Local Motors co-creation model - Case Study Example

Local Motors co-creation model Executive Summary Local Motors and its CEO Jay Rogers has come up with a plan to involve the buyers of its cars and other professional and amateur car designers in the designing and assembling of their respective cars thereby leading to the co-creation model. That is, by utilizing the online space, Rogers wants to provide its prospective customers and other designers a platform to air their views and suggestions regarding the design and make of their cars and then using their regional microfactories, the complete customized car can be manufactured. This idea is very innovative because no other major car manufacturers are following this practice except for few niche players like Factory Five who knew what their customers wanted their car like. With the active support and financial contribution of Factory Five's Mark Smith, Rogers laid the foundation for the Local Motors. Then, he built an online community of amateur and professional designers as well as future or prospective customers who not only provided their designs but also inputs about other designs. This process only led to co-creation model. Rogers' innovative idea to use an online community of designers as a source of designs, market intelligence, and even for marketing or buzz-building can be viewed as a one of its main differentiators which provided it an edge over other players. By having this co-creation model, LM can garner certain other advantages like optimally matching the customers' preferences, productively and emotionally involving the prospective customers, and so on. But, at the same time, there are some disadvantages as well. For example, the designers could be inexperienced and unprofessional who may not be able to come up with high quality designs. At the same time, facilitating and encouraging future customers to part of the car-building process along with their family and friends can make them emotionally connect with the product. This co-creation process also acts as a marketing campaign and can create a needed buzz. So, through the analysis of co-creation model in LM, it is possible to find its advantages and disadvantages, the actual processes involved in the model, and finally the value LM can extract from this model and use it to sell more cars. 1. Depict the idealized/conceptual Local Motors co-creation model. What are potential pros and cons of the idealized/conceptual model? Most companies would like to be more innovative, creating new products or services that change the rules of the market. Local Motors wanted to be innovative by giving its competitors the opportunity to build their own car. In that direction, Rogers visited many companies in order to know which strategy would be best. After that Rogers recalled: “The thing I saw missing is that except for one company, none of them really knew who the customers were going to be for their new cars” (Norton and Dann, 2011). They were just making extraordinary expensive cars”. It is when Co-creation came to his mind. Local Motors’ business model of co-creation involves getting closer to the customer and building a customized car. In that direction, the first approach is building a community where people from every car enthusiastic to experienced engineers have the opportunity to be part of the various process of car making from designing to manufacturing. As these designers have in-depth knowledge and understanding about customers’ preferences, car designs, and many more, this co-creation model can work. In addition, this strategy is a great advantage because it helps the company to know and understand what the customer exactly wants. However, one of the key cons is majority of these designers are fresh from arts school and even amateurs who might not exhibit strong, experienced, and professional skills. Moreover the design talent is easy to identify but not all the designs are easy to develop and build them into new cars. On the other hand, the pro of this co-creation model is that it enables LM to come up with a new way of thinking in the car industry, which is “Design by the crowd, built by the customer”. Furthermore, microfactories, which have been built around USA and where cars are manufactured, can be optimal places for the customers and LM to cooperate and coordinate. Built by the customer is Local Motors’ community-oriented marketing strategy. LM also wants to encourage customers to bring their family and friends during the building of their car to not only give a customer-friendly and personal touch to the process but also to lessen the work load of LM staffs. However, the disadvantage with this process is that many potential customers might not have the “time or the enthusiasm about cars to spend weekends cooped up in a factory” (Norton and Dann, 2011). This innovative strategy has attracted many new customers and car enthusiastic to follow and be part of the community. 2. How did the co-creation model unfold in practice? The central to Local Motor's co-creation model in practice is attracting a robust set of both professional and amateur car designers who could design the cars that LM would build. In that direction, LM along with its contractors began work to build an online community in which designers can post their car designs or design concepts, as well as suggest and collaborate on others' designs. Rogers hired young designers from arts school, who are not acculturated to the traditional car designs, and so can be expected to come up with innovative and interesting designs. However, the involvement of these fresher did not provide the expected results. So, Rogers recruited Ariel Ferreira to find more optimal designers. In that direction, Ferreira visited number of automotive as well as industrial design communities on the web to find potential designers and initiated online dialogues with them. Many of those designers were skeptical initially as the feared that their designs could be stolen. However, in course of time, the creditability of LM accentuated with positive word-of-mouth, and that resulted in building of an online community with over 1400 members. After the formation of the online community, Rogers periodically launched auto design competitions. Designers were challenged to design and develop auto concept that is geared and apt to the weather, culture, aesthetics, and customer needs in defined U. S. Regional Markets. The submitted design entries were put for voting, rating, and discussion among the community members, with the designs earning highest number of votes getting short-listed. Then, Rogers led LM's 10 staff members in picking up the best design of the short-listed set following a democratic process and based on inputs from key experts. The other key part of the co-creation model is the regional microfactories. Rogers wanted these microfactories not only as a place where cars be assembled but also as a physical place where the car designers from the online community, car mechanics, and other car enthusiasts can meet, discuss about the designs and manufacturing process, and in total work together. Rogers commented, "We have a community going forward on the internet. We still need that physical campfire to gather around" (Norton and Dann, 2011). In the final stage of the co-creation process, the future owner of the vehicle would play a major role during the 14-day building process. That is, as the vehicle is being built at LM's microfactories, owners (even along with their family members and friends) are encouraged to not only contribute to the design and final output but also to the actual building process. 3.    How can Local Motors extract the most value of its co-creation idea and finally sell more cars? Prepare a concept which you present to the Local Motors board of directors in form of an elevator pitch. By involving number of designers from different geographical regions and varied cultural as well as automobile background, LM was able to actualize an active online community, which can be provide diverse and at the same time effective designs. As this diverse group of designers moved among common people, car users, car enthusiasts, researched and read a lot of car-related literature, and many more, they have imbibed in them key perspectives about cars. In addition, they would have in-depth understanding of the customers’ preferences and tastes regarding cars. So, the online community of designers can use those perspectives of cars as well as understanding of customers’ preferences while designing the cars. It is obvious that by utilizing designers’ perspectives about car as well as customers’ preferences, LM can extract most value of its co-creation model. Then, when one focuses on the design contest and how designers are facilitated to come up with designs based on certain geographical aspects, cultural aspects, and customer needs in defined U. S. regional markets, it is possible to state that it helped LM to come with designs that aptly fitted with the customers’ expectations in particular markets. That is, as designers came up with customized designs based on the factors prevailing in a particular market, the resultant car would be naturally in line with those factors. In addition, the greater role for the community members regarding feedbacks, voting, rating, and so on provides them the much-needed motivation and impetus to come up with interesting and optimal designs for LM thereby giving it an advantage over its competitors. The involvement of the future customers in the car building process as part of the co-creation model first created a much-needed buzz. That is, instead of carrying out separate and detailed marketing campaign, this co-creation practice provided LM a good marketing platform. Then, the involvement of the future customers along with family and friends lessened the work load of the LM’s employees, as the customers were encouraged to contribute sizable work hours during the 14-day car building schedule. From this analysis, it is clear that co-creation idea and practice can optimize LM’s functioning, attract more customers and thereby sell more cars. Reference Norton, M & Dann, J. (2011). Local Motors: designed by the crowd, built by the customer. Boston, MA: Harvard Business School Publishing. Read More