Mass Customization & Open Innovation News

Interview: Bruce Kasanoff of NowPossible.com on "Personal=Smarter"

Bruce Kasanoff is founder and editor of NowPossible.com, which "covers the leading edge of personalization". Bruce wrote the one of the first business books in our domain of mass customization & personalization, "Making It Personal" (2002). He was head of training, research and development for Peppers and Rogers Group, a leading personalization consultancy. The Chartered Institute of Marketing cited Bruce among their inaugural listing of the 50 most influential thinkers in marketing and business today. He works with innovative vendors and enterprises, helping them leverage personalization strategies to build lasting competitive advantage.

"Personal=Smarter," says Bruce, explaining that the more a company customizes, the smarter it becomes. The smarter it gets, the more formidable a competitor it becomes. He has delivered training programs, workshops and keynote speeches to a wide variety of organizations in 21 states and eight countries. His audiences have included technology executives, physicians, managers, customer service representatives and entrepreneurs.

And as he shares in the following interview, Bruce is writing a second book on the topic! So stay tuned for much more brilliant ideas from this great mind in personalization!

FTP: Bruce, there has been a long discussion about terms and concepts in our field. So, what is personalization in your understanding?

BK: Personalization is using technology to accommodate the differences between people. Done right, it's a win/win strategy for providing a better outcome for both the service provider and the individuals involved. For example, if a doctor gives you a test to determine which treatment will work best for you before she starts your treatment, that's personalization. Likewise, if a company gives you the option to tell them when and how to contact you, that's also personalization.

FTP: How is this different to mass customization, where are differences and complements between personalization and mass customization?

BK: Mass customization is a process for implementing personalization. In some respects, personalization is a goal and mass customization is one way to accomplish that goal. But we need to be careful about defining or debating semantics. Both personalization and mass customization push a company towards being more responsive to the marketplace and thus being more nimble. Both result in a firm that can react faster and more effectively to volatility. Both enable a company to build defendable competitive advantages, because both require a firm to track, understand and accommodate the needs of its customers.

FTP: You are one of the earliest voices and thinkers in the field. What originally drew your interest to the concept of personalization?

BK: I was very lucky. One day I read "The One to One Future" by Don Peppers and Martha Rogers, and thought it was brilliant. At the time, I was working for Ogilvy & Mather, and I wrote a strategy brief for a client that used some of the personalization ideas from that book. Shortly thereafter, I saw a little story in our local paper announcing that Don and Martha were starting their company in my town! I sent them an email asking if they wanted a partner, and included a version of my brief. One week later, I was their partner. That was 1996, and it gave me the luxury of spending all my time thinking about personalization and working with many of the pioneers in the field.

FTP: What are recent trends you see with regard to personalization? Are there any industries or individual companies driving these trends?

BK: Personalization is everywhere, although it's not necessarily called that. I dare anyone to name an industry in which personalization is not playing an increasingly important role. It impacts how you search for information, share opinions, make decisions, place orders, use products, get service, and live your life. Google is a leading practitioner, and both IBM and HP are key enablers. For example, IBM's "smarter planet" approach is a wonderful embodiment of the "Personal=Smarter" logic I've been talking about for some time. I was thrilled to see one of the world's largest companies adopt this theme as a selling point for its clients.

The most important trend, just now emerging, is the opportunity to personalize the development and care of our bodies and minds. It sounds dramatic to say it, but personalized medicine and education will literally impact the future of the human race. At present, "personalized" approaches are being used to restore health and function to people who have a physical challenge, such as the loss of a limb or of control over their body (such as ALS.) But as these technologies get cheaper and more powerful, they will be made available to everyone. For example, a brain-computer interface that a "locked-in" individual uses to communicate (because he can't speak) will someday help students learn faster and more in tune with their personal learning styles.

FTP: What is the largest challenge still to be overcome in personalization?

BK: The way we think. Personalization is not a difficult concept to understand, but it is a difficult concept to apply. It's easier for managers to look at customers, projects and investments in isolation, but personalization requires a process – and a mindset - that pervades an organization. It requires a different culture, and near-constant care and feeding of that culture. Not many managers understand this, yet.

FTP: What would be your main advice for a manager who wants to lead a personalization or mass customization implementation?

BK: Spend 25% of your time and budget on training, and on changing your culture. When it comes to personalization, training is not a one-time thing. Your staff and your systems are used to a non-personalized approach; they will constantly try to shift back in that direction. Unless you anticipate this and work consistently to prevent such backsliding, it will prevent you from enjoying measurable success.

FTP: You recently started your new blog, nowpossible.com. The depth and width of content you have provided there just within the last two months is really astonishing! What was your motivation to start this effort, and who is your target audience?

BK: Thanks. I'm writing a second book on personalization called "You! and Improved!", and as you know, writing is a solitary process. The website gives me an opportunity to test ideas, get feedback, and enlist innovative people in my work. I have two target audiences. The first includes innovators in organizations who are making personalization work better and better. The second comprises thoughtful individuals who would like to understand and benefit from this trend that can change their lives for the better.

FTP: To conclude: What is, in general and beyond your industry, the greatest personalization (and/or mass customization) offering ever – either one that is already existing or that you would like to get in the future?

BK: That's simple. I want to gain control over my fate, to anticipate and thus prevent the afflictions that would otherwise shorten my life or reduce my quality of life; to stay strong and mentally sharp longer than previous generations; and to be able to find and connect with the people and ideas that personally interest me.

Contact Bruce Kasanoff at (203) 341-9448 or bruce (at) nowpossible.com

Book Reveiw: Marke Eigenbau

A new German book provides a great analysis of a world shifting from centralized value creation in large corporations to individual value co-creation.

Two German journalists and researchers, Holm Friebe and Thomas Ramge, just published their new book "Marke Eigenbau – Der Aufstand der Massen gegen die Massenproduktion". The title is difficult to translate, like "The 'I did it myself' Brand – The mass rebellion against mass production"). It is a great summary of all topics I am writing about in this blog. The book itself also is a great example of mass customization and the new craft movement. All volumes are customized by hand and have an individual cover (see here how the author's did it).

The book in one sentence (taken from the authors' web site): It is the productive answer on "No Logo": My Logo!

As the book is in German, a more detailed review follows in German language:

Das Buch ist um die zentrale Botschaft der Marke Eigenbau fokussiert. Damit bezeichnen die Autoren Bastler und Kunsthandwerker, Hacker und Hobbyforscher, Labelmacher und Sozial-Entrepreneure – alles Akteure die hinter einer Revolution des Selbermachens stehen, die durch neue Formen der Kooperation ermöglicht wird und Produkte und Services für tausende kleine Nischen und Spezialprobleme schafft, die in der Summe mächtiger werden als der Massenmarkt. Dies gilt für die Produktion materieller Güter ebenso wie für politische Entscheidungsstrukturen oder soziale Hilfsprojekte.

Wenn auch an einigen Stellen etwas veraltet (die Autoren sind hier dem naheliegenden Versuch erlegen (den ich aus eigener Haut sehr gut kenne), aus älteren eigenen Artikeln einfach Teile in das Buch zu übernehmen), so ist das Buch doch in der Gesamtheit die bislang beste (und lesbarste) deutsche Analyse der neuen Welt einer Nutzer-getriebenen Wertschöpfung, die völlig neue Wirtschaftstrukturen schafft.

Wo unser eigenes Buch "Interaktive Wertschöpfung" mehr Wert auf die theoretische Fundierung und wissenschaftliche Argumentation legt, legen Friebe & Ramge Wert auf das große Bild. Die Autoren spannen einen weiten Bogen von einer knappen Rezension der Massenproduktion, der Analyse ihrer Fehler über die Analyse neuer flexibler Arbeitsformen und Marktstrukturen bis zu Marketing und Unternehmensorganisation Marke Eigenbau und Ende bei einem faszinierenden Ausblick, wie sich diese Strukturen auch auf unser politisches und soziales System übertragen lassen.

Die Autoren fassen sehr gut wie alle aktuelle Literatur und Trends zusammen, die sich in diesem Bereich in den letzten Jahren aufgetan haben. Mit vielen internationalen und auch erfreulich vielen deutschen Beispielen zeigt das Buch, wie Weltwirtschaft Marke Eigenbau schon heute funktioniert. Es beschreibt, wie die Grenzen zwischen Produzenten und Käufern fließend werden, warum „Prosumenten“ immer mehr Einfluss auf Produktgestaltung nehmen - oder sich entscheiden, gleich selbst Produkte herzustellen, die der Massenmarkt trotz vordergründiger Vielfalt nicht offeriert. Dazu gehört auch eine ausführliche Berücksichtigung der neuen Fabbing-Technologien oder des Open-Innovation-Ansatzes.

Kurz: Ein sehr lesenswertes Buch, das nicht umsonst vom Handelsblatt als eines der Top10-Wirtschaftsbücher 2008 ausgezeichnet wurde. Kaufen!  

Friebe, Holm; Ramge, Thomas: Marke Eigenbau. Der Aufstand der Massen gegen die Massenproduktion, Frankfurt, Campus, September 2008

Ein Auszug aus dem Buch findet sich hier.

Und natürlich hat das Buch auch einen Tralier auf You Tube:

 

Mass Customization Gets Its First Novel: UK author Sean McManus explores personalized music

Interview: Sean McManus on personalized music, customized books, and why he is using on-demand service Lulu -- and the background of his idea to write a novel featuring a mass customized service offering as its key element.

Sean McManus is the author of ‘University of Death’, a new novel satirizing the music industry. The book explores what happens when a major record label comes up with software for mass customizing music and uses spyware to sell it to customers, without telling them it’s all computer generated. Sean’s previous books include ‘Small Business Websites That Work’ and ‘The Customer Service Pocketbook’. As a journalist, Sean has written for Making Music, Melody Maker, Internet Magazine, Business 2.0, Internet Works and many more. And he has covered mass customization before: In May 2000 he wrote the mass customization essay ‘As you like it’ about for Personal Computer World magazine and in December 2005, he interviewed the company behind Erasure’s customized MP3s for his website at www.sean.co.uk.

Sean, Congratulations! You have written the first novel I know with strong references to personalization and matching-services in the music industry! What's the story?

It's a satire of the music industry, centred around one of the last surviving major record labels, Bigg Records. Clive Bigg is gobbling up independent labels and marketing lowest-common-denominator tosh made by boybands. It’s not enough, though, and like every other label, he’s seeing his business shrink away.

Then one day the solution arrives: a smooth-talking geek called Jonathan Harrington has spent ten years creating the perfect song: moving enough to make you laugh, cry, or dance on the first listen. The catch is that it’s computer generated and tailored for each listener after analysing his or her music collection. Together, Bigg and Harrington conspire to use hidden software to study what fans listen to, and then to automatically concoct and market their dream music to them.

While all this is going on, the story also follows the progress of Dove, who is burned out from touring for decades. He wants to break up his 'creatively bankrupt' band, University of Death, but he couldn't do a proper job. Now Bigg's bought up the indie label the band was on, he's about to make Dove an offer he can't refuse.

And the story also follows two of Dove’s biggest fans: Simon and Fred have a band called Goblin (performing a mix of rock and glam they call 'heavy tinsel'). Like many bands today, they can't get anyone to listen to them, and hope that Bigg will pluck their demo from the pile and launch their careers. As well as doing their own stuff, they cover University of Death in the hope that they'll catch someone's ear. As it turns out, their cover gets them into all kinds of trouble...

Dove, Simon, Fred, Jonathan and Bigg all collide in a finale that threatens the very existence of the music industry.

The story takes a slice through the music business: from the board room to the stage; from the studio to the record fair. It explores how fans relate to their favourite bands, how businesses use technology to manipulate consumers, and what would happen if the music industry disappeared overnight.

Where did you get the idea for this book?

In the 80s I remember typing in a program listing that created music on the Amstrad/Schneider home computer. It sounded a bit foreign and unstructured to me, but it started a fascination with computer generated music that I’ve had ever since.

