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Strategic Digital Transformation

2019, Routledge eBooks

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This paper discusses strategic digital transformation through collaboration and co-consumption models, emphasizing the importance of building trust with customers and enhancing organizational innovation. It highlights how network structures and co-creative environments can provide competitive advantages by leveraging a data-driven approach. Case studies exemplify leading practices that support dynamic engagement and provide insights into effective mechanisms for digital transformation.

Please cite the Published Version Griffiths, Marie and Dron, Richard (2020) Enabling organisational change: co-creation, coproduction and co-consumption. In: Strategic Digital Transformation: A Results-Driven Approach. Business and Digital Transformation . Routledge, pp. 165-173. ISBN 9780367031060 (hardback); 9780367031077 (paperback); 9780429020469 (ebook) DOI: https://doi.org/10.4324/9780429020469-19 Publisher: Routledge Version: Accepted Version Downloaded from: https://e-space.mmu.ac.uk/631462/ Usage rights: tive Works 4.0 Creative Commons: Attribution-Noncommercial-No Deriva- Additional Information: This is an Accepted Manuscript of a book chapter published by Routledge in Strategic Digital Transformation: A Results-Driven Approach on December 4, 2029, available at: http://www.routledge.com/Strategic-Digital-Transformation-A-Results-DrivenApproach/Fenton-Fletcher-Griffiths/p/book/9780367031077 Enquiries: If you have questions about this document, contact openresearch@mmu.ac.uk. Please include the URL of the record in e-space. If you believe that your, or a third party’s rights have been compromised through this document please see our Take Down policy (available from https://www.mmu.ac.uk/library/using-the-library/policies-and-guidelines) Enabling organisational change Co-creation, co-production and co-consumption Marie Griffiths and Richard Dron Preface With greater transparency and engagement, the opportunities to build trust with customers and clients also increases. The collaborative combination of co-creation, co-production and co-consumption provide mechanisms for a data-driven, people-focused organisation to engage with customers and supply chains in ways that increase levels of trust and build lasting social capital. These actions build strong external relationships and support the achievement of an organisation’s vision. To illustrate the value of collaboration in digital transformation, a series of international case studies are used to reveal the patterns of success that exemplify leading practice. 1. Collaboration In traditional organisational innovation paradigms, an organisation identifies user needs, developing products and services at private expense and profiting through their protection and sales. That said, more and more organisations are increasingly engaging in collaborative mechanisms and network structures. These mechanisms and structures can provide a competitive advantage through the combining of skills, competencies and resources of connected organisations as well as (Figure 19.1) leveraging their end-consumer knowledge of products and services to co-create more compelling and relevant value propositions (Lee et al. 2012). Traditional concepts of value creation based on sequential value chains (Porter 2011) have evolved; in modern organisation, networked organisations (Santos et al. 2018) redesign values and shuffle structural, technological, financial and human capital, responding to their business’ opportunities (Fine et al. 2002). Such organisations evolve their structures to maximise value-chain capabilities so as to respond to industry dynamics (Fine et al. 2002) and customer preference (Prahalad & Ramaswamy 2004). As such, collaboratively networked organisations, like Airbnb, or Ovo Energy, have increased agility in dynamic markets (Romero & Molina 2011). Enabling co-creative environments enhances organisational innovation processes (Nambisan 2002) and unlocks competitive advantage sources (Prahalad & Ramaswamy 2004). For customers, interaction with an organisation co-creates consumption experience (O’Cass & Ngo 2011), enhancing brand experiences (Nysveen et al. 2013) and strengthening end-user relationships (Payne & Holt 2001). There are yet further added benefits: employee engagement (Hatch & Schultz 2010); improved supply chains (Jüttner et al. 2010); shareholder commitment (Madden et al. 2006); and, occasionally, beneficial Actions Mechanisms Customer focus Build trust Added value Data driven Co-create Co-produce Co-consume Figure 1 Mechanisms of collaborations for digital transformation Source: Adapted from Fletcher et al. 2016 knowledge sharing with competitors (Kohlbacher 2007), with associated potential benefits and risks (Ilvonen & Vuor 2013). The other collaboration practices alongside co-creation that we suggest as being mechanisms for organisation to adopt are co-consumption and co-production (Figure 19.1). We look to Heinonen et al. (2019) in their work on how online communities create value, as they take an alternative viewpoint o whether value is formed in the customer domain or the providers and whether the value is viewed as with the individual or collectively. Traditionally, value is viewed as an interaction between a customer and a provider, a ‘tradeoff ’ between what has to be given up or traded in order to receive a benefit or gain back. Transactional activities become less viable as a sustainable part of a business model when value formation occurs within collaborative environments and at multiple points along the customer journey. The presence of co-creation and co-consumption activities across multiply actors also problematises the idea of a transaction itself as a discrete manageable event. We have identified a number of ‘actions’ that organisations are utilising to engage with their customers and clients. 