Co-Creation from an Employee Perspective Preconditions for success in Professional Service Firms

Transcription

1 Co-Creation from an Employee Perspective Preconditions for success in Professional Service Firms Master thesis in Service Management Copenhagen Business School Supervisor: Patricia Plackett The Department of Operations Management Number of pages: 69 Number of STU s: Karolina Forsmark MSoc.Sc. Programme: Service Management

2 Abstract Nowadays, the number of opportunities in a business market characterized by networks, alliances and knowledgeable empowered customers has increased considerably compared to the past. This thesis will tackle the challenge of how Professional Service Firms can expand their collaboration with customers through implementing customer co-creation of value in their organization. The goal of the thesis was to define a number of internal preconditions that according to the employees are important for companies to succeed with customer co-creation of value. Questionnaires were sent out through , and answered via a website, to employees working as consultants in Professional Service Firms (PSF). With the aim of linking the theoretical perspectives of the thesis with the findings from the survey, hypotheses were created. The hypotheses was selected through a study of how present literature is defining cocreation and based on the theory of Liedtka et al., An Ethic of Collaboration. The conclusion of the thesis was 5 key preconditions that can serve as a valuable guideline and/or starting point for the management of PSF consultancies in planning and implementing co-creation. These preconditions were Coherent Intent, Capital for Learning and Relationships, Person- Centered Attributes, An Ethic of Collaboration, and Understanding of Customer Needs. Although the majority of articles written analyze co-creation from a management perspective, this thesis provides a new perspective through focusing on the employee experience and knowledge. By incorporating the employee perspective to the management perspective, important complementary information is gained and in addition, the probability of successful co-creation of sustainable business practices is increased.

3 Table of Contents 1. Introduction Outline of the Thesis Theoretical Base for Study Professional Service Firms & Collaboration Customer Co-Creation of Value An Ethic of Collaboration When to collaborate? Methodology Secondary Data Collection Literature Review Primary Data Collection - Survey Hypotheses Data Collection Employee Survey about Customer Collaboration Question Question Question Question Question Question Analysis & Discussion Conclusion & Future Research Bibliography List of Figures Figure 1 - Hypotheses: Potential Preconditions for Co-Creation... 5 Figure 2 - Outline of Thesis... 8 Figure 3 - Building Blocks for interaction for customer co-creation of value (Prahalad & Ramaswamy 2004) Figure 4 - Liedtka et al. (1998), An ethic of collaboration, p Figure 5 - Bar Chart showing the mean for All Participant Question Figure 6 - Factors that are influencing participants with a position as Senior Figure 7 - Factors that are influencing participants with a position as Other... 34

4 Figure 8 - Chart including the answers for Question Figure 9 - Confirmed hypotheses List of Tables Table 1 - Demographics of the Participants Table 2 - Overview of answers given to Question Table 3 - All Participants; The Median, Mode & Mean Table 4 - Seniors; The Median, Mode & Mean Table 5 - Others; The Median, Mode & Mean Table 6 - Existing internal factors in companies that support employees in the collaboration process Table 7 - Question 3 - What internal factors should a company focus on to improve in the future for successful collaborations? Table 8 - Action/Decisions needed to achieve a "win-win" situation Table of Appendices Appendix 1 - Questionnaire

5 1. Introduction Nowadays, the number of opportunities in a business market characterized by networks, alliances and knowledgeable empowered customers has increased considerably compared to the past. This thesis will tackle the challenge of how Professional Service Firms can expand their collaboration with customers through implementing customer co-creation of value in their organization. Thus, the first goal of the thesis was to investigate how to implement cocreation successfully while the second objective was to analyze what internal preconditions employees think are a necessity for co-creation. The results from the primary research were analyzed, with the help of hypothesis, in relation to a theoretical framework. Finally, the findings obtained from the analysis were 5 key preconditions for successful co-creation from an employee perspective. Background The opportunity to create economic value through creating societal value will be one of the most powerful forces driving growth in the global economy. Porter & Kramer (2011), p.75 Is it possible for companies today to create economic value without collaborating with stakeholders and listening carefully to their interests and needs? The quotation above comes from an article written by Porter & Kramer (2011) where the importance for all actors to create shared value is discussed. That benefit will come to companies that are creating value for and with their society rather than being solely firm-centered and working against it. The notion of that economic benefit, which comes to those who are creating shared value, underlines the concepts that will be analyzed, questioned and discussed in this paper. Even though creating societal value through sustainability actions is a factor few companies today can afford to ignore, it is not the main study in this thesis. Rather, this paper focuses on the possibilities that exist to create economic value through collaboration with customers. 1

