Co-Creation in Organizational Design: The Power and Limits of Collaboration
As an advocate for co-production, collaboration, cooperation, and teamwork, I’ve witnessed firsthand how these principles drive success, especially when applied to product and service design. Small, agile teams excel when collaboration is at the core of their operations. However, while I am a strong believer in co-production and teamwork for driving innovation, I remain cautious about applying the principle of co-creation at the scale of an entire organization, particularly large ones.
I served as the project manager for the incorporation of Jersey Harbour, Jersey Airport, and Jersey Post Office, and was also a member of the Incorporation Steering Group for the incorporation of Jersey Telecoms. In this context, “incorporation” refers to the process of transforming a public sector department, traditionally led by politicians, into a private company governed by a board. However, the public sector, specifically the Treasury Department, typically retains majority or full ownership of the company. This model ensures continued public interest and oversight while granting the company commercial freedoms, such as the ability to borrow, engage in joint ventures, and pursue capital projects, which may have been challenging if the organization remained within the public sector.
The Case for Co-Creation in Small Teams
Co-creation works effectively when a small, focused group collaborates to design a product or service. For example, Airbnb’s early success came from co-creating their platform with users in small teams, ensuring that feedback directly influenced the product. This allowed the co-founders to remain agile and responsive to user needs. Small teams, by nature, are dynamic, flexible, and capable of making quick decisions. Communication is direct, relationships are close, and feedback loops are short—factors that enable rapid iteration and clearer alignment on goals. This has long been advocated by thinkers such as Clayton Christensen, whose work in *The Innovator’s Dilemma* emphasizes that innovation is often driven by small, nimble teams.
Studies, such as Hackman’s (2002) research on group dynamics, reinforce the idea that smaller teams outperform larger ones in terms of collaboration and decision-making. In these environments, cooperation is seamless, which fosters a greater sense of collective ownership. This makes co-creation highly effective for new ventures and early-stage product design.
The Challenge of Co-Creation in Large Organizations
While co-creation may flourish in small teams, it faces significant obstacles when scaled to larger organizations. A company with hundreds or thousands of employees presents challenges that smaller teams do not experience. The dynamics that make small teams effective—clear communication, fast decision-making, and shared values—become much more complex as the size of the team increases.
1. Communication Breakdown: As Tushman & O’Reilly (1996) noted in their research on organizational ambidexterity, larger teams face difficulties in balancing innovation with efficiency due to structural and communication barriers. In large organizations, communication often becomes fragmented. Multiple factions, departments, and hierarchical layers complicate the flow of information. This makes it harder to align on shared goals and slows down decision-making. Zappos’ adoption of Holacracy provides an example where decentralized decision-making attempts to address these issues. However, despite its promise, Holacracy faces its own set of challenges in maintaining coherent communication across a large, diverse workforce.
2. Diversity of Interests and Perspectives: Large teams naturally have diverse interests, which can lead to fragmentation. Different departments and teams will have competing priorities, making collaboration difficult. Geert Hofstede’s Cultural Dimensions Theory highlights how differences in national culture, department culture, and personal values affect communication within large organizations. This cultural fragmentation can dilute the effectiveness of co-creation efforts.
3. Slower Decision-Making: The Agile methodology, known for its flexibility in smaller teams, has also been adapted in larger organizations like Spotify to maintain a focus on collaboration. However, the larger the organization, the slower the decision-making process becomes. In a large organization, co-creation may require too many decision-makers or too many layers of approval, reducing its effectiveness. Hackman (2002) also found that in larger teams, the overhead of managing diverse opinions and feedback often results in delayed outcomes.
4. Cultural Fragmentation: A unified organizational culture can be difficult to maintain as a company grows. In large organizations, subcultures can emerge in different departments or regions, which can hinder collaboration and co-creation efforts. This makes aligning values and goals across the entire organization particularly challenging. Chris Argyris’ work on organizational learning also highlights how, in large organizations, the internal silos can lead to “defensive routines” that block open communication, a key aspect of co-creation.
The Limits of Co-Creation in Large-Scale Design
While co-creation has proven successful in the early stages of product and service design, the application of this process to an entire organization presents significant challenges. The idea of co-creating a large organization of 1,000 people is impractical due to the complexities of communication, coordination, and decision-making. The growth of the organization inherently introduces more layers of communication, slower decision-making processes, and more fragmented interests, making true co-creation at scale nearly impossible.
Large-Scale Co-Creation Models
While traditional co-creation in large organizations is challenging, there are frameworks and models that attempt to reconcile large-scale collaboration:
* Agile Methodology: Some large companies, like Spotify and ING, have adopted Agile practices to maintain flexibility and collaboration despite their size. Agile emphasizes short feedback loops, decentralized decision-making, and iterative improvements, allowing for co-creation within smaller teams while keeping the broader organizational goals aligned. However, scaling this approach across an entire organization requires careful consideration of how teams interact and share insights.
* Decentralized Decision-Making (Holacracy): As seen with Zappos, Holacracy is an attempt to decentralize decision-making and give teams more autonomy. While this can facilitate greater participation in decision-making, it is not a silver bullet for large organizations. The key challenge remains balancing autonomy with the need for a unified organizational strategy.
See Holacracy
These models demonstrate that while co-creation may be difficult at an organizational level, it is not entirely unfeasible if framed appropriately within smaller, more autonomous teams.
Conclusion: Balancing Co-Creation with Leadership
Co-creation is a powerful tool for innovation and growth, especially in smaller teams where communication and decision-making are straightforward. As organizations scale, however, the effectiveness of co-creation diminishes due to structural complexities. That said, leadership still plays a critical role in fostering a culture of collaboration, even in larger organizations. By leveraging models like Agile and Holacracy and focusing on smaller, more manageable teams, companies can still create environments that encourage innovation while maintaining the focus and direction needed for success.
Leaders in large organizations should strike a balance between maintaining centralized control and allowing decentralized decision-making within smaller teams. By understanding the limits of co-creation at scale and applying collaborative processes in appropriate contexts, organizations can thrive while staying true to the principles of teamwork and collaboration.