From Co-creation to Structural Collaboration

@steven_insites @tomderuyck conversationmanagement.biz I @steven_insites I @tomderuyck

………………………………………….………..……………..……………………………………………………………………………………………………. What to expect from this paper? ………………………………………….………..……………..……………………………………………………………………………………………………. An inspirational view on structural collaboration between your company and the market, based on 15 interviews with senior executives of (global) brands from different industries. • Main reasons why your company should be serious about structural collaboration with your customers. • A clear overview of what will be key, in order to succeed with structural collaboration. • An overview of some organizational measures your company will need to take when moving from one-off co-creation to structural collaboration. • conversationmanagement.biz I @steven_insites I @tomderuyck

………………………………………….………..……………..……………………………………………………………………………………………………. Definition: what do we mean with structural collaboration? ………………………………………….………..……………..……………………………………………………………………………………………………. This paper describes the success factors for ‘structural collaboration’. When we talk about structural collaboration we mean the integration of the voice of the customer in all decision making flows of your company. In most companies, customers are only allowed to give feedback at the very end of a decision making flow through traditional market research. This paper gives insights on how to involve the customer in every single phase of the decision making flow on an ongoing basis. We acknowledge that collaboration can also be done with employees, but the focus of this paper is on collaboration with the market. conversationmanagement.biz I @steven_insites I @tomderuyck

………………… Part 1 conversationmanagement.biz I @steven_insites I @tomderuyck

………………… Part 1 The facts about crowdsourcing, co-creation and collaboration. Co-creation is hot. In recent years, the world has been witness to a whole host of successful co-creation cases. Doritos allowed its fans to develop an advert to be shown during the Superbowl. Lays Crisps asked their customers to help choose a new flavour and snack manufacturer Mora produced a new croquette in collaboration with its consumers. Co-creation and crowd-sourcing are high on the agenda of the majority of today’s marketers. It is seen as a quick way to experiment with this new way of working. There is nothing wrong with this, but in most cases it doesn’t go any further than being just a trendy marketing campaign. The other problem with all of the examples above: they were all ‘one-offs’. There is no long term vision, nor intention to collaborate with the customer in a more structural way. Currently, only 3% of all companies have experience with developing new products and services with their consumers. In most cases1, this collaboration starts with a pilot project. If the test is successful, the collaboration can gradually be built up in a more structural manner. Less than one out of ten companies who co- create with their customers also use this collaboration for the launching of new products. We may say that the focus of co-creation is mainly focused on the initiation of new ideas2. But even if consumers are more or less continually involved in the process of dreaming up new ideas, this is still not enough to be able to speak of ‘structural collaboration’. Structural collaboration means that the customer is involved in all aspects of your company’s life. 12011, InSites Consulting, Social media integration survey. 22011, Frost & Sullivan, R&D/innovation and product development priorities survey results. conversationmanagement.biz I @steven_insites I @tomderuyck

1. Getting new insights: exploration of the target group. Listen directly on how they perceive the product and service quality to optimize the commercial portfolio. This also implies discovering new market trends and unmet needs from your most relevant customers. 1 2 Insighting Developing 2. The development of new ideas and fine-tuning of existing ideas. Create new commercial value together with the customer. By involving them in the product, campaign or brand development flow, you create a sort of self-fulfilling prophecy. The most relevant customers decide almost upfront what they will buy. Business Objectives 3. Key role during implementation. Include customers during the implementation phase to make sure that your interpretation of their ideas is done in a correct way. 4 3 4. Continuous evaluation and optimization. Use the voice of the customer as a continuous flow of information to improve loads of smaller, tactical issues and to re-shape the future of your company with your customer as your primary consultant. Optimizing Implementing conversationmanagement.biz I @steven_insites I @tomderuyck

