Co-Creation and Transient Advantages
Marketing Strategy for Short-Lived Opportunities
Aaron Motsenbocker
Undergraduate Honors Thesis
Metropolitan State University of Denver
April 1, 2015
Inspiration
My undergraduate education began at the perfect time for a paradigm shift. As the true
impact of the 2008-market crash came further into clarity, critical debates and skepticism
amongst professionals haunted society. But, what is always the case with turbulence is it is
temporary. We know if we hold tight, it will pass. This however begs the question, what comes
after the turbulence? With regard to our global and national economies, a lot changes, because
whatever was in practice before was faulty. So there’s this presence of transferability or
transferring from one period of time to another. And it leads one to ask, “what will make it out of
the turbulence?” and what will be created and added as new norms in the market, once we can
move on? I focused on this issue, and other current trends relevant to what is redefining the
major differences between what is today and what will be tomorrow.
In exploring how business and society were transferring, there were requirements. An
argument had to establish itself with originality, innovation, and practicality. I began searching
for material discussing the future of business, business and consumer interaction, paradigm
occurrence(s), etc. The first source I found was a lecture during the summer of 2013 by a
Harvard history professor to the Harvard School of Business. She discussed the massive transfer
long in the making and presented the issue of turbulent times, high stress, and social hunger for
leadership. According to her, we are intensely re-constructing the new frame for society and all
the factors within it, results of a paradigm shift. The frame? The frame is societal norms and
standards. It’s how we exist in a commercialized global economy. So, what goes on the frame?
Even she admits, “I don’t know, but we need it.” For the intensive purposes of my paper, this
justified entertaining an evaluation of what a marketer could or will take to and from the new
frame. Many months later this lead to the findings of “co-creation,” a strategy or study that
involves the consumer more with value creation and ideation, and “transient advantage,” the
strategy or theory that businesses no longer have sustainable competitive advantages. Both are
separate strategies that compliment each other well. So I married them.
Hopefully this argument will grant me admission to a graduate program and function as
something applicable with our personal and professional planning in the future. I would like to
extend my most sincere appreciation to the committee and everyone who assisted and guided me
throughout the difficulties of my own doing.
Thank you.
1 Table of Contents
Abstract
3
Literature Review
Introduction
4
7
The Changes for Business Today
7
Customer Centric Concepts
8
Transient Advantage Concepts
Simplifying the Phenomena
Methods for Tomorrow
Significance
9
10
11
13
Observations for Review
13
A Timeline for Co-Creation and Transience
Origins of Customers Centrality
16
Origins of Transient Advantages
17
Defining Co-Creation
14
22
Co-Creation as a Strategy
25
DART (Dialogue, Access, Risk-Reduction, and Transparency)
Experience Environment and Experience Co-Creation
Co-Creative Environment Model
Examples of Co-Creation
29
31
Immaterial and Experience Co-Creation
42
References
44
32
34
Co-Creative Transient Advantage Model
Conclusion
28
31
Material Co-Creation
Defining Transient Advantages
26
38
2 Abstract
Our understandings of marketing strategy and competitive advantages are undergoing
redevelopments from two sequential paradigms. These shifts in thought are identified as from
firm centric to customer centric and from sustainable to transient competitive advantages. These
shifts in thought have delayed the title and definition of our current marketing era. Furthering the
complexity of these issues are the preceding and succeeding interrelated concepts relevant to
each shift. On the customer centric end, we note the reopening of the prosumer thesis and “co”
models, in particular, co-creation as created by Prahalad and Ramaswamy in 2002. With regard
to short-lived competitive advantages, we note the creation of transient advantages and the
transient advantage model or lifecycle (McGrath, 2013), through which susceptible organizations
move through five phases. These phases are known as the launch, ramp up, exploit, disengage,
and reconfigure stages of a transient advantage model and are initiated by and managed with a
firm’s adaptive capabilities. In recognizing theses paradigmatic concepts as sequential and
interrelated, in that, they both require an outside in approach and continuous, as well as,
instantaneous action, they inevitably must intersect and synergize. This nexus of customer
centrality and transience is the solution to creating and maintaining value in a world of
empowered prosumers who are ruled by abstractions afforded to them via the Internet, mobile
technology, and information abundance. This paper proposes a solution to these paradigmatic
problems, by conceptualizing a model through which co-creative concepts and the transient
advantage lifecycle are merged. With this creation, the co-creative transient model (CCTM)
presents itself as an igniter of and manager for transient advantages.
3 Literature Review
We are in the middle of defining a new era of marketing. It was recently proposed the
current marketing era be titled the, “Social and Mobile Marketing Era” by marketing professor
Dr. Steven White. It is a proposal indeed, because a common consensus amongst professionals is
scattered by the noise of many transformational activities (White, 2010). Fueling the complexity
of this definition, are the two sequential paradigms of from firm centric to customer centric and
from sustainable to transient advantages. The customer centric shift is defined by a change in
business structure as we’ve know it to be for over 100 years, in which value is created from
within the firm, to now being sourced from outside of the firm, through the customer (Prahalad
and Ramaswamy, 2002, 2004a, 2004b; Ramaswamy 2008; and Ramaswamy and Ozcan, 2014).
Some professionals have summarized this shift in thought as, “a move from shareholder
capitalism, to customer capitalism” (Holmes, 2012), while others present it as a way to mass
customization for conquering hypercompetitive markets (Tseng and Piller, 2003). Customer
centrality is receiving more attention then ever before, but has been a developing concept since
1960, when Theodore Levitt challenged business to never forget what needs they are actually
satisfying for their customers. Buzz discussion amongst strategist and other business
professionals has lead to the mergence of the producer and consumer, which inevitably lead to
the creation of the “prosumer,” one who produces and consumes their own value (Alvin Toffler,
1980, Ritzer et al. 2010, 2014; Ritzer 2012). Early analogies of the prosumer were material
based, by which, the prosumer designed their own suit to be laser tailored and stitched instantly
or prepared their own legal documents from templates without professional assistance (Banks,
1999). Modern day versions of this market player paradox however, have lead to a slew of
interrelated concepts fueled by the creation of the Internet, mobile technology and information
4 abundance. The most dominant concept being co-creation, has been developed as a solution to
empowered consumers who have access, networking capabilities, thematic communities, and the
option to customization in world were more options than ever before provide less value than ever
before (Prahalad and Ramaswamy 2002, Ramaswamy and Ozcan 2014). Other customer centric
concepts fueled by the Internet are seen by the reintroduction of the Prosumer, who is exploited
through their free providence of information and content on the Internet and other shared
platforms. Nevertheless the prosumer remains both an innate and revolutionary function (Ritzer
et al., 2014). We live in a world of prosumers, who co-create, inject their interest into the mix of
offerings by a firm, and competitive advantage lies with those who co-create or recognize the
prosumer the best (Prahalad and Ramaswamy 2004b, Ritzer et al., 2014). In referencing the
second paradigm, all focus shifts from understanding competitive advantages as sustainable to
short-lived and temporary (D’Aveni 1995, 1995b; D’Aveni et al., 2010). This understanding has
lead to the creation of the transient advantage model or lifecycle, which outlines five phases
organizations susceptible to transient advantages move through (McGrath, 2013). Much like
waves, each is different with its own unique factors. Transient advantages are launched, ramped
up, exploited, disengaged and reconfigured in their specific arena (McGrath, 2013) or experience
environment tailored to their unique thematic community (Ramaswamy 2013). Strategists have
responded with such approaches to strategy, because markets are instable with hypercompetition
(D’Aveni, 1995, 1995b). The original tools of strategy, specifically Michael Porter’s five forces
analysis and the resource based view of the firm, are now mostly obsolete, “as they are stuck
defending the market as it were when they advantage was already found” (McGrath, 2013).
