Since 1993, Bain & Company, a management consultancy, is investigating the use and performance of popular management tools. In this year’s edition, mass customization and open innovation are included for the first time as two of the 25 most popular and pertinent management tools.
The survey is based on a findings from 960 global executives surveyed during 2004, including 212 Chinese business leaders. Executives were asked questions about the use and satisfaction by their companies with the management tools and techniques.
Here are some summaries of the reports of mass customization and open innovation:
Mass Customization is defined by Bain as “the large-scale production of personalized goods and services. To succeed at it, companies must harness technologies that revamp their speed, flexibility and efficiency at minimum expense. Combined with organizational changes to focus firms on the unique needs of very small customer segments, these technologies help companies affordably deliver custom versions of their offerings to profitable niche markets.”
I was pleased to read that also Bain sees MC beyond being a pure manufacturing strategy: “Once considered a manufacturing and supply chain capability, Mass Customization now encompasses a company’s ability to differentiate a product or service in any way—from distinct branding to unique delivery.” [Read more: http://www.bain.com/management_tools/tools_mass_customization.asp].
Open Innovation (called open-market innovation in the study) is characterized as applying “the principles of free trade to the marketplace for new ideas, enabling the laws of comparative advantage to drive the efficient allocation of R&D resources. By collaborating with outsiders—including customers, vendors and even competitors—a company is able to import lower-cost, higher-quality ideas from the best sources in the world.”
According to the survey, companies need to focus on four areas to foster open innovation, including improving innovation circulation (“to build information systems to capture insights, minimize duplication of efforts, improve teamwork and increase the speed of innovation”), but also to increase innovation exports (“establish incentives and processes to objectively assess the fair market value of innovations, raise incremental cash and strengthen relationships with trading partners”).
A strong focus on customers and users as partners of the corporate innovation process is lacking in Bain’s interpretation of open innovation. But the notion of the idea anyway is already a big step forwards. [Read more http://www.bain.com/management_tools/tools_open-market_innovation.asp]
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