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Co-Creation and the $300 House

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UPDATE: I’ve posted an entry on the $300 House on the Harvard Business Review site: The $300 House: The Co-creation Challenge >>

One of my professors, the late C.K. [Prahalad], used to say that “managers are so preoccupied with operating efficiently that they don’t even think about value in terms of the consumer’s experience.”

Sadly, despite all the brouhaha about customer-centricity, most companies still operate in a highly product-centric manner.   The difference between the two approaches, using C.K.’s words follows:

The traditional company-centric view says: (1) the consumer is outside the domain of the value chain; (2) the enterprise controls where, when, and how value is added in the value chain; (3) value is created in a series of activities controlled by the enterprise before the point of purchase; (4) there is a single point of exchange where value is extracted from the customer for the enterprise.

The consumer-centric view says: (1) the consumer is an integral part of the system for value creation; (2) the consumer can influence where, when, and how value is generated; (3) the consumer need not respect industry boundaries in the search for value; (4) the consumer can compete with companies for value extraction; (5) there are multiple points of exchange where the consumer and the company can co-create value.

All is not dark and bleak of course.  Several countries, cities, companies, and nonprofit oranizations are beginning to take the initiative to collaborate with their customers to co-create value in fields as diverse as healthcare innovations (Norway), improving the quality of life of 50+ year olds (Scotland), Swasthaya Chetna; Hindi for creating health awareness (Hindustan Lever), and Crashing the Super Bowl (Frito-Lay).

In my new book, I devote an entire chapter to co-creation beyond the business world.  I share case studies of how the new platforms of customer collaboration and co-creation can be applied equally effectively beyond the business world, to drive collaborative innovation efforts in fields such as education, health care, energy, alleviation of poverty, and sustainability. The consumer-centric view is gaining momentum in non-business environments as countries, regions, and cities experiment with collaboration to co-create more promising futures for their people and the environments in which they live.

One example of a project which will be using co-creation at the bottom of the pyramid is the $300 House (disclosure: I’m an advisor).

$300 House for the Poor

The project, which came to life based on the remarkable response to a blog entry in Harvard Business Review, will take into account customer needs in various countries – from Haiti to India and the Philippines.  I don’t expect to see a single house design emerge, but rather a variety of local designs – each designed to meet local needs.

How do you engage the customer at the bottom of the pyramid?  By spending time with them, and understanding their experiences, challenges, and frustrations as they tackle everyday tasks and chores that so many of us take for granted. Or like A.G. Lafley was fond of saying – by doing your laundry in 25 countries!

Let’s just pause for a moment to acknowledge that your company’s customer of the future may well be at the bottom of the pyramid.  You would be well advised to adopt a customer-centric mindset and develop a system of initiatives to engage her.