Other professionals have aided this new approach by emphasizing the use of adaptive
capabilities (Day, 2013), to enhance a firm’s dynamic capabilities (D’Aveni, 2010) and identify
5 new opportunities. Inevitably, it appears these shifts in thought must intersect and synergize in
the their relations of always looking to customers first to innovate (Prahalad et al. 2002, 2004a,
2004b, 2013; Ramaswamy et al. 2014; McGrath, 2013; Day, 2013) and solve their needs by
being adaptive and constantly analyzing what is actually occurring. From these two interrelated
paradigmatic problems with those of co-creative concepts, in which prosumers co-create and
organizations find themselves susceptible to transient advantages, a model is created to
conceptualize what value creation and competitive advantages look in the 21st century. This view
is enhanced and guided with the creation of the co-creative transient model (CCTM).
6 Introduction
We are in the middle of defining a new era of marketing. Rapidly changing and
hypercompetitive environments, accelerated advancements in technology, and empowered
consumers have ignited a change in thought on what value is and how advantages are obtained.
Currently, consumers are at a loss of value with more options than ever before and business
continues to be unsustainable with inadequate returns on investment. Deepening the complexity
of this paradox are two sequential paradigms forcing business to redevelop the playbooks of
strategy and success evaluation. These paradigm shifts can be identified as, from firm centric to
customer centric, and from sustainable competitive advantages to transient advantages. Each
identifiable with their own nuances, are affecting every aspect of business management and have
forced professionals to address the question, what now? For business to continue, we must
develop improved strategies to successfully combat ambiguous environments and provide greater
value to both businesses and consumers.
The Changes for Business Today
To solve these paradigmatic problems, it appears these shifts in thought must inevitably
meet and synergize to move forward with a fresh ever-changing take on value creation. In
discussing the paradigm shift of from firm centric to customer centric, Oliver Wendell Holmes
Jr. of Forbes Magazine presents it as, “a shift from shareholder capitalism to, customer
capitalism ” (Holmes Jr. 2012). As outlined by Holmes, value and our attempt to maximize it, is
transferring from what that means for business, to what maximized value means to the consumer.
Similarly, business professors Mitchell Tseng and Frank Piller address customer centric, as way
to mass customization for conquering the growing demands of competition (Tseng, et al. 2003).
With the customer centric thought, consistency does nothing in comparison to flexibility and
7 interaction. More evolutionary, the firm centric to customer centric shift is a move from focusing
on the creation of value from within the firm, to focusing on the creation of value outside of the
firm (Tseng and Piller, 2003; Holmes, 2012). At the other joint of the intersection, is from
sustainability to transience. Not long ago, Rita McGrath professor of management at the
Columbia Business School and a highly regarded consultant, declared the sustainable
competitive advantage as no longer relevant to most industries (McGrath, 2013). Advantages
obtained by the ability to provide value to customers and the firm, are no longer defensible.
Essentially, if a firm has a competitive advantage, it is because the organization is successfully,
“surfing short-lived waves of opportunity” (McGrath, 2013). More revolutionary, sustainable to
transient completely redefines our understanding of what a competitive advantage is. And while
emphasizing the occurrence and inevitable intersection of the customer centric and transience
shifts is certainly intriguing, more imperative are the new ideas and approaches to creating and
exchanging value –the ideas composing and ushering in these new ways of thought. An eruption
of concept and theory ideation and research relevant to these separate paradigms, has lead to a
vast amount of new approaches to the roles of producers and consumers and strategic
management in whole.
Customer centric concepts.
On the customer centric end, we note the re-opening of the prosumer thesis –one who
both produces and consumes their own value– created originally by futurist Alvin Toffler in
1980, and succeeding concepts of the prosumer, such as, prosumption and prosumerism by
professor George Ritzer of the University of Maryland (2010, 2012, and 2014), to the
introduction of “co” models, with “value co-production” by the resource manager Rafael
Ramirez (1999) and “co-creation” by business professors C.K. Prahalad and Venkat
8 Ramaswamy (2002, 2004a, 2004b, and 2013), as well as, furthered work on co-creation by
Venkat Ramaswamy in 2008 and again in 2014 by Venkat Ramaswamy and Kerimcan Ozcan
authors of The Co-Creation Paradigm, to lastly, “service dominant logic,” as discussed by
business professors Stephen Vargo and Robert Lusch (2008). Bearing these phenomenological
concepts in mind as separate theories to the customer centric shift, it is noted they are interrelated
and this paper recognizes them as concepts relevant to the challenges of the 21st century
marketer. Current work on all of these topics, addresses the need for dialogue between the
business and the consumer. Because of the emphasis on the customer’s need, they are always at
the forefront of or involved in the business’s next move. Therefore, companies are or need to be
transparent and easily accessible. Where value was once created at the end of the exchange
process, value is now determined before, during and after the supply chain. Multiple channels of
communication, transaction, and experience are utilized anywhere and at anytime within the
customer business relationship (Prahalad et al. 2002, 2004a, 2004b, 2013; Ramaswamy 2008;
Ramaswamy et al. 2014; Ramirez 1999). In some cases, we recognize the consumer as not just
the receiver of the product or service from which they maintain value, but as the creator too –
with or without the business’s resources, because we are innately prosumers (Ritzer, et al. 2010,
2012, 2014). Under this new approach, producer and consumer communication does not separate
what the business wants or how it thinks, from what the consumer wants or how he or she thinks.
It instead recognizes both sides, but especially the consumers.
Transient advantage concepts.
With regard to the transient shift, we note the proposition of “short-lived opportunities”
or “temporary advantages” by business professor Richard D’Aveni (1995), and the “transient
advantage model,” or, “transient advantage lifecycle,” as created by business professor and
9 consultant Rita McGrath (2013), to lastly, business professor George Day’s introduction of
“adaptive capabilities” for enhancing a firms dynamic capabilities (2013). Similar to those of
customer centrality, the preceding and succeeding concepts of transience are also interrelated.
Current work by this way of thought, directs firms to focus first on innovation with the customer
to obtain the advantage, as possible through their dynamic capabilities. The requirement then, is
a valued product or service (the advantage) that is accepted by consumers. Per the transient
model, this advantage is launched through an innovation or by an opportunity, is then ramped up
for market segmentation and market share, exploited in the market, and then reconfigured to
repeat the process all over again with a new innovation or opportunity. This is the new product or
service lifecycle. According to McGrath (2013) the sustainable competitive advantage as we
practice it does not deliver the results needed anymore, because it is stuck defending itself as the
market were, when the advantage was originally found. Strategy now requires a continuous
pursuit of where value can be obtained.
Simplifying the phenomena.
