Mass Customization & Open Innovation News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Customization of Music: SongMap helps you to create custom songs

Church music may be one of the most standardized products in the world. Since hundreds of years, church goers use the same songs and rhythms which often become part of the cultural tradition of a society.

Not any more. Last week, LifeWayWorship unveiled the latest innovation in digital music: SongMap, a web-based application that allows users to create custom arrangements of songs and produce corresponding audio files and sheet music.

Lifeway is a service company supporting the Southern Baptist Convention and one of the world’s largest providers of Christian products and services. But despite its religious mission, it uses latest technology and has invented really a world's first-of-a-kind product with its customizable music offering

Well, old-time readers of my blog my remember a similar offering of cutomizable music, but not in this scale and scope.

SongMap is the first web-based technology that allows users to choose specific sections of songs: verses, choruses, transitions, and more ... and then download sheet music and audio files that correspond to the custom arrangement. The technology was developed specifically to meet the needs of worship leaders who want more flexibility arranging songs for church services. At the same time, SongMap has broader implications throughout the mainstream music world.

“SongMap is the first technology that gives users the ability to change songs on the Internet to meet their own tastes,” said Mike Harland, director of LifeWay Worship.

“Some churches need sheet music for a full rock band each week, while others rely solely on accompaniment tracks. We set out to find a way to help these churches create music that suits their congregations. In doing so, we created a new music technology that does what none other has done before.”

Very similar applications could be used by schools, theaters, local choirs, and so on ... however, I don't know whether the creators of this technology would love to see their product used for some raunchy song by 50Cent.

Three years in development, SongMap was created by a team of software engineers and music industry professionals. It involved the largest known recording project in Nashville history. Nearly 1,000 songs and 8,000 mixes were recorded in just 10 months by over 150 professional musicians, vocalists and engineers. The production team then divided the arrangements into more than 500,000 individual segments. From these segments, the SongMap technology allows users to “map” custom mixes of individual songs.

The cost to map a song ranges from $ 1.49 to $1.99 per part. Once a song is purchased, the user has immediate access to the corresponding MP3 file and sheet music. I am curious to learn how this technology is accepted and how it will develop in the next years. I could imagine a Zazzle or Spreadshirt-kind of business model: Some creative people create new songs to address, e.g., a recent trends, and then share their creation with others in their own online song store. 

Context Information:

• SongMap Website
• Springwise on SongMap
• Earlier Posting on similar offering
• More on customized music
• Mass customization seems to be the concept of the year at US Christian enterprises, as also this news article reports

Open Innovation in the Financial Services: New Book by Daniel Fasnacht Covers Change in Banking Industry

Can open innovation save the financial industry? A new book suggests that this concept may have an important contribution to the change required in setting up more sustainable business models.

 The idea of open innovation is still getting more and more attention of managers responsible for innovation. Most of the publications and reports on the topic, however, are focusing on tangible products. But how about open innovation for services? Like financial services? Daniel Fasnacht says yes. In an upcoming book, he regards open innovation as a key concept for change. Daniel Fasnacht is an executive director at Bank "Julius Baer" in Switzerland and the author of the recently published book, Open Innovation in the Financial Services, published by Springer in January 2009.

The book identifies the shift from a closed to an open innovation paradigm in many financial institutions to react on recent financial and political challenges. Open innovation according to Fasnacht's definition is a mindset characterized by openness, flexibility, and customer integration. The book presents open innovation as a broad framework, including also concepts like developing ambidextrous thinking, creating an intrapreneurial attitude, and getting a systemic and holistic view on the firm. The term "open innovation" thus is used as a metaphor to address a wider array of options for strategic change in a conservative industry (Fasnacht uses the term much broader than I do it usually).

I invited Daniel Fasnacht to summarize his thoughts presented in his book. Find his short guest article to this blog in the following. FTP.

---

Open Innovation in the Financial Services

By Daniel Fasnacht

Banking has traditionally been a conservative industry and resistant to change. The stable industry structure, defined boundaries, clear business models, and identifiable players made change linear and predictable. But the recent global financial crisis have led to an industry with ambiguous structure, blurred boundaries, new business models, intermediaries and market entrants.

