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The strategic relevance of ethics, commitment and rewards in Co-Creation

Ethics in Social Media Research – the privacy debate

In the market research community the discussion about data privacy and guidelines for social media research (mainly focused on listening) is peaking right now as ESOMAR, CASRO, MRS and other Market research associations have published their guidelines recently. This debate is crucial as behaviors like that of Nielsen Buzzmetrics scrapping data from patienslikeme.com, a closed Online Community on health issues, can create distrust against a whole industry. I think a discussion of ethics in Social Media Research is crucial. But that doesn’t mean I agree with everything written in the recent guidelines. And I am not the only one. A rising number of market research authorities reject and question these guidelines. For example Ray Pointer states in a recent blog post that “in several areas, ‘new’ market research is at odds with the traditional guidelines. Examples of where NewMR is at odds with the traditional ethics includes: the brand-related incentives for members of communities, the brand advocacy of community members, the changes wrought by deliberative research, and most of social media monitoring research.

Other areas where research is drifting away from the classic model of anonymity include a growing amount of customer satisfaction and most of enterprise feedback systems.” So Ray is making the point that “If market research companies abide by the old ethics, in particular anonymity and informed consent, they will not be able to compete for business in most areas where market research is growing. This is because there will be no commercial benefits that will accrue to sticking to rules and ideas that nobody else does.”

While I am really curious to see where the debate is going, I don’t want to concentrate on the privacy debate in this post. For everyone interest in the discussion I recommend to follow the public forum debate on Monday, August 22 at 12:00 EST, hosted on the MRGA 365 Virtual Event Platform http://www.marketplace365.com/registration/mrga365/

Ethics in Co-Creation – the exploitation debate

I want to share my thoughts and start a discussion about another important area of ethics in Social Media, which I think is the way we integrate and reward people in co-creation and crowdsourcing projects. There is hardly a debate on this yet from an ethical point of view, as “Co-Creators” seem to be willing to share their ideas for free or relatively low money without real commitment from the company running the initiative. But in the long-term this might change! Here is why.

#1 Co-Creators will become more selective and demanding

Happily consumers seem to love the new way of participation with companies. Last year Forrester Research asked US online adults if they want to co-create with companies. Here are some results:

• 61 percent of US online adults would consider providing input to help companies design and build new products or improve existing products (“Willing Co-Creators”).
• A majority of these “Willing Co-Creators” would participate in a co-creation engagement regardless of the product, brand, or service involved.
• 30% of “Willing Co-Creators” would only participate in co-creation efforts with their favorite products and brands.
• In 12 of the 17 industries that were included, more than half of the “Willing Co-Creators” expressed interest in co-creation engagements.

So there seems to be a reasonable number of “Willing Co-Creators”. But as the number of companies that involve consumers in the development of new products will continue to grow – as I am convinced that Co-Creation is here to stay – Co-Creators will become more selective and demanding in choosing the initiatives they want to take part in. Thus attracting Co-Creators will become harder for companies. A “War for Co-Creators” – similar to the “War for Talent” might start. Attracting the most creative and/or skilled “Co-Creators” or Lead Users (see the Lead User Method) for co-creation initiatives aimed at creating breakthroughs will become the most competitive area.

The competition will force companies to spend more effort on co-creation advertising/recruiting as well as to increase the co-creation value they offer in terms of outcomes and interaction/co-creation experience. According to social exchange theory, consumers would only participate in co-creation activities because they expect that doing so will be rewarding. But For individuals, tangibles such as goods or money, as well as intangibles such as social amenities or friendship, are rewarding. Further, not only the outcomes, but also the interaction experience itself may offer a benefit.  Thus, to make participation in Co-Creation a more rewarding experience companies need to really understand consumers’ motivations to co-create and incorporate this into their campaign design, the interaction/co-creation experience, the reward system and last but not least the company’s commitment to a co-creation initiative.

Implications:

• Be strategic today to succeed in the coming “War for Co-Creators”
• Increase co-creation value to attract Co-Creators
• Understand Co-Creators’ motivations and expectations in terms of outcomes and interaction/co-creation experience

#2 Monetary rewards as necessary condition and signal for ethics and commitment

So if the competition for Co-Creators will be more intense and we will have to increase the rewards to attract the most talented Co-Creators, how should we do that? Of course increasing rewards should include more than simply increasing monetary prices. As stated above it is about increasing the value of co-creation for the participants in terms of outcomes and interaction/co-creation experience.

But I think monetary rewards are a very important aspect of co-creation in that case as it attracts extrinsically motivated people AND it shows the company’s attitude, recognition and commitment towards collaboration with external stakeholders. Attractive rewards signal that the company doesn’t want to exploit consumers but appreciates the effort that participants invest and the (potential) value that their submissions can create. Furthermore you could argue that a company that spends a reasonable amount of money on a co-creation project is serious about it and really wants to act upon your input.

Non-cash prices, brand-or ideally project-related ones are at least as important as money. Project-related rewards, like for example a visit of the headquarters and a meeting with the team behind the project can even help to build stronger relationships with Co-Creators.