To provide an addition to the framework by which business conducts itself as a science,
this paper proposes a model by which the ideas of customer centrality and of transience are
married. By doing so, a supreme model for overcoming the problems plaguing value creation and
exchange today is created. It is an invention for strategy. The intersection of from firm centric to
customer centric and from sustainable to transient is not dichotomous. They are interrelated and
complimentary. Both tip toe on and around the same problems affecting every business and
every industry today. Customer centric approaches and transient advantages, both require firms
to leave their organizational guidelines. They involve issues of instantaneous adaptation and or
creation, with risk and benefit analysis for both the consumer and business. And both require the
10 input and acceptance of consumers through namely, innovation. Arguably, the primary attribute
synergizing these two separate yet interrelated thoughts is the innovation requirement of the
transient advantage model. One could say, to be competitive is to innovate constantly, as done by
being customer centric, launching short waves of opportunity. Moving forward with this idea,
technicalities must be established. First, the vast amount of work on customer centric concepts,
such as, prosumerism or prosumption, value co-production, co-creation, and service dominant
logic, are so interrelated, a single definition for the phenomena should function as a reference to
the whole. For the sake of this thesis, that definition is co-creation. Clarifying this summation,
co-creation is then synonymous with value-co-production, service dominant logic, and
prosumerism or prosumption. Similarly, in referencing market members or economic actors,
prosumers co-create or in other words co-creators are prosumers. With regard to the concepts of
competitive advantages, transience and or the transient advantage model/lifecycle will subsume
and serve as a definition for the ideas of short-lived opportunities, dynamic capabilities for
adaptation, and transience itself. These simplifications are made for conciseness and
foundationalism; it gives inclusive titles to parts of a new model for marketing strategy to come.
Methods for tomorrow.
The purpose of this paper is to combine co-creation as a strategy to the transient
advantage lifecycle and propose an applicable model for addressing transient advantages –
opportune waves outlining a lifecycle of value creation and exchange.
In defining the transient advantage model, we note the innovation phase, the ramping up
phase, the exploitation phase and the disengagement phase (McGrath, 2013; Day 2013). The
transient advantage begins with the discovery or reconfiguration of a valued product or service.
In the ramping up phase, business strategy and consumer excitement result in a market presence.
11 Once established, the product or service is then exploited. It is marketed and it’s maximum value
obtained. After return is no longer sustainable to strategic goals, and value is no longer obtained
(for both the producer and consumer), the advantage begins disengagement. The focus then shifts
to reconfiguring strategy, by either altering or finding a new product or service.
Defining co-creation, we understand it as a medium or offering for communication and
experience. It is an implementable concept that is inclusive to every business. It involves
dialogue, in which the producer and consumer communicate what needs to be created and what
needs to be changed. It is a means by which consumers can instantaneously enhance their
experience with a product or service through customization and interaction (Prahalad et al 2002,
2004a, 2004b, and 2013; Ramaswamy 2008; Ramaswamy and Ozcan 2014; Ramirez 1999;
Ritzer 2010, 2012, and 2014; and Vargo et al. 2008). It is beautiful, because it always provides
what the consumer wants. Co-creation occurs through, mobile technology, web 2.0, applications,
information technology, face-to-face communication, and the experience itself. As stated earlier,
it happens anywhere and at anytime.
This process of co-creating some unique value is innovative. Primarily, co-creation meets
this model or lifecycle during the innovation stage. To restate the previous synergistic example,
‘one could say, to be competitive is to innovate constantly, as done through co-creation,
launching short waves of opportunity, while managing it with co-creation as a dynamic
capability.’ Brilliantly, the consumer plays a hand in catching the wave of opportunity –which
benefits both the consumer and producer–, because they assist in creating the valued product or
service. With these definitions in place the argument of this paper, therefore, constitutes cocreation as the theory or strategy for addressing present day implications of value creation and
exchange, and in being so, it both ignites and assists in managing transient advantages. Thus, the
12 proposed model of marketing strategy for short-lived opportunities is called the Co-Creative
Transient Model (CCTM) and is presented later in the paper.
Significance.
With the construction of the co-creative transient model, three things are significant.
Until, this paper, co-creation as created by C.K Prahalad and Venkat Ramaswamy, has not been
used as an inclusive definition referring the vast amount of similar phenomena. Secondly, no
strategy or theory has been added to the transient advantage model to function as an igniter of
and tool for conducting transient lifecycles. Lastly, by developing the co-creative transient
model, it logically is in an implementable way of thought and strategy for furthering success in a
new and advanced marketing era. In this new era, the conceptualization of co-creation as a key
strategy for the transient advantage model or lifecycle and as an approach to strategic marketing
is revolutionary. It contradicts how we have known and practiced strategy and competitive
advantages since the 1970’s. With a more in depth model guiding reconfiguration as an infinite
process, the science of business is advanced.
Observations for review.
This paper does not argue that sustainable competitive advantages are obsolete or
irrelevant. The co-creative transient model thesis composes itself based off of previous work
supporting the importance of being adaptive and perceptive to short-lived advantages (D’Aveni
1995; McGrath 2013; and Day 2013). This paper does not argue or have the intention of proving
the occurrence of the said paradigm shifts. It accepts that the shifts have already occurred, and
uses new knowledge resulting from the shifts to join interrelated discussions.
13 A Timeline for Co-Creation and Transience
It was recently proposed by professor of marketing Dr. Steven White the most current
eras be titled as the Social and Mobile Marketing Eras, the Social Era being from 1990 to 2010
and the Mobile Era being from 2010 to present (White, 2010). The fact that these are proposals,
highlights the amount dynamism and noise occurring in the market making a conclusive
definition nearly unattainable. Through exploring the mentioned phenomena of customer
centrality and transience, we see just how complex these transitions in thought and into a new era
are. Bearing in mind that marketing eras have evolved numerous times, producers and consumers
remain constant, however, factors in the environment change. The trends they focus on and their
activities in the market place evolve, leading to paradigm shifts, which segment new eras. This is
because the entire foundation is phenomenological. As Edward Comor a professor of
information and media studies at the University of Western Ontario emphasized in his discussion
of Karl Marx’s’ argument on capitalist political economies, “individuals are ruled by
abstractions” (2010). These abstractions change with our interests and influence how we define
what is valuable. Thus marketing strategy changes too, because our interests define the
abstractions we appeal to through marketing. Currently, our abstractions are obtained and voiced
through technology. The Internet in particular has empowered consumers to join thematic
communities, fulfill their own needs via online services, seek information and make informed
decisions. This is new to our current paradigms. But what has always been consistent to every
marketing era is the concept of the market. The science of business owes its very existence to the
concept of the market. Our purpose for analyzing this is to establish, if it were not for the market
in which, producers and consumers were established as value exchangers, “business” would not
be here. There would be no strategy to manage and no phenomena to discuss. None of the
14 resulting mechanics of business –strategic management, marketing strategy, competitive
advantage analysis, etc.– would exist. We give much credit to this scientific way of thought, to
the two founding fathers of free market theory, aka capitalism. The first, Adam Smith (1776) in
his work “The Wealth of Nations,” which attests that production and labor are essential to
economic wealth, and of course, Karl Marx in his book Das Kapital, a continuous piece of
literature developed from 1867 to 1894. As Classical Era members, they focused primarily on the
processes and implications of production and the utility benefits of exchange. This makes sense
given their time, but in both discussions –philosophical or not in their contexts– production and
consumption are always present. They simply do not exist without one another, and what is
always occurring, is an exchange of value. Up until the Marketing Company Era of the 1960’s to
the 1990’s value was mostly measurable (White, 2010). Value had a monetary number with
every exchange. But as technology advances, more options become available with opportunities
to enhance ones “self” with both social and hedonic value. This ethos transformed the concept of
value beyond what the bang for the buck was, to what the status, experience and utilitarian value
of some exchange is. Differentiation for many companies then fell under their pricing strategy
and positioning strategies for competitive advantages. These strategies were fueled first from
within the company, for which market segments were then found. In present time, consumers
don’t want to scan through the options offered to them, they want to make their own additions to
the product or service offerings and customize them. We’ll begin exploring the phenomena of
customer centrality first to situate its inception and identify why it came about, followed by the
origins of transient advantages.