Banking and in particular banks have come under great pressure since September 2008 when Lehman Brothers, an institution which traces its roots back to 1850, filed for bankruptcy. Today, change in banking is unpredictable. Speed, efficiency, flexibility, and reliance have all become equally important factors not only for success, but to survive.

These new business rules and the hypercompetitive global environment have wide implications for management. Visionary leaders realized the need for extensive adaptations with innovation as a source of competitive advantage. Beneath the surface of banking, the overall phenomenon that will drive change in years to come is anticipated to be the shift from a closed to an open innovation paradigm.
Within the new paradigm, focus lies on openness, flexibility, and customer integration with the cooperation as the dominant organizational model. Firms in the financial services increasingly adopt open innovation concepts from manufacturing.

One application of open innovation has been adopted by almost all banks in recent years. They embraced open architecture as a model, which offers clients a full range of products, regardless of their suppliers. Openness is an essential prerequisite for the ability of modern financial firms to achieve differentiation, expertise, and specialization on the supply side, while providing superior service to highly satisfied customers on the demand side. To offer such a wide assortment, banks must balance the internal and external offerings. Thus, banks must restructure their client advisory processes as a complementary service to their product portfolio, with the aim of increasing customer value.

But with flexibility I would also like to refer to collaborative innovation. In other words, in a partnership flexibility is needed to control risk, commit limited resources, adapt to changing conditions, and exit easily. Listening to the voice of the customer and differentiating customer needs suitably are vital activities and impact customer satisfaction. Understanding client needs is key for developing new segments and value propositions. Many wealth managers hence today move from client segmentation based on assets to qualitative and psychographic criteria such as behavior type, source of wealth, and the life-cycle phase of the client. These are concepts for the future that help to tighten the relationship between the customer and the bank. Offering open architecture and focusing on servicing rather than pushing products is what clients want.

I am convinced that such approaches additionally increase trust. But managing multiple product offerings, serving, and advising clients across the globe is a huge challenge. By adopting a new open model of innovation, executives are able to cope with strategic change and simultaneously increase efficiency, flexibility and customer service. The capability for open, flexible, and aligned interactions is required for all business practices, but is not only important for expansion strategies in general, but especially during turbulent times.

In my book, I developed an integrative open innovation model (see the figure for an overview). The model illustrates the environmental changes, coming from the market, policy & regulation, customer, technology, and economy. These developments, together with recent incidents such as the financial crisis, have led to the phenomenon – the transition from a closed approach to open innovation. To master the transition, I elucidate the transition strategies observed in a number of firms. Implementing those strategies requires a set of new dynamic management practices and an open organizational culture that fosters the transition and releases organizational energy required to do business in the open innovation paradigm.

About the author: Dr. Daniel Fasnacht, born 1969, is an Executive Director at Bank Julius Baer. As chief of staff for Latin America, he is in charge for strategy, market development, and management support. Daniel has previously worked for Credit Suisse, Accenture and SAP. He has more than a decade’s experience in the financial services industry. He holds a degree in information management, an MBA from the University of St. Gallen, Switzerland, and a PhD in Strategic Management from the University of Nottingham, England. He has published several articles about open innovation and strategy. He may be contacted at open.innovation@gmx.ch

Download the table of contents and a sample chapter of the book.

MVM Visual Search - Free Webinar on new shopping personalization technology

In September last year, My Virtual Model (MVM) unveiled a first-of-its-kind personalization technology in a partnership with Sears and IBM (Note: I am using the term personalization according to my own definition, i.e. it refers to a customized shopping experience – I will work on an update on this definition soon).

Struggling retailer Sears is investing heavily in its web-site to counterbalance decreasing sales in stores by a great web experience, probably the right way to do! As part of this effort, Sears.com was the first company in the world to integrate MVM's new 3D visual search and e-commerce capability on its site. Now, after the x-mas shopping rush, Sears confirmed that the technology significantly improved and enhanced a consumer’s online shopping experience. Sears was the first retailer to apply both a visual search and virtual model to an entire catalog online.

