Thriving on Complexity: Co-Creation as the Future of Value Creation and Innovation
by Venkat Ramaswamy

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We are witnessing a fundamental structural shift in both the means and ends of value creation in society, which is manifesting itself as the increase in “complexity” of the environments we are all experiencing. “Complexity” by itself is not the issue – many have recognized that natural systems inherently have complexity built into how they work. The real issue lies in the “paradigm of value creation” that we have been practicing, which has served us well in the past, but has resulted in the complexity we are all trying to deal with as individuals — from goods and services that don’t quite enable and/or connect with our human experiences on the one hand, to the organizational environments that create the offerings on the other.

Not sure where the clear connection to complexity is. This could all be said without reference to “Managing Complexity”.

Consider that networked individuals around the globe are no longer passive and docile recipients of supply, thanks to digitization, globalization, the World Wide Web, advances in interactive communications and information technologies, social media, and ubiquitous connectivity. Rather, all stakeholding individuals expect not sure – they want to be served even better than what they could imagine to be active participants and collaborators in the value creation process, as co-creators of value through the lens of their human experiences. The fundamental distinction between a human experience and a good/service is that the former must by definition involve the individual. It is impossible to create an experience of value to you without engaging you actively (in contrast to the conventional “production” of goods/services.) From the perspective of enterprises, platforms of engagement based on human experiences are the new locus of value creation. Such experience-based engagement platforms—assemblages of people, artifacts, interfaces, and processes, whose design evolves with value-generating experiences—are both the means and ends of value creation, and the key to thriving on complexity. But first, we must recognize the shift in thinking that this requires:

1. Engaging stakeholders personally and collectively in creating value together, as much on their terms as those of the enterprise, expanding how the enterprise thinks about opportunities and resources.

2. Recognizing that value is subjective and varies from individual to individual, as a function of their interactions with their environments around them;

3. Viewing individuals as attaching meaning to actualized outcomes and imputing value as a function of their human experiences over time;

4. Leveraging the capabilities of meshworks across social, civic, business, and natural communities in which individuals are embedded, together with the capabilities of stakeholders themselves; and

5. Virtualizing new potentialities of value-creation by building ecosystems of capabilities together with other private, public, and social sector enterprises to expand wealth-welfare-wellbeing in economy and society as a whole.


Co-creation can be practiced everywhere in the ecosystem in which the enterprise operates, designed for varying purposes. As this blog entry is not the place to discuss examples in detail, see the book, The Power of Co-Creation (Simon & Schuster, 2010, with F. Gouillart), for over forty enterprise examples from over twenty sectors, and the forthcoming book, The Co-Creation Paradigm (Spring 2014, Stanford University Press, with K. Ozcan), for a detailed exposition of the theory and practice of co-creation as a paradigm of value creation and innovation, entailing engagement platforms for:

• Product-service offerings themselves;

• Encouraging entrepreneurship and decision-making;

• Enabling the design of offerings;

• Harnessing ideas and insights;

• Supporting the delivery of offerings;

• Facilitating training and sales interactions; and

• Expanding the circle of value creation stakeholders.


Innovating experience-based engagement platforms can enable enterprises to thrive on complexity by:

• Learning faster through the experiences of its customers and other stakeholders;

• Building deeper relationships and trust with the communities served and whose resources it depends upon;

• Generating new ideas and insights rapidly and becoming more resilient to unpredictable events in the system;

• Experimenting with new offerings quickly and engendering stickier brand collateral; and

• Enhancing new sources of value creation advantage by inclusively leveraging network and stakeholder resources (as opposed to just allocating resources) and accessing competencies in the ecosystem on demand.


Senior executive leadership must also pay attention to both the technical and social architecture of engagement platforms. On the technical side, the platforms must be reconfigurable, scaleable, linkable, and generative, with the capacity to enable and support new forms of value together with stakeholders. On the social side, it must enable and support a participatory culture in the organization that enables “silo-breaking” engagement inside the organization with appropriately designed incentives (designed together with people), encouraging collaborative decision-making, and strategy execution and re-formulation that expand capability ecosystems.


If leaders become co-creative engagement orchestrators, we can thrive on complexity by co-evolving our organizational systems, structures, and states (offerings, decisions, ideas, and relations) into a more holistic, next generation co-creative value creation that has built into it the expansion of wealth, welfare, and wellbeing of individuals, enterprises, economies and societies.


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