You’ve probably heard me say “Success is not created, it is co-created.” As a result, we spend a lot of time thinking about how collaboration and co-creation help drive great strategies and results that win markets.
Recently, my team at Rubicon (Harry Max especially) introduced a new process framework for understanding relationships between consumers and companies.
The Lifetime Opportunity Value Equation (LOVE model) is designed to drive revolutionary change in organizations, making them more innovative, responsive, and efficient by driving deep alignment between individuals and companies. The five phases of the LOVE model guide online relationships beginning with initial introductions. As a relationship progresses, the parties seek useful information and balance in roles, leading to commitment. From there relationships develop affinity which ultimately leads to the co-creation of value. Co-creation touches every part of a company, from product development to marketing to processes.
One of the challenges with a qualitative process framework like the LOVE model is that it is hard quantify all the benefits, especially during the initial stages of adoption. The latest McKinsey Global Survey looks at the business benefits from Web 2.0. Operationalizing the LOVE model in practice leverages many aspects of Web 2.0, so the McKinsey data is perhaps the most relevant data we currently have for this type of approach.
Some of the key McKinsey findings and their relevance to the LOVE model include:
Collaboration and better information drive measurable business benefits. 69% of respondents reported measurable business benefits, including: more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues. Not surprisingly, greater use led to even greater benefits. The LOVE model framework enables companies to consolidate these gains while extending them to all parts of an organization.
Access to outside expertise was ranked highest among the specific benefits. Web 2.0 provides a set of tools for efficiently gathering information from a variety of new sources. The LOVE model offers a practical basis for growing and nurturing the relationships Web 2.0 enables rather than simply harvesting information. The LOVE model goes further and encourages a bi-directional process where companies to share more information with their best customers, making the effect McKinsey measured for companies two-way.
Collaboration drives revenue. Respondents who reported deeper customer interactions also reported an increase in revenues they attributed to these interactions. No surprise here. The LOVE model seeks to drive co-creation rather than simply closer ties. At that level of relationship, customers co-own a vision of success, meaning they feel a stake in the company’s success.
Improved customer satisfaction. Once customers co-own a vision of success, they become huge advocates for your business.
McKinsey correlates the technology use with the benefits, but doesn’t discuss the underlying forces at work, and completely ignores how consumers gain and are drawn to engage. A program like McAfee’s Maniacs reduces support costs while providing a better support experience and building grassroots support. Dell’s IdeaStorm seeks to affect the speed and quality of product decisions while giving users a say in what Dell does. Amazon is a poster child for the LOVE model because their approach engages people and pays dividends in so many areas.
Some consumers will want to align their interests with yours because it makes their lives easier, such as frequent customers who want the sales process to run smoother. The motivation of other consumers may be less direct, perhaps visionary customers who see a better way or an interesting combination of products or services.
Web 2.0 is a collection of technologies, not a strategy, so simply implementing Web 2.0 technologies with the expectation they will benefit the bottom line is another case of the fallacy of “hope as a strategy.” Understanding the how allows companies to seek out similar types of benefits rather than similar types of technology.
The McKinsey data confirms and quantifies the thinking behind the LOVE model’s process framework. While this confirmation is good, executives are better able to guide to their companies to success by focusing on the why and how of collaborative relationships. The changes made to develop and nurture these relationships will drive change across your company. McKinsey’s data may drive directives to “do what they’re doing,” but by itself is far less actionable than a holistic framework such as the LOVE model.