Co-creation: How to Harness It For Your Business Co-creation is turning consumerism into teamwork, enabling buyers to be part of a company's innovation.

Innovation isn't just about the end result. It's also about the experience.

The concept of co-creation has been around for years. In the late 1990s, authors Joseph Pine and James Gilmore dubbed it the "experience economy," in which consumers buy experiences rather than goods or commodities. Large firms like Lego, Starbucks, Dell and Unilever have popularized the method.

Smaller companies are also embracing customer engagement. Blank Label lets men customize their own dress shirt, from the fabric, collar, shoulders and cuffs down to the buttons and placket. Since the company's launch in 2009, customers worldwide have designed and ordered more than 10,000 men's dress shirts. Create-your-own-chocolate-bar startup chocri, imported from Germany to the U.S. in January 2010, gives chocoholics more than 27 billion ways to customize their creations, including topping options like chili peppers and gold flakes. The site has more than 80,000 customers.

In 2004, University of Michigan professors Venkat Ramaswamy and C.K. Prahalad coined the term co-creation to describe the collaborative relationship between customers and companies.

Quirky-like startups are using crowdsourcing to refine ideas and push them to market. "Social ideation" platform Ahhha, for example, lets users make money by submitting an idea or adding value to one. Once an idea becomes a product or results in a licensing deal, the idea's originator receives 10 percent of the profit. The rest of the profit is split between contributors and Ahhha.

Co-creation is leveling the playing field between firms and customers, evolving the traditional consumer economy into one that emphasizes the value of collaboration. There is no "I" in team, but it turns out there may be a few dollar signs.

How to Co-create
No matter the industry, co-creation can transform your business for the better--and there's no better way to ensure a constant flow of new ideas than tapping into customers' creativity. Moreover, it's incredibly cost effective to get validation without having to pay for market research, say Jeremy Brown and Brian Millar, respectively, CEO and director of strategy for Sense Worldwide. For the last decade, the two have worked with brands like Nike, Johnson & Johnson and Procter & Gamble to bring co-creation strategies to life. Here's what they need to get it right.

The right people: Successful co-creation starts with a good conversation. You'll want to find the most interesting, creative people with different perspectives, even if they aren't your best customers. "The people in the community that hate what you're doing--invite those guys, too," Brown says. And keep them engaged so they stick around. "Make them feel like they're being listened to and being rewarded for what they do," Millar adds. Quirky, for instance, credits the community on packaging, in YouTube videos and with higher-than-average royalties.

The right questions: When you've got creative people willing to help, don't waste their talents. "You want to ask for their innovative ideas, not for them to do boring research or data gathering," Brown says. "Make the process enjoyable, make sure there's some takeaway." And make sure you do whatever it takes to get people talking. Quirky does it through social media, humor and a transparent online platform.

The right people (part 2): True co-creation isn't a marketing gimmick.

To prove it, you need to get senior people from your organization involved in the initiative. "That's where the magic happens," Millar says, "when the consumer is talking to a designer or engineer and actually having a meeting of minds. That instant feedback loop allows real creativity to happen." At Quirky, in addition to regularly scheduled virtual town hall meetings with everyone on staff, for special occasions, the company flies ideators and influencers in from around the country. --Jennifer Wang