Product development is not a spectator sport: you must be in it to win it. Competition gets tougher with every passing year. Retail shelves are crowded. That is, whenever retail shelves are actually displaying merchandise, given the record number of store closures over the past couple of years. This year, at least 7,000 (and estimates approach 12,000) big box or chain stores will close, making it the worst year for retail in history. In fact, retail is so challenging at this time that it has earned the dubious moniker of “retail apocalypse.”
To succeed, you need a distinct advantage over every other provider in the marketplace. How exactly does one do that? The answer lies in the hidden value of co-creation.
Product development and the importance of getting it right
These days, there are few forgivable transgressions in product development. Companies do not have the luxuries of time and endless resources to bring their product to market. With all of the tools, technology and methodology that exist in support of product development, the pressure is on to get it right – and to get it right the first time around.
Even when companies bring discipline and experience to their product development process, they still may not get it right. Case in point, in 2017, over 30,000 new consumer packaged goods (CPG) debuted in the USA. Of these, 80-95% of those products failed. While this number varies depending on whether you site Nielsen, the University of Toronto or Harvard Business Review as your source. Although there is some discrepancy as to the true failure rate, all agree that the number is very high and they are united on the central point of failure: “The biggest problem we’ve encountered is [the] lack of preparation.”
Analysts who have delved into the reasons behind product development failures and how to avoid them have elucidated a few common threads. These include solving the wrong problem or failing to nail down all the assumptions and risks at the start with the key stakeholders. Some err by not allowing enough time for the product development process to be properly executed.
But, one of the biggest impediments to success is that companies do not adopt a product development methodology anchored in a customer-centric approach. In a nutshell, these companies fail to recognize the hidden value of co-creation for product development. So, let’s dig into co-creation and how to unlock its hidden value for product development.
The value of co-creation
By definition, the emphasis in co-creation is placed on the prefix, “co,” meaning, together, jointly, and collaboratively. Co-creation communities are deliberately structured to put customers first, ahead of all other stakeholders. The design follows the familiar adage, “the customer is always right.”
To unlock the hidden value of co-creation, companies must first conduct market research to understand the context and the marketplace. Specifically, they need to understand the buyers’ demographics, needs, habits and preferences. Market research, when conducted properly, identifies the true need that then drives product development. In addition to the obvious benefits of enhanced customer loyalty, reduced risk plus fast and flexible product development, there are two not-so-obvious benefits of co-creation for product development: informed design and a coordinated organization. As a result, big brands, as well as upcoming brands, have begun to tap into the hidden value of co-creation.
Co-creation can be used to inform design
Product innovation begins with ideation. What better source for fresh thinking and creative needs-based concepts than your own existing or prospective customer base? Converting your customers from market research study subjects into active participants unlocks the hidden value of co-creation for product development. Iteratively alternating between traditional market research to refine ideas, delve deeper into insights collected and applying co-creation methodologies to drive product development allows companies to quickly zone in – and stay in the zone – of what customers want, need and are willing to buy. Essentially, co-creation guides development to help companies to solve the right problems.
Product development is an intrinsically creative process that, by necessity, must have a steady stream of innovative ideas. Co-creation enables real-time feedback, validates the effectiveness of the solutions proposed and streamlines research efforts. In this way, product development and market positioning can be conducted in tandem, which greatly reduces costs and the chance of concept being “lost in translation” during hand-offs.
Co-creation is an organizational multi-tool
Though its definition and methodology may vary from one company to the next, there is a collective understanding that valuable co-creation projects are dependent upon a coordinated effort amongst product developers, marketers, designers and users. The term “users” itself is broad and may encompass customers, retailers, supply chain partners, regulators and beyond. Continuous co-creation is where it really gets interesting. Regular interaction with external users, customers in particular, throughout the product development process, ensures that the voice of the customer (VOC) is maintained from start to finish.
Co-creation ideation simultaneously enables the articulation of product positioning within the market and the understanding of customer segments and personas. Soliciting customer feedback builds goodwill, fosters loyalty through trust and leads to positive experiences with the brand. Product development benefits from the transparency inherent in co-creation as it further intensifies positive feelings towards the brand. In essence, co-creation makes customers feel deeply invested in the brand by “creating unique and specific value for individual customers.” It is precisely this notion or perception of individuality that harnesses the full value of co-creation for product development.
This deep emotional connection often spurs greater action by the customer. Many go on to become brand champions. Here at KL Communications, we encourage our partners to embrace the wisdom of crowds. By introducing co-creation activities into their research plans, it provides brands with the deep insights that they need for successful product development.