Mass Customization & Open Innovation News

Interview: Joel Yatscoff of Joy de Vivre on Microfinanced Crowdsourcing and How He Helps Creative Designers to Get Their Products Out to Consumers

I recently wrote in this blog about Joy de Vivre, the Toronto based company that lets consumers vote on its product assortments. In this interview, founder Joel Yatscoff provides us more information about his vision, how the idea got started (Joy de Vivre seems to be again a typical case of an user innovation, originating from a frustrated user), about first successes and challenges, and what is coming next. His basic motive of democratizing the process how designers can get their products out to consumers, bypassing the power of traditional manufacturers of choosing and investing in designs, reminds me of Ronen Kadushi's idea of open design – different approach to the same problem.

Joel Yatscoff is a Toronto-based product designer. Originally from Beaumont, a small French Community in Alberta, he later studied at the University of Alberta and received his Bachelor of Design with Distinction in 2003.  Currently working in a product development consultancy in Toronto, Joel has also interned at Karim Rashid in New York City in 2002.  He has been recognized nationally and internationally for his roles as a freelance, collaborating, and supporting designer by the Chicago Athenaeum Good Design Award, IDEA, and Conduit National Design Competition.  Joel is also pursuing post-graduate studies in design management at Ryerson University.

Frank T. Piller: Joel, what was the insight and inspiration that motivated you to start Joy de Vivre?

Joel Yatscoff: I had been tinkering around with this concept since about 2006.  I had been out of post-secondary studies for 3 years and had been pitching some really great ideas [of product designs] to companies in New York with my good friend and business partner Bradley Price.  As I remember, it was about our 3rd consecutive year of pitching concepts with limited success.  I was getting really frustrated with how our great ideas were only receiving lukewarm reception but the company was producing real garbage.  We were biased towards our work of course, but it really seemed like frustrating process where we were acting more like salesmen than designers.  This was really the start, thinking there must be a better way for designer to get their great ideas to market.

At some point I remember hearing about Muhammad Yunus’ Nobel prize for micro-loans.  I found the concept of raising money through small increments very inspiring.  I think that lodged somewhere in my head and I thought it made sense to raise the great sums of money required for consumer product manufacturing.

I slowly formulated the business structure in my head and was encouraged to write a business plan to clarify and refine my concept.  I also began to notice that a few companies were really starting to use crowdsourcing to develop goods and it was only a matter of time until someone decided to apply it to consumer products.  As I didn’t want to regret not giving it a shot, I plunged in.  I took the fall of 2008 off from my continuing education studies in design management to devote time towards setting up the business.  And here we are now, 2 months in.

FTP: What are the first experiences with Joy de Vivre? Which reactions did you get, and what are your early users saying?

JY: The first experiences are very, very positive.  Everyone is very excited about the idea and really hope that it works out for us.  Our sales and traffic are slowly increasing, but am impressed with the impact we have made in just over 60 days.  Most interesting is following we have developed from Australia, Germany, and Israel.

FTP: Can you tell us a bit more about yourself? Do you have any personal experience with crowdsourcing?

JY: By education and experience I am a product design that has been practicing since I graduated from University in 2003.  I’ve had the opportunity to work as an in-house, freelance, and consultancy-based designer.  These jobs have allowed me to work on projects that range from municipal water treatment products and peritoneal dialysis machines, to dog toys and water bottles.  I have a real passion for well designed products and love the industry.  Other than that, I’m getting married in July and realized a year ago that I should have been sailing my entire life.

I don’t have any real first hand experiences with crowdsourcing other than my fiancé buying shirts from Threadless.com.  I wouldn’t say I’ve studied crowdsourcing or anything, I just find it a natural process.  As the old adage goes, “many hands make light work.”  The internet has allowed many more “hands” to get involved than would have been possible in the past.

FTP: How do you think Joy de Vivre is different to similar crowdsourcing companies? How do you want to make it special?

JY: Currently, no one else is using crowdsourcing to procure new ideas for consumer products and fund them.  Some sites are using crowdsourcing to spotlight products or designers, to source all their designs like threadless.com, or fund the upcoming albums of new bands, but no one has applied this to capital intensive projects like consumer products.   This is the biggest difference.  

Threadless does a great job procuring really great graphic designs and then has a small investment to bring them to market (buying the shirts, creating the silk screens, etc...). But consumer products are quite different.  We still have to procure the ideas but we also have to pay for substantial costs upfront before anything is made.  Tooling costs for consumer products start in the tens of thousands of dollars and can get into the hundreds of thousands of ideas very quickly.  This is why we pre-sell the products: we raise the money to pay for all the capital costs.  It significantly reduces any financial risk we take on and eliminates the risk for the consumer as we refund any money if the product is not fully funded.

We really want to make Joy de Vivre special by offering designers an outlet where they are encouraged to submit their ideas (not rejected like at most traditional manufacturers), offered fair, competitive compensation, sell really well designed, beautiful, and functional products, and reward our community by compensating them for helping to fund the product’s development.

FTP: What is the source of the designs? Who are your first designers?

JY: The first product we made available for funding, Cellule, was designed by Bradley Price and myself.  We had designed this modular lattice a long time ago and I always thought it was great idea and was puzzled why no manufacturers had jumped on it.  It seemed natural to launch with this product as it seemed symbolic of why I founded the company.  The second product, Terence Cooke’s “Fruity Bowl”, was a submission (full disclosure, I’ve known Terence for several years).  From this point, we will only be making products available for purchase that proves popular from our community.  This is in keeping with our crowdsourced model and will really help ensure whatever is made available for purchase will sell really well.

We should have no shortage of good ideas that will be submitted to our website.  Most product designers are always tinkering in their spare time to either build up their portfolios, create submissions for design competitions, or to pitch new concepts to manufacturers.  In time we hope that designers will be designing product just for us and then we will have a steady stream of product ideas.
 We will hopefully be giving all these beautiful, orphaned ideas a good home.

