Any buyer-seller relationship is set up around the same three primary elements, which haven’t really changed since the moment the first organizations emerged. They are:
1. the selling organization as a whole;
2. the product, service, brand, experience – including all related information and processes;
3. the buyer and the purchase decision.
The first two, the seller and their offer, are traditionally controlled by the organization in order to manipulate the third element, the buyer and the buying decision.
The organization determines every aspect of their business: from who they are and what they stand for, to how they organize themselves, or whom they hire, etc. This is generally completely controlled from the inside.
Organizations also tend to control all aspects of their offer: from what they deliver, to how and where they do this. Traditionally, these decisions are based on the knowledge and expertise that has been built up within the organization.
Although it is impossible for organizations to fully control their customers’ decisions, they can manipulate aspects of their offer, distribution channels, marketing and communication in order to influence these decisions to their favor. This manipulation of ‘independent variables’ is typically done from the inside out: based on the organization’s knowledge and experience, with the customer as the ‘dependent variable’.
In the organization-driven era that lies behind us, manipulating the customer as a ‘dependent variable’ used to be an effective way to secure a stable market position. However, with the rise of the co-creation paradigm the customer is turning into an independent agent. Customers now have unlimited access to the information and resources needed to co-create their own world. Social media allow them to let others share in the process and be influenced by it. Word-of-mouth was always the strongest form of communication; in the co-creation paradigm it has become even more powerful.
Organizations can’t control the ‘people-powered’ information channels that customers now use to make their decisions, nor the ‘buying’ and ‘sharing clubs’ that allow customers to go around the traditional distribution channels, nor the way social media are used to share experiences and influence decisions.
If organizations want to survive within the co-creation paradigm, they can no longer independently determine what, how, when and where to sell to customers. They will have to listen to their customers, who are demanding that the offer is developed to their best interest and represents true relevance and value.
Moreover, organizations can no longer rely on modeling themselves to only serve their own interests. They can’t risk saying one thing and doing another, because in the co-creation paradigm ‘behind closed doors’ is history. Customers expect organizational transparency in order to make their decisions. If transparency is not a given, that will be an incentive for independent customer-instigated research into the organizational motives and actions. Thus, organizations should shape their business around the needs, wants, and ethics of their customers.
Note that this affects the hierarchy of the three core elements. Where traditionally the organization lies at the heart of these elements and is the controlling agent, in the co-creation paradigm the customer is the central agent. In other words: control is shifting from organization to customer.
Organizations that will continue to try to manipulate customer decision making from the inside-out will find themselves more and more pushed to the position of ‘dependent variable’. This is nothing to become nervous over. It just calls for modesty on the organization’s side. As soon as organizations let go of their dominance and allow their customers to co-create their organization and offer with them, they will flourish.
Authors: Maarten Pieters & Stefanie Jansen, Copyright 2014