An exploration of the characteristics of co-creation in the B2B service business This dissertation is for the degree of Doctor of Philosophy Krista Eerika Keränen Sidney Sussex College Department of Engineering University of Cambridge March 2015 Declaration This dissertation is the result of my own work and includes nothing which is the outcome of work done in collaboration except as declared in the Preface and specified in the text. It is not substantially the same as any that I have submitted, or, is being concurrently submitted for a degree or diploma or other qualification at the University of Cambridge or any other University or similar institution except as declared in the Preface and specified in the text. I further state that no substantial part of my dissertation has already been submitted, or, is being concurrently submitted for any such degree, diploma or other qualification at the University of Cambridge or any other University of similar institution except as declared in the Preface and specified in the text. It does not exceed the prescribed word limit for the relevant Degree Committee. Krista Keränen Sidney Sussex College University of Cambridge March 2015 iii Abstract The emergence of the service economy challenges companies to understand co- creation, as this seems to be a central notion in service marketing and management, service design and service innovation. Additionally, businesses are increasingly interested in developing service operations together with their customers and in order to do this they need to work more closely with them. Furthermore, existing knowledge challenges companies to understand how they can engage with their customers’ value creation and become value co-creators. Reasons for the emergence of co-creation might be the changed business landscape of having services as a dominant factor fostering communication and interaction between companies and customers. Moreover, companies are finding it difficult to keep up with the competition and to meet customer demands through traditional business approaches so co-creation can offer a powerful mindset for businesses to tackle the challenges they face not only today but also in the future. Thus this study seeks to understand co-creation within service marketing and management, service design and service innovation, based on qualitative empirical enquiry into B2B service businesses. The findings of the study indicate that certain characteristics of co-creation are needed in order to co-create and which can create potentiality for strategic thinking. The study contributes to academic knowledge by introducing a co-creation framework: The characteristics of co-creation in the B2B service business. The framework aims to clarify what co-creation is. As a practical implication the study increases the awareness of co-creation and the framework supports companies in adopting a co-creation approach. v Publications Briscoe, G., Keränen, K. & Parry, G., 2012. Understanding complex service systems through different lenses: An overview. European Management Journal, 30(5), pp.418–426. Keränen, K., 2013. CoCo - From co-production to co-creation. In Tutkimusprojektijulkaisu 2013. Helsinki: Tekes, pp. 26–34. Keränen, K., Dusch, B. & Ojasalo, K., 2013a. CoCo Tool Kit - A co-creation workbook and collection of tools for service businesses, Espoo: Laurea University of Applied Scieneces. Keränen, K., Dusch, B., Ojasalo, K. & Moultrie. J., 2013b. Co-creation patterns : Insights from a collaborative service design tool. In Conference proceedings. 2nd Cambridge Academic Design Management Conference, 2013, University of Cambridge, pp. 1–14. Keränen, K. & Ojasalo, K., 2011. Value co-creation in b-to-b-services. In Campus Encounters - Bridging Learners Conference. Porvoo: Campus Encounters - Bridging Learners Competences, Developing Competentes for Next Generation Service Sectors, April 13-14, 2011, pp. 1–13. Ojasalo, K. & Keränen, K., 2011. Designing a tool for analysing the current state of a company’s co-creation approach. In 1st Cambridge Academic Design Management Conference, 2011, University og Cambridge, pp. 1–12. vii Acknowledgements "To know the road ahead, ask those coming back." (Chinese proverb) This has been an exciting, challenging, enlightening and rewarding journey. It has been so because of the unpredictable nature of a doctoral thesis. People might say that there is nothing unpredictable about it and that it has all been done before by other people and the process is quite clear. So I thought too, at least to begin with. Yet once you enter the process and it becomes your personal learning and everyday way of life, the picture changes. It is no longer a technical process but one of personal learning involving many people, where the researcher is an explorer walking a tightrope between what is known and what is not known. I have been extremely lucky to have many people tirelessly supporting my steps and coping with my excitement, frustration, distress and enlightenment. This study would not have been possible without the support of the University of Cambridge and my colleagues at the Institute for Manufacturing and at Laurea University of Applied Sciences, as well as my family and friends. The early stage support of Dr Pentti Rauhala, Jaakko Tarkkanen, Maarit Fränti, Dr Vesa Taatila and Dr Katri Ojasalo from Laurea and Dr Alan Barrel from Cambridge made this journey possible. They personally encouraged me to go towards this degree and authorised me to apply funding for this research. They believed in me. I would like to express my greatest gratitude to my supervisor Dr James Moultrie, my advisor Dr Chris Pearson and my Laurea colleague Dr Katri Ojasalo for their encouragement and valuable guidance throughout this journey. Moreover they have significantly supported my learning. Dr Sudhanshu Rai has greatly inspired me during this journey with his passionate for co-creation. In addition to them, my dear colleagues at the IfM have saved me many times from losing faith. CoCo project members, especially Dr Bernhard Dusch and the case companies of this study have substantially supported my work with an open mind. viii I wish to sincerely thank my examiners Dr Alison Prendiville and Dr Tim Minshall who engaged me into inspiring discussion and generated thoughtful suggestions which supported me in improving this thesis. Furthermore, I feel fortunate to have many wonderful friends around me. It must have required perseverance to listen my stories over and over again about the current state of my work. I have received supportive postcards, e-mails and even gifts which have given me a lot of strength. I am also grateful to have found some wonderful new friends during this journey. Moreover, I have been lucky to receive funding from various different sources. First, the funding for the CoCo project at Laurea University of Applied Sciences from Tekes - the Finnish Funding Agency for Innovation - made this journey possible. Second, the funding from the Foundation for Economic Education (Liikesivistysrahasto), from the Foundation for Technological Advancement (Tekniikan Edistämissäätiö), and from the Sidney Sussex College enabled me to finalise my thesis. Finally, nothing would have been achieved without the full support of my family. While I have been in Cambridge my husband Asko, my mother Anneli and many other family members, especially the Heimo (Tribe) group and friends have taken responsibility for our home and our reconstituted family, including four children. This journey has been an exciting, challenging, enlightening and rewarding journey for me, and I hope that to a greater or lesser extent it has also been of value to all of you involved, to whom I will always be grateful. Krista ix