FTP: You also announced an open design competition. How will this take work?

JY: Yes, in a sense we are running an ongoing design competition.  Unlike traditional manufacturers, we are encouraging designers and innovators to send in their product ideas.  Normally, it is very difficult to make a good contact in an organization to pitch your ideas and most of the times they don’t accept design submissions if they have not asked for them.

We have now setup a submissions and voting platform where designers can submit their product ideas and our community can vote on them.  Popular ideas rise and less popular ideas sink.  We will be closely monitoring the submissions and ideas that do really well be chosen for production.  The submission process is really easy: all a designer has to do is upload a short description of the product and a few nice images.  The onus is on them to clearly communicate what the product is and really sell to the community.

FTP: A critical success factor for your business will be to gather a large enough crowd that follows the proposals and votes for them (with their money). How do you plan to create this movement?

JY: I couldn’t agree more, a big crowd makes or breaks this model.  We have a promotion strategy that has several fronts to get the crowds to us.

First, if a designer has a product made available for funding or voting, he/she has an incentive to spread the message to friends and family.  The more votes or purchases of that designer’s product the better its chances getting picked for production or become fully funded respectively.  We also hope that our consumers will spread the message.  Since we are rewarding everyone who helps to fund a product’s development, there is an incentive on the purchaser to tell friends and family about their purchase and encourage them to also buy.  More sales greatly increase the likelihood of a product being manufactured.  It is word of mouth advertising and is very potent.  We’ve already had purchasers of our first product promote the product and generate additional sales.

Second, we promote all the products that are made available for funding.  We have begun developing an extensive network of online and traditional media to publicize our new product offerings.  We are now able to send out a press release to a few select blogs and be quite confident of receiving a posting.  This allows us to very quickly disseminate a press release and really ramp the site traffic up.

Finally, we will be complementing the product promotion with our blog.  The blog highlights emerging designers and great products which are not being manufactured.  The blog combined with the submission/voting forum will slowly build up the community and make us a hub for emerging designers and products are not in production.  We are aware of how long this may take, but we are slowly getting there and have been surpassing all our site traffic targets to date.

FTP: In general, what are recent trends you see with regard to crowdsourcing and open innovation? What will be next?

JY: I see many more companies forming like us but for specialized products and services.  You already see many bands raising the funds to record their next albums through crowdsourcing models.  I’ve heard most recently of over $75,000 being raised for a female artist to record her latest album.  Her last track on the album has her singing out all the names of the people who helped raise the funds.  

With this kind of money able to be raised, it really opens doors to many more types of products and services.  The effect will likely be thousands of smaller companies using crowdsourcing and micro-financing to make product and services.  While I don’t believe the traditional Ikea’s will ever disappear, the consumer will have a lot more available to them because they will be helping to define what they want.

For more information, visit joydevivre.org or contact Joel Yatscoff at
joel (at) joydevivre.org or 364 King St. East, Toronto, Ontario M5A-1K9, Canada

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Interview: The Next Generation of Architectural Design: Daniel Smithwick from Physical Design Co on a great way to build the garden house of your dream … and much more

Daniel Smithwick is the co-founder and CEO of Physical Design Co., a Cambridge, MA, startup that wants to start a revolution in building structures. His vision: To empower every consumer to transform nearly any custom design into easily assembled physical structures delivered to your backyard! This could be your next garden house project. Before, you either had to purchase an expensive standard house at Home Depot that was not only labor intensive to assemble, but often ugly and not fitting exactly your requirements. Or you could get your hands dirty and start a complicated DIY project, constructing it with 2x4s and nails. As a last alternative, you could hire a contractor to build you your dream house … but this comes with a heavy price tag and often delays of the construction crew.

Daniel wants to offer another alternative: You design your dream in SketchUp, the free CAD software by Google, and his company will translate your uploaded design in a custom kit of interlocking CNC-cut parts that you can then easily assemble after delivery. His promise: "With Physical Design Co Web Platform anyone can design, remotely manage production, and assemble their own full-scale inhabitable creations!"

In an interview, Daniel shared more information about his project and company and what he regards as the future of mass customization.

Daniel Smithwick is an architectural designer by training and he is currently a graduate researcher at MIT where he is a member of the Smart Customization Group and the Digital Design and Fabrication Group.  Daniel co-lead the latest research project by the Digital Design and Fabrication Group called, “Digitally Fabricated Housing for New Orleans,” a project commissioned by and exhibited at the MoMA in New York for their 2008 show, Home Delivery, Fabricating the Modern Dwelling.  Before coming to MIT, Daniel worked professionally as a designer for leading architecture and design firms including: Pompei Architectural Design in NYC, Loom Architects in Minneapolis, MN, and Howeler + Yoon Architecture in Boston.

FTP: Daniel, what is the idea behind your startup, Physical Design Co?

DS: The central idea behind Physical Design Co. is to provide consumers with easy-to-use online tools that engage them in the design and manufacturing process and enables them to become the producers of their own architectural-scale designs.  Our web platform also allows consumers to utilize local manufacturing via our distributed fabrication network which not only reduces carbon emissions, but it also strengthens local economies.  Essentially, we’re re-thinking how our built environment is designed and constructed – with the Physical Design Co, online users, whether they live in rural China, or they are busy professionals interested in design, they can now play an active and participatory role in the built world around them.  

Through our web platform, anyone can upload and transform their digital design – any inhabitable accessory structure, from doghouses to backyard art studios - into a customized kit of interlocking parts that are locally manufactured and that can be easily assembled.  Consumers no longer need to rely on the traditional labor-intensive and wasteful construction process: with the Physical Design Co all you need is a rubber mallet to assemble your creation.

FTP: How is this different to existing companies in the field like Ponoko, Replicator or Shapeways?

