Mass Customization & Open Innovation News

The CEC Co-Design Contest: Open Innovation in the Footwear Industry

A year ago, I reported about the CEC User Co-Design Contest. Now, the results are in and the experiment is over. In the following guest article, Angelika Bullinger and Erik Hansen report about the contest. They are working at TUM Business School and were the project leaders of this contest. Here is their report:

During the last three to four years, we have seen a dramatic surge in interest in the principle of “open innovation”. “Open innovation” means the involvement of customers and other partners in the innovation process. By their creative input, many companies are significantly increasing their ability to source powerful products.

But how to meet with the creative minds outside your company?

For European shoe manufactures, an answer to this question is provided by the “CEC Co-Design Community (CE3C)”, a web-based platform that enables the integration of customers in the innovation process. The platform provides combinable modules for the interaction of the company with its customers and partners. For example, in the “mindstyle module”, customers get an analysis of their preferred style by intuitively selecting pictures out of number of photographs. The manufacturer gets information which trends are currently “hot”.

In another module, “product configuration” those shoes in the collection which can be customized are shown. By the data on individualized shoes, manufacturers are informed about customers’ preferences. Especially in combination, the modules of CE3C provide shoe manufacturers with rich information on their current consumers’ preferences. 

But preferences of current customers are not enough to your company? You want really innovative designs and get to know their creators? In this case, the “idea contest” is your solution. An idea contest is a forum in which passionate contributors from all over the world can exercise their creativity on account of a topic defined by the organisator. Prizes – and the recognition by the company – generate interest and drive participation. Typically, one company organizes an idea contest and submitted ideas are judged by a panel of employees.

The idea contest module of CE3C has already been very successfully tested - the “CEC Shoe Design Contest” was run between October and December 2007 on the platform. To involve customers more closely, a voting functionality allowed users to express their opinion on the submitted shoe designs. User votings were integrated the final decision-making on the winning designs.

The results of the CEC Shoe Design Contest have been very satisfying to the involved shoe manufacturers: In total, 63 highly innovative designs have been submitted. The active community of interested users (and submitters) has about 400 members who stem from nearly 50 countries around the globe. Both the unusual size of the community and the number of high-quality submissions indicate the power of the idea contest module of CE3C. The winning designs are currently manufactured and companies are getting in touch with the creative minds behind the designs.

You also want an idea contest for your company? You would like to meet with the still unknown designers? The CEC CoDesign Community (CE3C) stands ready for adaptation to your company’s particularities – and the established community only waits for the next idea contest on account of a thrilling topic. Let’s thus integrate and innovate!

For more information, contact Angelika Bullinger or Erik Hansen.

Here are some more results of the first contest in form of pictures:

Participate in Mass Customization Research Study (but only, if you understand German language)

Some old colleagues from TUM Business School are conducting a study to explore the differences between shopping for mass customization goods and normal products in the sport shoe industry. They need your help and about 20 mins. of your time to participate in a survey. Just answer the questions from the perspective of you, the consumer -- not a person interested in mass customization! Here is some more information:

Online-Befragung "Kaufentscheidung und Kundenzufriedenheit bei Laufschuhen"

Mit Ihrer Teilnahme an dieser Umfrage unterstützen Sie ein Forschungsprojekt der Technischen Universität München. Bitte nehmen Sie sich ca. 20 min. für die Beantwortung der Fragen. Als Dank verlosen wir unter allen Teilnehmern drei Einkaufsgutscheine von SportScheck im Wert von 100 Euro zusammen mit einer Teilnahmeberechtigung an einem SportScheck- Stadtlauf in einer Stadt Ihrer Wahl. Zur Umfrage geht es hier:  http://www.unipark.de/uc/Diplomanden_Accounts/c76a/  Für Rückfragen können Sie sich jederzeit an Herrn Dennis König wenden (denniskoenig@hotmail.com).

Mass Customization in Clothing & Fashion: Annual Conference of the European Technology Platform

Thursday May 29th 2008, 9.30 – 14.30 in Brussels, Belgium.
Pre-Conference on May 28th, 9.20 - 17.00 h

EURATEX, the European Association of the Textile Industries, is running its third conference on mass customization in the textile and clothing industry. It is the main European networking meeting for this sector and presents an excellent opportunity to connect with industry, technology providers, and EU policy makers.

More than 200 participants from industry, academia, public authorities and the media attended last year’s Technology Platform conference and the organizers expect at least a similar attendance this year.

A range of industry speakers are scheduled to describe their own experiences and business cases in the field of Mass Customization. The European Commission will present its policies and programs to support more Research & Innovation in the industrial sector in general and the textile and clothing sector in particular.

This event will be preceded on May 28th by a full-day pre-conference which provides an overview of recent mass customization related projects funded by the EU.

For the full program and more information, please download this PDF.