15 Origins of Customer Centrality
Presently, there is an abundance of interrelated discussions meditating on customer
centric practices, such as, value-co-production, stakeholder orientations, co-creation, service
dominant logic, and the prosumer. Interestingly enough however, customer centric concepts are
not all that new. The first and most notable critique to customer focused marketing was in 1960
by Theodore Levitt who wrote Marketing Myopia and asked the legendary question, “What
business are you really in (Levitt, 1960)?” This revolutionary article challenged managers to
consider what needs they are actually satisfying for their customers. Levitt provides examples of
what were once growth industries now failing. The most profound being the railroad industry:
“The railroads did not stop growing because the need for passenger and freight transportation
declined...not because the need was filled by others (cars, etc.)…But because they were railroad
oriented instead of transportation oriented…they were product oriented instead of customer
oriented” (Levitt, 1960).
Levitt was certainty ahead of his time in his strategic forthcomings and advice to future
managers. Unfortunately though, the direction Marketing Myopia outlined for business did not
resonate until present day. The issue was not a rejection of this article. Practical and
implementable systems were demonstrated in his thesis and well accepted. But the intention of
creating customer-focused organisms as business models was misconstrued as marketers gained
influence on strategy formulation. Quickly, the customer became king and the age-old saying,
“the customer is always right” became our reality. Managers responded by heeding Levitt’s
advice to establish customer-centered programs, but these programs were faulty. Reflecting on
marketing strategy from the 1960’s to present date, great advancements were made in terms of
16 customer relationship management and the perception of customer value, but such systems were
dominantly based around what the business perceived as valuable to the customer, not what the
customer personally perceived and experienced as valuable. As strategists and managers
continued to evolve, innovations in technology began influencing the unknown of the “high tech
future” and the roles of producer and consumer begin merging. Appropriately so, it was time to
redefine our titles as market members and economic actors. So in 1980, that is what futurist
Alvin Toffler did with the creation of the “Prosumer” in his book The Third Wave. In moving
through the waves as Toffler prophesied them, our species is destined to have evolved through
three waves. Our existence in the first wave was dismal, and exemplified by the market structure
of the trade era. Commodity and self-harvested and or self-created artifacts ruled the exchange of
our daily lives. Growing tiresome of self-dependency, humans created systems of specialization
in an industrialized society –the capitalistic society we are more accustom to today –, which
Toffler named the second wave. But as technology advanced or continues to advance, it is
Toffler’s greatest and most popular prediction that the roles of producer and consumer will fully
merge. With the availability of advanced technology, commodity and industrial resources will be
at the disposable of each individual and the empowered prosumer will posses the ability to
customize their products and services instantaneously in the third wave. Alvin Toffler’s most
famous demonstration of the almighty prosumer is given with his analogy of future retail
shopping:
“The most creative thing a person will do in 20 years from now, is to be a very creative
consumer…Namely, you’ll be sitting there doing things like designing a suit of clothes
for yourself or making modifications to a standard design, so the computer can cut one
for you by laser and sew it together for you by machine right then” (Toffler, 274, 1980).
17 Of Course, in this year 2015 we are not purchasing personally designed and laser tailored
suits, but this raised eyebrows then and still does now. In 1986 Philip Kotler of the Kellogg
School of Management at Northwestern University, reviewed Alvin Toffler’s vision of the three
waves outlining the recreation of the market as we know it post industrial era. His purpose was to
describe Toffler’s thesis, extend the prosumer concept further and to examine its validity and
implications to the modern day marketer (Kotler, 1986). By examining Toffler’s thesis through
Kotler’s lens, we identify the difference between producing for use and producing for exchange.
In this distinction, producing for use is a marriage of the consumer and producer. While
producing for exchange, is done by separating consumers from production. As a reflection to the
time when this analysis of the future was written, most of Toffler and Kotler’s examples of
prosumer activities for use, involve basic physiological and safety based needs. E.g. Food
production and consumption, shelter production and use, and blue-collar services such as
hanging wallpaper, painting, and working on ones car. Herein lies the new challenge for the
marketer. Kotler’s point, is marketers will be at a loss of consumers to market to. The action of
creating value through a product or service will decrease and marketers will have to research and
develop products and services that assist prosumers in prosuming. Because of this drastic change
in the structure and processes of the market, what is said to be a competitive advantage will be
redefined (Kotler, 1986). Proving to be ahead of his time as well, Kotler advises that before it is
acceptable to worry, marketers should not move to protect exchange in the market place, but
rather work to synergize with prosumers and identify the new opportunities coming with the
change(s). Kotler also reminds us, “the market is human created and will serve our needs as long
as we need it to” (Kotler, 1986).
18 Theories of the customer centric firm have been in the works since the 1960’s. Great
advancements in marketing were made putting consumers at the focus of strategy, but they were
geared around what the firm viewed as valuable to the consumer. This unstable and conflicting
relationship between producers and consumers in the market lead to the creation of the prosumer
empowered by the promise of advanced and interactive technology. It was then and remains
today a paradox for marketers to market products and services that assist prosumers in
prosuming. Today, however, immaterial value creation is not harvested from the experience or
utilitarian value of some product or service. The Internet, mobile technology, and thematic
networks of prosumers have created and fostered and even more customer centric enterprise.
This adheres to an even more empowered prosumer society.
Origins of Transient Advantages
The original tools for strategy were designed to create sustainable competitive
advantages. This idea of maintaining a sustainable competitive advantage is especially
exemplified in Michael Porters five forces analysis and the resource based theory of the firm.
Created in 1980 with its publication in the Harvard Business Review, the five forces analysis
analyzes the level of competition, threat of substitution, bargaining power of buyers, level of
supplier power, and threat of new entrants on a rating of low, moderate or high. It is said, if all
forces within ones market are low, the firm has a sustainable competitive advantage (Porter,
1980). Adding to this concoction of sustainable recipes, the resource based theory promises such
an advantage through the acquirement or development of valuable, unique, nonsubstitutable,
nonimitable, and rare resources. Other tools of the time, which became the dominant analyses
learned and practiced to present date include, the BCG (Boston Consulting Group) Growth Share
Matrix (1970) and the McKinsey’s 7s model. These tools as McGrath refers to them are, “the
19 biggies,” that don’t provide the results needed anymore because of their inadequate adaptability
to the more volatile current time.