DS: The Physical Design Co distinguishes itself in two ways. First, we provide consumers with the ability to custom design, and have fabricated, life-size and inhabitable scale structures, as opposed to only hand-held items like fashion accessories and table-top objects.  We’re interested in offering consumers more than just personalization; our web platform engages the consumer in the design, manufacturing and delivery process – giving them the tools to make smarter decisions about how they impact the built and natural environment.

Second, we have developed a patent-pending technology which automatically translates the user’s design into a unique kit of interlocking, easy-to-assemble parts.  For example, let’s say you wanted to design a backyard shed.  Instead of having to digitally model all of the individual parts, consider how they all attached together, worry about the structural integrity and verify that it is indeed possible to put it all together, with the Physical Design Co., all you have to do is model the shape of your design.  Our technology automatically and digitally translates the design shape into a kit-of-parts that can then be CNC fabricated and subsequently interlock together without the need for nails, screws or any additional hardware.  

FTP: Dan, you recently presented your company and some creations at the Maker Faire of MAKE magazine, a large gathering of hardware hackers and DIY enthusiasts in Austin, TX. Can tell us some more about this exhibition and the feedback you received?

DS: In October of 2008 the Physical Design Co., in collaboration with ShopBot Tools (an innovative manufacturer of user-friendly CNC machines) designed, fabricated and exhibited the ‘Austin Shed’ for the Maker Faire in Austin, TX.  This is the world’s first digitally fabricated shed.

The feedback we received from the Maker Faire attendees was incredible.  Most were simply amazed at how structurally strong the shed was without any nails, screws or hardware holding it together.  However, the most rewarding feedback we received was from children.  At the faire, we pulled a few of the ‘skin’ panels off to reveal the grid structure of the interlocking ribs so that visitors could understand how it was assembled.  What surprised us was that 10 year-old kids would pick up the removed parts and correctly replace them back on the shed without any knowledge of how the system worked.  We were delighted to find that our assembly process is intuitive enough that children could put it together!

FTP: How do you master the manufacturing process; who are your cooperation partners?

DS: The great thing about the Physical Design Co and our manufacturing process is that we don’t need to build any new large and energy-inefficient factories to produce our users’ designs.  In fact, the manufacturing infrastructure already exists worldwide – it’s the tens of thousands of individual CNC owners around the world whose machines are online.  These are our cooperation partners.

Through our web platform, these CNC owners become members of our distributed manufacturing network through which they can promote their existing and on-going services.  This is how we enable the users and designers on our web platform to have their structures locally manufactured - which greatly reduces delivery costs both in terms of money and energy use. 

FTP: What are the next steps for your company, and how do you expect to grow it in the coming months?

DS: This summer, in collaboration with ShopBot Tools, Make Magazine and Google SketchUp we’re hosting a competition called the Get Physical! Design Competition which will take place at the Maker Faire in San Mateo, CA.  The top 3 winners will have their designs digitally fabricated using our web platform, assembled and showcased at the upcoming Maker Faire.  Keep an eye on our blog for more details over the next couple of months.

FTP: What are other trends you see with regard to mass customization?

DS: When answering this question I like to quote Eric von Hippel from his book, Democratizing Innovation:

“When the cost of high-quality resources for design and prototyping becomes very low, these resources can be diffused widely, and the allocation problem diminishes in significance.  The net result is and will be to democratize the opportunity to create.”

I think we’ll continue to see an increase in user-engagement not only in the design process but also in the production process of our built environment as the availability of digital fabrication equipment exponentially grows.  In addition I think we’re just beginning to understand the power of online user communities and crowd-sourcing.  Rather than just offering product mass customization to isolated individual users, we are starting to see that by enabling them to interact with each other through a web platform, their collective intelligence is boundless.

For more information, contact Daniel at dan@physicaldesignco.com
http://www.physicaldesignco.com/
http://www.physicaldesignco.com/blog/

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

Interview: Scott Killian, Co-Founder of Yerzies, DemandMade, and FanBuz

An interview with US mass customization veteran Scott Killian on what are his objectives with Yerzies (see previous posting) and what he sees next.

Scott Killian has been advising and operating successful e-commerce companies for 10 years — most notably as Chairman & CEO of FanBuzz, a leading e-commerce outsourcing and fulfillment company. Killian co-founded mass customization site FanBuzz in 1996. In 2000, Killian raised the first of two private equity rounds for the company totaling $10 million. Scott has been a long-time advocate for the use of mass customization to better understand consumer preferences, reduce inventory, improve assortment flexibility, and enhance the overall brand experience for consumer products. His insights have been featured in such national publications as USA Today, The Wall Street Journal and CBS Marketwatch.

Frank Piller: What is the idea behind your new venture, Yerzies?

Scott Killian: We began about three years ago with DemandMade, a software platform that helps manufacturers adapt their production processes to support units of one and online retailers to effectively communicate with these factories. As the network of manufacturers using our platform grew, a consumer-facing opportunity of our own began to emerge.

Retailers were taking advantage of the platform, but most of them lacked the expertise in product development they needed to really get the most out of the manufacturing options we made available to them. Yerzies effectively places the capabilities and the limitations of these factories into the hands of ordinary people. We've begun with apparel, but we will be adding more product categories soon.

Not only is Yerzies a platform for user-generated content, we're also entering into licensing relationships with a diverse group of brands that will allow us to offer a "long tail" assortment of designs and intellectual property from movies, television, lifestyle properties and consumer products companies. Customers will have the option to purchase or customize products bearing these trademarks.

Finally, we're also providing many of these same tools to other retailers and content properties who wish to offer products that are made on demand. For example, a major consumer brand is using DemandMade this holiday season to launch an entire apparel program which will be produced on demand in our factories.

