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CO-CREATION: A new theory for effective innovation

As industries and technologies converged, everything is now being globalized and people all over the world connect to each other, thus allowing them to evolve into active end-users of products and services. These changes have influenced today’s business trends, transforming it into a dynamic ground, wherein value creation is no longer the sole responsibility of firms, but also involving consumers to co-create with them.

For the past years, co-creation has been used by different institutions as a business strategy for innovating products and services.  The notion is to use the target market in value creation simply because consumers are expert based on their own product experience. Through an integrated perspective and approach, the firm collaborates with the customers to find solutions on problems and develop ideas that can evolve into realistic entities.

The co-creation concept was illuminated through the article Co-Opting Customer Competence by C.K. Prahalad and Venkat Ramaswamy published in Harvard Business Review in 2000, explaining the evolution and transformation of the consumers from passive audience to active players. They discussed how the internet changed the relationship between people and organizations, allowing the customers to be part of an active and open dialogue with the product and service makers. “Customers are fundamentally changing the dynamics of the marketplace. The market has become a forum in which consumers play an active role in creating and competing for value,” they explained.

The topic was further developed in their book The Future of Competition (Harvard Business School Press, 2004) citing examples why the customers would no longer be satisfied with what the company offers to them. They theorized that the company needs a new structure to create a unique value for their market. And to do this, firms must collaborate with the customers through interaction. Thus, increasing interaction between companies and individuals becomes the core value of co-creation.

Co-creation means working co-creatively with the consumer. This indicates that the firm must interact constructively with the consumers by asking for their feedback, listening to their opinions, and using the conventional language to tap the hidden creative potentials of the market. This process makes co-creation scheme different with the traditional active firm-passive consumer approach.

And as the technology continuous to evolve, co-creation is no longer limited to product-oriented businesses such as bags, shoes, apparels and etc. It can also be used in tailoring effective web solutions. To know more about co-created solutions for web services please visit

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