Mass Customization & Open Innovation News

We are moving. RWTH-TIM at new address

We are moving. Today and tomorrow, our RWTH-TIM research group is moving into our new building in a research park in the suburbs.

The growth of the group within the last two years (from five to 18 people working full time in the group, plus about 25 student assistants and tutors) required that we need new space. And as often, new space only is available in new buildings.

The RWTH has acquired the old headquarters of AIXTRON, an Aachen high-tech company. Among other institutes and research centers, we can move into this building (and we are happy hat we got the former floor where the executive board was situated :-)

Our new colleagues will be material science researchers, civil engineers, textile engineering and electrical engineers -- so we are moving to a space where new technology is developed. While it really is a pity that we have to leave the core building of RWTH's School of Business & Economics, I am excited about these opportunities for cooperation. But most importantly, we will have sufficient space for our own researchers, and a more communicative office environment that should foster communication and creative exchange.

Our new building is close to Ford's European Research Center, Microsoft's Aachen Lab, and many further corporate research centers and start-ups. The building is well connected with many bus lines with the RWTH core campus.

Our new address:

RWTH Aachen, Lehrstuhl Technologie- und Innovationsmanagement
Kackertstraße 15-17, 52072 Aachen, Germany

All phone numbers and e-mail contacts remain the same !!!

How to find us: Go to Contact Section of our homepage. We hope to meet you soon in our new offices!

MCPC 2009: My Personal Conclusions and Learning from this Year's Conference

(updated on Oct. 17) After almost one week of discussions, lectures, keynotes and many personal interactions -- and four long postings about the conference --, what were my key insights from the MCPC 2009 (2009 Conference on Mass Customization & Personalization)?

(1) Don't mention the crisis: While still talking about the economic crises dominates the conversations of many business people, it was no topic at all during the conference. So is mass customization crisis resistant? Well, many of our participants told me that they saw it as unaffected or even an answer.

Take consumer goods. The more conventional retailers are coming under cost pressure, the more they are streamlining their assortments. The less likely it is that customers find exactly what they want -- the larger the appeal of customized offerings. This was a pattern reported frequently from participants from the apparel and clothing sectors. At the same time, mass customization is "affordable" luxury. When I am not sure about the future, I am postponing the purchase of my new car. But I still reward myself by paying a tad more for a pair of customized ski boots. This was a good sign – and a positive mood (To be honest, however, there also may have been a self selection effect: Branches of industry interested in mass customization but affected by the crisis did not show up – and so there was no one to complain).

(2) Configuration Technology: A new generation of customization logic is coming up: While Joe Pine, Lars Hvam, and myself still preach that modularization and product family structures are the key to efficient customization, Dr. Yusel from Certusoft Inc. and Konstantin Krahtov from the Open Experience GmbH both provided presentations that turned the common argumentation upside down:

I normally tell my students that for manufacturing companies mass customization means to move from ETO to MTO or ATO (engineer- => make- or assemble-to-order). But in these presentations, the idea was presented that instead of combining pre-defined modules, the configuration toolkit will engineer the components on the fly in real time. As Dr. Yusel said: "Conventional configurators replace what engineers do. Our system replaces how engineers think." He has implemented his configuration system within large US truck makers with amazing results -- and really opened my eyes to a new way of thinking of configuration. Similar Open Experience from Karlsruhe in Germany. Their vision is that in the end you just doodle what you like, and the system turns this into a component.

Perhaps the future of configuration is indeed beyond arranging pre-defined modules to a product, but developing components and production patterns in real time (you need, however, a very flexible manufacturing system for this).

(3) Customization & Personalization are becoming "the new imperative of business". In our MCPC community, we have to make the connection to industries like financial services, health, computer gaming, media, etc ... All these industries are very much driven by personalization but have not really been part of the mass customization debate (and community) yet.  This is one of my goals for the next 2011 conference: Broaden the conversation of mass customization from the domains where we are today into these new fields of applications.


(4) Customization is the true luxury – no matter the price. There is a long debate about the future of luxury goods. But a repeating theme during the conference was the notion that for many consumers, being able to customize a product is the true luxury, whether it is a chocolate bar for $4 or a custom trunk by Louis Vuitton for $25K.

Positioning mass customization in the "mass market" and regarding it as a "democratization" of manufacturing perhaps has misplaced the concept – and also has communicated it wrongly towards consumers. Even if mass customized goods still should be affordable and should not lift the offering into different market segments, its appeal for consumers still is the luxury and personal service connected with it (see the report about the MCPC 2009 Fashion Lab for more).

Mass customization means to "take away the need of products which are full of stuff and replace it with products full of meaning", as one of the participants of the discussion during the business seminar said. We have plenty of research on this meaning for consumers in mass customization offerings, but still have to find better ways to communicate and transport it to consumers.


Concluding, the MCPC 2009 again was a great experience. It really became a gathering of friends and colleagues, many of them joining the conferences since 2001 and becoming a great community of practice. Our community has started several companies, made important business connections, created many PhDs and master students, and really advanced the thinking in an important field!

What is next?

The next MCPC World Conference will be in October 2011, probably at a convenient East Coast location in the U.S. We will extend the name MCPC to "Mass Customization, Personalization & Co-Creation" to acknowledge the larger scope of the conference.

In 2010, a number of focused, smaller events will take place:

• We are planning again a German language MC event. My idea is to focus on the new wave of entrepreneurs that we find in Germany in the moment.
• I envision a similar event for the US, perhaps in connection with the next MIT Smart Customization Seminar, planned for late Spring 2010.
• Stefan from "Milk & Sugar" is planning a MC event in the Netherlands.
• Finland will continue to host an important MC meeting with the FIMCP 2010 in Tampere.

Context Information: More reports about the MCPC 2009 conference:

==> Twitter reports about the MCPC.

==> Great reports by Mass Sinclair in his blog no-retro.

==> Personal impressions of our keynote speaker Bruce Kasanoff.

==> Ran Machtinger, CEO of Optitex, about his presentation on Virtual Fashion.

==> Raul Lansik has a great new blog on customer co-creation in general, and a nice posting about the MCPC.

==> Teemu Arina, a speaker at the business seminar about real-time business, shares the ideas of his presentation.
==> Uche, Author of Luxury Online and panelist in the business seminar, will report about the conference at her new blog.
==> Mikkel Thomassen wrote a blog (in Danish) about the MCPC. And Robert Freund in German. And Chris Chatzopoulos has a report for everyone understanding Greek. Satu Miettinen wrote a nice report about the conference and service customization, in case you can read Finish.
==> Kate Herd has some pictures on Flickr.

(please let me know if you also have a blog post about the conference)

My previous reports about the MCPC 2009:

- Part 1: Day 1 of the Research Conference
- Part 2: Day 2 of the Research Conference
- Part 3: Business Seminar
- Part 4: MC Fashion Lab

MCPC 2009 Report Day 2: Benedict Dellaert, Zazzle, and Joe Pine

The first day of the MCPC ended with a great dinner in the center of Helsinki and one drink too much in the bar later. Still, everyone was back in time for the second day.

For more impressions and summaries, also check out the many Twitter feeds on the MCPC 2009 that report live!

MCPC 2009 Day 2: Prof. Benedict Dellaert from Erasumus University in Rotterdam started the second day with a great keynote on "Designing the gateway -- gateways to product spaces". He provided a very good overview of the state of research in marketing on the space where customers and suppliers interact today.

He started his differentiation of personalization and customization: Personalization is often a strategy of retailers to passively support customers to find the right selection, e.g. by using profile data or collaborative filtering. At the same time, mass customization is seen as a strategy by manufacturers to actively integrate customers in a co-design process. Along this line (a continuum, not two alternatives), Benedict then addressed the crucial question how to match solution options available in general with the capabilities of customers to make the choice: "It is nice to have the flexibility [to mass customize], but consumers also have to have the capabilities to make the right choice."

James Johnson from Avery Dennison and Jeff Beaver & David Gross from Zazzle followed with the second plenary presentation. The project that they presented was actually initiated during the Business Seminar of the Smart Customization Group at MIT last November: There at our meeting, the multi-billion incumbent  Avery Dennison met the much smaller Zazzle.com and started a cooperation that was launched last Thursday.

Custom binders are the first product that shoppers can customize under the new business alliance. Shoppers will be able to generate custom binders for contests, promotions and sales, or business binders for the office. They can select from thousands of templates, or start from scratch with a blank canvas. Like with every Zazzle designs, people can create stores and make money by selling designs in the Zazzle marketplace.

The interesting thing is that Zazzle is not offering its manufacturing system. "At Avery, we've been looking at Mass Customization for several years. Our focus on Enterprise Lean Sigma has allowed us to develop the expertise in manufacturing to be able to provide custom-made one-off products while still enjoying the benefits of mass production," said James Johnson who is the Director of Business Development at Avery Dennison Office Products. "Zazzle's software capabilities plus their partnerships with leading branded content owners complement our manufacturing core competencies." So it takes more than flexible manufacturing to do mass customization successfully.

Consider what the cooperation with a MC platform provided for Avery. The company was offering custom binders already since about one year over their own website. In just three days on Zazzle, there already were 60 times more designs created than in 365 days on their own website.

After these exciting keynotes, the conference participants again spread out into parallel sessions on all issues being custom and personal. Again, it is impossible to cover the breadth of discussion here.

After lunch, Fabrizio Salvador and I provided a plenary presentation based on our recent Sloan Management Review paper. I am sure some blogging participants will cover it soon, and will refer to them for a review.

After many exciting more parallel sessions, the day ended with Joe Pine, who provided some outlook.

His last slide probably was the most memorable:

• In 1987, when Stan Davis coined the term, mass customization = oxymoron.
• In 1993, when Joe wrote his first book, mass customization = "the new frontier".
• In 2009, when we all came together to the MCPC 2009 in Helsinki, mass customization = imperative!

I believe that the first 2.5 days of the provided great evidence that now mass customization and personalization are really becoming an imperative for businesses of all kinds -- and also for other organizations like education, public management, or non-profits.

The conference continues tomorrow with the business seminar at the Helsinki School of Economics.

MCPC 2009 Report Day 1: Joe Pine on the Future of MC and Bruce Kasanoff on Personalization

Just coming back from a long conference dinner and drinks (so excuse the typos), but here a first report from the MCPC 2009:

The main MCPC conference today took off with an opening presentation by the CEO of KONE. Matti Alahutha very neatly showed that for a multi-billion company like KONE, mass customization in an  essential driver of value and competition.

Next, Joe Pine -- brilliant as usual -- inspired us with some ideas on the "Future of mass customization"

He started with his famous 4*4 picture of process change / product change, placing invention (craft businesses), mass production, continuous improvement, and mass customization in it (if you haven't seen this argument, look up for Joe's speeches in YouTube).

From there, he moved into four themes where he sees mass customization is going. Here are his key thoughts in a nutshell (as I believe they are the roadmap for his next books :-):

1) From mass customization to continuous innovation: In order to build a sustainable mass customization business, you cannot stop with an existing MC solution space.  So what Joe sees next is connecting mass customization with tools of user co-creation and user innovation to continuously work on the solution space of a MC offering.

2) From markets of one to "one of markets": The traditional notion is that mass customization serves super niche markets, up to the market of one. But Joe thinks this is not the end, and we will move to "one-of markets". This very neatly addressed our conference theme of "mass matching". Consider you as a traveler. When YOU are traveling for business, your needs with regard to hotel selection, plane scheduling , or eating are very different compared to the (same) YOU when are traveling with your family for vacation. So the same YOU are representing different markets.

This is where personalization and mass customization meet. And a large future of mass customization will be to work not just on creating new products, but bundling (matching) them according to different "markets'"needs.

3) From reality to virtual reality. This is the theme of the next new book of Joe coming up. When the physical world is not offering enough variety, you move to the virtual space. Here, not only ultimate variety is possible, but also variety with regard to the self. Just as you are different person in front of your children as you are in front of your spouse, you can be a different person in a virtual world. So virtual reality is offering the opportunity of personalizing the self.

4) From MC of offerings to MC of management. This probably was the largest development Joe suggested. His idea: Why not take the tools and thinking of mass customization and transfer them to the way of managing a company. For this idea, Joe referred to Kim Korn of Business Architecture who originally came up with the idea of the Progression of Innovation Value. It reminded me also to a number of similar lines of thinking on "management innovation", as sketched for example by Gary Hamel. We today know that there is not "one best way" to manage a company. But at the same time, also "craft customizing" an organization may be not the best way. So I am curious to see what our community takes out of this and how "mass customization of management" will look alike. Johann Wallin, for example, in his presentation already was building on a similar idea, called "mass-co-configuration" of a value chain.

With so much food for thought, we entered into the parallel sessions. There was too much to listen to and to learn that I can summarize this here, so I just invite you to browse through the conference abstracts.

After lunch, Bruce Kasanoff, got everyone excited with his keynote: "Personalization will be THE driver of the economy within the next 8 years!" (yes, not "a", or "one of", but "THE"). He very much broadened the perspective of everyone but illustrating that the theme of customization and personalization is much larger than we cover today here.

His argument: the basic mechanism of personalization, "sense - reason - respond", can be applied for many markets -- or are already being applied. Consinder the revolution in media.DailyMe, MeeHive, DailySnooze, or FanFeedr are all start-ups that recently started with offerings for the future of media. All these companies' core is an algorithm to match user preferences to existing content. Still no one in this industry uses the term mass customization or personalization to address this.

Bruce made a second very interesting case about the development of personalized medicine ... go to hi blog for the full argument!

His second main point was: "To work on personalization means that we need much more interdisciplinary work". Well, in innovation management, the cure for all problems is seen in the interdisciplinary team. But Bruce has a point here that to understand the full consequences of personalization and customization, a firm really has to bring together people from inside and outside and different disciplines to make personalization happen. Sounds difficult? Yes, but when personalization is THE driver of competition, this effort is well invested.

I am looking forward very much to the second day of the main conference tomorrow!

Context information: ==> Great report on Day 1 also by Mass Sinclair in his blog no.retro.

Cracking the Code of Mass Customization: New MIT SMR Paper

Most companies can benefit from mass customization. The key is to think of it as a process for aligning an organization with its customers’ needs.

In the current issue of the MIT Sloan Management Review (Spring 2009 Issue), Fabrizio Salvador, Pablo Martin de Holan and I discuss how mass customization should be not any longer seen as a specialized business strategy but as a bundle of capabilities that could make sense for most businesses.

In the paper, we suggest that mass customization is not some exotic approach with limited application. Instead, it is a strategic mechanism that is applicable to most businesses, provided that it is appropriately understood and deployed. This kind of thinking also is the underlying logic of our upcoming Mass Customization Executive Education Class at IE Business School.

In the paper, we suggest three common capabilities that will determine the fundamental ability of a company to benefit from mass customization thinking:

(1) Solution Space Development.  A mass customizer must first identify the idiosyncratic needs of its customers, specifically, the product attributes along which customer needs diverge the most. (This is in stark contrast to a mass producer, which must focus on identifying central tendencies so that it can target those needs with a limited number of standard products.) Once that information is known and understood, a business can define its “solution space,” clearly delineating what it will offer -- and what it will not.

(2) Robust Process Design.  Next, a mass customizer needs to ensure that an increased variability in customers’ requirements will not significantly impair the firm’s operations and supply chain.  This can be achieved through robust process design -- the capability to reuse or recombine existing organizational and value-chain resources -- to deliver customized solutions with near mass-production efficiency and reliability

(3) Choice Navigation. Lastly, a mass customizer must support customers in identifying their own problems and solutions while minimizing complexity and the burden of choice.  It is important to remember that, when a customer is exposed to myriad choices, the cost of evaluating those options can easily outweigh the additional benefit from having so many alternatives. The resulting syndrome has been called the “paradox of choice,” in which too many options can actually reduce customer value instead of increasing it.  In such situations, customers might postpone their buying decisions and, worse, classify the vendor as difficult and undesirable. To avoid that, a company can provide choice navigation to simplify the ways in which people explore its offerings

But a company does not have to apply all three capabilities in full scope together. For many companies, it already is a great step forward to just work on one of these capabilities to get more customer-centric without, however, having to master the full complexity of a mass customization system.

Read the full article and learn more how these capabilities can be implemented in practice. MIT offers the full paper for free after registration on the SMR website. You also can purchase it there  ($6.50) for further distribution.

Context:

• Posting about the paper in the MIT blog.
• Reference to the article: Fabrizio Salvador, Martin de Holan and Frank Piller: Cracking the Code of Mass Customization. MIT Sloan Management Review, 50 (2009) 3 (Spring 2009): 70-79.
• Free online access to the paper.

Democratization of Manufacturing: Great Article in ASME's "Mechanical Engineering" Journal

In the recent issue of Mechanical Engineering (April 2009), the journal of the powerful American Society of Mechanical Engineering , Associate Editor Jean Thilmany has published a great article on mass customization. His conclusion: Mass customization is part-way here; when the rest will arrive is anyone’s guess.

The article provides a great comparison of traditional consumer-co-design driven mass customization (you designing your shirt in an online-configurator), traditional engineer-to-order and small-batch production, and the new opportunities provided by 3D printing and rapid manufacturing.

As Thilmany observes in the article:

"Pine’s definition [of mass customization] can get a bit muddled, what with the growth of rapid prototyping and related technologies such as 3-D printing. Is a rapid prototype an instance of mass customization? Does an object printed on a 3-D printer qualify?

If the printed piece is meant to be used as an end product—not a prototype—it’s an example of a mass customized product, Pine said.

“I always believe words have meaning,” he said. “It’s called rapid prototyping because you’re making a prototype.”

But say you design an object using an online service like Shapeways of Eindhoven, the Netherlands? That company allows you to upload your own 3-D models. Shapeways prints your object on a 3-D printer and sends it to you. You’ve created your own custom product, Pine said."

But what is the future of mass customization?

Donal Reddington, who runs the Web site MadeForOne.com, is quoted in the article on this:

"So far mass customization—of varying degrees—has supplemented mass production, Reddington said.  So why, in this age of the Internet, hasn’t it come closer to replacing mass production in both the retail and engineering sectors?

“The consumer society is very much based on the idea of gratification. I walk into a shop, see something I like, and walk out with a sense of satisfaction at having bought it,” Reddington said.