FP: But your roots in mass customization are much older. You are a co- founder of FanBuzz, a large provider of customized sports apparel, started in 1996 as one of the first BtoC mass customization operations in the US. Later, you started DemandMade as a BtoB enabler of mass customization. How did you incorporate your experiences from FanBuzz and DemandMade into Yerzies?

SK: After we sold FanBuzz in 2002, I began providing advisory services to online retailers and consumer products companies, including several projects involving mass customization. DemandMade started in early 2005 and is now the parent company to Yerzies. All of these experiences required us to "get our hands dirty" along the entire length of the value chain and I think that was a tremendous advantage for us over somebody just getting into this business. We learned a great deal about licensing, how to connect the manufacturing processes with the end consumer, the danger of burdening users with too many choices, how to scale these programs, etc...

What's really interesting about Yerzies is that the entire business began with a three-year investment in the back office. When it came time for us to develop a consumer-facing application, we were able to do it on a strong foundation. Despite our interest in concepts and processes, we have strong roots in retail so we're really here to create merchandising programs that capture the hearts and minds of end consumers. This is always our first priority.

FP: What are future steps planned for Yerzies?

SK: We're just getting out of the gate right now so our immediate focus is on attracting an initial audience of users. In the coming months we'll be announcing some interesting twists to our business model which will help us draw an even larger mainstream audience, but we're satisfied for the moment to operate in beta mode while we whittle away bugs and garner feedback from early adopters. In the meantime, watch for a huge increase in the number of licensed properties. We've signed many that we haven't announced yet and we're currently in active discussions with many more. We'll also be expanding the array of embellishment options in Q1 of 2009. Despite the launch of Yerzies, DemandMade continues to support other retailers who are launching programs. We will be announcing several of these before the 2008/09 holiday season.

FP: More general, what are recent trends you see with regard to mass customization?

SK: If the first wave of innovation we saw online was about letting users create or configure a customized item, then the second wave is clearly about the intersection of social networking and mass customization. Although Etsy.com isn't a mass customizer, they have proven that users are not content to merely sell the items they've created, they want affirmation and interaction with other users. Since eBay has long dominated the online auction world, conventional wisdom would suggest that a start-up like Etsy would have no chance at success, but they provided a sense of community and a platform that respected the handmade items these folks were creating and that was perhaps more important to these users than the size of the audience.

If I've seen a trend, it's the recognition that these communities will be important to the long-term success Iof many mass customization programs. Ponoko and Red Bubble are two really interesting examples of this at work.

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

SK: In larger organizations, the development and execution of these programs often requires a diverse group of departments to coordinate their responsibilities. As you can imagine, getting folks from engineering, product development, legal, marketing, creative and operations to huddle around an entirely new concept they may not completely understand (or even believe in) is a major task. My advice to someone trying to develop a program like this within a major company is to make sure they have support at the highest level within the organization - they'll probably need it.

Regardless of the program size, unless the brand has some other strategic objective, most of these programs are still retail businesses at their core. As such, it should always start with the customer. I've been involved in the planning and execution of many mass customization programs, including some for major consumer products brands and I think it's very easy for management to project its own preferences or assumptions onto these projects without first identifying and understanding the customer. People create, modify and personalize products for many different reasons. Although it might be impossible to address all of them, I think it's critically important to understand what customers really want before investing in the idea.

Un-Readymades: From Object to Experience. A study of mass customization from the perspective of industrial design

Interview with Martin Konrad Gloeckle, NYC, on consumer co-design and his series of "un-readymade" designs, a great interpretation of the customization trend

When I saw these pictures, I was fascinated immediately ... Martin Konrad Gloeckle, an Industrial Designer currently based in New York City, created some wonderful designs that are one of the best interpretations of the customization trend I ever saw. His designs are part of a study where he discusses the customization trend from the perspective of industrial design.

Born and raised in Germany, Martin relocated to the US in 1996, and recently finished his Master’s Degree in Industrial Design at the Pratt Institute in New York. Martin has additional degrees in Computer Science and Business Administration, and before returning to school had a successful career working for leading web and interactive advertising agencies both in Germany and the US. Martin’s design work has been featured in exhibitions, design blogs and magazines including New York Magazine, his award-winning Bendino lamp is currently produced and distributed in Europe.

Martin is the author of "Un-Readymades: From object to experience" – a study of mass customization from the perspective of industrial design. In this work, Martin has analyzed how consumers are moving away from being passive consumers to actively influencing and shaping their world. Parallel to this, consumers are increasingly looking for improved experiences, involvement, and personal expression. In return, user-generated content or the Do-It-Yourself movement are booming.

But how should product design react on this? Martin finds that up to today, most designers have not reacted on this trend and still are just focusing on providing ready-made, fixed and stable products. He also finds that conventional mass customization systems still do not provide a full user experience or often require advanced knowledge or tools.

In his study, he explores the next levels in this field. Based on research and design explorations, it proposes a framework for product design that engages the user and allows for deeper experience and involvement. It provokes a rethinking of the products we use and interact with on a daily basis, and presents several designs based on this.

In a recent interview, we spoke about his work and how he developed his design.

Martin, what is the key element of the design framework you propose to engage consumers deeper into experiences?

Well, the proposed framework actually has six major principles. However, these are based on two key points: A) Create design opportunities for the user, and B) Use a low-tech approach.

Let me start with the first point: What we can observe today in the online or two-dimensional world are increasingly active, involved, and creative consumers. This includes things like the so-called ‘user generated content’ of blogs, YouTube, Wikipedia and so on, as well as the whole field of desktop publishing, desktop video, desktop music etc. However, when it comes to the world of three-dimensional products, there is very little happening at this point. There are simply very limited opportunities available to the consumer.
The series of products I created tries to address this. Called ‘Un-readymades’ to express the involvement of the end-users, they provide consumers with opportunities to design, create, and express themselves.

