NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, August 7, 2014

In the late 1970s, the Chicago Police Department noticed that the city’s crime rate increased when cops stopped walking the beat and started driving around in patrol cars instead. They wondered why, and asked the political scientist Elinor Olstrom to provide some insight.

She realized the problem: Cars negated the ability to interact with people on the streets. As it turned out, cops did a better job fighting crime when they sought input from the public. That had happened organically when they walked their beats. And by sharing their knowledge of the neighborhood, the citizens helped the police to protect the citizens. Olstrom dubbed the phenomenon “co-production.”

Since then, it has become common for organizations to treat consumers as production partners. Many high-tech firms hire existing customers to beta-test early versions of products, in order to get critical feedback before creating the final versions. Some companies even base their business model on co-production; Build-a-Bear stores allow consumers to create personalized teddy bears.