“But the predominant mass customization business model that’s gained root since the mid-1990s is the online model, which provided customers with the facility to go online and configure the product, order it, and get exactly what they wanted delivered after one week. Or maybe two or three weeks,” he added.

And where will this lead to?

Despite the impediments to adoption, all the experts interviewed expect mass customization to grow.
“Going into the future, the Internet will facilitate a new wave of mass customization, where customers will create and trade designs for physical products in the same way they trade music files,” Reddington said.  

And not only will consumers find ever-more Internet-based design tools at their disposal, they’ll continue to see advances in the capability to build their own products to their specifications, Piller said.

For the full article, available for free online, head to:
http://memagazine.asme.org/Articles/2009/April/Democratization_Manufacturing.cfm

Building a Customer-Centric Organization: IE Executive Education Program

IE Business School's Executive Education Division is one of the world's leading institutions to educate managers on recent business trends. Their Open Enrollment Programs have been ranked no. 5 worldwide according to the Financial Times ranking, May 2008.

Within this scheme, we are offering again our program

Building a Customer-Centric Organization: OUTPERFORMING YOUR COMPETITION IN PROFITABILITY

IE Business School, Madrid, Spain
9, 10 and 11 March 2009. [PDF of Program Brochure]

The program features all three facets of building a truly customer-centric organization:

- Mass Customization and strategic capabilities of offering truly customer-centric offerings
- User innovation and customer co-design
- Relationship marketing

It recently is the only program of its kind worldwide! So register now to participate!

About the content:

Heightened competition is forcing business leaders to recognize that the new foundation for profitability is establishing loyal, long-term customer relationships; to conceive themselves not as a group of products, services, territories, or functions, but as a portfolio of customers; to know how profitable each of their customers or customer segments are, and to understand why; to continuously innovate in order to improve their customer value propositions.

The challenge then arises when trying to manage the organizational complexity that surfaces when trying to implement a truly customer-centric strategy. Organizations must align all aspects of their business with the target customer-value proposition. In order to be successful in implementing a sound customer-centric strategy, everyone in the company needs to make decisions consistent with this strategy.

The program features three core modules:

• Strategic capabilities for customer-centricity, taught by Fabrizio Salvador:  Building a customer-centric organization is appealing but also difficult because it involves profound changes in virtually all the value-adding processes of a firm. Yet the payoff is potentially enormous. This module examines the fundamental capabilities that a company has to develop in order to become more customer-centric, and offers a birds-eye view of the scope and content of the organizational changes associated to customer-centricity. Special attention will be devoted to the issues associated to connecting front-end and back-end areas of the firm for fast and efficient adaptation to customer needs.
• Placing the customer at the center of the innovation process, taught by Frank Piller: A key challenge in new product and service development (NPSD) is to match new designs to customer preferences. The growing heterogeneity of demand, the advent of "long tail markets", exploding product and service complexities and the rise of the creative consumer are making this task more difficult than ever. This module will explore new strategies to navigate NPSD more efficiently by utilizing the firm's periphery for innovation.
• Focusing on the individual customer relationship, taught by Martin Boehm: Delivering what customers' value provides competitive advantage in today's business arena. No matter in which sector it finds itself competing in each company needs to focus on the customer's point of view not only to improve the customer experience, but also to increase the customer's contribution to the business. This module will explore how to determine the value of each individual customer for your business and how to retain the ones that offer the highest value, as well as, switching costs associated with their loss.

For more information, download the program brochure, or head to IE's website. http://www.execed.ie.edu/internationalprograms

Interview: Frank Piller about Mass Customization and Customer Co-Creation

Reverse order: Interview the interviewer: While rather infrequent, the postings with interviews are the ones getting the most hits in my blog. And I am really enjoying them a lot, as this is where I learn most. But while normally I am asking the questions, Duann Scott, editor of the Ponoko Blog, asked me to switch sides and answer his questions. And so, reprinting from the PONOKO blog, here is what we talked about.

For the full interview, published in two parts, head to blog.ponoko.com: Part 1 and Part 2

Duann Scott: Frank, what brought you to focus on Mass Customization in the first place?

Frank Piller: I first realized the mass customization phenomenon by reading Joe Pine's book as a graduate student working on a paper for my master's degree (in 1993). One year later, I was in New York City, visiting one of the first Levi's stores selling its first version of mass customized jeans. There I thought, "Hey, they are doing it really" and was hooked by the concept. When I continued my education with a Ph.D. in Operations Management, I decided to study mass customization from a management perspective in more detail. After placing the first article on it in the German edition of the Harvard Business review (1996), I also got some great feedback from managers on the topic. Since then, I am continuously working on this topic.

DS: So you have been researching, writing and working in the field of customer co-creation for almost 15 years! What do you see as the greatest advancements or most innovative progressions in your time observing the field?

FP: Over the years, I recognized three cycles of mass customization. This first was in the 1990s when people looked on it as a production technologies, still yery much rooted in the CIM-Thinking that originally lead Alvin Toffler to deliver the first modern description of mass customization in the late 1970s.  During this time, mass customization was very much rooted in business-to-business markets. Machine tool makers like Sandvik from Scandinavia opened the first large scale mass customization businesses.

The second wave happed with the internet revolution (starting in 1998). Finally firms could connect their flexible manufacturing technologies with customers efficiently. This cycle brought us many great examples of mass customization, but also quite some disappointments. Often, start-ups during this time just opened, as you could do it, not as customers needed it. But some great examples of mass customization survived, like NikeID (opened for the only reason as former Nike CEO Phil Knight wanted to "something in the internet", and so they selected mass customization as this promised to cause little channel conflicts with established retailers).

In the following years, the internet-based mass customization offerings matured, and many more followed. The third wave of mass customization is happening now: It is driven by companies like Ponoko, Zazzle, Spreadshirt, Lulu, Shapeways, and many others, which offer design, manufacturing, and retail capacity to everyone. So in this third stage, people are not just customizing to fulfill their own needs, but to create (micro) niche markets and serve them efficiently. Here, I think, we are just at the beginning and will see many more application soon.

DS: What are the most common shared factors in mass customization business models that fail? Is there one thing you would recommend a start up to avoid?

FP: I believe many mass customization start-ups fail for the same reasons other start-ups fail: Lack of financing, inexperienced management, or just bad luck. What I can recommend for mass customization start-ups is, first of all, really decide where your system provides customer value. This may sound simple, but I saw too many start-ups that were build on the promise "when we customize, they will come". Think of BookTailor, a site where users could customize travel guide books. Sounds like a great idea, but when you have to become your own editor of a guide book, you loose the most important value of a good travel guide: To think of the unexpected, to surprise, and to provide input in a situation not planned (say, an entire week of rain). BookTailor considered customization as a value per se. But this is not true. Customization is just the vehicle for customer value, but not its origin.

A second advice is to see whether your mass customization business is scalable once success will come. Often, mass customization is based on large work shops or sample room operations. But when you want to succeed with mass customization, you have to have stable processes for each customer order.

DS: The use of online 'configurator' software seems to currently be the most common format for mass customization, what do you see as the benefits and drawbacks of this model and how do you see this evolving in the future?

FP: Yes, that's correct. It was the broader development of online configurators that made mass customization happens in a larger scale. Have a look at our web-site "http://www.configurator-database.com" for the scale and scope of configurators today.

The core drawback of most configurators, however, is that they are still parameter (option) based. Customers have to make their own decisions out of a list of pre-defined options. This often demands a large number of decisions and also knowledge of the user about the product. While this may be perfect in the business-to-business context where configurators originated, in consumer markets this is not always the best option.

Here, need-based configuration often is better. This means that users have to tell something about her preferences, requirements, or expected outcomes. This input then is transferred by an algorithm into a product configuration. There is a great paper by three scholars that compared the use of a parameter versus need-based configurator for Dell (asking people what graphic card they want versus asking people what games they play). In this paper, the authors clearly find that most users prefer the need-based solution, mimicking the behavior of a good sales person (T. Randall, C. Terwiesch, and K. Ulrich, User design of customized products. Marketing Science, Marketing Science, 26 (2007) 2 (March-April): 268-280). Here, I believe, industry has to invest much more in developing better configuration systems that minimize "mass confusion".

DS: Are there alternatives to mass customization?

FP: Absolutely! I recently see better matching-systems for standard products as a strong alternative to mass customization. Within an assortment (of pre-fabricated products), customer specific choices/options are recommended. Consider My Virtual Model (mvm.com), a matching service for fashion retailers and the appliance industry. MVM enables consumers, either on its own site or on the sites of its clients, to build themselves in a virtual model (an avatar), by selecting different body types, hair styles, face characteristics, etc. Consumers also type in their basic measurements so that the virtual model represents their body measurement. In addition, customers can specify what kind of “fit” they prefer (loose, comfort, tight, etc.) so that the recommendations provided do not only fit the customer in terms of sizes and appearance, but also in terms of how they do feel inside the garment.

When MVM started offering virtual avatars in 1999, they looked more like a curious oddity. But now their avatars are used by more than 12 millions individual users. Companies such as Adidas, Best Buy, Levis, Sears and H&M are using these virtual models to generate business and stronger ties to their customers, lured by the increase in such metrics as average order value and conversion.

DS: Any other example of such a matching service?

FP: Sure. A great example is Zafu.com. Finding the right size of a pair of jeans is a challenge for many women. The answer of mass customization is taking a customer's measurements and making a custom pair of jeans for her. Zafu offers a different approach. From the customer perspective, the experience starts similarly. Zafu asks women shoppers eleven questions about how they prefer jeans to sit on their hips or waist to create a body profile. In addition, they ask for some basic body measurements.

But instead of using this information to create a custom cut, they match it with a large database of proprietary fitting information about the jeans of more than 30 major brands. This database contains hundreds of styles, from broadly marketed Gap to pricey designer labels. The consumer then gets a list of ranked results, linked with the brand's website to purchase.

I predict that we will see many more examples of these matching services as they offer companies to profit better from what they already have: vast assortments of existing goods. The result may be a new understanding of mass customization, beyond its roots in on-demand manufacturing and product design. In the end, it is the customer who drives the business. And customers are not differentiating between personalized, customized, or standardized offerings. I believe that we will need a broader understanding of mass customization. And I am excited to work on this challenge in the coming years.

For the full interview, head to blog.ponoko.com: Part 1 and Part 2

MIT Seminar on Mass Customization - Meet the Thoughtleaders in the Field

MIT Faculty Club, MIT Sloan School of Management, Cambridge, MA, November 10-11, 2008

Another event ... but one that we believe will matter and create value: We are inaugurating the MIT Annual Smart Customization Seminar. Its foremost idea is to connect managers in peer-to-peer interaction to foster an intense discussion, facilitated by presentations from industry leaders and the Smart Customization Group faculty. The seminar's core faculty consists of Mass Customization guru B. Joseph Pine II, MIT Design Lab Director William Mitchell, and myself (Frank Piller).

The seminar provides a unique opportunity everyone working on, implementing, or considering mass customization and personalization strategies and technologies (note: it is organized in the style of the MIT Executive Education, so there are no student discounts, etc.).

The MIT Smart Customization Seminar is the only event of its kind in North America and provides an in-depth coverage of one of today's most important business trends. The objective of the 2008 seminar is to take an intensive look on the success factors and "how to do it” aspects of mass customization and personalization.

For more information, the preliminary agenda, and registration please refer to the agenda in the attachment and our seminar web site: http://stellar.mit.edu/S/project/smartcustomization/

Space in the seminar is limited, so reserve your seat today, and also enjoy the early registration discount until October 24, 2008.

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.

Guest article: Why Mass Customization Fails

A Guest article by Ben Moore & Clint Lewis

Adapted from their book "The Consumer’s Workshop: The Future of American Manufacturing"

Ben Moore is the Founder and President of Agent Technologies, Inc. a firm specializing in eCommerce 4 Manufacturing (sm) through manufacturing consultants and software applications. His prior experience has included managing global software projects with Procter & Gamble and leading the Pampers.com e-Commerce initiatives.

For over 17 years Clint Lewis was instrumental in the start up and expansion of many product lines at Procter & Gamble such as Pampers, Rely, and Luvs. Clint is the Founder and President of Lewis Group Consultants (LGC), an operations and technical manufacturing consultancy with a business philosophy that centers on "Maximizing the Merger of People and Machinery."

We all know that Mass customization aims to provide goods and services that meet individual customers' requirements with near mass production efficiency. We also know the importance of Systemization, the process of defining what range of products will be made and what range of production processes will be employed and Standardization, the process of defining what specific products will be made and what specific production techniques will be used to make these products.

We even know how to build product configurators and structure the product choices we present to the customer. Since we know all these things, then why after the incredible financial justification has been made that many mass customization/product configuration projects fail and/or don’t provide the anticipated return on investment? What is typically missed is the HUMAN FACTOR.

No matter how great the systemization, standardization, product configuration implementations are, it still requires PEOPLE to run the system. Most of these major technology projects give more emphasis on the technology than the people and hence are more likely to fail and/or underperform.

I know what you are thinking…We provided customized training so the workforce would know how to use our product. However, systems that transform a company require much more than just training, but changing how the workforce actually works together. People can MAKE a system work or people can LET a system fail. Yes, the system NEEDS people and people can’t be managed like things….they must be led, engaged and energized.

Now how do you engage your workforce (which is typically our largest ongoing costs) to MAKING your systems work. This is not a foreign concept, as many of today’s leading corporations discovered many years ago, the key is creating an environment where employees are:

Valued: Employees are not only fairly compensated but also routinely solicited for their ideas regarding day-day business activities, growth opportunities and innovative concepts.

Empowered: This environment flourishes as a result of an “institutionalized” work system that actively recruits, hires and develops people who demonstrate superior people, technical and leadership skills. Workers are expected to make keys decisions at the lowest possible level and are accountable for results. They make production, quality and improvement decisions. Teams police each other and develop their own team and individual improvement strategies.

Educated: Workers are immersed in the continuous improvement philosophy from day one. They are provided “state of the business” information in a timely fashion both through their own initiative as well as through formal business discussions. They are provided the most current technology training and also given the necessary tools to allow them to effectively utilize this training.

Stakeholders: Simply stated, team members execute the running of the day-day business as though they are the primary owners. Their philosophy is to always provide a product or service that is consumer focused and as consumers, they would be first to purchase.

Sounds so simple….but it’s not. Some companies can’t make this change because of the culture that has been setup within the company. There is a science to setting up these types of systems to support major systematic changes within an organization. The answer to the future of American Manufacturing and manufacturing in all developed countries is full utilization of each human resource due to the global pressures from lower cost workforces around the world.

For a practitioner’s guide on implementing a major initiative like mass customization within an organization, read Ben and Clint's book – The Consumer’s Workshop. http://www.theconsumersworkshop.com

Context: Interview wit the authors.

Trend Map 2008: See where personalization, open innovation, and mass customization are in 2008

Last year, I often showed in my presentations the great trend map created by Nowandnext.com and Future Exploration Network. They position in form of a subway map the major trends in society, policy, technology, and economy and thus provide a fresh look on these themes. And in case you need any buzzword for your talk or paper, they are all there.

Recently, the 2008 trend map has been published. It is derived from Shanghai’s underground routes. Limited to just five lines, the map uncovers key trends across Society, Politics, Demographics, Economy, and Technology.

Trends mentioned in the map include:

Simplicity, Reality mining, 3-D printers, Personalization, Geospatial web, Networked risk, Data visualisation, Open Innovation, or Constant partial attention.

But it also has nice ideas like Celebrity worship, Female chauvinism, or even Karma capitalism.

For all students, an important disclaimer from the trend map's authors: "Remember that our trend maps are generally for stimulation rather than being taken too seriously… :-)"

The trend map again is released on a Attribution-ShareAlike Creative Commons license, so readers are free to improve or modify the map!

Download the 2008 trend map as PDF here. The old 2007 trend map can be found here.

Video interview on mass customization and open innovation

In case you understand German and prefer to watch a video instead of reading a paper or book, this video is for you: Förderland, a large German Blog on Entrepreneurship, has conducted a nice video interview where I explain the basic concepts of mass customization, user innovation, co-creation and how this all belongs to each other (for a more detailed version of this, read our book).

In the video, I define the the basic concepts, give some examples, talk about the challenges, discuss, how entrepreneurs and start-ups can profit from these concepts, and name my personal best practice of a company in this area. And: The video also offers a view into my not really tidy and organized university office (note: I recently have ordered nice new office furniture, but as this industry is not doing any mass customization at all, delivery times for this are more than two months ...)

Here is the video (or go here to the full link and summary):
Thanks to the Exciting Commerce Blog where I noticed that my interview has been published first!

MCPC 2007: Finally a Conference Report & Review

The MCPC 2007 now is over since almost a month, and finally I get the time to restart blogging. Immediately after the conference, my teaching period at RWTH started, and I was very busy in keeping my students happy.

What to write? The MCPC 2007 was a terrific and very rewarding event. We were a great bunch of several hundreds of people at MIT and HEC Montreal, and the depth and quality of discussion was amazing. To get an overview, you can download all abstracts of the conference here. You also can order the full-text proceedings here.

I will not provide a long conference report here but let our participants talk. We received this quotes after the conference, and they summarize very neatly what was special about this conference:

"Thank you for organizing the best conference I have ever attended. This conference gave me a lot of power, ideas, and inspiration for my future research. I have been struggling in my research regarding MC for footwear for ten years. Few researchers are studying MC for the footwear industry in the US, but learning that many researchers and firms are tackling this issue in other countries, gave me inspiration. In addition, many colleagues don't realize the enormous potential of MC. Now I can perceive of a clear future direction for MC after attending this conference." Sage Endo, School of Business Administration, University of Mississippi

"Excellent conference. I thought Joe Pine's talk was enough to make the
conference worthwhile (it was) but then the rest of it was beyond my
expectations as well. Congratulations." Suzanne Loker; Cornell University

"One of the best, if not the best conference I've ever been to. Right mix of
theory and practice." Oinonen Sami, Nokia

"It has been one of the most rewarding conferences I've have attended. It was really
well organized as it brought together a heterogeneous group of people
who usually don't interfere with each other. The complementary competencies make an ideal arena for some really exiting stuff to happen." Christian Thuesen, NCC Construction Denmark

"It was an eye opener and I can't remember a time when so much new information (at least for me) was crammed into such a short time." Art St Onge, President, St Onge Company

"Seeing so many people trying to forward mass customization across so many different disciplines was very inspiring and I'm already looking forward to the next conference!" Monika Desai, Footwear Entrepreneur, Boston

And one note made all of us very proud:

"Thank you so much for getting me to speak at this week's event! I thoroughly enjoyed it, and seeing what a great group of folks you have brought together to push forward the state of art in Mass Customization." B. Joseph Pine II, Author of "Mass Customization"

Joe gave a really inspiring talk to start the conference. It almost was a journey though his life, starting with the very first research on mass customization and ending with its most recent book (just published this month) on Authenticity.

