Co-creation: adding and subtracting

significant sway in the Danish market among the carpenters, which led the Co-creator to insist on the co-branding partnership mentioned above:

“This is what we were asking in G1: why are we not selling the three-layered window? He (CEO of Co-creator) explained to us that he had sold none of these three-layered windows before, but that now he was selling them because there was awareness that it was a Pinta Inc.

Window. The brand was really lifting sales, because the Pinta Inc. brand in Denmark is so strong.” (Portfolio Manager, Interview, 2013)

Moreover, they found that that the window built with the Co-creator, that is, the three-layer window, was too heavy for carpenters, thus they were avoiding installing this type of window.

This cue led Woodstock to consider a version of the A class window, but noted that two layers would be “an optimal solution and best for the Danish market” (Internal document, 2012).

A very important discovery from feedback was the fact that end-customers were purchasing Woodstock G3, due to its maintenance free characteristics, and not the insulation, as predicted by Pinta Inc. This was an important discovery for the R&D team and the BU, who labelled it a surprise:

“[A]nd the last point which was also, which I have also put on this slide, is that the CEO of the Co-creator underlined that the insulation properties of our product actually don’t add to the USP for big front windows, since both our product and wood-aluminium are three layered glass windows, class A. So, that was also something that was a little bit surprising to us.” (Project Manager, Steering meeting, 2014)

However, from the moment Pinta Inc. has begun discussing pricing strategies and even invoicing their product, the relationship between Pinta Inc. and the Co-creator changed; the latter transitioning from being a co-development partner to a customer.

“But today, the Co-creator is more of a customer; they are more a customer than a developer. Co-creator was a developer, not a customer. So, you can say that he was 80% co-developer and 20% customer. But in the future, it will be 80% customer and 20% co-co-developer.”

(Project Manager and Portfolio Manager, Feedback Session, 2014)

In relation to his, a distinct episode illustrated that BU and the R&D vice president had a low level of trust in the Co-creator’s CEO. BU noticed the Co-creator was selling Woodstock windows at a considerably higher price than their other windows. The CEO of Co-creator explained that the production process was more expensive, but he was not believed and was asked to show the figures detailing the production of Woodstock windows compared with aluminium windows.

“Business developer: we had a meeting with Co-creator and he confronted us with the fact that he had to position the Woodstock windows as more expensive then the aluminium windows. That was his story, because they required much more work and blah, blah. This is what he tells us, I am not sure whether he is doing this in the marketplace, and I bet he is not doing this in the market. But OK, the good thing about it is that I have challenged them quite a bit on this issue and he promised me that he would show us the costing, what the hours are, in full detail. He did not want to tell us or put it on an email, he preferred only to allow me to see them when I am there. What he tells you today, might be different from tomorrow.” (Steering meeting, 2014)

The meeting was held at the Co-creator’s headquarter and the CEO of the company presented the costs involved in production. According to his budget statements, he was indeed pricing Woodstock windows 40% higher than wood windows and 20% higher than wood-aluminium windows. The reasons for this related directly to production and the high assembly cost of windows using Woodstock profiles. Despite their expectations, BU received from the meeting further positive cues about the success of Woodstock windows on the market. There had been a

low number of complaints and the Co-creator’s sales personnel were proud to sell the product, unlike at the start of the collaboration:

“Project Manager: At Co-creator, I spoke to their sales manager, and he says, right now his sales staff are actually really proud to sell this product and at the beginning of the year they were more reluctant, and worried when they were selling the product. They were really proud now so that also has a huge impact on a project.” (Steering meeting, 2014)

Given the strong collaboration, another issue emerged; i.e., that the capacity limit of the pilot production would influence the intake of orders. This issue became apparent early in the process, as Co-creator had received more orders than expected; of course, this was a positive market cue. The solution proposed was to determine a maximum limit for the number of kilometres of profile to be delivered to Co-creator. Furthermore, Co-creator was asked to provide forecasts regarding their orders. This became a key dilemma, and sometimes a source of frustration between Co-creator and BU, as they could not produce the product for any additional customers and the company could not generate profits without customers:

“It is a bit of a chicken and egg story, we are speaking with a limited number of customers, and we can’t talk to them because we don’t have production, so we can’t produce profiles. We learned from this discussion” (Business Director, Interview, 2013)

This was an important interruption, and the R&D team and BU worked to create a controlling mechanism to try to ensure the number of orders could be predicted. Therefore, in G1 the development team realized that they needed to work with a ‘maximum number of orders’

ceiling.

“We agreed provided the technical issues were clarified and we could start supplying to Co-creator. However, this included limiting the costs significantly by limiting volume and timing”

(Steering meeting, 2011).

Interestingly, the same interruption was encountered in the Woodstock G3 phase, when BU proposed a different solution; i.e., not setting a maximum volume, but proposing a recalculation of price if orders exceed capacity. The challenge was that production was still being conducted in a pilot production setting; therefore, the business was running at a deficit. The VP of innovation underlined this aspect several times to the business owners, to articulate the need to be selective when saying yes to orders:

“VP R&D: My point is, up to a certain point it would be too expensive to us because we are selling at a loss, so if we could have agreed upfront: ‘this is a pilot production: if you need more you need to pay more.’

Business Director: We have something else in there. We have a timeframe where we can renegotiate prices, and I think that is more important.” (Steering meeting, 2014)

The disadvantage of such close collaboration was that Woodstock was taking the risk of being damaged by the internal hiccups of their customer. When Co-creator went through internal organizational changes, this influenced the projects’ predicted timeline, causing delays:

“Cooperation with Co-creator is better and better. Still they were undergoing changes to the structure of their organization during the last year, so that has been a cost giving rise to some challenges.” (Project Manager, 2014)

The innovativeness of the technology was apparent, as were its properties. Combined with the lack of a BU to define the connection between the technology and the market, there was a need for a co-development element to the partnership. In the last meeting about the Woodstock project, it was acknowledged looking back that “lessons were learned that could be applied to our future projects” (evaluating meeting, 2014). On reflection, co-development was labelled as one of the main areas of success:

“One of the positive things about this project was having a customer on board right from the beginning. In this case, it was very important, because we were not capable of producing windows ourselves. However, we gained a lot of help from out Co-creator, so we considered them a very important team player. So, that I think is positive. It might not be the case for every project, but for this one.” (Portfolio Manager, 2014)