2. Co-creation Perhaps the seminal voices in relation to co-creation as a research paradigm are Prahalad and Ramaswamy (2000) in their article “Co-Opting Customer Competence”. More recent scholarship by Ramaswamy and Gouillart (2010) can be considered a key text in the discussion of how co-creation can enable and support organisational change. Co-creation shifts emphasis away from traditional organisation-centric perspectives that consider consumers as passive outsiders who are transacted with at point of purchase. Instead, within the co-creation paradigm, consumers are integral to value creation and can do so at multiple points of the value chain (Ng & Briscoe 2012). Organisations that co-create unlock consumer intellectual capital and feed this forward into developing products offering superior user experiences. Furthermore, enthusiastic end-users (or customers) prove to be willing collaborators in ideating, designing and marketing their co-created products, increasing their brand loyalty and readiness to pay a premium. 3. Embedding organisational co-creation Co-creational organisations requires an enabling platform as driver no matter whether interactions are formal or informal, online or offline. • • • Online co-creation platforms can be used to engage end-users and employees of an organisation in change – online connectivity and mobile and social media driven by Web 2.0 technologies enable organisations to leverage online co-creation. Such online platforms make co-creation with potentially infinite participants globally and simultaneously possible, and while these are powerful tools, on a technical level they are simple applications to implement. Personal interaction as a co-creation platform – design sprint techniques (Knapp et al. 2016) include activities such as brainstorming, prototyping, simulation, or interviewing with a focus on interactivity between actors. Meetings are enabling platforms for co-creativity through facilitation (Konsti-Laakso et al. 2012). Digital embeddedness of dialog into processes; co-creation as routine interactions with end-users (Furner et al. 2014) – creating feedback loops through surveying the team have proven value (Harter et al. 2002), yet co-creative organisations create opportunity for user interaction through rating systems, comments, chat functionality and short user surveys (Fink 2015) that stimulates internal organisational improvement. Furthermore, employee-facing processes like training completion, recruitment or performance management can benefit from embedding processes to understanding how experience may be improved. These platforms can enable co-creation to become an embedded and habitual approach to transforming organisational change. 4. The co-creation and co-production of organisational change In traditional management models, processes such as ideation are seen as a higher management and consultancy role (Todnem 2005), with employee involvement only at implementation phase. This may result in untapped business value because employees will have insight into organisational improvement (Benson et al. 2013) and will champion these ideas more passionately than those they are less connected to. Co-creation enables environments that co-produce organisational change and support transformation objectives by engaging employees through a sense of ownership of activities such as implementing new technology, post-merger integration, restructuring or transformation of work culture (Lee et al. 2012). Such approaches have many benefits. Ideation generates ideas that improve organisational operations; ideas that emerge enable underlying connections or themes to be uncovered, grouped into meaningful clusters and metricised for their value (Shah et al. 2003). As a human-centred approach, this produces effective designs supporting behaviours and reflecting needs and aspirations of the team (Khosla et al. 2003) by enabling co-design organisations to better identify their team needs. Interaction through co-creation develops stronger social-capital relationships amongst participants (Storbacka et al. 2012); in turn, this creates loyalty through interaction and workplace experiences which are more reflective of employee needs. Furthermore, co-creative processes affirm employee agency (Leavy 2014; Ramaswamy & Ozcan 2016) proactively, enabling them to be a part of organisational improvement. LEGO can be considered as pioneering in its approach to co-created product design, evidenced through the Lego’s IDEAS co-creation platform. Their website enables LEGO end-users to post set designs within an online community who can vote and feedback on these. Projects receiving over 10,000 votes enter a review phase where LEGO set designers and marketing decide on the viability of the product. Voting motivates design creators to leverage social networks to drive engagement with their submission, which in turn places the user centrally within brand promotion activities. When designs are realised, the user co-creators are credited on packaging materials and receives royalties worth 1% of net sales (LEGO IDEAS 2018). LEGO also organisationally engages with IDEAS through blog posts where they present end-user projects and interview the designers (LEGO IDEAS 2014). This longstanding approach to co-creation has permitted Lego to make rapid advances in innovative products starting in 1988 when their Mindstorm robot kit