Mass Customization & Open Innovation News

RWTH-TIM Conference: Business Model Innovation is topic of Aachener Innovationsplattform 2013

(In German for our German speaking readers: An invitation to the annual conference of our RWTH TIM Group. This year's topic: Busines Model Innovation)

Die Aachener Innovationsplattform ist einer der wichtigsten jährlichen Veranstaltung des Lehrstuhls für Technologie- und Innovationsmanagement (TIM) an der RWTH Aachen. Im Mittelpunkt steht dabei der Erfahrungsaustausch unter erfahrenen Praktikern aus F&E, TIM, New Business Development und Strategie.

Die Veranstaltung findet im Rahmen des TIM-Expertenkreises an der RWTH Aachen statt, ein Zirkel leitender Manager und Experten im Innovationsmanagement meist großer globaler Unternehmen.

Die AIP 2013 wird ganz im Zeichen eines der relevantesten und zugleich herausforderndsten Themen einer sich schnell wandelnden Marktumwelt stehen: Neue innovative Geschäftsmodelle erkennen, erschließen und erfolgreich umsetzten.

Unternehmen müssen zunehmend über neue Möglichkeiten zur Erreichung der Unternehmensziele nachdenken und stellen dabei fest, dass das traditionelle Geschäftsfeld nicht mehr trägt. Neben Impulsvorträgen und Praxisbeispielen steht dabei wieder vor allem der persönliche Erfahrungsaustausch zwischen den Teilnehmern im Vordergrund.

Wir freuen uns, Sie im April zur 4. AIP in Aachen begrüßen zu dürfen! Auf der offiziellen Konferenzwebsite finden Sie ausführliche Informationen zu Inhalten, Speakern, Anmeldung und Organisatorischem.

Hinweis:

Aufgrund der hohen Relevanz des Themas bieten wir einem begrenzten Teilnehmerkreis die Möglichkeit, sich im Rahmen des RWTH Zertifikatskurses "Business Model Innovation" mit uns noch intensiver auf die spannende, aber planbare und systematisierbare Reise der Business Modell Innovation zu begeben und anhand aktueller Fallstudien und Good-Practice-Beispiele (aber auch der Analyse von Flopps und Mißerfolgen) ein Instrumentarium zu entwickeln, um erfolgreich die Prinzipien von Business Model Innovation anzuwenden.

Das erste von zwei Modulen findet parallel zur AIP 2013 vom 17.-19.04.2013 statt und beinhaltet den Besuch der Konferenz!

Open Letter to MCPC Community: No MCPC 2013 at MIT, but many new opportunities

In case you participated at the last MCPC conference in San Francisco (Nov 2011), I believe you had, like me, a great conference experience. In fact, many of you already asked me about the next event.

Hence, I am really sorry to inform you that for personal and capacity reasons, we will be not able to organize and host the MCPC in 2013 at MIT.

Topping the great experience of MCPC 2011 in San Francisco would have been difficult and a lot of work, demanding capacity (time) that we as the original hosts and organizers do not have available any longer.

I am doing many exciting things in Europe and the U.S., but also have many commitments and responsibilities which do not give me the chance any longer to invest in the MCPC as I did in the past. The same holds true also for the core team of people at MIT and HKUST that were instrumental in doing this.

But I believe that this is not the end of the MCPC but just the beginning of more:

Mass customization now is at a transition point where we do not have to discuss it any longer, but just should practice it. This demands a different format of exchange in-between practitioners.

For this reason, we have established an exciting associate membership format for companies in the MIT Smart Customization Group at MIT Media Lab.  We believe that such a consortium of trusted members, meeting 2-3 times a year at MIT or in a company, can provide a better way of exchanging experiences and learning from each other.

In case you are interested to join our MIT group, head here: http://scg.mit.edu/people/corporate-members

We will continue to have smaller events or seminars at MIT, and there are the established mini-conferences of the MCPC family and several upcoming special tracks in established conferences.

But I also strongly believe that a large MCPC-alike conference still makes sense!

Mitch Tseng and I are open for any research group that feels empowered and strong enough to do an academic-practice event similar to MCPC. I am happy to support this as far as I can (mainly with publicity), but be warned that this demands at least Euro 100K investment and about 1 person year full time capacity for preparations, the CfP, paper reviews and management, and event organizations (and we never made any profit with the MCPC as we wanted to keep this an affordable community event).

In case you have a realistic plan to host (and fully organize) this conference in the future, let us know – or just do it: We do not claim any ownership or exclusivity of mass customization events. In fact, it really should become more a community organized thing!

So even with a MCPC conference organized by my colleagues and me, I am looking forward to may exciting interactions and meetings.

[Interview] Anthony Flynn & Emily Flynn Vencat, Authors of "Custom Nation"

As promissed in our recent book review of Custom Nation, authors Anthony Flynn and Emily Flynn Vencat, participated in our interview series with MC&OI entrepreneurs to share their experiences in the customization market, their book and who could profit most from reading it.

 FTP: Can you tell a little bit about yourself? What do you do and where did/do you get your experiences with mass customization from?

ANTHONY: I’m the founder and owner of YouBar, the world’s first customized nutrition bar company. I started the company in 2006 after feeling frustrated by my inability to find an off-the-shelf nutrition bar that met my – admittedly very specific – health and taste needs. So, I started custom-making bars for myself, and I thought there would be a huge market for bars made to meet individual consumers’ own unique needs and, out of that, YouBar was born.

Since then, I’m extremely proud to say that I’ve grown the company to seven-digit annual sales, and now employ 30 people in an 8,000 square foot facility in downtown Los Angeles. Thanks to my success with mass customizing, several years ago I started being invited to give talks on customizing to universities around the country (from UCLA to MIT), and have become a consultant to companies looking to add an element of customization to their existing mass-production based business models.

There has been so much interest – and this extended to the press too: I’ve given interviews to hundreds of news organizations, including the New York Times, Good Morning America and NPR – that I saw that there was a real need for a book to be written about how customization is changing the way we do business in the 21st century. But I’m not a writer, and that’s where Emily came in…

EMILY:  That’s right. Several years ago, Anthony – who in addition to being my co-author is also my brother – came to me with the idea for this book. At the time, I was working as a business journalist in London – I was Newsweek’s London-based business writer and, after that, was a business writer at the Associated Press -- and Anthony told me he wanted me to write this book with him. At first, I was extremely sceptical (and also very busy!), but the idea was so compelling that it didn’t take long before I was convinced and we signed with our publisher last year.

FTP: On the early pages of your book you tell us that "outline exactly how you too can use customization to launch a successful new business, or exponentially increase sales in your existing business". That sounds like a pretty ambitious promise. Have you found the holy grail of retail?

ANTHONY: I don’t think we’ve “found” the holy grail of retail. I think it’s been there all along. If you think about the way that the very rich have always consumed goods, you’ll see this. The wealthy have never really bought into the idea of consuming mass-produced stuff en masse – they’ve always had everything important custom made-to-order – from their furniture to their homes to their suits.

What’s new, and what I think we’ve “found” in our book is that – thanks to new technologies, like the internet’s ability to connect producers directly to retailers, the advent of online configurators and new production methods – high quality custom goods are now affordable to the average person (and not just the super-rich) for the first time in history. Because this shift is so new, however, many companies haven’t yet embraced it or figured out how to do it right. Our point in the book is to provide a guide for how to do exactly this.

FTP: You also write about a shift from DIY (Do It Yourself) to CIY (Create It Yourself). What exactly do you mean by that?

EMILY: Before the Industrial Revolution, custom goods were actually the norm – even for the very poor -- because Americans did everything themselves, like cook their own dinners, make their own furniture and sew their own clothing. What’s new about today’s customization is that it isn’t Do-It-Yourself (DIY); it’s Create-It-Yourself, or what we like to call CIY. Create-It-Yourself is when you get to do all the fun parts related to making something new, like designing the flames emblazoned on the side of your Mustang or choosing the exact ingredients in your gluten-free nutrition bars, without having to do the hard work of stencil painting or wheatless cooking yourself. Using online configurators, consumers can now participate in the high-level design of their products without having to get their hands dirty.

FTP: Without revealing too much from your book: Where do you see the most critical failures companies make when implementing or maintaining an MC strategy?

ANTHONY: The number one problem that I see and hear about again and again when companies begin customizing is that they start off giving their customers too many choices. Just because you run a customizing company, and want to give your customers choices to match their exact needs, doesn’t mean that you need to offer a million different colors or sizes or whatever. Earlier this week, I spoke to an executive at Nike who told me that it’s actually Nike’s goal right now not to add more customization to its excellent custom sneakers platform, NikeID, but actually, rather, to make it “simpler.” When you give your customers too many choices, they can find it overwhelming and difficult to engage with. What’s more, from a business perspective, if you offer too many choices you can end up painting yourself into a corner financially.

FTP: And how do you think these shortcomings could be prevented?