Of course, there are other developments related to this trend. Things like the many online customization tools, the fabber and prototyping tools, and the increasingly available D.I.Y. services like Ponoko or Buglags to name a few. These however generally are very technology driven. And this is where the second point comes in. Technology has opened many areas to the average consumer. But at the same time there still often is the need for certain knowledge and tools, be it of hard- or software. Therefore, this is not accessible to everyone. In addition, the user is physically removed from these products during the design process. Rarely is there any direct interaction between the product and consumer. By using a rather low-tech approach, I am trying to address some of these issues.

Browsing over your web site, I was fascinated by the originality of your designs that incorporate your ideas. Can you illustrate your framework with one of your own designs?

One of my goals was to create a multitude of designs, to explore different areas and address different users as well as to show the flexibility of the framework. To pick one piece out, the ‘drawn’ vase is probably a good example. It is essentially a combination of a dry-erase board with an opening for a flower and a water container mounted behind it. You can use it on the wall or on the table. What the dry-erase board does is to allow the user to redesign its surface and thereby the vase.

So lets go through the six framework principles:

Enable user involvement: The vase is somewhere between an off-the-shelf product and a D.I.Y. project. While it provides the users with a starting point in form of the vase functionality, it allows them add to this.

Make it interactive: By drawing on the dry-erase board, the user directly and physically interacts with the vase, and thereby develops a closer relationship with it.

Provide room for play: While the vase offers a starting point in terms of functionaly, it otherwise literally provides an empty canvas. Not everything is predetermined, but is left open for playful exploration. Watching people creating all different kinds of designs with this was definitely one of the highlights of this project for me.

Keep it simple: I wanted these pieces to be approachable for everyone, meaning not requiring any extensive tools or knowledge. Everyone knows how to hold a pencil, so everyone can use this product. Of course, people‘s drawing skills differ, but that is were the erasable and forgiving nature of the dry-erase board comes in.

Make it personal: As the vase provides for more than just pick&choose within a predetermined selection, it really allows people to create very personal and unique pieces. No vase will ever look the same as any other.

Small Steps: The piece doesn’t require anybody to suddenly draw like an artist. Rather, the user can start with a very simple drawing. But as his confidence and capabilities grow, so can his created product.

What is the role of companies in your concept? What would you recommend a manager that wants to place your ideas into practice?

In terms of manufacturing, the beauty of these designs is that they do not require any major changes in the manufacturing infrastructure as is usually associated with mass customization. As the customization happens at the end user and not in the factory, the company still only needs to create one fixed product.

In terms of management, it probably more comes down to being open-minded and believing in the creativity of end-users. Basically giving the consumer more credit than most companies currently do.

At the same time, we of course need to realize that while customization is a major trend, it is still to be seen how much of the mainstream it will become. While especially Generations X and Y are increasingly interested in self-expression and involvement, the majority of consumers still prefers buying non-customizable products and maybe express themselves solely through selected purchases.

What did originally motivate your research? How did you choose this topic?

As I was researching potential thesis topics, certain personal interests of mine came up repeatedly. These are areas that I have always been fascinated by, like peoples desire to express themselves, peoples urge to create, the growing D.I.Y. movement, and finally new and evolving production methods. At one point, I realized that there might be a way to bring these different areas together, and to use this combination to enable and encourage creativity and self-expression for the consumer. And to simply provide for more joy and fun as part of a product experience.

Why do most industrial designers neglect the customization and self-impression trend? Do design schools educate your designers in these new topics?

First off, there are of course certain products where customization is not applicable, for example for safety reasons. Besides that, a couple of things come to mind.

For one, designing a product that is customizable means giving away some control of the final product. As a designer, you put a lot of time and thought into determining a very particular look, feel, and functionality to create something that addresses a specific need. While most products usually stay as intended when they leave your hands, with customizable pieces you control them only up to a certain degree. This is something not everyone is comfortable with, especially with more visually driven pieces.

In addition, there is also a school of thought with some designers that only they should be the ones ‘designing’. After all, that is what they went to school for and spent a lot of time on, learning how to do it right. According to them, the general consumer does not know about designing, and should not be allowed to do so.

This whole issue of ‘professional’ versus ‘amateur’ designer, across all areas from web over graphic to industrial design, is something we could easily talk about for hours. I personally do not subscribe to this rather elitist thinking, and believe that there is and always will be a place for both. However, and as in every other profession, we designers need to rethink our roles periodically, and adjust to a changing environment.

In terms of design school education, there is obviously an inherent delay of current trends manifesting themselves in the education curriculum. Which is not necessarily a bad thing. I believe the value of design school, besides teaching basics like form and color, is rather in teaching creative thinking. This together with providing the appropriate environment for exploration is the starting point. The rest is really up to the individual student, to investigate and explore different areas, and push his own limits as well as that of design in general.

What’s next for you now that you have finished this project?

In terms of the ‘Un-readymades’, I am starting to look into potential options of moving some of them out of the prototype stage and into production. Besides that, as I am done with my Industrial Design degree, I am also currently interviewing for a job. Things are still open though, so I guess I should use this opportunity to invite anybody looking for an Industrial Designer to take a look at my resume and portfolio on my website.

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?

Well, this is a pretty grand and open question. Maybe to answer it in a similar open way, I would pick the human mind? It probably does not get much more mass-customized than that. And thinking of it, it actually fits pretty well in my framework. :-)

Contact Martin at martin@martin-konrad.com or http://martin-konrad.com
You can view an illustrated abstract of his work at http://martin-konrad.com/unreadymades

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

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

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

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

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

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

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

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

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

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

Where did you get the idea for this book?

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

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

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

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

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

Why did you want to write this book?

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

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

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

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

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

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

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

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

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

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

And where can we buy your book?

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

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

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

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

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

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

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

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

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

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

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

What did motivate your research on mass customization?