The Sears site allows consumers to recreate their in-store shopping experience online by enabling them to search for merchandise using images versus words, and to virtually “try on” selected items using a personalized model of themselves to ensure that the style, color, pattern and fit are right before purchasing.

It is a great advancement in personalization and online experience (Disclaimer: I served on MVM's board of directors, so I may be a bit biased in my positive evaluation :-)

Next week, Louise Guay, President and Founder of My Virtual Model, is offering a free series of Webinars where the visual search application will be demonstrated, and where Louise also will comment on the achievements and challenges of this technology.

Louise will make a 30 minute presentation on:
- January 21, 12PM (ET)
- January 21,  4PM (ET)
- January 22,  4PM (ET)
- January 23, 12PM (ET)

To register for a Webinar, go here.

Topics of the Webinar:

• 3D Visual Search: use Key-Images to find what you are looking for sooner.
• How to create a scalable solution that covers 100% of your product assortment.
• Outfitting: create inspirational fashion looks.
• Targeted recommendations based on shopper’s profile and behavioral patterns.
• How to uses MVM to drive qualified traffic to your site.
• News from the Virtual Model community.

Update (Jan 20, 2008): Today, MVM announced its new Jeans Finder in cooperation with IndiDemin:

For more information, go their site. More information about indiDemin is in this previous posting.

Invitation: Conference on Customizing & Personalizing Media

This is an invitation to a very interesting event in Cologne on Jan 15. Customizing media is one of the topics that has been discussed most in the last years. But while there is plenty of talk, practical applications are rather scare (beyond customizable music streams with Last-fm or Pandorra). So here is the opportunity to discuss the topic in depth -- with the people offering media in Germany. The conference is, however, in German language, and so is this posting.

Das Institut für Rundfunkökonomie an der Universität zu Köln lädt ein zu einer Vortragsveranstaltung anlässlich seines zwanzigjährigen Bestehens:

Die Individualisierung der Medien. Herausforderungen und Chancen
Donnerstag, 15. Januar 2009

Kammermusiksaal des Deutschlandradios, Raderberggürtel 40, 50968 Köln

10.00 h Grußwort: Prof. Ernst Elitz, Intendant des Deutschlandradios

10.10 h – 10.35 h: Prof. Dr. Detlef Schoder, Institut für Rundfunkökonomie: Die Individualisierung der Medien als betriebswirtschaftliche Aufgabe

10.35 h – 11.00 h Helmut Heinen, Vorsitzender des BDZV (angefragt): Die Individualisierung der Medien als Herausforderung und Chance der Zeitung

11.30 h – 11.55 h: Prof. Dr. Heiner Meulemann, Institut für Rundfunkökonomie: Nutzerpräferenzen und die Individualisierung des Rundfunks

11.55 h – 12.20 h: Dieter K. Müller, ARD-Werbung Sales & Services GmbH: Daten und Methoden zur empirischen Ermittlung der Zuschauer-/Zuhörerpräferenzen in Deutschland

13.50 h – 14.15 h: Prof. Dr. Horst M. Schellhaaß, Institut für Rundfunkökonomie: Individualisierung der Medien –  wettbewerbsstrategische Implikationen für die Sicherung der Meinungsvielfalt

14.15 h – 14.40 h: Eva-Maria Michel, Westdeutscher Rundfunk (angefragt): Individualisierung der Medien –  Herausforderungen und Chancen für den öffentlich-rechtlichen Rundfunk

15.30 h – 15.55 h: Dr. Manfred Kops, Institut für Rundfunkökonomie: Individualisierung der Medien – Selbstregulierung als medienökonomische Konsequenz?