ANTHONY: In Chapter Nine of the book, we outline the “Seven Lessons” for how to get customization right, which we derived from our interviews with the CEOs and founders of many of the world’s most successful customizing companies, including Vistaprint’s Robert Keane and Shutterfly’s Jeff Housenbold. I think all of these lessons are absolutely crucial, but – as implied by my previous answer – one of these lessons is that, even in the customizing model, a business should never give consumers too many choices. We give concrete details, examples and advice in this chapter about what exactly that means. Here’s just one basic example of limited choices in action: on the Ford Mustang Customizer website, consumers can choose from dozens of hood designs and paint jobs, but they don’t pick the materials used in the engine.

FTP: In your book you talk about the "automated expert". What do you mean by that?

EMILY: One of the most important technological developments that has made mass customization possible is the advent of online design tools – also known as “configurators” – which allow customers to go on websites and create their own products without needing the help of a human expert.

In the 20th century, one of the main reasons that customization was the preserve of the ultra-wealthy was that if you wanted to custom design something, you needed an expert at your elbow to help you turn your idea into real image. If, for example, you wanted to design a suit, you needed a tailor. If you wanted to design a ring, you needed a jeweller… and so on. Imagine, for example, trying to sketch your perfect suit or ring without expert help. For the vast majority of us, our basic drawing skills and lack of knowledge about how materials work would make this utterly impossible.

And human experts are expensive. But now, configurators allow even the non-expert consumer to go online and use automated tools to create-their-own suit or dress or jewelry or interior design – this list goes on and on – without needing an expert on hand. The configurator is, in essence, the affordable automated expert.

FTP: Can companies save themselves from some painful experiences if they read your book before acting? 

ANTHONY: Absolutely. Our lessons for how to customize identify pitfalls, like the problem with too much choice or the potential difficulty with choosing a price-point for your custom good, that are extremely easy to navigate once you know they’re there, but almost impossible to avoid if you don’t know about them. Honestly, I wish that someone had written this book seven years ago so that I could have read it before starting YouBar and avoided making so many of these costly mistakes myself in the first year of my business.

FTP: Where do you think mass customization is going? And what does still need to be done to make it an even more successful movement?

EMILY: In the next ten years, we are going to see a shift in what’s considered ‘normal’ in retail. In dozens of important industries, the ‘normal’ thing we buy is going to go from being a mass-produced item to being a made-to-order customized item.

The shift is actually already heavily underway in the auto industry, and its quickly coming in apparel, accessories and entertainment. For proof of this, you only have to look at the way young consumers – those under the age of 30 or so – are already buying things. Young consumers no longer see customization as a luxury in many parts of their lives, they just expect it. Instead of listening to entire mass-produced CDs, they tune into completely customized playlists care of iTunes or the popular custom radio station Pandora.

Instead of watching pre-set television channel line-ups, they watch on-demand digital recordings on Netflix and YouTube. Instead of driving identical cars -- like the Baby Boomers once did with their one-size-fits-all 1960s VW Beetles – they purchase custom, built-to-order Scions on the company’s customizing website. In fact, Scion isthe most popular car brand in America with buyers aged 18 to 27, and I’m sure this is because of its great, and affordable, customizing platform. If you look closely, there isn’t a single aspect of young consumerism that isn’t starting to be customized.

The Millennial generation gets custom dating recommendations from matchmaking websites, like Match.com, they have custom sneakers on our feet (from brands like Nike and Converse), custom sweatshirts on their backs, custom cases for their iPhones and custom newsfeeds from social networking sites like Facebook.

FTP: Is mass customization for everybody?

ANTHONY: Yes. There isn’t a single industry that won’t be transformed by the shift to customization within the next decade. Already, we’re seeing every major company – even the most classic mass-producers -- target their advertisements in customized, individualized ways online. This is the first large and important step towards thinking about consumers as unique individuals and not a single mass with homogenous tastes and values, as was the 20th century norm. 

FTP: Thank you both for this really insightful interview! 

European Commission is Funding Research on Mini Factories for Customized, Decentral Production

As part of the Factories of the Future Call, the European Commission is focusing on mini factories for customized products using local flexible production.

This is a topic that I have researched for a very long time, staring with a large research cluster during my old times at TU Munich (here some old paper: http://link.springer.com/chapter/10.1007/3-540-27367-0_27), and continuing with more recent research.

So it is very interesting that the EU Commission now also is taking up this topic and proactively is asking for proposals. In their call, they formulate future needs as follows:

Advanced production equipment and innovative systems are needed to enable ultra-fast and cost effective manufacturing of fully customised products on the spot and exactly at the required time. Innovative production solutions must be developed to bring manufacturing operations closer in time and space to the final customer. In addition, new factory concepts need to be developed like on-site factories or factories-in-a container, which provide instant manufacturing and customisation services in retail environments.

Those mini-factories, addressing adaptation to customer needs at or near the point of sales or use, will be characterised by fast ramp-up, small footprint and reusability, and will be easy to handle and to set-up. Those production systems should also include related new technologies for supply chain management, product distribution and direct end-user interaction.

 

The call expects project results to have the following impacts:

• Increased ability to rapidly follow the market dynamics by means of fast production and delivery of personalised final products.
• Reduction of the time to market by 50%.
• Cost reduction (around 30%) by decreasing lead times in product and process development.
• Set-up and ramp-up time reduction (around 30%) for new processes and plant designs of the mini-factories.

This is a really interesting field, and if anyone is searching for a scientific partner from a business school eager to join a consortium, please let us know :-)

The next big trend in innovation management: Reverse Innovation: A book review and how does this relate to open innovation

Reverse Innovation as seen by Google Image Search

I am sometimes asked what is the next big trend in innovation management. Given a number of recent discussions and observations, I would now bet high stakes that "Reverse Innovation" will be the idea that will shape our understanding of innovation management a lot in the next years.

 

The term reverse innovation, in short, describes how innovations made in the so-called developing countries can often lay the foundations for product innovations in the "developed" world. More often than not, these are relatively cheap yet efficient new concepts which can seriously callenge products on an existing "western" market -- they often are a source of disruptive innovation.

Developing countries are catching up on the knowledge- and technology gap and with that comes an increased chance for major innovations to be born in these countries. And this is where open innovation thinking comes into play: 

• First, we know from lead user research that lead users often develop novel innovations under extreme conditions. Developing countries often provide these extreme conditions (budget, but also climate or working conditions) -- hence leading to a high incentive to innovate in a functional novel way.
•  Second, a core idea of OI is to get input from unobvious others -- this is where broadcast search helps a lot. And developing countries offer a great potential for "unobvious" sources of ideas.
• Third, when established companies develop a product for a new market that demands a "good enough" solution that only costs 10% of the comparable established "western" product, they are often forced to look into very new fields and approaches -- input that often only can be acquired by looking beyond the firm's borders.

Hence, for established companies, reverse innovation offers both a source often "open" thinking and input for the own innovation process, and at the same time demands new approaches and networks.

 If you want to learn more about reverse innovation, there is one book to read:

Reverse Innovation: Create Far From Home, Win Everywhere

Written by: Vijay Govindarajan, Chris Trimble, Indra K. Nooyi (Foreword)

Availible at Amazon: Hardcover Edition, Kindle Edition

Prof. Vijay Govindarajan ( Tuck School of Business ) is the leading scholar researching this field. Together with his collegue Chris Trimble he has recently published his new book about the topic which I read in my recent summer vacation.

The book is an easy read: In part one, Govindarajan and Trimble describe in rather brief form how major companies are beginning to realize that the popular concept of glocalization is not necessarily the best approch to conquer new markets. They describe the flaws on the concept and why reverse innovation promisses better results in many cases.

Glocalization refers to the business concept often associated with the saying "Think Global, Act Local", in practice realized by taking an already existing product and adapting it to new target markets. If the target market is part of the developing world, these adaptions are usually severe downgrades.

Govindarajan/Trimble explain that these downgraded products are in fact often not what the target market needs - or even wants. Each market requires products fitting it's specific needs and given resources. And that is something that can often no be achieved by just stripping product features to allow a cheapter retail price.

The authors show how reverse innovation can help to overcome this barrier. By inventing locally, right at the target market, instead of at home, far away from the conditions and actual customers, companies can be enabled to develop the exactly right product for the market - not a stripped down version of an existing good.

While reverse innovation is the more risky, more pricy alternative at first glance, and many internal and external obstacles have to be overcome, the described advantages are remarkable: Not only can a company better tackle local markets in the developing world. Products invented abroad have a high potential of being cheaper, offent radically innovative and can potentially be engineered to become suitable alternatives for existing products on the companie's home market as well. The innovations made abroad come back home: Reverse innovation.

Part two of the book has eight business cases in which the conecpt is applied and explained why it is advantageous over other approaches. These include companies like Logitech, P&G, EMC, Deere, Harman, GE Healthcare and PepsiCo.

So, in conclsuion, a very interesting concept, and important idea, and a good read!

Update: YOUTAILOR Finds New Investment, Withdraws Insolvency Application

Just a few days ago, we reported about two mass customization companies that did not make it on their market for custom shirts. Amongst them was German start-up YOUTAILOR, one of the leading entrepreneurs in the field of online custom tailors.