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

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

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

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

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

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

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

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

Interview: Uche Okonkwo on the Mass Customization Trend in the Luxury Industry

Uche C. Okonkwo is the Executive Director & Co-founder of Luxe, E.t.c., a Paris based Strategy & Management Consultancy specialized in the luxury industry. She also will be a presenter at the MCPC 2007 conference at MIT in Boston (Oct 7-9, 2007). In her new book, Luxury Fashion Branding, she also discusses the growing mass customization trend in the luxury industry.

Uche is one of the pioneer strategy and management consultants in the luxury industry and a key player in the current re-shaping of the industry. Her company, Luxe E.t.c. advises luxury companies such as Louis Vuitton, Christian Dior, Gucci, Piaget, André Ross, Daniele de Winter among several others.

A regular conference speaker, Uche is also the Editor of the luxury business magazine, Luxe-Mag.Com targeted at both the luxury business and academic communities. She has an MBA from Brunel Buisness School, London and is a guest lecturer and doctorate candidate at Ecole Superieur de Commerce, Rennes.

Her new book, Luxury Fashion Branding>, addresses the business of luxury fashion from a strategic viewpoint through tracing the origins of luxury fashion, assessing its consumer behaviour, retailing tactics, branding and marketing strategies, ebusiness, business modeling, the new luxury, customization strategies and best and worst practices. The chapter on mass customization in this book attracted me to contact her and ask her about the growing mass customization trend in the luxury industry.

Ms. Okonkwo, what trends support the growth of mass customization in the luxury industry?

The major factor driving this trend is simply the changing needs of luxury consumers. Luxury consumers worldwide have evolved in recent decades and in most luxury key markets, the consumer has become highly informed and savvy about marketing techniques (and possibilities), making them appear more intelligent. And we all know that when people become more intelligent, they naturally become more demanding of choices, options and their levels of influence. In this industry, consumers want personal recognition through a more intimate relationship with the brands. One of the most efficient ways of addressing this need is through mass customization, which provides the possibility of participation in the product creation process.

Which are some recent examples of mass customization in the luxury industry that you find most appealing?

As indicated in my book, luxury brands have been reluctant to adopt mass customization as a core aspect of their marketing/ retail strategies since it has been widely believed that mass customization robs the brands of the ‘exclusive’ and ‘distance’ factors that luxury requires to thrive. Luxury brands are however beginning to understand the multiple possibilities of customization and how these can be applied without over-exposing their brands. As a result of this scenario, there remain few examples that can be used as benchmarks. A notable one is British accessories brand, Anya Hindmarch, which allows clients to personalize their leather goods on its website. Louis Vuitton has also provided the possibility of customizing its charm bracelets on its website, in the past.

How are these developments different to the traditional bespoke or tailor-made products which often are synonymously with luxury goods?

The main feature of the current mass customization techniques for luxury companies is technology, particularly the Internet. Luxury brands have multiple possibilities to customize products, services and experiences using the Internet and their e-Databases. There is also the advanced development of customizing the customer experience through mobile applications featuring brand-specific customized content, as powered by Interactive Luxury Solutions (www.interactiveluxurysolutions.com)

Do you think that mass customization will “downgrade” the image of luxury goods if now everyone can afford a custom-made bag or custom-made shoes? How will the democratization of the bespoke tailor affect the luxury industry?

Customization in itself does not downgrade luxury goods if the other aspects of the marketing mix remain constant. There are multiple tactics that can be applied to luxury product customization that do not dilute the luxury characteristics but actually enhance the brand equity. For example, if the price of customized luxury goods remain premium and the provision of customization possibilities is time-controlled or related to special products, events or client groups, then customization will actually become an aspirational aspect of luxury retailing.

What about mass customization of services? Luxury is very much about being pampered and supported. Will mass customization also change luxury services?

Customizing luxury services is actually one of the means of enhancing intimate relations with clients and extending the pampering element. If a client walks into the Louis Vuitton store on Avenue Montaigne in Paris, and is immediately recognized, not just physically but also their product preferences, sizes and how they prefer to shop, that would be exceptional customer service. In the same way, if a client visits the Palazzo Versace in Australia and every aspect of their stay is customized according to their preferences, it will definitely enhance their brand affiliation towards Versace.

What are the main challenges in mass customization for the luxury industry still ahead?

The major challenge lies in changing the orientation and thinking of luxury companies. The majority of luxury brands have a pessimistic view of mass customization. Luxury brands need to recognize customization as a core aspect of their corporate strategies and a booster of brand equity.

What would be your main advice for a manager or a top brand in the luxury industry who wants to implement mass customization?

I would tell them to apply customization but at same time remain true to their brand identity and the core attributes that set them apart as luxury brands. This is the way to assure the feasibility of customization in the luxury arena.

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?

This is a tricky one! Personally I will be thrilled the day I will walk into a luxury fashion store and receive product suggestions based on my shopping history and pre-registered preferences, both online and offline. The luxury industry is decades away from other sectors in adopting advanced customization techniques but I’d like to think that I’m wrong.

Contact Ms. Uche C. Okonkwo at author [at] luxuryfashionbranding.com

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

Interview: Detlef Schoder on the future of the newspaper, personalized printing, and how we can get our daily blog feed into the morning paper

Professor Detlef Schoder is known to me since years as one of the most active German researchers on mass customization. But he also is an entrepreneur and one of the driving forces behind the idea of a mass customized newspaper – a newspaper that is daily personalized according to each individual reader's personal taste and preferences. His company Medieninnovation.com provides technology and consultancy for custom publishing solutions. In this interview, he reflects about today’s state and the future of custom printing.

Prof. Schoder studied business administration in Germany at the universities of Munich and Passau. He obtained both his PhD and Habilitation (Higher Doctorate) from the University of Freiburg, Germany. Professor Schoder has worked not only in Germany, but also in the U.S.A., Republic of Kazakhstan, and Japan. He was an invited visiting scholar at Stanford University, MIT, and the University of California, Berkeley. In 2003 he became Head of the Department of Information Systems and Information Management at the University of Cologne, Germany.

