Reverse order: Interview the interviewer: While rather infrequent, the postings with interviews are the ones getting the most hits in my blog. And I am really enjoying them a lot, as this is where I learn most. But while normally I am asking the questions, Duann Scott, editor of the Ponoko Blog, asked me to switch sides and answer his questions. And so, reprinting from the PONOKO blog, here is what we talked about.
For the full interview, published in two parts, head to blog.ponoko.com: Part 1 and Part 2
Duann Scott: Frank, what brought you to focus on Mass Customization in the first place?
Frank Piller: I first realized the mass customization phenomenon by reading Joe Pine's book as a graduate student working on a paper for my master's degree (in 1993). One year later, I was in New York City, visiting one of the first Levi's stores selling its first version of mass customized jeans. There I thought, "Hey, they are doing it really" and was hooked by the concept. When I continued my education with a Ph.D. in Operations Management, I decided to study mass customization from a management perspective in more detail. After placing the first article on it in the German edition of the Harvard Business review (1996), I also got some great feedback from managers on the topic. Since then, I am continuously working on this topic.
DS: So you have been researching, writing and working in the field of customer co-creation for almost 15 years! What do you see as the greatest advancements or most innovative progressions in your time observing the field?
FP: Over the years, I recognized three cycles of mass customization. This first was in the 1990s when people looked on it as a production technologies, still yery much rooted in the CIM-Thinking that originally lead Alvin Toffler to deliver the first modern description of mass customization in the late 1970s. During this time, mass customization was very much rooted in business-to-business markets. Machine tool makers like Sandvik from Scandinavia opened the first large scale mass customization businesses.
The second wave happed with the internet revolution (starting in 1998). Finally firms could connect their flexible manufacturing technologies with customers efficiently. This cycle brought us many great examples of mass customization, but also quite some disappointments. Often, start-ups during this time just opened, as you could do it, not as customers needed it. But some great examples of mass customization survived, like NikeID (opened for the only reason as former Nike CEO Phil Knight wanted to "something in the internet", and so they selected mass customization as this promised to cause little channel conflicts with established retailers).
In the following years, the internet-based mass customization offerings matured, and many more followed. The third wave of mass customization is happening now: It is driven by companies like Ponoko, Zazzle, Spreadshirt, Lulu, Shapeways, and many others, which offer design, manufacturing, and retail capacity to everyone. So in this third stage, people are not just customizing to fulfill their own needs, but to create (micro) niche markets and serve them efficiently. Here, I think, we are just at the beginning and will see many more application soon.
DS: What are the most common shared factors in mass customization business models that fail? Is there one thing you would recommend a start up to avoid?
FP: I believe many mass customization start-ups fail for the same reasons other start-ups fail: Lack of financing, inexperienced management, or just bad luck. What I can recommend for mass customization start-ups is, first of all, really decide where your system provides customer value. This may sound simple, but I saw too many start-ups that were build on the promise "when we customize, they will come". Think of BookTailor, a site where users could customize travel guide books. Sounds like a great idea, but when you have to become your own editor of a guide book, you loose the most important value of a good travel guide: To think of the unexpected, to surprise, and to provide input in a situation not planned (say, an entire week of rain). BookTailor considered customization as a value per se. But this is not true. Customization is just the vehicle for customer value, but not its origin.
A second advice is to see whether your mass customization business is scalable once success will come. Often, mass customization is based on large work shops or sample room operations. But when you want to succeed with mass customization, you have to have stable processes for each customer order.
DS: The use of online 'configurator' software seems to currently be the most common format for mass customization, what do you see as the benefits and drawbacks of this model and how do you see this evolving in the future?
FP: Yes, that's correct. It was the broader development of online configurators that made mass customization happens in a larger scale. Have a look at our web-site "http://www.configurator-database.com" for the scale and scope of configurators today.
The core drawback of most configurators, however, is that they are still parameter (option) based. Customers have to make their own decisions out of a list of pre-defined options. This often demands a large number of decisions and also knowledge of the user about the product. While this may be perfect in the business-to-business context where configurators originated, in consumer markets this is not always the best option.
Here, need-based configuration often is better. This means that users have to tell something about her preferences, requirements, or expected outcomes. This input then is transferred by an algorithm into a product configuration. There is a great paper by three scholars that compared the use of a parameter versus need-based configurator for Dell (asking people what graphic card they want versus asking people what games they play). In this paper, the authors clearly find that most users prefer the need-based solution, mimicking the behavior of a good sales person (T. Randall, C. Terwiesch, and K. Ulrich, User design of customized products. Marketing Science, Marketing Science, 26 (2007) 2 (March-April): 268-280). Here, I believe, industry has to invest much more in developing better configuration systems that minimize "mass confusion".
DS: Are there alternatives to mass customization?
FP: Absolutely! I recently see better matching-systems for standard products as a strong alternative to mass customization. Within an assortment (of pre-fabricated products), customer specific choices/options are recommended. Consider My Virtual Model (mvm.com), a matching service for fashion retailers and the appliance industry. MVM enables consumers, either on its own site or on the sites of its clients, to build themselves in a virtual model (an avatar), by selecting different body types, hair styles, face characteristics, etc. Consumers also type in their basic measurements so that the virtual model represents their body measurement. In addition, customers can specify what kind of “fit” they prefer (loose, comfort, tight, etc.) so that the recommendations provided do not only fit the customer in terms of sizes and appearance, but also in terms of how they do feel inside the garment.
When MVM started offering virtual avatars in 1999, they looked more like a curious oddity. But now their avatars are used by more than 12 millions individual users. Companies such as Adidas, Best Buy, Levis, Sears and H&M are using these virtual models to generate business and stronger ties to their customers, lured by the increase in such metrics as average order value and conversion.
DS: Any other example of such a matching service?
FP: Sure. A great example is Zafu.com. Finding the right size of a pair of jeans is a challenge for many women. The answer of mass customization is taking a customer's measurements and making a custom pair of jeans for her. Zafu offers a different approach. From the customer perspective, the experience starts similarly. Zafu asks women shoppers eleven questions about how they prefer jeans to sit on their hips or waist to create a body profile. In addition, they ask for some basic body measurements.
But instead of using this information to create a custom cut, they match it with a large database of proprietary fitting information about the jeans of more than 30 major brands. This database contains hundreds of styles, from broadly marketed Gap to pricey designer labels. The consumer then gets a list of ranked results, linked with the brand's website to purchase.
I predict that we will see many more examples of these matching services as they offer companies to profit better from what they already have: vast assortments of existing goods. The result may be a new understanding of mass customization, beyond its roots in on-demand manufacturing and product design. In the end, it is the customer who drives the business. And customers are not differentiating between personalized, customized, or standardized offerings. I believe that we will need a broader understanding of mass customization. And I am excited to work on this challenge in the coming years.
For the full interview, head to blog.ponoko.com: Part 1 and Part 2
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