Just moments ago we received news from YOUTAILOR's public relations department, informing us that the company has managed to find a new investor to support its future operations. From what we have learned, Christian Heitmeyer of Pearl Bay Beteiligungs GmbH, a German investment company already involved with ventures such as brands4friends and Allyouneed.com, has decided to commit to YOUTAILOR and help the company to stay in business.

As a result, YOUTAILOR has withdrawn their insolvency application which they had filed in July of this year.

It is great to see that an uprising German start-up gets another chance to develop and (re-)establish itself in the market of mass customized clothing. We will watch their further work and report back on their future successes - or lack thereof.

The full press release (in German language) by YOUTAILOR as sent to us today, August 20th, 2012, can be downloaded here.

The MC Graveyard: Ideas that did not make it: YouTailor & Shirts Onthefly

Although mass customization has proved to offer great opportunities to companies of all sizes, there also have been quite some failures. We will try to look into some of the companies that did not make it in a new series of posts.

And there are many of these failures! When conducting the research for the MC500 study, we learned that over the period of just one year, 17% of our original sample population went out of business. Analyzing the failure reasons showed that these startups on the one hand face "common" challenges of startups like not progressing out of the bootstrapping phase into a scalable business due to undercapitalization, wrong investment policy, overconfidence, and an insufficient business model as well as problems within the team, such as the loss of key employees.

But on the other, there are two more specific reasons for failures of MC companies, according to our research:

First, difficulties encountered by the studied MC companies may be ascertained to possible inadequacies of their toolkits. Many of the toolkits that we studied do not follow the design principles suggested as success factors by previous research: Only 55% instantly visualize consumer input, less than 20% of vendors make use of peer input in the design process, 61% do not provide information on progress of purchasing process. Only 22% allow customers to share their creations with others, just to mention a few shortcomings. The reality of toolkits clearly falls behind the academic research on design parameters of successful toolkits, suggesting a large shortcoming in transferring research into practice.
   
Secondly, problems in making mass customization work may also lay elsewhere. In an exploratory survey of 68 entrepreneurs and consultants active in the MC business (conducted in Oct. 2009), for instance, we discovered that detecting customer idiosyncratic needs and creating flexible fulfillment processes are considered as more serious concerns (average score=4.0/5 and 3.9/5) than creating toolkits that support the sales process (average score=3.5/5). This  research, the preliminary results of the Customization500 study, and many interactions with managers during case-study based research show that profiting from mass customization is not an easy task!

Two current examples have been the market for custom tailored men's shirts. The German MC blog egoo.de recently reported on two consecutive insolvencies of companies believed to be promising ventures.

First company to be hit by bankruptcy was German start-up YouTailor, one of the leading entrepreneurs in the field of online custom tailors. Despite a number of potent backers like Holtzbrinck Ventures, Tengelmann Ventures and myphotobook, YouTailor CEO Michael Urban had to file insolvency mid-June caused by financial irregularities, as eggo.de reports.

Just two weeks later, another mass-custom shirt company, SHIRTS ONTHEFLY, had to strike colors or, as egoo.de quotes the company's announcement, to declare "the mission to make high-quality bespoke shirts available for everybody" a failure. Very sad indeed, seeing how they had announced to team up with Berlin-based venture Upcload, enabling customers to measure themselves via webcam capture technology.

May there be a trend indicating that custom tailored shirts are not very high in demand? Or may it be more likely that these two did not do one of the most important things when establishing a new MC company: Seek qualified expert advise and connect with other founders and MC entrepreneurs to share experiences.

Egooo.de is speculating that the heavy use of Groupon may have facilitated the bankruptcy of YouTailor. No other company in the mass customization domain has used Groupon so often, sometimes with discounts of 50% (which makes no sense at all for me if I consider the economics of mass customization manufacturing -- there you wanted stable sales, no sudden peaks!)

For the full stories about YouTailor and SHIRTS ONTHEFLY, head over to egoo.com by blogging colleague Heiko Vogelgesang!

Meet Christian Guelpen, Editor in Chief of Mass Customization & Open Innovation News

Everyone who knows me better may have wondered about the strong increase in blog postings since the last year. The reason is not that I discovered this extra 25th hour of the day, but that Christian Guelpen became a strong partner in form of an editor in chief and producer of this blog. Christian is in not just turning my blog ideas into great postings, but has also developed a great talent to know before me what I might be interested in. 

So, while I am very open to get your mails and comments in person, I also encourage you to contact Christian directly for any ideas for a story, any news, or tips.

Instead of a long introduction, here are three questions I asked to Christian:

FTP: What makes mass customization or open innovation such an interesting
topic for you?

CG: Mass customization is what I consider to be the future of retail, both for the B2C and B2B market. Historically, goods of all kinds were rather individual. On small local markets the demands of customers were well known to the sales- and craftsmen who were well-advised to make their products and services match these needs. 

With the industrialization came a loss of individualism in regards to every-day products. For a long time vendors had to produce stadardized goods to be competitive on a more and more globalized market. 

What we experience now is that mass customization takes the most globalizing of all technologies, the internet, and turns it into an enabler to make products and services more individual again, at a reasonable price. And MC is still developing. Once it has reached its full potential in a few years or so we will most definitively see applications of individual mass production that we can not even imagine as of today. 

And with regard to open innovation, I find it fascinating that it is not just about product innovation, but that it can serve a greater social goal by making knowledge and, equally important, emotions availible to others. The internet is the hardware, the great enabler of global connectivity. Open innovation is the software, the concept needed to channel all these connected minds to help them contribute in their area of interest. 

FTP: What would be a story you would like to cover for this blog?

CG: Ideally one in which a company manages to significantly raise its sales numbers by deciding to offer either mass customization for their existing products or employ open innovation techniques to find out what their consumer base really wants - and how it can be made reality. And while such stories of course do exist, I would love to cover the entire process of a large(er) company successfully implementing one (or both!) of the concepts, to give others an example of why and how it does work in practical details. So if anybody is just about to start doing this, please give me a call! 

FTP: What is the mass customization offering you are still waiting for?

CG: Truly individual books. By that I do not mean these already existing offers which customize stories by exchanging a characters name by yours but really individualized novels which are individually written based on what you think and dream about. Books that make your very personal fiction a readable reality. However, until somebody comes along and invents a mind reading device to serve as a capable "configurator" in this venture, fully customizable appartments (not just what you put into them) would be a great thing to have as well. 

Traveling in the Name of Science: RWTH TIM Group'S Delegation at the MC2012 in Salzburg

What a week! After the great Open Innovation summit at the Imperial College in London, hosted by my dear colleague Prof. Joel West on Monday/ Tuesday and the TTC mid-term event on thursday, last Friday was the great day: The MC2012, greatest MC/OI conference in German language took place in Salzburg, Austria!

It was a wonderful event with a lot of members from the MC/OI "family", friends and experts from many fields of mass customization. And, of course, we were amongst them, too!

Accompanying Stefan Thallmaier (representing Leipzig Grad. School of Management in our cooperative research project KUMAC) and myself, our research group's members Dr. Christoph Ihl, Wolfgang Gruel, Thorsten Harzer, Evalotte Lindgens, Moritz Wellige and Christian Gülpen assembled at the University of Applied Sciences in Salzburg to speak, listen, network, and exchange on the latest and greatest in MC and UI. 


Christoph Ihl, Wolfgang Gruel and Thorsten Harzer also contributed to the agenda, speaking about new findings from our MC/ OI research, the Customization 120 and how Daimler develops customized mobility services as a new offering.

More about their presentations and, of course, the entire conference will follow in another post really soon -- so stay tuned!

 

Mass Customization Explained - The Full Series from Innovationmanagement.se

I have been tweeting about it during the past weeks as more episodes have become availible:

Together with my colleagues Fabrizio Salvador and Dominik Walcher, we have been given the opportunity to provide an extended overview on eight parts of various aspects of mass customization on the well-known innovation blog Innovationmanagement.se .Finally, the last episode has been published.

The series consists of 8 parts, starting here.

In the series, we tried to shed some light onto:

• Part 1: Introduction: Competing in the Age of Mass Customization
• Part 2: The Market for Mass Customization Today
• Part 3: Solution Space Development: Understanding where Customers are Different
• Part 4: Robust Process Design: Fulfilling Individual Customer Needs without Compromising Performance
• Part 5: Choice Navigation: Turning Burden of Choice into an Experience
• Part 6: Choice Navigation in Reality: A closer look into the Customization500
• Part 7: Overcoming the Challenges of Implementing Mass Customization
• Part 8: A Balanced View: Conclusions and Key Learnings

The Million Dollar Zazzle Innovation Challenge: And the Winner is ... SELVE

Today, the winner of the "One Million-Dollar Zazzle Innovation Challenge" has been announced. The contest was launched during the MCPC 2011 conference and saw an enormous participation with about 1,000 entrants submitting their proposal.

During the last days, a panel of judges picked the winner, which was presented during a nice ceremony at the Haas School of Business of the UC Berkeley today. At the left, a few impressions of the day:

• Henry Chesbrough opened the event with a very nice talk about the promise of mass customization;
• Jeff Beaver from Zazzle addressed the audience and introduced the finalists,
• Elizabeth Miller, Head of Creative at HASBRO, presented a great talk on the power of personalization and how a large company like Hasbro can benefit from a customization platform like Zazzle.
• And then the five finalists gave short presentations on their companies and idea -- really cool! Just check the videos below to get some ideas.
• Finally, Dean Richard Lyons of Haas announced the winner!