Surprisingly as well, paradigmatic discussions responding to hypercompetitive markets
with a focus on short-lived opportunities are not all that new either. The first critique to semipermanent strategy was in 1995 by Richard D’Aveni who famously critiqued the McKinsey 7s
model. As a strategist, D’Aveni reviewed the conditions of the market and compared it to what
strategic tools mangers were using, as they deemed necessary. He proposed a new view of the
market, in which we observe it as extremely hypercompetitive and so fierce, “that competitive
advantages are competed away or eroded rapidly, because of erratic conditions” (D’Aveni 1995,
1995b, and D’Aveni et al. 2010). The proposal took the original application of the McKinsey 7s
model, being a firm’s “shared values, staff, style, systems, structure, skills, and strategy”
working in harmony to attain competitive advantages, and proposed the new 7s model. It
emphasizes, “superior stakeholder satisfaction, strategic soothsaying, positioning for speed,
positioning for surprise, shifting the rules of the game, signaling strategic intent, and
simultaneous and sequential strategic thrusts” (D’Aveni, 1995b). The primary problem this new
model solved was the ability to survive in instable market conditions, by being instable. With an
emphasis on continuous change, the 7s model is designed to provoke, encourage, and guide
continuous change with no solid “recipe for success” (D’Aveni 1995). Furthering this concept of
short-lived advantages, he proposed the “wave theory” in 2010. D’Aveni designed a metaphor
through which we observe that no ocean wave is the same. The air, the sun, the wind, and the
moons gravitational pool all have an influence on the unique lifecycle, structure, and size of each
independent wave. Correlating this to business, a competitive advantage in a hypercompetitive
market has its own unique and separate lifecycle because of the many environmental factors
20 affecting it. The swift attack of a competitor, the establishment of a new substitution or an
internal environment incapable of readjusting quickly, affects the length and quality of each
company’s ride on a wave (D’Aveni et al. 2010). Convincing and rationally sound, this theory
furthered a better understanding of how to grow and combat a loss of market share. Consistent to
McGrath’s (2013) argument, D’Aveni notes there are industries that do in fact have sustainable
competitive advantages, such as oligopolies and monopolies, but the different concepts are
mutually exclusive. Our understanding of conducting temporary strategies is furthered by
understanding one concept cannot exist if the other is not there for comparison.
21 Defining Co-Creation
Co-creation is used as an inclusive definition to the stated customer centric phenomena
primarily for two reasons. First, by its very word choice and definition, it is the most logically
sound and concise term for the interrelated thoughts. Secondly, it as its own concept has been
developed upon and published the most. Bearing in mind everything else, though co-creation has
received the most attention, all other thoughts, especially those of the prosumer with its
revolutionary and unique renaming of market members, are still relevant; that is to say cocreators are synonymous with prosumers. Simply put, prosumers co-create and co-creation is
synonymous with service dominant logic, value co-production, prosumption, and anything else
merging the roles of producer and consumer. Points of intersection and relation between these
concepts, include a requirement to pursue value from outside of the firm, both material and
immaterial value creation, an emphasis on experience, immeasurable returns of value, and in
some facet or another the Internet, mobile technology, and information abundance.
Early discussions of customer centric activities were conducted under the concept of the
prosumer and were solely material based. For example, Alvin Toffler’s (1980) analogy of the
laser tailored suite and Philip Kotler’s (1986) extension of the prosumer thesis with the paradox
of more do it yourself products and services, such as, working on ones own car, take home
pizzas, and in store kiosks, etc. But as the turn of the century approached, an emphasis on
revolutionizing the affordability and access of services became prevalent. Erik Banks of the
University Center at the City University of New York described his thoughts in 1998 on the
prosumer movement as, “political in nature…but an opportunity for consumers to manifest a doit-yourself ethos…in an economy that is a whole lot simpler than producers would like us to
know” (Banks, 1998). This opinion was essentially a response to a lack of affordability in
22 services and products. Foundational work on merging the producer and consumer afforded
market players supplementation to replace a service with their own time and effort, to create their
own value, and save money. With such buzz discussions occurring in the market a new sense of
consumer “self” began spreading through society and professionals turned to a revaluation of
business, which inevitably lead to “co” models.
The first “co” concept was in 1999 by Rafael Ramirez with his creation of value coproduction. His thesis analyzed the difference between what value creation looks like when it
adheres to the inherited behaviors and thoughts of the industrial era, versus the ways of thought
or processes of value creation with enhanced and new sociotechnical developments. Ramirez
explored the definition of business and demonstrated how value-co-production requires
reestablishing organizational structures and systems. This reestablishment of systems as
emphasized by Ramirez, calls for firms to leave their internal boundaries and establish an
outside-in approach to conducting exchange for utility (Ramirez, 1999). With reconfigured roles
as economic actors (prosumers), new offerings have to be jointly created with innovative coproductive relationships through new value creation systems. This necessitates dialogue and
engagement platforms, with value constellations composing different forms of value or types of
value. According to Ramirez (1999), value cannot always be measured or monetized. Much of
his work focused on creating systematic processes for reconfiguring strategy and organizational
systems, which influenced much of Prahalad and Ramswamy’s work on co-creation in 2002,
conveniently, shortly after the .com bust.
Differing from Ramirez, Prahalad and Ramswamy’s formulation of and focus on cocreation was geared towards solving the century’s paradigm of value deficit, fueled by the
Internet empowered consumer. Prahalad and Ramaswamy concluded the Internet has forced
23 business to change its industrial, capitalistic, and firm centric ways, because it fosters customer
centrality by its very nature. Through the Internet, consumers now have access to information, a
global view, thematic networks, enhanced experimentation, and more opportunities to practice
sociocultural and political activism (Prahalad and Ramaswamy, 2002). And while this is a
common consensus amongst customer centric authors, some argue immaterial and online
prosumption activities actually exploit the empowered prosumer (Ritzer et al. 2010, 2012; Ritzer
2014).
Such empowerments and exploitations are demonstrated by the English professor of
digital media studies at the University of Pittsburgh, Jamie Skye Bianco, who outlined some
intriguing “precarious affordances to the prosumer” (Bianco, 1999). Bianco’s work exemplifies
how the Internet and social media create an objective market place where knowledge can precede
abstraction. Prosumer activity on social media, in particular, can lead and function as a source for
communal disobedience and psychosocial avocation. This is shown whenever a thematic
community joins an avocation page to stand up against suppression, oppression, or societal
disapproval, such as supporting public breastfeeding (Bianco, 1999). On the flip side of this
communal empowerment, are the exploitive forms of online and immaterial co-creation or
prosumption, because prosumers of digital content provide free information. Demographics,
social trends, tastes and preferences, and our personal insights are available to companies
through social media platforms, such as Facebook, who sell that information (Bianco 2009).
George Ritzer and Nathan Jurgenson (2010) expanded on the ideas of immaterial and
online prosumption by emphasizing how prosumers of online activities provide information and
services for free and explored the exploitation of such activities in the capitalistic economy.
Though their conclusion was capitalists have a difficult time controlling prosumers in the same
24 ways they have been able when the roles of producer and consumer are distinctly separate
(Ritzer et al. 2010, 2012 and 2014), prosumers now fill a void once done by the firm. For
example, in the oil and gas industry there is a distinct separation between the provider of
gasoline (the producer) and the purchaser of gasoline (the consumer). In this scenario and as
described by Ritzer et al. (2010), material prosumption in this market occurs when the purchaser
takes on the role of prosumer by pumping his or her own gas. However, because this purchaser is
inevitably at the mercy of he producer for what they will pay, their role is distinguished and they
are exploited through their consumption of the gasoline, because their input on gas pricing is
absent. With regard to immaterial (Ritzer, 2010) and experience co-creations of value
(Ramaswamy 2008), the empowered 21st century prosumer via the Internet and other forms of
technology, is not easily exploited, because of their freedom afforded through self-generated
content. Bearing the distinction of a consumer versus a prosumer in mind, it would appear
exploitation only occurs when the resources of the individual are limited. Yet, it is still our
reality that prosumption from the material view, is an innate function e.g. we build our own
homes, harvest and prepare our food, and design and make our own clothing. Hence we are
prosumers, who innately produce and consume our own resources and artifacts, but have found a
new sense of empowerment with the Internet and mobile technology (Ritzer 2014; Prahalad and
Ramaswamy 2002; Ramaswamy 2008, Ramaswamy and Ozcan 2014).
