Mass Customization & Open Innovation News

Nike is Trying Threadless' Crowdsourcing Model

More Co-Creation at Nike

Coolhunting has an interesting small report on an upcoming NikeID project: They are offering their top-end (fashion) shoe, Nike Air Force 1, in a special co-design version. Starting 6 March 2007, users can design a custom Nike Air Force 1 using the NikeID configurator (how it works in detail). Designs are exhibited on the web, other users vote on the winning designs, and the winning design will then be specially made only for the winner, complete with bling sneaker jewelry.

For this project, Nike is collaborating with Sneakerplay, a social networking site of sneaker enthusiasts (only Sneakerplay members can particpate). While this sounds a bit like Threadless' collective customer commitment (crowdsourcing) model, it is different:

Nike takes the community, co-creation, and community evaluation idea, adds an easy-to-use toolkit to enable easier co-design (at Threadless, you have to know Photoshop), but then produces the winning design in a custom manufacturing step just for the winner.

[UPDATE: Just after I wrote this post, Bill commented on this post, saying that this is a good old design contest and not a new crowdsourcing model. And I agree! ]

Why not for everyone? Don't ask me ... it seems to be more like a clever PR pilot then a new business model. But at least it is a start and great idea to live their new "The consumer decides" philosophy with a different twist.

Pill Boxes 2.0: Vuru personalizes nutrition packaging

Sometimes it's all about the (re)packaging. As Springwise, a new Miami-based company called VURU sells nutritional supplements in personalized daily packs. Vuru is the brainchild of Grant Kornman, who says that his (heavy pill using) father inspired him to open this service, as Grant was fed up with selecting pills from many bottles to assemble the daily intake.

At Vuru, customers choose from over 2,000 name brand supplements and vitamins, select how many weeks worth they want to purchase and then have their personalized packs shipped to them. Each pack contains the daily dose into a slick little pack that fits 2-15 pills.

The idea: To spare customers the hassle of collecting pills from several bulky bottles into daily dosages. Vuru packs can be tossed into a handbag or pocket, and are perfect for travel. Each order comes with an information sheet, which has a picture of each pill, the supplement facts label, directions, warnings and any other information pertinent to that supplement or vitamin.

This is how the process works:

1 Name your pack: customers are asked to enter a name they would like to appear on their pack. This is an old personalization trick, that always works: Give something your own name, and you build commitment and involvement with this (standard) thing.

2 Fill your pack: From a long, long list, users now have to select their individual pills. In case you know exactly what you want, this is easy. In case you don't the site lacks a really important feature here: recommendation and advise. How should I know which nutrition supplement is best for me, what is the difference between the 15 kinds of vitamin C they offer, etc.

However: Besides creating their own unique blends, customers can pick one of Vuru's pre-selected mixes, varying from 'Woman's Yoga Pack' to 'The UrbanDaddy Pack'.

3 Choose the nubmer of packs to pick how many weeks supply you want and if you would like auto refills.

4 Checkout. Leave your credit card and money. Prices totally depend on the pills you choose.

Springwise comments on this idea:

"Several elements make this concept quite appealing. First of all, customers will love the ability to pick and mix their own, ultra-personalized blend from a wide variety of supplements. Secondly, there's the convenience angle: time-saving and life-hacking, Vuru is what our sister-site trendwatching.com would call a daily lubricant. One of those products that make people's lives just a little bit easier. Last but not least, the packaging is simple, shiny and chic. Which all combines to create a luxury 'health hack' that many consumers are willing to pay a premium for. The same concept could no doubt be applied to other industries. How about skin care products? Just be sure to think green and keep packaging to a minimum."

My comment: Nice idea and a good example how you can offer customization with standard products. This is just a nice packaging service, but one that may create customer value for heavy users of these products.

But: Sovital and other companies already go one important step further: They really customize the pill! and just produce a customized batch of nutritions just for you So that there is no need to take several pills (even if they come out of one nice bag) but just one that contains all the stuff your body needs.

The Consumer Decides: Nike Focuses Competitive Strategy on Customization and Creating Personal Consumer Experiences -- Data about the Nike Plus Personalization System

During its recent Investor Days, the Nike top management board announced a strong shift of its strategy from being a sportswear brand to becoming the enabler of customized, personal experiences. “Investor Days” are an extensive briefing for analysts; taking place only about every two years (the last was in June 2005). During its recent briefing at the company’s headquarters in Portland on Feb 6, 2007, the company placed a strong focus on its new global theme “The Consumer Decides” and revealed some interesting facts about its customization ambitions and ways to sustainable consumer experience.

During the meeting, also a number of interesting performance data of the Nike Plus system were provided, the Apple-Nike cooperation that allows runners to customize their running experience in a simple but very clever way. It is a strong contrast to the exploding variety Nike is facing today, offering more than 13,000 product different styles in every single quarter.