Five companies have been nominated. Here are their pitches why they should get the 1Mio Zazzle award:

Republic Bike

Everybody loves to ride a bike in the summer. But not everybody loves to ride the same bike. Why not design the bike of your dreams from the convenience of your couch and have it custom-built an shipped to your doorstep? Their pitch: Make bikes as the customers' canvas -- and allow then to really create a custom bike.  --> WATCH THE VIDEO

Selve

Why do women own so many shoes? Maybe because every one has something special that they like about it. For everybody with limited storing space, Selve offers the opportunity to pack all these special details into one shoe, your shoe.  Their pitch: We did ten years of homework and now have a great product space and manufactuing -- and ready for a huge audience.  --> WATCH THE VIDEO

YouBar

Everybody is different. And every body is different. And if you are a sports enthusiast who wants to give his body exactly the nutrition it needs, YouBar now might have you covered. Their pitch: With YouBars, Zazzle could enter the large growth field of custom food.  --> WATCH THE VIDEO

DODOcase

Do you sometimes wish your fancy iPad, useful as it is, would be a bit more...individual? DODO certainly does and gives you the tools to design your very own, handmade iPad case, that can (but does not have to) look like your favorite book. Their pitch: DODOcase would bring traditional craft to the Zazzle world of mass customization.  --> WATCH THE VIDEO

Designscape

Few things can personalize a home better than individually designed and crafted pieces of art and assessories. With Designescape's concept including production with modern lasercutters, individually produced home decoration could become an affordable reality soon. Their pitch: Bring laser cutting technologies to the Zazzle platform to do many more amazing things.  --> WATCH THE VIDEO

And the winner is ...

It was really difficult to select a winner, but in the end SELVE was selected as the recipient of the Zazzle Innovation Challenge 2012! Congratulations, and I am sure we soon will learn about the outcomes of this cooperation!  (on the left, Selve founder and CEO Claudia Kieserling who joined by video from Germany)

 

---

 Extra:  Amongst the entries that did not make it into the finals, many presented really interesting, funny, creative and/or useful ideas. Honorable mention can especially be given to ...

• Unitedstyles. A plattform for consumer-designers to design fashion, buy their individual pieces and open virtual stores. (Video)
• Modify Industries, Inc. High-design co-creation of goods with a high grade of interchangable elements.
• Spek, personal eyewear. Eyeware, personalized in design, fit and shape, using modern 3D printing technologies (Video)
• Happy Toy Machine. Enables kids and the young at heart to create their own cool, cute, and crazy custom plush toys online. (Video)
• Easy DIY Nail (Yuan Lu) Individual fingernail design made easy (Video)
• Fabric on Demand. Affordable custom fabric printing - bring your pictures and designs on fabric (Video)
• Waggers Pet Products Inc. Give your pet the best you can with individualized pet food.

The Market for Mass Customization: Results from the Customization500. Part II: The State of Choice Navigation Toolkits

 (Part 2 in our series with key results from the Customization500 study. Part 1: Some Data on the MC industry structure).

The Customization500 study (see http://www.mc-500.com) provided us also a very detailed view into the current practice of choice navigation and online configuration. When crunching the numbers, we found a large puzzle:

The reality of toolkits clearly falls behind the broad body of academic research on design parameters of successful toolkits.

You find lots of additional information about the Customization 500 (short: MC500) study in a special section in my blog, www.mc-500.com

 

How did we evaluate customer satisfaction with a configuration toolkit

 

We used more than 40 parameters to evaluate the state and design features of each toolkit in our study (Table 3).

Table 3: Data collected for each configuration toolkit profile

 

This objective data was then matched with the performance outcome of the toolkit, i.e. the perception of our trained experts of the configurator.

For this evaluation, we used five criteria to measure the performance of a configuration toolkit in our sample:

(1) visual realism, (2) usability, (3) creativity, (4) enjoyment and (5) uniqueness.

All impressions were measured by our panel of trained expert judges on a 1 to 5 rating scale (1=very low value / 5=very high value).

• Multiple items: For most of these criteria, we used multiple items to gather the scope of these criteria. Items were grouped and tested with the help of factor and reliability analysis.
• Inter-rater reliability of these factors was checked with the Intra- Class-Correlation-Coefficient.
• Performance: Finally, the single factors were combined to one overall performance factor.

In more detail, the five evaluation criteria were constructed as follows:

• Visual Realism was measured by means of one question “How realistic do you assess the visualization of the configuration process?”
• To measure usability, the evaluators were asked to rate: "The configurator is (1) intuitively usable, (2) user-friendly as well as (3) clearly and (4) logically structured".
• The creativity factor consisted of two items: "(1) The website gave me a lot of freedom", and "(2) I could give my creativity free rein while designing the product".
• To determine enjoyment, the experts had to rate: "The configuration was (1) fun, (2) delight, (3) pleasure, (4) entertaining and (5) interesting".
• To assess uniqueness following statements had to be evaluated: "My created product (1) is unique, (2) is different, (3) helps me to differentiate; and (4) no one else has such a product."

In addition, we had multiple other scales for performance like the satisfaction with the final product, the willingness to purchase, the likelihood to recommend the vendor to a friend, etc. 

All 500 companies that are included in the Customization500 are presented with a profile picture like the following Figure 4.

 Figure 4: Sample profile picture (purchase the full report for all 500 evaluations)

 

Configuration process experience is driving overall customer satisfaction

 

Our analysis showed that on the one hand side, “preference fit” and the meeting of a customer’s “need for uniqueness” are strong drivers of satisfaction with a particular mass customization offering.  

However, process satisfaction, resulting from the enjoyment and creative involvement during a user-friendly configuration process, has an even higher impact in many cases, according to our data.

This confirms the early findings of researchers like Nikolaus Franke or Martin Schreier who have stated that in B2C mass customization about 50 percent of the additional willingness to pay can be explained by the process experience and a feeling of achievement and co-design success – and not by the higher functionality of fit of a custom product.

Our study clearly supports this claim. We urge managers to look beyond the sheer technology and back office integration of configuration toolkits and also focus on delivering a great configuration experience.

 

Meaningful visualization

 

Academic research often has stressed the importance of realistic visualization as a core element of a good toolkit. But many companies in practice still have very simple visualization features, and sometimes no illustration of the outcome at all.  But there also can be too much of a good thing:

Evaluators often highlighted not those sites with the most advanced 3D visualization as best in class, But those with visualization features that matter and come to the point.

For many products, a realistic, fast, plug-in free and well-described visual of an individual configuration is better than a complicated 3D model wearing, for example, my custom T-shirt – that takes many seconds to load and almost crushed my computer when playing with it. Sounds obvious? Well, it is not. We still see many sites where technology is used as a point of differentiation – but not as a source of customer value!

 

Providing help and process navigation

 

When looking at the data which features of a configurator drive most the perceived usability and use experience, we found that navigation- and orientation-help features, such as a progress bar or an activity list, play a key role. Co-design toolkits with a higher level of company- and/or customer-help features, such as design inspirations, deeper product information or recommendations by other consumers, in general performed better in terms of satisfaction.

However, about 50% of the toolkits in the "Customization 500" do not offer any or only a low level of these features. Here, we find many untapped opportunities for practice to enhance the gross utility of customers.

At the other side, we’ve found quite a few offerings without or with only a low level of these features which were performing excellently nonetheless. In some cases, the simple product design (solution space) did not require special help features. In other cases, customer satisfaction with the offerings was excessively influenced by the particular value provided by the customizable product itself.

There is not one best way. Companies should “customize their mass customization strategy” based on the requirements of their customer stock. But having an understanding of the perception of customers or a firm's toolkit is crucial to make such a decision.

 

Parameter versus need based configurations

 

The largest gap between practice and recommendations of academic research can be found in the area of parameter- versus need-based toolkits.  We found that in today's mass customization reality, basic parameter (option) based toolkits still rule. Customers have to make their own decisions from a list of predefined 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, it is not always the best option in consumer markets.

Here, need-based configuration has been shown to provide better results. In such a need-based system, users share something about their preferences, requirements, or expected outcomes. This input then is transferred by an algorithm into a product configuration. A need-based configurator hence mimics the behavior of a good sales person who also may recommend you exactly the right product (configuration) after asking just a few but insightful questions. In our study of the best 500 toolkits, less than 3% of companies had such a need-based configurator in place. While we acknowledge that it is more costly to develop a good need-based configurator, these systems seem to offer a great opportunity for differentiation and larger customer satisfaction.

 

Conclusion

 

Concluding, we can state that mass customization still is an area in the making. While there has been much progress, and there are some really great toolkits in the market, the majority of systems still are in an early stage. But as our data shows, from the customer perspective it often is just a small step between a good to a great toolkit.

All companies that have been included in the Customization500 received this vignette to illustrate that they are part of the leading companies in the field of mass customization and personalization. So when search for customization on the web the next time, watch out for this sign.

