The Impact of Co-creation on Business Models
A Research on the Changes in Business Models through Co-creation Relations
Master Thesis Daniël J.E. Giesen
| Daniël J.E. Giesen

Content
 Capgemini
 Background – Business Developments towards Co-creation
 Problems
 Main Research Question
 Methodology
 Theoretical Findings
 Empirical Results
 Conclusions
| Daniël J.E. Giesen

Capgemini
 Consulting: Advices in business transformation
 Technology: Design/integrate technological solutions
 Outsourcing: Managing IT resources
 Consulting: Business Innovation (14 people)
• Improve innovation capabilities of organizations for market success
• Research: collaborations between organizations for innovation
| Daniël J.E. Giesen

The developments in the business landscape
indicate a trend towards co-creation
 Developments in the business landscape:
• Globalization, advances in IT, strong competition, organizational
innovations
• Saturated markets & decreased margins
 Organizations search for new opportunities in markets &
technologies
• Increased attention on B2B cooperations with customers and/or suppliers
in New Product Development (NPD)
 Co-creation as a way to add value in NPD
• Active & direct cooperation customer-supplier (financially independent)
• ‘Learning with’ & ‘create value with’
| Daniël J.E. Giesen

Problems (1): Business Model changes through
Co-creation
Resources Offer Customer
Co-creation
Customer
Partner Network Relationship
Co-creation partners? Relations developed /
maintained?
Core Distribution
Value Customer
Business Value Proposition
Capabilities Channels
Configuration Segment
What is the offer?
Capabilities/ How to reach
Functions
Main Activities? For who is the offer?
Competences? markets?
Revenue
Cost
Streams
PROFIT
Structure
In which way do we
What are the costs?
earn money?
Financial Performance
Figure: The Business Model (adapted from Osterwalder, 2006)
| Daniël J.E. Giesen

Problems (2): Co-creation relation
The decisions to The choice of an The choice of Dynamic
enter a co- appropriate structure for the evolution of the
creation partner co-creation co-creation
Figure: The sequence of events in co-creations (Adapted from Gulati, 1998)
 Co-creation partner selection
• Which selection criteria are used?
• Changes in Business Model?
 Co-creation structure
• Which structures are used?
• Relation with partner selection?
• Changes in Business Model?
| Daniël J.E. Giesen

Problems (3): NPD process
Stage 0: Stage 1: Stage 3: Stage 4:
Stage 2:
Concept Project Manufacturing Commercializa-
Development
Generation Evaluation Development tion
Figure: Stages in the NPD Process (Griffin, 1997)
 In which stages of NPD does Co-creation take place?
 Relation with partner selection?
 Relation with co-creation structure?
| Daniël J.E. Giesen

Main Research Question
 In what way affects partner selection and co-creation structure of
a co-creation relation between customer and supplier the
organization’s business model, given the stage of NPD in which
the co-creation relation takes place?
Co-creation Relation
Co-creation Partner Selection
(Independent Variable)
Business Model
NPD Process
(Dependent Variable)
(Independent Variable)
Co-creation Structure
(Independent Variable)
Figure: Conceptual Design
| Daniël J.E. Giesen

Methodology
 Literature Study
• Theoretical Framework
• Configuration
• Propositions
 Empirical Research at 7 Dutch Manufacturing Enterprises
• Interview
• Explore Propositions
 Comparison of Theoretical & Practical Configurations
| Daniël J.E. Giesen

Theoretical Findings (1)
 NPD Process
• Different roles of partners in New Product Development
 Co-creation Partner Selection
• Technological, strategical, & relational alignment dimensions
 Co-creation Structure
• Level of Interdependence: Low  Medium  High
• Different governance modes: Licensing  Co-makership  Joint Venture
 Business Model
• Influence of co-creation partner on Business Model building blocks
• Business Models on project, business unit, & company level
• Different consequences for the organization
| Daniël J.E. Giesen

Theoretical Findings (2): Configuration &
Propositions
Stage 3: Stage 4:
Co-creation in Stage 0: Concept Stage 1: Project Stage 2:
Manufacturing Commercializa-
NPD generation evaluation Development
development tion
Partner High level of High level of Medium level of Low level of Low level of
Alignment alignment alignment alignment alignment alignment
Co-creation High Medium-high Medium Medium-low Low
Structure interdependence interdependence interdependence interdependence interdependence
Large changes Medium-high
Few changes
within business changes within Medium changes Medium-low
Business Model within business
model; could end business model; within business changes within
(change) model; especially
up in new especially on model business model
on customer side
business models resources side
Proposition 1 Proposition 2 Proposition 3 Proposition 4 Proposition 5
Table: Theoretical Configuration & Propositions
| Daniël J.E. Giesen