Co-Creation as a Strategy.
Other models for co-creation are exemplified through service-dominant logic, created by
Associate Professor Stephen Vargo and Professor of Marketing Robert Lusch from the
University of Arizona. The two conceptualized and constructed theoretical work on an evolution
occurring in the market transferring strategy from goods-dominant logic (GD-logic), to what
25 they refer as, service-dominant logic (SD-logic) (Vargo, 2007). Service-dominant logic’s salient
relations to concepts of dialogue and of intimate interaction between the consumer and producer
are found in its foundational premises (FP). These premises establish that “the customer is
always a co-creator of value and that value is uniquely and phenomenologically determined by
the beneficiary” (Vargo et al., 2007).
As strategist, C.K. Prahalad and Venkat Ramaswamy were the first to establish an actual
model and framework to apply to marketing strategy. Bearing the pillars of empowerment for the
21st prosumer in mind, they created the DART model (dialogue, access, risk-reduction, and
transparency) as a building block for co-creation (2002 and 2004a) and the “experience
environment” (2004b and 2013) as a medium for fostering and making co-creative activities
more approachable and applicable to business. Ramaswamy who created experience co-creation
(ECC) furthered the concept of the experience environment in 2008, and then again in 2014 with
Kerimcan Ozcan, who both founded the co-creative environment model to include engagement
platforms of APPI (persons, processes, interfaces, and artifacts), with co-creative actions
powered by CITI (creativity, intentionality, integrativity, and transformativity).
DART (dialogue, access, risk reduction, and transparency).
Dialogue in the DART model is the creation of shared meaning. It’s a whole other level
of market research and development. “Dialogue involves more than listening and reacting. It
requires deep engagement, lively interactivity, empathetic understanding, and willingness of both
parties to act” (Prahalad, et al. 2002). For example, if companies would have listened in the
music industry, there would not have been as much or any at all, illegally downloaded music.
Instead, they should have changed their platform, the way it has been now with Spofity, Sound
Cloud, Hype Machine, iTunes Radio, etc., offering easily purchasable and reasonably priced or
26 frankly, free music. With access, dialogue and services with the company need to be easily
accessible. Music being another great example, it is not that consumers aren’t willing to pay for
music. Instead, they want easily accessible music after they have paid a fare price. But it cannot
be difficult to obtain. Car2Go is another great example. People are able to obtain transportation
with a monthly fee and pay as you drive system. They can easily communicate with Car2Go, so
both parties can enhance their experience and customers easily access a solution to their need,
transportation. With risk reduction, there is always going to be a component of liability on both
the business and consumer ends. Both parties have to assume responsibility and are obligated in
some way throughout their relationship’s lifecycle. With co-creation, consumers will be more
willing to take on more responsibility, if companies are more willing to reveal more information
about “the risks associated with the products and services they offer” (Prahalad and
Ramaswamy, 2002). In a world with more information and technology making that information
more readily available, consumers now demand opportunities to make better-informed decisions
and reduce risk. –Risk reduction was later changed to “risk-return,” by Ramaswamy in 2008 to
emphasize a return of value, and to “reflexivity” in 2014 by Ramaswamy and Ozcan to emphasis
the necessity of instantaneous action on both party’s halves–. Transparency is the component of
the DART model relinquishing value creation before the traditional point of exchange. For
example, the USPS allows current time packaging tracking and the option to re-route them to
other people, and by doing this, the company improves the customer experience. With no
secretes or lack of information in the value creation and supply process, consumers are able to
customize and specialize their product or service. The DART model serves as a guiding
systematic process and foundational core value to merge the views of the producer and consumer
through co-creation.
27 Experience environment and experience co-creation.
The experience environment provides a framework allowing firms to facilitate cocreative experiences with millions of prosumers. The experience environment includes products
and services, the interfaces by which the prosumer interacts with the company, including its
multiple channels, modalities, employees, and communities (Ramaswamy, 2008). This
environment itself is from where and how prosumers obtain value. Ramaswamy discussed this in
2008 with his analysis of the Nike case. Nike created an effective experience environment by
teaming up with Apple, creating online and physical thematic communities, with interfaces for
communication and customization. The Nike experience environment allowed experience cocreation because of their development of Nike+ (Nike Plus), a system that synchronizes your
shoes with your apple product to track your steps, distance, speed, geographic location, heart
rate, and more. Through the Nike ID website, the runner could then upload their trails or tracks,
distance ran, calories burned, their running goals and connect with other runners in their area,
which creates a thematic community of runners (Ramaswamy, 2008, Prahalad and Ramaswamy
2013). An experience environment as a framework for a co-creative business model is necessary
because of the complexity beyond simply embracing DART. Fueled by developments in
technology and the changing demands of prosumers who value instantaneous customization and
experience enhancement, an experience environment provides inclusive coverage to the nuances
of merging producer and consumer.
In establishing the creation of the experience environment from which utility and
experience value are obtained, we see it as a basis for innovation as well. That is to say,
innovation now goes beyond a new product or service and now includes experience environment
innovation (Prahalad and Ramaswamy 2013). And though co-creation can help with a product
28 or service innovation, by its nature, the experience environment encompasses much more. A
model of an experience environment as it was portrayed with the Nike case by Venkat
Ramaswamy (2008) is displayed below:
Co-creative environment model.
The co-creative environment model is the most innovative model of guidance for a cocreative system yet. With the new model, Venkat Ramaswamy and Kerimcan Ozcan developed
three new components the, “experience domain, engagement platform, and the capability
ecosystem” (Ramaswamy, et al. 2014). This model with its more in depth components, clarified
what a market of co-creators looks like. Furthering the definitions of the market players, firms
change from just enterprises, to stakeholding individuals and enterprises who instead of
producing goods and services, co-create experiences. Instead of just market activities, co-creative
engagement platforms function as a nexus of value creation (Ramaswamy et al. 2014). In short,
experience domains contain APPI (persons, processes, interfaces, and artifacts), DART, and
valued attributes of “personalization, quality, novelty, and variety” (Ramaswamy et al., 2014),
from which co-creation occurs and an experience is derived. The authors use a fantastic example
of the Apple store, in which, consumers enter to be greeted by a knowledgeable staff, with
29 efficient and customizable processes, a multitude of interfaces to utilize and enhance their
interaction, with customizable and attractive artifacts (the iPod, iPhone, etc.) These experience
domains are fueled by the ‘capability ecosystem’ and the ‘engagement platforms.’ In arriving at
an actual experience domain or similarly an experience environment, the input of the stakeholder
oriented enterprise and stake-holding-co-creator synergize by collaborating through the
capability ecosystem and the engagement platforms of the market. Note the experience and
product or service innovation occurs on the engagement platforms, which then affords an
experience domain to be created.
