Co-Creation...A strategic alternative to acquisitions and vertical/horizontal strategies

For companies who wish to control a larger part of their value chain or wish to eliminate uncertainty or reduce dependence on value chain partners (suppliers, distributors), vertical or horizontal integration is the best way available.

But such kind of integration either through takeover or acquisition involves lot of costs and risks. I was wondering if there is any other less costly/risky alternative to it and I came across a research article published in a leading economic newspaper about co-creation. Co-creation is the process wherein you involve your stakeholders like customers, suppliers, distributors and even other unrelated firms in the very act of developing products and delivering them.

After reading more about co-creation and the processes which it follows, I believe it is the best alternative to risky & costly strategies like vertical integration through acquisition of supply chain partners. In co-creation you bring various supply chain partners on a common platform and give them the responsibility to create an ecosystem, the ultimate aim of which is to deliver maximum value to customers at minimum possible cost. When every partner feels the ownership and a stake in the ecosystem, he contributes to it for his/her own benefit and thus the costs involved in establishing control system vanishes.

Another major advantage of co-creation as a strategy to better manage the entire supply chain is that you expand the canvas of creativity. You as an organization need not restrict your endeavours to those core competencies which you own; you can easily and effectively acquire additional competencies by simply co-creating or co-building them with right organizations.

A perfect example of it would be development of TATA Nano. The company involved all stakeholders’ right from suppliers, customers, employees and distributors in the process of co-creating a breakthrough product and this resulted in a huge success which we admire.

Although there is not a one co-creation model which suits all, but one thing is for sure that it is the best alternative to traditional strategies of acquisitions/takeovers and is the only way we can build enterprises of tomorrow.

Well next time you think of gaining new competencies or more control over your supply chain, don’t think about mergers and acquisitions. You have a smarter way of doing it.      Co-create it.

Strategic Intent (The Indian way...)

Having read examples of western organizations going out of their way and stretching their resources to accomplish big, I was wondering if there are any Indian organizations too which fit to the ‘Strategic Intent’ philosophy. Then I came across a news article (19, July, 2012) talking about Dainik Bhaskar (Daily Hindi Newspaper) having tied up with HBR (Harvard Business Review) and Time magazine for content sharing.


 After studying about the group in detail I found what I was looking for. Dainik Bhaskar Group is certainly an Indian organization who has reached a position which was beyond the scope of its available resources in earlier days.


 - Building layers of competitive advantage: It started and revolutionised Hindi newspaper industry by offering newspaper at lowest price of just Rs 1 per day. Later when other competitors followed the suit, it launched 14 regional versions to build a national brand and differentiated itself. Competitors again imitated its strategy, but this time DB launched itself in regional languages throughout the country. Definitely a perfect example of building layers of competitive advantage


 - Searching for loose bricks: When DB launched, publishing industry was highly fragmented in nature and many local players existed. It found this loose brick as an opportunity and promoted itself as a national brand. Operating on national scale and serving many regions simultaneously, gave DB advantage in content gathering and also economies of scale which it leveraged to cut input costs of materials like paper, ink etc.


 - Changing the terms of engagement: DB did not choose to operate like existing players, rather it chose to launch itself with a bang. Where existing players charged their subscribers on per day basis and made collections on monthly basis, DB for the first time in India launched yearly subscription plan at heavy discount and also for the first time in offered free gifts with these subscriptions. This new way of engaging with customers proved successful and DB gained huge readership base in very less time.


 - Competing through collaboration: This is a recent step which DB has taken, it has collaborated with HBR and Time magazine for content sharing for its Sunday edition. This step will give it an unprecedented differentiated positioning of a’ modern Hindi newspaper’ and an additional competitive advantage.