In recent years, we’ve seen the internet become a channel for both marketing and market research. We’ve seen the rise of technologies that make mass personalisation possible. And we’ve seen record companies backed into a corner and taking desperate measures to prevent piracy, epitomised by Sony BMG putting software on music CDs which was widely considered to be spyware. We’ve seen the start of artificial intelligence as part of our e-commerce applications, with Amazon knowing my taste in books and music better than I do. And we’ve seen the rise of independent bands through communities like MySpace, where high quality music can be shared and sold outside the conventional music industry. All these threads came together in my plot. It’s a timely book. In fact, when the Sony BMG story broke, it felt like my plot was starting to come true!

‘University of Death’ is ultimately about why people love music, and where its soul is. The book explores the extent to which that can be automated or faked. As the story unfolds, it becomes clear that (in my novel at least), music needs to come from people, not machines. I listen to a lot of synthesiser music, but that works because there’s a creative person directing it and the computers are just being used as instruments. Even Brian Eno’s generative music, which is unique each time you listen to it, works because a creative musician has defined its parameters before it runs. The question is whether the software will one day be good enough that you couldn’t tell the difference between a computer inventing and performing a song, and real human creativity.

I know your early essay on mass customization (still a well linked source on the topic on the internet). Have you written any other books in the meantime?

I’ve written ‘Small Business Websites That Work’, published by Prentice Hall, and co-authored ‘The Customer Service Pocketbook’. There are free chapters to download from both at www.sean.co.uk.

Why did you want to write this book?

They say everyone has a novel in them. This is mine: it includes so many of the things I love - music, technology, record collecting, old computer games, jokes. But all of them in service of a story and bound together by a single theme. Everyone has something that they just know they have to do in their life, and writing a novel was one of mine.

It's been a long time since I've devoted that much energy to a single project, and it was extremely satisfying. I really enjoyed the writing sessions.

What are your observations on personalization of music in the real world? How often are you, as a consumer, using these services?

The most exciting thing for me has been Trust Media’s customised MP3s, made on-demand using a Flash interface. Erasure made best use of the concept: you could define what kind of beats, vocals, basslines and synth lines you wanted, as you heard the track looping. When you were done, you paid and downloaded your track. Each combination was limited to a single copy, and had unique artwork. The music industry’s been marketing so-called ‘limited edition’ CDs for years, with serial numbers on them often running into hundreds of thousands. This really subverts that: Having the only copy of my favourite version of a particular song and knowing nobody else can buy it is truly a ‘limited edition’. Erasure really appreciated what they could achieve creatively with this technology, and it would be good to see more musicians adopt it. Trust Media is pushing the antipiracy aspect at the moment: people are less inclined to share something that’s unique to them (and traceable), and others are more likely to want their own unique version than someone else’s copy. When the music industry is suffering a decline, it makes more sense for the company to sell antipiracy software than an experimental music format, even if they’re the same thing.

Brian Eno’s done some interesting work with generative music, where he sets the parameters of the work and then each performance is unique. There’s no computer creativity involved in this: it’s still very much his work, with the computer randomly generating each performance of what is essentially one work. His first release of generative music ran on floppy disk and the software is obsolete now, but his 77 Million Paintings software brings the idea up to date and combines it with visuals. It’s not really personalised, though, even though each performance is unique, because I have no control over it.

I enjoyed the music recommendation engine Pandora while that was available [in Europe], but that’s been closed to people outside the US now because they can’t afford to pay international license fees. Last.fm is a nice recommendation engine, but I haven’t used it too much. I still tend to find new music through magazines, reviews online, friends and gigs.

As with publishing, mass customisation has made it viable for bands to sell their own music on CD from the very start. I’ve bought a few CDs by unsigned bands which probably wouldn’t have existed without the mass customisation and ecommerce technology that was used to create and sell them.

And your book is not just on personalization and customization, but I saw on your website that you also are using a print-on-demand service (Lulu.com) to publish it. So why are you self-publishing 'University of Death', and why are you using print-on-demand?

The main reason for using Lulu as my publishing platform is that it enables me to get the book out there much more quickly. I have friends who have written great books and then spent years trying to get interest from a major publisher, while their books have quietly gone stale. I spent two years writing my novel, and I didn’t want to spend another two traipsing it around publishers who are already inundated with other good books. By self-publishing, I can ensure the book reaches readers much more quickly. Because the book deals with many contemporary themes in the music industry and technology, this was important to me.

For a venture like mine, it makes good business sense. There’s no up-front cost working with Lulu, and I don’t have to store hundreds of copies of the book under my bed or in my garage. The downside is that it’s massively more expensive per copy than it would be to do a conventional print run, but it’s an ideal way to test the market for new creative products. I particularly like Lulu because it takes care of the retail side of things too – it handles the credit card or paypal orders, customer service and support. It helps that Lulu tends to rank well in search engines too. Working with Lulu means I don’t have to be involved in handling individual book sales, don’t have to spend up-front, and don’t have to carry stock. It also means customers can have a smooth and fully supported buying experience.

And where can we buy your book?

Thanks for asking! This book is not available in the shops. You can only buy the book at Lulu.com.

When you place your order at Lulu, they'll print your copy, perfect bind it, stick it in a sturdy cardboard wrapper and post it out to you. This book is not available anywhere else because copies don't exist until they're ordered.

You can download the first two chapters for free through www.universityofdeath.co.uk.

To conclude: What is, in general and beyond your industry, the greatest mass customization offering ever – either one that is already existing or that you would like to get in the future?

I’m not sure whether it counts as my industry or not, but I’d like to see more done on books. Wouldn’t it be great if I could instruct an intelligent agent to create a book about ‘Pink Floyd’, or even ‘Dark Side of the Moon’, and have it deliver a unique printed artefact to my door? The software could source newspaper clippings and reviews from leading publishers, maybe some blog posts from well-respected fans too. It could sort them into chronological order, and source images from leading photo libraries. It wouldn’t be easy: there’s a whole rights nightmare to resolve, and the micropayments could prove tricky to administer, particularly once you get down to the level of paying freelance journalists. But if the infrastructure was there, the content would follow. And you could create an interface for narrowing the search to something useful (eg, let users specify publication dates, proportion of blog content to newspaper content, number of images etc). Books are still the best way to communicate and digest large chunks of information, but at the moment, there needs to be a significant market for each book to make it commercially viable. That’s because somebody has to do the leg-work of writing each one, and someone else has to market and distribute it. If you want a book about 90s band ‘Kenickie’ (as I do), you’re probably the only one, so you’re out of luck.

We can already do much of the stuff required: we have good search algorithms, there is a lot of tagged content out there, and there are applications that create PDFs on demand, and others that print them in books. We already trust search engines to decide what content we should see online, so this would be an extension of that and would probably work best if restricted to trusted content providers named up-front. It could be a great way for rights owners to make money from archive material and for researchers or enthusiasts to access original reports from the archives.

This is all probably some way off. Still, I can recommend a nice novel to read in the meantime… ;-)

Why Mass Customization Fails: It is the human factor, Ben Moore and Clint Lewis propose in a new book

In a new book, Ben Moore and Clint Lewis are looking on the success factors of mass customization and customer-centric manufacturing strategies (The Consumer’s Workshop: The Future of American Manufacturing). Their main finding: People matter most for successful mass customization. This may sound like a simple truth, but confirms an understanding I got from working with many companies in the area as well. MC is enabled by technologies, but put in place by dedicated people.

Ben is the President of Agent Technologies, Inc., and Clint the President of Lewis Group Consultants (LGC), two operations and manufacturing consultancies in the United States (a more detailed bio can be found here).

Ben offered to summarize his key findings in a small guest article to my blog, which you find in the previous posting. In an additional interview, I asked him what motivated their research on mass customization and how they did derive their findings.

What did motivate your research on mass customization?

Ben Moore: I've always had an interest in mass customization even before my participating in a Defense Advanced Research Projects Agency (DARPA) project entitled Autonomous Agents at Rock Island Arsenal (AARIA) back in 1995; in this project we built a simulation to demonstrate a factory scheduler capable of mass customization based on autonomous agents that actively represent each step of manufacturing a part. Since this project and the growth of personalization tools, I've researched mass customization tools and techniques in an attempt to find the best system for consumers to create unique products and for manufacturers to efficiently manufacture these products.

What is an example of a company "that got it", i.e. that has a sustainable mass customization strategy that is both scalable and build-to-last -- and that understood the HUMAN FACTOR.

BM: I've found the HUMAN FACTOR to be the least understood and valued of companies. John Deere gets mass customization tools and techniques, but their people systems don't compare to the people systems in companies like Procter & Gamble (P&G) and General Electric (GE). P&G and GE don't focus on mass customization, but focus on customization through standardization and systemization that allows the creation of new products and machines; P&G and GE really get it with their people systems.

What would be your main advice for a manager that wants to start a mass customization initiative?

BM: I recommend really looking at the reasons and financials for a mass customization initiative versus some level of customization initiative. In some manufacturing companies, like capital equipment manufacturers, each product/machine is different so it makes sense to create processes and tools to efficiently manage the customer requirements and deliver these unique products/machines profitably. In many other companies, I've found that creating an agile manufacturing system that can be reconfigured / customized to make a wide variety of products to be more profitable.

What is, in general and beyond your industry, the greatest mass customization offering ever - either one that already exists or that you would like to get in the future?

BM: I believe the greatest mass customization offering ever will be health related. People are becoming more health conscious around the globe. Companies that find a way to capitalize on providing a health regiment specifically designed for the individual based on age, weight, diet, family history, lifestyle and behaviors that fits with the delivery system that they are looking for and at a price they find affordable, will win in this space.

Context: Continue reading with an excerpt of Ben's book.

Great Report on User Manufacturing, Mass Customization, and How a New Infrastructure is Providing New Opportunities for SMEs

Last week, I got a note by Steve King, a research affiliate with the Institute for the Future. This is a non-profit research group based in Silicon Valley. Founded in 1968 by a group of former RAND Corporation researchers with a grant from the Ford Foundation to take leading-edge research methodologies into the public and business sectors, the IFTF today publishes reports to help people and companies to understand what is coming next.

They recently released a forecast report that is part of a series on the future of small business. In this report, they stress that small businesses will actively take advantage and use new manufacturing methods to create mass customized goods.

The report was sponsored by Intuit and can be downloaded on their website: http://www.intuit.com/futureofsmallbusiness/ (download Report #3)

In the report, IFTF writes about a new artisan economy that is the result of new manufacturing technologies, enabling individuals to access similar production technologies as large corporations (crafters using Ponoko, see previous posting, are a perfect example). It is a very nice summary of many of the recent trends that I have discussed here. Fabbing, blogging, user manufacturing, customization, open innovation -- it's all there and brought into a nice and coherent framework.

I especially liked the part about the new infrastructure that is enabling these developments:

"Plug-and-play infrastructures will make small businesses more competitive and successful. The ability of small businesses to take advantage of large-scale infrastructures and leverage new technologies will allow them to enter and compete in industries formerly served only by big business."

As an example, they refer to a great service that is enabling moms to become entrepreneurs, Mom Inventors, Inc.:

"For those who want to avoid teh hassle of assembling these services, firms are available to do everything for an entrepreneur. Mom Inventors Ic., for example, weill develop, manufacture, and sell quality Mom invented products throughout the United States and Europe. The mom (entrepreneur) only needs to come up with the idea, Mom Inventors will do the rest."

So I am expecting to these many more knitted marvels and clever kitchen aids on the shelves, invented by "Lead Moms".

In an e-mail exchange, Steve told me more about the background of the report, and stressed another implication from their research:

"A major issue we are trying to figure out is how small business relates to mass customization and user innovation. This was originally prompted by our work looking at consumer generated media - specifically blogs.