Giving Co-Creators a platform to get feedback, recognition and visibility can be very rewarding for Co-Creators. Companies making their Co-Creators famous and involving them in their communication activities offer an additional value dimension to Co-creators and profit from authentic storytelling and increased advocacy and word of mouth activities.

Mc Donald’s “Mein Burger” campaign involved the winners in TV commercials:

Tchibo Ideas give co-created products that come to market a face by also showing the Co-Creator in their catalogues:

Implications:

• Monetary rewards attract extrinsically motivated co-creators
• Monetary and non-cash prices will signal ethics and commitment
• Non-cash, ideally project-related, prices can build relationships
• Recognition and visibility of Co-Creators ads value for Co-Creators and Companies

#3 No long-term engagement without real commitment

I think that in the long-term a company’s commitment for a co-creation project makes a big difference in the “War for Co-Creators”. I want to elaborate a bit on what I mean by that. I deal with open innovation, co-creation and crowdsourcing for more than 4 years and I think I know most of the prominent crowdsourcing and co-creation cases. But I only know a few products on the market that have been co-created and marketed as such (e.g. Vitaminwaters, Dewmocracy, Walkers chips, Tchibo Ideas, Quirky). There might be a number of reasons for that like ideas that weren’t technically feasible or the estimated market potential and/or profitability didn’t fit internal criteria. But I think one major problem is that companies struggle to open up and to change culture and processes. They still experiment and often have no commitment and no defined follow-up process to bring co-created ideas to market. This might become critical in at least three aspects:

• Image: Opening up without real commitment and follow-up processes that result in commercialization will lead to a sour taste of co-creation. Consumers might start to call co-creation or crowdsourcing campaigns without commitment “crowdwashing“, meaning that companies proclaim to be open but don’t act on consumers’ ideas. More demanding Co-Creators that can choose between different co-creation initiatives probably won’t choose a “crowdwashing” one (and in case they do, they won’t do it more than once).
• Reward: The most rewarding experience is going to the supermarket and buying “your product”.  Co-Creation and crowdsourcing activities that offer this potential reward will especially attract potential lead users. Lead users have very high requirements that are not served by existing products. Thus the chance to actually use a product that solves a current problem is very rewarding for them.
• Advocacy: The Dewmocracy campaign or Mc Donald’s “Mein Burger” initiative shows impressively the energy and activation power a committed crowdsourcing campaign can generate in terms of storytelling and word of mouth activity.

Attracting co-creators and building Long-term relationships can only work if companies move away from “crowdwashing” and show commitment to their co-creation activities. Especially to build ongoing relationships with the most valuable Co-Creators and Lead users requires commitment, as they won’t continue to invest their time and passion if there is no real commitment by the company and if they think their product will never be on the market.

Implications:

• Company’s commitment drives Co-Creator’s engagement
• Crowdwashing has negative impact on image and long-term relationships
• Commitment attracts Lead Users
• Commercialisation drives advocacy

Conclusion: Being successful in the “War for Co-Creators” by “sharing rewards and risks/efforts”

When thinking about Co-Creation in the long-term I think involving hundreds or thousands of consumers and paying three of them relatively low monetary prices might not be a sustainable business model, or at least not the most promising one. I prefer to think of Co-Creators as partners. That’s why I like Roland Hardwood’s simple definition of open innovation, which is: “Innovating with partners by sharing the risks and the rewards.”

Keeping this in mind you might argue that the risk and effort of consumers participating in crowdsourcing or co-creation projects is very low, so the rewards are also rather low. BUT if the war for co-creators starts companies will need to increase rewards to attract them. By increasing monetary and non-monetary rewards, showing commitment and giving Co-Creators recognition and visibility the effort and commitment they bring into the co-creation process can be increased as well. Making co-creators part-time, co-creation partners will give you more valuable input (= insights, ideas, feedback) and drive advocacy (=awareness and sales effect through word of mouth) throughout the innovation and commercialization phase.

I see huge potential in a co-creation approach, where rewards are shared to a certain extent, based on the risk/effort and potential value of the contributors. A committed co-creation project with a reward system that lets Co-Creators earn points for all the contributions they make, based on the related effort and value, allows not only to reward innovation activities but to reward advocacy and word of mouth activities of the community even during and after launch. The rewards might even be based on a percentage of sales in the first year after launch. This is already done by Quirky, a social product development company and one of my favorite cases for a co-creation business model. The UK-based Mobile Virtual Network Operator (MVNO) GiffGaff takes a similar approach and rewards their community members’ support and advocacy activities. But even more traditional companies like Walkers, which business model is not based on their community, rewarded the winner of their crowdsourcing campaign with 50k and 1% of future sales.

To sum it up, I think Co-Creation has to be fair for both parties and should avoid to be perceived as doing crowdwashing or exploiting consumers. Companies should design their co-creation initiatives as sharing rewards and risks/efforts. Companies signaling that they are fair, by offering attractive rewards, showing commitment and giving recognition and rewards to Co-Creators’ contributions will do pretty god in the coming “War for Co-Creators”.