Attendance of the conference including lunch and cocktail is free of charge. Registrations are handled on a first come, first served basis.

A registration form is here, and more information on accommodation in the conference hotel can be found here.

Contact for organizational & logistical questions
Paulette De Wilde, Euratex (Ph : +32-2-285.48.83, paulette.de.wilde@euratex.org)

Ultimate Customization: Design and Deliver - a new project that examines the next era of mass customization

A guest article by Daniel Eyers from the Cardiff University Innovative Manufacturing Research Centre (CUIMRC). CUIMRC is a new center at Cardiff University in the UK. In this post, Daniel describes about the mission and research at this center.

Imagine the opportunities that exist when the freedom of design opportunities afforded by Mass Customisation can be realised using innovative Rapid Manufacturing technologies, where one-off custom manufacturing is the norm, not the exception. As these technologies mature and become increasingly accessible to end-users, will this enablement of Mass Customisation be achievable? If so, what will be the effects of customised demand for business when compared to traditional Mass Production?

Cardiff University Innovative Manufacturing Research Centre (CUIMRC), funded by the Engineering & Physical Sciences Research Council, is the UK’s leading research centre in the field of sustainable manufacturing R&D. Ultimate Customisation: Design & Deliver is a new project that examines the concept of Ultimate Customisation, the next era of Mass Customisation. Ultimate Customisation will involve much greater personalisation, where customers actively take part as co-designers and thus contribute to the value creation. The project aims to understand the viability of Ultimate Customisation using advanced manufacturing technologies such as those associated with Rapid Manufacturing. In this project we explore the possible implications of Rapid Manufacturing within a consumer facing environment, challenging traditional mass customisation production economics and disrupting existing commercial logistics, distribution and marketing paradigms.

Our previous consideration for Mass Customisation of logistics (through the McCLOSM study) demonstrated the implications for businesses in customising both logistics and manufacturing, and now that this project approaches its conclusion, the Ultimate Customisation: Design & Deliver project will continue to examine the implications of Rapid Manufacturing technology.

Considering the current status of knowledge, we have found that extensive literature exists for Mass Customisation, and separately, Rapid Manufacturing. However, as a result of rising individualism of consumer demand together with the technological improvement of Rapid Manufacturing, we believe these concepts will increasingly be implemented together in the short term. Despite numerous companies actively engaged in this field, as yet the body of knowledge analysing the overall topic has as yet received little research attention.

As a research centre, CUIMRC aims to help industry through creating greater understanding of the complex interrelationship between economics and environmental and social factors in developing a truly sustainable business. Our approach to research is to actively engage closely with our research partners and their associated supply chains in order to get an impartial, first hand viewpoint of their particular situation, while also allowing us to maximise the relevance and usefulness of our research outputs. Industrial secondments in which our researchers spend time embedded within host organisations have proven an extremely useful mechanism in this respect. We engage with stakeholders on several other levels, ranging from their participation in surveys and focus groups through to collaborative partnerships on individual projects and strategic input to the consortium through representation on our Steering Group.

The Ultimate Customisation project involves a number of collaborative industrial partners embarking on Rapid Manufacturing-Enabled Mass Customised production and through case studies and modelling approaches, we are exploring both demand and supply management implications arising from Mass Customisation. For the organisations involved in the project, our research aims to provide a clear understanding of both their present and prospective supply chains through ‘what-if’ simulations of futuristic business models for Ultimate Customisation. Additionally, from these assessments we can also assist in the optimisation of processes to directly benefit their business. The collaborative partners represent a cross section of industry, including highly experienced designers and manufacturers with capabilities both for rapid manufacture of customised products and traditional mass production.

During our research we anticipate making a number of Ultimate Customisation publications based on our research findings, many of which will be linked to our industrial collaboration. A warm invitation is extended to any individuals or organisations wishing to become involved with the research or receive project updates/dissemination information to register their interest with us.

Contact for more information Daniel Eyers (eyersDR@cf.ac.uk) or Hartanto Wong (wongH@cf.ac.uk).

Aberdeen Group Report Published: Configuring Profits to Order: Best Practices in Mass Customization in Industrial Markets

A few weeks ago I offered you the chance to participate in a study by Aberdeen Group, a technology research company. Now, the results of this research have been published. The study focused on the use of configurators and customization strategies in industrial markets (b-to-b). Many manufacturers here are seeking to win business by offering their customers products configured specifically for them.

However, capturing and validating exactly what customers want, accurately quoting orders, and still delivering products quickly is challenging. Companies that are successfully addressing these challenges are able to reap the benefits of higher product profitability. Some are even seeing product profit margins improve by up to 80%, just by using configurator solutions.