But we expect that the Customization500 is a very dynamic field. Even during the time of our research we found many developments, improvements, and failures. This is why studying the field of mass customization remains a continuous endeavor ... but a fun one, too!

 

Context information

 

Part 1: of this series:  Data on the MC industry structure

www.mc-500.com: More information on the Customization500 study and a list of the 500 companies included in the evaluation.

 

http://bit.ly/mcpc-proceedings: The Proceedings of the last MCPC conference cover many dozens of case studies, latest research, 2500+ slides, and 15+ hours of video of the plenary presentations. As part of the proceedings, you also find three detailed PPT presentations using the Customization500 data in larger detail.

www.mc2012.org: Speaking German? Then participate at the next meeting of the German-speaking mass customization community (Salzburg, 29 June 2012) – and learn from some of the German champions of the Customization500.

 

The Market for Mass Customization Today: Results from the Customization500. Part I: Company & Industry Structure

In his recent report about mass customization, Forrester's J.P. Gownder concluded that "mass customization is finally the future of products".  But how does the future of products look today?

In a joint project, Dominik Walcher and I looked together with our colleagues Thorsten Harzer, Christoph Ihl and Fabrizio Salvador into the practice of mass customization. Our multi-stage study, "The Customization 500", is the first global benchmarking study on mass customization and personalization in consumer e-commerce.

In a series of postings, I want to introduce some of the results from this research. You find all about the Customization 500 (short: MC500) study in a special section in my blog, www.mc-500.com

Sample construction for the Customization500 benchmark study

 

Given the scope of the mass customization market, we focused our analysis in the Customization500 on companies that sell directly to end consumers (B2C), using an online toolkit for user co-design that is applied to change the physical characteristics of the product in a dedicated manufacturing step (hence excluding products where customization is embedded in the product like a smartphone). In addition, we pragmatically focused on companies which we were able to analyze as they had a website in either English or German language.

In total, we found almost 1000 firms meeting these criteria (refer to www.configurator-database.com, a continuously updated list of mass customization companies). Following an extensive evaluation activity, we identified 500 companies that lead this field from a customer perspective (see here the full list). For each company, we gathered more than 100 data points. Data was collected by a group of trained expert evaluators who spent hours on each website.

 

 Figure 1: Selecting the data for the Customization 500

Also, each website was at least evaluated independently by three evaluators, and we took care to investigate all cases where the inter-rater reliability was not sufficient. The result of this exercise was a ranking of all companies, and allowed us to identify some of the leading offerings in the field. Figure 2 shows a summary picture of one of the companies included in the study.

 

Figure 2: A typical illustration of the overall score sheet of a company included in the Customization 500 (to get access to  all 500 profiles included in the Customization500, you have to purchase the full market study).

 

Which are the dominating industries with mass customization offerings

 

Table 1 provides an overview of the categories where mass customization in BtoC online today is employed. We find some very crowded categories that dominate the market. As expected, the option to personalize items by applying a user design on a basic product by different forms of digital printing is leading the field (categories 1, 2 and 4). There also always seems to be room for another custom shirt business or personalized sticker / foil to decorate your smart phone. Interestingly, however, there also is a very large (and still growing) field of applications in the food and nutrition industry where mass customization is applied to customize taste and nutrition of food.

 

Table 1: Categories of mass customization application in the Customization500

Using customized products for the gift market is a growing, but still not over-crowded opportunity. Most vendors still see mass customization as a one-to-one business, providing a custom product for the buyer (hence, also the dominance of me, my, mein etc. brand names).

However, some of the most successful mass customizers have realized that mass customization offers a perfect cure of a common problem: „Oh my good, [Name here]‘s birthday is coming up in a few days -- I need to rush to get an „original“ present now – but what?“ Take customized chocolate. Chocri and MyM&Ms, for example, are competing with gift cards and gift books, not with other candy items. They are not to be eaten - even if they taste very good - but to express that I have thought of you and really have spent some effort in getting this present done. For this, I am willing to pay a premium of 1,000 percent or more. As a provider, however, this means that a delivery time of 24 hours is a must, plus advice for easy gifting, wrapping, additional greeting cards etc. Here, we still see many untapped opportunities.

When looking further in the domains of mass customization application, we interestingly only found very few good configuration toolkits (for functional customization) in the field of consumer electronics and computers. Here, apparently the improvements of hardware apparently make it less useful to customize a product via toolkits before purchase, but allow users to customize the product during the usage stage with an embedded toolkit. It may be a sign of the shift in mass customization that the early pioneer, Dell, today almost offers no customization at all at its website. Well, there still is a configurator, but the choice options are very limited.

 

A closer look into company structures

 

For 120 of the 500 companies, we also could obtain extensive data by means of a company survey. Figure 3 shows our two-step data gathering approach.

Figure 3: The expert evaluation of the Customization 500 was followed by an extensive company survey of 120 companies

Descriptive statistics for the responding firms are given in Table 2, providing an enhanced insight into the company structures of the players in the mass customization market today.

• About 83% of the firms were founded exclusively with the purpose of mass customization, while 17% run their mass customization business in addition to their standard business. In general, most firms are rather young.
• Only 16% of the mass customization offerings are older than five years, indicating the long time lag from the description of the idea to the broader application of toolkits for co-design.
• 54% of the firms have less than five employees.
• Annual sales of the responding firms range from less than $100,000 to over $5 million in the last fiscal year, with the majority having sales of less than $1 million (83.5%).

These observations are consistent with our observation that the current dynamism in mass customization is driven primarily by innovative startups that have built their business models from the ground up and focus entirely on the promises of mass customization.

Table 2: Descriptive data from the company survey of responding firms

Clones dominate mass customization entrepreneurship

If you have a good idea for a custom product, it will be copied fast. This is one of the major conclusions we can draw from our observations of the market. The barrier to entry for many products is rather low, and once an interesting idea comes on the market, copycats follow quickly. This in general has not to be a bad thing, as also clones help to build the market, generate attention, and signal to press that this is a new category.

However, for the pioneers this means that they have to focus as much attention on branding and differentiating their business as upon building the processes and systems. Patents or other forms of IP do not provide much help here, thus, we conclude: As a pioneer, be fast, smart, and differentiate your business beyond the brand name and your core products.

Despite the many "me-too" offerings, surprisingly often the late followers are doing very well in their segments. We see three reasons here:

(1) Strong growth opportunities in every market: The late comers even in the most crowded categories (like custom men's shirts) enter into a market that still is not matured at all. Overall, there is not one category in consumer B2C where custom products have more than a few percent of the overall category (in most cases, they have a few tenth of a percent!). So there is still enough space for everyone.

(2) Market education: Pioneers in a category often have to spend a lot of attention to educate the market and just let consumers (and journalists) know that this kind of custom product is available. Latecomers can build on this generated market education.

(3) "Best of Breed" solutions: Latecomers often perform as best of class of established players, combining the design elements of pioneers, but also of mass customization sites in other categories.  A recent good example if getwear.com, which came late with another custom jeans offering, but has the best online configurator in its industry.

Mass customization platforms make the third wave of mass customization

But despite many clones, we also found a lot of innovative business models. Some of the best performing companies in the Customization500 are not stand-alone businesses that deal directly with consumers, but are mass customization platforms. These platforms can be regarded as the third stage of mass customization development.

The first wave of mass customization was driven by the early pioneers in the field in the early 1990s, motivated by the opportunities of new flexible manufacturing technology. Levi Strauss is a typical example from this time. Most of these offerings worked offline in a traditional retail environment. Also, first internet offerings coming of in 1995 and 1996, like CyberChocy or Creo Interactive, came up at this time. But in most markets, consumers were not ready yet.

The second wave came with the internet economy, around 1998-2002. Often, startups at that time just opened, as everybody could do it, not as customers needed it. But some great examples of mass customization survived, like NikeID (opening only because former Nike CEO Phil Knight wanted to have „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. It was the broader development of online configurators that made mass customization happening in a larger scale.

But a third wave of mass customization is happening now: It is driven by companies like Ponoko, Zazzle, Spreadshirt, Cafepress, Lulu, Gemvara, and many others, which offer design, manufacturing, and retail capacity to everyone. These platforms allow entrepreneurs to open a dedicated mass customization business at very low investment cost. On these platforms, people are not just customizing to fulfill their own needs, but to create (micro) niche markets for their peers. The platform providers have successfully combined the eBay idea of very easily selling things over the internet with the customization model of robust fulfillment processes. Here, we are just at the beginning and will see many more applications soon.

In an upcoming posting, we look more closer into the state of the practice of choice navigation (configuration) toolkits.

Context information

 

www.mc-500.com: More information on the Customization500 study and a list of the 500 companies included in the evaluation. 