became successful by opening boundaries and allowing committed users to independently develop the range of Mindstorm products (Hatch & Schultz 2010). LEGO Mindstorm communities grew rapidly without company involvement, and within a month end-users had significantly improved the product through adapting the LEGO firmware (Von Hippel 2005) to increase functionality. Connectivity in online communities accelerated purchasing, and LEGO was unable to keep up with demand, selling out two weeks before Christmas that year. This led to a market segment change: 70% of customers for Mindstorms were over age 18, and the product became a craze amongst technical adults, leading to some Silicon Valley firms banning LEGO Mindstorms kits at work. The popularly of LEGO as an ideation tool has also been realised though LEGO products created for use in education including universities, such as MIT (MIT Technology Review 2017). From the core of LEGO Mindstorms products curriculums were created for the MIT engineering department where the hacking of :LEGO software by students enabled the creation of advanced robotics functionalities. 5. Co-production Co-production has become a buzzword in public service provision, where Co-production means delivering public services in an equal and reciprocal relationship between professionals, people using services, their families and their neighbours. Where activities are co-produced in this way, both services and neighbourhoods become far more effective agents of change. (Boyle & Harris 2009, 11) It is grounded in the theory that it is possible to achieve better outcomes, synergies and public engagement when public services, service users and communities combine strengths and capacities (Loeffler & Bovaird 2016). For organisations it represents an emergent hybrid, drawing on the legacies of ‘bottom up’ community activism that focused on campaigning for rights and social justice and ‘top-down’, new, austerity-driven public management aligned to the country’s welfare discourse which emphasises the values of active citizenship and involvement of citizens as co-producers, not simply consumers (Durose et al. 2009). Such co-production focuses on community development through individuals and groups that are creative resources and experts in their own social situation (Freire 1972). This community development is value-based approaches which harness participatory processes that validate and empower individuals, groups and communities involved; furthermore, they have proven effective in creating long-term change (Seebohm et al. 2012; Shaw & Mayo 2016). The National Health Service (NHS) is increasingly leveraging value through coproduction of services and tasking their management to do so, as evidenced in their model for co-production (Coalition for Collaborative Care 2017). NHS co-production shifts assumptions that their service users are passive recipients of care to recognise their contribution in the delivery of services (Cahn 2000) while empowering front-line staff (Needham & Carr 2009). The King’s Fund is an example of an NHS initiative designed to enable disruption of “the ‘them and us’ relationship dynamic in health and care systems” (Seale 2016), acknowledging how Achieving a more collaborative dynamic will require a change in the way that all of us work. The ability to adapt, communicate and shift between roles will be important for all who seek to establish a new, collaborative relationship that puts safety and quality at the heart of health and care in our communities. (Trimble 2015) As such, the NHS continually encourages “patients, service users and carers who work with [them] . . . to influence decision-making at a strategic level” (Centre for Patient Leadership 2013, 4). With time, co-production of many health-related resources and services has moved into the domain of those most connected to them, the end-user (Von Hippel 2005). Platforms enabling end-users to share and create solutions are increasingly common and take various forms; these can be through the supporting of specific communities (GMKIN 2019) or as crowdsourcing platforms for health solutions (Patient Innovation 2019). Such platforms have grown through community-crowdsourcing engagement and creating social business models around them (Disrupt Disability 2019; Be My Eyes 2019). 6. Co-production driven by experiential desires of the consumer The need for digital transformation is being driven by consumers, users, customers. As the instigators for change that are also a valuable source of knowledge for the products, services and experiences that they desire (Yachin 2018). Historically, organisations have sourced knowledge from and listened to their customers; this has been through traditional routes such as surveys, customer feedback and market research with focus groups. Digital technologies are enabling alternative routes in which to capture this knowledge source, and there has been a massive shift in the relationship to customers. Organisations are can now capture complete digital portraits of their customers’ wants, desires and interests. As customers have become disenchanted with traditional brands and indifferent to their unwanted attention a shift in power has occurred that enables customer-driven innovation. When this innovation is coupled with the need for organisations to be creative and resourceful new ways of interacting with customers become clearly mutually beneficial. Additionally, different business models have emerged, and the consumers have (sometimes unwittingly) become co-producers in the supply chain. Many of us have self-delivered flat-packed furniture to our spaces from warehouses in IKEA stores and then self-assembled the