
2011). The managerial contribution of this paper
is a response to Prahalad’s (2004) call for new
building blocks for co-creation.
This research develops a structured framework
that enables managers to identify and evaluate
co-creation opportunities. Previous frameworks
addressing co-creation (Jaakkola and Hakanen,
2013; Saarijärvi, Kannan and Kuusela, 2013),
innovation (Lichtenthaler, 2011) and new product
development (NPD) (Alam, 2002; Brockhoff,
2003) provide some guidance in terms of dimen-
sions that may be important. However, they do not
offer a detailed co-creation framework to identify
key dimensions and categories that can assist firms
design new opportunities for innovation.
This paper is organized as follows. First, we
review relevant the extant literature on co-creation
and design. Second, we describe the research
method, which involves field-based research with
groups of senior executives from eight large enter-
prises. Third, we explain the development of the
framework, identifying important dimensions of
co-creation and specific categories within these
dimensions. Fourth, we illustrate how one of the
firms participating in this research developed an
© 2015 British Academy of Management.
464 P. Frow et al.
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