 

http://bit.ly/mcpc-proceedings: The Proceedings of the last MCPC conference cover many dozens of case studies, latest research, 2500+ slides, and 15+ hours of video of the plenary presentations. As part of the proceedings, you also find three detailed PPT presentations using the Customization500 data in larger detail.

www.mc2012.org: Speaking German? Then participate at the next meeting of the German-speaking mass customization community (Salzburg, 29 June 2012) – and learn from some of the German champions of the Customization500 

Public Proceedings of the last MCPC Conference Published -- Access all Conference Presentations, Papers, Videos

Did you miss the MCPC 2011 conference? It was a terrific event, and we really got great feedback and comments on the conference.  Check here for some conference pictures!

Richard Henderson at UC Berkeley has been very helpful in creating the best conference documentation we ever had! On a special conference website, the full conference program  is  now available with links to the slides of the presentations, full papers (when available), and many full videos of the plenary and keynote presentations (for Day 1 and 2).

To access this rich source of information (I estimate that this are 2500+ slides, 1000+ pages of papers, and 15+ hours of video), either use the access code you got as a conference participant, or purchase* the full text proceedings:

Bridging Mass Customization & Open Innovation. Proceedings of the MCPC 2011 Conference -- including an access code to all presentations, papers, and videos. Edited by Henry Chesbrough and Frank Piller. Published by Lulu, Inc. (Raleigh, NC), 2012.

=>  Paperback version: ISBN: 978-1-4716-3023-1 (ca. 5 day delivery time)

=>  eBook version: ISBN: 978-1-4716-3086-6 (instant download)

For detailed information about presentations and speakers please also refer to the conference proceedings flyer!

---

*Note: Why do we sell these proceedings and do not provide open access? First, this would have been unfair to all people participating at the conference and paying the full fee there. Second, organizing such a conference is a big effort and investment, and we still need the proceeds from this publication to cover our cost. Third, many authors and presenters do not want to have their papers and presentations openly on the web, but agreed to a controlled publication only.

New Book: Customer-Driven Supply Chains: From Glass Pipelines to Open Innovation Networks

As a result of our EU-funded research project REMPLANT, we are proud to announce a new book that Prof. Frank Piller partly co-authored:

Customer-Driven Supply Chains From Glass Pipelines to Open Innovation

by Lyons, A.C., Coronado Mondragon, A. E., Piller, F. and Poler, R

Find Customer-Driven Supply Chains at Amazon.com

More book info and download of individual chapters at Springer.com

The Book reviews the concept of lean thinking and its relationship to other key initiatives associated with supply chain management. Detailed industrial case studies based on the authors’ experience illustrate the principles behind lean supply chains. Moreover, a series of diagrams are used to illustrate critical concepts and supply chain architectures. Special emphasis is placed on the importance of transferring lean principles from the organisational level to the supply chain level. The theory and principles behind lean supply chains are reviewed. Other concepts related to lean supply chains discussed in the book include: mass customisation, agility, information sharing and the bullwhip effect. A methodology used to measure the performance of supply chains is introduced; this methodology comprises the tools of decision timeline, data-flow diagramming, supply chain value stream mapping and a performance measurement scorecard.

Readers will gain a clear picture of the competitive implications of lean supply chains. Customer-Driven Supply Chains: From Glass Pipelines to Open Innovation Networks will be a valuable resource of material to students studying supply chain/operations management as well as researchers in this field. Industry practitioners will learn how to develop sound supply chain strategies that can have a positive impact in their organisation.

Lead author and driver behind the book has been Andrew Lyons from the University of Liverpool, a great research partner in the REMPLANET project. He has been a Lecturer in Operations Management at the University of Liverpool Management School since 2002. His research interests include: operations strategy, supply chain design and performance measurement, supply chain information structures, mass customisation and build-to-order strategies.

Full program of #MCPC2011 published: More than 150 Presentations on Mass Customization, Customer Co-Creation & Open Innovation

  

 Finally, the full conference program of the MCPC has been released. There still are a few things to update and exchange, but 95% of the program are fixed!

In addition to hundreds of CEOs, Founders, Directors, and Practice Leaders of the companies that apply and support mass customization, customer co-creation and open innovation successfully, many of the world's leading researchers in these areas will present latest findings in an accessible way.

The interactive conference format of the MCPC 2011, supported by the proximity to the Silicon Valley / Bay Area entrepreneurship and investment community, allows for deep interaction and networking between the participants. There are more than 150 presentations, panels, or workgroups on the program!

Join us in a lively exchange on best practices, case studies, success factors and open business models that focus on the top management and leadership issues and / or provide deep insights into specific design parameters of the tools and technologies behind open co-creation and mass customization.

Some selected topics of presentations and panels at the MCPC include:

- Setting up a mass customization business model;
- The market for mass customization;
- Defining a customer co-creation initiative that works;
- Managing customer-centric supply chains and fulfillment:
- Design elements of successful configuration toolkits;
- Metrics for open innovation;
- Implementing open innovation in an R&D organization;
- Learning from failures of the early pioneers;
- Getting VC investments for business models for MCP;
- Optimal incentives for internal and external participants;
- Getting corporate buy-in for customer co-design and OI;
- And much more!!

Before the main conference (Nov 18-19), a special business seminar provides executable frameworks for the management of mass customization and open innovation and a focused view on future topics.

Please register as soon as possible, as seats are limited and many are already taken! The conference hotel is conveniently located between San Francisco Airport (SFO) and Silicon Valley and allows for very efficient travel.

We hope to meet you in San Francisco in late Nov !

Frank Piller and Henry Chesbrough

MCPC 2011 Co-Chairs 

http://www.mcpc2011.com | MCPC2011 Full Program

 

#MCPC2011 Program Highlights - Mass Customization as a Driver for Sustainability

In a series of postings, we present some of the program highligths of the MCPC 2011 conference. The following is just one of more than 50 sessions we will host on Nov 16-19 in San Francisco, CA.

The relationship of mass customization and sustainability has discussed since quite a while, but still there is very little knowledge about this field. A dedicated track at the MCPC2011 will provide a closer look on this topic.

Sessions 2.2, 3.2 and 4.2 (Nov 18): Environmental Sustainability and MC

Mass Customization and Sustainability - An Introduction

An introduction to the general topic of this session will be held by Frank Steiner (RWTH Aachen University).

Is Mass Customization Sustainable?

Mass Customizers are like other companies currently experiencing an increasing customer demand for environmentally sustainable products as well as an increasingly strict legislation regarding environmental sustainability. In this presentation Thomas Petersen,  Kaj Jörgensen, Kjeld Nielsen, Stig Taps (Aalborg University) will address the issue whether the concepts mass customization and sustainability can be integrated by asking the question: can mass customized products be sustainable?

Proposal of a  Reference Framework to Integrate Sustainability and Mass Customization in a Production Paradigm

Mass customization strategy is applied by firms in order to make them more customer-oriented and make each individual customer a source of opportunity and hence profit for the firm. Sustainability on the other hand brings not only eco-efficiency for the company, but also has a great impact on economic efficiency and social perspective of the firm. Donatella Corti, Marco Taisch, Golboo Pourabdollahian (Milan University), Andrea Bettoni, Paolo Pedrazzoli and Luca Canetta (University of Applied Sciences and Arts of South Switzerland) will show how integrating these two concepts together to develop a new strategy of sustainable mass customization can create a significant value for companies in today’s globally competitive environment.

Modeling Framework to Evaluate Sustainability Performance of Mass Customization Solutions

In this presentation Fazleena Badurdeen (University of Kentucky) and Ken Wijekoon will present a framework to optimize the configuration of customizable solutions (products or product-service systems) to ensure economic, environmental and societal sustainability requirements are satisfied. Activities across the total product life cycle are considered to develop a model to evaluate closed-loop flow assuming a modular product where customization can be achieved by selecting from alternatives.

Towards an Integrated Mass Customization and Sustainability Assessment Framework

The new challenge of sustainable development adds more requirements to be dealt with in order to keep their competitiveness and sustain their position in the market. For the mass customization enterprises, sustainability performance may depend on several mass customization enablers, thus these two concepts needs to be assessed together in order to foster both. Khaled Medini, Catherine da Cunha and Alain Bernard (Nantes University) will take a closer look at enterprise interactions with environment, society and economical environment and how they can be interpreted as a first step to establish an enterprise model in the mass customization and sustainability context.
 

Supporting Sustainability and Personalization with Product Architecture

Consumers as well as governments are applying constant pressure on companies to adopt a more sustainable strategy, consumers request greener products and governments applies rules for reuse and more eco-friendly manufacturing. There are several factors counting in favor or against the sustainability of MCPC products.

Modularization is a driver for MCPC and earlier research within product architecture has indicated that modularization could support sustainability. In their presentation Thomas Petersen,  Kaj Jörgensen, Kjeld Nielsen, Stig Taps (Aalborg University) will present their empiric work on the drivers for modularization with focus on sustainability and MCPC.

Smart Customization: The New Driver of Sustainability. A Case Study in Custom vs. Standard Men's Dress Shirts

In 2009 Ryan Chin and Daniel Smithwick (Massachusetts Institute of Technology) published "Environmental Impacts of Utilizing Mass Customization," a paper that focused on sustainability benefits of mass customized men's dress shirts by examining the manufacture, distribution, and use of custom vs. standard off-the-rack men’s dress shirts. In this presentation they will extend this research in breadth and depth by conducting a series of detailed experiments focusing on the total consumer experience of custom vs. standard men's dress shirts. 

