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A co-created vehicle fromenthusiasts, manufacturedby handLocal Motors takes co-creation severalsteps farther. It’s CEO, Jay Rogers,says the company is changing the waycars are designed, built and brought tomarket.3 The company crowd-sources,or co-creates car designs and thenmanufactures the new models on asmall scale in micro-factories. Thecompany uses a co-creation approachthroughout the value chain—designideas are crowd-sourced, and suppliersexchange information on parts via anopen-source network.4Local Motors’ co-creative challengebased platform, The Forge, wassuch a successful example othercompanies started using it too. Paccar’sPeterbilt Division is collaboratingwith Local Motors to conduct anonline competition, RIG2—RoadIcon Generation 2.5 The globalcompetition sought innovative designsfor a classic heavy duty truck exteriorthat used more aerodynamic andmodern elements.Local Motors’ own first vehicle, theRally Fighter, took just 18 months togo from a 2-D drawing to a vehicleready for pick-up. That compares to3. “Wie Co-Creation in der Automobil-Industriefunktioniert: Interview mit Jay Rogers von LocalMotors”, ers-von-local-motors/4. “Das Case Local Motors: Co-creation andcollaboration in the Automotive-industrie,”Universität St. Gallen, Double Yuu, T ads/2011/12/Local-Motors-Case-StudyFINAL1.pdf5. “Local Motors wants your help designing the nextPeterbilt rig” p?co 68&tab design-brief6Looking aheadthe industry standard of 3 to 5 years.The company wants to streamline evenfurther, with a goal of a 12 monthtimeline. Customers actually help buildtheir car; creating a unique experience.That was not the first time anautomaker has put some aspect ofmanufacturing directly in the handsof the car buyer. General Motors hasoffered buyers of its Chevrolet Corvettethe chance to build the enginesthemselves for an extra price andunder supervision—a uniquely literaltake on co-creation.6Using co-creation to marketproducts and enhancethe brandGetting the car buyer involved indesign and production will surely buildsignificant brand loyalty. In fact, OEMswho collaborate with stakeholders findmany ways to enhance both marketingand brand management.In Canada, Volkswagen used a cocreation strategy to engage thecompany’s fans in creating the thirdin a series of ads themed ‘Drive Until’for the company’s Golf compact car.Facebook users helped develop thescript for the ad, choose the actors, andselect the music. Fans could choose to6. http://blogs.forrester.com/doug williams/10-07-13gm takes co creation literallybe anonymous or to be included in thecredits. This co-creative model goeswell beyond traditional marketing andbuzz creation, by opening the doorto a two-way conversation with keystakeholders where their ideas areturned into reality.In today’s consumer-drivenmarketplace, providing opportunitiesfor the public to share their ideas,enthusiasm, and complaints is thekey to building strong relationships.That may mean using existing socialmedia networks like Facebook, Twitterand YouTube, participating in newcommunities set up by enthusiasticfans, or interacting on cross-industrysocial websites. This is a way OEMs canact as peers in these new communities,sharing ideas or just listening to whatcustomers are saying about theirvehicles. Engagement platforms likethese are now shaping perceptionsof car brands, so OEMs need to takethem seriously.Automotive companies do not needto be constrained to existing socialmedia platforms either. Some OEMsnow have their own interactive onlinecommunities. For example, Ford’sinteractive site, Ford Social helpsto build customer-loyalty, promotetwo-way interaction and help spreadkey messages.

Beyond the customerCustomers are just the beginning. Cocreation has the potential to reshapeinteraction with virtually all internaland external stakeholders includingsuppliers, dealers, service and supportand internal audiences.Working together withsuppliersCo-creation platforms have been usedfor years to enhance relationshipsbetween OEMs and their suppliers;these run the gamut from onlineinformation sharing websites, to colocation facilities in business parks andbusiness model transformations.During the design stage, co-creationplatforms have become particularlyimportant. While in-person designworkshops are still common forpartners who are located relativelyclose, virtual platforms have becomedominant. Internal Team web portalsand supplier portals, where peopleshare everything from CAD drawingsto test results within an environmentthat can be adapted by all participants,are the most common today.Using co-creation strategies isone important way that OEMs areincluding their suppliers much earlierin their innovation processes, whichcan increase supplier commitment,transparency and trust,7 whichleads to lower pricing, increasedtechnology sharing and higher supplierrelationship rankings.Over the past decade, Ford has madebig improvements in its workingrelations with suppliers,8 citingincreased collaboration with keysuppliers as one important reason.7. 2011 PPI NA Automotive OEM—Supplier WorkingRelations Study8. Ibid.In September 2005, Ford introducedits ‘Aligned Business Framework’(ABF) to strengthen collaborationand develop a sustainable businessmodel to drive mutual profitabilityand technology development.9 As partof the framework, Ford is involvingsuppliers earlier in the productdevelopment process.And while co-creation may oftenstart with the design phase, it doesn’tend there. Shared manufacturingstrategies, like just-in-sequencedelivery and joint testing, can alsoprovide great opportunities for OEMsto co-create with their suppliers. Socan more transparency. Ford’s ABF alsoincludes sharing more information onforecast volumes and product planswith suppliers.9. “FORD, KEY SUPPLIERS ROLL OUT INNOVATIVEBUSINESS MODEL” http://media.ford.com/article display.cfm?article id 21677Driving co-creation in the auto industry7

