Conference Papers

Bridging the Co-creation Gap between Co-creators, Companies and Living Lab

 

 

Katharina Greve (kg403@cam.ac.uk) – University of Cambridge

Veronica Martinez – University of Cambridge

 Andy Neely – University of Cambridge

 

 

Abstract

 

Living labs offer a new open innovation platform for companies to engage in co-creation. Empirical investigation about co-creation enablers in this setting is however scarce. This paper analyses factors that facilitate co-creation in living labs. The study integrates findings from a systematic literature with primary data collected with managers and researchers of a living lab, co-creators and companies. Five critical factors enabling co-creation were identified: Customer Engagement, Relationship Management, Operating Principle, Design Layout, and Data Collection Approach. Within these five factors, an integrative list of 50 co-creation elements provides further detail about how co-creation can be facilitated in living labs.

 

Keywords: Co-creation, Open Innovation, Living lab

 

 

Introduction

In today’s customer-empowered world, co-creation capabilities are critical to the future growth of a company (Bhalla, 2010). Reaching beyond their own boundaries, companies aim to enhance internal innovation and expand their markets. An open approach to innovation (Chesbrough, 2003; Vanhaverbeke, 2006) requires the inclusion of more activities and actors than those of traditional innovation models (van de Vrande et al., 2009). Living labs offer a new platform for companies to engage with customers in a process of co-creation (Lusch et al., 2007) to understand both existing and emerging user needs (Westerlund & Leminen, 2011). Following Westerlund and Leminen (2011, p. 20), this study defines living labs as “physical regions or virtual realities where stakeholders form public-private-people partnerships (4Ps) of firms, public agencies, universities, institutes, and users all collaborating for creation, prototyping, validating, and testing of new technologies, services, products and systems in real-life contexts”.

In order to develop new products and services that better meet consumers’ wants and needs, it is crucial to identify elements that facilitate co-creation in living labs. In spite of a growing body of literature (e.g. Følstad, 2008; Almirall et al., 2012; Leminen et al., 2012), living lab practices are still under researched, and a theoretical as well as methodological gap continues to exist with respect to the limited amount and visibility of living lab literature vis‐a‐vis the rather large community of practice (Schuurman, 2015). Furthermore, understanding multiple stakeholders in the co-creation process in living labs is complex due to their diverse interests. Rosado et al. (2015, p. 81) point out “the need for more specific descriptions of the practice of running a living lab, i.e. how to organize a living lab’s activities, how to involve different stakeholders, ways of collaboration, co-ordination etc., combined with a more conceptual concern with the possibility of reconciling the interest of these different stakeholders”. This study explores and analyses factors that are critical to the facilitation of co-creation in living labs by integrating findings derived from existing literature with primary data collected with managers and researchers of a living lab called JOSEPHS as well as companies and co-creators. This paper therefore not only attempts to bridge the gap between research and practice, but also does so considering the perspective of diverse stakeholders.

Following the introduction, section two describes the approach to the systematic literature review and discusses the theoretical background relevant to the understanding of co-creation. The third section outlines the research design. Together with findings from the existing literature, results from the primary data collection are presented in section four. Finally, section five concludes the study discussing contributions to academic research and practice.

 

Systematic Literature Review

A systematic approach to review existing literature was employed due to its objective, transparent and unbiased approach (Tranfield et al., 2003; Mulrow 1994). Scopus was identified as the most relevant scholarly database to screen the literature of interest. Keyword pairs relating to co-creation in living labs were used to specify the literature of interest and to ensure that relevant studies are included and no study is excluded without thorough evaluation (Meline, 2006). Finally, snowball sampling was employed to ensure all influential papers are included.

The application of specific inclusion and exclusion criteria led to the identification of 65 papers and articles in press. Further scrutiny resulted in the elimination of duplicates; furthermore, only those papers discussing living labs in the context of business literature were considered. This process resulted in the selection of 43 articles for full review and ultimately in 11 relevant sources for this study that are concerned with concepts facilitating co-creation. Based on snowball sampling, 18 additional relevant papers were identified. In relation to this study, a total of 29 articles were used to analyse elements facilitating co-creation in living labs.

 

Co-creation Elements

A first evidence from the analysis of the literature is the relevance of concepts such as involvement, integration (Nambisan & Baron, 2007; Almirall & Wareham, 2008; Baron & Harris, 2008), and participation (Aarikka-Stenroos & Jaakkola, 2012). In order to facilitate co-creation, it is indeed vital that customers’ behavioural manifestation toward a brand or firm reach beyond purchase. Van Doorn et al. (2010) discuss the importance of customer engagement behaviour (CEB) which investigates customer activity beyond interactions with a provider. One of the most essential elements affecting CEB includes attitudinal factors. These encompass, but are not limited to, trust (de Matos & Rossi, 2008), customer satisfaction (Anderson & Mittal, 2000; Palmatier et al., 2006), customer goals, resources, value perceptions (van Doorn et al., 2010), brand commitment (Garbarino and Johnson 1999), brand attachment (Schau et al., 2009), and brand performance perceptions (Mittal et al., 1999).