We found that the blogs with the most traffic were not authored by consumers, but by professionals. The professionals tended to fall into two categories: (1) small or independent businesses trying to build a small publishing business; or (2) professionals using blogs to promote either themselves or the goods and services of their company. Looking deeper at the second group, we found that most of them worked for small businesses.

Based on this work (which we did several years ago), we started looking at other categories. We quickly found a similar pattern of small business participation across a broad range of categories, including media (YouTube videos, etc.), open source software, crafts and small scale manufacturing (a lot of Makers at Maker Faire are small businesses, for example), financial services, etc.

Basically, we saw small businesses playing a role in almost every category where niche products and/or services were being built or highly customized. We also found a pattern of category "power users" moving from being hobbyists to starting their own small businesses. We kept seeing "prosumers" turning into small businesses, and we kept seeing small businesses somewhere in the customization value chain."

Accordingly, another area indicated in the report where small businesses will grow in the future is to serve as an innovation lab for larger corporations. Platforms like Innocentive or P&G's connect and develop program will help small businesses to sell their creativity to larger corporations in an efficient way. This may be the next wave of contract research.

Overall, a nice summary of recent trends that is worthwhile reading due its focus on small businesses.

Context: Get the full report here. http://www.intuit.com/futureofsmallbusiness/ (download Report #3)

Design & Configuration of Complex Products -- Insights From DTU's Product Modeling Group, one of Europe's leading centers on the mass customization

Lars Hvam and his colleagues at Denmark's Technical University (DTU) in Copenhagen have built one of the world's leading research groups in the area of product configuration and modular product design. Their approach is that you not just should build a configurator or sales system for your existing products, but hat successful configuration and mass customization demands a dedicated modular product architecture that should be developed together with the configurator.

Their work is very much driven by industry input. Lars chairs a huge industry interest group with more than 40 company members, many of them world market leaders in customization. The group is one of the strongest pillars in our community of mass customization researchers, and you have two chances to interact with them in the next weeks -- and a new book is summarizing their recent research:

(1) Industry Meeting on "Product Modularization & Variety Reduction" on Jan 31, 2008 in Copenhagen.

The presentations at the meeting will include experiences from applying the principles of product modularization for managing and reducing the number of product variants at Rolls Royce Marine, Siemens and LEGO - see the agenda and register for the meeting at this link. All presentations will be held in English!

(2) PETO’08 Conference on Service customization

As reported before, Kasper Edwards and Lars Hvam from the Technical University of Denmark are hosting this European MC event in 2008. More information here.

(3) Product Customization - A New Book by Lars Hvam, Niels Henrik Mortensen, and Jesper Riis

From the abstract (I have not received the book yet, so this is just an announcement, not a review):

For the majority of industrial companies, customizing products and services is among the most critical means to deliver true customer value and achieve superior competitive advantage. The challenge is not to customize products and services in itself – but to do it in a profitable way. The implementation of a product configuration system is among the most powerful ways of achieving this in practice, offering a reduction of the lead time for products and quotations, faster and more qualified responses to customer inquiries, fewer transfers of responsibility and fewer specification mistakes, a reduction of the resources spent for the specification of customized products, and the possibility of optimizing the products according to customer demands.

This book presents an operational procedure for the design of product configuration systems in industrial companies, based on the experience gained from more than 40 product configuration projects in companies providing customer tailored products and services.

Published by Springer. ISBN: 978-3-540-71448-4

For any further information in any of the topics above, just contact Lars directly:

Lars Hvam, Chairman of the Association for Product Modeling
Department of Manufacturing Engineering and Management
Technical University of Denmark
lhv@ipl.dtu.dk

I am coming to your desktop: Webinar on Mass Customization Implementation, Trends, and Success Factors

Special discount code for blog readers and early registration price available

Please allow a little bit of self-advertising, but this may be an interesting offer for some of you: Together with Pure Insights, a London, UK, based company offering seminars and webinars on innovation and technology related topics, I am offering a live web-based seminar on mass customization and designing winning configuration systems. This may be a good offer for corporate readers that want to get a convenient introduction into mass customization thinking and product configuration strategies.

Mass Customization and Customer Driven Value Creation:
Implementation strategies for winning by product configuration

Date: 01 Aug 2007, 10:00-11:00am EST / 15:00-16:00 GMT [more time zones]
Location: Your Office

The cost to produce one-off custom products is high, and it affects both front- and back-end systems. But as Forrester Research reports in a recent study (“Why Custom Product Buyers Could Be Your Most Important Consumers“, June 2006), companies find this investment worth as it provides a new channel for manufacturers to reach out to buyers directly, and an opportunity to fine-tune their product mix based on direct observations of consumer behavior — consumers who are opinion leaders with greater than average influence.

Based on our own study of more than 250 mass customizers in consumer and industrial markets, the webinar outlines the building blocks of success full mass customization strategies and provides ideas how to avoid the pitfalls of implementing mass customization. The focus of this session will be on the design and development of product configuration systems or so called toolkits for customer co-design. Rather than commenting extensively on technical details, the session will provide hands-on recommendations on the strategic positioning and implementation of theses central tool of each mass customization strategy.

Session Outline

- What is mass customization and personalization – and what is it not?
- Which recent trends and development enhance these strategies and how is mass customization related to “The Long Tail” phenomena?
- What are the building blocks of a mass customization strategy and what does it demand from corporate functions like product development, manufacturing, and marketing?
- What are the elements of a successful product configuration system?
- What are the risks associated with mass customization? How do you manage these risks?
- Session wrap-up: Idea for further action

By attending you will learn how to:

- Champion and/or lead a mass customization initiative in your company
- Identify opportunities for mass customization and personalization in your industry
- Develop the fundamental competencies a company needs to build a sustainable MC business
- Prepare your company to benefit from mass customization and product configuration systems
- Discover the risks and threads of mass customization and develop successful counter strategies

To register, please go to http://www.pure-insight.com/webinars/mass-customization-customer-value-creation and use promotional code aix (case sensitive!) wenn registering for a 10% discount.

Note: You also can download the webinar after its initial live broadcast – but only when joining live, you can interact and ask direct questions.

All further information can be found here.

Interview: Klaus Moser on Mass Customization Strategies and How to Align Mass Customization with Corporate Strategy

Klaus Moser is a project leader at Boston Consulting Group (BCG) and a research affiliate of the TUM Research Center for Mass Customization & Customer Integration, Munich. Klaus is a long-time research partner and was an Executive Ph.D. student in the Munich center. Based on exploratory research in the field of mass customization, he focused his dissertation on the topics of mass customization strategies and competencies. His striking finding: Many firms do not have a dedicated mass customization strategy, but just use this approach to support other purposes – even if they think that their mass customization offering is profitable of its own.

The results of his research have been published recently in a book titled "Mass Customization Strategies". According to the topic, Klaus published his book with Lulu - a print-on-demand publisher. Print on demand means that the book is listed at online retailers and only printed whenever an order is placed. This business model enables the offering of books at a low price (no matter how many books will ever be sold). His projects at Boston Consulting Group focus on strategic, sales and organizational questions, and he has worked for firms within the industrial goods and financial services sectors since the year 2000.

In an interview, we recently talked about his research and what is a good mass customization strategy.

Klaus, in your research you find that many companies have no dedicated mass customization strategy. Why is this?

For many managers mass customization still is a new practice – and a common understanding of the possible benefits of mass customization does not exist. Moreover, most companies focus on operational questions and miss to define a strategy first. But there is an interesting observation I have made – a growing number companies have launched mass customization businesses which are supporting a core business based on either mass or craft manufacturing. In my book "Mass Customization Strategies" I identify seven mass customization strategies – only a few of these strategies are based on the understanding that mass customization has to be profitable on its own.

What is a good mass customization strategy anyway?

There is not one good mass customization strategy – more important is that the mass customization strategy is aligned with the overall business strategy. If the core business of a company is mass production based, than a mass customization offering could for example accelerate the objective of better understanding customer demand and needs. A good example provide Adidas sports shoes. Their mi adidas program is helping the company to gather important information to improve forecasting and design of standard products. Also, mass customization could help a company to demonstrate innovation leadership within one industry. Consider as an example Loewe, a German producer of TV sets. To build their brand and differentiate their company from Asian competitors, they very successfully launches a custom TV business.

So, what is the appeal of mass customization for a growing number of companies? Looking in my e-mail inbox, I get more and more requests of companies experimenting with mass customization? Why is this?

From my research I have learned that companies today better understand the competencies and technologies needed to successfully implement a mass customization concept. For several years, companies have gone through a phase of learning and development. But my striking hypothesis is that companies have now realized that not offering mass customized products and services might imply a competitive disadvantage. A good example is the sports shoes industry – today all major players have implemented a mass customization program: Nike, Adidas, Puma, etc. So managers fear to be left behind, and invest in mass customization. If doing so always is the best option, I however doubt.

How did you come to your findings, what is the background of your research?

My research and findings build on the results of two separate, but coordinated empirical research projects. Both projects were initiated at the Institute for Information, Organization and Management (IOM) – TUM Business School, Technische Universitaet Muenchen. The first project examined mass customization cases in a broader business context. This research project, titled international mass customization casebook project, offers a deeper understanding of the different types of mass customization, and also presents results concerning applied competencies. The second project, the industry research group on mass customization, presents empirical case data confirming the results from the first project. Both projects build on case study research and the results are documented in "Mass Customization Strategies".

What is an example of a company “that got it”, i.e. that has a sustainable mass customization strategy that is both scalable and build-to-last?

Two examples I personally like are Build-a-Bear and 121TIME. Both businesses being quite different from a sales channel strategy have successfully grown their businesses during the last couple of years and both companies have managed to very professionally understand market and customer needs, which I take as a measure of build-to-last.

What are the main challenges in mass customization still ahead?

Companies still struggle with understanding customer needs, since I see that most companies do not tailor their mass customization offering to earlier identify market needs. On the operations side, many companies struggle with missing standards for IT systems and configuration systems – I have made the observation that manufacturing capabilities, for example in the shoe or apparel industry, are often stronger than required IT capabilities. Another observation from my research is that the types of companies changing their focus from a mass manufacturing to a mass customization business model often struggle with proper change management around organization, processes and people.

What would be your main advice for a manager that wants to start a mass customization initiative?

My advice: study and understand best practices of the today's many existing mass customization examples. From the industry research group on mass customization which I have coordinated at the TUM business school I learned that best practice sharing is a successful instrument also when done across industries.

To conclude: What is the greatest mass customization offering ever – either one that is already existing or that you would like to get in the future?

My expectation is that the future of mass customization lays in the bundling of customized product and service offerings in order to fulfill people's overall and not only single needs – I have not seen such an offering so far.

Contact Klaus Moser at klaus@moser-mc.com, www.moser-mc.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.

New book: Product Information Systems for Mass Customization

Product Information Management for Mass Customization: Connecting Customer, Front-office and Back-office for Fast and Efficient Customization

A new book on mass customization by two close members of our MC community: CIPRIANO FORZA, Professor of Operations Management and General Management at Padova University, and FABRIZIO SALVADOR, Professor of Operations Management at the Instituto de Empresa Business School, Spain, have published their long anticipated book on product configuration (information) systems for mass customization.

I did not get the opportunity to review the book yet, but given the excellence scholarly work the two authors showed in many previous projects, I am sure this will be a helpful contribution in one of teh core topics of mass customization:

From the announcement: "Those who have successfully managed product information for mass customization carefully avoid disclosing how these esoteric systems work in practice. This is the first book to provide a holistic recognition of the essential aspects of an IT-supported product configuration system. In doing so, it reveals the basic building blocks of these systems, how they support mass customization, how these systems are selected and implemented, what alternative options there are, and lastly, what the operational and strategic implications of these systems are."

Read a sample chapter here.

Deutsche MC-Community (German MC Community): Montagekongress 2007 und Web 2.0 Report von z-punkt

This is a posting in German language with information on a German event and a new German Web 2.0 report.