First, Nike CEO Mark Parker explained the theme “The Consumer Decides”:

“The Consumer Decides is one of Nike's 11 maxims that really define who we are and how we compete as a company. Today, consumers have never held as much power as they do today. They have more choices and more access to those choices. They connect and collaborate with each other over the world. … Clearly, the power has shifted to consumers. For every Nike employee, there's ten million consumers out there deciding whether or not the products and brands we offer really matter. … The ability we have to connect with consumers is the single most important competitive advantage in business today, and nobody does that better than Nike. There is no substitute for connecting with consumers, but it's really just the beginning.”

Nike’s Brand President, Charlie Denson, focused in his speech on the changing consumer and the particular demand for customization:

“[Consumers] want to be part of a community, whether it's a digital community or a virtual community, or whether it's a physical community. They want to feel like they're a part of something. They want to be engaged. …

And another thing that is very, very important to us as we look to the future is the value that the consumer is placing on customization. It's a very, very important part of the way that they interact with anybody or with brands today. We used to talk about the consumer in what we thought was specific, but in today in retrospect, feels like generalities, the fact that we used to put a 18 and a 22-year old in a same set of psychographic, demographic targets. Today, I can very comfortably say that the 18 and the 22-year olds are working on different -- they're living on different planets or at different places. As Mark said, these consumers have more choices than they've ever had.

What our challenge is to keep it simple, make those choices as simple as we can, and make them personal. We've spent the last, or in our case, 20 or 30 years trying to bundle things, adding value to a purchase or a relationship. And now, it's almost in reverse, because you have to unbundle everything if it's going to become customizable.”

During the event, the Nike Plus system was described as a perfect example of this strategy. Trevor Edwards, VP Global Brand & Category Management, describes the system and gives some numbers on its acceptance:

Nike Plus "combines the physical world with the digital world. We put a sensor in the shoe that speaks to the iPod, and you can hear how far you went, how long you went and how many calories you've burned, pretty simple thoughts. And then, when you dock it, you have a world of information at your fingertips. You get to see all that you've done, all your runs stored in a very simple, intuitive web experience where you can set goals for yourself. You can see how you've progressed. In fact, this week, I think we've put up -- you can actually map your run anywhere you go. In addition, you can join in the Nike Plus community where you can challenge your friends or other community members to run physically, but compete virtually. And since our launch, we have close to 200,000 members.

What do the numbers tell us today? First important fact, 35% of the members that we surveyed are actually new to using Nike footwear. So, we've brought more consumers into our franchise. The second part is, more than half of them are actually using the survey to service four times a week. And this is probably the most important statistic, 93% said they would recommend it to a friend, 93%. This is an incredibly sticky proposition, a great way to build loyalty for our brand and obviously build the business.”

Charlie Denson describes the growth plans Nike has with the system:

“That is a dedicated consumer experience. It is changing the game, and it's creating that competitive advantage for us. We would like to see 15% of all runners using Nike Plus, 15%. Now, that's not a very big number, except for there's 100 million people who call themselves runners worldwide. ….”

So in summary, this sounds like a big success and stresses that this really has been a clever idea to provide customization in this industry in a rather simple way, but in one that matters for consumers. And with the target of 15 million users, this would be one of the largest mass customization programs ever.

In another section of the event, Don Blair, Nike’s CFO, provided some interesting figures on the scope of variety that Nike is facing today. I often mention in my presentations the explosion of SKUs and variants that global brands today think to have to offer to create appealing products in heterogeneous markets. Nike seems to have recognized that just increasing the number of variants is not the ultimate way to appeal to consumers:

“SKU productivity. One of the great strengths of our company is our ability to create compelling innovative products that excite consumers. But there can be too much of a good thing. Each quarter we sell about 13,000 different styles of footwear and apparel and because of our high rate of seasonal turnover, we sell tens of thousands of different styles every year. And there are many additional styles that make it part way through the process, but don't end up in the final line that goes to market.

Each one of these tens of thousands of styles drives costs; costs for design, development, sampling, transportation, storage and sales. For footwear 95% of our revenue comes from about 35% of our styles and for apparel the figure is about 40%. …”

Costs of samples to provide this variety were given with more than $100 million. Given these numbers, an adaptable product like Nike Plus or a truly mass customized product, produced on-demand, sounds very appealing and much more efficient.

For the full transcript of the investors meeting, go to nike.com.

Special Issue on Mass Customization Manufacturing of IEEE Transactions Published

The 2007/1 issue of the IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT features 13 papers on mass customization as part of a special issue on Mass Customization Manufacturing Systems. Thorsten Blecker and Gerhard Friedrich edited the following collection. As with most scientific journals, if you are not a subscriber or IEEE member, or have no access to the journal via your university library, getting access to the papers is very costly.

But here is a list of all articles, abstract are all available for free online:

- Selecting a Customization Strategy Under Competition: Mass Customization, Targeted Mass Customization, and Product Proliferation, by Cavusoglu, H.; Raghunathan, S.

- Product Development Cost Estimation in Mass Customization, by Tu, Y. L.; Xie, S. Q.; Fung, R. Y. K.

- Standardized Configuration Knowledge Representations as Technological Foundation for Mass Customization, by Felfernig, A.

- Management of Product Architecture Modularity for Mass Customization: Modeling and Theoretical Considerations, by Mikkola, J. H.

