Co-Creation in the Indian Context- Past, Present and Future
Posted in Marketing & Strategy Articles, Total Reads: 4132
, Published on 27 October 2011
The aim of the following article is to unfold the nuances of co-creation in the most natural and intuitive manner in the Indian context. Since all of us are consumers, we start with an analysis of Consumer Co-creation. Next we see that customer co-creation is possible only within a “co-creative enterprise”. In the process we have a look at the past and present of co-creation in India, thus setting the platform to ponder over its far reaching future possibilities.
The ultimate goal of a firm is that of “value creation”. The traditional practice of business considers the firm and consumers as distinct entities, with value creation happening inside a firm through its activities. Firms and consumers played, in fact still play, complimentary roles of producers and consumers respectively, with minimal interaction. The basis for value creation implicitly was thus “Information Asymmetry” between the knowledge of the firm and its consumers.
However, information asymmetry is decreasing in India in the age of internet, social networking and vast information availability (see figure 2). Hence, with the informed consumer who has the best idea about what he wants, value creation can happen only when he has a say in the product and service offering by the firm. This realisation was first cited by C.K. Prahalad and Venkat Ramaswamy in their 2000 HBR article “Co-opting Customer Competence”. The building blocks of co-creation, as they said, are dialogue, access, risk assessment and transparency. We look at various examples from India under these four lenses.
Building Blocks of Co-Creation
FMCG is a sector which requires constant innovate marketing to keep consumers attached to brands. To break the clutter and co-create with consumers, Lays introduced the “Give us your delicious flavour” campaign where people could give ideas about which flavour they would like to have and Lays chose the best ones. Similarly, Nestle’s Maggi introduced the “Me and Mera Maggi” campaign, which encouraged users to share their maggi experiences, some of which were converted into actual ads. The emphasis in these cases was on dialogue, which encouraged shared learning and communication between two equal problem solvers.
Considering the apparel sector in India, big brands account for 5% of the market but attract maximum investment. Inkfruit.com realised this huge potential away from big brands and emerged as a fashion co-creation platform. Consumers can design apparel as they would like to have it and in fact gain recognition as a “designer” who is looked upon by fellow users. This is a perfect example of a firm co-creating by giving access to its resources, in this case the online platform.
Risk assessment highlights the issue of how much risk a firm needs to share with consumers while co-creating. In 2007, Subhash Chandra of ZEE TV said that content co-creation is the future of the entertainment industry. With D2H and IP TV, “TV 2.0” is the future with 40% of the firms making money due to it as against the present 20%. The question is: what is the risk shared by the consumer (co-creator) in case the content created is not ultimately successful or a “hit”?
The time is just right to look at an instance of co-creation out of the private sector. The Planning Commission of India is inviting ideas, comments and suggestions on important themes and issues across sectors from Indian citizens for the 12th five-year plan. A portal on the planning commission website will be available for this. The emphasis is on transparency in policy creation; also realising that the best policy will emanate from the target it will affect the most.
A summary of consumer co-creation rational is thus given in the figure below.
We have seen that consumer co-creation can happen only with a change in the traditional mindset of firms about value creation, by providing a platform for shared interaction. A crucial point here is to recognise that such a change can happen only if other stakeholders in the system, like employees, suppliers, NGO’s and regulators, are given an opportunity to participate and generate value for themselves, too. This form of true co-creation which involves all the stakeholders in the process of mutual value creation is Enterprise Co-creation.
Co-creating with Stakeholders
Initiatives like the Innovation Co-creation program from Infosys, COIN by TCS and portals that engage employees in the IT and technology sectors are the normal culprits when we search for enterprise co-creation examples.
Moving towards manufacturing sector, Maruti has some startling statistics to share with regard to its employee co-creation efforts. It runs many employee engagement platforms to encourage them to come ahead and give suggestions on improving efficiency and productivity. It received about 2.29 lakh suggestions which resulted in a saving of close to Rs. 160 Crore in fiscal year 2009-2010.
