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The Ultimate Guide to Turning Professional Services into Scalable Products

Co-Create Like LEGO to Build Better Products

One of my favorite shelter-in-place binge shows has been LEGO Masters. Teams of LEGO enthusiasts compete to build original creations, and with each passing episode another team is sent home until a LEGO Master team is crowned. The show is fun, the builds are impressive and the show inspired my sons and me to haul out our tubs of LEGO and make our own new creations. It also reminded me of one of my favorite new product development tactics: co-creation.

What is Co-Creation?

In 2003, management gurus C.K. Prahalad and Venkat Ramaswamy first coined the term co-creation to describe the experience when customers and companies work together to innovate. Specifically, 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 suit their context.” 

LEGO has been a pioneer in the use of co-creation. The company enlists the help of customers through the LEGO Ideas portal. It’s an online community where fans and LEGO creators come together to suggest, iterate, and evaluate ideas for new LEGO kits. Some pretty amazing products have come from the ideas portal like Women of NASA, the Beatles’ Yellow Submarine, the DeLorean from Back to the Future, and, for my fellow binge watchers, the motel from Schitt’s Creek.

The process is simple. Customers can log in to submit an idea for a new kit. Then, the over 875,000 members vote on the kits they want to see come to life. It takes 10,000 votes for the idea to move forward, while that’s no easy feat, LEGO Ideas reduced the time to market for new LEGO kits from two years to 6 months. Of all kits developed on the platform, every single one was a best seller with 90% selling out in their first release.

I love co-creation because it keeps the customer at the center of new product development.  The biggest mistake I see companies make when developing new products is not developing a product that solves an urgent and expensive customer problem. Co-creation can help us avoid this mistake.

At Vecteris, when we guide clients through new product development using a co-creation approach, that we learned early in our careers. We use a 'charter advisor' model where we invite select customers and prospects to help articulate the problem to be solved and to develop a solution. Just like with LEGO, the result has been a quicker path to products that solve real problems and delight customers.

There are two flavors of this co-creation model:

Co-Creation Model #1: Co-Fund the Development

In this model, customers agree to help direct and fund the product development in exchange for a beta customer license for the first year and favorable pricing thereafter. They also know the product will be designed with their input and testing, so it’s a safe bet that it will meet their needs.  

Advantages:
  • We get help funding product development.
  • The process attracts only the most serious customers. 
  • There’s more commitment to the development process because of the ‘skin in the game.’ 

Disadvantages:
  • There is a longer initial recruitment cycle, as you are essentially pre-selling the product.
  • The process typically requires an already strong brand, loyal customer base, or social proof.
  • We may forego some early revenue because the advisors receive discounted pricing.

Co-Creation Model #2: Advise, Then Buy

In this model, customers and prospects are invited to join a select advisory group to advise on product design with the opportunity to purchase a Beta license or to receive a free Beta license and then purchase post Beta.  

Advantages:
  • It’s easier to recruit advisors and initial customers because the ask is for time, not money.
  • It can help overcome lack of brand recognition, not having a strong customer base, or social proof, so it’s good for start-ups or new to market.

Disadvantages:
  • The process requires more upfront capital from us. 
  • The advisors may be less committed to the process or the product because they don’t have ‘skin in the game.’ 

Recruiting Co-Creation Charter Advisors

Either way we structure the co-creation, the charter advisors receive early access to the product and contribute heavily to its design. And the elements for recruiting co-creators is essentially the same in both models. 

First, we start with an invitation-only, exclusive offer to be part of a group of charter advisors to design the product. We start by targeting well-known, industry thought-leaders first. Once they are onboard it is much easier to recruit the rest. 

We strive to recruit a mix of existing customers and prospects to help ensure the product is designed to attract new customers. Typically, we need to have at least one pitch or prewire conversation with each invitee to secure their interest in co-creating (it typically takes more than one conversation if we are also asking for an up-front development contribution like model #1 above). 

The primary value proposition for being a charter advisor is the ability to help design the product. It’s also the ability to network and benchmark with other advisors, and other optional features such as exclusive access before competitors, access to market analytics or insights generated during the product development process, and discounts after the product is launched. 

Once a critical mass of advisors have been recruited - we recommend at least a dozen - we convene the group of charter advisors to discuss design questions. We’ve seen this work well as one, half-day session or across several sessions with a kick-off session to meet each other and plan the first development sprint and then meet two or three more times for sprint demos.

Co-Creation Process Success Factors

Once the advisory group is recruited, there are a few important parts of the co-creation process that ensure success. To prep for your first session, collect and share bios of all members. They will want to know who else is involved. We also need to communicate a clear agenda and attendees in advance to encourage attendance and engagement.

During the session, we want to be sure we accomplish a few key things:
  • clearly understand the key problems or challenges that customers are facing 
  • solicit specific feedback on the product and the features we are considering (try a forced trade off exercise in the session or as a pre-meeting survey, such as giving a 100 pennies to “spend” on potential product features) 
  • collect input on price points and willingness to pay

Co-Creation Case Study

We’re working with a client right now, Mesh Intelligence, on co-creating a better, data-driven way to predict and manage risk in the food supply chain. We’ve helped them convene a group of 14 leading supply chain, risk, sourcing and food safety executives drawn from some of the largest and most innovative food companies around the world. We’re about halfway through the process, which so far has been a success.

To ensure that success, we took a few important steps. First, we recruited the right mix of advisors. It wasn’t easy as we were asking busy people to give up their time so we had to clearly communicate the value of being involved. Giving customers (or prospects) the opportunity to meet each other and learn from each other, having a hand in creating a product that solves an important problem, as well as early access and industry exclusivity to the product were most appealing. Last, but not least, we clearly outlined the process and the extent of their commitment (a total of five sessions, four with their peers and one individual) so that we knew what to expect. We’ve been pleased with the level of engagement and our client is getting a lot of usable insights. You can read a little about the progress so far here

As Photonic founder and CEO, Dr. Tony Atti, puts it “Co-creation is about helping the customer imagine a different future.” One that they get to help create. 

We would love to help you explore how co-creation might help you quickly develop new products. Please email me at eisha.armstrong@vecteris.com if you want to discuss your product creation goals and how co-creation might work for you.