His teaching, research, and project management focus on the economics and management of telecommunications in organizations, especially electronic commerce/electronic business, mass customization, peer-to-peer, ubiquitous computing, and new media management. In the mid 1990’s, he conducted one of Europe’s largest empirical studies on web-based electronic commerce. In addition, he in an adviser for electronic commerce to the German Parliament and consults the European Commission on research projects conducted under Information Society Technologies Framework Programme. Detlef Schoder holds a patent for “an individualized printed newspaper” (WO03052648).

Detlef, can you share a bit about your activities in this custom publishing business?

Our new cross-media product improo provides a synthesis between online and offline world. improo contains articles from high-quality newspapers, which are purchased for reuse, notifications from agencies and contents from our own editorial staff. Furthermore it includes internet elements, e.g. newsgroup messages, RSS feeds and blogs. New qualities are generated through calendar, forecasts and other information, which the reader can customize and add to his newspaper.

How is this idea different to the customized online versions of, for example, The Wall Street Journal?

First of all, improo is not restricted to an online version, but it is delivered as a real printed newspaper (which customers can take everywhere they want). improo provides information taken from many different sources, e.g. high-quality newspapers (like Financial Times, Wall Street Journal), Weblogs, professional journals, or information service providers (like market letter, newsgroups or notifications from eBay or Amazon). At the same time, a customized edition contains only information which meets each individual reader’s demands.

But why do customers want a personalized newspaper? Is not the element of surprise a major part of the enjoyment of reading the morning paper?

Most people are reading always the same sections of their usual newspaper. Day by day, they are overstrained by information overloads and spend a lot of time for filtering and seeking for the right information. Therefore improo saves time and fits the more individualized lifestyle of today’s modern society where people have several very special interests and hobbies. Furthermore improo still contains “surprising” breaking news and some kind of serendipity for this reason. And imagine, if you have much more news likely closer to your interests, or to the interest of your peer group, than -- I believe -- you will have much more surprising news and effects than a general newspaper can usually provide.

Who could benefit from your innovation improo besides the reader?

There is a clear business case. Not only our own studies, but other studies as well predict a market size of several hundred million Euros just in the German-language region. So anyone interested in becoming part of this great venture is invited to approach me for a joint realization :-)

This sounds like a perfect long-tail-application. Given these advantages, why do we not all read a custom paper already? I believe the technology is not the main hurdle anymore.

Technology is only one hurdle besides consumer acceptance and investment barriers. The improo system is a complex one which has to be developed especially for this purpose. Yet there is no product or system comparable to this. Although consumer demand has been approved by a representative survey, such an innovative product requires rethinking and open mindedness. But since people are getting used to customization through customizable internet online portals and news aggregation services, there is already a lot of acceptance. Actually many people already read customized news and retrieve specialty information via internet. A printed individualized newspaper is just the next evident step.

How do media companies and publishing houses react if you discuss your ideas with them?

In several discussions we discovered a wide interest in our individualized news paper. Especially traditional publishing houses suffer from shrinking markets and competition with e-medias. For them improo offers a chance to modernize their business and revive the media industry. However, it is a risky step to try this innovation and – so far- they do not want to take the risk. Others will…

Are there any other good examples of mass customization in the publishing industry?

First approaches to mass customization can be seen in regional/local editions and in books printed on demand. Also, direct mailings often include customized brochures or booklets. Customization in the internet (electronic editions of newspapers) is also common. But there is no publisher who customizes a printed newspaper for individual readers and delivers it to their homes.

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

As mass customization becomes more popular, new forms emerge, building especially on customer integrated innovation like user generated content. There is a strong demand for localized, specialized and individualized content with high editorial quality and augmented information with additional value like personal market letters or shopping assistants. There is also a new need for intelligent news aggregation. Just think of several millions of blogs out there. Even if only a fraction has high quality content, you still need filtering and customization to read the best and create a high quality of time spent with news.

Your role in the mass customization community is unique as your main job is that of a professor at one of Germany's leading business schools. So how can you connect your professional activities with your academic research? Can you share any recent results of your academic studies?

Yes, of course. The idea to create such a media innovation resulted from my academic research. Also many students and university staff members contributed to the project. Academic and business contacts combine well and I was able to build up a wide network in the areas of publishing, media and mass customization. The research primarily focuses on the acceptance and explanation of mass customized goods. It is evident that users have to invest time, money, and cognitive efforts.

On the other hand there are clear advantages of mass customized products over standard products. We develop integrated models which explain customer behavior and allow for extrapolation of usage patterns. All this is based on large scale empirical surveys and latest multivariate statistical procedures. Thus, academic insight as well as our market research not only advances science but also help to shape market communications and the effective introduction of such a disruptive innovation in the mass market of printed media.

In general, based on your experience both in practice and research, what questions should managers ask themselves when considering to enter the mass customization market?

Is the product suitable for mass customization? Do customers want and understand the value of mass customization? Is the market ready for such an innovation?

Is there a clear benefit of customization which is more than worth the effort? I think this is a crucial question managers should have an answer. Usually, only a market test campaign (piloting) can reveal the answer!

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?

This should come at no surprise: A mass customized newspaper. As we hold a bunch of patents in this field, we are at the heart of mass customized printed news. I am very optimistic to hold this innovation one day in my hands!

Contact: Universität zu Köln, Seminar für Wirtschaftsinformatik, insbesondere Informationsmanagement, Pohligstr. 1, 50969 Köln, Germany. Tel.: +49 (0)221-470-5325. E-Mail: Schoder@wim.uni-koeln.de

Information on the mass customized newspaper is available at www.medieninnovation.com

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

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.