"Kundenbindung durch reaktionsschnelle Montage" lautet das Thema des 20. Deutschen Montagekongresses, der am 6. und 7. Februar 2007 vom iwb-Institut der TU München veranstaltet wird.

Zu diesem Thema treffen sich an diesen Tagen in München Fach- und Führungskräfte aus dem Bereich Montage. Neben Informationstechnik und Logistik stehen diesmal die Flexibilisierung der Anlagentechnik sowie Baukastensysteme und low-cost-Automation im Mittelpunkt der Veranstaltung.

Referenten sind neben iwb-Institutsleiter Gunther Reinhart u.a. Adolf Kraus, Leiter Logistik und IT bei der BMW AG in Leipzig, Festo-Vertriebsleiter Deutschland Rolf Storr und Michael Freitag, Leiter Supply Chain Management und Logistik der Vaillant Group in Remscheid. Ich halte den Eroeffnungsvortrag am ersten Tag zum Thema Mass Customization und Open Innovation.

Das ganze Programm und weitere Informationen auf der Web-Site der Veranstaltung

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Reminder: DIE Veranstaltung fuer die deutschsprachige MC-Community:

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Web 2.0 Report von Z-Punkt

Z-Punkt, ein deutsches Trendforschungsbüro hat gerade den Web 2.0 Report veröffentlicht, der vor allem Managern, die sich über dieses Thema einführend, aber umfassend informieren wollen, Hilfestellung gibt. Der Web 2.0 Report liefert eine mfassende Analyse des Phänomens Web 2.0 im deutschsprachigen Raum.

Aus der Ankuendigung:

Web 2.0 – was ist dran? Von Consumer Empowerment und Geschenkökonomie schwärmen die einen – aber wer bezahlt die Rechnung? Eine zweite Dot.com-Blase bespötteln die anderen – aber ist das Netz nicht längst erwachsen geworden? Ein gutes Geschäft wittern dritte – aber was ist das Geschäftsmodell?

Der Report analysiert das Thema Web 2.0 aus der User-, Technik- und Businessperspektive. Und gibt so eine eher salomonische Antwort auf die Frage: Hype oder Quantensprung: Der Hype wird ver¬schwinden, das Phänomen wird bleiben – und an Bedeutung gewinnen. Web 2.0 ist keine neue „Version“ des Netzes, wie der Begriff suggeriert, sondern eine Metapher für einen evolutionären Wandel. Gleichzeitig steht Web 2.0 jedoch für etwas qualitativ Neues – für eine neue Art, wie User mit dem Netz umgehen, für neue Ansätze in der Webtechnologie und für einen neuen Zugang zum Business im Internet.

Der Report zieht drei Entwicklungslinien in die Zukunft:

- User-Driven Economy: Der User wird zum Wertschöpfungspartner
- Cybersourcing: Geschäftsfunktionen werden ins Netz ausgelagert
- Mash Up Your Business: Zukunftsmärkte sind Schnittstellenmärkte

Unternehmensprofile von vielen bekannten, aber auch etlichen nicht so bekannten Unternehmen, runden den Report sehr schön ab (z.B. 37signals, Flock, Netvibes, Nooked, qype, AllPeers, Cyworld, Outside.In).

Info: 115 Seiten als PDF im Querformat, Preis: 170 Euro inkl MwSt. Info und Bestellung hier. (HINWEIS: über den Exciting Commerce-Blog bekommen Sie den Report zum Sonderpreis von 140 Euro).

Kontext: Einen ähnlichen Report gibt es vom Erfinder des Begriffs Web 2.0, Tim O'Reilly: Web 2.0 Principles and Best Practices , O'Reilly Media, 2006, 101 S., PDF, 375$

Buzzword Collection: Wikinomics Is the New Crowdsourcing

Don Tapscott has been one of my favorite authors for a long time with regard to everything on the digital economy. Finally, he is also jumping on the co-creation and crowdsourcing trend and comes up with a new book on the topic with the wonderful title 'Wikinomics: How Mass Collaboration Changes Everything'. Together with co-author Anthony Williams from New Paradigm, a think tank focused on business innovation, the book promises to provide an easy-to-read discussion along the line of Benkler's Wealth of Networks thinking.

The book will be published at the end of the month, and once I have it, I will post a review. But I already wanted to provide you today one more buzzword to impress your colleagues at the next holiday party: The next trend in business is Wikinomics.

From the announcement of Wikinomics:

"Smart firms can harness collective capability and genius to spur innovation, growth, and success. ... Wikinomics builds on this research elucidating a new age where thanks to the Web 2.0 masses of people can participate in the economy like never before—creating a TV news story, sequencing the human genome, remixing their favorite music, designing software, finding a cure for disease, editing a school text, inventing a new cosmetic, or even building a motorcycle."

Along the promised case studies, only the first in this list is new to me, but sounds very interesting:

• Rob McEwen, the Goldcorp, Inc. CEO, former investment banker, and gold mining newbie, who used open source tactics and an online competition to breathe new life into a struggling business cobbled by the rules of an old-fashioned industry.

• Flickr, Second Life, YouTube, and other thriving online communities that transcend social networking to pioneer a new form of collaborative production that will revolutionize markets and firms.

• Smart, multibillion dollar companies like Procter & Gamble that cultivate nimble, trust-based relationships with external collaborators to form vibrant business ecosystems that create value more effectively than hierarchically organized businesses.

There is also a web site with some more information. And Dan Farber of ZDnet has a video interview with Don Tapscott.

Update on Music Personalization: Bas Reus analyzes Last.fm and Pandora Media

Some time ago, I wrote about different sites where you can personalize your music. Bas Reus, a student of information sciences at the University of Amsterdam, recently finished his master's thesis on customization in the internet economy, comparing different custom music services.

Now, Bas posted his entire thesis online. It is a great study on a good methodological and scientific level. His main research question is the relation between digital products, mass customization and variety. Building on earlier literature, Bas formulates a number of hypotheses on the relation between variety, the level of customization, the consumer search costs.

The case studies on Last.fm and Pandora show that variety does not necessarily leads to more complexity and higher search costs. On the contrary, Last.fm and Pandora try to increase the interaction between the site and the user to consumers to discover new digital products – and in turn benefiting from referral fees when users purchase this music.

His conclusions:

- Instead of lowering the average interaction length of time (as suggested often in the literature), it may be desirable to increase the average interaction length of time between the supplier and the consumer.

- Instead of lowering search costs for consumers, it is desired for them to discover as much as new products as possible.

- The thesis also stresses the "theory" of the long tail, where abundance of information is something to strive for, benefiting users. But this abundance needs useful customization possibilities to minimize the search costs for consumers.

Read his entire thesis here.

Context information:
- Older post on personalization of music.
- Bas Reus' Blog

Why do people want to co-create and to customize?

A new book by Lisa Johnson provides some good answers -- and some great new case studies, too.

Yes, we know today that modern consumers not just want to solely consume, but are active and co-creating and (a few of them) co-innovating – and want just what they want.
But why is this so? This still is one of the fundamental questions – also for companies that want to benefit from “crowdsourcing” or interactive value creation.

To answer it, you either have to rely on heavy sociological texts or studies from anthropologists, or on pretty weak trend assumptions by marketing consultants (I have summarized both discussions in my German MC books).

One of the few exceptions is the great book by Harvard Prof Shoshana Zuboff and her manager husband James Maxmin, “The support economy: why corporations are failing individuals and the next episode of capitalism” (London: Viking Penguin 2002), which contains a great analysis why the (US American) consumer wants more personal service and customized offerings.

The focus of Zuboff and Maxmin are baby boomers, the post-war generation now in its best living and spending age. However, most co-creation activities that are cool in the moment come from younger generations, today 14-to-40-year olds. Also these consumers are savvy, sophisticated, and particular – and they are becoming more and more immune to traditional advertising, while exploring the huge choice of “long tail” markets.

Divided by marketers in the Generation X (30+) and Generation Y (teens and twentysomethings), these groups shape today’s pattern of consumption and value creation. And Lisa Johnson, a marketing consultant, does a great job in her book “Mind your X's and Y's: Satisfying the 10 carvings of a new generation of consumers” (New York: The Free Press 2006) to describe why and how.

What I really liked about this book is that it is all about Web 2.0 and Social Commerce without even mentioning these terms, but bringing them into a more general, better founded and buzzword-free framework.

Her starting point:

“Whether we like it or not, recent technologies have changed how our brains operate. They have altered the way today’s consumers think – not just what they but, but how they buy, how they act and react, and which products and services they find compelling.”

Resulting form this is a different mindset that Johnson calls “the five essential criteria” which describe qualities consumers expect from all kind of products:

- Experience: The desire to get out and try new activities, to explore, text, and see what is possible.

- Transparency: The market as an antispin zone. Full disclosure for companies and consumers alike with accountable choices and decisions.

- Reinvention: Due to fast adaptation of new technologies that allow to do old things differently, markets are a place of constant change.

- Connection: Cooperation of people blending their talents and perspectives to improve the experience for everyone.

- Expression: Anything is possible. The desire to express the layered facets of ones personality and individuality by customization and personalization.

These five criteria inform how consumers operate in the market. And Johnson uses them to describe ten consumer cravings that cross industries and age brackets as they drive – in her opinion – every decision made by members of the Generation X and Y. Let me introduce five of them which seem more relevant for the themes of my blog. While the following quotes describing these trends are pretty much marketing-jargon, their description in the book is actually more profound:

Shine the Spotlight: Extreme personalization gives marketing a new face: "Clamoring for personal recognition. They’re itching to stand out, stand up, and be celebrated with their names in lights (or print or pixels). Brands that tap into this powerful need with highly creative efforts will get not only great buzz, but a whole new level of loyalty and brand ownership to match."

Make Loose Connections: The new shape of “families” and social networks. "This generation is rejecting traditional associations and club-style memberships in favor of loose connections that more accurately reflect their interests, lifestyles and busy days."

Filter Out the Clutter: Editors and filters step into a new role of prominence. "In a world that’s inundated with choices, editing is a critical market phenomenon and an important process in our daily lives. Consumers rely on editors to sift through the raw data and identify the top picks. As a result, many savvy brands are learning to build editing mechanisms into their brands, products, and websites.

Keep it Underground. The rejection of push advertising and the rising influence of peer-to-peer networks. "A select group of people discovers something new, from shoes to bands to politics to neighborhoods, and translates it to satisfy a much wider audience. This is the way of the underground."

Build it Together. Connected citizens explore their creative power and influence change. ".. we’ve only just begun to tap into the power of web-based networks. The Connected Generation is becoming intoxicated by their growing ability to spark change – both as consumer groups and end users. This awareness is spurring mass creativity and launching a power shift away from companies and into the hands of consumers."

And, just for record, the remaining five carvings are:

- Raise My Pulse. Adventure takes its place as the new social currency.
- Give Me Brand Candy. Everyday objects get sharp, delicious, intuitive design.
- Bring it to Life. Everyday activities are orchestrated to deliver a dramatic sense of theater.
- Go Inward. Spiritual hunger and modern media find common ground.
- Give Back. Redefining volunteerism and the meaning of contribution.

Regarding her first trend, Shine the Spotlight and Extreme Customization, she provides a number of good arguments why consumers want this kind of customization and expression of their personality – regarding the need for (mass) customization especially for product offerings that address aesthetic design and personalization:

- People are burned out. “Consumers are cynical and extremely educated about the entire marketing process. Add in a collective obsessions with celebrities, and people everywhere are longing to experience the insider treatment. They want to feel like someone really cares about their dreams and desires.”

- People have seen what is possible. New tools and websites allow consumers to share their unique personalities.

- There’s a sense of entitlement. “I deserve it and I am ready for it now, is the common attitude.

- People want profile in familiar formats.

- People want promotion without the appearance of self-promotion.

To illustrate this trend, Ms. Johnson uses a number of case studies which I personally find not too extreme or convincing, there are much better examples out there (like the new Adidas Pars Innovation Lab, DNA Style Lab’s idea or Build-a-Bear): Jones Soda that allows you to place personal labels on standard soda, Iamtoy.com, who create handcrafted superhero alter egos of your loved ones, DNA Artwork that uses your DNA for a custom picture. But you ge the point.

