"Co-creation" is a term flying around our shop these days. Rather than wrinkle my nose at its apparent trendiness, I rather like the idea. Here's the set of meanings that we are talking about:
Co-creating product and service: involve customers in the development of core products and services. This goes beyond traditional research - focus groups & surveys, even ethnographic studies. All of these examine the customer to find insight or need. We're now talking about an ongoing dialogue about the nature of the product. This is the most powerful form of co-creation. A neat example is Nespresso's 2005 call-to-action for designers to define the ultimate coffee experience.
Co-creating brand: well, this is a little like saying a dog barks. At the end of the day, any brand only exists in the minds of its customers. This gets into a whole sophistic (Alison, do I have that right?) discussion about what exists outside our thought, but I digress... Co-creating brand does have some meaning. I would argue that babycenter.com, owned by J&J (disclosure=client), is a co-created brand as so much of the service includes user-generated message board content. Also, what BzzAgent does? That's allowing people to help create a brand via word-of-mouth.
Co-creating marketing: the least interesting includes asking audiences to make their own commercial. When it's more at the grassroots-like level as it is/was for Firefox (one fun if not too polished example) it can be ...well, fun but still not much above a contest. Doesn't really qualify as co-creation on any meaningful level when the big company "acts-as-if" by asking customers to create ads a la MasterCard (or the dreaded Chevy Tahoe "hijack")
It takes openness, courage and commitment to involve customers - people like you and me - in the creation of a product or service. You cannot solicit all that input and not follow through. Companies who feel they own the intellectual capital (that they have invested heavily in) have a hard time looking for and accepting the ideas of "outsiders." Someday, their may legal questions of ownership from true co-creation. But the promise of co-created products and service is fantastic. Look at Linux (here's a great offshoot example of co-creation involving Linux and Thinkpad's).
There is a terrific summary of "Customer Made" at trendspotting.com. They have labeled a whole generation: Generation C.