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 / Second Quarter 2002 / Issue 27(originally published by Booz & Company)


The Co-Creation Connection

• Choice. Elaborately structured distribution and communications channels allow companies to control a consumer’s choices. But when companies don’t offer the same choices across channels, they risk antagonizing the customer. One clothing retailer trying to optimize inventory management and pricing by channel charged $48 for a shirt online and marked the same shirt down to $24.99 in a retail store. Over time, consumers will recognize such differences, and they might accept them, but only if an explicit policy exists that says online and in-store pricing (or styles and colors) may differ.

Information technology has opened a whole new opportunity for manufacturers to cost-effectively offer customized products faster and cheaper. In the computer industry, companies like the Dell Computer Corporation have an impressive competitive advantage in build-to-order PCs. Now BMW is offering a “custom” car, delivered in 12 days. For the Z3 roadster, the automaker offers a choice of 26 wheel designs and 123 console options.

Mass customization allows companies like Dell and BMW to offer variety, but who decides what can be customized? Customization ultimately is a matter of what can be built and delivered to suit the efficient operation of a company’s value chain. Even in the most sophisticated mass-customization schemes, the customer chooses from a menu dictated by the company.

Thanks to the Web, companies can become much more astute about what consumers like and don’t like, and that knowledge will greatly improve companies’ ability to be innovative and to anticipate consumer needs. On the Web, consumer-to-consumer recommendations, new ideas, critiques, musings, and more are having a powerful influence on choice. (owned by Primedia Inc.), one of the most popular consumer word-of-mouth sites, is host to discussions about more than 50,000 subjects, from allergies to zebras. Content, organized by topic, is kept fresh and credible with a thorough oversight system run jointly by and its community members. Sites like are trying to establish businesses promoting consumer-to-consumer communication, but thousands of Web sites exist that buzz with conversations about what consumers value and don’t value. Companies need to listen, learn, and absorb this valuable intelligence.

Even in the world of drugs for treating life-threatening diseases, consumer advocacy in online support groups seems to be as influential as company marketing. For example, when Novartis AG began clinical trials of a promising leukemia drug, word spread so fast that the company was overwhelmed with demand from patients seeking participation.

• Consumption Experience. Companies like the Starbucks Corporation and Walt Disney Company are highly attuned to human behaviors, preferences, and tastes because experiences are the essence of what they sell. But the fact is, companies that manufacture products bear just as much responsibility as restaurants and entertainment companies for enhancing or diminishing the value of consumer experience. For example, most antibiotics are prescribed to be taken several times a day for two to three weeks. If you forget to take the pills, the medicine is ineffective, and many people don’t remember to complete the full cycle. The pharmaceutical company Pfizer Inc. saw this behavior as an opportunity to make it easier for people to take medicine the way it was prescribed. It introduced an antibiotic called Zithromax that typically requires an initial dosage of two pills followed by a daily single pill for only four days. Then Pfizer marketed Zithromax in a blister pack called the Z-pak, which clearly reminds users of their daily dosage requirement and how much they have left to take. Pfizer effectively became the patient’s partner in making it as easy as possible for the medicine to do its curative work.

Zithromax now dominates its market. Consumers like Zithromax’s shorter cycle and the convenient reminders to take their pill. Doctors, too, applaud these features, because they make the drug more effective. With the Z-pak, Pfizer has creatively incorporated the consumption variable into the manufacture and design of the product to increase its value.

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  1. J. Philip Lathrop, Gary D. Ahlquist, and David G. Knott, “Health Care’s New Electronic Marketplace,” s+b, Second Quarter 2000 Click here.
  2. C.K. Prahalad and Stuart L. Hart, “The Fortune at the Bottom of the Pyramid,” s+b, First Quarter 2002 Click here.
  3. C.K. Prahalad and Venkatram Ramaswamy, “Co-Opting Customer Competence,” Harvard Business Review, January–February 2000 Click here.
  4. Neil Strauss, “Behind the Grammys, Revolt in the Industry,” New York Times, February 24, 2002
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