Co-Creation and Mass Customization from a Triple Bottom Line Approach

Very often mass customized products are considered more sustainable than mass produced products. However, there is little evidence that this is the actual case, there are however components in those supply chains that do suggest that less waste is produced. Jonas Larsson, Joel Peterson and Klas Hjort (University of Boras) will map and analyse three supply chains with different offerings of mass customised or co-created products from a social, environmental and economic perspective i.e. the triple bottom line. It will not be possible to conclude whether these supply chains are sustainable or not but rather to compare the supply chains with each other from the triple bottom line perspective. The work is based on qualitative and quantitative data and case studies of three supply chains.

MCPC: The Enabler to Open the Next Age, It's Opportunity and Challenge, Report from Japan Post 3.11 Earthquake

Yasuyuki Cho (Wacoal) is an MCPC practitioner born and living in Japan. Under the deep impression of the Tsunami that hit Japan on March 11 he changed the subject of his presentation to reflect on MCPC and its chances and opportunities for a sustainable life and business.

Customization and Manufacturing Sustainability: General Considerations and Footwear Investigation

To adapt to global competitive pressures, European Industry must develop methods and enabling technologies towards a personalized, customer oriented and sustainable manufacturing. To this end, a key question to be addressed is whether Mass Customization can be regarded as one of the main driving forces to achieve effective Sustainability, or rather a burden.
Andrea Bettoni, Paolo Pedrazzoli, Luca Canetta, Marzio Sorlini, Claudio R. Boer (University of Applied Sciences and Arts of South Switzerland) and Donatella Corti (Milan University) will first portray the two concepts of mass customization and sustainability and will then propose a framework to establish a link and evaluate it, also with the support of concrete examples in footwear.

 

Listen to the full content of these talks at the MCPC 2011, Marriot SFO Airport, San Francisco, Nov 16-19, 2011:

- Conference Website and Registration (reducted rates until Sept 30)

- All info here in one compact MCPC flyer

- Conference hotel and travel (rooms fill quickly, book now!)

- All posts about the conference in my blog

#mcpc2011 Program Highlights: 130+ session presentations, 20+ keynotes, and great networking

We are now working full pace to finalize the program planning for the MCPC 2011 conference. I don't know whether it was our co-chair Henry Chesbrough, the cooperation of four top universities like UC Berkeley, MIT, RWTH Aachen, and HKUST, our theme "Bridging Mass Customization and Open Innovation" or just the location San Francisco, but we go a really huge feedback on our call for proposals.

Also, the current news about the Cafepress IPO and rumors on more MC companies hitting Wall Street are building the excitement about the conference.

After a more critical review process compared to the previous years (about 35% rejection rate) of our program committee, we are proud to present more than 130 presentations in the main program and more than 20 plenary talks, panels, and keynotes in the business seminar.

The full program will be published in structured form on the conference website soon, but I will feature in a series of blog posts in the coming weeks some of the great content that will be presented at the MCPC.

Here some facts on the event:

Nov 16-19, 2011 - San Francisco Airport Marriott Hotel - mcpc2011.com

- Speakers from more than 25 different countries -- meet some of the top researchers in the field or the entrepreneurs that shape the field

- At least 45 sessions over the entire program, providing an in-depth view on many topics to build, implement, and run a mass customization program or to profit from open innovation and customer co-creation.

- Featured showcase sessions on special topics, bridging mass customization and open innovation

- Case Study Sessions - learn from direct experiences of entrepreneurs and managers DOING mass customization and open innovation

- Plenty of room to learn from latest research and studies

- Exhibition of technologies and enablers for mass customization and open innovation

- Networking receptions every evening, plus plenty of space to discuss during breaks and lunches

(Hint: If you are really curious, you already can get a sneak preview of many presentations in the parallel sessions here in the conference submission system. But this has a rather messy layout and no structure -- wait for a better version and also all plenary talks on the main conference site)

More info on the MCPC 2011:

- MCPC 2011 Business Seminar: Nov 16-17. Main Conference: Nov 17-19

- All info here in one compact MCPC flyer

- Conference Website and Registration (reduced rates until Sept 30)

- Conference hotel and travel (rooms fill quickly, book now!)

- More news about the conference in this blog

MCPC 2011: Call for Papers and Presentations - Bridging mass customization and open innovation

The 2011 World Conference on Mass Customization, Personalization, and Co-Creation (MCPC 2011): Bridging Mass Customization & Open Innovation

San Francisco Airport Marriot Hotel & Conference Center, November 15-19, 2011 
mcpc2011.com | twitter: #mcpc2011 | download Call for Papers

Finally, the MCPC 2011 is ready to go public: I am really excited about the next large MCPC conference, as we finally will bridge between the two topics that have been driving my research since many years: mass customization and open innovation. There are many common themes and topics between these two domains. In a separate posting, I have provided an overview about the connections between mass customization and open innovation.

For this endeavor, we could win the best possible conference co-chair representing this topic: Prof. Henry Chesbrough from the Center for Open Innovation, Haas School of Business at the University of California Berkeley. I believe Henry needs no introduction at all to anyone reading this blog. But head to his blog and web site for recent information about his work.

The second local 2011 co-chair will be Solomon Darwin, Associate Director at the Center for Open Innovation, University of California Berkeley. Solomon already was of great help in finding the venue and setting many details of the conference!

But the most important ingredient of the conference is YOU! We need YOUR best ideas, papers, and presentations to create an exciting and truly innovative program. And so I am happy to present today and here for the first time the upcoming Call for Papers & Presentations for the MCPC 2011.

The most important information follows below, but you also can download the MCPC 2011 Call for Papers in pdf form.

The MCPC Conference Series

As you may know, the MCPC conference series started out in Hong Kong in 2001 as a bi-annual conference devoted to Mass Customization & Personalization. The content has broadened in recent years, including also customer co-creation, user innovation and other strategies of customer-driven value creation (hence, MCPC = Mass Customization, Personalization, and Co-Creation"). The event frequently brings together hundreds of the world's most remarkable people in the field.

For reports and reviews of the previous conferences, check here (MCPC 2007 at MIT) and here (MCPC 2009 in Helsinki).

The MCPC 2011

The MCPC 2011 wants to engage academics, business leaders, and consultants in fundamental debates through a set of plenary presentations, discussion panels, and paper presentations. The conference will take place on Nov. 15-19, 2011 at the San Francisco Airport Marriott Hotel & Conference Center.  Located in Burlingame, CA, just minutes from the San Francisco International Airport and between downtown San Francisco and the Silicon Valley, the hotel offers a perfect location with great views of the San Francisco Bay. Its inviting waterfront location and great conference center will provide an inspiring conference setting.

The 2011 conference will consist out of four major elements:

• The "Research and Innovation Conference" is an academic-style conference, with a broad call for papers. All contributions are peer reviewed by at least two reviewers. An international program committee and many ad-hoc reviewers support the program chairs with this process. Presentations are organized in parallel tracks, with plenty of time for discussions and feedback. The conference has the policy of "all participants, including presenters, have to pay the registration fee" that is characteristic for academic conferences.  The open call for papers & presentations relates to this part of the event!

• The "Business Seminar" provides an innovative platform for managers DOING mass customization and open innovation as the core of their business. The seminar's foremost idea is to connect managers in peer-to-peer interaction to foster an intense discussion, facilitated by presentations from industry leaders and the seminar faculty. In 2011, the Business Seminar will kick-off the entire conference event. Presentation at this seminar is by invitation only.

• Networking events: A sponsor's marketplace & exhibition, social events like networking lunches, conference dinners, and cocktail receptions, but also site visits to local companies provide unique opportunities to connect and exchange ideas among participants. The event has a long track-record of successful business relationships and even a number of start-up companies that has been launched thanks to new connections during participants of the conference.

• Pre-Conference Show: The first day of the conference, Nov. 15, will be used to host a public event in a central location in Palo Alto or san Francisco to showcasre to a wide public that customization and co-creation are new future trend but a broad reality. A press event and exhibition will be part of this pop-up sho of MC excellence.

How to submit your paper and presentation proposal

We invite you to submit your best work, addressing the conference theme along one or more of the questions asked in the detailed call for papers (PDF). We especially seek papers which follow the idea of "engaged scholarship", i.e. which are relevant to both practice and research.

You can submit three types of proposals (Page limits include references and figures):

1. Full papers: Max. 10 pages, according to the formatting guidelines (http://bit.ly/g8y1Tr). This is the preferred form of submissions.
2. Short papers / extended abstracts for work in progress (3-5 pages), but including comments on the research question, the methodology, data and empirical methods used (if applicable), and a discussion of the results. Please also use the formatting guidelines for preparing your extended abstract (http://bit.ly/g8y1Tr).
3. Presentation proposals (PPT slides) by managers: In order to accommodate practitioners who have interesting results but are not familiar with writing papers, this alternative way for contributing is offered. Mass customization business proprietors, open innovation project managers, services and technology providers are invited to submit a presentation outline in form of a slide presentation (PPT of max. 20 slides, transferred into PDF). 