6 The Idea The idea for this thesis came from reading about the theoretical concept Customer Co- Creation of Value. This concept, which will be analyzed in this paper, was first introduced in an article by Prahalad & Ramaswamy in Customer Co-creation of value arose from the belief that value is lost for many companies that have not yet realized the economic benefits obtained from having a closer collaboration with customers. Along the history the world has developed and changed, the way we today describe the business market is quite different from how we would have described the market in the 19 th century. Over time, the role and the dynamics between companies and customers have changed and the customer has gone from being passive to become an active, empowered participant. Thus, in the market today, the customer has the choice of whether to play the role of the collaborator, communicator, or competitor according to his/her own interests (Prahalad & Ramaswamy, 2000). In this developing business environment, with increased globalization, technological development and communication available through the internet, not only the role of the customer has changed but also the role of the companies. From being in an environment where all parts knew their place in the market, companies found themselves in a situation where all parties are collaborating and communicating through networks and alliances. (Prahalad & Ramaswamy, 2000) Customer co-creation of value is an interesting concept to study in depth, particularly because it has occurred from the notion that the business environment is changing. In order to survive, companies need to be flexible and adapt to the present situation and see how they can create competitive and financial advantages. Though it is the changed role of the customer which is explained as the reason behind the development of co-creation, the central role of the individual (employee) can neither be forgotten/denied (Ramaswamy 2009). In addition, all stakeholders demand in a larger extent high quality interactions and experiences from business (Ramaswamy 2010). The importance of the employee is also present in the type of firms the research of this thesis was made on, namely Professional Service Firms. 2

7 Problem Statement Professional Service Firms are companies which are found to be of high interest in the context of this thesis because they are characterized by a main intangible resource, namely the employees (Professionals). Traditionally, these companies are already dependent upon their customers, however it is believed that there is even more value to be gained for companies by extending and increasing the cooperation activities with customers. Many professionals, companies and researchers have identified and recognized the value there is to gain from co-creation, such as Prahalad & Ramaswamy (2004). Continuously, a number have also developed models for how to co-create value with their customers. Even though it is of weight to have knowledge in how to co-create, identify with whom and how to motivate customer to co-create (Hoyer et al. (2010), Tankha (2008), etc.), it will be of less importance to a company if it does not have a structure that supports co-creation. This point is made by Ramaswamy (2009), who claims that it is a transformation that starts from within the organization: becoming a co-creative organization is about changing the very nature of engagement and relationship between the institution of management and its employees, and between them and co-creators of value customers, stakeholders, partners or other employees. In reality, the co-creation journey always begins inside the organization. (p.32) A focus on the internal preconditions needed to succeed in co-creation is also of interest because a lack of research in terms of guidance to companies in how to implement a cocreative mindset was found through the execution of a literature research for this thesis. Hence, the focus of the thesis will not be on the external factors such as identification and motivation of co-creators, but rather on the internal factors. For companies to take the risk and the step to implement new business practices they do not only need to know that there is value to gain but also guidance in what to focus on when introducing a co-creation initiative. Thus, the aim of the thesis is to identify and define internal preconditions that can act as a base to encourage and support co-creation initiatives of successful sustainable service management business practices. Based on this goal, the research question structures the research described in this thesis: What preconditions increase the probability of successful co-creation of sustainable service management business practices? 3

8 In order to increase the prospect of reaching an answer of the research question, a number of hypotheses have been defined. The hypotheses have been selected through a study of how present literature is defining the co-creation and based on the theory An Ethic of Collaboration. The decision to include an ethic of collaboration was made because of the interest of seeing if the attributes stated in the theory An Ethic of Collaboration are the same as the preconditions for a successful customer co-creation of value. What will also be analyzed is whether or not the concept of An Ethic of Collaboration is in itself a precondition for successful co-creation. An ethic of Collaboration was first introduced in an article by Liedtka et al., in 1998 and it presents the findings from a study made on a number of companies whom had taken actions in increasing the internal collaboration activities. They defined it as an ethic of collaboration for the reason that it is not a wish to build a onetime activity but rather to build up a culture that fosters collaboration over departments and segments in a company. Through the study, a number of factors were found present within the companies whom successfully had created an ethic of collaboration. In this thesis, the main factors to be tested are the firm-centric attributes, with the belief that those are the factors that companies need to foster first of all in order to develop and employ the right people. On the other hand, the person-centered attributes are still standing as part of the hypothesis, however they are treated as a collective factor to test if hiring the right and developing employee skills is a precondition to increase the probability of successful co-creation of sustainable service management business practices. In addition, to the hypotheses based on an ethic of collaboration, Transparency was analyzed as being a hypothesis needed to be included. According to Prahalad & Ramaswamy, 2000, transparency can be considered as a precondition necessary to succeed with co-creation of sustainable service management business practices. Therefore, transparency is a key factor that defines what co-creation is. This hypothesis as such will not be tested but rather stand with the other hypotheses to show its position as a precondition for co-creation. As result of the discussion above, the hypotheses to be tested through the research are shown in the model below, which has been built up by combining the attributes of internal collaboration by Liedtka et al. (1998), with the attribute of company transparency from the article Prahalad & Ramaswamy (2000): 4