15.55 h  – 16.20 h Ernst Elitz, Deutschlandradio: Individualisierung der Medien –  Herausforderungen und Chancen für den professionellen Journalismus

16.50 h – 17.00 h: Prof. Dr. Günter Sieben, Institut für Rundfunkökonomie: Schlusswort

Das Funkhaus des Deutschlandradios liegt im südlichen Kölner Stadtteil Raderberg. Ab Dom/Hbf fährt die Buslinie 132 bis Haltestelle Bonner Str./Gürtel und die Linie 133 bis Brühler Straße/Raderberggürtel. Von dort aus erreichen Sie in wenigen Gehminuten das Funkhaus. Mit dem Auto fahren Sie über den Kölner Autobahnring bis zum AB-Kreuz Köln-Süd. Von dort fahren Sie über die Bonner Straße ca. 2 km stadteinwärts bis zum Raderberggürtel. Am Funkhaus steht den Tagungsteilnehmern eine beschränkte Anzahl von Parkplätzen zur Verfügung. Vom Flughafen Köln-Bonn erreichen Sie das Funkhaus mit dem Taxi in ca. 20 Minuten.

Veranstalter und Anmeldung: Institut für Rundfunkökonomie an der Universität zu Köln, Hohenstaufenring 57a, 50674 Köln, Tel. +49221-233536, Rundfunk-Institut@Uni-Koeln.de
www.rundfunk-institut.uni-koeln.de

Weitere Information zum Thema auch bei Prof. Detlef Schoder [schoder at wim.uni-koeln.de]

User Innovation in the Catholic Church: Dioceses of Cologne launches idea competition platform

This is the last sign that there is something behind user & open innovation: The Catholic Church has started an online open innovation idea competition (well, one could say that the entire church IS a lead user invention anyway).

KJG, the Catholic youth organization of Cologne, one of Germany’s largest dioceses, just launched a web site where young people are encouraged to submit ideas what they want to change at the Catholic Church.

The website aenderwas.de (German for „Make a change“) broadly asks for ideas and suggestions. You can either submit a short idea or comment, or upload a long suggestion (perhaps for a real innovative interior design of a Church that you would like to see; or the tunes of a song you would like to sing …). Interestingly, they also ask one of the easiest but often neglected questions: If you don’t go to church, why?

People who submit the best and most innovative ideas will be invited to a kind of lead user workshop to build on these ideas and to transfer them into more concrete offerings. But the people behind the initiative also know about the limits of this approach and acknowledge in a disclaimer that not all change requests can be incorporated immediately.

It all started, by the way, when one of the organizers was in an Executive MBA class I taught on open innovation a while ago. She immediately saw the opportunities of improving the offerings directed towards younger people by the Church, and later transferred her learning into this project.

I am very curious to see what comes out of this initiative and what will be the experiences of this project. Will such a broad call for input generate real innovative ideas? I will keep you posted – and if you have an idea what to change with the Catholic Church (from the perspective of you, the user), the opportunity is there: www.aenderwas.de (note: While God speaks all languages, you need German language skills for this).

Pill Boxes 2.0: Vuru personalizes nutrition packaging

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

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

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

This is how the process works:

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

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

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

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

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

Springwise comments on this idea:

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

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

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

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

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

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

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

His conclusions:

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

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

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

Read his entire thesis here.

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

Custom Credit Cards: Mass Customization in the Banking Industry

Springwise today featured a nice new custom-banking product: Custom credit cards. Mass customization in the banking sector is one of the hottest trends in the area. Surprisingly, above much talk, not much has happened yet.

Credit cards seem to lead the industry. The idea of custom credit cards is pretty old. But in most cases, it is just an extension of the custom personal cheque, featuring your pet, grad-daughter or president (for example at www.uniquechecks.com).

Turkey-based Garanti Bank however has extended this idea. With its Flexi Cards does not only allow customers to personalize the look of their bank cards, but also to develop the entire own banking product.

"Flexi Cards are Visa cards that let the cardholder make a few key decisions, allowing them to set over ten parameters. When applying for a card, customers can manipulate variables like reward rates and types, interest rate and card fee. The rewards system is especially flexible, not only letting customers determine reward ratio and type (cash or points), but also enabling them to choose which payments will earn them extra rewards: whether it are broad categories like restaurants, or specific stores like Zara.