- The Development of a Component Commonality Metric for Mass Customization, by Blecker, T.; Abdelkafi, N.

- How Small and Medium Enterprises Effectively Participate in the Mass Customization Game
Ismail, H.; Reid, I. R.; Mooney, J.; Poolton, J.; Arokiam, I.

-Changeover Improvement: Reinterpreting Shingo's “SMED” Methodology, by McIntosh, R.; Owen, G.; Culley, S.; Mileham, T.

- Process Platform Planning for Variety Coordination From Design to Production in Mass Customization Manufacturing, by Jiao, J.; Zhang, L.; Pokharel, S.

- A Product and Process Modeling Based Approach to Study Cost Implications of Product Variety in Mass Customization, by Zhang, M.; Tseng, M. M.

- Exploiting the Order Book for Mass Customized Manufacturing Control Systems With Capacity Limitations, by Wikner, J.; Naim, M. M.; Rudberg, M.

- Integrated Configuration of Platform Products and Supply Chains for Mass Customization: A Game-Theoretic Approach, by Huang, G. Q.; Zhang, X. Y.; Lo, V. H. Y.

- Modularity as a Strategy for Supply Chain Coordination: The Case of U.S. Auto, by Ro, Y. K.; Liker, J. K.; Fixson, S. K.

- A Service-Oriented Architecture for Mass Customization—A Shoe Industry Case Study, by Dietrich, A. J.; Kirn, S.; Sugumaran, V.

Automotive Customization 2.0: The MIT City Car project

The MIT City Car project was one of the initiators to host the upcoming MCPC 2007 World Conference on Mass Customization & Personalization at MIT. Coordinated by the MIT Media Lab, this project looks into the future of the car. And this future is much more than faster engines, a futuristic shell or more entertainment features in the car, but it is all about delivering a highly personalized mobility solution.

The main idea: The future of the car is a shopping cart. Well, a very special shopping cart. Sponsored by General Motors Corp., a team lead by MCPC 2007 conference chair William Mitchell and MCPC 2007 coordinator Ryan Chin, is building a prototype of a lightweight electric vehicle that can be cheaply mass-produced, rented by commuters under a shared-use business model, and folded and stacked like grocery carts at subway stations or other central sites.

The Boston Globe recently published a nice update about this project, and also has a great interactive graphic on its site that explains the concept. “Dreamers have been reinventing the wheel since the days of cave dwellers. But the work underway in "the Cube," the Media Lab's basement studio, may be the most ambitious remake yet.”, Globe writer Robert Weisman reports in this article.

The main idea to totally redesign the car was to move everything what today drives and controls the car into the wheels. Embedded in each of its four wheels will be an electric motor, steering and braking mechanisms, suspension, and digital controls, all integrated into sealed units that can be snapped on and off. With this design, the rest of the car can be designed totally new from the sketch. By removing as much hardware from the car as possible, a totally new design is possible.

The main visible feature is the car’s stackability. The idea is that you do not own a car, but just take one within a city when you need it – a modern interpretation of the (perfect) Boston based car sharing service ZIP car or Germany’s “Call-a-bike” system. As space is often a constrain in the city, cars will be foldable away to occupy as little space as possible when not in use. It is much easier to see than to explain how this will work, so have a look at this interactive graphic.

But the MIT team still recognized that cars often are an object of personal impression and more than just a seat in a public transportation system. This is where personalization comes into this system. . "We think of the car as a big mobile computer with wheels on it," Ryan is quoted in the Globe article. "This car should have a lot of computational power. It should know where the potholes are." And it also knows how you like your car. Once you have rented a car, the software that sets passenger preferences, changes the color of the cabin, controls the dashboard look and feel, and even directs drivers to their popular parking spaces next to their destination.

As the MIT researchers envision it, the City Car won't replace private cars or mass transit systems but ease congestion by enabling shared transportation in cities. Commuters could use them for one-way rentals, swiping their credit cards to grab a City Car from the front of a stack at a central point such as a school, day-care center, or office building. "What you'll be buying is mobility," Chin said.

"The existing infrastructures can't support the population growth that we're seeing, so we're going to have to find viable alternative vehicles like the one MIT is designing," Rebecca Lindland, director of automotive research at Global Insight in Lexington, is quoted in the Boston Globe article.

The MIT City Car concept transfers a piece of hardware into a product-service-system that delivers a truly customized service as a bundle of products and service components, some mass produced, some adaptable, some customized for each user. The first real working prototype of this car is scheduled for presentation on the MCPC 2007 conference. "I think we'll be driving it around the interior of our building," Chin said, "and hopefully ask the MIT police to let us drive it around a parking lot."

In a dedicated track on this conference, we invite researchers and managers to discuss this concept and present their own visions of the custom car of the future. (http://www.mcpc2007.com). In general, the idea of product-service-systems is a promising option for many customization offerings in several industries:

- Why not add a custom training plan to your custom sports shoe? (a great example for this is the Nike Plus Personalization program)
- Customization of cell phones may not only include a custom cover or your personal ring tone, but a service that configures your phone to your profiles, adds your phone books – and comes with your personal service plan that adjusts the pricing structure to your personal need.