9 H.1. Company Transparancy Y/N - Yes Hypotheses Preconditions for Co-Creation? H.2. Firm-Centric Attributes Y/N H.3. *PersonCentered Attributes Y/N H.2.1. Coherent Intent Y/N H.2.2. Capital for Learning and Relationships Y/N H.2.3. Congruent Systems Y/N H.2.4. Consciensous Stewardship Y/N H.4. An Ethic of Collaboration Y/N Figure 1 - Hypotheses: Potential Preconditions for Co-Creation 1 Sub-question Even though the aim is to find the preconditions for successful co-creation co creation of sustainable service management business practices, these are of limited value if the companies do not have the tools or necessary knowledge to measure the cost and benefits of a co-creation co activity. This is especially true since the bottom line for all companies survival depends d on whether or not they can create economic profits. In the case of this thesis the measurement of a co-creation creation initiative will need extra attention as the main resources are intangibles. PSF and co-creation creation is both about handling the so called intangible intangible assets, that Kaplan & Norton (2004) argues for should be measured and handled differently from tangible assets. This is because of the complexity in giving a value to for example a strong company culture or knowledge base, and in the case of co-creation co ation how to know what value a customer s competences and knowledge has for a company. 1 *The Person-Centered ntered Attributes are; Caring Attitude, Creative Energy, Conscientious Stewardship & Calling. (Liedka et al. 1998) 5

10 As such, in addition to the research question, a sub-question, standing not as the dominating question, but one that cannot be ignored, has been formulated as follows; - What are the cost and benefits of co-creation for building sustainable service management business practices? Study Focus There are different perspectives from which the research question could be discussed and answered: theoretical, management, employee or customer perspective. With the aim, as the research questions are indicating, of getting an internal perspective from Professional Service Firms, the decision was made to focus on the employees and how they relate to collaboration (co-creation) with customers. Since it can be said that the management perspective already exists in the literature, this perspective would not be as large contribution to the study as looking at the employee perspective. A survey was created and sent out to employees working as consultants in Professional Service Firms. The survey was answered by a total of 18 employees working in different companies and holding various positions. In order to guarantee answers to the questionnaire the employees were asked questions related to their collaboration with customers, and not co-creation itself. This decision was made because cocreation is a concept yet unknown to many people and it would have made people more confused than actually leading to interesting inputs and ideas about collaboration from their own experiences. Definitions In order to clarify the meaning of the research question, it is important to define what meaning some of the chosen words have in the context of this thesis. Firstly, the words in the research question and sub-question will be defined, followed by a description of cost and benefits in the sub-question. Lastly, a clarification of the use of the term customer co-creation of value in the thesis will be discussed. The reason behind the choice of Preconditions was explained previously with the aim of finding the crucial factors to succeed with co-creation. However, the choice of including sustainable service management business practices might need a clarifying explanation. The 6

11 introduction started with stating that it is of crucial importance for companies today to consider if they are creating shared value. The word Sustainable was incorporate for the belief that a company which today wishes to survive in the long term cannot afford to not consider if their actions are destructive or if they contribute positively for the future of the society and the world we live in. As such, Sustainable is included to show that it is a factor which should not be ignored and instead be part of the daily work and development of a company culture. Lastly, it can be argued whether Service Management Business Practices, customer cocreation of value is a service offered to their co-creators (customers). The term is however included to highlight the differentiating factor of intangibles and that the customer is participating in the process of creating a service. How to handle and measure the value of investments in intangibles are high important in this case because co-creation activities are a development of a company s intangibles. Secondly, personalization is a feature of co-creation that emphasizes the customer s participation in the process. Even though this study has had a focus on Professional Service Firms, the two mentioned factors would still be valid for any company today, since co-creation can be regarded as an additional service whether or not the main activities production of the company is a service or a product. Cost and benefits in the sub-question is referring to the financial costs and benefits associated with the implementation and execution of co-creation initiatives in a company. Finally, Customer Co-Creation of Value has been written throughout the paper as co-creation, in order to make the text easier to read by avoiding long sentences in every reference to the concept. 7

