« Back Reflection 09.11.2018

Value co-creation begins with defining the customer’s needs

Liina Lehtonen, Account Manager, Aidon Oy:

What is value co-creation, and how do you succeed at it? Liina Lehtonen delved into the subject by reviewing previous research and by interviewing Aidon’s customers for her master’s thesis. Aidon’s business is founded on the idea that customers get the most out of our solutions when they are involved in developing them. The study conducted by Liina supports this idea as well as the belief that value co-creation benefits both parties.

Co-creation of value refers to the customer and the supplier – or sometimes even more parties – working together to discover ways to create value for the customer or for all parties involved. Here, value refers to the benefit gained in relation to the cost. The cost may be other than monetary: it can be labour, for instance. The benefit, on the other hand, may not be quantifiable in currency, either. The gain can be, for example, an acceleration of processes. Therefore, the topic at hand is rather abstract, but I will give more concrete examples below.

Collaboration and listening to the customer are key

Value co-creation requires a process, where the supplier and the customer collaborate closely from the very beginning. It’s not enough if our customer places an order, Aidon delivers the product and the customer then takes it into use – we as a supplier must be involved in the customer’s processes and learn to know the customer thoroughly in order to understand what creates value for the customer.

Our products are designed according to the customer’s needs, and we help our customers to gain the full benefit from products after they are in use. Customer value is determined cumulatively throughout the lifespan of the product or service. As one of our customers put it when I interviewed him, sometimes the benefits cannot yet be seen during the deployment phase:

“I could single out control room services as the greatest success (in the deployment of remote reading); the operations personnel got a lot more out of this than they expected. At the beginning of the project, they suspected this would be a waste of money. But the reality is that the control room can now monitor the network’s status through the DMS and act immediately when a customer calls about a meter.”

On the other hand, creating a product together can create value for Aidon, because co-creation is often a learning process that helps us to make better products in the future. From us, successful value co-creation requires a customer-oriented organisational culture, where it is possible to collaborate. Customer orientation must be a solid part of our way of working: listening to the customer and a genuine interest towards developing tailor-made solutions are key.

In smart metering, you need to understand that your solution is at the core of the DSO’s business, and therefore the customer’s needs must come first. We must take responsibility of any bumps in the road. Therefore, in a customer-oriented company, the customer and the customer’s needs must be visible to the whole organisation – not just for those working in the customer interface daily.

Successful value co-creation with Aidon

I recently finished a second master’s degree. In my master’s thesis I looked into how Aidon co-creates value with customers. My analysis was based on interviews with customers, which taught me how customers see us and our partnership. It turned out that key enablers of collaboration and value co-creation are continuity and trust, which has developed over the course of a long-standing partnership.

One practical example of successful value co-creation is our solution for power grid monitoring. Over a decade ago, we started throwing around ideas with a customer about what kind of low voltage network data a meter could produce, and how the DSO could utilise this data in its operations. The co-creation process yielded the first version of the PGM solution that nearly all our customers now use.

Based on my interviews, Aidon’s customers felt that our partnership is based on trust, which is built through practical day-to-day collaboration. Throughout the research project, customers emphasised how the basic functionality of devices is extremely important to them. Nonetheless, innovativeness is equally important: the supplier must understand the customer’s business to be able to put forward new solutions.

As one of the interviewees put it:

“The added value created by Aidon’s meter and products plays a significant role in maintaining the accuracy of our invoicing and in ensuring that the power stays on. It’s a thing our customers appreciate and that we appreciate. Of course, there are many other data, which we get on the quality of electricity through PGM, which are extremely important to us. […]. It’s very versatile. You might think it’s just a meter, but it affects a lot of things, and you could imagine it also affects whether we reach our strategic goals.”

My personal interest towards the topic was sparked by my work in the customer interface. Although writing the thesis while working a full-time job was challenging in terms of time management, it offered me a brilliant opportunity to enrich my understanding of value co-creation in light of previous research, reflecting it on our customers’ experiences. I especially enjoyed the openness of my discussions with customers on how they find value is created and how we can help them create it.

My takeaway from the study is that the prerequisite of value co-creation is a long-standing partnership, where the partners trust one another. This is the foundation of open, collaborative development. On the one hand, value co-creation is based on a genuine interest towards understanding the customer’s processes in practice and their challenges. On the other hand, the customer needs to be willing to give the supplier access to its processes. A sustained, open dialogue is essential to co-creating value. All parties gain benefit from such collaboration.