And it pays off: a recent article in the ‘Harvard Business Review’ claimed that companies are better able to solve all their main business problems if they collaborate closely with their consumers. 3The good news is that consumers are also willing to help companies out with this: more than half of them4 want to collaborate with one of their favourite brands around one or more of these issues. Moreover, recent research carried out at the University of Wageningen5 has demonstrated that products whose packaging is labelled ‘co-created with consumers’ will sell significantly better than equivalent products that are not labelled in this way. In other words, consumers have more confidence in each other’s judgement than in the judgement of professional experts within a company. And they are probably right. In a recent study, we found that new product ideas that were co-developed with consumers score especially higher on ‘being relevant’ and ‘fulfilling ones needs’6. The goal of this paper is to look into the necessary ingredients for a company to structurally get the consumer on board: every single day and for almost all decisions that need to be taken. As a consequence of this intense collaboration between your company and the market, decisions will no longer be imposed from above. And when the majority of your decisions are taken in this manner, following consultation with the market, you may really speak of ‘structural collaboration’. The consumer is truly represented in the boardroom. His voice can be heard in every part of your company, a voice that is every bit as loud as the voice of management and staff. You may even want to consider actually appointing a consumer as an honorary member of your board. 32008, Harvard Business Review, The contribution economy, Scott Cook. 42011, InSites Consulting, Social Media around the world study. 52011, MSc thesis: Van Dijk, J. (30 August 2011). ‘The effects of co-creation on brand and product perceptions’. Faculty of Social Sciences, Wageningen University, more info: Joycediscovers.wordpress.com 62011, InSites Consulting with Heinz, R&D study. conversationmanagement.biz I @steven_insites I @tomderuyck

………………… Part 2 conversationmanagement.biz I @steven_insites I @tomderuyck conversationmanagement.biz I @steven_insites I @tomderuyck

………………… Part 2 The objectives of structural collaboration. Companies who are working on structural collaboration with their customers have four clear objectives in mind with this approach: 1. Create better products, improve the customer service and communicate in a more impactful way. This is by far the most important objective for large brands to collaborate with consumers. By succeeding in this objective, the overall performance of the organization will increase. 2. Become more agile. By involving customers in every phase of a decision making chain, things move faster. Companies can make better decisions faster and have a better feeling what will be needed to be as successful in the future. A big plus in today’s fast moving world. 3. Add consumer-feeling to the gut-feeling. A lot of managers rely on their gut-feeling, which is wonderful. Structural collaboration should add ‘consumer-feeling’ to it. By collaborating so often, managers create the ability to put on the consumers hat during a meeting and think as the customer. Allowing them to make more consumer relevant choices. 4. Marketing & PR. Companies who are listening and involve consumers in decision making are popular nowadays. Tell all your customers that you take decisions based on consulting other customers, and they will like you more. Leveraging the internal collaboration platforms towards the external communication, has an impact on the overall perception. This is not the main goal, but a very welcomed indirect effect. conversationmanagement.biz I @steven_insites I @tomderuyck

………………… Part 3 An evolution, not a revolution. It’s clear that structural collaboration with consumers is not about having the right technology to make it happen. It is about a mentality shift for most organizations. A shift from a ‘we know best’-attitude towards an open mentality. The most beautiful results of collaborating companies is the creation of what we just called the ‘consumer feeling’. Adding the consumer feeling to the gut feeling of companies is the biggest change one can achieve through structural collaboration. To reach this situation, there are a number of steps to be taken. Based on our research, we learned that all companies started small and evolved towards bigger and bigger collaboration projects. In the end, collaboration was really embedded in their organization. It was a process of change, not a revolution. conversationmanagement.biz I @steven_insites I @tomderuyck

1. 2. 3. ………………… ………………… ………………… 1-time try out Project based collaboration Structural collaboration 1. Collaboration always starts with a first time try out. Companies organize a co-creation project in which they allow the customer to participate in one specific project. Most occurring examples are co-creation of a new product, a new package or new marketing communication. 2. If this try out is experienced as a success, the second step is to apply collaboration on a project based level in the organization. In this stage, companies have the habit to involve customers in every important new project they work on. 3. After a while, it becomes hard for them to take decisions without the voice of the customer during the process and they decide to structurally collaborate. conversationmanagement.biz I @steven_insites I @tomderuyck

………………… Part 4 Five pillars for Collaboration Based our interviews, we concluded that there are 5 crucial pillars if you want to be successful in the evolution towards structural collaboration. 1 4 Fit with the company culture Internal = External 3 C-level involvement, support is not enough 5 2 Measure impact Select the right participants conversationmanagement.biz I @steven_insites I @tomderuyck

