In these days, many of the leading companies are using crowdsourcing to gather innovative ideas or provide operational support. Crowdsourcing involves the harnessing of dozens if not thousands of people through professionalized techniques and intermediaries to address a specific business opportunity or solve a research problem. Some leading companies have taken crowdsourcing to the next phase, collaborating with customers and key stakeholders to co-create new products and services or solve complex problems. This new approach can spark breakthrough innovation and solve hard technical challenges quicker and at a lower total cost than deploying expensive R&D teams or buying risky startups. Just to make certain, transaction cost theory, which considers the well-known trade-off between make or buy, something should only be outsourced if it is cheaper to rely on the market than to do something internally.

The term of co-creation was popularized by scholars C.K. Prahalad and Venkat Ramaswamy in their book “The Future of Competition: Co-Creating Unique Value With Customers” published in 2004. We have all heard about the wisdom of crowds, bringing the outside in. And a large majority of people supposes they are in favor of co-creation as it is now.

Co-creation is well suited to better deliver on customer needs, at a lower product development costs and risks. Some notable examples of co-creation, as highlighted in the Harvard Business Review, include:

FedEx

Problem: How to ensure on-time, zero-defect delivery of live tissues for organ donation.

Solution: With external medical staff and suppliers, FedEx developed a sophisticated logistics technology that manages key variables like location, temperature and pressure.

General Electric

Problem: How to extract Alberta’s heavy oil in an environmentally friendly, low-cost way.

Solution: GE, government officials and customers collaborated at a shared innovation center to develop a new water filtration system that reduced water consumption.

Have a beautiful co-creation.