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Co-creation drives the service business

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Service companies are increasingly operating in networks, forming ecosystems. These ecosystems are developing according to the markets to respond to the changing needs of end-users. In a fast-paced environment, the roles of co-creation, lean methods and service design are emphasized.

Internet and information technology bring and hold ecosystems together. Development is guided by the exponentially growing amount of real-time information. Business model development follows the market and technological developments, while value creation is guided by iterative service design. Servitization is increasing due to self-service and more diverse service portfolios. In this environment, it is neither the strongest nor the most intelligent company that survives – it is the company that is the most responsive to change. In the digital age, every company is an IT company.

In this environment, it is neither the strongest nor the most intelligent company that survives – it is the company that is the most responsive to change. In the digital age, every company is an IT company.

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Seppo Kuula

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CEO

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Ecosystems usually have a strong platform vendor as the center of continuous service development. Well-known examples include Apple, Facebook, Google, Amazon and Alibaba, but the same kind of thinking is becoming more common in business networks of smaller enterprises. Companies integrate their resources in value co-production.

A transformed business environment calls for a transformed business logic: the product-driven philosophy of industrialization does not serve co-creation. Service development is, however, still stuck on old patterns: the company develops a product and puts it on the market, hoping to generate sales. This logic does not work well with services – products are sold, whereas services are bought. People and companies demand services they really need. The service provider needs to be an enabler, not a subcontractor.

Companies can respond to this transformation with a combination of lean thinking and service-dominant logic. To be able to react to the constant changes of the digital age, service companies need a service-oriented and iterative operating model in which value is co-created with the customer.

Highly educated and digitally advanced societies, as the Nordic countries are, have everything it takes to succeed as a part of global ecosystems, even as platform actors. For this reason, universities and enterprises should join forces to develop a new service-oriented service platform adapted according to global customer needs. This will require continuous business model development, value-offering coordination, and a new kind of leadership where the owners, board of directors and operational management all trust their organizations and the transparency to operations is seamless. This way, we can help Nordic service business and service exports develop in the direction set by the trends.

 

Seppo Kuula, CEO of Enfo, presented his dissertation on May 20, 2020. His dissertation “Continuous co-creation of knowledge-intensive business services” is available on the website of the University of Oulu.

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