Joe agreed that we can share his slides and so you can follow his thoughts at least partly on paper. Download his presentation here. (Including Joe's personal comments on screen during the presentation!).

For more conference reviews, several blogs have provided feedback:

A great large and extensive conference report can be found here: http://no-retro.com/home/category/mass-customisation/

Ronal Reddington from the Made For One Blog collected a selection of feedback from our visitors posted in several blogs. He could not make it in person to the MCPC; but contributed with this selection! Thanks a lot, Ronal!

Based on his original summary, here are some quotes and links to more extensive reports:

First off, Peter Semmelhack of Bug Labs, who spoke at MCPC 2007, wrote briefly about the event on the company’s BugBloggers weblog. For some pictures, just look here.

As Ronal Reddington wrote, Bug Labs is producing an open source, modular consumer electronics platform which will allow individual users to customize gadgets. I am really looking forward to their launch at the end of this year.

Elaine Polvinen, Professor of Fashion Textile Technology at Buffalo State University, published her thoughts on the MCPC Business Seminar in Montreal on her Virtual Fashion Technology blog. Her conclusion:

"The conference was short, and jam packed with interesting presentations highlighting the latest developments in mass customization and personalization. Someone mentioned at the conference that an obstacle preventing wider scale use of mass customization and personalization was a system to input and save standardized measurements. As I listened to these comments I remembered that such a system was recently developed in Korea called i-fashion."

I-Fashion was represented with several talks during the MCPC research conference at MIT.

Michael Galpert, Chief Operations Officer of Worth100.com, shares his notes on MPCP 2007 Pre-Conference Workshop at MIT. Real notes, but interesting to read (especially for me to see what people note while I am talking :-).

Adrian Bowyer of the RepRap digital manufacturing machine (3D printer) project, posted about his journey to Boston and how he set up one of the ‘Darwin’ 3D printers in the conference lobby. This was one of the great exhibits we had a MIT !! And one of the most interesting discussions we had a MIT: The upcoming world of user manufacturing where cheap manufacturing infrastructure will allow users to make directly what they want ... without having to wait for a manufacturer to set up a traditional mass customization system for them.

Another home fabbing device we had on the conference was the famous Fab@Home machine from Cornell university (I wrote about this before in this blog).

Robert Freund reports in German, but larger detail on his impressions from the conference and the feedback he received.

Ruben Robert of open innovation accellerator FellowForce has published a short summary of his MCPC presentation ‘The Business Smarts of Strangers’ on the FellowForce blog. And FellowForce also gave us their innovation widget for free to gather feedback and ideas for the next MCPC 2009 ! (See it on the conference web site),

The writers of the OPENeur blog also participated át the MCPC 2007 – here is their preview.

Adam Fletcher from Spreadshirt also reported from its MCPC 2007 trip which took place while he was very busy in running the "Open Logo project" for Spreadshirt: Posting 1 and Posting 2

So: A great event with great people and really interesting discussions. The next conference will be in Europe in September/October 2009 –we have not decided yet where and are taking proposals from interested universities who want to host the 2009 conference. if you are interested, you drop me a line!

Update: On configurator-database.com, you find a number of MCPC 2007 conference pictures, but -- first of all -- a number of great videos with some prominent participants.

More information:

You still can order the proceedings: They are a pretty expensive 149 USD for the booklet and CD-Rom, but the price included VAT (19% sales tax) and international shipping. The proceedings include many of the papers in full text or extended abstracts, plus access to a special web site with about 40 slide sets of the presentations and the pre-conference workshops.

MCPC 2007 @ MIT -- Program Online: More than 150 Presentations Selected for the MCPC 2007 Conference at MIT

The 2007 World Conference on Mass Customization & Personalization is coming closer. Finally, an overview with all presentations accepted from the "Call for Papers" is available. Just click on the banners below for more information.

Information about the MCPC 2007 Research & Innovation Conference at MIT:

Information about the MCPC 2007 Business Seminar at HEC:

All conference information is at http://www.mass-customization.de/mcpc07/

MCPC 2007 Montreal Business Seminar: An Extreme Makeover of Retail - Program online

Don Tapscott, author of Wikinomics, and Mike Gray, Supply Chain Evangelist at Dell, Inc. to keynote MCPC 2007 business seminar

The second part of the MCPC 2007 will be in the form of a business seminar hosted by My Virtual Model, Inc., at HEC Montréal—Canada’s oldest business school. It addresses the application and implications of mass customization and personalization in retail. The business seminar is presented by MVM.com

An Extreme Makeover of Retail

Personalized advertising is transforming marketing, advertising and the media business. Virtual identity, product placement in games and movies, televisions and ads, social shopping and communities are driving and transforming forces in the market. How will merchants, brands and retailers address this new wave of interaction? The business seminar features the new breed of entrepreneurs: investors, advertisers and researchers in E-commerce, gaming industry leaders, TV and movie special effect providers and new media innovators in PDA, iPods, SMS, RSS feeds and even RFID.

Keynote Speakers at the MCPC 2007 Business Seminar

DON TAPSCOTT, Chief Executive of New Paradigm, Adjunct Professor of Management at the Joseph L. Rotman School of Management, University of Toronto

Don is an internationally renowned authority on the strategic value and impact of information technology. He has authored or co-authored eleven widely read books on technology and business, including his most recent Wikinomics: How Mass Collaboration Changes Everything, which will form the basis of his presentation. He is also the author of The Naked Corporation, Digital Capital and Growing Up Digital.

MIKE GRAY, Supply Chain Evangelist – Dell, Inc. With Dell for over 15 years, Mike is considered an expert on Dell’s unique approach to supply chain management. He has been a lead architect for many of the business processes that allow Dell to achieve its unprecedented levels of inventory while maintaining industry-leading customer service.

Mike Gray is a lifetime Certified Purchasing Manager (C.P.M.) with the Institute for Supply Management (ISM) and is also certified in Integrated Resource Management (CIRM) by APICS, the Association for Operations Management.

Don and Mike’s presentations are framed by four panel presentations. Experts, specialists and leaders scheduled to participate in the "Extreme Makeover of Retail" seminar include:

Sean Belka, Senior Vice President, Online Strategy for Fidelity Personal Investments(FPI), unit of Fidelity Investments

Robert Bonneau, President of Global Wine and Spirits

Lukasz Gadowski, President and Founder of Spreadshirt

Louise Guay, President and Founder of My Virtual Model

Philip Jacob, Founder of StyleFeeder, computer, programs architect and entrepreneur

Kirk Jones, Director, Nike ID Innovation

Michael Kahn, Vice President, Account Manager, double click performics.

Paul Miller, Senior Vice President Direct Commerce Sears Holdings Company

Jacques Nantele, Secretary General, HEC.

John G. Palfrey Jr., Clinical Professor of Law & Executive Director at The Berkman Center for the Internet and society at Harvard Law School

Frank Piller, Researcher & Author, Chair Professor of Management at RWTH Aachen University Germany, and Founding faculty member of the MIT Smart Customization Group

Sean Ryan, CEO of Meez

Christian Stegmaier, Head of Life Style, Reebok International Ltd

Jarmo Suominen, Professor of Mass Customization, Director of the Future Home Institute University of Art and Design Helsinki, Guest Researcher at the MIT.

Marybeth Thomson Luber, General Manager Custom Archetype Solutions Inc.

Paul Trevitchick, CEO and Co-Founder, Parity Communications Inc.

Joshua Young, Product Imaging Operations Manager of Nike Apparel US

Registration for the seminar and much more information here.

Context:

This business seminar is part of the MCPC 2007 World Conference that will take place from Oct 7-10 on the MIT campus in Cambridge, MA, USA, and from Oct 10-11 at the HEC Montreal, Quebec, Canada. The MCPC 2007 is the largest event in the field of mass customization and personalization. More information here.

MCPC 2007 -- Latest Program Information -- Registration Is Now Open

I did not blog for a while about the MCPC 2007 conference. But in the meantime, we did organize the program and really stepped forward in making this conference happen.

Here are some general information on the conference. In the coming weeks, I will feature in individual postings some special presentations that will be given at the event!

The 2007 World Conference of Mass Customization & Personalization (MCPC 2007) will become a high profile and truly interactive event for the mass customization research and practice community on the MIT campus on Oct. 8 and 9, 2007. On Oct 11, a special business seminar will be held in Montreal.

(1) Program Overview

Our program committee selected from the submissions of more than 400 authors about 150 papers and proposals for presentation at the conference. Besides the latest research on mass customization, personalization, and related topics like user innovation, we are very glad that also a large number of managers from leading companies will share their success stories and challenges from running a MCP business.

In addition, we will have academic keynotes of several top MIT researchers, including
- Eric von Hippel (Sloan School of Management),
- Marvin Minsky (“inventor” of artificial intelligence), and
- William Mitchell (Professor of Architecture and Media Arts and Sciences at MIT Media Lab).

Also the expert who made mass customization known and developed the original concept in detail, B. Joseph Pine II, plans to attend and keynote the conference.

In total, we will have much more than 200 participants on the program!

The business seminar on Oct. 11 in Montreal -- a one-day focused event of high-profile invited management presentations -- gets in great shape in the moment. We will have companies like Dell, Google, Rebook, Nike, Fidelity, among many others, presenting their latest customization and personalization initiatives. Montreal is an easy 4-5 hour drive away from Boston; and the trip though the New England Indian Summer should be a great experience at this time.

More information on the Montreal program will follow very soon in a separate posting. Please make your own travel arrangements, there is no central group travel organized by the conference.

(2) Registration

Conference registration is now open online.

Participants can register until the beginning of the conference. On-Site registration is possible as well. The early registration discount however ends on Sept 1, 2007 !! You can either register for the MIT event only or enjoy a special discount when registering for the Montreal business seminar as well.

(3) Program and Scheduling

The final program will be ready at the end of August once we have the feedback and commitment by all authors to come and present. General presentations will be scheduled either on Oct 8 (between 10.15-6.15) or on Oct 9 (between 10.15-4.45).

The MCPC 2007 will start with our opening keynote session on Sunday, Oct 7, at around 3:30pm, followed by an opening reception. Earlier on this day, there will be s special interactive workshop program. More information on this will follow soon.

The MIT part of the conference ends on Oct 9 with a closing keynote panel at about 6pm.

The Montreal part will start on Oct 10 with an evening reception and go until Oct 11 night.

(4) Sponsorship Opportunities and MIT Smart Customization Group

If your organization, company, or consultancy is interested in supporting the MCPC 2007 conference at MIT and exhibit your services, products, or MC offerings during the conference, please contact Betty Lou McClanahan who will discuss any possible arrangement with you (contact data at the end of the posting).

Also, for corporations who want to continue to work with MIT after the conference, the MIT Smart Customization Group, part of the MIT Design Lab, is a great initiative to join. You find more information on this group here: http://design.mit.edu/smartcustomization/

There will be a special information session on the MIT Smart Customization Group during the conference, and again Betty Lou is glad to discuss any options of working with MIT students and researchers on mass customization.

(5) Hotel Booking

On the conference web site, you find a list with hotels. We got a special room block at the Marriot Cambridge, which is just on the MIT Campus.

Also, the Renaissance Cambridge and the Kendall Hotel are within steps from the conference site. The Hotel Marlone, the Royal Sonesta, and the Hotel@MIT are in easy walking distance (<10 min.). As October is a busy season in Boston, hotel prices are not cheap. So as an alternative, you may want to stay in a cheaper motel outside Boston (e.g., at Route 1 north of Boston) and drive to the campus (parking is available at public garages for about 15-20 $/day).

Or check Craigslist where you may find a cheap room sublet (listings for Oct will not be in before mid of Sept).

There also is a helpful site at MIT with guest houses and B&Bs.

Context: MCPC 2007 contacts and more information:

Registration and Payments:
Nicole Silva
MIT Conference Services
Phone: 617-253-0116
Fax: 617-258-7005
Email: conferences-www AT mit.edu

Sponsorship and Organization:
Betty Lou McClanahan
Program Manager, MIT Media Laboratory
20 Ames Street, Room E15-228
Cambridge, MA 02142-1308, USA
Phone: 617-253-0630,
Fax: 617-258-6264
E-Mail: bl AT media.mit.edu

Abstract / Paper Updates and Modifications:
Dina Franzen
RWTH Aachen University, TIM Group
Phone: +49 241 809 3577
Fax: +49 241 809 2367
Email: franzen AT tim.rwth-aachen.de

Program Planning and All Other Questions:
Frank T Piller
RWTH Aachen University, TIM Group
Phone: +49 241 809 3577
Fax: +49 241 809 2367
Email: pillerAT tim.rwth-aachen.de

Report on State of Mass Customization Implementation and Cost Drivers

Only 67% of BTO/ETO manufacturers know how much it costs to produce customized products, and 73% don't know the cost of engineering change orders

A new report on mass customization and build-to-order manufacturing has recently been published by Cincom Systems, a manufacturer of configuration and quote-to-order solutions. The study is based on 72 interviews with senior engineering managers at manufacturers of complex industrial, electrical, and transportation equipment and systems between January and February 2007.

While such an industry-driven report is biased by the perspective if its sponsor (and also its interview base is pretty small and probably not representative), the study contains a number of interesting data which, from my experience, represent the state of many companies offering customized industrial products (b-to-b).

The report found that only 67% of build-to-order and engineer-to-order manufacturers know how much it costs to produce customized products, and 73% don't know the cost of engineering change orders. Only 27% had figured out the cost of engineering change orders. But despite the lack of cost information, more than half of the survey respondents believe that they have the ability to charge a 10-25% or higher premium with a product customization strategy.

Customization rates will increase in the future

The disconnect between pricing assumptions surrounding product customization and traceable costs becomes a barrier to sustaining momentum with mass customization strategies into the future. This is especially true as the broad majority of managers interviewed by Cincom for this report state that requests for customized products have been increasing over the last five years, and 26% anticipate that the growth rate will be between 25% and 50% in the next two years. Managers quote the following corporate objectives which are driving customization efforts (in ranked order of importance): (i) Meet specific customer requirements, (ii) Demonstrate product leadership, (iii) Improve positioning against lower-cost competitors, (iv) Improve internal efficiencies, and (v) Enhance margins or price premiums.

Some other key findings, as quoted from the report:

“Product customization strategies are predominantly relied on by manufacturers to both increase production efficiencies at the low end of their product lines and drive up premium pricing at the high end. 73% of total respondents see product customization as critical for products over $100,000; 25% also see them as critical for products under $1,000.

There is a significant knowledge gap between what engineering needs to contribute to a mass customization strategy and what existing systems are delivering. While only 50% of respondents use any type of software for managing the product customization processes, 56% do not have service information, 55% do not have catalog and selling information, and 50% do not have product development information critical to support product customization.

One of the greatest risks to mass customization is the intensive amount of intellectual capital that engineers have, yet it is not captured anywhere (64%). Additionally, 35% of respondents report that there is no method in place for sharing knowledge throughout the company.”

Automated Product Configuration

The study asked managers about the tools they use to support mass customization. Not surprisingly, CAD is the primary tool used to support the customization process (92%). The implication is that the customization process is primarily drawing-driven based on tribal knowledge with heavy engineering involvement in the specification process. Beyond the CAD system, most manufacturers are using ad hoc technologies such as spreadsheets (51%) or manual processes supported by documentation (41%) to support the customization process. Few companies utilize automated configuration systems. Of those who do, 30% use homegrown systems and only 24% use third-party packages.

These numbers indicate that there is rather little integration of tools within the customization process, and the level of integration decreases significantly as you move from manufacturing (ERP at 30%) through engineering (CAD at 24%) into the sales channel (Selling Systems at 14%). The lack of integration implies that there is a significant amount of manual intervention within the customization process requiring time and resources, and leaving opportunity for errors.

Barriers to Mass Customization

According to the study, most engineers believe that product complexity is not the primary barrier to customization. They cite lack of knowledge of options by the customer (67%) as the primary barrier to customization efforts. The implication is that the knowledge required to effectively sell customized products is not being effectively transferred to the customer. This is not surprising given the often technology-focused implementation of configuration systems. There are huge opportunities for improvement in sales and operational effectiveness to be gained by addressing this issue. Of the surveyed respondents, 43% indicated that inadequate systems are also a barrier to customization.

As written before, these numbers and findings have to be interpreted from the perspective of its originator: a company selling exactly those systems to improve the gaps identified in the survey. But despite all sales buzz, the study shows that many companies still have a long way to go to change their (craft) engineer-to-order systems to true mass customization operations.

Context:
Download the report.

A special issue of the IJMassC (4/2006) has a number of case studies that demonstrate how MC pioneers closed these gaps. Read especially the paper by Lars Hvam on the configuration system of APC, a provider of data center equipment.

I am the cover star of the latest WIRED issue (and you can be it, too)

New York Times reporter Claudia Deutsch yesterday had a very nice article about the latest WIRED magazine issue. This issue’s cover story is about the growing personalization trend. And to illustrate this trend, subscribers could upload a picture in the last week to the WIRED website which was then digitally printed on their individual issue. A great way to impress your mother in law and get your 15 minutes of fame.

The project was enabled in a cooperation with Xerox who also want to promote their capabilities of high-speed, large volume custom printing (using their iGen3 110 digital production press). There have been many attempts to customize papers and journals according to a user’s individual profile, but that you could appear on the cover of a major national magazine is a new thing.

The NYT article reports about the cooperation between the two companies and has some more information about the production process of the personal cover. And in case you missed this, on the WIRED website, you can still create your custom WIRED cover, but this time in digital form (and their toolkit really is bad, a shame for a technology magazine).