MC&OI Interview: Jan-Christoph Goetze from Personalnovel about custom love stories, on-demand printing and how his business just democratized an idea from the 15th century

Here is number two of my new series of interviews with pioneers from the mass customization community (to the first interview). Jan-Christoph Goetze is founder and CEO of PersonalNOVEL, a German mass customization site that allows its customers to create a truly individual book: One in which they and their friends or loved ones are the main actors. On its website Personalnovel.de, the company offers a wide selection of titles, ranging from Romance Novels, Adventure, Mystery, Sci-Fi to Detective stories.

Personalization is possible for the leading characters, their physical appearance in terms of hair color, eye color and, in the more intimate romance novels, also their perfume and pet names. A personal dedication and a variety of additional attributes, depending on the book, as cars, ships, friends, villains and places contribute to a unique experience. Using latest digital print-on-demand technology, the books are produced by an external partner in paperback, hardcover or even leather cover. Additional features are individualized covers and titles.

Before moving into custom publishing and founding PersonalNOVEL in 2003, Mr. Goetze worked as an architect with Murphy/Jahn in Chicago, Il, Berlin and Munich, after finishing his Master of Architecture at Cornell University, Ihaca, NY.

Mr. Goetze, how did you develop the idea to launch PersonalNovel? Was this your first encounter with mass customization?

Based on several observations, the idea of creating PersonalNOVEL was driven by the goal to let everyone become the star of a book. Another approach was to stress the limits of digital printing and the opportunity to create industrially produced individual copies in volumes of just one book. Exploring the technical limits was also my first encounter with mass customization -- and apparently a lasting one.

Can you describe briefly the process how your books are developed, configured, and produced?

All our featured books are written exclusively for PersonalNOVEL. We developed a guideline how the text is written to have a good balance of personalized and not personalized content. Our authors come from a wide array of backgrounds and have mostly published with other houses as well.

The submitted text will be formatted, proofread and fed into our specifically developed software which allows us to format the books the way the customer has ordered it. The software itself is not only restricted to generating text, but also features our customer relationship management.

Once customers have chosen a title from our vast selection, they enter the questionnaire containing names, characters and so on. While they enter their information, they can read the resulting personalized text in real time. The next remaining five steps allow our customers to configure the book with features like a personal dedication, fonts and binding or cover options.

Our associated print shop prints the formatted books on digital printing equipment every weekday. Paperback books are usually shipped the next day, hardcover and linen books three days later.

What are the achievements with PersonalNovel you are most proud of?

The most exciting aspect about PersonalNOVEL is the high level of customer satisfaction. People seem to be extremely thrilled by reading their name in a completely customized story.
At this point we created a good base of customers, we are providing a reliable and quick customer support, it is fairly easy to generate a book and our quality in content and output is improving more and more – so PersonalNOVEL has become a wonderful source for personalized books.

Due to our good reputation [and a press coverage that should envy every PR manager; FTP] big publishing houses are approaching us. We just signed the first contract with one and are discussing new projects with others.

What are the reasons of your customers to purchase a personalized book? Do you think there are limits of your business due to a novelty effect, meaning that once the idea of a personalized novel is known in the market, the appeal of this product will diminish?

PersonalNOVEL’s books are mainly used as gifts and it is an interesting question what limits our product is facing. I don’t think it has any appeal to the mass market, because it takes quite some effort to generate your own book. PersonalNOVEL might take advantage of a certain novelty effect but I assume we will always have a certain group of customers enjoying the idea.

Are there any other good examples of mass customization in the publishing industry?
And do you see any upcoming trends with regard to new players, technologies, markets, etc. of mass customization in the publishing industry?

Maybe personalized mailings, calendars or postcards as the basic predecessors; but quite frankly I couldn’t think of any, since there aren’t too many applications around anyway.
Since we are currently developing a few new ideas which also might become real products I am sorry to pass on this one. Interesting samples for customized products are the printed versions of Wikipedia or a customized travel guide book.

Why do we have not more customization of books, journals or newspaper yet? It seems to me that, from a technology point of view, this industry is far ahead of others. What prevents companies to exploit the capabilities of digital printing for more customization?

I make a distinction between personalization and mass customization in the publishing industry. Customization configures data according to the profile of the customer, like a Wikipedia encyclopedia about medieval history or a guide book limited to restaurants in Tuscany, both chosen from list of article components in a database. Personalization means to incorporate the customer into the content itself. That’s the reason why a personalized journal or newspaper contradicts its name.

Mass customized print products, weather books or newspapers, share the fate of being produced in small volumes and are rather expensive compared to usual products. Their value to customer is that they fit their customers' interest, while a PersonalNOVEL stars the customer himself.

Another reason could be that for reading newspapers and journals, one might enjoy the wide array of topics being offered compared to a customized product which limits a reader to her selection.

In addition, Publishers that want to offer personalization face a barrier of entry: Their current distribution is limited to bookstores (on- and offline) and they do not have neither customer support nor customer interaction which is crucial in this business. So a publisher would have to enter a new market which is not his core business -- and that’s why he is better advised to work with specialists like our company.

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?

If we turn back the pages a couple of centuries we encounter the roots of mass customization: manufacturing and handcrafting. In the old days everything like shoes and shirts were produced by hand and therefore unique. When Gutenberg invented the book press in the 15th century many books, especially bibles and other religious prints, got personalized covers accustomed to their owners like kings, lords and so on. So even 500 years ago a very limited number of people could enjoy customized and personalized books. Our achievement is that today everybody can afford a PersonalNOVEL.

Contact Jan-Christoph Goetze at info@personalnovel.de.

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

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

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

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

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

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

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

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

Q: Why is user innovation growing?

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

Q: Why does innovation by users matter?

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

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

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

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

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

Q: So, do manufacturers like user innovation?

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

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

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

Q: Thank you very much!