The research report found, that:

- Best-in-Class reduce write-offs by 26.2 times by minimizing order errors with sales configurators.
- Best-in-Class are 20% more likely to accurately predict costs used to develop quotes for custom products, allowing them to achieve higher profit margins.
- Best-in-Class are 14% more likely to meet the customer’s promised delivery date with design rules to automate the creation of sales and design deliverables
- Best-in-Class achieve higher customer satisfaction by offering 3.5-times as many customizable product features as Industry Average companies
- Best-in-Class are 18% more likely to hit revenue targets with integrated sales and product configurators.

The research found that the biggest performance differentiator of the companies surveyed is in their ability to predict cost. "The key to being profitable is in knowing what the costs will be and developing an accurate, yet competitive quote," the report states. "To accomplish this, companies must look at the unique challenges of their business and implement the capabilities and enablers that will provide more visibility and predictability to cost.”

Another finding also stresses the need of a stringend product configuration system and corresponding product structures. Best-in-Class companies report only US $31,400 in lost revenue due to quote or order errors. In comparison, the Industry Average report write-offs of US $823,900. Best-in-Class companies are better equipped to accurately capture what their customers want and process, engineer, and manufacture the order with far fewer errors. The research concludes:

"Companies who have not deployed a configuration solution will be at a competitive disadvantage and will forego the benefits of higher profit margins. A sales configurator alone can translate to profit margins that are 12% higher. An integrated sales, product and manufacturing configurator solution can mean profit margins that are 21% higher."

Context:
# Download a free copy of the report here.
# Posting about a similar report on the configuration practice of industrial companies.
# Configurator database: Get inspiration by browsing though hundreds of configuration solutions in all industries.

New Blog on Mass Customization and Rapid Ranufacturing and how this will influence the design profession

We dont do retro is the personal blog of Matt Sinclair, a designer based in Helsinki. I first met Matt on the MCPC 2007 conference and then again last week on a workshop in Helsinki, and he does REALLY interesting work on user co-design.

His blog mainly concerned with mass customization and rapid manufacturing, which are the areas he researching for his PhD at Loughborough University in the UK. But you’ll also find information about other subjects that interest him - lead user innovation, open source design and industrial design in general (Matt also wrote one of the most extensive MCPC 2007 reviews)!

His Ph.D. is titled "An investigation of the feasibility of product architectures to facilitate consumer-created designs in the consumer electronics industry, using rapid manufacturing technologies as an enabler"

While he expects not to be ready before Summer 2010, his early thoughts already are quite interesting:

"Rapid Manufacturing (RM) is defined as the direct production of finished parts or products, most often utilising one of a number of 3D printing technologies. ... The most important difference between rapid manufacturing technologies and traditional mass manufacturing technologies such as injection moulding is the absence of tooling. This has a number of important implications. One of the common features of mass manufacturing processes is that the means of production require substantial initial investment, however once in place the cost of manufacturing a single part or product (relative to the initial investment) is negligible. It is therefore a basic principle of mass manufacturing that as the number of parts produced increases, the cost of production of each individual part decreases. This inevitably leads to uniformity, since even small design changes require significant reinvestment in tooling.
...

Mass customisation offers the possibility of designing for niche markets, in small production runs, but it will be impossible for a designer, or even a design team, to be an expert in all these niches. Designers will therefore need to accept the necessity of inviting consumers to take part in the design process, even to design their own products. Furthermore, rapid manufacturing reduces the level of technological expertise required to design functioning parts. It is therefore likely that consumers will begin to design and produce their own products whether officially sanctioned by a brand or not.

The purpose of the traditional design process is not just to impose a uniform aesthetic however, it also refines and rejects on the basis of ergonomics, durability, integration with other products and systems, cost etc. These are all areas in which the designer’s expertise is the best tool to resolve the conflicting demands of a product brief. To make sense of the potential for multiple product variants which mass customisation offers, my hypothesis is therefore that the task of the industrial designer will in future be to create modular product architectures which define and limit the parameters of any possible design."

Go to Matt's blog here: We dont do retro

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

User-led innovation: New report suggests a framework to structure forms of interactive value creation

strong>"User-led Innovation: A New Framework for Understanding Business and Social Value" is a new report published by the Smart Internet Technology Research Group in Australia.

The report reveals some of the major drivers of user-led innovation and explores how it is affecting organizations' relationships with key stakeholders. It investigates how user-led practices generate business and social value through a major case study of the virtual world Second Life.

A first part by Darren Sharp presents a comprehensive analysis of the structural changes behind the rise of user-led innovation, and develops a model of an emerging ‘User-led Services Ecology’. The second part by Mandy Salomon presents a practical case study of the 3D virtual world Second Life, an important site from which to explore advanced user-led practices, business strategies, and new forms of social engagement.

A nice feature of the report are extensive quotes from interviews with some of the key persons in the user innovation world, including: Eric von Hippel (MIT), Yochai Benkler (Harvard), Jimmy Wales (Wikipedia), Siva Vaidhyanathan (Virginia), John Howkins (Adelphi Charter), Michel Bauwens (P2P Alternatives) and Mitch Kapor (Linden Lab).