Interest rate, bonus rate and card fees are selected by sliding bars that render various combinations of rates and fees. Card fees, for example, can be pushed back to zero by committing to a monthly spending minimum. A lower interest rate leads to a lower bonus rate, etc. Lastly, after making serious decisions about financial terms, customers can design their own card, choosing from different colors and a gallery of images, or uploading their own image. There's even the option of picking a vertical card, which is a world's first for Visa."

A very similar idea (based on a Mastercard) was introduced already in 2002 by the UK company Royal and Sun Alliance. Their MORE THAN credit card also provided their customers the opportunity to create their ideal credit card. Customers could choose their own APR, cashback, servicing options and annual fee to suit their needs as they change over time. I have featured this example since years in my presentations, but just had to learn that the company stopped this offering. Reasons unknown.

But the concept itself promises many opportunities:

"While customers appreciate being in control and creating a tailor-made card, inside and out, the bank is able to test various value propositions, gaining valuable insights into which customer segments choose which options. Self-segmentation through ultra-personalization. ;-)"

I couldn't say it better than the guys at Springwise! If you know interesting other concepts of mass customization in banking, let me know!

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

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

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

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

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

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

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

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

See here for authors and abstracts of all cases.

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

Related posts on this topic:

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

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

Personalization and Music: Beyond shuffling on your Ipod -- an overview of new services to customize your music experience

What we can learn from the BBC, Pandora, and Musiclens for mass customization

The traditional compilation CD is deader then ever. Instead of listening to all songs of an entire CD, most consumers today prefer just to listen to what they want on their MP3 players (a typical long tail phenomenon). But selecting, filling and arranging the playlists of these players have stayed more or less a craft business. While some persons feel joy and achievement once they have generated their very own, individual playlist, this is, none the less, plenty of work. Also, listeners are restricted to the music they known (and, more or less, own).

Sure, with satellite radio, there are now highly focused radio stations which substitute general radio broadcasts. But often, even these stations are still a bit too broad and contain songs that you don't really like too much – and too few of your real favorites.

Here, three new services provide help. Using different approaches, they allow users to customize their music experience beyond the restrictions of ownership, information about favorite songs, and the demand to manually craft a custom playlist. These services provide tools to find new music matching an individual's preferences, but also enable custom broadcasting services of a new level.

Note: I am not talking here about the option of customizing the particular song. While there are some new promising offers (e.g., at http://www.dabreakupsong.com you can create a custom rap song to break up with your partner :-), this is a minor field of application (see my posting on this subject). Most people don't want to customize their music on the level of the single song, but they want to personalize the stream of songs they listen.

BBC to Develop Personalized Radio Service

Madeforone recently reported about a new personalized radio service that the BBC is developing. The UK state broadcaster wants to allow audiences to create personal radio stations from its content, its director general has said. The service, provisionally called MyBBCRadio, aims to give audiences more control by combining existing services such as podcasts and the BBC Radio Player. It will be part of the BBC’s iPlayer, a new interface device that shall transport custom content (music, video, reportings) to each user.

With its earlier Backstage offering, the BBC has been a forerunner of user-generated content. It changed its policy from protecting its content to giving most of it away to listeners for free, allowing users to create new works by mixing their own stuff with BBC programming (more information here). NNC Backstage, however, was more an offering for leading-edge users or music lovers. But the new MyBBC Radio Service wants to bring this capability to the mainstream.

Radio 2.0: Pandora and the Music Genome Project

But personalized radio stations do already exist. Once of the best services is Pandora, a music discovery service designed to help users find and enjoy music that they like. Based on a huge database that has categorized songs of over 10,000 different artists based on unique attributes, it helps users to find music that has the same characteristics of a song or artist they like. Just type in a name of a favorite song or artist, and let the magic begin. I was highly fascinated by the quality and scope of the resulting personalized music stream (you need an US ZIP code to use this service, if you live abroad, just use 02138, my postal code).