Results (1): Overall Results
Comparison of Organizations on the Research Variables
Company A B C D E F G
Stage 0: Concept Stage 2: Stage 0: Concept Stage 3: Stage 4: Stage 1: Project
Stage 2:
generation and Development generation and Manufacturing Commercializati evaluation and
NPD Process
Development
further and further further development on further
Supplier / Customer /
Partner Customer Supplier Supplier Customer Supplier
Competitor Partner
Technological Technological Technological Technological
Technological Technological
(2); Strategical (3); Strategical (3); Strategical (2); Strategical
Alignment Technological (2)
(2); Relational (1) (2); Relational (1)
(2); Relational (1) (2); Relational (3) (2) (2); Relational (3)
Joint R&D,
Research Customer -
marketing &
Co-makership / Joint venture /
cooperation / supplier relation
Transitory / low Licensing / low
medium high production /
Structure
interdependence interdependence
high / medium
interdependence interdependence high
interdependence interdependence
interdependence
Business Model Business unit Business unit
Project level Project level Company level Project level Project level
level level level
Large change, Large change,
Business Model
new business new business
Medium change Medium change Small change Small change Medium change
(change)
model model
| Daniël J.E. Giesen

Results (2): Comparison of Configurations
Stage in NPD Variables Theory Practice Explanation
Partners already have a
long-term relationship.
As in theory, medium-high
Partners are competitors
alignment on
Co-creation partner
of each other.
High level of alignment
selection (alignment) technological, strategical,
Therefore, not all
& relational dimensions
alignment dimensions can
be used.
Co-creation structure
Stage 0 Concept High interdependence As in theory
(interdependence)
generation
Co-creation relations can
still be in the beginning
Large changes within As in theory, medium- stages of NPD. Therefore,
business model; could end large changes, also new the definite business
Business model change
up in new business models business models model can be designed
when products are
actively sold.
Co-creation partner
High level of alignment As in theory
selection (alignment)
Co-creation structure Medium-high As in theory, high
(interdependence) interdependence interdependence
Stage 1 Project evaluation
Medium-large changes
As in theory, large
within business model;
changes, also new
Business model change
especially on resources
business models
side
Table: Comparison of the Co-creation & Business Model Configuration conducted from Theory and Practice
| Daniël J.E. Giesen

Results (3): Comparison of Configurations
Stage in NPD Variables Theory Practice Explanation
As in theory, medium-low Partners are more or less
alignment, focusing on condemned to each other.
Co-creation partner
Medium level of alignment
selection (alignment) technological & strategical Therefore, not all alignment
dimensions dimensions can be used.
Stage 2 Development
Co-creation structure
Medium interdependence As in theory
(interdependence)
Medium changes within
Business model change As in theory
business model
As in theory, alignment
Co-creation partner
focuses on technological
Low level of alignment
selection (alignment)
dimensions
Stage 3 Manufacturing
Co-creation structure Medium-low As in theory, mostly low
development
(interdependence) interdependence interdependence
Medium-small changes As in theory, mostly small
Business model change
within business model changes in business model
As in theory, alignment
Co-creation partner
focuses on technological
Low level of alignment
selection (alignment)
dimensions
Co-creation structure
Stage 4 Commercialization Low interdependence As in theory
(interdependence)
Few changes within
business model; especially
Business model change As in theory
on customer side
Table: Comparison of the Co-creation & Business Model Configuration conducted from Theory and Practice
| Daniël J.E. Giesen

Conclusions
 Early phases of NPD
• More alignment dimensions
• Co-creation structure with high interdependence
• Large changes in business model / new business model
 Later phases of NPD
• Less alignment dimensions
• Co-creation structure with less interdependence
• Smaller changes in business model
 Logical explanations for outliers  Findings can be assumed
 Preconditions for futher research
• New relationship
• No forced relationship
• Finalized NPD process
| Daniël J.E. Giesen

THANK YOU FOR YOUR ATTENTION
Questions???
| Daniël J.E. Giesen

Together. Free your energies
http://www.capgemini.com

Research Questions
 In which different stages of NPD do organizations co-create?
 Which selection criteria do organizations use in choosing a co-creation partner?
 What kinds of structures do organizations use to organize co-creation relations?
 What is a business model?
 Which changes do organizations face in their business models?
 In which way does the stage of NPD influence the choice of a partner in a co-creation relation?
 In what way does the stage of NPD influence the choice for a structure of the co-creation relation?
 To what extent does a partner choice determine the structure of a co-creation relation?
 In what way does the stage of NPD influence an organization’s business model?
 To what extent does the choice for a partner for a co-creation relation influence the organization’s
business model?
 To what extent does the chosen structure for the co-creation relation influence an organization’s
business model?
| Daniël J.E. Giesen

