1+1=11 The (Profitable) Arithmetic of Co-Creation
In business schools, the most popular course is Competitive Strategy, which teaches future managers how to compete and succeed in winner-takes-all markets. The belief that the “pie (market) is of fixed size” drives companies to grab as big a pie slice (market-share) as possible before a rival does. In any industry today, firms interact with each other as if they play a zero-sum game ruled by the formula “1+1=0”.
In India, however, there is a saying Ek Aur Ek Gyarah, that is 1+1=11. The millennia-old Indian culture has long practiced “inclusive syncretism”: it has enriched itself by embracing and integrating foreign influences. Cooperation and interdependence form the basis of the highly diverse and resilient Indian society. Our holistic thinking makes us believe that the whole is larger than the sum of the parts, hence 1+1=11.
When applied in the economic sphere, this synergistic formula leads to co-creation, whereby two companies, even rivals, transcend their differences to co-create something greater than their individual selves. Instead of competing for a tiny share of a small pie, co-creators strive to make a much larger pie for everyone to share.
While large firms in established industries remain stuck in zero-sum mentality, enlightened entrepreneurs and innovators are using co-creation as their core business strategy to generate value for themselves and the society at large. In June 2014, Elon Musk, founder of electric carmaker Tesla, decided to give away patents on its core technology to all companies, including rivals, in order to rapidly expand global market for electric vehicles, which currently account for just 1% of auto sales.
Similarly, the Khan Academy (which recently teamed up with Tata Trusts), realized that 5 billion people worldwide who lack Internet access couldn’t access its online tutorials. So it teamed up with the NGO Foundation for Learning Equality to pre-load Khan Academy content onto a server running on the open-source Raspberry Pi microprocessor. Students in developing nations can access this offline content — known as KA Lite — locally using a low-cost tablet like the $35 Aakash. Today, low-income students at Akanksha Schools in Mumbai and Pune learn math using KA Lite.
As the global business environment gets ever more complex, large firms must show humility and acknowledge they don’t have all the answers to huge issues they face. They must unlearn their competitive instinct and reach out to external partners to co-create robust solutions in energy, healthcare, education, transportation, etc. In particular, big companies must learn to co-innovate with five key stakeholders:
Universities. Eschewing the “not-invented-here” attitude, corporations must embrace “best (ideas) from anywhere”. They must open up their insular R&D labs and link them up with universities, the fountainheads of innovation. For instance, scientists and engineers at Xerox Research Centre India, set up in 2010, collaborate closely with Indian universities to co-create frugal solutions in healthcare, education, and transportation. Likewise, the French group Saint Gobain set up its R&D lab directly inside IIT-Madras Research Park to accelerate academia-industry collaboration on sustainable habitat solutions for tropical regions.
Startups. Rather than fret about being “Amazon-ed” or “Uber-ized” by disruptive startups, brick-and-mortar Goliaths must engage digital Davids as allies to crack new markets. For instance, recognizing the relevance of digital learning tools like MOOCs, the global education firm Pearson is teaming up with innovative e-learning startups to scale up delivery of educational content to millions of digitally-savvy Gen Y and Gen Z students worldwide. The global hotel chain Accor went one step further by appointing an SVP of entrepreneurship advocacy reporting directly to the CEO — a world first. This exec’s job is to foster an entrepreneurial culture within Accor and turn it into a “caring elder brother” for innovative startups with whom it could co-create cutting-edge solutions is areas like digitization and sustainability.
Prosumers. Social networks and technologies like 3D printing are transforming passive consumers into empowered “prosumers”, who can share and produce goods themselves without middlemen. Rather than feel threatened by these prosumers, brands must actively engage them to co-create market-relevant solutions. For example, rather than selling goods to customers, European home improvement retailer Leroy Merlin is inviting clients to its stores to build their own products using tools like 3D printers and with the help of the retailers’ staff.
Governments. Companies tend to perceive governments as an impediment to business. Yet around the world, visionary political leaders at national and local level are keen to forge public-private partnerships to deliver public services cost-effectively and sustainably. That explains why GE Healthcare teamed up with the Indian government to launch the Skill India initiative, which aims to train over 100,000 healthcare professionals over the next five years. Likewise, Philips is signing performance-based contracts with municipalities such as Washington, D.C. to upgrade lighting systems in cities. Philips gets paid from energy savings achieved annually.
Non-governmental organisations (NGOs). Businesses have long partnered with NGOs as part of their CSR initiatives. Now they must enroll NGOs’ help to make their for-profit core business model socially inclusive and eco-sustainable. For example, Essilor, the world-leader in corrective lenses, has set up a new business unit called 2.5 New Vision Generation that aims to improve vision for 2.5 billion people globally (including 550 million in India alone). As part of 2.5 NVG, Essilor runs Eye Mitra, an initiative in India that engages NGOs like ASSIST to train thousands of underprivileged rural youth to conduct basic vision screening and prescribe glasses.
Rival companies. Enlightened corporate leaders can engage even rivals to co-create solutions that serve a noble purpose — with the belief that “a rising tide lifts all boats”. For instance, in 1999, when Infosys became the first Indian software company to earn the coveted CMM Level 5 quality certification, co-founder Narayana Murthy shared the firm’s experience of the certification process with its Indian rivals. Murthy did so to raise the quality level of the entire Indian IT services sector, which was then still its it infancy. This sector has now become globally competitive. Likewise, under the visionary leadership of CEO Paul Polman, Unilever is now sharing its eco-friendly inventions — like compressed aerosols that cut waste and emissions — with rivals, thus incenting other FMCG firms to join Unilever’s efforts to build a sustainable planet.
Co-creation is akin to a jugalbandi (Hindi word for improvised music) between two talented musicians: it elevates their performance to a much higher plane. By engaging with universities, startups, prosumers, governments, NGOs, and even rivals, businesses can co-create effective solutions that address big issues facing the planet today — thus raising the “vibration frequency” of entire humanity. Let’s hope that by 2020 the most popular course in B-Schools would be Co-Creation.
Co-creation is one of the five mega-trends showcased at WAVE, an original exhibition on collective ingenuity imagined and produced by BNP Paribas and curated by me. Here is a short video on co-creation.
This article was originally published in Economic Times.