Assignment Zero Interview on Mass Customization, Crowdsourcing, and the Demand for Change Management

Dave Butler and I talk about the latest trends in mass customization, crowdsourcing, and why this all depends from the ability of firms to master change

Assignment Zero is a large project on crowdsourcing journalism. Inspired by the open-source movement, Assignment Zero is an attempt to bring journalists together with people in the public who can help cover a story. It's a collaboration among NewAssignment.Net, Wired, and those who choose to participate. Facilitated by Jeff Howe, the Wired reporter who coined the phrase crowdsourcing, and coordinated by editor David Cohn the project wants to create a repository of the state of the art of the crowdsourcing movement.

This is how Assignment Zero works:

“The investigation takes place in the open, not behind newsroom walls. Participation is voluntary; contributors are welcome from across the Web. The people getting, telling and vetting the story are a mix of professional journalists and members of the public -- also known as citizen journalists. This is a model I describe as "pro-am."

The "ams" are simply people getting together on their own time to contribute to a project in journalism that for their own reasons they support. The "pros" are journalists guiding and editing the story, setting standards, overseeing fact-checking, and publishing a final version.

In this project, we're trying to crowdsource a single story, and debut a site that makes other such reports possible down the road. But we don't know yet how well our site and our methods work. Our ideas are crude because they are untested. By participating, you can help us figure this puzzle out.

… Assignment Zero is a starting point, a base line. Who knows where we will end up. But if reporting in the open style ever comes into its own -- at our site or someone else's -- that might very well change journalism and expand what's humanly possible with the instrument of a free press.”

The project’s web site is a huge, although sometimes confusing to navigate, collection of links, definitions, articles, and interviews on crowdsourcing.

The interviews form the core of this project. The community identified a few tens of people worldwide who contributed to crowdsourcing by either starting one of the projects or businesses utilizing this concept, or by thinking and writing about it. I am very proud that I was identified by this community as one of those 50 persons who matter most in crowdsourcing.

Now, this interview with me on crowdsourcing has been published in full length online. An abbreviated version may also end up in an upcoming Wired magazine article on the topic. In this long interview, we talked about a number of exciting topics, including:

- What is crowdsourcing 2.0?
- How do business-to-business (B2B) relationships change as a result of crowdsourcing?
- What is the major roadblock to crowdsourcing? What is the largest hurdle?
- What is the new function of a company when its core activities can be crowdsourced to its periphery?
- Why does crowdsourcing demand change management?
- What is the connection between crowdsourcing and instant companies?
- In an interview with mass customization pioneer Joseph Pine, Joe noted that Henry Ford was the father of mass production, but Michael Dell is the Henry Ford of mass customization. So who’s the Henry Ford of crowdsourcing?

As described before, interview assignments are crowdsourced. Contributors select their favorite subject from the list of interview partners, and contact the person to be interviewed. In my case, I had the pleasure to speak with Dave Butler of WorkLife, a consultancy that has a great twist on customer integration: Integrating employees in corporate change processes by theater and cultural experiences.

This is a less covered application of applying the principles of integrating the periphery in value creation. Don Tapscott has a very good chapter about this mode in his book Wikinomics, and David Butler is living this in his consultancy. He combines his initial career as a professional actor and stage director with his extensive experience in personal and corporate transformation initiatives.

So if you want to read extensively what David and my thoughts are about the recent state of mass customization, crowdsourcing, open innovation, and customer integration, read the full interview here.

Context: Other great Assignment Zero Interviews on Crowdsourcing with:
- Lawrence Lessing on Creative Commons
- Howard Rheingold on virtual communities,
- Sydney Poore aka FloNight, a Wikipedia super-contributor, and Jimmy Wales, WikiPedia founder
- NYTimes.com Design Director Khoi Vinh on MicroStock Photography
- Alpheus Bingham, co-founder of Innocentive
- David Lionel, founder of Crowdspirit
- Eric von Hippel and Karim Lakhani on User Innovation

All interviews are published under a Creative Commons license, and are available for re-use in your own texts, as editor David Cohn writes:

"The reporting found in this blog can be mixed and mashed to write your own story on crowdsourcing. Perhaps you want to write about a specific topic -- there are plenty of interviews that cover microstock photography, open source movies, conferences, etc. Or for a real challenge, try to write a big feature that encompasses all the different aspects of crowdsourcing."

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

How mass customization really works -- Spreadshirt

Spreadshirt has a nice video on their blog that shows how a custom product really is made. You would expect a lot of high tech machines .. but the secret are many many hands and human labor ... given this complexity and the German wage level, it is amazing that the custom t-shirts do not cost more (but perhaps workers are just paid in t-shirts).

Or, as the company's founder writes:

"When people visit one of Spreadshirts manufacturing sites, they are often surprised. they expected a big machine, somebody pressing a few buttons and a customized shirts to emerge. instead they find real manufacturing. real people taking real apparel from shelves (hard till impossible to replace with robots at a competitive price with nowadays tech), real people preparing the designs, real people pressing the shirts, real people doing quality control and packaging."

Here is the video about the reality behind one of the largest mass customization consumer sites (show this video to your local government funding agency, and they will provide you money as this shows the labor effects of a mass customizer in town)):

Link: sevenload.com

Recent Partnerships and Acquisitions Provide New Infrastructure For Launching Instant Mass Customization Offerings

It gets easier and easier to open an instant mass customization company. You have a great idea or design that you want to offer customized? But you do not want to mess up with manufacturing, fulfillment, or building a configurator? You are either a large existing brand, mass producer, or an individual consumer?

Never mind, a new bunch of mass customization enablers is helping you to set up instantly a mass customization value chain from design to delivery with a few clicks. Well, this is at least the promise of a number of mass customization enablers that can change the mass customization game.

A partnership by DemandMade with Exclusive Pro and the acquisition of Confego by Zazzle (see the previous two postings) have created integrated mass customization fulfillment systems in the US that can be utilized easily to open a MC or personalization business. Leipzig, Germany, based Spreadshirt offers a similar integrated value chain for the custom apparel business, with a smaller solution space, but an even easier interface to create your own mass customization business.

Years earlier, Germany based Human Solutions already have provided a similar integrated supply chain for custom garments including also custom fit and mass-bespoke tailoring. Their system, however, was based on more formal contracts and a traditional franchise system. It was not as easy to set up as your own customization web store at Spreadshirt or Zazzle.

I am curious to see how these ventures will play off and what kind of services will be enabled in the future. It never has been easier to open a mass customization business … what is happening here is the creation of a common infrastructure, think of a mass customization operation system that enables instant companies and user manufacturing in these domains.

So use these capabilities to create your custom world.

Context:
- Mass Customization Enablers I: Zazzle Acquires Confego to Move the Company beyond BtoC Customization Business
- Mass Customization Enablers II: DemandMade & Exclusive Pro Create Partnership to Deliver a Complete Custom Apparel Solution for Online Retailers
- User Manufacturing: The trend and developments

Mass Customization Enablers II: DemandMade & Exclusive Pro Create Partnership to Deliver a Complete Custom Apparel Solution for Online Retailers

Zazzle-Confego is not the only new partnership this spring. Also the second specialized mass customization enabler in the US, DemandMade , announced a new cooperation to provide a seaming less mass customization value chain by integrating product configuration with a domestic factory & fulfillment.

Hermitage, PA, based DemandMade provides technology and managed services for the complete mass customization value chain including consumer brands and retailers who wish to configure and offer personalized or mass customized products and factories who assemble made-to-order consumer products. The company was founded in 2005 by eBusiness veterans Scott Killian and Tim Brule, who pioneered eCommerce outsourcing when they launched FanBuzz in 1996 and the mass customization process CustomFan in 1999. One of the first online applications of mass customization, CustomFan was used to operate successful online merchandising programs for such brands as Coca-Cola, the National Hockey League, Peanuts, ESPN and the 2002 Olympic Games. The pair later sold FanBuzz to the television shopping network ShopNBC in 2002.

Last week, DemandMade has entered into a partnership with Rockford, IL, based Exclusive Pro, a provider of domestic apparel embellishment and fulfillment services specializing in retail programs using mass customization and personalization. Exclusive Pro's capabilities include full-service, single-piece tackle twill processes (twill, felt and leather), embroidery, heat transfer applications and private labeled fulfillment of single piece orders that are produced on-demand.

“We’ve combined a suite of Web-based tools specifically designed for apparel retailers with a domestic factory that is already using our platform to produce and fulfill single-piece orders,” said Scott Killian, DemandMade CEO, in a press announcement. “The result is a comprehensive solution for online retailers who want to launch a customized apparel or soft goods program.”

The combined offer uses an AJAX-based product configuration engine designed specifically for apparel items that online retailers can integrate with their existing online stores to offer personalized or custom apparel products. On the backend, the configurator is integrated with Exclusive Pro’s domestic production and fulfillment facility -- a complete solution that provides retailers with everything they need to launch a custom apparel program.

Terry Taylor, President of Exclusive Pro, says about his motivation to enter this partnership, “We have a long history of producing orders for single piece garments. However, the demand for our services has shifted dramatically in recent years to online retailers where the dynamic nature of these products can best be presented. This partnership with DemandMade effectively ensures continuity between the online experience and the production process.”

To see an example of the new product configurator, visit www.scenicstore.com/example

Mass Customization Enablers I: Zazzle Acquires Confego to Move the Company beyond BtoC Customization Business

When Brennan Mulligan, founder of Confego, told me that he sold his company to Zazzle, this transaction made a lot of sense for me. With Confego, Brennan had helped other companies like Nike, Rebook, or Timberland, to open mass customization businesses, based on the experiences he gained by working at Timbuk2, the messenger bag customizer, going into business more than 12 years ago (Timbuk2 was founded by Rob Honeycutt).

Confego, a San Francisco Bay Area-based company, has helped in the past years large retail brands to offer customizable versions of their products. The company's primary role is to build and maintain supply chains that are optimized to source customized products quickly and efficiently. While Confego also provided a proprietary, web-based order management software to link contract factories directly to client web sites and other points of purchase, their special focus was more like a boutique consulting firm, helping big brands to understand mass customization in lager detail.

And Zazzle? Like Cafepress or Spreadshirt, at Zazzle http://www.zazzle.com anyone can create and share one-of-a-kind products like apparel, posters, and greeting cards. Zazzle combines on-demand manufacturing, an online community, a huge collection of customizable digital images and different toolkits to empower consumers to create their products. In addition, individuals can choose to become contributors by sharing their unique creations in Zazzle's public galleries. Within these galleries, anyone can browse, comment and connect with others who share their interests. Contributors also earn royalties every time their creations are purchased by others.

So how can this consumer playground ( “Internet's Creativity Marketplace(TM)” is Zazzle’s claim) match to Confego’s boutique BtoB focus? Well, the core of both companies was to enable others to sell custom products, either brands or individual users. And both companies did utilize existing brands: Confego helped large mass production brands to go customization. Zazzle played with brands twofold: First, they used big entertainment brands as part of their merchandising strategy to offer branded images of cartoon characters, movies, etc. Secondly, they created the user brands: Create your stuff, name it, and sell it to everyone.

The Confego acquisition by Zazzle now combines these areas. As a result, Zazzle arrives as a great enabler of customized brands, on the retail, consumer, and merchandising level. And so the press announcement is full of joy:

"This relationship marks the beginning of a new generation of customization for Zazzle," said Robert Beaver, CEO and co-founder of Zazzle.com. "New brand partnerships mean new choices for our customers who are always looking for better means of self expression."

"The creativity of the Zazzle community is a perfect fit with our current offerings," said Brennan Mulligan. "Consumers have come to expect more for their money. The growing availability of fast, easy and affordable customization is empowering shoppers to get exactly what they want, without being force-fed what designers are offering."

And Zazzle gained more: Confego co-founders Brennan Mulligan and David Gross will become part of the Zazzle team. As a pioneer in the field of customization, Mulligan will help Zazzle achieve limitless customization that provides consumers a unique finished product almost immediately and at an affordable price. Confego has perfected the manufacturing and fulfillment process, allowing delivery of custom shoes in just one week, as opposed to the three to five week lead time currently provided from similar vendors. Confego also brings expertise in the customization of the construction of products, including cut, color, fabric choice and custom embroidery.

Guest Article: Market Relevancy for 21st Century Manufacturers -- Connecting Your Customers to Your Enterprise

In this guest article, Dave Gardner, a long time mass customization veteran, comments on how companies can become a “progressive manufacturer” by moving towards mass customization.

David J. Gardner is the Founder and Principal of mass-customization-expert, a consultancy helping companies in the design and integration of innovative business process and information technology solutions for companies. He has held management positions in Engineering, Manufacturing, Sales, Marketing, and Customer Service, and Product Management. He joined Tandem Computers in 1979 where he was responsible for Corporate Documentation Standards for Tandem's highly configurable and expandable computer systems. In 1983, he designed and implemented a Configuration Guide for Dialogic Systems instituting a process that greatly simplified a complex, modular product such that the field sales organization and international OEM customers could easily define their order requirements. David improved the approach at System Industries in the late 1980’s by developing a methodology that not only accommodated "new system" orders but also fully addressed "add-on" orders. In 1991, he founded his consulting company. In July 2002, David was recruited by E-ONE, one of the world’s largest manufacturers of fire and rescue vehicles, as Vice President of Product Management to lead an enterprise-wide change initiative to transition the company from an “engineer-to-order” to a “mass customization” business paradigm. He is a graduate of San Jose State University (BA) and Santa Clara University (MBA).

Market Relevancy for 21st Century Manufacturers -- Connecting Your Customers to Your Enterprise

In an ideal world, manufacturing executives would:

1) Carefully consider the over-arching business and operational strategies needed to create a truly compelling, differentiated business in their marketplace, and,

2) Select the business software applications.

How many companies start with Step 2? The vast majority! Why?

A manufacturing executives’ spotlight is usually aimed at the product and marketplace, not operational details unless there’s been a serious breakdown in the operational side of the business. Let’s face it—it’s hard to get executives excited about a new business application system.

When was the last time an executive from a manufacturing company exclaimed, “Our new ERP system is a true source of competitive advantage and differentiation in our market?” While it may be true that there are genuine business execution issues that arise from a poorly implemented, poorly architected, or an inappropriate ERP system, ERP by itself is not a source of competitive advantage. ERP is essentially a “back-office” tool.

The biggest question about new business systems is typically “how much is it going to cost and how long is it going to take?”

Last year, Managing Automation hosted the Progressive Manufacturing Summit 2006. David Brousell, Editor-in-Chief of Managing Automation, delivered an address “7 Rules to Win in a Global Market.” In his presentation, David defined the global manufacturing winners as “Progressive Manufacturers,” offering the following definition:

Progressive Manufacturers infuse technology into all areas of their business to create sustainable competitive advantage by connecting the customer to the manufacturing process.

This definition is powerful and compelling and should be the rallying cry behind all operational and information technology initiatives. Let’s break this down.

My first observation about the notion of being a “progressive manufacturer” is the holistic or seamless nature from a customer’s perspective. As a customer (or a prospective customer), wouldn’t you prefer to deal with a “progressive manufacturer” as it is defined above?

“Connecting the customer to the manufacturing process” implies that a company is customer-driven—the company, its business process and information technologies are seamlessly designed with the customer in mind and offer the customer the means to interact directly with the company. What might this mean?

- Being able to determine order status (in order administration, production control, production line, shipping, etc.)
- Being able to determine in-transit status
- Being able to look at financial issues (open invoices, paid invoices, etc.)

For companies that offer configurable products, “connecting the customer to the manufacturing process” suggests:

Being able to make decisions about the product or order configuration
Being able to understand the configuration possibilities, pricing and estimated lead time based on actual order configuration

“Sustainable” implies a continual state of evolution—that a company is constantly enhancing its ability to maintain its relevancy and value provided to the customer. There is no such thing as steady state or time-out. It is said in nature that there is no “steady state”—something is either growing or dying. The same can be said for manufacturing companies. Progressive companies enjoy no extended periods of relaxation.

“Competitive advantage” suggests you are doing things that you competitors are not. Generally, this would imply innovation either in technology, process or the way in which you delight the customer. If everybody else in your industry is doing exactly the same thing, how can a company expect to enjoy competitive advantage?” The other added benefit of seeking competitive advantage is it catches competitors by surprise and can take years for them to catch up. This is a stealth approach at its best.

Are there any companies that meet the criteria of being a “progressive manufacturer?” Dell is one of the best examples I can think of. I’m certain Cisco Systems is another. In reality, the number of manufacturers you could classify as “progressive” is probably quite small. That bodes well for companies seeking to differentiate themselves in their market.

Let’s circle back around to our original proposition:

In an ideal world, manufacturing executives would carefully consider the over-arching business and operational strategies needed to create a truly compelling, differentiated business in their marketplace.

A company seeking to become a “progressive manufacturer” has the opportunity to start with the objective of “infusing technology into all areas of their business to create sustainable competitive advantage by connecting the customer to the manufacturing process.”

This requires a holistic view of where you want to go as a business. It doesn’t make sense to select one or more applications in isolation of the total solution and hope that you can “connect the dots” later. It’s no different than having an architect design a house. You really can’t architect and build at the same time. However, once the architecture is complete, you can build away.

It’s best to fully understand and agree what the target is to ensure you end up becoming the “progressive manufacturer” David Brousell characterizes in his speech. Getting outside assistance with this is one way to ensure you don’t, as well-know author and consultant Alan Weiss often says, “breathe your own exhaust.” Once you have a comprehensive, coherent vision, you can then begin to assemble the pieces of the solution. To do otherwise, is to open the door to a less than satisfactory solution.

Contact Dave Gardner at
djg@mass-customization-expert.com
www.mass-customization-expert.com
USA/Canada: +1.888.488.4976
International: +1.775.722.8230

I am blogging again

Hi everyone,

After some weeks without postings, I will start blogging again. This break was not motivated by a lack of interesting topics, but I had so much to do in my day jobs ... starting the new job at RWTH Aachen University was more demanding with regard to my time than I thought. Let's see how it develops, but I will try to post at least once a week.

Best greetings, and thanks a lot for coming back and staying tuned.

MCPC 2007 Paper Submission System Finally Online -- Submit Your Proposal to Speak at MIT until April 2, 2007

The 2007 World Conference on Mass Customization & Personalization (MCPC) at MIT (Boston, USA) and HEC Montreal (Canada), October 7-12, 2007

Finally, and with some delay, the submission system for the MCPC 2007 is ready and online. You can now submit your speaking proposals for the upcoming World Conference on Mass Customization & Personalization (MCPC) -- the premier event in this area.