Pandora has a totally different approach to configuration compared to the majority of other configuration toolkits. It is a good example of a need-based system, i.e. an expert system that does not demand that users can describe exactly what they want, but that just analyses what they like and provides suggestions based on this analysis.

The service is powered by the Music Genome Project. In this project, founded by Tim Westergren in January 2000, a group of musicians and music-loving technologists came together with the idea of creating a comprehensive analysis of music. They assembled hundreds of musical attributes or "genes" into a very large "music genome". Taken together these genes capture the unique and musical identity of a song -- everything from melody, harmony and rhythm, to instrumentation, orchestration, arrangement, lyrics, singing, and vocal harmony.

This kind of expert analysis of all songs provides the main difference of Pandora to other music recommendation systems based on collaborative filtering (as, e.g., at Amazon.com). Collaborative filtering works without any idea of the nature of the articles it is recommending, as it is solely based on comparing the usage (shopping) behavior of one user with the behavior of other users. Pandora, on the other hand, is not based on such a analysis, but solely on the nature of the products (songs) it recommends.

Pandora is offered for free in an advertising supported version (and of course the company hopes to get a provision when you buy a song you discovered though its service). There is also a subscription based service without advertising. All music is streamed, this means it is not possible to download or safe the stream (legally). With a special device, you can also listen to your very personal music channel without your computer.

More information and analysis: http://blog.pandora.com/press/

MusicLens: Configure Your Music

Now compare Pandora to MusicLens.de, a German project that aims to test four different technologies to analyze music like it has been done in the Music Genome Project. However, this service opens the Pandora box and allows you to really configure the music you like. Using more than 10 sliders, you can describe exactly the music you want to hear, like its tempo or subjective volume. You can also define the purpose of the music on a scale from listening over driving and sex to dance. And set the mood of the song (on a scale from smile to angry).

As a result, you get a play list with songs matching your desires. Sounds too complicated? You also can just provide a favorite song for the start, see its characteristics, modify them just a bit, and get new music. As this is a test project, however, the music available does not match the scale and scope of Pandora's repertoire. But the web site provides already a good indication of the service.

MusicLens uses a fuzzy search technology to find music - CDs, albums, song titles or artists - by characteristics. Searches can be carried out in large masses of data quickly and effectively. And, despite the terms of the enquiry being vague or indefinite, the results are clear. The idea is to provide users also good results when they do not know what they are looking for – a feature conventional search engines do not have. Users also do not need to use specific search vocabulary or any form of literal definitions. The search is conducted by way of various characteristics or categories, represented by the slider navigation system.

DDD-Systems, a Hamburg based IT services company that is behind MusicLens, hopes to position the system also as a business-to-business service. The search technology shall assist those involved in purchasing film, radio or television content to find the right content.

Beyond segments and clusters

Why do I write about all this? In my opinion, MyBBCRadio, Pandora, and MusicLens provide some great general insights for mass customization:

-- These services overcome the traditional categorizations (market segmentations) of music in genres. There are no clusters of "Independent", "Pop", or "Rock" music. All categorization is based on an individual user's preferences and desires.

-- Pandora and MusicLens apply modern search technologies which support a need-based configuration approach. Instead of today's dominating parameter-based configuration approach (users configure products based on concrete selections of components and modules), they help to define products based on a description of the user's needs and preferences.

-- They address the customization of services. Up to today (and also in this blog), mass customization is often solely discussed in relation to the individualization of physical products. MyBBCRadio, Pandora, and MusicLens are great examples of mass customization of service offerings.

But for now: Enough words, now go ahead and listen to your personal music.

Ning.com - Mass Customization of Business Models and More

Social Web is one of the hot topics of the Web 2.0 paradigm. The term Social Web refers to an open global distributed data sharing network similar to today's World Wide Web, except instead of linking documents, a social web link people, organizations, and concepts. It builds on user-generated and user-distributed content. A new venture, online for less than 6 months, is now making the creation of social web applications, mixing and matching existing data in new ways, more easily as ever.