Co-creation is the future of marketing and a firm’s ability to maintain a competitive
advantage. As stated earlier, co-creation as discussed in this paper subsumes the preceding, as
well as, current discussions of interrelated concepts, specifically, value-co-production, and
30 prosuming or prosumption. The prosumer thesis as a model for an actual economic actor or new
definition for a market member is accepted to derive the conclusion that co-creation is something
prosumers do; prosumers co-create their value. Since the inception of the prosumer and market
activities marrying the roles of production and consumption, value creation has been majorly
material and utility based. For example, prosumers take home sauce packets and create their own
sauce at home, or prepare their own tax documents, etc. 21st co-creation is still in many cases
material and utility based, but the Internet, mobile technology, and information abundance have
created a new wave of value creation through the process of co-creation fostered by the customer
centric enterprise. This new concept of value goes beyond measurable return, and is now notable
by the experience and immaterial value a prosumer obtains from their interaction or exchange
with a firm or the resources afforded to them. These conclusions lead to the primary attribute of
the co-creative transient model (CCTM), being the co-creation component (CCC).
Examples of Co-Creation
Material co-creation.
In recognizing the prosumer as an innate function of the human condition (Ritzer, 2014),
we can note more simplistic and evolutionary forms of prosumption. Such practices would
include, building one’s own home, planting, harvesting, and preparing one’s own food, making
our clothes, etc. Such forms of material co-creation and or prosumption would include:
•
Conducting a personal exchange on a kiosk machine independently.
•
Checking one’s own blood pressure in the grocery store or pharmacy.
•
Taking group photos in photo booths.
•
Functioning as the DJ in your restaurant through wireless jukeboxes.
•
Participating in live broadcasts.
31 •
The square and cash applications and credit transaction devices.
Immaterial and experience co-creation
Material and physically experiential forms of co-creation are obviously going to continue
as an innate function of the human condition. Immaterial and experience forms of co-creation,
however, are more intriguing and prominent to such precarious times. These are the forms of cocreation afforded to modern day prosumers via the Internet, mobile technology, and information
abundance. These forms empower prosumers, foster instantaneity and customization, and create
experience environments of mass membership. Such examples include:
•
The experience environment of Nike+ and Nike ID.
•
Thematic online communities (e.g. dating websites, avatar profiles, nutrition and health
web-based communities, Facebook groups, etc.).
•
The Google Maps location creator.
•
Spotify and other music platforms allowing users to add songs, create playlists, and share
music.
•
iCal, Asana, Google Calendar and other cloud-based scheduling systems that are
customizable buy the user.
•
Amazon, Etsy, craigslist and eBay, etc. which allow everyday people to sell their
products and services online.
•
Social media platforms such as, Facebook, Instagram, Pinterest, and YouTube, which
allow users to join cohorts, voice themselves, provoke psychosocial avocation, and create
their own marketing resources.
32 •
The Wayz mobile application in which users create new drive paths, report accidents,
pull-overs, and longer drive times instantaneously on the road for a community of drivers
to better navigate their commute.
•
The Robinhood application, which allows users to independently invest and trade
American stocks from the convenience of their phone independently.
•
The Acorns application with allows users to invest in a portfolio with now minimum
limit, by either rounding up daily purchases on their phone, or investing personally
decided amounts whenever they want.
33 Defining Transient Advantages
The transient advantage model for this paper’s definition includes its existence as a shortlived opportunity phased through the transient advantage lifecycle/model (TAM) (McGrath,
2013), initiated by and managed with the firm’s adaptive capabilities for enhanced dynamism
(Day, 2013). This concept so far as this paper is concerned recognizes that not all industries are
subject to transient advantages. There are in fact some industries that capitalize on semipermanent strategies with sustainable competitive advantages. Such include, the oil and gas
industry, high tech industries, and industries with loyal customer basis. Complex by its inclusive
coverage of strategic management, the transient advantage model as created by McGrath (2013)
is revolutionary because of its continuous redefining of the internal structure of the firm, with a
never ending pursuit of out-side in approaches to action. With continuous internal
reconfigurations of the organizational demographics and systems of a firm, the TAM necessitates
more outside-in based approaches to value creating activities. Earlier forms of competitive
advantage and market share analysis portrayed product and service or business models as
defensible yet still finite. With McGrath’s view of the transient advantage, an offering by the
firm (its advantage) goes through five stages or phases: the launch, ramp up, exploit, reconfigure,
and disengagement phases. In the launch stage, the firm identifies a new opportunity, re-allocates
its resources and assembles a team to create something new. This new obtainment is either an
alteration to something already existing, an innovation, or a new market entirely (McGrath,
2013). During the ramp up phase, the new product or service benefits from a period of buzz and
excitement leading to an established market presence. As more and more segments are captured,
the business gains ground, and systems and processes designed to gain full-scale market
dominance are implemented. McGrath notes speed to be a crucial factor during the ramp up
34 phase, because competitors can quickly match what is being done, steeling market share and
destroying differentiation. In the third phase, this now established opportunity enters into
exploitation. During exploitation, “the company has effectively differentiated its strategy,
customers are appreciative and everyone’s enjoying the benefits” (McGrath, 2013). The key
component to this phase, is mastering how to prolong the advantage as long as possible, while
still being mindful it will eventually erode. Managers do this by constantly analyzing the market
for threats and opportunities, while mindfully minimalizing assets and people specific to the
function, because they will create barriers to the next innovation or opportunity. After
exploitation, comes reconfiguration. During reconfiguration, assets, people and the capabilities
of the firms begin making a transition from the current advantage to another. Employees shift
from current assignments or activities to new ones and assets are moved (McGrath, 2013). Once
it becomes clear the opportunity has begun eroding, the need to disengage is suggested. The firm
then disposes of assets no longer relevant to its successful future, and either sells them, shuts
them down, or disposes of them all together. The process then repeats itself, and is capable of
doing so because of its adaptive capabilities. Below is the transient advantage model/lifecycle as
created by Rita McGrath.
35 Original resources that allowed firms to compete in unstable markets by being instable
were proposed to be dynamic capabilities. Within the last few years the validity of dynamic
capabilities has been proven to be inefficient in providing the dynamism needed to react in time.
Richard D’Aveni (2010) discussed what were once conceivably effective tools to reconfigure
and react, as incapable of providing the results necessary because of fatigue from initiation and
misdirection from the noise and chaos of transitioning. Such capabilities required to reconfigure
for a short-lived opportunity, as mentioned previously, are now referred to the adaptive
capabilities, as created by Wharton business professor George Day. Adaptive capabilities are
more or less malleable guidelines to enhance the dynamic capabilities of the firm, and they
include, “vigilant marketing learning, advanced warning systems, adaptive and planned
experimentation, and inclusive marketing to forge relationships and anticipate change” Day,
2013). These adaptive capabilities when practiced enhance those of dynamism discussed earlier
by D’Aveni (2010) and Day (2010) which include “sensing organizational change, scanning
across markets and technologies, responding by combining, transforming or adding new
36 resources, and selecting an organizational reconfiguration and business model to deliver and
capture economic profit” [Kozlenkova 2013, as cited by Day (2013)]. Transient organizations
must harness this view of strategy formulation and perfect a continuous process of reaction and
adaptation. This continual reconfiguration requires companies to operate with ambition as a
customer-focused organism, with strength in their identity and culture, a thriving organizational
development program, flexibility with internal and external change, and a continuous pursuit of
experience and product or service innovation.
