From King to Partner

The role of the customer used to be limited to buying. To make sure they continue to buy in the future, today, customers are being increasingly directly involved in the development of products. At Merck as well, a part of our innovation strategy focuses on a partnership approach.

Joint development as an innovation driver

Today it is common knowledge that a customer orientation is a prerequisite for business success. Hardly any companies these days would not claim that they focus on their customers. The understanding of the customer's role, however, has changed increasingly in recent years. Today the customer is no longer just king, but also a partner. To be more precise: Passive consumers become active partners in innovation. The reason is that customers’ requirements are growing and becoming increasingly specific due to globalization and technological advances.

These trends have led companies to open up their innovation processes. Conventional structures governing the distribution of tasks are increasingly breaking up, and companies focus more and more on an interactive value chain. An established method of innovation management allowing companies to accomplish this, is “customer co-creation”, or in other words, the active integration of customers in product development. It represents a concrete manifestation of the principle of open innovation, according to which companies are most innovative when they cooperate in a network with external actors and share their own knowledge.

The advantages of customer co-creation are obvious. If you assume that customers themselves know best what products they need, then it only makes sense to involve them early on at the development stage. With this approach, the company’s own perspective is rounded out with an additional point view, and products and services can be optimally adjusted to the customer’s needs from the start. In addition, costly iteration and feedback loops can be avoided and development costs reduced. Another positive side effect is a stronger customer relationship, as active involvement signals that the company listens to suggestions or even criticism and takes its customers seriously.

Going from a passive to an active role

Critics might note at this point that taking customers’ needs into account during product development is nothing new. And I can only agree: It has long been common practice for companies to obtain customer feedback before carrying out their own development processes, for example in order to enhance existing solutions or even receive entirely new ideas. Such feedback can take the form of customer reviews in online shops, or direct feedback gathered in customer surveys. After market launch as well, gathering and evaluating customer feedback has always been a key instrument for companies seeking to optimize their products.

All these approaches, however, involve the customer only in a relatively passive way and cannot be called customer co-creation just yet. The customers’ needs, as identified through these market research methods, must then be translated into concrete technical solutions during the innovation process. Customer co-creation, on the other hand, means that the customer actively participates directly in the process. In close collaboration, the customer makes suggestions and at times even takes over tasks within the project, for example in the process of generating ideas, refining concepts, or developing and testing prototypes.

Using swarm intelligence

Customer involvement can take a number of different forms. One form is the classic B2B partnership: A company organizes workshops with one or more selected customers in order to work out new product requirements and specific solutions in a joint process. Depending on the nature of the task, another option might be an innovation competition in which several customers participate. Especially in the case of open and creative tasks, where solutions are difficult to foresee due to their complexity, competitions can lead to better and more open-ended solutions.

Thanks to the possibilities offered by digitalization, the number of customers who can be involved in co-creation is theoretically unlimited. With so-called crowdsourcing, for example, a very large number of customers or users participate in the product development process, usually via an online platform. The company merely defines the task and the framework conditions, then leaves the development process itself to the swarm intelligence. A well-known example of this is Lego. The Danish building-block company has created a platform on which fans can present their own Lego creations; the community can vote on the models and give feedback. After successfully undergoing internal review at Lego, the most popular ideas are refined together with the “inventor” and then brought to market.

Creating trust through openness

At Merck as well, we are focusing on customer co-creation as a means of fostering innovation. Our Performance Materials business sector operates so-called joint development projects with various customer companies. Together with Samsung, for example, we develop innovative semiconductor technologies for the electronics industry. We’re collaborating successfully with our customer PPG, one of the leading manufacturers of paints and coatings worldwide, to optimize effect pigment coatings. One of the keys to developing these partnerships was the willingness to openly share our materials expertise with our partners from the start, which enabled deep mutual trust and an even closer customer relationships to emerge.

This is exactly the idea behind customer co-creation and ultimately open innovation – the conviction that the best results emerge when we are open to external ideas and inspiration, share our know-how, and cooperate across various disciplines. True to this conviction, we at Merck collaborate not only with customers, but also with scientists, companies, start-ups, students and experts from various areas with the goal of finding solutions for the technological and scientific challenges of today and tomorrow.