12 1.1. Outline of the Thesis Introduction Theoretical base for study Professional Service Firms & Collaboration Customer Co-Creation Co of Value An Ethic of Collaboration When to Collaborate? Methodology Secondary Data Collection Primary Data Collection Hypotheses Data - Presentation of Survey Findings Analysis & Discussion of result from survey findings and theoretical perspectives Conslusion Future Research Figure 2 - Outline of Thesis 8

13 2. Theoretical Base for Study The motivation for using the theories that will be discussed below have steamed from the methodology chapter and have been chosen due to their interesting nature and the connection that they have with each other. These will serve as tools that will make it possible to answer the research question and sub question. As the business environments and markets are developing so is the theoretical base. The theoretical concepts have most likely been developed as a result of analyzing previous theoretical concepts in line with the present business and market environment. Even though similar concepts to the theoretical base used in this thesis have been used previously, including; Customer Participation, Participatory Design, New Service Development, Social Exchange Theory, they are still differing in this case. Hence, the theoretical base in this thesis has been chosen due to the fact of how things are today and how they fit with the study object of employees in Professional Service Firms, and are as such seen in this thesis to be more interesting and relevant than other similar concepts. Firstly, an introduction and explanation of the study object in this thesis; Professional Service Firms. As the theoretical base will be applied and analyzed towards the employees in that line of business. Being the inspiration for the study, the origination and the definition of Customer Co-Creation of Value will be presented from the perspective of the founders of the concept Prahalad & Ramaswamy. Followed by, a description of the theory which the hypotheses are based on An Ethic of Collaboration as depicted by Liedtka et al. (1998). Lastly the study will discuss the economical benefits of adopting co-creation 9

14 2.1. Professional Service Firms & Collaboration In the concepts of services you often talk about the traditional services, hotels, tourism, travel agencies, and the so called Professional Services. As the surveys presented and analyzed, in this thesis, were all answered by consultants the focus will be on the later, Professional Services often referred to as Professional Service Firms. Professional Service Firms, from here on referred to as PSF s, are not only separated from the traditional services but are also argued to have distinct character. Therefore it is argued that they should be analyzed independently. (Von Nordenflycht, 2010) In an article by Von Nordenflycht (2010) the question of what is a PSF was posed. Although, there are a number of definitions of what a PSF is, it is the definition given in that article that will be used when referring to PSF s in this thesis. History of the concept As with customer co-creation of value, the concept of PFS s has been developed along the transitions in the business environment/market. The discussion around the concept of a profession started in the mid 20 th century, if not even earlier, with the aim to define and analyze what is meant by a profession. However, it was not until the beginning of 1990 that the full concept of Professional Service Firms started to come up through the uprising of so called knowledge-intensive firms, for example management consultants and large accounting firms. (Von Nordenflycht, 2010) Definition of Professional Service Firms Through analyzing the definitions of PSF s from other authors, Von Nordenflycht found three distinctive characteristics of the concept, namely Knowledge Intensive, Low Capital Intensity and Professionalized Workforce. Among the three he argues that it is the first characteristic that is the more fundamental in defining the concept. In Knowledge Intensive companies, the organization relies and is dependent upon the skills & knowledge of the workers and, as such, not solely on management. It is a concept that can be related to the often used notion of Human Capital. Companies relying upon a knowledge intensive workforce have two challenges. The first is how to retain and direct skilled employees, who often have high bargaining power as they possess strongly desirable skills for companies. Secondly, it is often difficult for many customers to judge the quality of an 10

15 experts output, not only prior to providing the service, but in many instances also after the service has been performed. As such there is a need for tools on how to measure the quality through, for example, reputation or appearance. The second character is Low Capital Intensity. A firm that has low capital intensity does not have a large amount of value/resources lying in non-human assets, in comparison to tangibles such as factories and inventory. Lastly, the third characteristic is Professionalized Workforce. He identify that a Professional has three key features; a particular knowledge base, regulation and control of the knowledge base, and ideology. The first two features points to the fact that the employee possess his or her knowledge and can as such also control when and how much to share the knowledge. An ideology is here referred to as a professional code of ethics, which has been enforced through professional associations and internal preferences. End Note the key to a competitive advantage in a Professional Service Firm Even though there are some specific challenges that a PSF meets, there are also competitive advantages to gain. Through, for example, recruiting and retaining the top experts within desired areas companies can construct a unique workforce. For a PSF, it is argued that one of the most important processes in the organization is how to manage and integrate that expertise in the company. (Boh et al., 2007) For the sake of this survey, it is of value to clarify that the PSF s in the study are consulting firms with business-to-business customers and therefore business relationships are in focus. 11