When discussing the conditions needed for successful value co-creation, CEB focuses on the resources contributed by customers. Jaakkola and Alexander (2014) remark how a firm’s willingness to integrate customer resources into offering development affects the joint value co-creation process. The same scholars, also identify mobilizing behaviour, defined as customers utilizing resources to mobilize other stakeholders’ actions towards the focal firm, as another co-creation enabling element. Jaakkola and Alexander (2014) suggest that mobilizing behaviour offers the prospect of generating value co-creation opportunities beyond existing relationships accessing new customer and stakeholder relationships. Other scholars are trying to address the same issue by putting emphasis on strong relationships (Jaworski & Kohli 2006; Prahalad & Ramaswamy 2004; Arnold, 2017), high quality interactions (Payne et al., 2008; Jurietti et al. 2017; Voytenko et al. 2016; Hyysalo & Hakkarainen, 2014) and dialogue (Auh et al. 2007).

Value itself, however, must be considered as part of the collective social context (Edvardsson et al., 2011). Even if, the type of service determines the level of interaction (Lazarus et al., 2014) different customers may perceive the same service in a different way, and the same customer might regard the service differently between occasions in a different social context. The framework suggested by Payne et al. (2008) outlines contextual elements that are likely to have an influence on the level of effort a customer decides to invest on service co-creation. Specifically building on Normann’s (2001) research, Payne et al. (2008) identify two sets of aspects: customers’ own capabilities, skills, and motivation and the operant resources that the customers can access to accomplish those goals. On the provider’s side, two aspects are vital to facilitating the exchange: the quality of its employees and the perceived quality of its facilities. Rust and Oliver (1994) add the customer−employee interaction to these elements: in the context of services, the interaction between service providers’ employees and the customers propels value (Bailey et al., 2001).  Moreover, Aggarwal and Basu (2014) suggest that the amount of effort exerted by a customer in the co-creation of value is positively influenced by the personal goal clarity that the individual has with respect to service outcomes and that the amount of effort exerted is positively affected by the perceived relevance of the service in achieving desired service outcomes. The extent of co-creation is also influenced by firms’ willingness to co-create and consumers’ willingness to co-create.

Yet to successfully engage with customers, their expectations have to be met (Füller, 2010). They only offer their time and talent if they consider co-creation to be rewarding. Empirical studies conducted in online settings show that customers are motivated to engage in non-transactional behaviours because they expect benefits such as enhanced knowledge and reputation, social benefits, and economic benefits (Füller 2010; Nambisan & Baron 2009). Expectation management is therefore crucial in the co-creation process (Baelden & Van Audenhove, 2015).

Research in the context of smart cities (Bifulco et al. 2017) suggests that living labs should engage a suitable and wide set of actors and resources for the co-creation of new services. More specifically, to increase usage and improve the abilities for actors to participate – regardless of the skill level – several studies (van der Graaf & Veeckman, 2014; Voytenko et al. 2016; Rosado et al. 2015) recommend offering different tools “to guarantee that every citizen, also those who lack specific capacities, is able to become involved and be heard” (van der Graaf & Veeckman, 2014, p. 82). Methods used in living labs must be interactive and engaging and accessible to all citizens irrespective of their skill level in order to create a real-life environment that is capable of stimulation co-creation (Franz, 2015; van der Graaf & Veeckman, 2014).

According to Kang (2012), stakeholders should share mutual goals and trust others to realise a successful living lab. Further, the principle of mutual learning points to the need of creating a common ground so that a variety of knowledge and values can be explicated, appreciated and applied to influence the co-creation process. Thus, Rosado et al. (2015) suggest employing a more systematic approach, such as regular meetings or workshops to improve the likelihood of mutual learning during the co-creation process.

Besides these soft aspects of co-creation, also the infrastructure and layout of living labs play a key role. Living labs require big and open buildings that are in line with the open innovation philosophy they are based on. Gascó (2017) emphasises that the infrastructure needs to reflect upon the open culture that stimulates innovation inside its walls.

 

Empirical Research Design

To gain an in-depth understanding of co-creation practices and the factors that facilitate co-creation in living labs, a single case study at the living lab JOSEPHS® – the service manufactory was conducted. The case study approach was selected to control for biases and explore the rather new phenomenon, co-creation in living labs, in greater depth (Yin, 2013).  “JOSEPHS” – the service manufactory is chosen due to its set-up as an open and interactive innovation platform with co-creators.

 

Data Collection and Analysis

This study is based on data collection with a) management, research and operational staff of JOSEPHS, b) companies that have utilized JOSEPHS for their innovation activities in the past 2.5 years, and c) selected co-creators that regularly get involved in the co-creation process at JOSEPHS. Following Leminen et al. (2015, p. 8), this study adopts the term co-creator which is defined as an individual that “seeks and solves problems, ideates and innovates, and develops the solutions together with the companies’ R&D teams and other living lab actors on an equal basis”. Therefore, in the context of this study, users and customers that participate in the co-creation process are considered to be co-creators. The data collection (Table 1) was carried out between November 2014 and September 2016.

 

Table 1 – Data Collection

Activity Approach Purpose
Pilot-Study

 

·   3 interviews with JOSEPHS team (3 hours)

·   Observations

·   Analysis of secondary data

Understanding of JOSEPHS as a project idea and collect background information about business model, historical background and current issues.
Living Lab perspective ·   2 focus groups with JOSEPHS team (8 hours)

·   Complementary Interviews (2 hours)

·   Observations

Understanding factors, mechanisms and characteristics for co-creation. Validation of findings from the first focus group.
Company perspective ·   Focus group with 3 companies (4.5 hours)

·   Secondary data analysis

·   Paper-based survey

Evaluation of perceived co-creation processes in JOSEPHS; development of factors for the co-creation framework.
Co-creator perspective ·   Focus group with 9 co-creators (2.5 hours) Understanding co-creation factors that facilitate co-creator feedback in the co-creation process.