The idea behind Ning.com is to create a free online service for cloning, customizing and sharing Social Web Apps. Think of a "Playground" for finding, creating, and sharing web applications that enable anyone to match, transact, and communicate with other people. Ning's online platform allows users to painlessly create these web applications without any hosting demands or server administration hurdles.

Applications are created by users or by Ning. The existing standard social apps offered today include listings, reviews, ratings, recommendations, bulletin boards, dating applications, photo sharing, social bookmarking, wishlists, events, and people matching, among others. Examples are Map Mash-Ups (like Restaurant Reviews, Photo Maps, Review systems, Trail desriptions etc.), media sharing applications (Photo, Video, Book sharing), Social Bookmarks, Marketplaces (like Craiglist), Social Networking, Dating application, and many more. Users can also easily add commerce functionalities of Flickr, Google Maps, eBay, Amazon, or Yahoo! Search.

So what can users create and customize? Say, you want to create a web site which helps food loves in your region to share their favorite restaurants, add cook books written by local chefs, a matching service to find dinner dates, and a navigation system optimizing the trail for a restaurant crawl. Within a couple of clicks and trials, you can build such a web serve with Ning. This sounds for me very much like mass customization of business models: Take some generic modules, adapt and customize these, mix and configure them according to your vision, and launch the business – to either profit from it or just have fun by connecting with other people.

The idea is to put the power of social web apps in the hands of everyone. "We think it should be as easy as a few clicks to turn any great idea into reality. On top of that, we just think it's more fun when people share their great ideas.", the founders describe their motivation. "We want to put something out onto the web that inspires creativity and where it's fun to make things."

Ning provides users with a
- Free hosted environment
- Standard PHP & HTML modules,
- Lots of freely available PHP code to get you started
- SFTP support for own IDE
- The opportunity to create own ads
- Data sharing between apps
- Automatic user authentication
- a built-in search engine and tagging system, and much more.

How does Ning make money? All user generated sites have a generic Ning Sidebar to provide shared services, but also text advertising and links. I believe that they will also get provisions for purchases made at, e.g., Amazon though one of their apps. And the user base of Ning will become an important asset for the company. We will see if this idea takes off. But I liked the concept very much, and it shows a new frontier of user co-creation and mass customization in an area not discussed before.

UK Pop Duo Erasure sells customizable MP3s -- Music configurator online

Sean McManus reports in his blog on a new technology that enables fans of the UK synth pop duo Erasure to mix their own single and then download the custom mix as an MP3 for UK£2.

This is the ultimate version of the "limited edition CD" trend". The web site erasuredownload.com offers a web interface, a kind of music configurator, representing different parts of the music like the bass line, synth lines, drum pattern, vocal delivery and backing vocals.

In his article, Sean reports how he purchased mix number 16835 (out of about 40,000 different possible mixes). But most important:

"The site won't sell two remixes the same, but there are 40,000 different possible combinations to choose from. "When someone tries to buy a version we check whether the version number is already bought or not," says Marc-Henri Wouters, CEO and founder of Trust Media, the company behind the customization technology. "If the desired version has not been previously bought, then we continue the buying process. Otherwise we ask the user to choose another version." Now that is what I call a limited edition."

Read the full story here: http://www.sean.co.uk

This is a nice idea, and from a marketing perspective, I like the artificial limitation of the tracks. The service offers also some devoted fans without large computer or composing skills the possibility to create a custom product which shows their personal bonding to the band.

However, on the long run, I think this kind of customization is not really sustaining. New music is created by mixing and matching existing tunes, sounds, ideas or motives -- and thus the idea of sharing a band's tunes freely under a Creative Commons License with all fans is much more sustainable and satisfying. And only this allows for real creativity. This is where open innovation is superior to good ol' mass customization. There are a huge number of bands which share their content more openly with their fans (have a look at http://creativecommons.org/audio/).

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

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

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

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

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

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

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

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

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