16 2.2. Customer Co-Creation of Value Since co-creation was first presented in an article written by Prahalad & Ramaswamy published in 2000, there have been a number of additional articles published by other researchers. Today there is a vast literature on the topic. However, in order to give a clear definition of co-creation, this paper will solely take the perspective on the concept as presented and developed by the originators. To get an understanding of why the concept of co-creation has been developed it is important to see from what background it came into existence. Prior to defining and explaining what Customer Co-Creation of Value is, the following questions can be of help: how is it that companies have lost some of the power and control they used to have towards the market and their customers? How to regain this power or control through establishing company activities that are fostering and developing co-creation activities with their customers? These questions are the main points throughout his chapter when, in a collective way, presenting the present ideas and thoughts in existing literature that are defining and explaining what customer cocreation of value is all about. The origination of the concept To fully comprehend the concept of customer co-creation of value it is beneficial to see under what circumstances the concept has been developed. During the past 100 years the markets and role of customers has changed and developed. As our world has developed, likewise the market to which we are selling and buying products and services has gone through a transformation. Since the beginning of the 21 st century the customer has become a so called active player in the market. Where the sole power no longer lies within the companies and rather the customer has been empowered through becoming more knowledgeable and a competence resource for firms. (Prahalad & Ramaswamy, 2000) A customer today knows that there are more value to gain by being informed and updated about the market and the options available. In today's market customers can choose with whom they wish to interact and create a relationship for future investments. (Prahalad & Ramaswamy, 2004) As such, customers today are no longer passive players, but rather have the choice whether to play the role as the collaborator, communicator and/or competitor according to their own interests. (Prahalad & Ramaswamy, 2000) 12

17 Thus, with the changed role of the customer as the one of the main interest to understand the concept co-creation, there are a number of transitions worth mentioning which has contributed to this development. The base for the change comes from the developing business environment, with for example increased globalization, technological development and communication channels available through the internet. In which, not only the role of the customer has changed but also the companies. From being in an environment where each part new their place to in the market, companies found themselves in a situation where all parties are collaborating and communicating through networks and alliances. In this new business environment the markets/networks are the forums for dialogue. Where not only the companies can initiate a dialogue but also the customers, when needed can start the communication with companies and/or other consumers. As such, a part of the companies power and to some extent control has been transferred to the customers. However, not all control is lost. Companies still have the possibility to influence and to some extent control the customers by acting as mediators on communication platforms and establishing co-creation initiatives. (Prahalad & Ramaswamy, 2000) Definition and explanation of the concept The main incentive for companies to develop and invest in co-creation activities with customers is the hope to receive benefits through the input from their customers in terms of competence and knowledge. Even though, companies previously have realized that collaboration with customers is a source of income, the principles of co-creation differentiate it from antecedent actions/concepts. Therefore, the belief, that it can bring even larger benefits, in pursue for customer competences and knowledge, is what defines co-creation. As such, the way the company interacts and communicates with the customers will be of most importance when determining the level of success of co-creation. The authors Prahalad & Ramaswamy who coined the concept in 2000 argue that the aim of co-creation, which should be the focus from a company's perspective, is to create a so called personalized experienced. What defines a personalized experience is; the customer becoming a co-creator of the content of their experiences. (p.84) There is a need to personalize the experience, for each customer, depending on how they individually wish to participate, and what benefits they hope to gain from an interaction with the company. (Prahalad & Ramaswamy, 2004) The base to build a personalized experience lies in the 13

18 interaction with the customer. As a result, Prahalad & Ramaswamy (2004) presented in an article the figure Building blocks for interaction for customer co-creation of value; Dialogue Transparancy Co- Creation of Value Access Risk-Benefits Figure 3 - Building Blocks for interaction for customer co-creation of value (Prahalad & Ramaswamy 2004) In Figure 3, it can be seen that the buildings blocks for interaction are facilitating the cocreation experience between companies and customers. The four buildings blocks are by the authors summarized and called DART. Dialogue, for a dialogue to be defined as successful in a co-creation initiative it needs to lead to a desired outcome for all parties involved. That will say solving issues of interest to all participants. To know and to find the way to the desired outcome of a co-creation activity (dialogue), all participants must interact, engage, and become equal, joint problem solvers. To interact on the basis of being equals is often not easy. Therefore, to have clearly defined rules of engagement is recommended, to act as guidance during the dialogue. However, dialogue on equal basis may be difficult for customers to participate in. Hence, as an act to solve this problem it is recommended for companies to become Transparent & give Access to company information. Customers have today the power to walk away from collaboration if they feel that they do not trust that the company is acting truthfully and is hiding information. Today, hiding and not giving out important information which can have an effect on the outcome of actions are seen as less acceptable compared to in the past. However, for a customer to find and collect information needed is often not easy. Thus, to assist and to keep a dialogue running with a customer, companies are recommended 14