 

Findings and Discussion

Results coming from focus groups, interviews and observations were integrated with the results from the systematic literature review to provide a list of factors facilitating co-creation. 50 co-creation elements were grouped in five critical co-creation factors, according to a framework developed in an earlier study on co-creation facilitation in living labs (Greve et al., 2016): Customer Engagement, Relationship Management, Operating Principle, Design Layout, and Data Collection Approach.

13 co-creation elements were identified through data collection with companies, whilst 18 co-creation elements emerged engaging with living lab facilitators, and 16 with co-creators. Integrating this list with 21 co-creation elements already examined from the analysis of the literature, 50 unique co-creation elements are identified (Table 2).

 

Table 2 – Five critical factors for facilitating co-creation in living labs

Co-creation Factor Co-creation Element Literature Living Lab Companies Co-creators
#1: Customer Engagement 1.1          Customer capabilities, skills & motivation X X
1.2          Willingness to co-create X
1.3          Social context X
1.4          Perceived relevance of service X
1.5          Attitudinal factors X
1.6          Mobilizing behaviour X
1.7          Type of product/ service X
1.8          Personal goal clarity X
#2: Relationship Management 2.1          Dialogue X X X X
2.2          Managing expectation X X X
2.3          Stakeholder interaction & participation X X
2.4          Expected benefits X X
2.5          Mutual learning X
2.6          Managing relationships X
2.7          Engage a suitable and wide set of actors & resources X
2.8          Integration/ Involvement X
Relationship: JOSEPHS – Co-creator
2.9          Convey seriousness of co-creator contribution X
2.10      Tailored approach for guidance X
2.11      Opportunity to give feedback about JOSEPHS X
2.12      Recruitment & continuous training of guides X
Relationship: JOSEPHS – Company
2.13      Background information about company X
2.14      Sharing best practices X
2.15      Consulting through a tailored project template X
2.16      Creation of networking opportunities X
#3: Operating Principle 3.1          Comfortable atmosphere X X X
3.2          Proactive, enthusiastic guides X X
3.3          Room for action/ interaction/ discontinuation X X
3.4          LL as a consulting/ service provider X
3.5          Continuous feedback & immediate adjustment X
3.6          Establishing themes X
3.7          Relevance for B2C & B2B X
3.8          Understanding the concept of JOSEPHS X
3.9          Central location in city centre X
#4: Design Layout 4.1          Clear structure & storyline X X
4.2          Intuitive elements of familiar behaviour X X
4.3          Self-explanatory signage X X
4.4          Service Facilities X
4.5          Infrastructure & layout of living lab X
4.6          Access to operant resources X
4.7          ‘Hands-free approach’ X
4.8          Design of Island: key elements & order X
4.9          Reflect work-in-progress status to encourage feedback X
4.10      Try out space X
4.11      Playful and interactive setting and design X
4.12      JOSEPHS layout: innovation as 1st impression X
#5: Data Collection Approach 5.1          Interactive and engaging data collection tools X X X
5.2          Tailoring tools X X
5.3          Explicit research question X
5.4          Workshop to reach specific audience X
5.5          Capture first impression & receive authentic feedback X
  Total Elements: 50 21 18 13 16
  1. Customer engagement is defined as “the level of a customer’s physical, cognitive, and emotional presence in their relationship with a service organisation” (Patterson et al. (2006, cited in Broedie et al., 2011, p. 256). Engaged customers play a central role in the development of new services and products, particularly in co-creating experience and value (Hoyer, et al 2010; Nambisan & Nambisan 2008; Brakus et al., 2009; Prahalad & Ramaswamy 2004). The findings from the systematic literature review show nine elements that influence customer engagement. However, companies only recognised customer capabilities, skills and motivations as a critical co-creation element.
  2. Relationship management refers to “the process of managing the relationships between an organization and its internal and external publics” (Oluseye et al., 2014, p. 53). Although, eight concepts emerged through the systematic literature review that are associated with this factor, practitioner only discuss two of these concepts: managing expectation and dialogue. In addition to elements derived from literature, data gathered from the companies and living lab specifically highlight co-creation elements concerning the JOSEPHS-co-creator as well as JOSEPHS-company relationship. JOSEPHS’ staff highlight that a tailored approach from them to guide the co-creators is needed, for example, in accordance to their level of knowledge. Thereby, providing company background information is vital for co-creators in order to make informed judgments in the co-creation process. Although JOSEPHS put emphasis on the fun and interactive part of the co-creation process, it is very important to convey the seriousness of co-creator contributions and to maximise feedback opportunities. To achieve this, HRM related activities, such as recruitment, and continuous training of guides play a pivotal role. A living lab facilitator describes: “Obviously, we need to hire the right people who are able to do small talk. They are somehow outgoing, open, motivated, curious, open to new things […] they have to get to know new technologies, new products/services – so you have to be interested in new developments and they need to be proactive”. However, also the opportunity to give feedback about the living lab and co-creator experience itself is a factor that encourages the co-creation process. Also, a tailored project template from previous case studies is an element that supports firms in managing the co-creation process more effectively. “Some type of project template which describes the process and how we interact, what are the milestones, what kind of documents do we sign, what input do I need” (Company C). Also allowing for more transparency, accessibility of knowledge and learning are networking opportunities, and sharing of best practices among companies that have been at JOSEPHS at different points in time.