1 Fit with the company culture ……………………………………………………………………… During our interviews, everyone mentioned company culture as a very important pillar to evolve from co-creation to structural collaboration. It is easier to collaborate with employees and customers if your organization is characterized by an open and positive culture However, this does not imply that collaboration is only possible in certain companies. Collaboration is possible in every company, but the current culture determines where you can start. To be successful with collaboration it is important to select an approach that fits the current culture. Don’t try to change the culture through your first collaboration projects. For example, if you have culture where low cost is key, make sure the objective of the collaboration is to reduce costs of other expenses (e.g. doing less ad hoc market research). If you are a company that has connection with its target group high on the agenda, add consumer connectivity as an objective. In other words: let the collaboration objectives and way of working (duration, intensity and level of involvement of different departments) fit with the existing culture. This approach will allow you to start. After a while, the company culture will change automatically, project by project. Employees will be more connected to consumers. This will result in direct feedback which will allow better and faster decisions. In the end, this brings in more money. As a consequence, the opinion of the customer will increase in value and your company will evolve towards an open, collaborative environment. Culture Collaboration conversationmanagement.biz I @steven_insites I @tomderuyck

2 Select the right participants ……………………………………………………………………… There are two types of customer collaboration possible: an open online platform where everyone can participate and a closed online community where you select the people to join in. In the large open communities you have little direct control over who joins in and who doesn’t. The members come together in a very spontaneous way to discuss particular subjects that are of their interest. Your role with regards to these people is simply to listen. This will allow you to discover a series of unfulfilled market needs, which may eventually lead to new products and services. Of course, you are also free to ask them questions, but you must always remember that these are open communities – anyone else might be listening to their answers! Companies that want to involve the customer in more strategic decisions and who have a need for in-depth feedback, tend to work with a closed online community with a limited number of relevant customers. If you want to solve a specific management problem, it is better to discuss possible solutions with a smaller, closed group of between 50 and 150 of people with a keen interest into your category. It could also be a group of your most ardent fans, fans who you have carefully vetted and selected yourself. The major advantage of this approach is that you have everything in your own hands –and this is advisable when you don’t want the whole world to know what decisions are being taken. conversationmanagement.biz I @steven_insites I @tomderuyck

It is important to acknowledge that not every customer will be able – or is suitable – to help you solve management problems. To give your company access to the right advice on a daily basis, you need to listen to the right (and relevant) people. For your communities seek to attract people who can offer an added value. The minimum condition is that they must have a clear commitment to the company and what it stands for. They might be an expert in the sector, a knowledgeable and enthusiastic amateur in the sector or just a big fan of your brand. Research has shown that without this kind of emotional commitment people seldom have enough interest to contribute effectively to an online community7. In other words, you need to talk to people who are interesting and interested. If they don’t have an opinion or the natural motivation to take part is missing, your community will not achieve what you want it to achieve. But it natural engagement not enough, in order to make your community a real success you need to manage it well. A number of things are important: be open and transparent about the goals of each project, listen in an active way (allow participants to put their issues on your agenda too), make it a fun experience (after all people are doing this in their spare time) and give enough feedback on what you did with their answers. 72010, Ludwig, De Ruyck, Schillewaert, InSites Consulting and the University of Maastricht. conversationmanagement.biz I @steven_insites I @tomderuyck

If you really want to progress to co-creation of new products or services with your community, you need to add the following two dimensions to your selection criteria, resulting in two complementary groups of co-creators8 • People with innovative vision and social independence: These people formulate their vision about innovation in an independent manner. They base this vision exclusively on their own experience and opinions, without taking account of what might be ‘popular’. This results in very pure ideas. They like trying out new things and generally have more extreme views than the ‘average’ customer. As a result, they can sometimes come up with revolutionary ideas. • Social influencers: This group discusses innovations whilst taking account of what their social environment thinks. Influencers are regarded by this environment as creative specialists, who are quick to see the advantages of new innovations. Consequently, their opinions about such innovations are frequently asked – and followed. They like to be occupied creatively with new products and think that it is important that others also approve of the products they like to use. They converse with others proactively on these matters. It is therefore clear that this is a very relevant group for collaborative purposes. It is also a group with significant conversation potential. This means that they not only help with the initiation and development of new ideas, but that they also start conversations during the implementation of these ideas. They have a sixth sense for the innovations that will catch on and those that will not. In this respect, they filter the ideas of the first group. 82010, Schillewaert, De Ruyck, InSites Consulting conversationmanagement.biz I @steven_insites I @tomderuyck