19 to become transparent and to make it more accessible for customer go get company information. In turn, dialogue, access and transparency are all factors which assist the customer to make an assessment of the Risk-Benefits of the interaction around a co-creation activity with a company. Four principles of co-creation The above mentioned building blocks for interaction have been created to encourage and assist the customer in co-creation. As such, the building blocks are important for the companies to understand and foster. There are however 4 principles, that are to some extent overlapping with the building blocks for co-creation, but are more broad factors for the companies to follow to succeed with co-creation. These 4 principles were presented by Ramaswamy & Guillart (2010) article; building the co-creative enterprise. They can be seen as a practical guide applicable to any kind of business. The four principles were taken forward by the authors from the opinion that to be able to generate new experiences for customers the development has to start within the company. It is important that better experiences are first provided internally before they can be successful externally. This internal experience is meant to help employees to acquire a better and deeper understanding for how it is like to be on the other side of the interaction, and as such, provide better solutions for interaction. 1. Stakeholders won t wholeheartedly participate in customer co-creation unless it produces value for them, too. 2. The best way to co-create value is to focus on the experiences of all stakeholders. 3. Stakeholders must be able to interact directly with one another. 4. Companies should provide platforms that allow stakeholders to interact and share their experience. The first principle can be connected to the above mentioned Building Blocks for Interaction. Through having a dialogue, show transparency and access a company can make it easier for the customer to assess the risk-benefit factors of participation in co-creation. The meaning of the second principle is that companies should not focus solely on the economical value, rather it should be put focus on supplying rewarding experiences for all stakeholders, both customers and employees. The co-creation activity is about improving and creating new experiences in collaboration with different parties. Hierarchies and the lack of platforms can 15

20 hinder and limit the level of interaction for co-creation with customers, which is the point with principles three and four. However, even though there will always exist discussions and decision making through the hierarchies in a company, firms need to consider how to relief some of the hinder for communication to foster a flow of interaction activities, through for example platforms for interaction, where participants can freely share and discuss their ideas. Concluding remarks Co-creation differs from antecedents concepts/theories, thru having the characteristics of; personalized experience, transparency and dialogue on equal terms. The building blocks for co-creation and the 4-principles should be used as guidance by companies wishing to implement co-creation in their company. However, none of the two are specific with the preconditions needed to success with co-creation from an employee perspective, since it is the employees whom in practice will interact with the customers. As such, the guidance from the originators of the concept will used as a base when filling out the gaps of what preconditions the employees, through the survey, have expressed are needed to succeed with collaboration with customers (co-creation). 16

21 2.3. An Ethic of Collaboration Collaboration with customer within the service industry has been seen for some time now as beneficial for companies. Related to that, collaboration has been argued, by for example Liedtka (1998), to be a good strategy because it is an opportunity that is difficult for competitors to imitate since each collaborative relationship/initiative is unique. This chapter is based on the article; Beyond Teams Toward an Ethic of Collaboration, from the authors Liedtka et al The idea behind the concept of an ethic of collaboration originated from a study made by the authors Liedtka et al., on a number of companies during a four years period. The companies used in the study have all gained benefits through increasing the collaboration within their organizations. In the study they found a number of common factors present in the companies that they concluded to be the elements needed for the development of successful internal collaboration. These factors that the authors call attributes are presented in the model shown in Figure 4. The chapter will firstly be built up through a presentation of what is an ethic of collaboration, followed by an explanation of the model created by Liedtka et al. What is an ethic of collaboration? An ethic is defined by the authors as;... a system or moral principles and values grounded in a sense of calling or stewardship. (p.34) The authors named it an ethic because it is not a onetime activity but rather a culture that creates shared values, of how to work together that stretches beyond teams on to an institutional level, within a company. The main factor within an ethic of collaboration is the connections which build bonds between employees, departments and institutions. With the aim, as the authors say, to create a super synergy ; an ability to jointly recognize opportunity, realign and mobilize resources in creative ways, and deliver innovative solutions with a speed and agility unattainable through episodic, assigned, transactional-type collaborations. (p.36) 17