The report distinguished between four different fields where user-generated value creation unfolds:

"Widespread convergence of participatory culture, DIY media, collaboration and open exchange, along with decreasing processor, bandwidth and storage costs, have all driven the development of user-led practices across a range of disparate fields. This is leading to the emergence of a post-industrial innovation system that brings with it new production processes, content models, service platforms and licensing agreements.

In contrast to various forms of market-based transactions, user-led practices encompass their own distinctive value systems, motivations and principles governing cooperative forms of social exchange.

This report identifies four ‘user-led niches’ which have become sophisticated enough in their own right to warrant further investigation. Each niche embodies a major driver of the new post-industrial innovation system in the present era of distributed capitalism. These drivers play an important role in shaping the future development of user-led services, and comprise their own unique internal logic, economic model, source of value and objective."

The four user-led niches identified are:
- Social Currency Niche
- Collaborative Niche
- Extractive Niche
- Hybrid Niche

For a summary of the characteristics of these niches, see the picture or read the entire report. I enjoyed the structure and think it provide a nice way to evaluate current developments in the field of interactive value creation. The report is available for download here.

Participate at Industry Benchmarking: How good is your configuration practice?

Exclusive survey by Aberdeen Group wants to evaluate how companies are profiting from configuration. I was asked by Aberdeen to support this survey, and given their questions, I believe it is a good initiative.

How do you customize or configure your products to specific customer preferences, while maximizing profitability? The Aberdeen Group is looking to answer that question.

If your company offers a mass customization configurator, weigh in on the debate by taking a short 10 minute survey.

Each respondent who answers the survey will receive a complimentary full copy of the report containing this study's results (a $399 value). This report allows you to benchmark yourself against your industry peers. Individual responses will be kept strictly confidential and data will only be used in aggregate.

Questions the survey wants to ask:

# How do you capture and validate what your customer wants?

# What are you doing to develop accurate, yet timely quotes?

# Do you have anything in place to help automate repetitive or tedious steps of the sales or design process?

# Is reducing rework and returns of tailored products a concern for you?

Share your experiences to help us identify best practices for producing customized products that drive profitability.

We greatly appreciate your participation in this research effort and look forward to sharing our findings with you. BUT: Please only participate in the survey if you are offering customizable products in any industry.

Go here to the survey: aberdeen.com/survey/CustomIIMCP

Invitation: European Conference on Sports and Innovation

Are you interested in the future of sports and mass customization in the sports goods industry? Then you should join this upcoming conference.

12 to 14 March 2008 in EINDHOVEN, Netherlands

The conference is an initiative by the European Action Project INNOSPORT.EU. In this project, a number of the core players of the European sports goods industry brainstormed in the last year how to create a better platform for this important industry. I was invited to join the advisory board of this project, as mass customization and user innovation are regarded as some of the key trends in this sector.

The results of this coordinated brainstorming will be presented on the conference. This also is THE KEY EVENT if you are interested in participating in European projects around this sector.

Topics to be discussed on the event:

Sport vision 2015: What social trends are there in relation to sport? What developments are taking place in health and safety aspects? What impact can sport have on the economy? Where are the opportunities for innovation? The Sport Vision 2015 which will be presented at the conference will provide some insight into these issues about trends, needs, aspects and innovation opportunities. The programme also includes a number of workshop sessions and visits to field labs about football, sports promotion, gymnastics, swimming and horse-riding.

European platform: The European Sport Innovation Platform (ESIP) will be launched at the conference. This is a proactive networking platform at European level for high-tech companies, knowledge institutes and government, with the aim of joining forces in innovation and creating new opportunities as a result.

Free company presentation: We are pleased to offer you the opportunity to present your company free of charge during the conference. Please visit the website for more information.

International speakers who have already agreed to take part in the conference are Alberto S. Bichi – Secretary General FESI (Federation of the European Sporting Goods Industry), Antonello Marega – R&D Director of Tecnica, and Philippe Freychat – Vice-president Sporaltec and R&D Director of Decathlon.

Program and registration: For a detailed and up-to-date programme, please visit www.innosport.eu where you can also register for the conference.

Further contact: Marc van der Zande, TNO Science and Industry, marc.vanderzande@tno.nl

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

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

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

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

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

(2) PETO’08 Conference on Service customization

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

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

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

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

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

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

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

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

Crowdsourcing methods are McKinsey's Prime Business Technology Trends to Watch In 2008

In the recent issue of McKinsey Quarterly, the business journal of strategy consultants McKinsey & Co, James Manyika, Roger Roberts and Kara Sprague discuss Eight Business Technology Trends to Watch In 2008. Five of those eight relate directly to the topics of this blog:

Four trends, Distributing Cocreation, Using consumers as innovators, Tapping into a world of talent, and Extracting more value from interactions are sub-sets of the larger Crowdsourcing idea.