3 C-level involvement, support is not enough ………………………………………………………………………………………………………………………… One of the critical success factors is the involvement of your top executives. To implement collaboration in a credible way to the market, there is need for tangible proof of the results of the collaboration. Consumers want to see a new product, change in service or communication. If they feel there is no impact of their efforts, they will drop out. Consumers participate in this type of projects to get recognized by a company, not to get rich. In order to make sure the feedback of consumers is used during implementation, the involvement of your C-level is necessary. Top management support is actually not enough. Based on our interviews, we conclude that the most successful cases of collaboration are all stories where the CEO has an active role: both internally and externally. Internally, he or she leads by example: consumer feedback is used to make important decisions. To the external world, they are the face of the company who reports back on decisions that have been made. CEO’s who invest in collaboration want to add consumer-feeling to the gut-feeling of the organization. Many organizations don’t have a clue about what the consumers thinks. As a consequence market research is needed for every small step. The moment your organization gets a consumer- feeling, managers can look at the world through the eyes of the consumer, which increases speed and decreases costs of ad hoc research. conversationmanagement.biz I @steven_insites I @tomderuyck

4 Internal communication is not enough. Internal = External …………………………………………………………………………. Who How Managers show more interest in a project or approach that gets external credits than in a project with a sole internal focus. In other words: make sure your structural collaboration is not completely taking place behind the scenes of your organization. Within the Board Brand/Product Management, R&D, … All departments Movies & infographics Workshops & reports Consumer stories: posters, intranet, … company Sharing your collaboration work with the whole organization and the rest of the world has a number of advantages. Next to an increase in motivation of your management, it will also increase the motivation of the participants of your communities. Further, research has shown that consumers have a higher trust level towards and a better perception of brands that co-create. So, there is also a commercial benefit to leveraging your efforts externally. Outside the General & trade/niche press New & traditional media Crisis management company Consumers Brand fans Adversaries conversationmanagement.biz I @steven_insites I @tomderuyck

There are a few communication tactics you can apply to increase the internal and external impact of your collaboration process: • Meet-up with participants: Collaboration occurs on a digital platform but it is an interaction between people. To increase the interaction and the emotional bondage, make sure your employees meet-up with these people in the real world as well. Show them around in your company, tell them your challenges and treat them like part-time employees. • Go for tangible results: If you work together with your consumers on a structural level, make sure you have concrete deliverables. These results (e.g. new products, insights, advertising, packaging…) should be shared with the world to make the collaboration aspirational for the market and for the involved manager. • Bite size & creative reporting: share the results of your collaboration in a short, compelling and creative way with your employees. Make sure it is easy to digest and to share. • Apply content marketing techniques9: don’t communicate 1 or 2 times about your collaboration, but talk about it on a more frequent basis. Use three levels of content: big content campaigns (e.g. when you have BIG news: launch of an initiative or showing the end result), content projects (e.g. a theme that you talk about for a few days/weeks) and content updates (small, daily updates with relevant information). 92012, InSites Consulting, A six step content marketing model (http://www.slideshare.net/stevenvanbelleghem/) conversationmanagement.biz I @steven_insites I @tomderuyck

5 Measure impact ………………………………………. To keep the collaboration flow going, there is need for evidence that the approach works. Therefore we advise to use a number of clear success indicators that you can measure during the implementation of structural collaboration in your organization. There is no standard list of KPIs to use; they differ from company to company, as they are closely linked to the company culture and the company’s (long term) objectives. There are a few KPIs that apply to all companies to follow up on the impact of structural collaboration: Success of innovation, impact of communication and improvement of customer service: by involving customers early in the process, your company will take better decisions. Product launches, new advertising campaigns and so on, should have a higher success rate than before the collaboration was implemented. • Cost reduction: by integrating the voice of the customer in the entire decision making flow, the cost of ad hoc market research could be reduced. Next to that, by creating better products and service based on the input of the market, the impact of word-of-mouth will increase, which may lead to lower media budgets. • Consumer feeling of the organization: you can measure to what extent your management has a better feeling of the attitude and behavior of your target market. The goal is that managers can think as consumers and improve their performance through this new required skill. • Brand perception: listening actively will humanize your brand and make it more popular. • Define your KPIs, measure them and celebrate success! conversationmanagement.biz I @steven_insites I @tomderuyck