products. The added value in this co-produced mechanism is access to affordable designer furniture, but this value must then compensate the resources of the consumer’s time and labour. There is also the element of built-in trust of the customer’s experience of the IKEA brand in this co-production mechanism (see Figure 19.1). The co-production mechanism in some sectors has been driven by certain demograph-ics that are valuing experiences rather than possessions (O’Lenski 2017). Organisations wanting to invest in attracting this demographic need to offer interesting events that build in activities that add brand value, and engage the customer. Classes and workshops are a growing experience, with Lululemon, a Canada-based retailer, offering a range of com-munity-based exercise classes, festivals and retreats for their customers to interact with the brand (O’Lenski 2017). Though these activities might not be directly related to products or services being sold, the message and brand are being reinforced. More locally, many organisations are using co-production mechanisms, opening their doors at alternative hours to host cooking classes and bread-baking classes. One awardwinning restaurant, The Allotment in Manchester, offers vegan cooking classes and makes the claim that there is such a shortage of vegan chefs they are using these classes to recruit from. Similarly, there are opportunities to co-produce different gin and vodka flavours in many distilleries, as organisations look to offer experiential events to attract consumers into their physical spaces. They are multi-purposing their spaces during potential quiet periods, and they offer an experience to co-produce a product. Additional value added for organisations offering these co-production sessions are an opportunity for in-depth consumer feedback, brand building and consumer purchase of add-on products, and many return as consumers of the main business purpose. Business owners can then capture these experiential activities for marketing purposes, and they can be shared across social media channels. 7. Co-consumption Conventional consumption can be viewed as the exchange of goods or services for a payment. In this transaction there is no opportunity or expectation that the consumer will be involved in any part of creations, development or production processes outside of traditional marketing engagements. However, Botsman (2018) identifies a “reinvention of traditional market behaviors – renting, lending, swapping, sharing, bartering, gifting – through technology, taking place in ways and on a scale not possible before the internet”. This definition does, however, miss the detail that co-consumption sits firmly in a middle ground between sharing and commerce (Belk 2014), providing access to goods and service rather than a direct ownership model. The co-operative models of business that are encouraged by sharing through social networks is increasingly now more typically a process of sharing with strangers Sholar (2014). These new arrangements fully challenge the transactional model of business – which could be characterised in contrast as being transacting with strangers. Other monikers of co-consumption are the sharing economy, peer-to-economy or P2P (peer-to-peer) services, but typically providers on either side of the transaction can provide a rating and a review to build trust and demonstrate trust for future consumers. Typically co-consumption is often linked with large-tech enterprises such as Airbnb (accommodation rentals), eBay (auction platform) and Uber (ride sharing) that have disrupted traditional sectors. However there are many such co-consumption initiatives, such as charity shops and car sharing like BlaBlaCar (BlaBlaCar 2019). Rowe (2017) observes that much research has focused upon the economic and market orientation, ignoring the social aspects, non-economic value that the author argued is necessary to construct a complete understanding of the co-consumption mechanism. In the case of Parkrun this model for co-consuming sports is now a global event. Generally offered in local parks for free, these 5km weekly timed runs are open to everyone. The emphasis is not just on running for health or a good race time but also on the contribution that can be made through volunteering as a course Marshall or other roles on race day. As it is based on a voluntary model for running races, Parkrun relies entirely upon a co-consumption mechanism to exist. 8. Opportunities With greater transparency and engagement, opportunities to build trust with customers and clients also increases. The collaborative combination of co-creation, co-production and co-consumption provides mechanisms for a data-driven, people-focused organisation to engage with customers and supply chains in ways that increase levels of trust and build lasting social capital. These actions build strong external relationships and support the achievement of an organisation’s vision. To illustrate the value of collaboration in digital transformation, a series of international case studies are used to reveal the patterns of success that exemplify leading practice. Key takeaways • • • • • • • Organisations need to make data-driven decisions in embedding co-consumption mechanisms opportunities Build trust by embedding a culture of transparency across all touch points and through the provision of mechanisms for review and feedback Add value by providing intermediary platforms where customers can come together and share, build and enhance products and services Plan events that actively engage your customers in innovative ways The traditional retail model is broken. 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