(1) Distributing co-creation is just another term for our own "interactive value creation" or Benkler's "commons-based peer production" or Don Tapscott's "Wikinomics". No doubt that this is a mega-trend which has been described widely in the last years but which practical implementation just has started. In consequence, McKinsey estimates that 12% of all labor activity could be transformed by more distributed and networked innovation:

"Outsiders offer insights that help shape product development, but companies typically control the innovation process. Technology now allows companies to delegate substantial control to outsiders -- co-creation -- in essence by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control."

Interestingly, however, in the entire McKinsey article is no word on open source or open licensing models ("commons-based") which are a main driver for the efficiency of distributed open systems of value co-creation. This may be perhaps too much for the typical reader of McKinsey Quarterly.

(2) Using consumers as innovators: Well, not really a new trend, Eric von Hippel is saying this since the 1970s, and since the beginning of industrial production consumers are inventing new products. The new trend, however, is that firms are seeing this potential and they increasingly are utilizing the capabilities for innovation. They are not just asking for feedback on their own creations, but they are integrating consumers actively in the creation of something new. MyKinsey is quoting Threadless here, but this is not a correct example for this trend as most the creators at Threadless are no consumers but experts!

A better example, quoted by the iRise Blog in a posting on the McKinsey article, is Dell's IdeaStorm, and, on the B2B front, Salesforce.com. This software company is using an application for users to make suggestions to improve their CRM software. The top ideas from this contest is receiving executive-level visibility.

(3) Tapping into a world of talent is the consequence of opening your innovation and value creation process:. The people reacting on an open call for participation in the " Distributing co-creation" idea are those who are the most talented to do this work (as they have relatively lower cost to fulfill the job):

"As more and more sophisticated work takes place interactively online and new collaboration and communications tools emerge, companies can outsource increasingly specialized aspects of their work and still maintain organizational coherence. Much as technology permits them to decentralize innovation through networks or customers, it also allows them to parcel out more work to specialists, free agents, and talent networks."

This leads to a further consequence, and their next trend: (4) Extracting more value from interactions. The more a company is relying for value creation in its periphery, the higher is its costs for coordination compared to production cost.

"As a result, a growing proportion of the labor force in developed economies engages primarily in work that involves negotiations and conversations, knowledge, judgment, and ad hoc collaboration—tacit interactions, as we call them. By 2015 we expect employment in jobs primarily involving such interactions to account for about 44 percent of total US employment, up from 40 percent today. Europe and Japan will experience similar changes in the composition of their workforces."

This is nothing new at all, the fact, that the so-called transaction cost are dominating the overall cost in a modern economy is known since several decades. But it is good that McKinsey are stressing this relationship again – as mastering these cost will become a major capability for firms which want to profit from crowdsourcing. Technology is leading this path:

"Technology tools that promote tacit interactions, such as wikis, virtual team environments, and videoconferencing, may become no less ubiquitous than computers are now. As companies learn to use these tools, they will develop managerial innovations—smarter and faster ways for individuals and teams to create value through interactions—that will be difficult for their rivals to replicate. Companies in sectors such as health care and banking are already moving down this road. […] But: Creating the business case for investing in interactions will be challenging—but critical—for managers."

(5) A last trend from their report is "Putting more science into management". Technology is continuously helping managers exploit ever-greater amounts of data in real-time to make smarter decisions. One of the business models which are enabled by this data-driven management is mass customization, named by McKinsey as "the holy grail of deep customer insight":

"The amount of information and a manager’s ability to use it have increased explosively not only for internal processes but also for the engagement of customers. The more a company knows about them, the better able it is to create offerings they want, to target them with messages that get a response, and to extract the value that an offering gives them. The holy grail of deep customer insight—more granular segmentation, low-cost experimentation, and mass customization—becomes increasingly accessible through technological innovations in data collection and processing and in manufacturing."

Go to the original article which has plenty of good references for further reading (requires registration, for a version of the full text of this paper, go to ZDnet).

Public Lecture: Open Innovation and User Innovation (RWTH Aachen, 4. Dec 2007)

What is open innovation? What is user innovation, and what is the real idea behind the 'lead user' concept? What are tools and methods companies can employ to profit from these buzzwords? Why does it make economic sense? When does it make no sense at all? What have we learned from case studies and pilot studies in this field? And how is Webasto, a leading German automotive supplier, profiting from creative users & customers?

These are some of the questions Alexander Lang and I will address in a public evening lecture at RWTH Aachen on Tue, Dec. 4. The event is hosted by the German Association of 'Wirtschaftsingenieure' (industrial engineers)..

