Experience Co-Creation. Creation. Venkat Ramaswamy. Professor, Ross School of Business Founder, ECC Partnership. Sepember, 19.

Transcription

1 Experience Co-Creation Creation Venkat Ramaswamy Professor, Ross School of Business Founder, ECC Partnership Sepember, Buenos Aires

2 Agenda What is experience co-creation? Experience co-creation at the strategic level Co-creating at the process level

3 Experience Co-Creation is the Emerging Next Practices of Value Creation Top Ten Book of the Year December 13, 2004 Best Ideas of 2005 Best business books: Strategy Winter 2004 Excellent new book January 12, 2004

4 Historically, Business Has Been About Designing, Making and Selling Competitive Products and Services Suppliers Company The Firm Marketing Channels Customers as Passive Recipients of Value Propositions and Most Business Processes and Functions Have Largely Been Focused on Creating an Inside-Out Efficiency for the Firm SCM ERP CRM Customers as Passive Recipients of Value Propositions

5 My Starting Point Consumerization of Communications & Information Technology is enabling the Individual to be Engaged in Value Creation in ways, and on a scale, as never before

6 Today, Individuals are Highly Informed, Connected, and Networked, and are no longer Passive Recipients Suppliers Product & Service Offerings The Firm Marketing Channels SCM ERP CRM Company Customer (Individual)

7 The New Paradigm of Value Creation: Experience Co-Creation Business Processes Network esources Company Product-Service Offerings INTERACTIONS as the Locus of Value Creation Customer Customer Communities

8 Agenda What is experience co-creation? Experience co-creation at the strategic level Co-creating at the process level

9 Nike Let us take Nike as an example

10 Nike has enjoyed solid growth and strong profits Revenues $13.7B Net profits $0.6B 6.3% of revenues $9.5B Net profits $1.2B 8.7% of revenues

11 This Is Particularly True in the Soccer Market Nike achieved dramatic growth in the soccer market in just over a decade: from roughly a $40 million business in 1994 to one that is approaching $1.6 billion today Nike has caught up with Adidas in soccer in Europe and in the US, the only sport in which Adidas has had an edge over Nike : Market shares 2006 est. Europe US Nike 32% 32% Adidas 36% 48% (Source: NPD group Sporting Goods Intelligence, in BW)

12 Film Your Best Moves and Upload Your Video

13 The Community Is the Judge of the Contest, Not Nike

14 The Community Promoted or Relegated Adidas from head to toe

15 In March 2006 Nike launched Joga.Com, a joint initiative with Google

16 The Concept of Thematic Communities

17

18

19 Members Could Search the Site by Users, Videos, Communities, Team

20 Starting 11: build your dream team

21 Nike also Engaged the Community through a Soccer Blog they sponsored

22 But that was Independent in Spirit

23 JogaTV Joga TV: Nike also engaged individuals in the football/soccer experience through a series a humorous video clips starring Eric Cantona. They made the soccer experience come alive. The fun of playing, tricks and moves (make the ball happy) The joy of winning; just move forward (4-4-2 or 1-1-8) Team spirit ( alone you are just a vine ) The need to reestablish the sport s reputation (Is soccer loosing its soul? joga bonito) Only 2 clips out of 10 talked about the shoe. Instead they focused on the experience of wearing a Nike shoe: a player physically puts the shoes on and plays amazing tricks

24 Nike also spread these videos through various community web sites Example: Nike is a registered user of YouTube.com, where they posted the Joga TV videos A Joga video of Ronaldinho was viewed over 3 million times there

25 Joga 3 A game inspired by the traditional futsal, played indoors or outdoors on small courts with an emphasis on skill over power (usually 5 on 5) Nike s version was 3 on 3. Teams competed in 3 minute games Street players assembled a team of 3 and registered their team through the web site Teams competed locally, then regionally, then nationally for a final in LA

26 The Product as an Interaction Platform

27

28

29

30

31 The Nike+ Experience

32 Nike+ Apple

33 Thematic Communities of Runners

34 Local web sites enable sharing of local content (ex RunLondon by Nike UK)

35 Nike More than 200,000 runners are using the Nike Plus website; more than half visit the site at least 4 times a week Company has goal of having 15% of the world s estimated 100m+ runners using the system Twice a week, people gather at the Nike store in Portland and go for a run; Nike s staff keep track of their performances and hail members who have logged more than 100 miles

36 Experience Co-Creation (ECC) Value Outcomes to Company Strategic Capital and Economic Returns: Value Outcomes to Individuals (e.g., Customer) Experiences of Value and Economic Returns: Generating new ideas rapidly Refining new ideas rapidly Brand collateral Accumulated learning and soft knowledge Building deeper relationships and trust with community Becoming a Nodal company Increased revenues per customer ECC Interaction Platforms Influencing the design process Being a part of creating the product or service Emotional satisfaction Access to new ideas Developing peer relationships Increased productivity Increased margins (if applicable) Cost and Risk: Reduced marketing costs thru word of mouth by community Reduced risk of offerings Mitigating business risk and better return on investment in new product development Cost and Risk: Reduced risk of dissatisfaction Reduced cost of networking and socializing with other individuals