Bridging academic research and management practice, the conference provides an interactive and interdisciplinary platform to share ideas about mass customization strategies and to discuss the latest technologies and enablers.

For the first part of the conference, taking part on the MIT campus in Cambridge, MA (Boston area), we invite submissions and speaking proposals. The conference is designed to engage academics, business leaders and consultants in fundamental debates through a set of plenary presentations, discussion panels, and paper presentations.

We especially welcome submissions from managers and consultants reflecting upon the conference theme.

Download the most important conference info as PDF: the call for papers and a checklist with all information how to prepare your submission.

You can submit two types of papers:

Full papers: Max 25 pages (12pt font, double line spacing). Only full papers will be considered for the conference's Best Paper Award.

Extended abstracts: For work in progress (about 4-8 pages), but including also comments on the research question, the methodology, data and empirical methods used (if applicable), and discussion of the results.

To submit a paper (practitioners: presentation proposal), please use ONLY the online submission system on the conference web site (www.mcpc2007.com). All papers will be double-blind reviewed.

Important dates

April 2, 2007: Deadline for submissions (extended)
June 1, 2007: Final notification of accepted contributions
Oct 7-9, 2007: MCP Research & Innovation Conference at MIT
Oct 11-12, 2007: Business Seminar in Montreal

For the 2007 conference, we invite submissions for many different topics and themes in the field of mass customization and open innovation:. The following topics are just some examples:

Mass customization in practice

This track is open for submission of acting managers and entrepreneurs from mass customization and personalization businesses. We ask for presentations which do not focus on presenting just your company or business idea, but on sharing your experiences and success factors of executing mass customization.

Presentation proposals for this track should follow the general guidelines for submission (extended proposal introducing your mass customization offering, the focus of your talk, and some of the key results you plan to present). Proposals should be submitted with the online submission system.

Mass Customization Case Studies (Teaching)

The MCPC 2007 will be followed by a special session in Montreal focused on case studies for mass customization. The idea is to develop material to teach mass customization better. We invite submissions of case studies dealing with mass customization and personalization. Cases must be original work based on real events, people, and organizations. They must be accompanied by a teaching note and not have been previously published or accepted for publication. The presentation of the cases will be held in Montreal on October 12, 2007. Authors of the best cases will be invited to submit their work to a special issue of the International Journal of Mass Customization or a special issue of the International Journal of Case Studies in Management. Cases should be submitted with the online submission system and authors must follow the MCPC paper submission process and deadlines.

Special Sessions

Today, there are examples and applications of MCP in all industries and sectors. The MCPC 2007 does not focus on one particular industry, but wants to provide a platform to exchange ideas beyond disciplines and industry borders. We are however especially interested in applications and examples in the following fields where we recently see a lot of interesting momentum in MCP:

* Mass customization, personalization and user innovation in architecture, housing and construction
* Automotive Customization 3.0: Bridging pimped rides with option lists
* Mass customization of services, e.g., in the financial and hospitality industries
* Mass customization of health services & products (pharma-cogenetics)
* Extreme customizing: What can we learn from extreme, leading edge examples of customization and personalization.

But there are also many other tracks which provide plenty of opportunities to discuss your knowledge in the field.

Context information:
- Full call for papers with all information.
- Checklist with all information how to prepare and upload your submission.
- Previous posts with MCPC information.

New affiliation and contact data: I am at RWTH Aachen University now

Starting today, I will have a new affiliation. I accepted the offer of a chair professorship in technology and innovation management at RWTH Aachen University, a leading European institute of technology. I will work in RWTH’s technology and innovation management group, following Prof. Hans-Horst Schroeder who became emeritus at the end of last month.

RWTH’s school of business & economics, where my new office is placed, has a focus on value chain design and global supply chain management systems, fitting perfectly my interest in “interactive value creation” as a new form of industrial organization between firms and external entities, especially customers and users. And of course there is no better place to do research on new product design and leading-edge technologies as within an organization that produces some of Europe’s best engineers, computer scientists, and product developers.

Besides working at RWTH Aachen, I will keep an affiliation with MIT, supporting the MIT Smart Customization Group’s faculty at the MIT Design Lab.

The focus of my research and industry collaboration will remain in the areas of interactive value creation, open / user innovation, mass customization, user manufacturing, and other forms of customer-driven value creation. I will also expand my research on managing discontinuous (disruptive) innovation, a premier challenge for many companies that have perfected their systems to master incremental innovation, but often fail to discover, evaluate, and implement radical innovations disrupting their present business models and markets.

And I hope that despite my new responsibilities and all the interesting things happening at my new department, I still will find enough time to blog about MC and OI.

For my new contact data, please refer to the About section on the right.

And for all non-German readers: Where and what is Aachen and RWTH Aachen?

[From the university homepage]: RWTH Aachen University is the largest university of technology in Germany and one of the most renowned technical universities in Europe, with around 28,000 students, more than the half of which in engineering. Aachen's location in the heart of Europe and its proximity to the Netherlands, Belgium and Luxembourg and the subsequent exposure to a variety of cultural heritages has placed RWTH Aachen in a unique position with regard to the reflection and promotion of international aspects and intensive interaction with other universities.

The RWTH was founded as a politechnical institute in 1870 with considerable support from local industry and was conferred the right to award doctoral degrees in 1899. Re-established after World War II as the Institute of Technology of the German state of North Rhine-Westphalia (Rheinisch-Westfälische Technische Hochschule Aachen) it soon obtained the status of a full university. Teaching and research are characterized by an international, innovative, and interdisciplinary approach and a close cooperation with industry.

The city of Aachen -- also known as Aken, Aquisgrana, or Aix-la-Chapelle -- is the westernmost town in Germany, located at the borders to Belgium and the Netherlands. Due to its location it is regarded as Germany’s most international town or "the Gateway to Europe". With a population of about 260.000 inhabitants, a booming high-tech industry and its renowned university, Aachen is a mid-sized town with a modern yet historic flair. Regio Aachen and part of the Dutch province of Limburg, the two Belgian provinces of Limburg and Liège and the German-speaking community of Belgium form the EUREGIO Maas-Rhine. The typical Euregio resident lives in Germany, works in the Netherlands and shops in Belgium or vice-versa. Aachen was founded more than 2000 years ago as part of the Roman empire. 1200 years ago, Emperor Charlemagne chose Aachen as his main residence and centre of power. Today, visitors can visit his shrine and remember the former splendour of Aachen’s imperial past. The Aachen Cathedral (Aachener Dom) is Germany’s oldest cultural heritage site, which draws tourists from all over the world.

Pill Boxes 2.0: Vuru personalizes nutrition packaging

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

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

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

This is how the process works:

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

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

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

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

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

Springwise comments on this idea:

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

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

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

Personal Design is main topic at upcoming ISPO Trade Show for the Sports Industry

6th VOLVO SportsDesign FORUM on 3 Feb. 2007

"Personal Design: Developing one product that is serial but also corresponds to one individual only." This is how the planners of the Volvo Sports Design Forum describe the idea of this year's event that will take place on the first ISPO weekend on Feb 3, 2007, in Munich, Germany.

I only recently learned about this conference that sounds like one of the most promising events in the 2007 mass customization event landscape.

Various speakers from design, the sports industry and professional athletes present the latest developments in SportsDesign to a mixed audience of sports people, managers, designers, and everyone else interested in the topic. The participants also have the chance to directly implement and live their theoretical experiences in several workshops.

Speakers are prominent: Formula 1 icon David Coulthard will highlight in his speech the efficiency and necessity of the personalized sports equipment within the competing world of Formula One. Computer pioneer Steve Wozniak – he invented 1976 with the Apple I the Personal Computer – will present his visions about technology and society. Industry insiders should start getting excited about the speeches from Stefano Natoli, Rick Ridgeway and Jeff Hakman: The top-class representatives of NIKEiD, Patagonia and Quiksilver will talk about Personal Design in footwear and textile industries.

I will provide an input for the conference's opening session and organize with Adidas an exclusive workshop on the mi adidas mass customization system.

And the forum provides an unique opportunity: Both Nike and Adidas will demonstrate their latest customization offline toolkits so that you have a direct comparison b etweenboth systems. You even can get a custom Nike ID and a custom mi adidas shoe on the same event and then compare the results and experiences!

Single tickets are 300 Euros, but there are many discounts: A company ticket for up to five people is 700 Euros, and students can participate for 50 Euros. All tickets include a lot of bonuses (including a bag with many gifts from Volvo) and a large ISPO party on the evening.

On the evening of the forum, the winners of the ISPO VOLVO SportsDesign AWARD will be announced, honoring outstanding and innovative product and design developments of designers from all creative disciplines in the field of customization and personal design.

More information and registration here: http://www.ispo-sportsdesign.com/

Context: In combination with our own 8th German Mass Customization conference in Salzburg on Feb 16, participants of both the ISPO and the MC 2007 Salzburg Conference will get the perfect overview on MC and personalization and an in-depth insight in the state of the art:

While the ISPO Volvo event provides a focused view on one industry, sports, and has great general speakers, the MC 2007 Salzburg event provides a much more focused discussion of the concept of mass customization and is the community meeting of people DOING mass customization in their daily businesses.

The only event that should provide even more interaction possibilities in the mass customization domain in this year will be the MCPC 2007 in October 2007 in Boston!

Interview: B. Joseph Pine II on the State of Mass Customization and Why Authenticity in Business is the Next Big Issue

B. Joseph Pine II is known to most readers of this blog as the author of THE book on Mass Customization (Mass Customization: The New Frontier of Business Competition, Harvard Business School Press, 1993). Published in eight languages, this book opened the debate on Mass Customization and made the concept widely known around the world.

Together with his partner James H. Gilmore, he also wrote The Experience Economy: Work Is Theatre & Every Business a Stage (Harvard Business School Press, 1999). This book demonstrated how goods and services are no longer enough; what customers want today are experiences – memorable events that engage each customer in an inherently personal way. He and his partner followed that up by editing a collection of Harvard Business Review articles entitled Markets of One: Creating Customer-Unique Value through Mass Customization (Harvard Business School Press, 2000).

Joseph Pine is also an internationally acclaimed speaker and management advisor to Fortune 500 companies and entrepreneurial start-ups alike. He is co-founder of Strategic Horizons LLP, a thinking studio dedicated to helping businesses conceive and design new ways of adding value to their economic offerings. Prior to beginning his own company, Mr. Pine held a number of technical and managerial positions with IBM. One of his many assignments was key to the effective launch of the Application System/400 computer system, where he managed a team that brought customers and business partners directly into the development process of the system.

I am very glad about the opportunity to start the 2007 blogging year with the following great conversation with Joe Pine. He was always a main source of inspiration and ideas for me, and I am still grateful for his spontaneous willingness to provide a wonderful introduction into my first German book on mass customization (in 1997).

Joe, what was your first encounter with mass customization?

I first became interested in the topic when I worked directly with customers on the AS/400 system at IBM. I realized that every one of those customers was unique. They used the system in different ways, applied different applications with different data sets, and connected to different hardware. We didn’t really take that into account in developing the system, designing it for what we thought was a large, homogeneous market that simply did not exist.

After the system came out I joined strategic planning and soon read Stan Davis’ 1987 book Future Perfect. When I absorbed his chapter on mass customizing, it was like the heavens opened up and the angels sang! It explained everything I saw happening, and gave me a context for thinking about what we could do about it. I made sure Mass Customization became an integral part of our strategy, and when IBM gave me the opportunity to get my master’s degree at MIT, I decided to write my thesis on this subject and turn it into a book.

And the rest, as they say, is history! Indeed, almost everybody reading my blog has also read that book, Mass Customization. Is there anything in this book you would phrase different today? And is there an idea in your book that was a bit overlooked?

Yes, indeed. I put everything I know about Mass Customization into that book – and then some! I would definitely do it differently today – and perhaps you and I ought to think about joining forces to do exactly that, Frank – starting with one glaring fact I got wrong. I defined Mass Customization as “variety and customization through flexibility and quick responsiveness”. Variety, however, is not the same thing as customization. Variety is still putting something in inventory in the hope that a customer will come along and say they want it. It’s only true customization if it’s done in response to a customer order, reflecting the needs of a real, live, breathing customer.

Today I define Mass Customization more exactly as the low-cost, high-volume, efficient production of individually customized offerings (which, incidentally, may be goods, services, experiences, or transformations). Or even more simply, to use the phrase coined by my friend Steve Goldstein of Growth Advisors, it is efficiently serving customers uniquely.

The perhaps overlooked idea – well, I don’t know if it’s the most overlooked idea, but it is the one with the greatest potential impact – is the Product-Process Matrix framework provided in Chapter 9, which was originally developed by Bart Victor (now a professor at Vanderbilt) and Andy Boynton (now Dean of the Carroll School of Management at Boston College). We extended this model in “Making Mass Customization Work”, our 1993 Harvard Business Review article and other places, most completely in Victor & Boynton’s book Invented Here (Harvard Business School Press, 1998) – an overlooked book that should be widely read, particularly by everyone reading this blog.

I affectionately call this model THE 2x2, so powerful is it for explaining the shift to Mass Customization. It frames the entire debate on changes in business competition, and contains a pattern – a fractal – yielding insight at many levels of analysis, from the entire history of business at the top level, through what happens in industries, companies, units, processes, and even what happens in the brains of individual people as they learn and work. I also find that same framework and pattern popping up in widely diverse subject arenas, from how ecologists see forests growing to Jim Gilmore’s and my work on how theatre is performed.

What is the state of Mass Customization practice today? Are we beyond or behind the situation you envisioned when writing the book almost 15 years ago?

Yes and no. I did expect it to be more pervasive in consumer markets (particularly apparel, where every body is unique), but on the other hand it’s quietly become widespread in B2B industries, for companies can more precisely gauge the value of the customization their suppliers can provide.

There are also a number of industries that have been revolutionized by Mass Customization, including personal computers, eyewear, painting, sign-making, textbooks, lighting controls, windows, car rental, and insurance. And there are some incredibly significant industries that simply could not exist without it; mass customizing is the only way to do, for example, check printing (think Deluxe), package delivery (FedEx), internet search (Google), and digital music delivery (Apple iPod/iTunes).

In this vein I should give one mea culpa on my first book. It’s amazing to think (even to me), that in 1992 when I finished it I didn’t include what is now clearly the world’s premier mass customizer, Dell, Inc. Indeed, I view Michael Dell as the Henry Ford of Mass Customization – the man who put it all together and created a shining example for the world to see. But I suspect I was too blinded by the company I worked for at the time to take them seriously. What a mistake – for IBM even more so than for me.

Do you see any upcoming mass customization trends with regard to new players, technologies, markets, etc.?

I think the biggest trend is the realization of everything implied by the principle that anything that can be digitized can be customized. Once it enters the realms of zeroes and ones, one can instantly change a one to zero and vice versa. With the advent of digital technology and especially the rise of the Internet, so much more can be digitized today than before, and soon everything that can be will be. In some cases (such as music) the actual offering can be digitized, in other cases the process for creating the offering can be digitized (such as book publishing), and in all cases information about the offering can be digitized. Any company in the world, therefore, can reach any potential customer in the world with a digitized representation of what it has to offer, and can change that representation – and then the actual offering – to meet the needs of that individual customer.

(I also look forward to the day when everyone in business recognizes that the phrase “individual customer” is redundant; until then you and I will keep pushing the case.)

One other thing I’ll mention doesn’t relate to new players, new technologies, or new markets – rather, new offerings. As alluded to earlier, in The Experience Economy my partner Jim and I show that there are two offerings beyond commodities (which, by definition, can’t be customized), goods, and services: experiences, memorable events that engage each person in an inherently personal way, and transformations, effectual outcomes that change each individual to achieve his aspirations. There’s precious little that has been done to mass customize either experiences or transformations, and a world of opportunity for firms that wish to start.

Recently, there is all this hype about Web 2.0 and Social Commerce. How does this fit with Mass Customization and the Experience Economy, if at all?

They are part and parcel of the same trends. Web 2.0, as I understand it, is about the web becoming a platform – a modular architecture – for weaving everything available on the Internet into a dynamic flow that is right for each individual. Social Commerce brings in the aspect that much of the available content is not created by companies, but merely facilitated by them while being generated by individual people (I hate using the term “users” in this context). So together you have the beginnings of a truly mass customized, digitally delivered experience.

The other phenomenon this brings to mind – although probably not directly related to your question – is virtual worlds. What is happening with Everquest, Worlds of Warcraft, There, and all the rest – especially all the commercial activity going on in Second Life – is fascinating to me. Now the opportunity exists to mass customize virtual offerings to the avatars of real people!

What are the main challenges for companies doing mass customization today? What questions should managers ask themselves when considering entering the mass customization market?

The main, overarching issue is still mindset. The executives, managers, and workers in the company have to understand how the mindset required to properly mass customize differs from that of Continuous Improvement, Mass Production, or Invention organizations (to allude now to THE 2x2 that I mentioned earlier). If you don’t have that, you flat-out will make decisions antithetical to what’s required to efficiently serve customers uniquely.

I truly believe there are few if any non-commodity markets where Mass Customization can’t be a success. (Every single time I say to an audience that I don’t think it would work in a certain industry or endeavor, someone invariably points out a company that’s already doing it in some way, shape, or form.) The question isn’t one of “Is there a market?”, but rather “What do we need to do to find the market?” And the way to find that market is to ask “Where do customers sacrifice today?”

A term that Chris Hart of Spire Group first said in work we did together, customer sacrifice is the gap between what a customer wants exactly and what he has to settle for today. As opposed to customer satisfaction, which relates to expectations, customer sacrifice looks at what each customer really and truly wants and needs. Companies need to uncover the few dimensions, or even just the one, solitary dimension of sacrifice that will yield the most value for their customers, and for them. Think of Select Comfort, which focuses relentlessly on the one dimension of mattress firmness and you can see how effective this can be.

Today there are plenty of people doing academic research on Mass Customization – your original thoughts have started an entire new discipline. Are there any particular research questions that you think are especially fruitful to pursue for future research?

First, Stan Davis should continue to get all credit for coming up with the idea and the term – and Alvin Toffler as well for presaging the idea in his 1970 book Future Shock. That said, it is indeed gratifying to see how far this idea I was able to popularize has come, and how many have latched onto it as an arena worthy of research. In my mind, the key research areas include: modular architectures, process technologies (particularly in bringing the concepts to industries where some invention is still required), design tools, financial models (a big one!), and, again, applying the principles of Mass Customization to experiences and transformations.