Alex Lang and I will also talk about our experiences from a joint research project on user innovation which is co-sponsored by "Stiftung Industrieforschung", a large grant giving institution on Germany.

This is the first public event I am organizing in Aachen at my new university. So a special invitation to come and discuss with us. The regular language for this event is German, but if we will have international guests, we will talk in English.

All information (in German language) and an abstract of our talks can be found in this PDF.

The event takes place on 4. Dec 2007, 7:15 - 9pm, followed by a network reception. Place: RWTH Aachen, Karmann-Auditorium, Room FO 5, at Templergraben 62 (opposite of the RWTH Main Building).

The lecture is free of charge, and no registration is necessary. Just come to the room!

Here is some more information for all of our German speaking readers.

Open Innovation: Neue Ansätze zur Steigerung von Effizienz und Qualität der Produktentwicklung

Eine öffentliche Veranstaltung (Eintritt frei!) in Zusammenarbeit des Verbands Deutscher Wirtschaftsingenieure (Hochschulgruppe Aachen), des Lehrstuhls für Technologie- und Innovationsmanagement an der RWTH, der Stiftung Industrieforschung und der Webasto AG

Vorträge:

Prof. Frank Piller, RWTH-TIM: Open Innovation und Interaktive Wertschöpfung: Prinzipien und Erfolgsfaktoren

Alexander Lang, Webasto AG: "Ideen aus der zweiten Reihe" - Strategien für kundenorientierte Innovationen in der Automobilindustrie

4. Dezember 2007, 19:15 – 21:00 und anschließender Network-Empfang
RWTH Aachen, Karmann-Auditorium, Raum FO 5 (Templergraben 62 gegenüber RWTH Hauptgebäude, 1. Stock

Abstract:
Open-Source-Software ist nicht nur ein technisches oder gesellschaftliches Phänomen, sondern das dahinter stehende Wertschöpfungsprinzip erweitert herrschende Prinzipien im Innovationsmanagement zum Teil völlig – auch in anderen Bereichen jenseits der Software-Entwicklung. Auf dieser Veranstaltung soll anhand aktueller Fallbeispiele diskutiert werden, wie durch eine solche Open Innovation Effizienz und Effektivität der Neuproduktentwicklung gesteigert werden können.

Kernidee von Open Innovation ist, eine Aufgabe nicht an den "besten" bekannten internen oder externen Entwickler zu vergeben, sondern das Problem in einem offenen Netzwerk in Form eines breiten Aufrufs zur Mitwirkung auszuschreiben. Potentielle externe Problemlöser entscheiden dann durch Selbstselektion, ob sie mitwirken oder nicht.

Im Mittelpunkt stehen dabei Strategien von Unternehmen, die ihre Kunden bzw. Nutzer nicht mehr als nur passive Empfänger und Konsumenten einer von Herstellern autonom geleisteten Wertschöpfung sehen. Vielmehr treten Nutzer als Wertschöpfungspartner von Unternehmen oder anderen Nutzern auf, indem sie Produkte oder Dienstleistungen mitgestalten und teilweise sogar deren Entwicklung und Herstellung bestimmen oder übernehmen.

Bei allen Potentialen von Open Innovation zur Effizienzverbesserung in der Entwicklung stellen sich jedoch auch neue Herausforderungen. Open Innovation ist nicht einfach ein "Outsourcing" interner Entwicklungsaufgaben an die Peripherie, sondern verlangt eine aktive Beteiligung durch den Anbieter, der hierfür bestimmte Ressourcen und Fähigkeiten besitzen muss.

Dies zeigt eindrucksvoll das Beispiel der Webasto AG, einen führenden deutschen Automobilzulieferer. Eine Neuausrichtung des Webasto-Innovationsmanagements betont entscheidend das Potential von durch Endkunden generierte Produktideen im Entwicklungsprozess. Die so entstehenden Produkte verfügen über einen echten Mehrwert, worauf Webasto als Automobilzulieferer mit überwiegend Sonderausstattungsprodukten eminent angewiesen ist. Generell wird es bei der Vermarktung von Sonderausstattungen zukünftig noch wichtiger werden, einen echten Endkundenmehrwert klar vermitteln zu können.

Dazu entwickelte Webasto zum einen eine umfangreiche Workshop-Methodik, mit der Kunden und potentielle Nutzer in die ersten Phasen der Produktentwicklung einbezogen werden. Zum anderen nutzt das Unternehmen ein interaktives, webbasiertes Tool, mit dem die Bewertung und Speicherung von Ideen vereinfacht und standardisiert wird.

