There is a fundamental differentiator between companies that are winning the digitization race and transforming industry segments and those that have traditional business models.
I’m talking about companies like Airbnb, Uber, Facebook or Amazon. Those companies don’t just create stuff for their customers, their customers create stuff for them, and for each other. The value of their product or service, therefore, is co-created by the people who use it.
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Facebook is the most obvious example of this. We are the product. Facebook just provides a platform. Its customers create all of the content and thus create the reason to engage as well as the value of the platform. Without us, there is no reason to be on Facebook.
That's true for other companies, as well. If you buy tons of stuff on Amazon like I do, you probably aren’t doing it simply because you’re a Prime customer and shipping is "free" (for $100 a year) or because you can buy with one click (although that’s awesome). You are probably shopping on Amazon because the ratings and reviews from other customers are incredibly valuable in your purchase decisions. In fact, if you’re like me, you may even look up that information on your phone as you are standing in the isle of a Target or Barnes & Noble (although I’m in those stores a lot less frequently, thanks to Amazon).
It’s simple: if you haven’t figured out how your customers create value for each other and how that co-creation advances your business, you’ll be left behind as soon as another company begins to transform your industry.
And you know it’s only a matter of time.
Let’s get started
The first step in getting your customers to co-create with you is to connect them with each other. The second step is to give them a platform or mechanism to engage in the co-creation of value.
As we’ve discussed in other blog posts, this is the golden age of networking. Networks separate winners from losers because networks of people and devices help to create a network-effect, building more value for everyone in the network each time someone or something new is added.
This is amplified tenfold when they also create value for each other by adding their own content, opinions, code or connections. And once this flywheel starts to turn, it gains momentum until you create a natural monopoly in an industry. After all, it doesn’t make sense to start a new community or a new network of users within a specific industry if everyone is already participating in one. It’s too much work and not enough return.
How do you co-create value?
You may have to re-think your products, services, support model, partnering strategy or all of the above in order to allow customers to co-create value. And you’ll no doubt have to rebuild your digital infrastructure and your network to accommodate this. It isn’t a fast journey; some companies, such as GE and Microsoft, have been at it for 10 years. They’re big, and they have a lot to transform. But believe me when I say they are determined to make this transition.
And if they can do it, so can you. In fact, if you’re not the market share leader in your space, the urgency to transform is probably much higher. This could be your chance to take share and remake your company, creating growth and differentiation. Or it could be the source of your greatest risk should someone else, larger or smaller, get there first. Remember, co-creation on a networked business naturally tends to produce a monopoly because value grows exponentially when everyone is creating together. So, if you’re not first, you’re last.
Speaking from experience
I know how hard this is to do. Brocade is transforming its own business while at the same time developing products with and for our customers so that they can successfully navigate this transition. And in everything we build and create, our first question is how do we enable customers to create their own value? Strangely, this often means doing less, not more, and it always means thinking about the product development process in a completely different way than we would have a decade ago.
We know we must take out anything that would lock a customer into the product. Co-creation requires that our customers be able to add other network ingredients quickly and easily. If we lock them in, we can create for them. But they can’t create for themselves or with their customers—at least not as easily as if we remove this constraint.
We also have to think about automation—making it fast and simple for customers to automate their own environments. Amazon isn’t asking you to write a review and then submit it to them to edit, review and post. You do all this; they just provide the tools and platform.
The same has to be true for network services. Everything about a digital business relies on things and people being connected together: measuring, sharing, consuming. All of this has to be automated. If you have to process a change order every time you want the network to do something new and different or every time someone needs a new service or a new connection, then you’ve just ground the entire process to a screeching, inefficient, expensive and error-prone halt. That’s like crossing the streams; it’s bad.
Nope, you’ve got to automate anything and everything that can possibly be automated. And this doesn’t just mean configurations and setups; this means workflows. Amazon deploys new software to production every 11.4 seconds. You can’t innovate at this speed if the process is manual. So, as a vendor, it is our job to make it fast, easy and painless for you to create the type of network you need to support a new, digital business model—one that puts co-creation of value at its center and lets you innovate at the speed of business.
Your job is to figure out where and how the co-creation of value with your customers can fundamentally change your business and spur growth and differentiation. It’s a critical part of your digitization strategy—and of the journey of IT from a cost center to a growth engine.
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