With reference to the transient advantage model as an inclusive definition to interrelated
phenomena, establishes the requirement of an organizationally transformative and strong firm,
who embraces temporary advantages –acknowledging that each is different with its own unique
factors– guided by its ability to enhance its dynamism through adaptive capabilities.
37 Co-Creative Transient Advantage Model
Using the co-creative transient advantage model (CCTM) conceptually, we see it as both
an igniter of transient advantages and tool for managing them. It includes two components. The
first is an alteration of the co-creative environment model (Ramaswamy et al. 2014) call the cocreative concept (CCC) and the second, is the transient advantage lifecycle as created by
McGrath (2013), with its five phases. These two components are merged to demonstrate the
process of creating a short-lived competitive advantage and its management throughout its
lifecycle.
As the “co-creative” function to the CCTM, engagement platforms are the epicenter of
the co-creative component, which exist as the environment’s artifacts, people, processes, and
interfaces, which are always guided and influenced by DART (dialogue, access, risk reduction,
and transparency). Differing from Ramaswamy and Ozcan’s (2014) co-creative environment
model, in which, enterprises are distinguished by their sector, meeting “stakeholding” individuals
as co-creators through the environment’s engagement platforms, the CCTM synergizes the
interaction of customer centric organizations with prosumers on engagement platforms.
Additionally, the ecosystem of capabilities in the CCTM is composed of adaptive capabilities
(Day, 2013), outside resources (McGrath, 2013) and creativity (Ramaswamy et al., 2014), versus
“generativity, evolvabilitiy, inclusivity, linkability, infrastructure, development, sustainability,
and governance” (Ramaswamy, et al., 2014). We recognize the customer centric organization
could be from any sector of society. Regardless its function, the organization must be an
ambitious, agile, adaptive, strongly lead, reconfigurable, and a life-long learning organization.
With prosumers merging at this nexus of engagement, we respect their role as stakeholders who
are empowered from thematic communities. Interaction on the engagement platforms is either
38 direct or through the environment’s ecosystem of capabilities. At this junction, we distinguish
the difference between general or direct interaction and a co-created product or experience
environment innovation.
General exchange and interaction on an engagement platform include frequent or daily
product use and value creation. For example, using a mobile phone to co-create a social media
post, update a car accident on Wayz, taking an amazing photo, or preparing a new take home
pasta. With established processes, the customer centric firm has to constantly engage in dialogue
and analyze its performance to either make an alteration to an existing advantage or engage in
innovation. When communication between the organization and prosumer concludes a change
needs to be made, they work together to co-create an alteration to the existing transient
advantage with adaptive actions. If it has become clear through constant analysis and dialogue
that value is no longer obtained, the parties engage in innovation, which is fueled by the
environment’s ecosystem of capabilities. The firm centric organization and prosumer arrive at
this process from either the engagement platform, or through the ecosystem of capabilities itself,
which directs them back to the engagement platforms, resulting in a new innovation and transient
advantage. Refer to the co-creative component below:
39 The innovation process fostered and guided by the CCTM is the igniter of transient
advantages, while general and direct interaction via the engagement platforms is a function for
managing the advantage throughout its life cycle. When innovation or an entirely new
opportunity presents itself or is found, the business and prosumer synergize in the community’s
ecosystem of capabilities fueled by outside resources. As a nexus for recreating a new experience
environment or constructing an innovation, creativity and open-mindedness dictate the duets
utilization of the dynamic and adaptive capabilities afforded. If an adaptive move has to be
made, the organization may reorganize its organizational demographics or discontinue a product
line. Recognizing this a continual process, the co-creative component is present at every phase of
the transient advantage lifecycle and can be used to find additional transient advantages, while
one continues to exist. Below is the CCTM as a conceptual model, demonstrating how one
40 advantage may continue to exist, while others are continuously found, with adaptive actions
taken to prolong the transient advantage as long as possible.
The co-created outputs of the CCTM are what mergers the paradigmatic problems of
customer centrality and transience. Co-created outputs as made from the interaction of the
customer centric organization and prosumer are what either creates a new transient advantage
through innovation, or provokes adaptive action adhering to the prosumer’s desires which extend
the transient advantage’s lifecycle. By applying the co-creative component (CCM) to every
phases of the transient advantage model (TAM), market dominance is established, exploitation is
fully utilized, disengagement queues are quickly identified, and the process of reconfiguration is
done with ease.
41 Conclusion
The definition of our current business era has become increasingly complex with the
sequential paradigms of from firm centric to customer centric and from sustainable to transient
advantages. To solve our current paradigmatic problems, it appears these shifts in thought must
inevitably intersect and synergize to provide a solution to creating value for a world of
prosumers and organizations susceptible to transient advantages. Customer centric concepts such
as service-dominant logic and value co-production have been thoroughly subsumed by the
concept of co-creation and its succeeding building blocks, such as, the experience environment
and DART. The market is now dominated by prosumers (co-creators) who inject their interests
into the menu of products and services a company offers, to co-create not only their experience
and utilitarian values, but also new product and experience environment innovations as well.
Developments in technology with the Internet and mobile technology especially, have ushered in
a new wave of empowered prosumers who are not as easily exploited with their freedoms of selfgenerated and customizable content. This new fabrication of the market has increased the amount
of company’s subject to transient advantages. Transient advantages as a model or concept
inclusively converge other concepts relevant to short-lived opportunities or temporary
advantages. These lifecycles or waves of opportunity are discovered and created by the enhanced
dynamism of an organization’s adaptive capabilities.
The intersection at which the paradigms of customer centrality and of transience meet is
based on an outside in approach with constant change as derived from the prosumer’s input. As a
paradox, industries who have sustainable advantages in stable markets who embrace little to no
co-creative activity, is juxtaposed by industries operating in unstable environments who seek the
customer first, to then innovate, and ignite a short-lived advantage. Simply put, transient
42 industries are already co-creative, while sustained industries, such as the oil and gas industry, are
firm centric and do not have to be agile and adaptive. Herein lies one of the greatest connections
between customer centrality and transience. As Prahalad and Ramaswamy established with their
earliest work in 2002, the competitive advantage will now lie with those who co-create the best.
In conceptualizing a marriage of the solutions from the transient advantage model and
those from co-creative concepts, the co-creative transient model (CCTM) exists as an applicable
prototype for strategy formulation. The co-creative component (CCC) as an alerted version of
Ramaswamy and Ozcan’s co-creative environment, added to the transient lifecycle as outlined
by McGrath, conceptualizes the CCTM as both a provider of transient advantages and tool for
managing and prolonging them. The engagement platforms of the CCTM are the epicenter of all
co-creative transient activities. These platforms either provoke adaptive action or result in cocreative innovations that ignite new transient advantages. This nexus of interaction and creativity
is fueled by and composed of customer centric organizations, empowered prosumers, and the
environment’s ecosystem of capabilities.
With constant engaged communication, analysis, and action, many components of this
new model will affect the future of business and employment opportunities for the 21st century
marketer. In light of Richard D’Aveni’s (2010) discussion, data analysis and information
interpretation will become increasingly more important. More current analyses reflecting what is
really occurring in real time will open new portals of research and development opportunities to
prolong advantages and identify new ones. It is concluded then, that much attention will continue
to be given to the market place dominated by the prosumer, with co-creative bliss and short-lived
opportunities. Further research on such topics will include the application of the CCTM to
business models that have or will embrace concepts on co-creation and temporary advantages.
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