Neben den Ideen, die aus den firmeninternen Quellen sprudeln, ist es hier nun auch möglich, systematisch „Endkundenideen“ mit in die Bewertung aufzunehmen. Dies ist der letzte Baustein, der die Lücke zwischen Zulieferer und Endkunde schließt. Im Vorfeld wurde eine Methode entwickelt, die es ermöglicht, aus einer beliebigen Gruppe von Endkunden mit Hilfe eines eigenen Testverfahrens so genannte "Lead User" zu identifizieren, die dann in mehrtägigen Workshops gemeinsam mit professionellen Moderatoren völlig neuartige Ideen generieren. Der Unterschied zur Gewinnung von Ideen durch die hauseigene Entwicklung besteht in der strukturierten Vorgehensweise, die immer zuerst ein Endkunden-Bedürfnis identifiziert, bevor Funktionen daraus definiert und schließlich in Produkte überführt werden.

Die Veranstaltung basiert auf gemeinsamen Forschungsarbeiten der Referenten, die durch die Stiftung Industrieforschung im Rahmen eines aktuellen Projekts unterstützt werden.

MCPC 2007 Starts: The International Mass Customization Community Gathers at MIT

Wow, these were a couple of very loaded weeks of preparing the MCPC 2007 conference. But now the fruits of all this work are there: Hundreds of mass customization enthusiasts are arriving in Boston to meet at MIT during the next days.

The conference will start tomorrow (Sunday) with pre-workshops and then the big opening keynote of B. Joseph Pine. Joe will discuss the origins of the mass customization movement that led to the MCPC, his views on the current state of the art, and where his continuing search for how businesses can add economic value through their offerings is leading him -- and where it could take us.

After Joe, Brennan Mulligan will present the latest from Zazzle.com. The company recently relaunched its website and introduced a number of new services that enable consumers to even easier create their own stuff and sell it to others in their own MC mini shop.

I am very excited to here what they will say – as the other 160 speakers in the remaining two days. But most exciting will be to meet

As you have realized, I did not find the time to blog really a lot during the last weeks, and will be very busy also during the conference. But the guys from the Openeur Blog are with us reporting from the MCPC, and I also think that Adam Fletcher from Spreadshirt / HipHipUK will post a line or two.

I will provide my comprehensive report after I return from Boston. If you cannot join us, there again will be the opportunity to order the conference proceedings with a full text version of many papers.

Talking about joining: If you do not have a private jet or live on the East Coast, it may be a bit difficult to arrive in time for the MIT event, but you still can make it relaxed and in time to the great MCPC 2007 Business Seminar at HEC Montreal on October 11th . It will provide a focused top-management-view on mass customization in retail and the future of virtual identities.

During the Montreal event, more than 30 top executives from the industry will talk, plus some very great keynotes from Don Tapscott and the leading Supply Chain Manager at Dell !!

Bikers Want Customized Motorcycle Seats, Custom Fit Study Finds

Motorcyclists are in favor of customizing their motorcycle seats according to their body geometry. A survey on customization of motorcycle seats carried out as part of the European funded project Custom-Fit, found that 81% of the survey respondents support the idea of a customized seat.

The Custom-Fit project is investigating new techniques for customizing a product based on Rapid Manufacturing (RM). The project is supported with almost 10 millions Euro by the European Community and is one of the largest projects in the area of customization (Disclosure: I am a member of the project’s scientific advisory board).

As explained in the previous posting, RM allows parts to be manufactured directly and automatically using 3D computer-aided design (CAD) model. The new technique will enable consumers to buy products that are built to the exact requirements of the consumers. A motorcycle customized according to body geometry is one of the products which the project is investigating. Other possible applications of the new technique include prosthetic sockets, helmets, mandible implants and knee implants.

The survey was recently carried out by Loughborough University in UK, who is a partner in the project, and received 3200 responses from motorcyclists worldwide. In the survey, majority of the respondents owned a motorcycle and do not share their motorcycle with another person. Although only half of the respondents said that they had experience of discomfort from their motorcycle seats, but majority felt the discomfort during long distance travelling. In addition, more than half of the respondents are willing to pay a premium for the customized seat and many were willing to wait longer.

Professor Richard Hague, Head of the Rapid Manufacturing Research Group in Loughborough University, said: “These initial results show that there is wide support for customised goods – even if initially they are more expensive and take longer to produce.” (Note: Richard Hague chairs the Rapid Manufacturing Track at the MCPC 2007 conference!)

The next phase in the project will be to investigate the technical practicality of designing a motorcycle seat based on the scan data of the consumer’s body profile. Research on how to obtain the body geometry has already started and the project is is now working on defining a “comfort map”, which is a combination of the pressure map and the discomfort zones.

This result is used to identify the area on the seat which needs to be redesigned and the new seats will be testes on motorcycles. At the same time, the management issues involved in providing a customization service for motorcycle seats have also been studied. The project has identified the possible ways to offer the service to the consumers and is studying the supply chain implications of introducing such a service.

Context:

- More results from the Custom Fit project will be presented in several talks on the MCPC 2007 @ MIT !

