Psychology of Co-Creation and Marketing

Psychology of Co-Creation and Marketing

 

Psychology of Co-Creation

 
Michael Norton, Associate Professor – Harvard Business School

My favorite speaker was Michael Norton from Harvard Business School.  He delivered a talk on Co-Creation which is the involvement of a consumer in the labor and/or design of your product.  Co-Creation

  • IKEA : You build your own furniture post-purchase which inserts the customers labor into the process.  Very affordable modern (and cool I might add) furniture, but the value is increased as you assemble the furniture either alone or with friend, spouse, or family.  Brilliant!
  • NIKE : Design your own shoes online which inserts the customers creativity within the boundaries of what can be designed and delivered.  Something I’ve created, has my design, and displays my name on the shows build more value in the mind of a consumer.  My son designed a pair of NikeID baseball cleats recently complete with his chosen team colors, last name, and jersey number on the back.  Needless to say we paid a premium for that value!
  • LEGO : Build anything with legos which involves labor and creativity in the building process with virtually unlimited materials.  Disassembled legos have little value, but constructed legos have substantially more value to an individual.  My children have a huge bin of loose legos, but they have self created masterpieces displayed on their shelves like trophies.

So how does co-creation apply to those of us building software and charging money for use of that software?

Answer: the labor illusion.  Getting customers to understand the labor we put into our product and being more transparent about our level of labor in a light way.  Michael gave boring progress bars as an example.  In general, progress bars are a very mundane way of displaying effort (aka blind wait).  But if the progress bar is more descriptive such as Kayak.com then people begin to perceive more value (aka Operational Transparency).  Numerous travel sites have adopted this technique by displaying progress that they are checking site A, site B, and then site C before delivering your search results.  A blind wait and operational transparency have the exact same outcome, but when people wait with operational transparency they feel it is a thorough service.

Also, software functions based on time generates value.  Michael shows statistics that if a search comes up too quick the user perceives little effort and little value.  Contrary that if they have to wait too long, they become frustrated and abandon the search.  But mid spectrum (about 40 seconds) the users see the most value.  In the end all 3 searches did the same thing and delivered the same results, but of the 3 (20 seconds, 40 seconds, and 60 seconds) consumers perceive the highest value at 40 seconds given they are getting progress updates of what the software is doing.

There is a truism that as service times decrease, customer satisfaction increases.  But we have to ask can fast become too fast?  Anyone thinking about the fast food industry now?  What about labor, effort, and work?  If you make people wait longer they perceive more value …if it takes longer I should be getting a better product or service.

Overall Michael is driving at the point that: show the labor I’m doing and people will value it more.  One of the key highlights is that if it is too easy there is little value and if it is too hard then consumers won’t want to try.  The most value is where it feels hard but doable.  This is the spectrum where the most value is created.  And finally, showing customers the labor you’re performing through operational transparency on their behalf builds value.

Thank you Michael and Harvard Business School for this enlightening presentation on Co-Creation.