Among the many other, much better case studies in the remaining chapters of the book, is the venture of an active member of our mass customization community: Andreas Schuwirth (http://www.xxpo.de), who developed a body measurement solution for the bike market that allows a totally new sales experience there. The book describes in large detail the application of this system in a new chain of bike stores in the US, "roll:bike". These stores are envisioned by an industry outside, Stuart Hunter, who wants to provide customers a custom shopping experience with a highly edited and customer-centric store. The book describes here a great case study of an offline-customization (matching) system that really provides customer value.

What the book is missing, however, are all forms of co-creation that go beyond operational marketing or improvements of merit, but which do address topics like lead users or other forms of user innovation (Patty Seybold’s book does a better job here). Ms. Johnson stays in the traditional regime of thinking – but this is also where most co-creation activities do take place anyway.

I could go on with quoting from this book, but just recommend that you get a copy and read it for your self.

Outside Innovation: New book by Patricia Seybold builds a bridge between open innovation & mass customization

Outside Innovation: How Your Customers Will Co-Design Your Company's Future, by Patricia B. Seybold. New York: Collins, October 2006. ISBN: 0061135909, about 26$.

This book review has been overdue for more than two months when I got the pre-version of Patricia Seybold's new book, "Outside Innovation". I immediately read it with very large interest, as Seybold is one of the authors I have quoted often in my own books. In her bestselling title 'Customer.com', she provided a great analysis of how the internet is changing consumer markets. So meeting her here in Boston for several occasions in the past year and discussing with her some ideas of her new book was a great opportunity. Here is the result of her recent research: In "Outside Innovation", Patricia Seybold provides one of the first general-management books on co-creation of value between firms and customers.

Well, there have been other books on this topic before (starting with the great, but today almost forgotten book by Rafael Ramirez and Richard Norman on Value Co-Creation [1994: 'Designing Interactive Strategy'], Prahald & Ramaswamy's [2003] highly abstract book on customer co-creation, and of course Eric von Hippel's [2005] fantastic review of three decades of academic research on user innovation in 'Democratizing Innovation'.

But Patricia Seybold's book is full of great and very up-to-date case studies that make the idea of value co-creation really lively and accessible. She describes (in great detail and with plenty of background information) many classic examples like Lego's co-development of the new Mindstorm toy, Threadless, Flickr, BBC Backstage or National Semiconductor, but has also some great new (at least for me) examples of customer-centric innovation like the development of a new fitness machine (Koko Fitness – great story and concept) or SEI Wealth Networks.

And her pitch line why her book is important tackles one of the main problems of integrating customer and users in a firm's innovation process:

"The good news is that customer-led innovation is one of the most predictably successful innovation processes. The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall."

I hope that her books can support more mangers to consider customer/user integration not only as a nice add-on pilot initiative, but to make it a crucial part of the company's core strategy. The book, however, offers no recipes or frameworks how a manager could do so. Its core contribution is to document and describe what is happening in a world that is not any longer dominated by companies creating things FOR users. And as Seybold does this in great detail and style, this record of promising practices may convince managers to turn away from old prejudices.

Patricia Seybold bridges in her book between innovation and operation, between users and customers, between leading edge contributors and average customers. Eric von Hippel strongly differentiates between these levels. He argues that for functional novel innovation, firms have not to listen to their present customers but to search for "lead users" who face a specific need ahead of the market and have turned this need already into a solution for themselves. In many cases, these lead users are in a different domain than the manufacturer and are not its present customers. Gathering input from lead users thus is totally different to market research methods of any kind.

Seybold uses the term "lead customer" to describe a group of a firm's current customers who are truly innovative: "These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about." Getting their input may also be the result of a more conventional market research approach.

This distinction is worthwhile to note when you read the book. Otherwise, without previous knowledge, you may get a bit confused where in her cases real innovation starts and more general customer-focused business strategies end. But as she argues, this is exactly the beauty of co-designing with customers: You start with some small steps, perhaps within the context of a mass-customization-toolkit, and suddenly your customers want more and get motivated to innovate on their own.

My conclusion: A book very worthwhile to buy and read. Its great collection of case studies will inspire you to look for more and deeper information on this topic – or to start to brainstorm immediately how you can benefit from the creative potential of your customers.

For abstracts from the book and an insight into the cases, have a look in Patricia Seybold's blog, http://outsideinnovation.blogs.com.

SAP Info on Open Innovation & Innocentive

While this is an audacious act of self promotion, I still want to guide you to a nice interview I did with SAP Info, the global customer magazine of Software Company SAP. The topic was the U.S. company Innocentive that specializes in Open Innovation. Karim Lakhani, who worked as a Ph.D. researcher in the same group at MIT that I am visiting, got some fascinating performance data on Innocentive, on which I comment in this interview.

The interview answers questions like:

From Open Innovation, it is only a small step to companies developing products with the help of their own customers. Does this mean that manufacturers and customers are once again communicating directly with each other about the products, like in the good old days of the corner shop? Is it possible to prevent submitted entries, even those that haven't won, from being used commercially, patented as someone's own idea or sold on?

Isn't it still more lucrative for someone with good ideas to secure themselves a patent rather than accepting a comparatively small amount of money anonymously from Innocentive?

Does Innocentive have a monopoly at the moment or are other companies already copying its business idea?

How could external and internal innovation specialists usefully share out the work in future?

Open Innovation has been called the "Ebay of ideas". Do you see a danger of people's gift for invention being sold off cheap?

Read the answers and the full interview in English here (the translation from German is not always very good). There is also a version in German language.

Growing Open Innovation Community in Europe: New Book and Executive Course

Heavy conference traffic caused a delay in postings to this blog. On one of these conferences, I had the opportunity to catch-up with Wim Vanhaverbeke, a prof at Technical University of Eindhoven in The Netherlands. Wim is part of a network of researchers around Henry Chesbrough (UC Berkeley) who promote the open innovation idea and develop it further.

Open innovation in their understanding is broader than my usage of the term on this web site. While I use "open innovation" as a continuation of the "open source" idea, with focus on users co-developing solutions for their own use, Chesbrough et al. use the term in the meaning of "distributed innovation" -- means and measures that allow companies to capture the distributed knowledge within a wide network of actors to solve a technical problem. If you have not read Henry Chesbrough's book "Open Innovation" (HBSP, 2003) yet, order it now, it is a great introduction to the idea of distributed innovation.

This group of researchers recently published a new edited book on open innovation research. I did not get a copy of this book yet (and it comes with a very heavy price tag), but it looks like a very interesting compilation of papers around the topic:

Open Innovation: Researching a New Paradigm, edited by Henry Chesbrough, Wim Vanhaverbeke, and Joel West, Oxford University Press, USA, $99. (Update: More information on the book can be found here).

From 25-29 September 2006, the editors of this book also organize an European executive education course on "Corporate Entrepreneurship and Open Innovation".

Led by Henry Chesbrough and Kenneth Morse, MIT Entrepreneurship Center, this course teaches the fundamentals of Open Innovation as applied to develop new venturing options for global corporations. The participants will be given the opportunity to develop and refine their own business case, which will be evaluated during the last day of the course by an objective and demanding team of experts.

More information here.

Contact: Prof. Wim Vanhaverbeke, Technische Universiteit Eindhoven (W.P.M.Vanhaverbeke@tm.tue.nl)

Mass Customization Case Study Collection -- New Issue of the Mass Customization Journal Published

A new issue (No. 4, Vol 1) of the International Journal of Mass Customization has just been published (see here for more general information). This issue is a special CASE STUDY issue containing eight cases from the International Mass Customization Case Collection, an initiative of more than 25 international researchers collaborating to build a broad basis for empirical research on mass customization. The idea of this project, coordinated by Klaus Moser at TUM, is to document current practices of mass customization businesses in a form that allows rich cross-case analysis and learning from previous experiences.

We are happy that we now can present the first eight cases of this collection in one issue, starting with three cases of mass customization of industrial goods:

* APC, a provider of data centre infrastructure from the US and Denmark,
* MarelliMotori, a manufacturer of electric motors from Italy,
* F.L.Smidth, a Denmark-based manufacturer of complex process plants for the construction industry.

Then, three case studies from the footwear industry provide the opportunity for cross-case analysis in one industry:

* Adidas, an international manufacturer of sports goods based in Germany,
* Left foot, a Finland-based worldwide operating provider of custom men’s shoes, and
* Design&MC Lab, a research lab and model plant for the mass customization of footwear based in the Italian shoemaking capital, Vigevano.

The two remaining cases focus on special objectives connected with the implementation of a mass customization strategy in business-to-consumer markets:

* Steppenwolf, one of Europe’s leading manufacturers of custom bicycles, and
* Turo Tailor, a Finnish manufacturer of apparel (men’s suits).

See here for authors and abstracts of all cases.

Full text access to the cases demands a subscription of the journal. But: Due to the cooperation with the publisher, we now can offer to all past participants of our conferences (MCPC, Deutsche MC Tagungen, IMCM, etc.) full online access to all issues for a very (really!) good price. Please contact me for more information and to get the special subscription form. Disclaimer: I am neither the publisher of this journal nor do I profit in any form from its sales or subscriptions.

Related posts on this topic:

- First issue of IJMassC published
- Special issue on Customer Centric Enterprises published

PS: We are extending this collection. If you want to contribute a mass customization case, please contact me as well (Important: Cases have to be contributed by independent scholars, not by members of the case company described!)

German: Special Issue of Die Unternehmung on Mass Customization (in German language)

(The following posting is in German language only as it covers a German language publication only. Sorry! )

Sonderheft "Mass Customization" der Fachzeitschrift Die Unternehmung (in GERMAN language)

Die Schweizer BWL-Fachzeitschrift (Die Unternehmung) hat unter Federführung von Prof. Manfred Bruhn ein gutes Sonderheft zu Mass Customziation mit starkem Marketing-Fokus herausgebracht (Ausgabe 3/2006).

Die Beiträge:

-- Kundenzufriedenheit bei Mass Customization: Eine empirische Untersuchung zur Bedeutung des Co-Design-Prozesses aus Kundensicht

-- Warum «Toolkits for User Innovation and Design» für ihre Nutzer Wert schaffen

-- Mass Customization: Strategische Option mit beschränktem nachfrageseitigem Erfolgspotenzial

-- Produktkonfiguration als Präferenzkonstruktion

Das Heft (Ausgabe 3/2006) kann für 17 Euro direkt beim Verlag bestellt werden: http://www.dieunternehmung.ch ==> Ausgabe 3/2006

Mass customization and The Long Tail -- A review of Chris Anderson's book

What a coincidence: Today I finally finished to read Chris Anderson's bestselling book "The Long Tail", and today Donal Reddington, editor of the MadeForOne blog, posted an extensive review of the book. Donal's review is worthwhile to read as it has a special focus on mass customization.

[ I assume that you are familiar with the Long Tail idea. If not, Wikipedia has a good summary, Chirs Anderson an entire website, and Wired the article that started it all ]

I enjoyed reading the book very much and recommend it to everyone interested in mass customization and open innovation. Even if the book is highly focused on digital goods, it provides a number of convincing arguments why firms need to find better answers on the growing heterogeneity of demand -- and what the role of users is to shape and provide this demand. But as Donal Reddington notes, The Long Tail is not a book on mass customization:

"It does provide examples of mass customization as evidence of the growing power of the tail, but it is principally about leveraging the potential of massive product variety.