  3. The Operating Principle of JOSEPHS can be defined as the concept and values that outline how the living lab While it represents a critical factor in facilitating co-creation, no contributions are made through literature. However, nine co-creation elements are identified through data collection with living lab facilitators, companies and co-creators. Practitioners put emphasis on the importance of the comfortable and open atmosphere at JOSEPHS. Also, creating this atmosphere in workshops is key to derive honest answers and insights from co-creators: “It has to be informal and casual. This is extremely difficult to achieve and not everyone can create this atmosphere. I think the idea of JOSEPHS to achieve exactly this is executed really well.” (Company B). The guidance provided by the living lab facilitator should be proactive and enthusiastic, whilst maintaining a neutral position and ensuring the independence to the companies. Thereby, facilitators should give co-creators room for action, interaction but also discontinuation in the co-creation process. A co-creator explains: The guides have to be aware how the person is interacting with the space“. JOSEPHS’ operating principle has to cater for the needs of different firms including B2C and B2B. Another key element of JOSEPHS’ operating principle is the establishment of themes which change every three months, allowing co-creators to co-create across different business islands under one theme. Based on continuous co-creator feedback throughout the period of three months and an iterative feedback process to the company, immediate adjustments can be achieved and just in time learning takes place. Furthermore, JOSEPHS acting as a consultant, coach or service provider by assisting the company in the co-creation process more in-depth displays another key element of the operating principle facilitating co-creation. However, first and foremost, for co-creators it is key to understand the concept of JOSEPHS in order to enter the living lab in the first place, participate and leave feedback” (Company A). Similarly, co-creators describe the central location in the city centre of Nürnberg as a great advantage.
  4. To facilitate the co-creation process in a broader context, it is critical to consider the living lab’s design layout. Adding to three co-creation elements present in the existing literature, this study identifies nine further co-creation elements. Interestingly, companies have not stressed any aspect that is related to the design layout of a living lab. Living lab and co-creators point out that intuitive elements that incorporate a familiar behaviour are helpful in order to maximise the opportunity to receive/give feedback. Specifically, living lab facilitator point towards the design of the business islands which should be structured in a way similar to a film script, incorporate key elements in a logical and coherent order. “It has to have some logical flow” (Living lab facilitator 1). Both, living lab and co-creators emphasise that the islands should also contain signage for self-explanatory description. Co-creators explain that the setting and design should be playful as well as interactive and incorporate a try out space which is not highlighted by any other stakeholder group, nor literature. This research also found that it should be taken into account that trying out products as well as services and giving feedback may require co-creators to use their hands. Thus, living lab facilitator state a ‘hands-free approach’ should be employed, providing enough shelf space for items such as handbags that could hinder the co-creator to engage in the co-creation process. Equally, living lab facilitator point out that the product or service should reflect a work-in-progress status to encourage input from co-creators. According to co-creators, JOSEPHS’ layout should be about innovation as a first impression.
  5. Finally, the Data Collection Approach emerged as a critical co-creation factor. While two co-creation elements are emerging from literature, three additional aspects are revealed through data collection with practitioners. Literature, living lab and co-creators are in agreement that interactive and engaging data collection tools (Franz, 2015) help obtaining information on early product and service developments. Existing research further specifies that tailored tools increase usage and improve the abilities for actors to participate – regardless of the skill level (van der Graaf & Veeckman, 2014). Co-creators agree: “The beauty of it is to give feedback in a variety of forms. For example, you have tubes where you can place something inside and in the end a 3D bar chart appears, or you can use sticky notes to write feedback […]. The variety of methods to give feedback addresses the play instinct of humans.” (Co-creator A). Besides these findings, three additional aspects are revealed through data collection with living lab facilitators and companies. Companies stress that a living lab should be prepared to capture co-creators’ first impression and provide authentic feedback. Usually operating online, Company C explains why capturing the first impression through a living lab has been a valuable experience: If they [customers] see a product online, they have a first impression and for us to get this first impression is a make-or-break factor so that we know how to improve our products”. […] To me JOSEPHS is actually the opportunity to receive feedback without asking.”. According to companies, workshops should be utilised to address very particular topics of interest to the company whereby the structure should be adapted to the complexity of the co-creation task. I believe that through the workshops one can get a bit more concrete with the topics and target audience” (Company B). Living lab facilitator, on the other hand, focus on the importance of explicit research questions which are an important element to define the research objectives for the project. These should be formulated clearly and communicated in an appropriate manner to co-creators.

 

Conclusion

The framework developed through this study identifies 50 elements grouped in five critical co-creation factors; their implications for facilitating co-creation in living labs were examined and discussed. The contributions of this study are therefore both theoretical and practical. Findings corroborate and complement existing research (Greve et al, 2016).

This study found that literature, living lab, companies and co-creator are in agreement over only one co-creation element: ‘dialogue’. Therefore, a large gap between theory and practice appears to exist. No patterns could be detected with regards to the agreement of important co-creation elements among the three different stakeholders.

Even if involving a limited number of participants, this study offers promising insights. The study contributes to practice by creating first insights into the operational activities, design structures and data collection approaches which are implemented to facilitate co-creation in living labs. Particularly, living labs and companies gain deeper understandings on the factors that are relevant to consider when engaging in co-creation.