Co-creation Structures
Level of Interdependence B2B Modes of Collaboration
Joint Ventures & Research Cooperations
High
Joint R&D
Minority Investment and Cross-holding
Medium
Customer-Supplier Relations, Co-production, Co-makership
Technology Exchange Agreements (mutual), Technology
Sharing, Cross-licensing
Low
One-directional Technology Flow, Licensing, Transitory
| Daniël J.E. Giesen

Propositions
 Organizations that (start to) co-create in concept generation will:
• Search for high alignment with a partner
• Structure the co-creation relation with high interdependence
• Face large changes within business model or face new business models
 Organizations that (start to) co-create in project evaluation will:
• Search for high alignment with a partner
• Structure the co-creation with medium-high interdependence
• Face medium-large changes within business model, especially within resources part
 Organizations that (start to) co-create in development will:
• Search for medium alignment with a partner
• Structure the co-creation with medium interdependence
• Face average changes within business model
 Organizations that (start to) co-create in manufacturing development will:
• Search for less alignment with a partner
• Structure the co-creation relation with medium-low interdependence
• Face medium-small changes within business model
 Organizations that co-create in commercialization will:
• Search for less alignment with a partner
• Structure the co-creation relation with low interdependence
• Face small changes within business model, especially within customer part
| Daniël J.E. Giesen

Dataset
Co-creation Contact Date
Business Unit Products Co-created Product Stage of NPD
Partner Date Interview
Above Water Systems Customer &
Naval & Concept
A Network-centric Research Key Exchange Cell 02-06-2008 09-06-2008
Maritime generation
Systems Institute
Nutritional Ingredients for Animal
B Supplier Enzymes Development 05-06-2008 10-06-2008
Products Nutrition
Corporate
Mobile, Processor, Supplier / Wireless Concept
C Innovation & 05-06-2008 12-06-2008
Memory Technologies Competitor Applications generation
Technology
Management Manufacturing
D Retail Support Loss Prevention Systems Supplier 02-06-2008 17-06-2008
Information System development
Technology
Commercializa-
E Melamine Melamine Customer Package, 05-06-2008 19-06-2008
tion
Accelerator
Aramid/Nomex
Advanced High-segment Textiles
F Supplier applications in Development 02-06-2008 27-06-2008
Textiles (specific characteristics)
Textiles
Decorative varnish
Chemicals Aluminum Plating Project
G Performance coatings Customer 25-06-2008 30-06-2008
(Polymer) Process evaluation
Chemical products
| Daniël J.E. Giesen

Measurements
Interview Question Variable
1, 2, 3, 4 Company Outline
5, 6 Respondent’s Background
7, 8, 10, 11 Co-creation Relation (Characteristics)
9 NPD process
13, 14(a-c) Co-creation Partner Selection
12 Co-creation Structure
15, 16 (a-i) Business Model
17 Business Model Changes
Interview Question Variable Items
Concept generation
Project evaluation
9 NPD process Development
Manufacturing development
Commercialization
| Daniël J.E. Giesen

Measurements (2)
Interview Question Variable Items Sub items
Technological capabilities
Technological alignment Resource/Market knowledge complementarity
Overlapping knowledge base
Co-creation
Motivational correspondence
Partner
13, 14(a-c) Strategical alignment
Goal correspondence
Selection
Compatible cultures
Relational alignment Propensity to change
Long-term relationship
Degree of Nr. of alignment
Alignment dimensions
Items Sub items
Interview Question Variable
Low 1-3
Joint Ventures &
Medium 4-5 High Research Cooperations
High 6-8 Joint R&D
Minority Investment
and Cross-holding
Customer-Supplier
Medium
Relations, Co-
production, Co-
12 Co-creation Structure
makership
Technology Exchange
Agreements (mutual),
Technology Sharing,
Low Cross-licensing
One-directional
Technology Flow,
Licensing, Transitory
| Daniël J.E. Giesen

Measurements (3)
Interview Question Variable Items Sub items
Partner network
Resources Core capabilities
Value configuration
Offer Value proposition
15, 16 (a-i) Business Model Customer relation
Customer Customer segment
Distribution channel
Cost structure
Financial performance
Revenue streams
Interview Question Variable Items Score
Business model Small 1
17 building block
Large 3
changes
Variable Item Score
Small 1-9
Total business model change Medium 10-18
Large 19-27
| Daniël J.E. Giesen

NPD Process
Stage 3:
Stage 0: Concept Stage 1: Project Stage 2: Stage 4:
Manufacturing
generation evaluation Development Commercialization
development
Co-creation with
   