You once told me you are writing a new book. Can you share a bit about your new thoughts: What is your next big idea next after Mass Customization and the Experience Economy?

Jim and I are indeed finishing up a book, expected to be published (once again by Harvard Business School Press) in Fall 2007, on authenticity in business. We realized that in the Experience Economy people increasingly question what is real and what is not. Authenticity is therefore becoming the new consumer sensibility – the buying criteria, if you will, by which people choose what to buy and whom to buy from. They no longer accept the fake from the phony; they want the real from the genuine. Therefore, rendering authenticity needs to become a new management discipline whereby companies diligently manage the perception of authenticity amongst their customers.

And, yes, as you might expect we do believe that offerings mass customized to individuals tend to be perceived as more authentic than mass produced, standard, off-the-shelf offerings done for anybody in general and nobody in particular! All of our ideas and frameworks relate to each other, and flow from one common world view.

Can you share a little bit about the "private" Joe Pine? What moves you beyond writing and working with your clients?

In this year’s Christmas letter my wife Julie just wrote how her job is handle absolutely everything around the house so I can work, read, and golf. So, mostly, I work, read, and golf! The reading (four daily newspapers, over fifty periodicals, and scores of books every year) informs my work, enabling me to recognize patterns going on in business as well as the world at large. Golf lets me enjoy friends and the great outdoors while enabling me to focus on something that I can get better and better at – while keeping me decidedly humble.

I would also add that I adore my wife and family – one daughter, Becca, is now a freshman in college, with Lizzie a junior in high school – and seeing my kids grow and mature is a great joy in my life. I would also add that my business worldview is informed by my personal worldview, which is firmly Christian and shared with Jim. My early goal at IBM was to rise up the management ranks until the age of 45 or 50 (a band I am now within), and then go back to get a Ph.D. and teach and write for the rest of my life. The only question was whether that degree would be in business/economics or theology.

So I was basically fortunate to begin that path 10-15 years ahead of schedule on the business front. At some point, I may swing back over and focus my remaining days on Christianity, particularly in apologetics.

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

Well, the one I’d like to see is what Jim and I call experience guiding. With so many companies getting into the business of experiences and transformations and with the very real limits in the time, money, and attention any individual can give to these offerings, what emerges is the crying need for companies to wade through this growing mass of possibilities and help individuals determine what is right for them. People are beginning to ask, and will eventually clamor, “What experiences should I encounter?” – that is, determining what would be most gratifying; “What transformations should I undergo?” – that is, what would be most edifying; and, overarchingly, “What offerings are right for me?” – that is, what would be most authentic.

Transformations are experiences guided to achieve particular demonstrated outcomes; that’s why I call this experience guiding – the capability of understanding, determining, recommending, and managing the set of experiences individual customers have to effect the transformations they desire. Note that it applies just as much to business customers as to consumers. With individuals in businesses, there also is an overload of possibilities for the knowledge they need in order to transform their own businesses, with limited time, money, and attention to gain that knowledge. For knowledge is experiential information, learned by experience and applied in experience.

While no one has put it all together – indeed, I think all the functions being lumped into Web 2.0 will be required – there are many elements coming together, with companies increasingly doing parts of it.

And if somebody actually does experience guiding well, perhaps that will be my signal finally to turn to pursuits other than the world of business!

Thanks a lot for your comments and thoughts, Joe! And keep on your productive and creative thinking in 2007!

Contact Joe Pine at www.strategichorizons.com, bjp2@aol.com, +1 651 653-6850

Happy Holiday Greetings - and how OfficeMax helped to elf up my holidays

Merry Christmas and a great start into the new year!

Postings will restart in the new year (with an exclusive interview with B. Joesph Pine, the most popular face behind mass customization -- and also the most knowledgeable one, so come back on January 3, 2007 for this great start of the 2007 MC&OI blogging year).

In the meantime, enjoy the little trick I prepared for you: I just morphed myself into an holiday elf! .

The is a great example of personalization, and OfficeMax really made my day today when I tried this tool. Perfect toolkit, the elf personalization works very smooth (see the great integration between phone and web site when you customize your elf), and it is a fun thing that also drives traffic to their web site. So A+ for this little personalization gimmick.

So now Elf Yourself and have fun during the holidays!

PS: And if you have some spare time during the holidays, plan your speaking proposal for the MCPC 2007 conference!

2007 Mass Customization Event Preview (I): MCPC 2007 Web Site Launched

The World Conference on Mass Customization & Personalization (MCPC) is the primary event in this domain. Bridging between academic research and management practice, the conference provides an interactive platform to learn about mass customization strategies and to discuss the latest technologies and enablers.

On October 7, 2007, the fourth MCPC will start at the MIT Media Lab, Massachusetts Institute of Technology, in Cambridge / Boston with an interdisciplinary focus on the new advancements in the field (Oct. 7-10, 2007). The second part of the conference, hosted by HEC (Hautes Études Commerciales) Business School in Montreal, will address in the form of a business seminar the challenges to bring mass customization and personalization in retail (Oct. 11-12, 2007).

Today, we finally could finish the first version of the MCPC 2007 web site. Go there to get all details how you can contribute to this event and present your mass customization work or research.

I will keep you updated on all developments and news regarding the conference. The teams at MIT and HEC are working very hard in the moment to get the conference running. More exciting news will come in the next weeks.

More MCPC 2007 information:
- Download MCPC 2007 Flyer
- Download MCPC 2007 Call for Papers & Speaking Proposals
- Website: http://www.mass-customization.de/mcpc07/

Context information: In June 2007, Thorsten Blecker organizes again the Joint Conference of IMCM’07 & PETO’07 (June 21-22, 2007, Hamburg/Germany): "Innovative Processes and Products for Mass Customization”, a research focused smaller event on mass customization in Hamburg (more information here). While I personally only endorse the MCPC 2007 and believe that one focused general MC event is sufficient and more beneficial, I am of course happy about any platform for sharing information on mass customization. But I consider special tracks and sessions as part of established general conferences (like POMS, INFORMS, AOM, etc.) and national events (like the FiMCP event) as the more efficient and effective ways for such a discussion outside the MCPC conferences.

But if you understand German, you don't have to wait until October 2007. In February 2007, the next German-language business seminar on mass customization will take place in beautiful Salzburg. More information on this national event in the next posting.

2007 Mass Customization Event Preview (II): Die 8. Mass Customization Tagung für Deutschland, Österreich und die Schweiz (8th German-language Business Seminar)

In February 2007, the next German-language business seminar on mass customization will take place in beautiful Salzburg (the following announcement is in German language only).

Zum achten Mal wollen wir die deutschsprachige Mass-Customization-Community in einer Fachtagung zusammenbringen. Am 16 Februar 2007 treffen sich wieder Anwender und Wissensträger rund um die kundenindividuelle Massenproduktion - dieses Jahr im Audimax der FH-Salzburg.

Im Fokus der Tagung stehen diesmal Zukunftsstrategien für Mass Customization: Welche strategischen Optionen bietet Mass Customization, und wie kann dieses Konzept in eine nachhaltig erfolgreiche Unternehmensstrategie integriert werden?

In einem Intensivworkshop am Nachmittag des Vortrags (15. Februar) besteht zudem die Möglichkeit einer intensiven Einführung in die Thematik.

Aufgrund des Feedbacks der letzten Veranstaltungen ist die Tagung dieses Jahr noch interaktiver gestaltet. Klassische Vorträge werden durch themenfokussierte Panel ersetzt und durch Workshops ergänzt, um eine intensive Kommunikation unter den Teilnehmern zu ermöglichen.

Erfahren Sie in einem Dialog mit herausragenden Unternehmensexperten im Gebiet,

- welche strategischen Optionen Mass Customization bieten kann,

- wie Mass Customization die Profitabilität steigern und Kosten senken kann,

- welche technischen und organisatorischen Voraussetzungen Mass Customization besitzt,

- wie Mass Customization die derzeitigen Mega-Trends Web 2.0, Social Shopping und Customer Co-Creation konkretisiert und ergänzt,

- welche Erfolgs- und Misserfolgsfaktoren bei der Einführung von Mass Customization zu beachten sind.

Die Tagung ist das Nummer-1-Networking-Event zum Thema im deutschsprachigen Raum und eine optimale Ergänzung der internationalen MCPC 2007 Conference.

Die Tagung wurde auf einen Freitag gelegt, um Ihnen die Möglichkeit zu geben, das anschließende Wochenende mit Freunden, Partner oder Familie im winterlichen Salzburg oder den angrenzenden Skipisten zu verbringen.

Alle Information zu Programm, Anmeldung und Anreise finden Sie hier:
http://www.mass-customization.de/mc07/

Donal Reddington on Customerism: Great Analysis of Recent Developments Along the Active Customer

Many of you will know the great blog of Donal Reddington, who regularly reports about developments, company announcements, and new technologies in the mass customization and personalization domain.

Recently, he posted a great feature on "Customerism", explaining different recent trends in business and technology seem to be converging into a new business model, that includes mass customization but also user innovation, crowdsourcing, and other developments.

His main arguments in brief (but read the entire post – there is also a great picture summarizing his thoughts):

Customer Empowerment: "The idea of empowering customers with a higher degree of control over their relationship with business has gained widespread acceptance. Various terms have been devised to describe different approaches or strategies that empower the customer."

The Rise of Mass Customization & History of Product Configuration: "The major impediment to wide adoption of mass customization in the early 1990's was the absence of an efficient communication channel for customers to describe their requirements. But than, the right tools cane up: The Product Configurator. My research suggests that the earliest work on what would be considered a product configurator was carried out by Ron Brachman at Harvard University in 1977. ... In the mid-1980's, Brachman worked at the Artificial Intelligence Principles Research Department at American Telephone and Telegraph (ATT) which developed the PROSE product configuration system for use in the telecoms industry. A few years later, unrelated research by Tim Berners-Lee would produce the first web-browser. By 1996, Dell had combined these two technological innovations into the first web-based product configuration system, that would allow anyone to specify their requirements when purchasing a computer."

Micro-Manufacturing: "The first examples of how mass customization could be the catalyst for new business models came about at the turn of the Century, with the launch of two companies: Zazzle and CafePress. Both of these companies offered conventional personalization of everyday products ... However, the most important aspect of their business was that they were also 'micro-manufacturers'" – allowing creative users to sell their creations to others.

User Innovation: "Ideas about involving the customer in the innovation process had been around since the late 1980's, … devised by Eric Von Hippel at the MIT. Von Hippel discovered that most products and services are actually developed by users, who then give ideas to manufacturers. This is because products are developed to meet the widest possible need; when individual users face problems that the majority of consumers do not, they have no choice but to develop their own modifications to existing products, or entirely new products, to solve their issues."

Crowdsouring as an alternative model of MC: After discussing Threadless etc., Donal concludes: "While to date crowdsourcing has been used mostly in the area of visual design, it could easily be adapted to issues of technical design also. Who is to say that an electronic equipment company could not use crowdsourcing to develop new products? There could be thousands of engineers itching to submit designs for new devices or contribute to the design of a new product. ...

Customerism: This is where we are now then: "A collection of separate business concepts and enabling technologies, that encourage user/customer participation, whose attributes overlap with one another to a significant extent. ... While there is no single word that can take in all of them ('masspeercustomizationcommonsmarketplace' doesn't roll off the tongue!), my personal opinion is that the term 'Customerism' is probably the most suitable word to describe a series of ideas that empower the customer ... "

Great observations and conclusions, again: read his entire post! I asked Donal what motivates him to spend so much time and effort to documenting mass customization and Customerism with this dedication. And his answer was a typical example for the motivation of empowered users in the new market space:

"As regards motivation, I guess you could say it is mainly interest in the topic. I researched MC as part of a master's degree a few years ago. I couldn't use my MC knowledge in my 'day job' (working for the Irish Government), so I set up the website as an outlet to pursue these ideas further. My view at the time was that if I did nothing, my work on the topic would 'go to waste'."

It is only through the great contributions of people like Donal that mass customization is really catching up. There are very few consultants or people who do mass customization professionally that have contributed so much back to the community – and doing this with so much modesty and intellectual generosity. Thank you, Donal!

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

Today Is MC Day in the Blog Sphere: History, Future, and a Missed Trend

Today was mass customization day in the blog sphere: Two great and one interesting post on mass customization and creative customers stroke out the mass of general postings just mentioning the term. And an update on Zafu in the NYT.

Tim O'Reilly on Threadless and custom fabrication. Tim O'Reilly, master guru of Web 2.0, today posted about Threadless and why he loves this business model. Why I do not share his evaluation that Threadless is a perfect example of the Long Tail (see my comment on his post), Tim makes a good observation where this will lead us in the future:

Right now, Threadless is just making t-shirts. But custom fabrication devices like laser-cutters, water-jets, and 3D printers are currently at about the price points of typesetting machines back when desktop publishing took off in the early 80's. Even traditional manufacturing techniques can now be harnessed by small companies and individuals, who can hire overseas factories to make short runs of custom designs. How far off is a future in which the creative economy overflows the thin boundary that separates "information" from "stuff"?

We've been fascinated with this idea since Marshall Burns and James Howison gave a talk entitled Napster Fabbing at our first P2P Conference in 2001. They pointed out, quite rightly, that in a world of personal fabrication machines, stuff could be shared as easily as music is shared today.

But what would the mechanisms be by which new designs first come into play? Will they merely be copied from traditional manufacturing and brands, or will there be a new economy in which users compete in creative abandon?

I am preparing a longer review posting on user manufacturing and the new infrastructure that is just coming up to help consumers to turn their creative ideas into physical outputs (and sell those to others) – an alternative model to the today dominating mass customization model. Stay tuned for this next week or so.

But Tim's post is a summary of the idea and what will come up. Or, as he says with William Gibson's words at the beginning of his post, "The future is here. It's just not evenly distributed yet."

Tom Evslin on the history of mass customization. Tom Evslin, a technology veteran and pioneer of many core technologies of the information age, posted in his blog today – in a comment of Tim's post – a great story on the history of mass customization.

Until today, I always paid tribute to Alvin Toffler for mentioning the concept first, who quoted (in 1970) Robert H. Anderson, at this time Head Information Systems, RAND Corporation, that "The most creative thing a person will do 20 years from now is to be a very creative consumer… Namely, you’ll be sitting there doing things like designing a suit of clothes for yourself or making modifications to a standard design, so the computers can cut one for you by laser and sew it together for you by NC machine ..."

But Tom has the following story to share:

In 1963, IBM paid me overtime for attending courses and lectures at its System Research Institute subsidiary – plus an all-expenses-paid drive into NYC. One Tuesday night the lecture was on the kind of future that computers would make possible. Those who thought about that at all thought of a Big Brother sort of world and enforced uniformity since computers liked dealing with millions of items which were all formatted just the same.

But the speaker at SRI said that computers would make mass customization possible.

“Imagine,” he said, “going to a store and seeing a dress you like (nb. no online shopping in the dark ages). The clerk takes your exact measurements but then asks if you would like any changes to the design. You say ‘I’d like the fleur de lis a little smaller, the straps a little wider, and the hem an inch higher.’ After just a short wait a machine disgorges just what you want. Computers will make it possible to undo the uniformity and conformity that began with the industrial revolution and mass production.”

Wow! Not that I bought any dresses with or without fleur de lis in those days but I was really turned on by this. Didn’t really have anyone to discuss it with because my co-workers at IBM were much older than me and not as given to bursts of enthusiasm and no one else knew what a computer was.

So why are we not all customize our dresses (or dress shirts) today? Here the third provides an answer.

Robyn Waters on Mass Customization. Business Week today posted an interview with Robyn Waters, a "Trend guru" on "spotting what is next" and former vice-president of Trend, Design, and Product Development at Target.

While I really love her work for Target and how she turned this company in place for great shopping experience and discoveries (Target's high-profile, high-revenue "design-for-all" marketing strategy, developed by Waters, is a industry benchmark), she really missed the point when asked about the which companies she recommends watching that are great in mass customization? Her answer:

"Mass customization refers to products for a mass market that are designed so customers can personalize them to their exact needs or desires.

Companies doing a wonderful job of mass customization are: The U.S. Postal Service and the www.mystamps.com site. You can design your own postage stamps...upload a photo, chose a color, a border, a denomination, pay by credit card. Jones Soda uses digital technology to customize labels. The customer uploads a photo, writes a label, selects the flavor of soda, and a case of custom-labeled soda is shipped to their door. Starbucks allows you to customize your cup. There are purported to be over 19,000 ways to order your coffee drink at Starbucks.

M&Ms allows you to select special fashion colors, and 95% of Mini Coopers are customized. Cold Stone Creamery customizes your cone with mix-ins. My Twinn is a doll that is customized to look exactly like your child. TiVo turns you into your own TV programmer. iPod gives you all the controls for your music when you want it.

I prefer the term "customer-made" to "custom-made." These examples turn a customer into a designer."

I totally share her last comment. But are the companies she quotes really good examples for mass customization worthwhile watching. I doubt this. Most of them are examples of online mass customization of the first generation. Are you really a designer of you order a latte with skimmed milk and extra cinnamon at Starbucks? Are you a designer if someone create a doll that looks exactly like you? Is a custom soda label the future of customization? Well, then I should stop writing this blog.

Tom's 1963 quote of mass customization of much more insightful and futuristic -- almost 45 years ago! I just mention this as it are exactly this kind of examples that make it difficult to bring mass customization forward and shift it out of the niche of custom embroidery etc. If forward looking thinkers like Robyn Waters use these kind of old examples and narrow ideas, then it will be difficult to motivate other managers to really see a sustainable business model behind the concept.

Update: One post that I just found today: The New York Times has a good review of Zafu.com, the mass customization alternative I wrote about some while ago. While the article in general praises the Zafu service, it remarks that it does not weigh heavily enough a user’s brand preference. But the label of a jeans is a as a big factor as the fit. The article also comments on the increasing use of other personalization services, like gift-finders or recommendation engines. Nothing new, but finally getting implemented.

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.

MCPC 2007: How you can participate at THE mass customization event of 2007

Call for Papers and Pre-Announcements of the 2007 World Conference on Mass Customization & Personalization

Finally, more information about the MCPC 2007. The most important message of this long posting: Save your time and travel budget for Oct 7-12, 2007! At this time, the next World Conference on Mass Customization & Personalization (MCPC) will take place at MIT in Boston and HEC in Montreal – and it will become THE event of the MC event circuit.

