Transparency: The key to successful co-creation

6 November 2017 11:27

Transparency: The key to successful co-creation

To succeed with co-creation, brands have to work along four building blocks: Dialogue, access. risk assessment and transparency. Although all four are important, we here want to emphasize the specific importance of transparency.

Co-creation – defined as “joint creation of value by the company and the customer” (Prahalad and Ramaswamy, 2004b, p. 8) - has positive influences on brand experience, brand satisfaction, loyalty and word-of mouth (Nysveen and Pedersen, 2014; Cambra-Fierro et al., 2017). Given these positive influences, many brands have worked hard to stimulate co-creation the last decade.

In their original work, Prahalad and Ramaswamy (2004a) point to four building blocks of co-creation;

  • Dialogue means interactivity and deep engagement. It includes “shared learning and communication between two equal problem solvers” (Prahalad and Ramaswamy, 2004, p. 23) – the brand and the customer.
  • Access is about access to desirable experiences - not about ownership of products.
  • Risk assessment; We often assume that the brand is responsible for reducing the risk of using their products and services. When a brand and a customer co-create value, both actors are to some degree responsible for risks and benefits.
  • Transparency is about open flow of information and disclosure of information (Park and Blenkinsopp, 2011). Transparency means no information asymmetry between the brand and the customer.

Although both the brand and the customer have to satisfy the conditions described in the building blocks, the brand usually have the largest responsibility for facilitating dialogue, access, risk assessment, and transparency.

To succeed with co-creation, brands have to work along these four building blocks. Although all four building blocks are important, we here want to emphasize the specific importance of transparency. In many ways, transparency is (besides being one of the four building blocks) also a precondition for realizing the three other building blocks. A precondition for achieving a real dialogue between two equal partners is that both partners have access to all relevant information. If information asymmetry is present, the dialogue will not be between two equal partners, and the part with the least information will not be able to realize its best potential in the dialogue because of lack of relevant information. Hence, transparency is a precondition for realizing the full potential of dialogue. In many new business models, brands provide access to desirable experiences for customers in various user situations. This imply that customers should have a flexible access to the brands’ offerings and full access to information about all possible offerings available. Brands also depend on customers disclosing all relevant information about their preferences to be able to provide access to desirable experiences. So both the brand and the customers must be transparent and disclose and share all relevant information on how to realize the best possible experience in various situations. Hence, transparency is a mechanism for realizing access to desirable experiences. The third building block is risk assessment. When customers participate in co-creation of value together with a brand, both the brand and the customer are responsible for the value created. Thus, both parts must be given access to all relevant information, making it possible for them to evaluate both possible benefits and risks. This points to the importance of transparency to enable risk assessment. Overall, an important implication of this short discussion is that managers should strive towards transparency to succeed with co-creation.

At CSI we are in the process of conducting empirical studies together with Telenor on influences of transparency and trust in online customer communities. In another project we study the influences of all four building blocks of co-creation among customers of banks, hotels, restaurants, and mobile operators. Next year we will get back with results from these studies in this blog.

 

Literature

Cambra-Fierro, J., Pérez, L., and Grott, E. (2017): Towards a Co-creation Framework in the Retail Banking Services Industry: Do Demographics Influence?, Journal of Retailing and Consumer Services, vol. 34, pp. 219-228.

Nysveen, H. and Pedersen, P. E. (2014): Influences of Co-creation on Brand Experience: The Role of Brand Engagement, International Journal of Market Research, vol. 56, no. 6, pp. 807-832.

Park, H. and Blenkinsopp, J. (2011): The Roles of Transparency and Trust in the Relationship between Corruption and Citizen Satisfaction, International Review of Administrative Sciences, vol. 77, no. 2, pp. 254-274.

Prahalad, C. K. and Ramaswamy, V. (2004): The Future of Competition, Harvard Business School Press, Boston, Massachusetts, USA.

Prahalad, C. K. and Ramaswamy, V. (2004a): Co-creation Experiences: The Next Practice in Value Creation, Journal of Interactive Marketing, vol. 18, no. 3, pp. 5 – 14.