 

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Facilitating co-creation in living labs:

The JOSEPHS study

 

 

Katharina Greve (kg403@cam.ac.uk)  – University of Cambridge

Veronica Martinez – University of Cambridge

Julia M. Jonas – University Erlangen-Nürnberg

Andy Neely – University of Cambridge

 

Kathrin Möslein

University Erlangen-Nürnberg

 

 

Abstract

 

Living labs offer a new open innovation platform for companies to engage customers in co-creation and to understand user needs. However, empirical investigation about co-creation enablers in living labs is scarce. To fill this gap, this paper analyses factors that facilitate co-creation in living labs. The study integrates findings derived from existing literature with primary data collected at a living lab called JOSEPHS as well as with companies using it. Six critical factors to facilitate co-creation in living labs are identified and discussed.

 

Keywords: Co-creation, Open Innovation, Living lab

 

 

Introduction

Organisations are increasingly using open innovation to reach beyond their own boundaries, enhance internal innovation and expand their markets. Living labs provide a new platform for companies to engage customers in a process of co-creation (Lusch et al., 2007) and to understand both existing and emerging user needs (Westerlund & Leminen, 2011). Living labs are “a user-centric innovation milieu built on every-day practice and research, with an approach that facilitates user influence in open and distributed innovation processes engaging all relevant partners in real-life contexts, aiming to create sustainable values” (Bergvall-Kåreborn et al., 2009, p.3). Considering this definition it is evident that living labs have the potential to enable businesses, authorities, researchers, and customers to collaborate for the creation, validation, and testing of new services, business ideas, markets, as well as technologies in real-life environments (Bergvall-Kåreborn, et al., 2009).

In order to develop new products and services that better meet consumers’ wants and needs, it is however crucial to identify elements that facilitate co-creation in living labs. While existing literature offers conceptual discussions about co-creation in living labs, empirical investigation about its enablers is scarce, particularly with respect to services. To advance the understanding of co-creation in living labs, the objective of this paper is to analyse factors that are critical to the facilitation of co-creation in living labs. To achieve this objective, the study integrates findings derived from existing literature with primary data collected with JOSEPHS’ managers and researchers as well as companies that have utilized the living lab.

Following the introduction, section two describes the approach to the systematic literature review and discusses the theoretical background relevant to the understanding of co-creation. The third section outlines the research design. Together with findings from the existing literature, results from the primary data collection are presented in section four. Finally, section five concludes the study discussing contributions to academic research and practice.

 

Systematic Literature Review

A systematic approach to review existing literature on co-creation in living labs has been employed due to its objective, transparent and unbiased approach (Tranfield et al., 2003). Systematic reviews, indeed, deliver the most efficient, as well as high-quality, method for identifying and assessing extensive literatures (Mulrow, 1994). A search with a broad range of keywords, terms and strings related to value co-creation, living labs and services research across six databases was performed. According to the number, quality and focus of articles reviewed by title, Scopus was identified as the most relevant scholarly database for this research topic. Keyword pairs were used to specify the literature of interest and to ensure that relevant studies are included and no study is excluded without thorough evaluation (Meline, 2006). Furthermore to ensure all relevant articles were captured in the literature review, a single keyword search was also performed. Finally, snowball sampling was employed in order to include other influential contributions not already captured in the systematic review. Based on defined inclusion and exclusion criteria, the search strategy described identified 278 academic papers. These are used to analyse concepts that are associated with elements facilitating co-creation.

 

Co-creation Elements

A first evidence from the analysis of the literature is the relevance of concepts such as involvement (Nambisan & Baron, 2007), integration (Baron & Harris, 2008), and participation (Aarikka-Stenroos & Jaakkola, 2012). In order to facilitate co-creation, it is indeed vital that customers engage in behaviours beyond those of a buyer or a user only. An approach that investigates customer activity beyond interactions with a provider is called customer engagement behaviour (CEB). One of the most essential elements affecting CEB includes attitudinal factors. These encompass, but are not limited to, trust (de Matos & Rossi 2008), customer satisfaction (Anderson & Mittal 2000; Palmatier et al. 2006), customer goals, resources, value perceptions (van Doorn et al., 2010), brand commitment (Garbarino and Johnson 1999), brand attachment (Schau et al., 2009), and brand performance perceptions (Mittal et al., 1999).

The value literature has predominantly put emphasis on firm conditions needed for successful value co-creation, stressing strong relationships (Jaworski & Kohli 2006; Prahalad & Ramaswamy 2004), high quality interactions (Payne et al., 2008) and dialogue (Auh et al. 2007). CEB focuses instead on the resources contributed by customers: Jaakkola and Alexander (2014) remark how a firm’s willingness to integrate customer resources into offering development affects the joint value co-creation process. The same scholars, also identify mobilizing behaviour, defined as customers utilizing resources to mobilize other stakeholders’ actions towards the focal firm, as another co-creation enabling element. Jaakkola and Alexander (2014) suggest that mobilizing behavior offers the prospect of generating value co-creation opportunities beyond existing relationships accessing new customer and stakeholder relationships.

According to Lazarus et al. (2014), the type of service determines the level of interaction and the greater the level of interaction between firm and consumers, the greater is the extent of co-creation. Besides the type of service and brand; the extent of co-creation is also influenced by firms’ willingness to co-create and consumers’ willingness to co-create.

