What is co-creation and how is it going to affect bills?

Telecoms have traditionally taken an organization-centric and command-and-control approach to innovation. But people are inherently creative and increasingly want to shape their own experiences. How can telecoms firms support this need? How does co-creation affect bills? Rob Vos, Calvi’s business consultant investigates. 

What is co-creation?

During the Covid-19 crisis, there was a huge increase in Minecraft usage with sales surpassing 200 million, 126 million people playing the game monthly and it remaining “king” of YouTube viewership. Despite spending .5 billion on what is, after all, a very simple game, Minecraft is still regarded as one of Microsoft’s best acquisitions. But what’s the secret of the 12-year-old game’s appeal? How did it build a dedicated and passionate user base and build value year over year? And, most importantly, what can we learn from its success?

Tapping into people’s innate creativity builds value

How did Minecraft go from a bedroom project to one of the most successful and valuable games in the world? The answer is that it captured gamers’ imaginations and engaged them by tapping into their innate creativity and desire to craft a world just the way they like it, using their own skills and resources. 

But what can we learn from Minecraft’s success? Well, according to McKinsey, half of company’s revenues in 2026 will come from products, services, or businesses that haven’t yet been created. While product managers will continue to have a vital role to play in the innovation process, they cannot come up with enough good ideas to fulfill the telecoms industry’s demand for innovation. CSPs need new sources of innovation and are therefore turning to co-creation as a way of uncovering valuable new ideas. With co-creation, vendors and end customers contribute their own ideas, skills and resources to create a product or service that is specifically tailored to the customer’s need. Game meets reality.

But isn’t co-creation just another name for collaboration?

Collaboration is when vendors, integrators and business enablers customize off-the-shelf products and services to create a product that they believe is good for the customer. This model might still involve collaboration with customers, but their input is limited.

In contrast, co-creation – a term coined by C.K. Prahalad and Venkat Ramaswamy to describe a new, emerging relationship between customers and companies - embraces the customer’s participation in product development. By doing so it accepts that customers are the real experts on what they want and that they have a unique perspective to offer. Co-creation therefore shifts innovation from an internal process to one that includes outsiders, allowing companies to gain fresh perspectives and ideas, break away from the status quo, better meet their customers’ needs and widen their innovation funnel by increasing the number of ideas sourced from partners and customers.     

Success factors for co-creation

61% of businesses say co-creation leads to more successful products

Business benefits of co-creation

What’s the catch?

It’s easy to get carried away with the potential for this new exciting form of innovation, but the bottom line (as always) is how to make and share the resulting value. If CSPs aren’t careful:

• a lot of effort and revenue will be eaten up by monetization processes.
• the party delivering the service to the end customer will have a hard time providing simplicity and transparency
• the end customer will potentially receive a lot of bills rather than one consolidated bill, undermining their perception of value.   

To create the kind of engaged audience that Minecraft was able to, and to unleash the full revenue-generating potential of co-creation, CSPs need support systems that enable them to pivot to new opportunities and which can monetize the value being created.

To find out how to support a co-creation initiative, check out the webinar we co-created with our partner Aria Systems and don’t miss my next blog How Co-Creation Impacts The Bill.

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