22 An ethic of collaboration was found in their research to foster commitment, engagement and relationship building/creation, for collaboration. The benefits of having an ethic of collaboration are that employees are having the opportunity to continuously work together, across departments, time, and is as a result building internal relational collaborations. To get a better understanding of the concept you can put it in comparison to a transactional collaboration, where the sharing of knowledge is limited to within a group and the time span they are working together. The factors seen in Figure 4 all contributed to an increased competitive advantages as well as improved client services for the firms in the study. A model for an ethic of collaboration Figure 4 - Liedtka et al. (1998), An ethic of collaboration, p.37 The model (Figure 4) above presents the context and attributes needed, according to the study made by Liedtka et al., to create a collaborative community in a company. The collaborative community is seen at the centre of the model. The two surrounding rings, with their attributes, are the support to foster and sustain the inner core. The inner ring is representing the personcentered attributes; Caring Attitude, Creative Energy, Conscientious Stewardship, and Calling. These person-centered attributes are in turn supported and strengthened by the firm- 18

23 centric attributes represented in the outer ring; Coherent Intent, Capital for Learning and Relationships, and Congruent Systems. The idea behind the figure is to show how these attributes collectively contributes and creates an ethic of collaboration (collaborative community). However, in order to succeed with creating a collaborative community all attributes needs to go in line - it is critical to understand how the attributes fit in the systems and how they work together towards a common goal. For management the development of the outer circle plays an important role for guidance and control. As well as, the management task to build the organization in a way that guides the individual person s context and feeling of connectivity. Person-Centered Elements The first among the three person-centered attribute is what Liedtka et al. named The Sense of Calling. It is described as an attribute that even though work is at times tough the employees still have a strong level of commitment, quality, effort, need to growth and willingness to collaborate. If the employees has a sense of calling they feel a responsibility and always need to serve their customers since this is related to the connectivity they feel towards their job. The second element is a Caring Attitude, which can be defined from different dimensions: first, having a caring attitude towards colleagues in relation to their well-being and development and secondly, considering whether or not the job they do is sufficient or good enough. These factors take form in the pride they feel for their work, colleagues and company. However, to keep the caring attitude a company needs to foster their employees feeling of accomplishment. For the employee to feel that they are seen and valued for the work they do, in order to keep the interest for taking actions, and doing the jobs which leads to benefits for the firm. The last attribute is Creative Energy, the authors argue for that an ethic of collaboration can help people to innovate/be more creative. They believe that many people have a storage of creative energy that is not used to its full potential. However, once people in an organization interacts, innovative ideas are triggered through the cooperation and discussion with other employees to find collaborative solutions to problems they which to unravel. Organization-Centered Elements In her model Liedtka et al presents four organizational-centered elements, which are acting as a base and support the system for the personal-centered attributes. The first element is the so 19

24 called Coherent Intent that acts as guidance for the employees in an organization. Intent is in this context defined by the authors as; to imply a link to motives, to the will and drive to focus on and achieve goals [that] captures the hearts and minds of people (p.43). If well communicated in an organization it is a lens that acts as an interpretation tool that employees can use when making decisions regarding priorities and the purpose of activities. In their research the authors that the companies that had an ethic of collaboration were also willing to invest in Capital for Learning and Relationships. One of the reasons is to fully facilitate the knowledge and capabilities of the employees inside the company. Another reason is founded on the belief that if employees at an early stage assimilate how to learn, they will be more flexible towards to shaping after company developments. Since the values a firm wants to communicate are mirrored in the performance/reward systems in the company, an important factor, in relation to retaining and recruiting the right people, is to have a Congruent System which back-up an ethic of collaboration. Though, the congruent system needs to be understood and accepted by all parties, given that a norm that seems fair and caring by management may not be seen as fair and caring by the employees. There is a fourth attribute, placed both in the personal-centered and the organization-centered elements, called Conscientious Stewardship. To have awareness, either as an employees or a company, of that what we do today can create a legacy for the future employees and partners of the organization. With an aim to, by feeling pride in the actions you take as well as a feeling of loyalty towards your colleagues, build up company values and reputation. Concluding Remarks Succeeding with implementing an ethic of collaboration, is not only about finding the people with the right skills and knowledge, but that also ones that fit in and understand the ethics and the company culture. This should be connected to the intent of a company, it must go in line with the values that have been laid down, and support and fosters them. This will ensure individuals connection with the organization and consequently their collaboration. 20