………………………………………….………..……………..……………………………………………………………………………………………………. Conclusion: change of internal implementation processes needed ………………………………………….………..……………..……………………………………………………………………………………………………. Collaboration should lead to decisions that are taken through a cooperation of the market and your company. The proof of structural collaboration is in the implementation of the ideas. In order to succeed in this crucial step, there is a need to change the internal decision streams. The challenge is to integrate consumer feedback and input into every phase of the decision cycle. Remember that structural collaboration does not come overnight. It starts with a try-out that fits within the existing culture. Make sure that as from the start you know what your next step will be. In other words: it is important to start with a try-out, but it is as important to start with a long term view. Make sure you know where you're going. After the try-out, it is a matter of including collaboration into projects where the fit feels right. People (internal and external) get bored fast. Make sure you have a flow ready in your collaboration process to keep the conversations going. Plan with room for flexibility. Once you completed a number of successful collaboration projects, the possibility to move forward to structural collaboration arrives. conversationmanagement.biz I @steven_insites I @tomderuyck

Make sure that along the way, you take into account these last tactical tips to make collaboration work: • Have clear objectives in each collaboration project.Make sure that you don’t collaborate just for the sake of it. To get the feedback of consumers in the decision flow, it has to be very clear what the objectives are. Objectives that are in line with the business goals. • Involve all stakeholders early in the process. The more departments are involved during the beginning of the process the better. In order to integrate the collaboration flow in the decision flow, it is crucial to have a buy-in from the relevant teams. • Manage expectations.Collaboration won’t bring in the next big idea for your company. Customers are great sparring partners, but don’t set the expectations too high. Make sure that during the integration of their feedback in the decision flows, everybody is aware of what to expect from the collaboration. • Have a community manager. Make sure you have somebody assigned to manage the community. This person is responsible to manage the conversation with participants of the collaboration process and to share the insights internally. He or she brings the consumer’s voice to life within the company. • Create internal and external credibility. By delivering results and integrating the voice of the customer in your decision flows, you will gain credibility among the participants of the collaboration platform. Credibility among employees will also grow as they will see that collaboration adds value. Marketing your collaboration efforts is not a bad thing, but it should not be the only thing. conversationmanagement.biz I @steven_insites I @tomderuyck

List of interviewees: ………………………………………………………………………………………… Caroline Van Hoff, Concept Development Manager, Heineken International Charles Hageman, Research Manager, KLM Erkinheimo Pia, Global Collaboration Manager, Nokia Graham Kahr Social Commerce Product Manager, Zappos Hans Similon, Evangelist, Mobile Vikings Joella Marsman, Marketing Researcher, HJ Heinz Marc Fouconnier, CEO, Famous Marjan Rintel, VP Marketing & Brand, KLM Martijn Van Kesteren, Yunomi Leader Benelux, Unilever Pascale Mignolet, International Market Research Director Coffee & Tea, Sara Lee Philip Rogge, CEO, Microsoft BE Piet Decuypere, CEO, Danone Pol Van Biervliet, CEO, Cisco BE Stan Knoops, Head of Consumer Insights Europe, Unilever R&D Tormod Askildsen, Senior Director Community Engagement & Events, Lego conversationmanagement.biz I @steven_insites I @tomderuyck

Steven Van Belleghem Managing Partner, InSites Consulting Author of The Conversation Company & The Conversation Manager ……………………………………………………………………….. steven@insites-consulting.com ……………………………… Thank you & open for all feedback. ……………………………… @steven_insites Tom De Ruyck Head of Research Communities, InSites Consulting ……………………………………………………………………….. Steven & Tom. tom@insites-consulting.com @tomderuyck conversationmanagement.biz I @steven_insites I @tomderuyck

From Co-creation to Structural Collaboration