The long tail concept presumes that the product is available - sometimes on a build-to-order basis, but more often from stocks already held. This aspect of the long tail idea is at odds with the mass customization idea, which presumes little or no finished stock inventory, with products being made only after they are sold. …

The growth of more ‘democratic’ markets is also shared between mass customization and the long tail. One example is the growth of peer production, where individual members of a large group propose new products (such as new music, Lego toys or t-shirt designs), which are then rated by their peers within the group. The most successful are then made available to the open market. This displays characteristics of both the long tail and mass customization. Also, the growth of the long tail make build-to-order more feasible in many markets. Lulu.com can publish a book for you and print copies in tiny numbers to fill orders on-demand."

I personally took away from the book:

-- The story of Sears, and how this company was founded 100 years ago to provide rural customers with more choice and variety;

-- A great argumentation regarding the "mass confusion" and "too much choice" debate: As Anderson correctly remarks, there is not too much choice, but just too little intelligent support and filtering helping users to deal with variety. This chapter of the book (the tenth) should be a must read for all people dealing with configuration systems for mass customization – as providing better choice for customers should be the core of any configuration toolkit.

-- The idea that measuring actual demand ex-post is better than today's dominant logic of forecasting and predicting demand by market research ex-ante. Anderson writes: "Rather than lumping consumers into predetermined demographic and psychographic categories, post-filters such as Netflix's customer recommendations treat them like individuals who reveal their likes and dislikes through their behavior." The same idea is the underlying logic of a co-design toolkit (when compared to a shelf with standard goods): Instead of making decisions which product configuration the majority of customers presumably would like, a co-design toolkits provides this choice to the customer.

The final chapter of the book, Anderson's glimpse into the future, tackles a topic that I have discussed several times in connection to mass customization (see earlier posting): the advent of rapid (digital) manufacturing technologies like laser sintering or 3D printing.

Donal Reddington: "Andersen rightly states that if digital manufacturing can be developed to output more complex products, then almost every market will become a digital market. In the same way that online music can be downloaded now, someday the design for pretty much anything else might be downloaded someday and manufactured at home. Then every market will be a long tail market, and the cost of carrying infinite variety of stock will be zero for everything."

So: Read this book, buy a 3D printer, and start your own Long Tail economy.

Deutsche Mass Customization Community -- A Special for the German Mass Customization Community (in German Language)

(The following posting is in German language only as it covers German events and publications. Sorry! Continue to read in English here.)
Neue deutsche Publikationen zu Mass Customization und Open Innovation, neue deutsche Fallstudien und ein Hinweis auf eine spannende Veranstaltung vom 21-24. Juni bei Stuttgart.

(1) Interaktive Wertschöpfung: Open Innovation, Individualisierung und neue Formen der Arbeitsteilung Unser neues Buch zum Thema dieses Blogs ist erschienen !!

Das Thema: Open Innovation, Social Commerce und Mass Customization sind aktuelle Strategien, bei denen die Kunden eine neue Rolle bekommen: Sie sind nicht mehr nur passive Konsumenten, sondern aktive Wertschöpfungspartner. Kunden gestalten heute Produkte oder Dienstleistungen aktiv mit und übernehmen teilweise sogar deren gesamte Entwicklung oder Herstellung.

Aus betriebswirtschaftlicher Sicht kommt es damit zu neuen Formen der Arbeitsteilung. Das Konzept "Interaktive Wertschöpfung" (IWS) diskutiert die daraus resultierenden Strategien und Prinzipien und stellt eine neue ökonomische Theorie vor, die die neuen Formen der Arbeitsteilung erklären soll.

Das Buch steht in weiten Auszuegen kostenlos zum Download zur Verfuegung (Open Access). Mehr Informationen auf einer eigenen Web-Site: www.open-innovation.com/iws

(2) Mass Customization Buch bei Gabler in 4. Auflage erschienen

Mein "blaues Buch", das Mass Customization aus einer wissenschaftlichen Perspektive betrachtet, ist nun in der vierten, vollständig aktualisierten Auflage erschienen. Vor allem die Fallstudienübersicht im Anhang und die Literatur wurden überarbeitet, aber auch z.B. die Definition von Mass Customization konkretisiert. Wenn Sie eine der früheren Auflagen schon haben, lohnt sich der Kauf eher nicht (angesichts des hohen Preises, den der Verlag fordert), ansonsten freue ich mich über den Kauf.
Einen Auszug aus dem Buch als Download hier (PDF von Vorwort, Inhaltsverzeichnis, Leseprobe).

(3) Neue Fallstudien zu Mass Customization beim Symposion Verlag erschienen

Während das vorangehend erwähnte Buch eher wissenschaftlich ist, habe ich zusammen mit meinen Co-Autor Christof Stotko in unserem Buch "Neue Wege zum innovativen Produkt: Mass Customization und Kundenintegration" eine eher praxisbezogene Herangehensweise gewählt. Dieses Buch behandelt auch ausführlich die Verbindung zwischen Mass Customization und Open Innovation (Mehr Infos zum Buch, das Ende 2003 erschienen ist).

Eine Besonderheit dieses Buchs ist, dass sich jeder Leser dieses selbst konfigurieren und individualisieren kann. Dazu dient neben dem Grundtext vor allem ein ausführlicher Fallstudienanhang, geschrieben von verschiedenen Fachexperten. Dieser wurde nun um 10 neue Fallstudien ergänzt.

Die NEUEN Fallstudien im Überblick (teilweise handelt es sich um Aktualisierungen):

- My Personal Channel: Kundenindividuelle Fernsehangebote
- IKEA: Die individuelle Lösung für Ihre Küche
- InVIDO GmbH: Mass Customization in der Möbelindustrie
- Kfz-Versicherungen: Kann man Kundentarife individualisieren?
- Kreditkarten: Die eigene Wunschkarte konfigurieren
- Lands’ End Custom: Hosen und Hemden maßgeschneidert
- Karstadt und Maile: Zwei Konzepte für Herrenmode nach Maß
- NIKEiD: Individuelles Design von Sportschuhen
- Dynamic Packaging: Mass Customization in der Reisebranche
- Linel: Mass Customization in der Wasseraufbereitungsbranche

Alle Fallbeispiele können Sie zum günstigen Preis zwischen 4 und 6 Euro direkt beim Verlag beziehen. Die Auswahl erleichtert Ihnen dabei unser Fallstudien-Konfigurator (einfach "alle Beiträge anzeigen" lassen, die neuen sind eindeutig gekennzeichnet). Dort bekommen Sie auch mehr Informationen zu den einzelnen Fallstudien. Natürlich können Sie sich auch einzelne Abschnitte des Grundtextes des Buchs einzeln als PDF-Download erwerben.

(4) Open Innovation, Mass Customization und Innovationskommunikation – ein Executive Training im Communicate-Programm der TU München

21. bis 24. Juni 2006 im Schlosshotel Liebenstein, Neckarwestheim bei Stuttgart (Info)

Aus der Ankündigung: "Andere sprechen von Innovationskommunikation – wir nennen es „Communication and Leadership“. Denn Leadership heißt: Neue Dienstleistungen und Produkte entdecken, entwickeln und erfolgreich einführen. Und dazu gehört Kommunikation. Wollen Sie Innovationen zum Schlüssel des Erfolgs Ihres Unternehmens werden lassen? Kennen Sie die wichtigsten Prinzipien der Gestaltung erfolgreicher Innovationsprozesse? Haben Sie die Nase vorn bei der Kommunikation neuer Entwicklungen?"

Als Teil der Veranstaltung wird TUM Business School Professor Joachim Henkel eine ausführliche Einführung in Open Innovation und den Lead-User-Ansatz. geben. Ich werde einen Nachmittag zum Thema .Mass Customization. gestalten, mit besonderem Schwerpunkt auf Kommunikation und innovative Kundeninteraktion.

Die Teilnahmegebühr für ein Executive Training beträgt 2.350 € (zzgl. MwSt.). Bei einer Anmeldung bis zum 29. Mai 2006 zahlen Sie einen reduzierten Teilnehmerbeitrag in Höhe von 1.850 € (zzgl. MwSt.). Im Preis enthalten sind Tagungsgetränke, Mittag- und Abendessen sowie Trainingsunterlagen.

Das vollständige Programm finden Sie hier: http://www.communicate-program.de/580.0.html
Info-Telefon: +49 (0) 89 - 289 28481

Hinweis: Leider zeitgleich zu dieser Veranstaltung findet in Hamburg die wissenschaftliche Mass-Customization-Tagung imcm06+peto06 statt.

Special Issue of IJMassC on Competitive Advantage Through Customer Centric Enterprises – Advances in Mass Customization Research, Vol. 2

Edited by Frank T. Piller, Ralf Reichwald and Mitchell M. Tseng, International Journal of Mass Customisation, Volume 1 - Issue 2/3 – 2006 (ISSN: 1742-4208).

In 1993, when we started this field of research, our graduate students complained about not many reference articles, only a score of them on mass customization at that time. Today, we can identify more than 2,500 published papers on mass customization and personalization, and their number grows rapidly. To overcome the scope and speed issues of knowledge explosion in this area, the bi-annual World Congress on Mass Customization (MCPC) has been organized since 2001.

Among the more than 250 authors presenting their work at the MCPC 2003 conference (held at the Technische Universität München, Munich), we invited a number of authors to submit a chapter for a special issue, based on their representativeness of particular issues in the subject. After a long editing and publication process, these papers has just been published as a special issue of the International Journal of Mass Customization (IJMassC, 1 (2006) 2/3).

Read the editorial paper on "Competitive Advantage through Customer Centric Enterprises" by Frank Piller, Mitchell Tseng and Ralf Reichwald in full text here (free PDF download).

The other papers have to be purchased by the publisher. Here an overview of all papers of this issue (contact Inderscience directly to order the entire volume at a special price: Inderscience Enterprises Limited, Fax: +41 22 7910885, subs@inderscience.com).

The first four papers deal with the genus of mass customization, the co-design process between each individual customer and the manufacturer in order to specify a custom product. Margarita B. Guilabert and Naveen Donthu discuss the development of a scale to measure customer customization sensitivity to evaluate whether customers are interested in mass customization anyway. It seems obvious that if consumers are not interested in customization there is no need to pursue customization strategies. Consumers may be more or less inclined toward different types of mass customized products/services, and therefore, it is critical to know how important customization is for consumers. The paper presents an approach how companies can evaluate the likeliness of customers to evaluate a mass customization offering.

Given that a mass customization offering appears appealing for a customer, Sri Hartati Kurniawan, Richard H. Y. So and Mitchell M. Tseng evaluate in the next paper how the co-design process is perceived from the customers’ perspective. The paper reports the results of an experimental investigation of differences between product configuration and product selection in terms of consumers’ decision quality. The results show that configuration offers not only greater satisfaction with the resulting products (as compared with standard products), but also increases the satisfaction with the shopping process.

The following paper provides an in-depth look on the information systems enabling the configuration or co-design process. The special topic of Rosmary Stegmann, Thomas Leckner, Michael Koch and Johann Schlichter is how customers can be supported by such a system during their design task. While configuration systems enable customers to virtually assemble a product and find a fitting specification, customers must also learn how to deal with the complexity of the product model and of the configurator tool itself. Their paper introduces different approaches to overcome the problems of complexity and uncertainty associated with this customer tool interaction.

The implications of mass customization on business information systems, however, go beyond the implementation of configuration systems, as Andreas J. Dietrich, Stefan Kirn and Ingo J. Timm discuss in their paper. They analyze the impact of mass customization on future business information systems, with focus on globally distributed value chains. Using a case study from the footwear industry, the authors develop an innovative multiagent approach, which is using information represented with explicit machine-understandable semantics for coordinating and negotiating mass customization activities throughout the supply web.

The next contribution, co-authored by Jianxin Jiao, Lianfeng Zhang and Shaligram Pokharel, proposes an approach of process platform planning to support the variety synchronization from design to production. This is a basic principle of mass customization in order to reduce the internal variety of a product architecture and to create a stable solution space and stable processes, allowing for “mass production efficiency” as a main characteristic of mass customization. The authors show how a process platform is conducive to the synchronization of product and process variety.