Interacting with dealersA strong relationship with the dealernetwork has long been seen as criticalto OEMs’ success. By collaboratingwith dealers, companies can marketvehicles more effectively. Excellentcustomer service at the dealerlevel is also critical to developing astrong brand.It’s not always smooth sailing though.In the US, for example, recent hardtimes in the automotive industrydrove thousands of dealerships outof business. Many OEMs found thatrelationships with the survivingdealerships were tense as a result.By implementing co-creationplatforms together with dealers,OEMs can actively foster collaborationdownstream. That can help them reachout to the customer together withdealers, and enhance relationshipswith dealer networks too.That’s especially important, since allaround the world dealers are facingnew challenges that go well beyondthe economic environment. Consumershopping behavior is changingsignificantly. Online informationresources mean that new and usedcar buyers now have instant accessto vehicle inventory availability andprice transparency through online8Looking aheadsearch engines such as Auto Trader.com, Edmunds.com and KBB.com.That means more pressure on prices,since new car buyers can comparisonshop in a way they never could have inthe past.In the past, the dealership was theprimary site of interaction with a carbrand, but that’s expanding now.Third-party sites and the OEMs’ owndigital platforms—particularly mobileand social—provide the potential fora whole host of other interactions.Making sure that dealers are linkedinto such efforts is critical. Whendealers work together with OEMs anddevelop robust co-creation platforms,they can enhance traffic into dealerstorefronts, improve how the customerinteracts with both the dealer andthe OEM, increase sales and build therelationship between the dealer andthe OEM too.Connected carsJust how interactive will cars be?Automakers are starting to explorethe possibilities.Toyota’s “Fun Vii” concept car—Viistands for vehicle interactive internet—made waves at the Tokyo Auto Showin 2011. Its touch screen exterior canchange to suit the drivers’ mood. Theconcept car can also connect to thedealer’s website for a check-up.In 2007, Ford and others developeda connectivity platform, called SYNCthat allows users to make hands-freetelephone calls, control music andperform other functions with the useof voice commands in the vehicle.Now, the automaker is working onincorporating a series of in-car healthand wellness apps and services aimedat monitoring people with chronicillnesses, into vehicles.In the area of diabetes, Fordresearchers have developed aprototype system that allows FordSYNC to connect via Bluetooth toa continuous glucose monitoringdevice and share glucose levels andtrends through audio alerts and visualdisplays for drivers or passengers. Thesystems envisioned would be able tointeract with drivers’ other devices,like smart phones and then relay thisinformation to health care providers bystoring the data in the cloud.Using a co-creation approach to getinput not only from customers, butalso from a whole range of otherstakeholders, will be vital in movingother innovations like these forward.

OEMs and suppliers are already workingtogether to make vehicles more connected—carsare starting to become a “social” product.Big opportunities in serviceand supportIn the US, a recent survey reportedthat only around 33% of customerstrust dealer repair and service facilitiesto conduct their repairs.10 Further,over 80% of respondents indicatedthey wouldn’t use dealers for out ofwarranty repair work. That’s a lot oflost potential opportunity for dealers.OEMs and suppliers are alreadyworking together to make vehiclesmore connected—cars are startingto become a “social” product.There’s a big opportunity to build inconnectivity with dealers and otherafter-sales support providers too. Newinfotainment and other electronicsystems should also work togetherwith dealers and customers to identifythe best way to provide transparencyto the vehicle operation and servicerequirements. They’ll need to takeinto account the driver’s desire forprivacy and leave freedom for selectinga preferred service location, but stillconnect interactively with dealernetworks (and potentially other serviceproviders as well). Some automakersare already working on such concepts(see Connected cars).When the tire pressure is low or theoil needs a change, for example, thecar could not only alert the driver—it could potentially show possiblelocations to have the service done. Ifdealers see that a car will be in need ofservice, they can reach out to the driverand let them know. That might includeoffering a discount at the right time orincluding functionality that lets driversmake service appointments directlyfrom the vehicle’s interface. Customersbenefit too, by obtaining a clear viewof what their service requirements are,and can quickly identify a dealer thatcan perform necessary maintenance orrepairs at an acceptable cost.10. Source: AutoMD.comDriving co-creation in the auto industry9