A
customer starts
Co-creation with
 
B
supplier starts
Co-creation with
   
C supplier/competitor
starts
Co-creation with
D
supplier
Co-creation with
E
customer
Co-creation with
F
supplier
Co-creation with
  
G customer/partner
starts
| Daniël J.E. Giesen

Alignment in Partner Selection
Resource/Market Overlapping Motivational Goal
Technical Compatible Propensity Long-term
knowledge knowledge corresponden correspon Total
capabilities cultures to change relationship
complementarity base ce dence
A X X X X X 5
B X X X 3
C X X X X X X X 7
D X X 2
E X X X 3
F X X X X X 5
G X X X X X X 6
Low alignment Medium alignment High alignment
A X
B X
C X
D X
E X
F X
G X
| Daniël J.E. Giesen

Interdependence in Co-creation Structure
Low Interdependence Medium Interdependence High Interdependence
A Research cooperation
B Co-makership
C Joint venture
D Transitory
E Licensing
F Customer-supplier relation
G Joint R&D
| Daniël J.E. Giesen

Business Model Changes
Value Distributi Value Core
Customer Customer Partner Revenue Cost
Propositi on Configura Capabiliti Total
Segment Relation Network Streams Structure
on Channel tion es
A 3 1 3 3 3 3 16
B 3 3 3 3 1 13
C 3 1 3 1 3 3 1 3 3 21
D 1 1 1 1 1 5
E 1 1 3 1 3 9
F 1 1 3 3 1 1 10
G 3 1 1 3 3 3 3 3 3 23
Small change Medium change Large change
X
A
(Project level)
X
B
(Project level)
X
C
(Company level)
X
D
(Business unit level)
X
E
(Project level)
X
F
(Business unit level)
X
G
(Project level)
| Daniël J.E. Giesen

NPD Process & Alignment in Partner Selection
Stage 3:
Stage 0: Concept Stage 1: Project Stage 2: Stage 4:
Manufacturing
generation evaluation Development Commercialization
development
Company B – Company D - Company E -
Low Alignment
Supplier Supplier Customer
Company A –
Medium Alignment Company F - Supplier
Customer
Company C – Company G –
High Alignment
Supplier/Competitor Supplier/Partner
| Daniël J.E. Giesen

NPD Process & Interdependence in Co-creation
Structure
Stage 3:
Stage 0: Concept Stage 1: Project Stage 2: Stage 4:
Manufacturing
generation evaluation Development Commercialization
development
Low Company D - Company E -
Interdependence Transitory Licensing
Company B – Co-
makership
Medium
Company F –
Interdependence
Customer-Supplier
relation
Company A –
Research
High Company G – Joint
Cooperation
Interdependence R&D
Company C – Joint
Venture
| Daniël J.E. Giesen

Alignment in Partner Selection &
Interdependence in Co-creation Structure
Low alignment Medium alignment High alignment
Company D – Supplier
Low Interdependence
Company E – Customer
Company A – Customer
Medium Interdependence Company B – Supplier
Company F – Supplier
Company C – Competitor
High Interdependence
Company G – Partner
| Daniël J.E. Giesen

NPD Process & Business Model Changes
Stage 3:
Stage 0: Concept Stage 1: Project Stage 2: Stage 4:
Manufacturing
generation evaluation Development Commercialization
development
Low BM Change Company D Company E
Company B
Medium BM Change Company A
Company F
High BM Change Company C Company G
| Daniël J.E. Giesen

Alignment in Partner Selection & Business
Model Changes
Low Alignment Medium Alignment High Alignment
Company D
Small BM Change
Company E
Company A
Medium BM Change Company B
Company F
High BM Change Company C Company G
| Daniël J.E. Giesen

Interdependence in Co-creation Structure &
Business Model Changes
Low Interdependence Medium Interdependence High Interdependence
Company D
Small BM Change
Company E
Company B
Medium BM Change Company A
Company F
Company C
High BM Change
Company G
| Daniël J.E. Giesen

Business Model Example: Company A
Resources Offer Customer
Co-creation
Research Institute Intense relationship
Ministries of Defense Knowledge exchange
Organization’s BU’s (Technology)
Net-enabled capabilities Integration effort: Innovative customers
Business
Above Water Systems Synchronize existing Network-centric System Marketing & Sales (Netherlands, UK)
Armed forces field systems / Build simulation (Key Exchange Cell) Department Fast followers
Functions
knowledge environment Off-the-shelf customers
NA (perhaps selling
system in a later stadium
Development costs PROFIT to fast following and
off-the-shelf customers
Financial Performance
| Daniël J.E. Giesen