25 2.4. When to collaborate? For companies, business will always be business. Accordingly, no matter how strong the belief is in collaboration, it is always of importance to measure what the companies potentially can gain from a collaboration initiative. This, as explained in the introduction, is the purpose for including the sub-question in this thesis; What are the cost-benefits with co-creation of sustainable service management business practices? This chapter starts with a discussion on when and when not to collaborate, followed by how to measure and estimate the value of intangible assets. When to collaborate? In an article written by Hansen (2009) he poses the question: When Internal Collaboration is Bad for Your Company? That will say when does internal collaboration increase value and when does it not give any value. He argues for;...that groups in your organization are encourage to work together only when doing so will produce better results than if they worked independently. (p.84) Even though the question is based on internal collaboration, it will be argued for in this paper, that the same thought can be applied when collaborating externally, for example with co-creation initiatives. To know when or when not to collaborate, Hansen (2009) argues for that it is necessary to look at whether or not the collaboration will give a collaboration premium. The collaboration premium you estimate by calculating the difference between the financial return of a project and the opportunity costs and collaboration costs; Even though the formula in itself give a guidance in how to estimate the return from a collaboration effort the challenge with building a co-creative company lies with the handling and evaluation of intangible assets. Project Return - Opportunity Costs - Collaboration Costs Collaboration Premium 21

26 3. Methodology This thesis is an exploratory study that aims to gain deeper insight about what preconditions are important for employees in a co-creation initiative. The primary data collection was based on a survey with questions resulting in both quantitative and qualitative data. The process of selecting methods and theories can be helpful to understand and explain why the used theories and methods were chosen. The idea of using co-creation as the main theory of research was the first decision taken in the process of writing this thesis and therefore, the main area of interest. From then on, the process of literature review and secondary data collection took place Secondary Data Collection Literature Review The secondary literature review executed during the process of writing this thesis was done through a search of scholarly reviewed articles on on-line data bases. The purpose of this search was mainly to investigate what and how much has been written about the subject treated in this thesis, but also to find articles within similar areas of research. There are a number of articles and authors that have discussed the concept of co-creation in several different contexts. However, it was realized at an early stage that the base of cocreation and how it can be accessible for companies was the main area of interest. Therefore, it was decided upon to go back to the origin and base of the concept as explained in the articles of Prahalad & Ramaswamy. For that reason the view on cocreation in this thesis will solely take the perspective of Prahalad & Ramaswamy (with an exception of the article written by Ramaswamy & Guillart 2010). Moreover, the article by Liedtka et al. (1998) about an ethic of collaboration was also chosen to be incorporated. The reason behind the decision was simply because of the interest of investigating if the same attributes needed to succeed with an internal collaboration are also valid for external collaboration (co-creation). In addition, the aim was also to see if an ethic of collaboration in itself is a precondition for co-creation. Though, there might be a number of other articles also depicting what is of importance to succeed with an internal collaboration, this thesis needs to be read not as a best practice but rather as an alternative and guidance to how it could be done. 22

27 Standing as two important concepts, although not seen as the main focus of the thesis, are the concept of Professional Service Firms and When to Collaborate. Understanding the characteristics of PSF s and how they work is important since it can have an influence on how the answers of the employees are interpreted. A fundamental notion when analyzing the results of the survey is to understand how important the role of each employee is in PSF's. The passage of When to Collaborate was incorporated as a tool for how to calculate the collaboration premium of a co-creation initiative Primary Data Collection - Survey The process of reaching the decision regarding the method for the primary data collection was developed through phases with both failures and success. However, the wish during the whole process was to find a method which would give answers depicting preconditions needed to succeed with co-creation. At the end, the decision of making a survey was taken and a questionnaire was sent out to the respondents through and answered via a website. As it occurs with all methods, using surveys as a research tool has both positive and negatives sides. Survey is defined by Lietz (2010) as a complex communication process whereby the product of the interaction between researchers and respondents leads the sharing and creating of meaning. (p.249). In addition, due to the characteristics of being an exploratory study and the limited samples in this research, it would be interesting in the future to remake the study on a larger scale to see if the same preconditions needed according to this study could be also found valid in other types of Professional Service Firms. Survey Sample Before describing the process of writing and deciding upon the questions in the survey, it is of value to understand the sample selection because the outline of the questions in a survey may be affected by to whom the survey is intended to be addressed. As previously stated, the survey was sent out to a number of consultants working at Professional Service Firms. PSF s are of interest because the employees are their main asset. In turn, the employee perspective was chosen because it is an interesting angle towards the management perspective often represented in the theoretical articles. 23