Rebecca Duray supplements these insights about process planning for mass customization with her paper on the relation between a company’s capability of flexibility and quality and the financial performance. Her study tests within a sample of 126 mass customizing companies the tactical requirements of a mass customization strategy and finds that teamwork and worker flexibility lead to increased financial performance for mass customizers.

The paper by Thorsten Blecker, Nizar Abdelkafi, Bernd Kaluza and Gerhard Friedrich provides another contribution in regard to defining the processes of a mass customization system. Their analysis of flexibility capabilities of a mass customizer presents a number of key metrics to measure variety and complexity in operations and manu¬facturing related tasks. The result is an elaborated system to detect the levers that should be considered to keep variety induced complexity under control.

Moving from process to product structures, Udo Lindemann and Maik Maurer discuss the early evaluation of product properties for individualized products. They present a methodology for testing and evaluating product spectra and individual products with regard to lead time optimization. Recently, a number of design techniques have been developed to improve the design of custom-made products.

The paper by Janet K. Allen, Farrokh Mistree and Gabriel Hernandez strives to combine these techniques systematically, based on the formulation of the design of customizable products as a problem of optimal access in a geometric space. Their method is illustrated with the design of a line of custom-made hand exercisers.

The remaining papers of this issue deal with special issues of mass customization. Mikko Ruohonen, Jaakko Riihimaa and Marko Mäkipää present empirical insight generated from forty case companies in Finnish metal and electronics industries. Their results reveal four different clusters of mass customization strategies which can be also interpreted as knowledge-based business strategies, reinforcing the central role of knowledge management as a success factor of mass customization.

The development of rapid prototyping technologies into rapid manufacturing systems could become a main enabler for the efficient production of custom goods, as Christopher Tuck and Richard Hague discuss in their paper. The paper focuses on the effects regarding the logistics and supply chain infrastructure with the advent of rapid manufacturing.

Guixiu Qiao, Roberto F. Lu and Charles McLean discuss the manufacturing system planning for mass customization using a simulation model of component assembly line of Boeing aircrafts. Their focus is on the evaluation of information integration to derive a data-driven reconfigurable mass customization modeling methodology.

The issue’s final paper, contributed by Joachim Warschat, Mehmet Kürümlüogl and Rita Noestdal, provides an integrated perspective of the mass customization value chain. Based on the processes for marketing, sales, design, production and distribution, a case study from the footwear industry illustrates the demands of system and data integration along this process chain. The authors present an IT architecture to support an extended enterprise offering mass customized products.

Read the full abstracts of all papers here. You can also subscribe to this journal there.

New Special Issues and Web-Publications on Mass Customization and Open Innovation

Within the last weeks, several print or online journals have dedicated special issues to mass customization and open innovation. They contain some really great contributions on different aspects of these themes. So start browsing with this little collection:

Wood Digest – Mass Customization in the furniture industry. Wood Digest magazine is a monthly publication reaching over 51,000 woodworking professionals including those who manufacture cabinets, millwork and specialty wood products. The magazine provides global coverage of technical advances in equipment and supplies to assist its readers in overcoming productivity challenges.

The journal's January 2006 issue is dedicated entirely to the topic of mass customization – and I highly recommend to browse though it and read these articles. Especially the opening article by Don Shultz provides a great background story and general analysis. Other articles report about special application, case studies form the furniture industry or IT support.

Read the whole issue here.

How Open is the Future? A book on the Economic, Social & Cultural Scenarios inspired by Free and Open Source Software. This book offers a constructive and innovative look on the boundaries of intellectual property, as well as new and open forms of collaboration, not only situated in an academic and industrial context, but in musical and artistic spheres as well.

The book is released under a Creative Commons License – this means it is freely available online as full text -- and presents an interdisciplinary perspective how open source spftware can serve as a role model for many more ideas beyond software.

From the book's jacket:

"There are two reasons why the free and open-source software issue has become such an inspirational and powerful force today: the rise of the Internet and the growing tendency to protect all intellectual property. Internet technology made it possible to handle massive decentralized projects and irreversibly changed our personal communication and information research. Intellectual property, on the other hand, is a legal instrument which – due to recent excesses - became the symbol of exactly the opposite of what it had been developed for: the protection of the creative process. As a result, free-thinking programmers, scientists, artists, designers, engineers and scholars are daily trying to come up with new ways of creating and sharing knowledge. In 2003 Vrije Universiteit Brussel launched its university and industry network called CROSSTALKS, aimed at developing a new interdisciplinary exchange dynamic for key players in society. This first CROSSTALKS book provides an open, constructive platform for a wide range of researchers, lawyers, artists, journalists and activists invited to air their complementary – and sometimes contradictory – views and discuss future prospects for the driving forces of our time."

Read more and get this really interesting book at http://crosstalks.vub.ac.be

KPMG Study "Retailers Find That Customized Clothing Is the Right Fit: Apparel retailers are waking up to the reality of mass customization in clothing." This is the title of a KPMG study which is summarized on the "KPMG Consumer Markets Insider" web site. Worthwhile analysis and some nice figures:

"Mass customization isn't just about customer satisfaction, but also about pumping up margins. About 20 percent of the population wants custom apparel -- and they're willing to pay an extra 30 percent or more for it."

"Retailers have been developing sizes based on standards that date back to body measurements taken before World War II. But the United States has become taller and heavier than previous generations, and only 10 to 20 percent of Americans fit the national standards."

"About 54 percent of consumers have difficulty in finding clothes that fit and 68 percent don't bother to try them on because they find it such an unpleasant experience. Retailers that provide consumers with the ability to customize their apparel size, could earn up to 25 percent more per purchase."

Read the whole story here.

PO Monthly is a website for people interested in operations management. They regularly run special theme issues, and the latest was dedicated to mass customization. Topics include a general overview and discussion, a look on MC web design, and a great case study on mass customization in architecture. See the full issue here.

The Manufacturer, another online magazine for the manufacturing community, recently run a focus article on manufacturing, too. Pamela Derringer reports on general mass customization issues and explains the systems of Dell and LEGO in more detail.

The International Journal of Flexible Manufacturing Systems just issued a special issue on mass customization. Number 4 of Volume 16, guest-edited by Ashok Kumar and published by Springer, has four long academic papers on different mass customization aspects: Mass Customization: Metrics and Modularity, by Ashok Kumar; Mass Customization: Reflections on the State of the Concept, by Frank T. Piller; Process Variety Modeling for Process Configuration in Mass Customization: An Approach Based on Object-Oriented Petri Nets with Changeable Structures, by Jianxin (Roger) Jiao, Lianfeng Zhang and Kannan Prasanna; Mass Customization in Videotape Duplication and Conversion: Challenges of Flexible Duplication Systems, Fast Delivery, and Electronic Service, by Gregory R. Heim. Check the abstracts of all papers here.

However, to read the full text, you have to pay a VERY heavy price for each paper, so I do not advertise this more as it just supports an old and outdated business model (but the papers are worth it and great contributions to the field!). Check if your local university library has subscribed to the journal or if you find a full text database with its content.

Talking about outdated: The issue officially has the date "October 2004", which is strange as I wrote my contribution for this particular issue in summer 2005. There are probably good reasons of the publisher for this, even if these are beyond the understanding of their customers. But this is just another reason why open access publishing as proposed in the Crosstalks book mentioned before is a more sustainable model for the future.

Finally, a special issue on mass customization in GERMAN LANGUAGE only: OSCAR, eine hoch professionelle Studenteninitiative an der Uni Köln, hat ihren neusten OSCAR Trend Newsletter unter das Schwerpunktthema Mass Customization gestellt. Die im Web verfügbare Ausgabe enthält viele spannende Beiträge:

Mass Customization: Definition und Charakteristika von Detlef Schoder und Stefan Grasmugg geben eine Einführung in das Themengebiet und stellen einige der entscheidenden Merkmale heraus.

Exklusive Meisterwerke - vom Massenprodukt zum Unikat Professor Bruhnke ist Geschäftsführer der BMW M GmbH, einer 100%igen Tochter der BMW AG. Er ist neben den M Fahrzeugen und dem Fahrertraining auch für den Bereich BMW Individual verantwortlich – die wirkliche Individualisierung im Hause BMW (jenseits von Mass Customization). Bruhnkes Beitrag stellt die Historie und das aktuelle Angebot von BMW Individual vor und gibt einen Ausblick in die Zukunft.

Mass Customization: Prinzipien und Erfolgsfaktoren. Mein Artikel in diesem Newsletter beschreibt einige Mechanismen und Erfolgsfaktoren von Mass Customization.

Von der Mass Customization (MC) zur Seriellen Unikatfertigung (SU). Kristin Müller ist Geschäftsführerin des Möbelherstellers InVIDO GmbH. Die dort praktizierte "serielle Unikatsfertigung" ist ein Modell von Mass Customization in der Möbelindustrie. Müller beschreibt aus praktischer Sicht, wie sich Mass Customization in ihrer Branche darstellt und welche künftigen Entwicklungen sie für möglich hält.

Mass Customization - Kundenwunsch vs. Massenramsch von Nils Holle, Trend Recherche der OSCAR GmbH. Während seiner dreimonatigen Recherchetätigkeit für das Magazin hat er unterschiedliche Tendenzen und Strömungen der Mass Customization kennen gelernt. Vom Standpunkt des Beobachters zeigt er, mit dem unvoreingenommenen Blick des Verbrauchers, Grenzen dieses Themas auf.

Mass Customization of Books: Amazon finally jumps on the unbundling trend

Amazon.com announced last week that it will finally offer readers the possibility to customize books from various publishers. Building on its "Search Inside the Book" technology, which allows customers to search the complete interior text of hundreds of thousands of books, the company is currently developing two new programs that will enable customers to purchase online access to any page, section, or chapter of a book, as well as the book in its entirety.

Amazon thus is finally offering on a retail level what innovative publishers like MetaText, Cinado.com, Symposion or Addison Wesley have done since years: Providing readers the opportunity to purchase just the pages they really need. What might be not a good idea for novels, is great for edited books or also many trade books, where often the first and last chapter are giving you 80% of the information you want to know.

Indeed, also my most recent book on mass customization and open innovation has been published in this manner (in German language: "Mass Customization und Kundenintegration: Neue Wege zum innovativen Produkt", co-authored by Frank Piller and Christof Stotko, 2003). This was the first customizable book on mass customization. The book's first part discusses the implementation of a mass customization strategy and extends the concept towards open innovation. Readers can order all chapters of this book separately (here, of course, the 80% rule mentioned before does not apply).

The second part of our book consists of more than 25 case studies and plenty of additional expert chapters on specific parts of the book. These chapters can be identified with an easy, but useful configurator, helping readers to decide which chapter is fitting best to their needs (more information on the book: http://www.mass-customization.de/ibook.htm, the configurator can be found here: http://www.symposion.de/msc/inhalt.htm).

So, while Amazon's announcement is nothing new, it will affect the market for customization in the book sector enormously as it will offer readers a one-stop-shopping and combine customization with Amazon's market power.

In one of the planned offerings, called "Amazon Pages", the physical-world experience of buying and reading a book will be "un-bundle" so that customers can simply and inexpensively purchase and read online just the pages they need. For example, an entrepreneur interested in marketing his or her business could purchase the relevant chapters from several best-selling business books.

A second program, "Amazon Upgrade," will allow customers to "upgrade" their purchase of a physical book on Amazon.com to include complete online access. For example, a software developer who buys a Java programming book will not only get the physical book delivered to his or her home, but will also get Web access to the complete text of the book. Buy a cookbook and you will not only have it on your shelf, but also be able to access it anywhere via the Web. However, many publishers still have to sign so that Amazon can offer these services. In the moment, only very few books are available in this mass customization program.

For customers, this is great news. It will make access to books faster and more accessable. And will finally also provide to customers the convenience that purchasing one chapter is cheaper and more convenient than copying this chapter from the library page by page.

