2. Networked Value Creation
New rules apply to companies in a networked society. The integrated value chain of the past is developing into a network value chain. This means that value creation by companies no longer functions within a closed structure but in an open network. In this process, product development and innovation are performed over worldwide collaborative networks consisting of experts, customers, companies and even competitors.
Companies must open their processes up to the outside world at the same rate as the world becomes more interconnected and markets and technologies evolve. In an increasingly complex and unpredictable present, collaboration and strategic partnerships are becoming the precondition for being able to compete in the market. Open innovation and coopetition are therefore the paradigms in which added value develops.
Open innovation means creating open platforms on which external partners can contribute to value creation. Social media represent an important base in this respect. Crowdsourcing platforms on the Internet, for example, allow companies to gather knowledge and ideas in order to then further process these internally for the purpose of developing innovation. Co-creation goes a step further – businesses actively create the possibility for users to propose new product ideas or invite users to participate in the improvement of existing products.
The particular focus here is on the customers. Involving them directly in the development process, allows products and services to evolve that exactly match their desires and requirements. This satisfies the customer's desire for an individual, personalised consumer experience. The scope for participation and creativity made possible by the Internet has awakened the expectation among customers of also being able to exercise a creative influence on a company's products. The co-creation platform Jovoto.com, 17 for example, allows large companies to offer cash prizes for the development of new products or packaging design. Coca Cola, for example, arranged a competition for the design of their Coke Zero bottles. Recently, the hotel chain Marriot had its "hotel room of the future" designed there. The prize money in this case totalled USD 15,000. 18 P&G's Connect + Develop 19 is an example of a co-creation platform operated by a large group. It allows individuals or organisations to propose ideas and developments to Procter & Gamble. The many successful outcomes include, for example, the Pulsonic Toothbrush, an ultrasonic toothbrush that was brought to market in less than one year through collaboration with a Japanese partner. 20
Co-creation can bring forth entire product eco-systems. Kinect, the motion-sensing user interface for Microsoft's Xbox 360 game console, suffered from massive hacking attacks shortly after its launch and was used for other purposes. 21 Microsoft initially prosecuted the hackers until it became clear that the new applications were creating positive publicity. 22 Microsoft now earns money through selling a version that is expressly intended for accomplishing objectives, different from the original purpose and which is tied to specific licence conditions. 23 The Kinect hacking has transformed the originally closed proprietary system into an open innovation platform.
Besides open innovation, the networked economy focuses on another form of innovation – cooperation. "Coopetition" is the name given to the situation in which competing businesses cooperate in specific fields while they remain keen competitors in others. The benefits are, for example, savings in research and development or the shared use of sales and