Nevertheless, co-creation needs to be understood and assessed with respect to the social context in which it occurs (Edvardsson et al., 2011). According to Edvardsson et al. (2011), value itself must be considered as part of the collective social context as different customers may perceive the same service in a different way, and the same customer might regard the service differently between occasions in a different social context. The framework suggested by Payne et al. (2008) outlines contextual elements that are likely to have an influence on the level of effort a customer decides to invest on service co-creation. Specifically building on Normann’s (2001) research, Payne et al. (2008) identify two sets of aspects: customers’ own capabilities, skills, and motivation and the operant resources that the customers can access to accomplish those goals. On the provider’s side, two aspects are vital to facilitating the exchange—the quality of its employees and the perceived quality of its facilities. Moreover, Aggarwal and Basu (2014) suggest that the amount of effort exerted by a customer in the co-creation of value is positively influenced by the personal goal clarity that the individual has with respect to service outcomes. Moreover, the amount of effort exerted is positively affected by the perceived relevance of the service in achieving desired service outcomes. Thereby, the service provider contributes two resources to the service encounter: service facilities and service employees. Existing literature highlights that both aspects are critically important for service outcomes (Aggarwal & Basu, 2014). Similarly, Rust and Oliver (1994) recognise these two elements as the service environment and the customer−employee interaction. Personnel can play a significant role in facilitating customer effort. They can help customers understand their role in value co-creation and support them by directing their exertions into more productive use of their time and effort. In the context of services, not the exchange, but the interaction between service providers’ employees and the customers propel value (Bailey et al., 2001).

Yet to encourage customers to contribute their creative ideas, honestly share their product preferences, and devote substantial amounts of time altering existing product concepts, their expectations have to be met (Füller, 2010). They only offer their time and talent if they consider co-creation to be rewarding. Empirical studies conducted in online settings show that customers are motivated to engage in non-transactional behaviors because they expect benefits such as enhanced knowledge and reputation, social benefits, and economic benefits (Füller 2010; Nambisan and Baron 2009). A consolidated view of the elements facilitating co-creation derived from the systematic literature review is offered in Table 1.

 

 

 

Table 1 – Co-creation elements from existing literature

Co-creation Element References
Attitudinal factors Van Doorn et al., 2010
Consumer’s/firm’s willingness to co-create Lazarus et al., 2014
Social context Edvardsson et al., 2011
Perceived relevance of the service Aggarwal & Basu, 2014
Personal goal clarity Aggarwal & Basu, 2014
Customer capabilities, skills and motivation Payne et al., 2008
Mobilizing behaviour Jaakkola & Alexander, 2014
Type of service/product Lazarus et al., 2014
Participation Aarikka-Stenroos & Jaakkola, 2012
Dialogue Auh et al., 2007
Strong relationships Jaworski & Kohli, 2006
Integration/involvement Baron & Harris, 2008
Interaction Payne et al., 2008
Expected benefits Füller, 2010
Quality of employee interactions Aggarwal & Basu, 2014
Firm’s willingness to integrate customer resources Jaakkola & Alexander, 2014
Access to operant resources Payne et al., 2008
Service facilities Aggarwal & Basu, 2014

 

Empirical Research Design

To gain an in-depth understanding of co-creation practices and the factors that facilitate co-creation in living labs, a single case study at the living lab JOSEPHS® – the service manufactory is conducted. The case study approach was chosen to explore the rather new phenomenon, co-creation in living labs, in-depth (Yin, 2014). Through an open approach, a deep understanding of processes (Swanborn, 2010; Symon & Casell, 1999) will be enabled as well as the assessment of real-life experiences in their context (Miles et al., 2013; Flick, 2014). The case JOSEPHS is chosen due to its set-up as a continuous platform for interactive innovation with volunteers on one hand and its openness and approachability on the other. The results from the case study will be integrated with the main concepts emerging from the literature review to provide an integrative framework about the enablers of co-creation in living labs.

 

The Case

The subject of the case study, JOSEPHS, is a living laboratory for new service development and testing with real users. The project is initiated by the Fraunhofer Center for Applied Research for Supply Chain Services (SCS) in cooperation with the Chair of Information Systems at Friedrich-Alexander-University Erlangen-Nuremberg. The project is funded by the Bavarian Ministry for Economic Affairs and Media, Energy and Technology. Established in May 2014 in Nürnberg town centre, JOSEPHS attracts co-creators through its living lab which is an open space that is divided into five co-creation spaces each occupied by a company for three months under one theme. Apart from the actual living lab, JOSEPHS also offers three additional areas: think tank, shop, and café.

 

Data Collection and Analysis

The data collection for this case is based on three full day focus groups with a) the team behind JOSEPHS and b) companies that have utilized JOSEPHS for their innovation activities in the past two years. The data collection, as presented in Table 2, was carried out between November 2014 and March 2016. A team of trained researchers was involved in the conduction of focus groups, interviews and observations, enabled by a number of formal and informal visits to the site, telephone calls and workshops.The focus groups were recorded and transcribed, and integrated with notes from the focus groups and research protocols. Each of the workshops were analysed individually, and summarized according to the perspective of the customer or company. Then, the findings from the systematic literature review and the findings from the primary data collection were synthesized.