Two new books on mass customization

For our German speaking readers: Two new books on important aspects of mass customization have just been published. The first discusses mass customization from a consumers’ perspective (based on an empirical study) and is a major contribution to the field, given the very limited research in this area. The second book focuses on the co-design aspect of mass customization in the setting of industrial goods and analyses by the means of a large scale sample if mass customizing companies can utilize the interactions with their customers to increase their efficiency.

(1) Die praktische Relevanz von Mass Customization. Die individuellen Bedürfnisse des Kunden – oder der Konsument als Lemming?, von Michael Kreuzer, Haupt Verlag; Bern, Stuttgart, Wien 2005; ISBN 3-258-06876-3

Zusammenfassung: Viele Verfechter der kundenspezifischen Massenfertigung (Mass Customization) begründen ihre praktische Relevanz mit den informations- und produktionstechnologischen Fortschritten, die es dem Anbieter ermöglichen, individualisierbare Produkte kostengünstig herzustellen. Zahlreiche kritische Stimmen geben deshalb zu bedenken, dass die Optik der Nachfrage zu stark vernachlässigt oder zu oberflächlich behandelt wird. Das Buch soll Forschende als auch Praktiker für mögliche Motive und Erwartungen des Konsumenten gegenüber individualisierbaren Produkten sensibilisieren und damit zu einer differenzierteren konzeptionellen sowie empirischen Auseinandersetzung mit dieser Thematik beitragen.

Im Rahmen einer empirischen Studie wurden die nachfrageseitigen Erfolgsvoraussetzungen von Mass Customization untersucht. Die theoretischen Überlegungen und empirischen Befunde legen nahe, dass bei den wenigsten Gebrauchsgütern die massgeschneiderte Form das traditionelle, standardisierte und vorproduzierte Angebot verdrängen wird. Mass Customization wird auch mittelfristig eine Wettbewerbsstrategie bleiben, die sich unter gewissen Vorraussetzungen primär zur Bearbeitung einer Nische anbietet. Zudem ist diese Angebotsform nur zweckmässig, wenn sich der selbe Nutzen nicht mit der gezielten Ausgestaltung der einzelnen Markeing-Mix-Instrumente erreichen lässt. Denn diese Möglichkeit der Leistungsindividualisierung ist sowohl für den Anbieter als auch für den Nachfrager mit bedeutend weniger Risiken und entsprechend geringerem Transaktionsaufwand verbunden.

(2) Vertriebseffizienz durch Kundenintegration: von Christof M. Stotko, Wiesbaden: Gabler-Deutscher Universitätsverlag 2005, ISBN: 3824483076

Diese Arbeit leistet einen wichtigen Beitrag zur empirischen Fundierung der Forschung rund um Mass Customization. Der Fokus der Arbeit liegt hierbei ausschließlich auf den Kostensenkungspotenzialen, die sich durch die Kundenintegration ergeben, die notwendig ist, um individualisierte Produkte anbieten zu können. Das Ziel der Arbeit ist es dabei, herauszufinden, in welchem Maße die in der Theorie rund um Mass Customization erarbeiteten Kostensenkungspotenziale in der Praxis des deutschen Werkzeugmaschinenbaus umgesetzt werden. Hierzu befragt der Autor schriftlich 105 Herstellern von Werkzeugmaschinen. Der Autor gelangt zu dem ernüchternden Ergebnis, dass es dem deutschen Werkzeugmaschinenbau heute nicht gelingt, Kostensenkungspotenziale aus der Integration des Kunden in seine eigene Wertschöpfungskette ziehen zu können.

Dies ist insbesondere daher erstaunlich, da der Werkzeugmaschinenbau seine Produkte traditionell sehr stark individualisiert und seine Kunden regelmäßig bis in die Produktentwicklung hinein integriert. Dennoch kann das so gewonnene Kundenwissen nicht dazu genutzt werden, um Vorteile (bspw. gegenüber Wettbewerbern, die Standardgüter anbieten) im Vertrieb und in der Fertigung zu erlangen. Anbieter von individualisierten Werkzeugmaschinen werden bspw. von ihren Kunden nicht früher von anstehenden Kaufentscheidungen informiert als Anbieter von Standardprodukten. Ebenso führt das Angebot individualisierter Produkte nicht zu einer Reduktion von Lagerbeständen. Aufbauend auf dieser empirischen Basis entwickelt der Autor Implikationen für die Praxis.

Diese fokussieren sich insbesondere auf den Einsatz des Internets im Vertrieb und in der Fertigung. Durch die übergreifende Verknüpfung von Vertriebs- und Fertigungssystemen durch Internettechnologien soll es möglich werden, das im Vertrieb gewonnene Wissen für die Fertigung zugänglich zu machen. Im Sinne der Kundenintegration schlägt der Autor vor, dieses System im Internet zu veröffentlichen, um dort selbst Bestellungen tätigen zu können. Der Autor kommt zwar zu dem Ergebnis, dass die persönliche Kommunikation im B2B Vertrieb die wichtigste Komponente ist, schränkt dies jedoch auf den Erstkauf ein. Folgekäufe könnten durch aus vom Kunden über das Internet durchgeführt werden. Insgesamt ist die Arbeit wissenschaftlich sehr gut fundiert. Insofern ist sie für Wissenschaftler, die sich mit dem Thema Mass Customization befassen, eine wichtige Quelle, wenn es darum geht, die Realisierbarkeit von Kostensenkungspotenzialen zu evaluieren. Andererseits ist ein großer Teil der Arbeit konkreten Handlungsanweisungen für Praktiker gewidmet.

International Journal of Mass Customization (IJMassC): First Issue published

The first issue is published, the second and third on its way, and further issues are waiting for YOUR contribution

Finally: Mass Customization has its own journal. After almost two years of planning, the first issue has just been published. And the best news: You can read it all online as a free sample issue [http://www.inderscience.com/ijmassc].

Most of the work for this journal has been done by Prof. George Huang from the University of Hong Kong, who is serving as the executive editor. Six further editors (Gerhard Friedrich, Bart MacCarthy, B. Joseph Pine, Frank Piller, Timothy Simpson, and Mitchell Tseng) will be responsible for specific topics and special issues, and a distinguished editorial board of industry and academic members provides additional support for the journal.

But the most important actor is YOU: Contribute with your ideas, papers, research and insights, and put the journal on your regular reading list by subscribing it or recommending it to your library.

More information can be found online: http://www.inderscience.com/ijmassc

ISSN 1742 – 4208 [4 issues per year]

For more information, contact me or the IJMassC executive editor, George Huang

An interview with Eric von Hippel, MIT, on Democratizing Innovation (updated)

I have written several times in this newsletter on connecting mass customization with open or user innovation, i.e. to integrate customers in the innovation process by the means of co-design toolkits. The scholar who has founded this field is Professor Eric von Hippel, Head of the Technological Innovation and Entrepreneurship Group at the MIT Sloan School of Management. I am privileged to work with him here at MIT in the moment.

[Update: As this posting gets plenty of traffic, I have updated this post with the full interview -- the link to the external EURAM site where it had been placed does not work any longer.]

For the occasion of a keynote at the EURAM 2005 conference, where Eric delivered the opening keynote, he shared some thoughts on “democratizing innovation” in this interview. Democratizing Innovation is also the title of his new book (The MIT Press, ISBN 0-262-002744.). The book is available for download from MITPress.com and his website under a Creative Commons license.

The following interview provides a good summary of his thoughts and why this all is important.

Q: Professor von Hippel, what do you mean when you say innovation is becoming democratized?

A: I mean that product and service users – both individuals and firms - are increasingly able to innovate for themselves. Open source software has brought this phenomenon to general academic attention. However, I and my colleagues find that innovation is actually being democratized quite broadly: this is the case for physical products as well as information products like software. I think that this trend is a “good thing.” It seems to me that user-centered innovation processes offer great advantages over the manufacturer-centric innovation development systems that have been the mainstay of commerce for hundreds of years. Users that innovate can develop exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents. Moreover, individual users do not have to develop everything they need on their own: they can benefit from innovations developed by others and freely shared within user communities.

Q: Why is user innovation growing?

A: Users develop products for themselves when they cannot find what they want on the market. Available data indicates that user need is highly heterogeneous – many users have “custom” needs. Advances in computing and communication technologies are enabling users with custom needs to design and build what they want for themselves at steadily lower prices. This leads to increasing levels of innovation by users. Indeed, levels of user innovation appear to be remarkably high. Empirical research conducted by Luthje, Franke and Shah and others finds that from 10% to nearly 40% of sampled users engage in developing or modifying products in various fields.

Q: Why does innovation by users matter?

A: Innovation by users matters for two major reasons. First, users that innovate – both individual consumers and user firms - have been found to be “lead users.” That is, relative to other users in their populations they are ahead of the majority with respect to an important marketplace trend and expect to gain relatively high benefits from a solution to their leading-edge needs. The correlations found between innovation by users and these lead user characteristics are highly significant, and the effect sizes found are also very large. This means that the innovations users develop for themselves will be of interest to many users. Second, it has been found that users that innovate often freely reveal what they have developed. This means that other users – and manufacturers – are able to imitate what lead users have developed. The net result is that manufacturers often do produce innovations pioneered by lead users. Indeed, these innovations are a major feedstock for the new products that manufacturers produce and sell to the general marketplace.

Q: You also say that user-centered innovation can “out-compete” manufacturer-centered innovation under some conditions. Can you give us an example?

A: The innovation history of kite surfing is a nice example. Kite surfing is a water sport in which the user stands on a special board somewhat like a surfboard, and is pulled along by holding onto a large, steerable kite. Users were the initial developers of kitesurfing equipment and techniques, and then manufacturers came in as the market grew. By 2003 the market for commercially-produced kitesurfing equipment exceeded $100 million annually, and several manufacturers had entered the business of designing and manufacturing kites for commercial sale.

In about 2001, Saul Griffith, a MIT PhD student with a long-time interest in kite surfing and kite development, decided that kite surfing would benefit from better on-line community interaction. Accordingly, he created an Internet site for the world-wide community of user-innovators in kite surfing. Griffith began by posting patterns for kites he had designed on the site and added helpful hints and tools for kite construction and use. Other user innovators joined in and posted improved designs. Some also posted sophisticated design tools such as aerodynamics modeling software and rapid prototyping software. Many site participants turned out to have top-level technical skills – for example, one was a skilled aerodynamicist employed by an aerospace firm.

The scale and quality of the collective user effort grew to exceed that of equipment manufacturers. Indeed, some designs posted on the site for free downloading were clearly better than the designs developed by manufacturers. As a result, some manufacturers began to shift to downloading and building user designs rather than designing their own. In other words, free user-developed designs began to drive out manufacturer-based development activities. Of course, one can see the same phenomenon in industries that are economically more important – although perhaps less fun to talk about. For example, many manufacturers in the custom integrated circuit industry have become “silicon foundries” that specialize in produce user-designed circuits. Billions of dollars of these are produced each year.

Q: So, do manufacturers like user innovation?

A: Not all of them! The ongoing shift of product development activities from manufacturers to users is painful and difficult for many manufacturers. Open and distributed innovation is "attacking" a major structure of the traditional division of labor. Many firms and industries must make fundamental changes to long-held business models in order to adapt.

Q: These fundamental changes seem to imply also changes for governments and legislation.

A: Yes. Together with Joachim Henkel I have explored the social welfare implications of user innovation. We found that, compared to a world in which only manufacturers innovate, social welfare is very probably increased by the presence of freely-revealed innovation by users. This finding implies that policymaking should support user innovation, or at least should insure that legislation and regulations do not favor manufacturers at the expense of user-innovators. Governmental policy and legislation have long contained the assumption that manufacturers are the developers of new products and services. As a result, innovation-related government incentives have sometimes been directed preferentially to them. Social welfare considerations suggest that this must change. Especially, the workings of the intellectual property system are of special concern. But, despite the difficulties, it seems to me that the goal of a democratized user-centric innovation system appears well worth striving for!

Q: Thank you very much!