Internal collaboration andemployee innovationsWorking with stakeholdersin the communityCo-creation can also be a usefultool to build relationships within anorganization. Establishing the rightinteractive engagement platformsto reach out to employees can beespecially powerful as part of internalchange programs, or as a way to fosteran innovation culture throughoutthe organization. When companiesreally engage their employees andnot only ask for their ideas, butalso implement them, employeesatisfaction and morale goes way up.And since satisfied employees are moreproductive and less likely to leave thecompany, there’s a direct impact on thebottom line.Consumers and society in generalhave become increasingly focusedon a firm’s economic, social andenvironmental impact, or the “triplebottom-line”. With informationthat is easy to share, companies thatdon’t uphold high standards in theseareas quickly suffer damage to theirreputation and subsequently theirprofitability. The continued growthof Corporate Social Responsibilityprograms (CSR) across manyindustries has shown how firmprofitability improves with the“greening” of a firm’s business.However, while many companieshave developed CSR programs, thereis a growing sense of complacencyin communicating them and theirimpacts. Further, there is a risk of theperception of “greenwashing”—wherewhat is reported in terms of impact isnot the true performance.New tools and resources cantake internal collaboration to anentirely new level. But good onlinecollaboration tools alone aren’t enoughto really fuel an internal culture ofco-creation or gain efficiency benefits.Automotive companies also needto listen to the voices of employeeswho will actually use these tools intheir day-to-day interactions. Indeed,collaboration tools work best whenthey are co-created with employees.Implementing new HR systems tostreamline time reports, for example,can potentially save companies a lotof administrative time. But they needto make sure that systems work wellfor employees. That’s easier if staff isincluded in the development process.There are many other ways to co-createwith employees. With many companiesnow operating with a smaller staff,looking to every employee as a possiblesource of new ideas and informationcan make the difference betweensurviving and thriving.10Looking aheadWith multiple reporting standardsthat can be used, such as: GlobalReporting Initiative (GRI), ISO 26000and 14000 and Social AccountabilityInternational (SAI) just to name a few,there is a significant challenge for firmsin deciding what to report and how toreport it. Firms that have a co-creativemind set, recognize that social mediacan be a very effective platform formoving beyond the often long and dullannual CSR reports to more dynamic,transparent and targeted reporting.Some firms are even now beginningto utilize social media platforms suchas facebook and twitter to report theirCSR performance11 with a goal toengage actively with participants whobecome a following to a firm’s CSRperformance. This not only helps buildtrust with stakeholders and interestedparties but also allows firms to bettergauge overall sentiment early on.OEMs recognize that they are oftenunder the spotlight when it comesto the impacts that automobileshave on society at large. Cars areintimately linked to environmentalconcerns, public safety and economicsustainability. By leveraging many ofthe same platforms and techniquesused to reach out to consumers,suppliers and dealers, OEMs couldbuild interactive dialogues withother stakeholders that may not beso interested in what the design ofa vehicle looks like, or how it’s puttogether, but are rather interested withthe impacts on the environment andsociety that comes with building andadding another vehicle to the road.Through cocreation and the utilizationof social media platforms, OEMs cangain the capability to quickly identifywhat needs to be communicated,gauge overall sentiment and reactearlier to concerns that may emerge.11. 2012/01/18/the-top-10trends-in-csr-for-2012/

What’s next?Co-creation is already starting toemerge as a mainstream method ofcollaboration and idea generation inthe automotive industry. We believethe pace of implementation willincrease significantly over the next fiveyears. Automakers should embrace thisnew level of openness and stakeholderinteraction and leverage the significanttools and resources available. We thinkthose that do this most effectivelywill be well-positioned to create asustainable leadership position forthe future.How PwC can support yourco-creation effortWe help our clients give stakeholdersmore active and direct responsibility inplanning, innovation, operations, anddelivery. PwC Management Consultingcan work with your organization toexplore how co-creation can propelyour business to the next level invarious ways: Product and Service Co-Creation Public-Sector and Multi-StakeholderPolicy Co-Creation New Business, Ecosystem, andBusiness Model Co-Creation Business Interaction Redesign Enterprise Co-Creation Assessment Customer Experience Co-Creation Supply Chain Co-CreationDriving co-creation in the auto industry11

www.pwc.comTo hear how our services couldbenefit your organization,please contact:Dietmar OstermannGlobal Automotive Advisory Leader 1 313 394 3220dietmar.ostermann@us.pwc.comDoug BillingsPrincipal, Co-Creation Specialist617 530 6163douglas.s.billings@us.pwc.comChad MollinManager, NA Automotive ManagementConsulting Practice 1 224 622 2593chad.a.mollin@us.pwc.com 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please seewww.pwc.com/structure for further details.This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. PwC helps organisationsand individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering qualityin assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com. LA-13-0260 SL

enterprise co-creation is a fundamentally different way of looking at value generation between the organization and its customers, suppliers, dealers, partners, employees, and public sector agencies. it is opening up business processes and reengineering them, so that they work both ways. tangible benefits include revenue growth, improved