Another interesting and unique case in point is that of IKSL, IFFCO Kisan Sanchar Limited, a JV between Airtel and IFFCO. It is a perfect example of how co-creation brings together the expertise of different stakeholders on a common platform resulting in value creation for the society (figure 4). Airtel provides what is called as “Green SIMs” to farmers under the distribution network of 40,000 societies of IFFCO across villages in 18 states of India. A green SIM provides 5 daily one minute agriculture related informative voice messages to the farmer subscriber for free. The information in the voice messages relate to crop, weather, fertilizers, seeds, etc that help improve the yield of farmers by up to 50%. The information for the voice messages is created by State and National level agricultural institutions. Considering Airtel, IKSL helped generate revenues of Rs. 170 crores and a profit of Rs. 20 crores in 2010. IKSL accounts for half a million subscribers out of the three million subscriber base increment every month for Airtel.
ITC e-Chaupal is another classic example, which has resulted in a lowering of procurement costs for ITC by 25 to 30%.
Ideas for the Future
The potential of co-creation is huge, especially in a country as large and as diverse as India, with multiple viewpoints and value creating ideas that can thus emerge. In fact, the idea of co-creation for India is not alien, just as we took to social networking rather naturally when compared to our western counterparts, given our traditionally collaborative, democratic and social culture. An analysis of the future of co-creation with regard to opportunities in the private sector, public private partnership and entrepreneurship follows.
The emphasis in the private sector today is on quality and strategies relate to improving efficiencies and reducing costs. In that sense co-creation is “anti – Six-sigma”. IT infrastructure and human capital is abundant in India. After the Global Delivery Model, co-creation can be the next stage in the leap towards growth in the future for IT. As enterprises around the world move towards a more collaborative environment, the role of IT infrastructure moves from being an internal process automation tool to being a platform provider for co-creation. With emerging trends like cloud computing, the opportunity for the IT sector lies in adapting and capitalizing on existing relationships with leading clients to “up sell” co-creation platforms.
Teledensity in India has reached 68%. On the other hand, banking services are available to only 45% of the population, with 42% of those without a bank account having a mobile phone. Thus, mobile banking can be the next revolution. Usage of smart phones and increasing penetration of 3G means mobile payment services like M-wallet carry huge potential. Hence, co-creation among telecom companies, banks, government and customers is what needs to be looked at more closely.
Public Private Partnership
With public policy on issues like infrastructure development and education, concurrence of knowledge from the public and private sector becomes essential. An infrastructure project for example becomes very complex with interaction between the government, private parties, even IT companies, police, villagers, NGO’s etc. The existence of a platform to create mutual value is thus paramount. Education sector is ready to take off to the next phase with the advent of online courses, libraries and universities. Expertise from top universities like IIT’s and IIM’s, IT, education policy makers, and students together is what will drive this movement.
With more and more entrepreneurship ventures in India, the potential to co-create and get an advantage is huge. The greatest positive for new ventures is that they do not have to modify a set of rigid processes that established firms need to deal with. Taking advantages of new age IT tools like cloud computing can help them save a lot of capital investment. The challenge really will be to sustain that co-creation framework in the future.
The task to transform into a co-creative enterprise may look daunting, but it sure can be done. The best way to move ahead is to start small. Identifying a set of 2 or 3 stakeholders to co-create with and learning from the experience is the key. Later the perimeter can be expanded naturally, including other stakeholders. Another important factor is that of change management, with the role of managers becoming absolutely essential. Just as quality is now a responsibility at an individual level in a firm, co-creation needs to be ingrained into the DNA of each employee. Ultimately, one of the most important factors is that of transformational leadership. Emergence of leaders and proponents of co-creation is what will ensure the creation of a truly democratised enterprise which invites individuals to influence its future in collaboration with the management.
This article has been authored by Rohil Mitra from NMIMS
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