Co-creation between companies: what it really means and how to make it work

Co-creation is more than traditional collaboration. In conventional collaboration, the parties often divide responsibilities and deliver their respective parts towards a common goal. In co-creation, however, both the solution and the value are jointly shaped through a process where ideas, knowledge, and choices are developed together. The parties combine competencies, networks, brands, resources, data, and perspectives to create a product, service, or business model that neither of them could have developed as quickly, accurately, or competitively on their own. This also means that participants need to be open to reconsidering their original assumptions and allowing the collaborative process to influence the final outcome. Co-creation is therefore based on mutual trust, transparency, and a clear understanding of the value each party contributes and the value the collaboration should create for the customer and the market.

In a situation where several companies jointly develop a common offering that can then be marketed and sold jointly or by each party separately. This is a relatively advanced form of co-creation, as the collaboration involves the entire chain from needs analysis and idea development to production, commercialization, and continued management. Therefore, from the outset, the parties need to agree on the vision, target groups, responsibilities, decision-making authority, and principles for investments, revenues, and risks. Equally important is to clarify who owns existing and newly acquired intangible assets, how the solution is to be used, further developed and packaged, and what limitations apply if the collaboration changes or ends. A well-designed model should also give each party sufficient freedom to act in their own market without undermining the common offering or creating ambiguity for the customer. When these prerequisites are in place, co-creation becomes more than a project form: it becomes a strategic relationship where the parties share learning, strengthen each other’s positions, and create long-term value through a solution that is jointly developed but commercially usable across multiple channels.

Why co-creation is difficult

The technical or business part is rarely the biggest problem.

The real challenges almost always arise around:

• expectations
• trust
• status and influence
• ownership issues
• resource allocation
• future profits

When co-creation fails, it often stems from the fact that the participants believe they are in agreement, even though they actually have different mental images of collaboration.

Examples:

Company A believes that they are building a common product.

Company B believes that a common concept is being built, but that each company is then free to develop its own versions.

Company C sees the project primarily as a way to build relationships and create new business.

Everyone leaves the meeting with the feeling of agreement, but in reality there are three different opinions.

It is here that psychological contracts become crucial.

 

Psychological contracts

A psychological contract is not a legal document.

These are the unspoken expectations that people and organizations have of each other.

In co-creation, these are often more important than the legal agreements.

A legal agreement can regulate who owns what, but it cannot create:

• commitment
• creativity
• generosity
• openness
• trust

If trust is broken, the agreement often becomes of little importance because the project still loses its energy.

The most important psychological contracts therefore concern issues such as:

• How generously do we share knowledge?
• How transparent are we?
• How do we handle disagreement?
• How do we make contributions visible?
• How do we share success?
• How do we identify opportunistic behavior?

When these questions are clear, the likelihood of success increases dramatically.

 

The six basic pillars of effective co-creation

1. Shared vision

Everyone must understand why the collaboration exists.

Not just:

”We’re going to build a product.”

Without:

”We will create the market’s most attractive solution for X.”

The clearer the vision is, the less risk of conflicts in the future.

A good rule of thumb is that all participants should be able to describe the purpose in roughly the same words.

 

2. Clear roles

Co-creation does not mean that everyone does everything.

On the contrary.

The most successful co-creation projects have clear roles.

Examples:

• One party is responsible for the methodology.
• One party is responsible for the technology.
• One party is responsible for the sale.
• One party is responsible for quality assurance.

Clarity creates security.

 

3. Mutual dependence

If any party succeeds equally well without the others, the co-creation will gradually weaken.

Every participant should know:

”We become stronger together than apart.”

This is perhaps the most important factor for success.

 

4. Transparency

Suspicion kills collaboration.

Therefore, high transparency is required regarding:

• decision
• economy
• customer dialogues
• development process
• Priorities

The more questions that are answered openly, the less room for speculation.

 

5. Conflict resolution skills

Many people believe that strong collaborations lack conflict.

That is wrong.

Strong collaborations overcome conflicts.

Disagreement is often a prerequisite for innovation.

The question is therefore not whether conflicts arise, but how they are handled.

A good principle is:

Challenge ideas harshly, treat people gently.

 

6. Experience justice

People rarely accept perfect solutions.

But they often accept solutions that are perceived as being fair.

If any party perceives that it is contributing more than it receives in return, the co-creation will begin to erode.

Justice therefore deals as much with experience as with actual figures.

 

Risks in co-creation

There are some classic pitfalls.

The free passenger – One party benefits from knowledge and networks but contributes minimally.

The hidden agenda – One party participates primarily to learn enough to be able to compete on their own later on.

Dominance – A larger or stronger company starts to control the process so that the others feel marginalized.

Identity theft – Someone starts to consider jointly developed material as their own.

Unclear success model – The parties have different views on how value should be created and shared.

 

Checklist before co-creation

The following questions should be discussed before work begins.

Purpose

□ Why are we doing this together?

□ Why don't we do it ourselves?

□ What problem are we trying to solve?

□ What does success look like?

 

Relationship

□ Why do we trust each other?

□ What could cause us to stop trusting each other?

□ How do we handle misunderstandings?

□ How do we give each other feedback?

 

Contributions

□ What does each party contribute with?

□ How do we measure contributions?

□ How are the contributions made visible?

□ What resources are expected to be allocated by each party?

 

Decisions

□ Which decisions require unanimity?

□ What decisions can be made by a majority?

□ How do we handle locks?

□ Who has the deciding vote?

 

Knowledge

□ What information is shared openly?

□ What is confidential?

□ How do we document lessons learned?

□ Who gets to use the knowledge afterwards?

 

Commercialization

□ Should the product be sold together or separately?

□ Does each party have the ability to further develop the product itself?

□ Are there any geographical limitations?

□ How are future versions handled?

 

Checklist for the psychological contract

This checklist is often more important than the legal agreement.

All participants are asked to answer individually the following questions:

Trust

□ I feel that the other participants want everyone to succeed.

□ I feel that we can discuss sensitive issues openly.

□ I dare express dissenting opinions.

Justice

□ I feel that efforts are valued fairly.

□ I believe that success will be shared fairly.

□ I believe that we will handle problems transparently.

Engagement

□ I am willing to invest time beyond the minimum requirements.

□ I want the collaboration to be long-term.

□ I feel responsibility for the whole, not just my own part.

If the responses start to become negative, it is an early warning sign.

 

A practical principle: ”Relation before product”

A common mistake is to put 90% % of your energy into the product and 10% % into the relationships.

Successful collaborations often work the opposite way in the beginning.

They invest time in creating:

• common language
• common values
• common vision
• mutual understanding

The product then becomes a result of the relationship, not the other way around.

Conclusion

Effective co-creation between companies is fundamentally less about law and more about social architecture. The legal agreements can protect the parties against certain risks, but they cannot create what is truly needed: trust, transparency, fairness, and shared commitment. The most successful co-creations are therefore based on a strong psychological contract where the participants have a shared understanding of purpose, roles, contributions, decision-making, and future value creation. When this works, something emerges that is greater than the sum of its parts: a shared innovation system where all parties both contribute to and benefit from the whole.