 

Table 2 – Data Collection

Method Approach Purpose
Pilot-Study

 

·   Interviews with JOSEPHS team

·   Observations

·   Analysis of secondary data

Understanding of JOSEPHS as a project idea and collect background information about business model, historical background and current issues.
Facilitators perspective ·   2 focus groups with the team of JOSEPHS & team of researchers

·   Complimentary interviews

·   Observations

Understanding factors, mechanisms and characteristics for co-creation. Validation of findings from the first focus group.
Companies’ perspective ·   Focus group with 3 companies

·   Interviews

·   Secondary data analysis

·   Paper-based survey

Evaluation of perceived co-creation processes in JOSEPHS; development of elements for the co-creation template and discussion.

 

Findings and Discussion

Results coming from focus groups, interviews and observations were triangulated with the results from the systematic literature review to provide an integrative list of factors facilitating co-creation. The findings point out 54 co-creation elements which were grouped in six critical factors. They are: Customer Engagement, Relationship Management, Atmosphere, Operating Principle, Design Layout, and Data Collection Approach. These can be viewed in Table 3.

1. Customer engagement is defined as “the level of a customer’s physical, cognitive, and emotional presence in their relationship with a service organisation” (Patterson et al. (2006, cited in Broedie et al., 2011, p. 256). Engaged customers play a central role in the development of new services and products, particularly in co-creating experience and value (Hoyer, et al 2010; Kothandaraman and Wilson 2001; Nambisan and Nambisan 2008; Brakus et al., 2009; Prahalad and Ramaswamy 2004). The findings from the systematic literature review shows eight elements that influence customer engagement. These include attitudinal factors (Van Doorn et al., 2010), the firm’s as well as customer’s willingness to co-create (Lazarus et al., 2014), the social context (Edvardsson et al., 2011), the perceived relevance of the service (Aggarwal and Basu, 2014), personal goal clarity (Aggarwal and Basu, 2014), customer capabilities, skills and motivation (Payne et al., 2008), mobilizing behaviour (Jaakkola and Alexander, 2014), and the type of service or product (Lazarus et al., 2014) involved in the process.

2. Relationship management refers to “the process of managing the relationships between an organization and its internal and external publics” (Oluseye et al., 2014, p. 53). Six concepts emerged through the systematic literature review and are associated with this factor: involvement (Nambisan & Baron, 2007), integration (Baron & Harris, 2008), dialogue (Auh et al., 2007), interaction (Payne et al., 2008) strong relationships (Jaworski and Kohli, 2006), and participation (Aarikka-Stenroos and Jaakkola, 2012). Customers’ expected benefits are another crucial element in this category (Füller, 2010).

To these elements, more can be added from the analysis of the relationship between JOSEPHS and the customers, and JOSEPHS and the companies that utilize the living lab. As part of the JOSEPHS-customer relationship, a tailored approach from JOSEPHS’ staff to guide the customers is needed – for example in accordance to their level of knowledge. The management of customer expectations is also a prerequisite for delivering superior service from JOSEPHS and from the companies’ point of view. This is vital as living labs allow companies to present products and services at an early development stage which may have errors; furthermore although JOSEPHS put emphasis on the fun and interactive part of the co-creation process, it is very important to convey the seriousness of customer contributions and to maximise feedback opportunities. Well-trained and enthusiastic guides are essential to JOSEPHS and as a consequence HRM related activities, such as recruitment, training motivation and internal communication play a pivotal role.

As well as managing customer expectations, although for different reasons, firm expectations have to be managed too. This is important because a living lab differs from ordinary market research and allows to derive in-depth understanding of customer perceptions that may reside outside the usual target groups but does not necessarily produce large amounts of data. Furthermore, a tailored project template drawing on experience from previous case studies is an element that supports firms in managing the co-creation process more effectively. Networking opportunities, sharing of best practices and encouraging communication via an online tool among companies that have been at JOSEPHS at different points in time are also all elements facilitating effective co-creation. These would allow for more transparency, accessibility of knowledge and learning. Moreover, providing company background information to customers is vital for them in order to make informed judgments in the co-creation process. Jaakkola and Alexander (2014) argue indeed that customers supply a broad variety of resources to co-creation which influence the firm and the customers in different levels of magnitude and impact (cf. Van Doorn et al. 2010). Consequently, a firm’s willingness to integrate customer resources into offering development affects the joint value co-creation process between the firm and its customers (Jaakkola & Alexander, 2014).

3. Atmosphere is of paramount importance in co-creation. This study found that both, firms and living lab facilitators, put emphasis on the importance of the atmosphere at JOSEPHS. The guidance provided by the living lab facilitator should be proactive and enthusiastic, however maintaining a neutral position is and ensuring the independence to the companies. Thereby, facilitators should give customer room for action, interaction but also discontinuation in the co-creation process. Also, creating a comfortable atmosphere in workshops is key to derive honest answers and insights from customers. Aligned with this goal, it is important to prevent embarrassing situations for the customer. Despite the important role this element “atmosphere” plays in co-creation, the literature does not report it.

4. The operating principle of JOSEPHS, defined as the concept and values that outline how the living lab operates, also represents a critical factor in facilitating co-creation. JOSEPHS operating principle has to cater for the needs of different firms including B2C and B2B. Another key element of JOSEPHS’ operating principle is the establishment of themes which change every three months, allowing customers to co-create across different business islands under one theme. Based on continuous customer feedback throughout the period of three months and an iterative feedback process to the company, immediate adjustments can be achieved. Furthermore, JOSEPHS acting as a consultant, coach or service provider by assisting the company in the co-creation process more in-depth displays another key element of the operating principle facilitating co-creation.