We are in the moment in the heavy planning stage of the event here at MIT, but I want to share some more information here so that you can start thinking what YOU want to present on the MCPC!

The event: The biannual World Conference on Mass Customization & Personalization (MCPC) is the premier event for the Mass Customization community. Bridging academic research and management practice, the conference provides an interactive and interdisciplinary platform to share ideas about mass customization strategies and to discuss the latest technologies and enablers.

Download MCPC 2007 Flyer

In October 2007, the MCPC will include two parts:

Part 1, Oct 7-10, 2007: MCP Research & Innovation Conference. Hosted by the MIT Media Lab, Massachusetts Institute of Technology, in Cambridge/Boston (USA) with an interdisciplinary focus on the new advancements in the field.

The MCP Research & Innovation Conference is designed to engage academics, business leaders and consultants in fundamental debates through a set of plenary presentations, discussion panels, and paper presentations. In addition to the traditional functional conference streams of the MCPC conferences, we especially welcome submissions from managers and consultants reflecting upon the conference theme.

Part 2, Oct 11-12, 2007: MCP Business Seminar hosted by HEC (Haute Études Commerciales) Business School in Montreal (Canada), with a focus on applying mass customization & personalization in a retail setting.

The MCP Business Seminar wants to provide managers a practice-orientated, focused overview on mass customization applications and best practices. The 2007 topic is the application of customization & personalization in retail – leading to a total makeover of retail!

2007 Conference Theme: The objective of the MCPC 2007 is to extend the dialogue beyond today's boundaries and to explore the future of MCP. The theme "Extreme Customization" asks for leading-edge examples of customization, non-traditional and emerging new concepts of personalization. For the technology community, we attempt to identify critical research issues and technological challenges with a rigorous methodology.

Our manifesto is to shift the mass customization debate from a physical product perspective to a total life cycle experience. Mass customization should be more than just configuring a piece of hardware, but should be seen as the co-design of an entire system, including services, experiences and human satisfaction at the individual as well as at the community level.

Continuing the established MCPC tradition, we invite contributions from a wide range of specialists in the engineering and management community including architecture, industrial design, or visual arts, to participate in the larger debate of customization. Mass customization studios, a co-creation challenge, and several focused workshops will elevate the quality of exchange during the conference.

Questions for Discussion in the MCPC 2007. To start the discussion, here are some initial themes and related questions. We encourage participants and authors to engage in these questions and to bring forth their experiences from an interdisciplinary and cross-functional perspective.

System thinking and architectures

How can we design system architectures, extending the discussion of product families?
How can we define ecosystems for mass customization which span the entire product life cycle?
How does system thinking in MCP enable firms to search for new and underutilized opportunities?
What new kinds of capabilities do we need to produce, sell, and maintain MCP systems?

Business models for mass customization

How do we have to adapt, modify or expand established models in marketing and operations management to cover the new debate on mass customization? When do we need new models?
What are the different business models for mass customization? What are the contingency factors describing the preference for such a strategy?
Have we fully utilized postponement strategies for MCP?

Product versus service customization

What is mass customization of service? How is this different from product customization?
What are successful examples of service mass customization which go beyond the conventional, e.g., self-service kiosks?
What are the features of configuration toolkits for service customization?
What are efficient production systems for service customization?

Adaptability: feature or substitute

Adaptability, i.e. built-in flexibility embedded in a product, can both substitute customization delivered by flexible manufacturing or supplement the inherent flexibility of a customized product. How can we develop adaptable systems along the entire life cycle of a product-service-system?
How can we make products more adaptable ("hackable") so that users can adapt them?
What are the economies of adaptability? How to balance the trade-off between performance (cost) and adaptable capabilities?
How to design usable interfaces to utilize a product's adaptable features?

Individual versus community

What is the role of communities for mass customization?
Is personalization exclusive or non-exclusive of shared experiences?
How do online and offline communities effect customization (e.g., by setting trends, helping each other with the configuration, etc.)?
How do communities develop new mass customization offerings?

Emotion, experiences and happiness

Can you mass customize for emotions? How can we capture emotions in product-service-systems?
How does research on emotions help to build better products and services?
What is the premium customers are willing to pay for different experiences along the segments of the MCP product life cycle (e.g., willingness to pay for configuration, co-design, status, custom utility, adaptability, etc.)?
Does mass customization provide "happiness" to consumers (and what is happiness anyway)?

Choice, complexity and simplicity

What is meaningful customization? What are the rules for simplicity in MCP?
Do people want choice? How much is too much?
How can we support users to navigate a solution space?
How do we foster and utilize the creativity of users and customers?

Configuration system and rule sets

How can we change configurators from focusing on constraints and rules to fostering creativity and co-creation?
How can we expand user interfaces with more tangible and intuitive features?
How can we develop embedded configurators?
How can we substitute the pain of customization for the sales force by building integrated sales systems for customization, including the knowledge, tools, and attitudes for efficient customization?

Rapid manufacturing and personal fabricators

What is the state of innovative manufacturing concepts allowing flexibility with no cost penalty?
Where is mass customization manufacturing located (distributed versus centralized)?
Is rapid manufacturing here (to stay)? Is rapid prototyping becoming obsolete?
Are there alternative approaches for efficient flexible manufacturing?

Contradictions in mass customization

What is the relationship of simplicity to complexity in MCP?
What is the tipping point between standardization and customization?
What is the range between user innovation and custom configuration? When, and to which extent, do users customize and manufacture in their own domain and with their own means?
What is the relation of constraints in manufacturing (switching costs) to constraints coming from the entire environment (e.g., health and safety, branding, IP …)?
Are all customers suited for mass customization? Is mass customization suited for any business?

Profits, benefits, and value

What is the benefit and value of MCP? How does this benefit translate to value for individual stakeholders (customers, manufacturer, or retailers)? How can we capture this value from the perspective of an entire system?
How do we measure the value of personalization and customization?

Education & capabilities for MCP

How do we educate students in mass customization? How do we integrate mass customization thinking in established curricula (in a meaningful way)? (See also the call for teaching case studies below.)
How do we build the qualifications and capabilities demanded for mass customization in companies?
How can managers (and educators) unlearn conventional thinking when implementing mass customization?

Mass customization in practice

This track is open for submission of acting managers and entrepreneurs from mass customization and personalization businesses. We ask for presentations which do not focus on presenting just your company or business idea, but on sharing your experiences and success factors of executing mass customization.
Presentation proposals for this track should follow the general guidelines for submission (extended proposal introducing your mass customization offering, the focus of your talk, and some of the key results you plan to present). Proposals should be submitted with the online submission system.

Mass Customization Case Studies (Teaching)

The MCPC 2007 will be followed by a special session in Montreal focused on case studies for mass customization. The idea is to develop material to teach mass customization better.
We invite submissions of case studies dealing with mass customization and personalization. Cases must be original work based on real events, people, and organizations. They must be accompanied by a teaching note and not have been previously published or accepted for publication. The presentation of the cases will be held in Montreal on October 12, 2007. Authors of the best cases will be invited to submit their work to a special issue of the International Journal of Mass Customization or a special issue of the International Journal of Case Studies in Management. Cases should be submitted with the online submission system and authors must follow the MCPC paper submission process and deadlines.

Special Sessions & Themes

Today, there are examples and applications of MCP in all industries and sectors. The MCPC 2007 does not focus on one particular industry, but wants to provide a platform to exchange ideas beyond disciplines and industry borders. We are however especially interested in applications and examples in the following fields where we recently see a lot of interesting momentum in MCP:
- Mass customization, personalization and user innovation in architecture, housing and construction
- Automotive Customization 3.0: Bridging pimped rides with option lists
- Mass customization of services, e.g., in the financial and hospitality industries
- Mass customization of health services & products (pharma-cogenetics)
- Extreme customizing: What can we learn from extreme, leading edge examples of customization and personalization?

Paper Submission Process

We invite you to submit your best work on mass customization and related areas, addressing one or more of the questions asked before. All papers have to be written in English language. We prefer papers which are empirically grounded and go beyond pure conceptual contributions. We are open to a diverse set of quantitative and qualitative methods of empirical research. We especially seek papers which follow the idea of "engaged scholarship", i.e. which are relevant to both practice and research.

You can submit two types of papers (Page limits include references and figures):
Full papers: max. 25 pages (12pt font, double line spacing). Only full papers will be considered for the conference's Best Paper Award.
Extended abstracts for work in progress (about 4-8 pages), but including also comments on the research question, the methodology, data and empirical methods used (if applicable), and a discussion of the results.

The conference proceedings will contain short abstracts of all accepted papers. Authors of accepted papers can decide if they submit a (revised) version of their full paper for publication in the full-text proceedings of the conference, or just a summary version which does not compromise publication of the paper in top journals.

A number of highly respected academic journals expressed already their interest in featuring special issues with selected conference papers after the conference. We will try to facilitate this process for appropriate submissions.

To submit a paper (practitioners: presentation proposal), there will be an online submission system for this conference on the conference web site. Please wait with paper submissions until this system in installed and in place. Do not submit papers per e-mail directly to the conference chairs. All papers will be double-blind reviewed.

Important dates

March 19, 2007: Deadline for submissions
June 1, 2007: Final notification of accepted contributions
Aug. 1, 2007: Author registration deadline
Oct 7-9, 2007: MCP Research & Innovation Conference at MIT
Oct 11-12, 2007: Business Seminar in Montreal, Quebec

Note: ALL presenters and participants, including presenters from companies, have to register for the conference and pay the full registration fee (about 450 USD, 50% discount for students with student ID). There are no exceptions.

MCPC 2007 Program Committee – MIT Research Conference
Conference Chair: William Mitchell, MIT Media Lab, Massachusetts Institute of Technology
Conference Program Co-Chairs: Frank Piller, TUM Business School, Technische Universität München, and Mitchell Tseng, Advanced Manufacturing Institute, Hong Kong University of Science & Technology
Conference Coordinator: Ryan Chin, MIT Media Lab, Massachusetts Institute of Technology

MCPC 2007 Program Committee – HEC Montreal Business Seminar
Conference Chair: Jacques Nantel, HEC (Haute Études Commerciales) Business School, Montreal (Canada)
Conference Coordinators: Sylvain Sénécal and Jean-Francois Ouellet, HEC Business School, Montreal

More information:
- Download MCPC 2007 Flyer
- Past conferences: MCPC 2005 (Hong Kong) and MCPC 2003 (Munich)

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.

This is so long tail: Newly Launched ZAFU.com Helps Women With Personalized Jeans Recommendations to Find their Perfect Jeans

Personalization as a more scalable alternative to mass customization?

Many women I know share this experience: Looking frustrated at thousands of jeans listed on a search engine, or carrying a pile of denim into a changing room – just still to find not the jean that really fits. ZAFU.com. a new venture by Archetype-Solution's Rob Holloway, wants to provide help – and is the perfect example of an application riding the long tail.

Remember (see post from July 28) that the idea of the now bestselling "The Long Tail" book by Chris Anderson is that today there are (a) unlimited choice and variety, (b) more consumers that want to utilize this variety to find a better fitting product, (c) large profit opportunities for companies not focusing on a few large blockbusters or hit products but on helping customer to explore this variety.

Anderson's book focused on long-tail-applications in the digital sphere, music, books, and movies. But zafu.com brings this into the world of apparel.

CNN described in a press coverage Zafu's concept quite well:

"Sizing jeans to the myriad shapes of women is a challenge even in a department store dressing room, let alone online. Zafu.com, launched this week, arrives as the industry shifts from years of marketing baggy or flare-cut jeans to a skinny silhouette that is much harder to size and wear. "We've taken the trouble to actually measure and check the jean and try it on people to see how it really fits," Chief Executive Rob Holloway told Reuters. "We are the friend in the dressing room, I guess."

Zafu asks women shoppers 11 questions about how they prefer jeans to sit on their hips or waist to create a body profile. That alone is a departure from the incongruous body-type descriptions of "pears" or "triangles" found in fashion magazines and retail catalogues.

The results are used to match the user with as many jeans as could suit them from a database of hundreds of styles, from broadly marketed Gap to pricey Seven, then link them to a retailer to purchase."

In a recent phone conversation with Rob Holloway, he described the laborious process it took them to set up this fit database. They invited hundreds of women in their offices, each woman hat to try on 32 different jeans, all fits being evaluated by the company's own apparel experts. This gave them both information about women's shapes and figures and information about the cuts and fitting secrets of dozens of different jeans brands. To update this information, Zafu has created a streamlined process so that new models can easily being integrated into their database and assortment.

Correct sizing is one of the biggest obstacles to the growth of online apparel and footwear sales, which are expected to rise in the US to $13.8 billion this year from $11.3 billion a year ago, according to tracking firm Shop.org data. Almost 14 billion sounds a lot, but is only 6 percent of total U.S. apparel and related sales.

The jeans market is an interesting market segment. Market research firm NPD Group reports women's jeans sales reached $7.8 billion for the 12 months through March 2006 -- a 10.8% increase over the $7.04 billion reported during the same period a year ago. This data is on top of a 13.7% growth rate of jean sales between 2004-2005. Much of this growth comes from new jeans models and niche designer brands – offering more choice and options, but making the entire selection process also more difficult for women to navigate.

CNN quotes Ellen Tolley Davis of Shop.org saying "Many consumers still want to touch and feel merchandise before they buy it. When it comes down to particular sizing for shirts and pants, there's still some room for retailers to make improvements."

This is exactly what Zafu does. They also provide a service that you will get not from many retail associates: Zafu's web site will tell you also when there is NO jean at all in their assortment to fit your body – asking you to postpone your purchase.

Zafu will tell the consumer outright and suggest she check in periodically as styles are updated. "We wondered, should we be completely honest here and show someone zero [results] or fiddle a bit," said Holloway.

They decided to be honest – and this is exactly where the value of such an intermediary comes from. But according to their estimations, their assortment of analyzed and databased jeans is already large enough to provide an exact fitting jean for 94% of all consumers. And loosing this 6% of sales (theoretical) is a good price to pay to show to the other users that they are really serious and honest about fit! Early users of the service seem to love it a lot, as this customer review suggests.

Zafu also allows women to save their profile making the process even easier next time they return. This helps them also to inform customers when a new jean is added to their assortment that exactly fits their body style. However, if a user does not want to leave any data, she does not have to do register etc.

And how does Zafu make money?

First, there are provisions for each sale. Zafu does not carry any inventory, but directs customers directly to the web sites of affiliated retailers and gets the usual commissions between 5-20% of each sale.

Second, they will provide in-house fit recommendation services to online and offline retailers, helping the customers of just one brand to navigate the assortment in a store or online shop better.

Third, I believe there is a lot of potential to extend the service to other product categories, becoming the one-stop style adviser for women with regard to fit. This could also provide some nice aggregated market research data, another potential source of revenue. For this, a cooperation between My Virtual Model and Zafu would be a perfect option.

For me Zafu is also an interesting business model as it provides another alternative to real mass customization. Zafu's parent company, Archetype, launched in 2003 a fit consulting business that provides mass customization services to some of the leading apparel retailers and brands in the US, including Land's End's Mass Customization business.

Zafu's personalization service is an alternative model. It may not have the inventory advantages and value prepositions of mass customization, but provides a much more easy to implement and much better scalable system. The future will show where there is more value for customers. I believe that both models will work hand in hand and supplement each other: For most consumers, a better matching service as zafu.com will provide sufficient value. For others, however, the ultimate product will still be the truly custom jean -- providing not only perfect fit, but also all the hedonic satisfaction connected with a custom product.

Updates: "Customized online fashion finally clicks with consumers": A journalist tests zafu.com (and competitor myshape.com) [Thanks to madeforeone.com for this link]

Report on Internet-Retailer (Nov 7, 2006): Shopping.com, a large shopping portal, has partnered with zafu.com to launch a women’s jeans finder on the shopping engine. The new feature, accessible under a link from women’s clothing category pages on Shopping.com, carries shoppers who click on it to a co-branded web site that guides them through the process to yield a selection of jeans and then links to the merchants where they may be purchased. The feature exposes shoppers using it on Shopping.com to brands they might not have previously known about or considered, but which might be a fit for them. “By suggesting new brands, styles and fits for shoppers, Shopping.com can offer them more relevant choices via a recommendation expressly tailored for them,” the company notes.

Update (20 Nov 2006): The New York Times had a good review of Zafu.com. on Nov 20, 2006 While the article in general praises the Zafu service, it remarks that it does not weigh heavily enough a user’s brand preference. But the label of a jeans is a as a big factor as the fit.

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!)

MC&OI Interview: Sergio Dulio on Advancements and Open Opportunities of Mass Customized Footwear

With this posting, I will start a new series of interviews with key persons from the mass customization and personalization community. I plan to publish a new interview each month or so. The idea is to provide you first-hand access to the experiences of some of the leading entrepreneurs in our field.

The interview series will start with an industry where the benefits of customization seem to be very obvious, but where the level of application is lacking behind the level of available technology: custom footwear. And when talking about custom footwear, no one is a better partner for dialog than Sergio Dulio. Sergio is know to me as one (if not the) world's foremost authoritis on mass customization of footwear (see his bio at the end of this posting):

Sergio, how did an aerospace engineer come down to earth to revolutionize the footwear business?

I think it has to do somehow with my “roots”. Being born in Vigevano, a town which lived of shoe making until the 1960s and that now lives of shoe technologies, it was inevitable that sooner or later I would get involved. I started almost 20 years ago with CAD systems for shoe design, then worked with machines. More and more I build experience with shoe design and manufacturing processes. Mass customization is my latest passion.

What are the three greatest achievements we have made so far with regard to mass customization of shoes?

I would say that the main achievements deal all with “consciousness”: First, consumers are becoming more conscious -- and demanding -- of how important it is for them to have the right shoes for their feet and to find producers that really care about them. 

Second, shoe producers are becoming more conscious of the added value that selling made-to-order customized shoes can generate for them. And eventually the consciousness, among consumers and producers, that technology, in particular information technologies, is available to make the mass customization paradigm happen.

Do you see any upcoming trends with regard to new players, technologies, markets, etc. of mass customization in footwear?