37 Agenda What is experience co-creation? Experience co-creation at the strategic level Co-creating at the process level

38 Our processes have traditionally been company-centric Processes Suppliers to the process The Firm Interface to customer process Passive Process Customers Research and development Product development and pricing Marketing Communication Sales Customer Service Manufacturing Information Technology Human Resources

39 Could we open up some of the processes in our business to experience-centric co-creation? Back room Points of customer interaction EXPERIENCE Network Resources Company Customer Research and development Product development and pricing Marketing Communication Sales Customer Service Manufacturing Information Technology Human Resources Customer Communities

40 Opening up product development and design

41

42 Choose: Base color Tip color Heel color Swoosh color Tongue top color Lining color Lace color Sidewall color Outsole color

43

44 Choose a country Flag

45 Your Icons Your Mascot Your Name Your Team Colors

46

47

48 The Nike id Design Contest

49 Nike has trained store associates to provide a better interaction Nike started a web based training program to provide store associates with better tools to interact with customers The system is called Sports Knowledge Underground One of Nike SKU s central goals is to positively affect the dialogue between retail sales associates and customers at the point of sale, said Michael Donahue, e-learning manager and program manager for Sports Knowledge Undergound. Increasing sales associates comfort level with the technical performance aspects of Nike products motivates them to proactively share that knowledge with customers. The end result of more positive customer interactions like these is increased sell-through.

50 SKU Web Site

51 Nike s Sports Knowledge Underground One of Nike SKU s central goals is to positively affect the dialogue between retail sales associates and customers at the point of sale, said Michael Donahue, e-learning manager and program manager for Sports Knowledge Undergound. Increasing sales associates comfort level with the technical performance aspects of Nike products motivates them to proactively share that knowledge with customers. The end result of more positive customer interactions like these is increased sell-through.

52 Nike In-store kiosk

53 Retailers relayed Nike s Joga 3 Campaign, thus providing linkage between the retail and the community environments Example of Academy sporting goods, a southern retailer

54 The New Paradigm of Value Creation: Experience Co-Creation Experience Environments of Individuals as the Basis of Value Creation Network esources Business Processes Company INTERACTIONS as the Locus of Value Creation Product-Service Offerings Co-creation with Individuals as the Process of Value Creation Customer Customer Communities

55 For more examples of companies that are discovering and practicing ECC, you can visit:

56 Experience Co-Creation can generate new opportunities for value creation and new sources of competitive advantage, anywhere in the eco system EXPERIENCE CO-CREATION EXPERIENCE CO-CREATION EXPERIENCE CO-CREATION EXPERIENCE CO-CREATION Network stakeholder Firm Customer Thematic Community of individuals Where value is created Thematic Community of Individuals Thematic Community of Individuals The customer is not the only potential co-creator. The company can also co-create with its own employees, suppliers, or any other stakeholder.

57 ECC and Strategy Formulation-Execution ECC provides a new frame of reference for the Customer perspective Think about Interactions Think about Experience Environments ECC provides a new frame of reference for the Process perspective Think about Value Outcomes through Experiences Think about Co-Creative Processes ECC provides a new frame of reference for the Learning & Growth perspective Think about Co-Creating Human Capabilities to support value creation through ECC Think about IT as an Enabler of Interaction Platforms to support value creation through ECC

58 Best Wishes in Co-Creating the Future

59 Appendix Venkat Ramaswamy Professor, Ross School of Business Founder, ECC Partnership September, Buenos Aires

60 Let us take Progressive as an example

61 Opening up the pricing process Progressive Direct gives online quotes and allows prospective customers to quickly compare them to competitor prices before buying.

62

63

64 As a Result, The Customer Gets Greater Fairness of Pricing, While Progressive Reduces Its Claims Losses INCREASED KNOWLEDGE FOR PROGRESSIVE Progressive: By having access to detailed driving records of many drivers, we learn what truly drives accidents and claims costs. This allows to improve our underwriting and pricing criteria continuously. LOWER COST AND RISK FOR PROGRESSIVE Progressive Insurance ECC Interaction Platforms Progressive: We tap into a larger pool of applicants, which allows us to select our risk better and lower our loss ratio. We also dramatically reduce the cost of our market research and the cost of attracting customers to come get a quote with us We reduce our claims cost by understanding the driver s driving habits and we increase the likelihood of attracting good drivers to Progressive DIFFERENTIATED EXPERIENCE FOR CUSTOMER Customer: I save money if I am a safe driver. I can get direct quotes from Progressive on-line, and I can compare the Progressive price to competitor quotes, which gives me peace of mind. I control whether I want to share my data or not, based on whether I know I will benefit from sharing. I derive a sense of better fairness than when I was subsidizing bad drivers in the old model. LOWER COST AND RISK FOR CUSTOMER Customer: I do not have to spend a lot of time chasing information. I avoid over-paying out of ignorance I pay less if I am a good driver (up to 25% discount).