5. To facilitate the co-creation process in a broader context, it is critical to consider the living lab’s design layout. However, literature vaguely discusses this factor and only focuses on access to operant resources (Payne et al., 2008) and service facilities (Aggarwal & Basu, 2014). The case of JOSEPHS shows that intuitive, playful elements that incorporate a familiar behaviour are helpful in order to maximise the opportunity to receive feedback. This research also found that it should be taken into account that trying out products as well as services and giving feedback may require customers to use their hands. Thus, a ‘hands-free approach’ should be employed, providing enough shelf space for items such as handbags that could hinder the customer to engage in the co-creation process. Equally, the product or service should reflect a work-in-progress status to encourage input from customers. Given the importance of knowledge and resources accessible to customers (Normann, 2001), the design of the business islands should be structured in a way similar to a film script, incorporate key elements in a logical and coherent order, and contain signage for self-explanatory description.

6. Finally, the data collection approach emerged as a critical co-creation factor. A living lab should be prepared to capture customers’ first impression and authentic feedback. Informed by the data collection tools that can be used in this setting, JOSEPHS can obtain information on early product or service developments that give unique insights. Similarly, explicit research questions are an important element to define the research objectives for the project. These should be formulated clearly and communicated in an appropriate manner to customers. Workshops should be utilised to address very particular topics of interest to the company – also considering if it operates in a B2C or B2B industry – and the structure of the workshop should be adapted to the complexity of the co-creation task.

 

Discussion

The six critical factors for co-creation facilitation provide a framework that shows how co-creation in a living lap is facilitated. Interestingly, existing literature does not focus on aspects relating to the operating principle and data collection approach. The operating principle of the living lab plays a major role for companies because it outlines the concept and values of the living lab and how companies can engage with it. The data collection approach is also critical to companies because of it’s a uniqueness. JOSEPHS however, is mainly concerned with the operational goals and the relationship to the customer. For similar reasons, emphasis is put on the atmosphere, data collection approach and design layout of the living lab as well as individual business islands. In addition, design layout is not extensively discussed. However, attention is paid to behavioural aspects, motivation, and incentives of the customer which in turn is acknowledged but not seen as critical by living lab facilitator nor companies. On the other hand, companies would like to obtain further benefits from their living lab experience e.g. sharing best practices of past cases. Furthermore, companies consider only the relationship between them and JOSEPHS as important, although the customer is the one involved the in co-creation process with the company.

 

1. Customer Engagement 2. Relationship Management 3. Atmosphere 4. Operating Principle 5. Design Layout 6. Data Collection Approach
Attitudinal factors Participation Enthusiasm (but no sales pitch) LL as a consulting / service provider Access to operant resources Data collection tools
Willingness to co-create Dialogue Prevent embarrassing situations Feedback integration and adjustment Service Facilities Explicit research question
Social context Relationship Proactive guidance Establishing ‘themes’ ‘Hands-free’ approach Workshops to reach specific audience
Perceived relevance of the service Integration/involvement Room for action/ interaction/ discontinuation Relevance for B2C and B2B Design of Island: key elements and order Capture the first impression
Personal goal clarity Interaction Comfortable atmosphere Elements of familiar behaviour Receive authentic feedback
Customer capabilities, skills and motivation Expected benefits
Co-creation elements derived from existing literature

Co-creation elements derived from data collection with companies

Co-creation elements derived from data collection with living lab facilitators

Reflect WIP status to encourage feedback Appropriate level of structure – B2B or B2C
Mobilizing behaviour Relationship

JOSEPHS – Customer

Relationship

JOSEPHS – Company

Self-explanatory signage
Type of service/ product Quality of employee interactions The firm’s willingness to integrate customers resources ‘Film script’
Managing customer expectations Information about company background Intuitive and playful elements
Convey the seriousness of customer contribution Sharing of best practices
Tailored approach for guidance Consulting through a tailored project template
Opportunity to give feedback about JOSEPHS Creation of networking opportunities
Well-trained and enthusiastic guides Communication via online tool (medium)
Recruitment & training Managing firm expectation
Internal communication possibilities Transparency and accessibility of knowledge & learnings

Table 3 – Six critical factors for facilitating co-creation in living labs

 

Conclusion

The framework developed through this study (Table 3) identifies 54 elements grouped in six critical co-creation factors; their implications for facilitating co-creation in living labs were examined and discussed. The contributions of this study are therefore both theoretical and practical.

This study contributes to theory identifying new facilitating elements for co-creation in living labs: 15 co-creation elements are derived through data collection with companies and 21 co-creation elements emerged through data collection with living lab facilitators. This study also supports 18 co-creation elements already reported from literature.

The study contributes to practice by creating first insights into the operational activities and design structures which are implemented to facilitate co-creation in living labs. In particular, living labs and companies gain deeper understandings on the factors that are relevant to consider when engaging in co-creation. Through this research also JOSEPHS gains further insights on how to maximise co-creation outcomes, visitors contact time and idea encouragement.

This research was focused on a limited number of companies, and its results offer therefore limited opportunities for generalization. Further research is needed to achieve a more comprehensive view of value co-creation across various company types and sectors. The present work can serve as a basis for developing evaluation mechanisms in order to assess the effectiveness of the critical factors facilitating co-creation in living labs.

 

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