I actually see two parallel trends: Outsiders who are fascinated by the idea of modernizing what they perceive to be an old fashioned business like shoemaking and who are starting new ventures for MC shoes. I would call this a hexogen approach to shoe MC. In parallel, I see an endogen movement by traditional shoemakers who realize the potential of MC and are in increasing numbers considering projects of this kind. Form the technology standpoint, I see a progressive consolidation of all the major enablers that are needed to support this business.

What are the best (your favorite) examples of mass customization in the footwear industry?

I would give you three examples: the MiAdidas initiative that I would name “knowledge and German discipline” for the profoundly thought and structured approach how Adidas applies the MC concept to demanding shoes like the sport ones.

Then Selve that I would define “courage and determination” for having tackled the challenging sector of lady fashionable shoes and for not having given up despite the sometimes insurmountable  problems a young and small start up company may have.

And last but not least the American OTABO that I would name “going against the odds” for having decided to start a footwear manufacturing business in the USA when all the other shoemakers had fled away to the famous low labor cost countries

What are the main challenges still ahead? And what are the limits of mass customization of footwear, when does it make no sense?

I believe that the basic technical “building blocks” are all available and in their right place. Forerunners have taken advantage of that. What is still missing is a widespread acceptance of the concept both by the producers and also by consumers. Perhaps an “education campaign” aimed at consumers would help. Honestly, if the concept of MC applied to footwear is clearly defined and well understood, I see no real limits to it and very few circumstances in which it makes no sense.

Apparently, mass customization of footwear is not for everyone. What questions should managers ask themselves when considering mass customization?

I do not completely agree on the fact that MC in footwear is not for everyone. Potentially it could be, from the operational and technical standpoint, adopted by all shoe companies. It is only a question of determination in changing, at least in some parts, the traditional organization of the enterprise.

The questions managers should ask themselves are: Do we know and do we care about our consumers? Are we conscious that caring about them could give an added value to our business? If the answers to these questions are positive, than companies are fit for MC.

Why are so many established footwear companies reluctant to enter the mass customization business – even if they seem to loose more ground to Asian manufacturers each year?

I believe it has to do with “ignorance”, in the sense that they seem to ignore what the business model can bring and they are then afraid by the technical difficulties; I am convinced that the more they will know about what MC can bring and how it can contribute to differentiate their offer, the more they will start to seriously consider it.

What is your personal (recent) contribution to work on these challenges?

I would define it “spreading the Gospel”, in workshops and conferences, in contacts with companies, trying to help them understanding on one side the technical challenges not be underestimated and on the other the benefits that could derive from the adoption of MC.

I recently have been actively involved in many field tests with real shoes and real consumers, which convinced me even further that the efforts are worth it. Last but not least I am working, together with Professor Boer, with whom I shared my experience in coordinating the EUROShoE project, at book precisely on the subject of mass customization and footwear.

One question I am sometimes asking myself is why am I so attracted by mass customization and footwear?  I think it is the fact that it conjugates the fascination of tradition and well made crafts with the combination of latest technologies to obtain these products in a cost effective way.

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?

The greatest offering I don’t think it exists yet. It will be there when we will enter the customized shoe shops, go through the measurement and selection process with no need to testing samples, knowing that the shoes will come in time and will be good at the first go. And knowing that my shoes will certain be “made in…my country” and “made with love for the product”. Perhaps a bit utopistic, but certainly not unrealistic.

Brief bio of Sergio Dulio

Sergio Dulio, by training a master in aerospace engineering from the Polytechnic of Milan, joined IBM in 1984 as a member of their first technical support team to the 3D CAD/CAM application CATIA. During this time, he also got in initial contact with the footwear world introducing some of first families of shoe specific CAD / CAM applications. Later, he worked for ATOM, one of the leading companies in the field of shoe machinery, as an expert of leather cutting technology.

In the past decade, he coordinated a number of innovative projects for SINTESI, a footwear research consortium with the Italian National Research Council ITIA–CNR. In 2001 he was appointed by ITIA as the technical coordinator of the EUROShoE project, one of the largest EU funded projects in the footwear field, with 33 partners and a total budget of 17 million €, aimed at the development of technologies for the design and manufacturing of customized shoes. In 2003 he gets a contract with CNR – ITIA to organize, install and activate a Design and Mass Customization Laboratory in Vigevano (the capital of Italian shoe manufacturing), where a pilot factory for the production of customized shoes has been put in operation.

He currently works as a technical consultant for ASSOMAC (Association of shoe machinery producers) and ANCI (Italian association of footwear manufacturers) and helps private entrepreneurs to master the challenges of mass customization in footwear.

Contact him at dulio@tin.it or Tel. +39 0381 905827, Cell +39 335 6664251

Previous postings on mass customization of footwear:

• Open Source Footwear -- bringing customer co-design to a traditional industry
• Shoe Individualizer Selve Wins Retail Week's Product Innovation of the Year Award 2006
• Prior 2 Lever: Footwear Customization With Rapid Manufacturing
• Overview of recent customization offerings in footwear and apparel

Business 2.0 on The 50 People who Matter Most -- On Rank 1: YOU

US magazine Business 2.0 has in its new edition a cover story on the 50 people who matter now (thanks to John Winsor for the link).

Their list strives to identify people whose ideas, products, and business insights are changing the world we live in today - those who are reshaping the future by inventing important new technologies, exploiting emerging opportunities, or throwing their weight around in ways that are sure to make everyone else take notice.

On the list are regulars like Sergey Brin and Larry Page, Google Co-founders, Qualcomm CEO Paul Jacobs, Rupert Murdoch, Steve Jobs, Genentech's Susan Desmond-Hellmann or Fujio Cho, Chairman of Toyota. But I am very pleased to read that the Number 1 position of this list is: YOU -- today's customer and consumer, user and inventor, co-creator and co-marketer .

Business 2.0 has written a great ode on the modern consumer and why we are really living in the age of co-creation (the theme of my blog and the underlying assumption of mass customization and open innovation):

"Why You Matter: They've long said the customer is always right. But they never really meant it. Now they have no choice. You -- or rather, the collaborative intelligence of tens of millions of people, the networked you -- continually create and filter new forms of content, anointing the useful, the relevant, and the amusing and rejecting the rest. You do it on websites like Amazon, Flickr, and YouTube, via podcasts and SMS polling, and on millions of self-published blogs.

In every case, you've become an integral part of the action as a member of the aggregated, interactive, self-organizing, auto-entertaining audience. But the You Revolution goes well beyond user-generated content. Companies as diverse as Delta Air Lines and T-Mobile are turning to you to create their ad slogans. Procter & Gamble and Lego are incorporating your ideas into new products. You constructed open-source and are its customer and its caretaker. None of this should be a surprise, since it was you -- your crazy passions and hobbies and obsessions -- that built out the Web in the first place. And somewhere out there, you're building Web 3.0. We don't yet know what that is, but one thing's for sure: It will matter."

And Wired's Chris Anderson has reported in his blog about a GREAT video illustrating this nomination. Made by Peter Hirshberg of Technorati, and Michel Markman, this video gives you all the ideas what you have to know about co-creating customers and "The Long Tail": See the Video here on Youtube! See it!

Consumer Created Branding: Rob Walker on Minibrand Entrepreneurs, The T-Shirt Economy and Why This Is an Alternative to Mass Customization

The NYT Magazine (July 30, 2006 issue) has an interesting cover story on ("The Brand Underground"). It provides a great insight study in the world of consumer created branding, the minibrand entrepreneurs. In great detail, NYT columnists Rob Walker draws the picture of leading-edge consumers who turn their lifestyle into business.

Trendwatching.com called these consumers minipreneurs. Their scope of activity is broad, "Some design furniture and housewares or leverage do-it-yourself-craft skills into businesses or simply convert their consumer taste into blog-enabled trend-spotting careers." Walker writes. "Some make toys, paint sneakers or open gallery like boutiques that specialize in the offerings of product-artists." All of them produce products which are a perfect illustration of the Long Tail.

Most of them also serve the need for uniqueness for the people buying them. You don't purchase (often for a large amount of money) a product from a small sub-brand because you want to look like every teenager in Urban-Outfitter clothing. This makes these minibrand entrepreneurs an interesting alternative model to mass customization: Instead of co-designing an own product, a consumer may turn to one of the minibrands to feel individual. Interestingly, the categories where minibrand entrepreneurs are most active, t-shirts and sneakers, are also two of the largest categories of mass customization in the consumer good field.

Rob Walker's main theme in the article is how corporate or anti-corporate these consumer-generated brands are. On the one hand, their founders see their brands as a "cool" way to earn a decent living. But still:

"Many of them clearly see what they are doing as not only noncorporate but also somehow anticorporate: making statements against the materialistic mainstream — but doing it with different forms of materialism. In other words, they see products and brands as viable forms of creative expression."

To look into this paradox and generate a better understanding of the minipreneurs, Walker focuses on the t-shirt economy. He quotes three trends or enabling factors that helped small t-shirt labels, which pop up in an enormous variety, to become one of the largest categories of consumer-generated brands:

"One thing that has changed since the days when they [the first sub-culture t-shirt labels of the 1980s] scrambled to make a living is that Japanese consumers have embraced certain small New York brands as something culturally significant and worth a price premium. Nigo, a Japanese designer, built a fanatical following for his A Bathing Ape brand partly because he collaborated with so many graffiti writers and others who had an aura of authenticity that impressed young, hip Japanese consumers.

The second change is technology, which has allowed production to become more accessible. (It is easier than you think for a two-person brand to work with factories overseas, using computer files and the occasional package.) The technology of the Internet has also acted as an amplifier. … There are blogs like Hypebeast and Slam X Hype dedicated to this practice, reporting dozens of new products or design collaborations from the brand underground every day.

There is a third factor: manufactured commodities have in fact become accepted as quasi art objects, and there is no more stark example than the sneaker. Hunting for unusual sneakers and modifying them with markers or different laces has been cool for decades, a phenomenon defined in Harlem and the Bronx."

While other minipreneurs may not build on the willingness-to-pay of Japanese teenagers, the two other factors are main enablers of many co-creation products as well. After reviewing the story of several user-created t-shirt labels (an world that sometimes even Walker as an expert admints not to understand totally), Walker comes to his conclusion -- and provides a great insight into the motivation of consumers to become active producers:

"If the dance between subculture and mainstream has always been more compromised than it appears and if every iteration of the bohemian idea is steadily more entrepreneurial than the last, then maybe a product-based counterculture is inevitable. Maybe subcultures are always about turning lifestyles into business — or the very similar goal of never having to grow up.

And I have to admit, the more time I spent with the minibrand entrepreneurs, the more I had to concede that what they have been up to is more complicated than simply imitating the culture they claim to be rebelling against. They believe what they are doing has meaning beyond simple commercial success. For them, there is something fully legitimate about taking the traditional sense of branding and reversing it: instead of dreaming up ideas to attach to products, they are starting with ideas and then dreaming up the products to express them."

Site note: Rob Walker has a regular column in the NY Times Magazine, where he often writes about a other great minipreneur, mass customization and customer co-creation businesses. He also has a great new blog site that should be worthwhile reading for you. This blog regularly links to his latest column, follows up on issues and ideas raised there, and "wants to advance the conversation about matters relating to what we buy and who we are": http://www.murketing.com/journal.

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.

Buyers of custom products are a most desirable customer segment, a new Forrester Report finds

In the Exciting Commerce Blog, I today found a link to a new Forrester report by Carrie A. Johnson, addressing the old question "why consumers buy custom products" and who these users are. Her conclusion why manufacturers or retailers should serve these users with customized products despite the rather high costs of implementing mass customization: "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."

Internet Retailer has some more information on this report (249 USD):

"Customers who design and purchase custom consumer products online tend to have more online experience and are tech friendly: 83% of custom purchasers have been online for five or more years, Forrester found. That compares with 66% of all online consumers. In addition, more than half of custom product purchasers have e-commerce tenure of five or more years, twice the rate of all online consumers.

Forrester also found that more than half of custom product buyers have a college degree or higher, compared with just 38% of all online consumers. Purchasers also have higher income levels, with 41% having household incomes of more than $75,000 a year, compared with 23% of all online consumers. Custom product purchasers also are more likely to be male.

Customer product buyers also are more likely to use multiple channels when shopping, according to the report. 42% like to research online and purchase offline, compared with 36% of online shoppers.

In addition, 54% of custom product buyers consider themselves natural leaders, versus 35% of all online consumers, and 18% consider themselves trendsetters, compared to 11% of all shoppers. “These beliefs carry over into action, with [custom product] buyers more likely to tell others about products that interest them and e-mail products that interest them to others,” Forrester said.

The study also found that the major concern for consumers wanting to buy products they build online is not being able to return a custom-designed product. Only 19% said they are unwilling to pay more for a custom product, and only 8% said they are concerned about credit card security for online purchases. “To make consumers feel comfortable with the process, allow them to return or exchange products they buy and make it clear that they have recourse if they have a change of the heart,” Forrester said. Greeting cards, jewelry, linens/home décor, apparel, footwear and accessories were the most popular items to customize online, Forrester found. "

User Profiles: How the Higgins Project can prevent mass confusion in mass customization and enable a new generation of virtual identity services

How a new initiative, the HIGGINGS project, wants to give users full control over their profiles, and what this means for better mass customization businesses.

Asked what is the genus of mass customization, I always answer customer co-design. A custom product can only be provided if the manufacturer has specific information about the demands of each particular customer. In most cases, this information is provided by an explicit act of co-design in which customers choose between options or create a configuration within a given solution space.

The problem of mass confusion

This co-design process, however, is also the reason of mass confusion, a reason why consumers often abandon a mass customization purchasing process. Mass confusion has two major reasons:

Burden of choice: One limit of mass customization is that excess variety may result in an external complexity. Users might be overwhelmed by the number of options.
Matching needs with product specifications. In addition, customers often simply lack the knowledge and skills to transfer their personal needs and desires into a concrete product specification. A pair of sport shoes becomes a rather complex product if one has to decide explicitly between different widths, cushioning options for the insole, patterns for the outsole, and color options.

The premier task of the design of co-design toolkits (configurators) is to prevent mass confusion. A premier measure for this is a starting solution so that customers do not have to start from the scratch. In a good mass customization system, there will be a pre-configuration which represents already a full configuration and which customers can modify according to their wishes (the factory121.com web site provides a good example).

To generate starting solutions, manufacturers could present a number of "standard" products (as in the case of Factory121), not connected to the individual customer. An even better way though is to customize also the starting solution according to each customer's preferences: If the Factory121 website would know that I find a particular class of watches ugly, it would present me more choices of other models. It may even present me starting solution with watches in my preferred colors, or those of my wife.

But the prerequisite for customizing the configuration process is that the vendor possesses knowledge about my preferences. If I am a returning customer, this should be the standard situation (coined "learning relationship" by consultants Peppers & Rogers). For first-time customers, however, the provision of a good starting solution is a more challenging task.

Virtual identity: The dream of the universal user profile

The optimal situation would be if the vendor could draw on an existing profile of my preferences, generated by shopping and configuring at other companies in the past, but also fine-tuned by my own feedback and demands. Such a profile would contain information about past purchases, configurations, measurements, allergies, socio-demographical data, and, of course, address and payment data. Another element of such a profile could be my previous search terms at Google and alike, representing the "Database of my intentions", as John Battle has called it in the great book "The Search" .

In short, such a profile would represent my (virtual) identity. This idea of such a unique user profile, representing the identity of a customer, is pretty old and has been discussed many times in the context of personalization and customization. And there were many commercial attempts to generate and manage such a universal user profile, like Firefly, Microsoft passport, or Sun Microsystems-led Liberty Alliance. All failed due to missing trust by users: You may trust Amazon to build such a profile of your media preferences supporting its recommendation engine, but most users do not trust Microsoft to build such a profile for their entire personal lives.

How the Higgings Project can help

At this place, a new project may provide help: The Higgins Project (http://www.eclipse.org/higgins), managed by the Eclipse open source foundation, aims to give people more control over how their personal information is used online and aims to develop so-called 'user-centric' identity management. Rather than big corporations managing identity data, the user-centric identity management approach puts individual users in the driving seat. They shall be able to decide what information they want shared with trusted websites that use Higgins-derived software. The project is supported by a large rooster of companies, including Dell and Microsoft. IBM, Harvard's Berkman Centre for Internet & Society, Novell, and Parity Communications all said they are contributing already code to the project.

As John Leyden reports, Higgins breaks a person's identity into pieces, allowing users to dictate who can access parts of their identity information, within applicable privacy guidelines and laws. Organizations using applications built with Higgins open source tools can share specific identity information, such as their telephone number or buying preferences, according to rules set by the individual.

This set-up will also help users to integrate identity, profile, and relationship information across multiple systems. Using service adapters, systems such as directories, collaboration spaces and email systems can be plugged into the Higgins framework. Users thus could change an address across all their online accounts more easily or delegate who can see which parts of their body measurements, for example. The only cross-vendor application working (very successfully, but proprietary and challenged by many constraints) is the Virtual Model from My Virtual Model (Full disclaimer: I am on the board of this company).

The result is a system to manage the digital identity of a user. Digital identity management are seen at the forefront of next generation web services – enabling finally the ideas of personalization and customer centricity we envisioned in our mass customization community for more than a decade.

If Higgins is successful and adopted by mass customizers, this will mean a large boost for mass customization. New research has clearly shown that mass confusion and the burden of choice are major obstacles of mass customization – preventing consumers to adapt this strategy. It would make so much sense to get a 3D body scan, if I could transport this data from one vendor to another, but still owning and controlling the use of this data by myself. And this would be just the beginning.

Identity Mash-Up: A conference on reusing identity profiles and information

The possibilities and business strategies enabled by digital identity management systems like Higgins are explored in the conference Identity Mash-Up at the MIT Media Lab and the Berkman Center for Internet & Society at Harvard Law School (June 19-21, 2006). A variety of parties – governments, technology companies, health organizations, financial institutions, international agencies, and merchants – will address a spectrum of issues from terrorism and child pornography to identity theft and spam, but also new business models building on virtual identity.

In the business track of the conference, several companies and organizations, including Microsoft, IBM, Novell, BestBuy, and MyVirtual Model, will discuss and make public announcements about new products and services, and will demonstrate their next generation identity services. I will attend the conference and will try to report here what I learned!

If you want to participate as well: The full conference will be webcast by Harvard Law School.

More information on HIGGINS can be found at spwiki.editme.com and channelregister.co.uk