- Custom-Fit is an industry led project to investigate the possibility of moving towards knowledge based manufacturing and customized production through integration of knowledge in Rapid Manufacturing, Information Technology and Material Science. Funded under the Sixth Framework Program, the project involves 33 partners from around Europe. The aim is to create a fully integrated system for the design, production and supply of individualized products. It has targeted product for implementing the new technology, including motorcycle seats, helmets, implants and prosthesis. Project homepage: http://www.custom-fit.org/

Rapid Manufacturing for Mass Customization: Good Report in DESIGN NEWS Analyzes Recent Development

Joseph Ogando, Senior Editor of DESIGN NEWS, a trade publication, recently published a great feature article on “ Rapid Manufacturing's Role in the Factory of the Future”.

It reports on the use of laser sintering and similar direct manufacturing technologies not just to make prototypes but also to turn out production parts. It’s a practice that goes by many names — including rapid manufacturing, direct digital manufacturing, solid freeform fabrication and low-volume-layered manufacturing. All of the names refer to the use of additive fabrication technologies, which were initially intended for prototyping, to make finished goods, instead. Rapid manufacturing is considered to be one of the main enablers of mass customization of the future.

The report has a number of nice case studies and analyzes the main challenges or rapid manufacturing:

The biggest barrier in the coming years is seen with regard to materials. Some additive parts simply don’t measure up to their molded, machined and cast counterparts when it comes to tensile and other mechanical properties. … Another material issue involves freedom of choice. With additive technologies, engineers currently have to settle for a limited materials line-up. But as the article shows, the scope of applicable materials is fast growing.

A second barrier is seen in the persistent lack of design data. “it’s not so much that current prototyping materials have some shortcomings as the fact engineers have no way of knowing exactly what those shortcomings are.” The article cites a lack of long-term creep and environmental data for additive plastic parts and fatigue data for metals as the most glaring examples of this data deficiency. But rapid manufacturing observers expect more and more data will become available as direct digital manufacturing becomes more popular. In the meantime, large OEMs with stringent manufacturing requirements have worked to develop their own property data.

A third barrier quoted in the report are the capabilities of the existing machinery. Making good production parts every day ups the ante on process repeatability, quality control, throughput and reliability. “Today’s additive fabrication systems aren’t completely ready for prime time. They’re still primarily prototyping machines that you can coax into working as manufacturing systems”´, an industry expert is quoted in the report.

But despite these limitations, the article comes to a positive conclusion:

“With all these factors weighing against direct digital manufacturing, you might wonder, why bother? But, these additive systems already offer design benefits that can offset their manufacturing limitations.

For one, additive machines can produce complex part geometries without regard to conventional manufacturing limitations. Additive fabrication methods based on powder metal beds, for example, can enable parts with interior cavities and features that could not be machined or cast — at least not in an economical one-piece part. ... The upshot of all this design freedom, and the benefit most cited by advocates of direct digital manufacturing, is parts consolidation.

How long will it take for engineers to recognize the design benefits associated with additive processes? Todd Grimm, a consultant to the rapid prototyping industry, thinks it could take 10 or even 20 more years given the current lack of familiarity with additive machines and the technical barriers associated with the machines themselves. …

For a handful of applications, though, the future is now. The best known and highest volume direct digital manufacturing niche has, so far, involved applications where mass customization plays a role. 3D Systems’ Reichental points to the hearing aids as one example and also says RM machines have seen use in the production of casting tools for Invisalign braces. And as the additive machines in general become more capable, … they’ll play a stronger role in other kinds of customized medical and dental devices whose geometry is tailored to the requirements of individual patients.”

Context:
- Read the full article here: Joseph Ogando, Rapid Manufacturing's Role in the Factory of the Future, Design News´, 26 July 2007

- Other reports on rapid manufacturing in this blog.

- Browse the program of the MCPC 2007 to explore talks and presentations on rapid manufacturing during the conference.

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

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

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

Information about the MCPC 2007 Business Seminar at HEC:

All conference information is at www.mcpc2007.com

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

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

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

An Extreme Makeover of Retail

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

Keynote Speakers at the MCPC 2007 Business Seminar

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

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

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

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

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

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

Robert Bonneau, President of Global Wine and Spirits

Lukasz Gadowski, President and Founder of Spreadshirt

Louise Guay, President and Founder of My Virtual Model

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

Kirk Jones, Director, Nike ID Innovation

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

Paul Miller, Senior Vice President Direct Commerce Sears Holdings Company

Jacques Nantele, Secretary General, HEC.

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

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

Sean Ryan, CEO of Meez

Christian Stegmaier, Head of Life Style, Reebok International Ltd

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

Marybeth Thomson Luber, General Manager Custom Archetype Solutions Inc.

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

Joshua Young, Product Imaging Operations Manager of Nike Apparel US

Registration for the seminar and much more information here.

Context:

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