Please check the detailed Call for Papers for more details on what we expect from a good proposal, how to format your paper, and how to submit it!

To submit a paper (practitioners: presentation proposal), head here. 

Important dates

April 7, 2011: Deadline for submissions for paper and presentation proposals (via this online submission system only)

June 15, 2011: Final notification of accepted contributions

Aug. 1, 2011: Presenter registration deadline

Nov 16-17, 2011: MCPC 2011 Business Seminar (optional registration required)

Nov 18-19, 2011: MCPC 2011 Research Conference and Presentation Sessions

More information

• Download full call for papers & presentation as PDF (with much more information!)

• Download MCPC 2011 Conference Briefing - An extended "About the Conference"

Conference Report: MCP-AP 2010 - Mass Customizaton in Asia Pacific

 Just coming back from two weeks of heavy travel that brought me from Cologne to Frankfurt, Bangkok, Taipei, New York, Quebec, and Brussels, and today finally back to Aachen and Cologne.  One of the core events of this trip was the MCP-AP 2010, the "Mass Customization & Personalization Conference Asia Pacific".

The idea of the MCP-AP is, along with other regional conferences, to create a platform for exchange and collaboration on mass customization and personalization. We were a great crowd of people in Taipei. As expected and targeted, about 80% of the participants came from Asia, representing countries like China, Hong Kong, Indonesia, Japan, Singapore, Taiwan, Vietnam.  The rest was a nice circle of old friends and MC enthusiasts from Europe, Canada, and the US. In total, about 300 different people participated over the course of the three conference days.

The event took place at the National Taiwan University of Science and Technology, a premier university of technology in Taiwan (with one of the best industrial design schools in the world (recently ranked #4), and hence all the conference graphics and setups really were innovative and great).

We had a number of great conference keynotes, and also some very interesting PhD student papers. This is what I learned from the days (very subjective report, just what stuck in my mind):

• Research on MC and sustainability is coming. Slowly, but steadily. We had a number of good presentations on the topic. But still there are plenty of measurement problems and especially questions on where to draw the boarder of the system analysis. Claudio Boer from SUSPI in Lugano presented a very interesting new European project on sustainability drivers of MC.
• The term "mass customization" is getting more and more fuzzy. Roger Jiao had a nice keynote presentation with a very good summary of research in the field from the last 10 years, and he proposed the term "personalization" to denote the concept of really "personal" products as those being created for example by rapid manufacturing or other digital / parametric manufacturing technologies that do not any longer demand a pre-defined set of options. I am not sure whether I will adopt this definition, but the trend is there.
• Also, we had a great presentation by Dr. Yih-Ping Luh, CEO of OLE Technology Ltd. Canada. He is working with some of the largest companies in the world to organize flexible supply chains, and had a nice concept of assortment customization in large scale for different retail formats. This definitely is mass customization thinking, even if the unit of analysis are batches of products, and not individual solutions.
• Quasi or defacto standards for configuration systems are developing, as Paul Blazek from Cyledge in Vienna showed in his presentation. This means that consumers start to learn how to operate a configuration toolkit, and that companies have to make wise decisions whether to meet a standard (like placing the configuration progress bar in a specific corner) or breaking with it as a point of differentiation.
• Confortable high-heels are possible (even very high ones). It was great to see again Prof. Ravi S. Goonetilleke from the Hong Kong University of Science and Technology, one of THE world experts in footwear design, and an old friend in the mass customization domain. He presented a new "scanning" (measurement) device to evaluate the perfect and most comfortable heel for an individual woman. Not that I am personally in the need for it, but it is leading edge research that really addresses the needs of MANY people.

On top, there was a great social program with excellent food (Taiwan has, in my opinion, some of the best Asian cuisines) in great locations like the world's highest restaurant (in Taipei 101) or the historical Palace Museum.

Thanks a lot to the local organizers around conference chair Prof. Shuo-Yan Chou and the great head of the organizing committee, Ms Hime Wang, for a great MCP-AP experience!

More information: For more information on the conference and a documentation of the program and presentations, please head to the conference website.

Term wars: Personalization versus Mass Customization -- A review of the definitions

In the last days, I have been drafting a chapter on mass customization for an upcoming book on customer-centric supply chain management. As part of the endeavor, I also was looking into the long, apparently never-ending debate on the difference between mass customization and personalization.

So: Is this the same, something fundamentally different, or something in between?

The starting point for mass customization and personalization fundamentally is the same: To turn customers’ heterogeneous needs into a competitive advantage. Or, as Bas Possen, a Dutch mass customization pioneer states his as the vision of his company (customax.com): "In general, too little use is made of the advantage that all people are different."

Bruce Kasanoff provided a good definition of personalization during his keynote at the MCPC 2009 conference in Helsinki:

"After years of trying to simplify [the definition of] personalization, I finally got it down to two words: Personal = Smarter. The more you customize, the smarter you get. The smarter you get, the more competitive you become. It really is that simple. Doing it, of course, takes a lot of work."

According to Bruce's definition, 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 a patient a test to determine which treatment will work best for her before the treatment starts, that's personalization. Likewise, if a company gives their clients the option to tell their service center when and how to contact them, that's also personalization.

Mass customization then could be seen as a process for implementing personalization.

Stan Davis, who initially coined the term in 1987, refers to mass customization when

“the same large number of customers can be reached as in mass markets of the industrial economy, and simultaneously […] be treated individually as in the customized markets of preindustrial economies”.

B. Jospeh Pine II then defined mass customization in his 1993 seminal book as

“providing tremendous variety and individual customization, at prices comparable to standard goods and services” to enable the production of products and service “with enough variety and customization that nearly everyone finds exactly what they want”.

A pragmatic definition was introduced by Mitchell Tseng and Roger Jiao (2001). According to them, mass customization corresponds to

“the technologies and systems to deliver goods and services that meet individual customers’ needs with near mass production efficiency.”

Often, the mass customization definition is supplemented by the proposition that the individualized goods do not carry the price premiums associated traditionally with (craft) customization. However, we found that consumers are frequently be willing to pay a price premium for customization that reflects its increment of utility. Hence, I today opt for not including a price proposition into the definition of mass customization.

Also, mass customization does not demand lot sizes of one. Custom products can be produced in larger quantities for an individual customer. This frequently happens in industrial market, when, for example, a supplier provides a custom component that is integrated in a product of the vendor.

Indeed, one of the biggest lessons from my past research is that there is no one best way to mass customize. Take, for example, the widespread belief that mass customization entails building products to order -- a belief that also I followed for a long time. But today I agree that this is not necessarily true.

Customers are looking for products that fit their needs, and they do not necessarily care whether those offerings are physically built to their order or whether those items come from a warehouse – just as long as their needs are fulfilled at a reasonable price.

Consider, for example, the success of style-matching services like MyVirtualModel, Zafu, or Intellifit: These services provide consumers with a customized assortment fitting exactly their needs – created out of a set of standard apparel items. Or take the example of Pandora Radio. Every user of this internet radio station will praise its ability to customize a really individual stream of music, different for any particular user. Pandora creates a custom music delivery system by matching standard songs to a user's preferences.

So: Are these examples personalization or mass customization? Both?  In some respects, personalization is a goal and mass customization is the way to accomplish that goal. Mass customization means to create processes and capabilities for aligning an organization with its customers’ needs.* The resulting offering may be called a "personalized" offering from the perspective of the customer.

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.

In the end, it is not the term, but the result and value created by applying these concepts. The core point I want to make here is that mass customization should not be seen as a dedicated business model or a specific form of competitive strategy.


*Note: In our last year's paper in the MIT SMR, Fabrizio Salvador, Martin de Holan and I introduced three fundamental capabilities which characterize mass customization:  The ability of an organization to identify the product or service attributes along which customer needs diverge (solution space definition), the ability to reuse or recombine existing organizational and value-chain resources (robust process design), and the ability to help customers identify or build solutions to their own needs (choice navigation).

From Open Innovation to Open Manufacturing: M. Tseng on "Shanzhai" cell phones in China -- A model of open manufacturing

My colleague Mitchell Tseng from HKUST, brother in arms of many of our MC initiates and publications, last year gave a very inspiring presentation that now has been published in print. On invitation of the Peter-Pribilla-Foundation, Mitch was asked to present his ideas on how open innovation thinking will influence manufacturing.

And he came up with a very different take to the state of the discussion. Before, the term open manufacturing often has been connected to the community of people that develop "open" manufacturing technologies like OS-based 3D-printing (Makerbot et al.) and "Open Hardware" (see http://www.openhardwaresummit.org -- I participated at this event but had not time to blog about this yet).

But Mitch is not talking about these initiatives that more or less build on the transfer of the principles of open source software idea to hardware. His approach towards open manufacturing is building more on Henry Chesbrough's understanding of open innovation as a broad collaboration of organizations.

Open manufacturing in Mitch Tseng's understanding builds on the idea that supply chain networks are getting more open and often are organized around a kind of platform that allows the exchange of resources and capacity between the participants. This allows new and smaller players to enter the market and produce new products (often for niche markets) faster and with high efficiency.

One example of open manufacturing in his understanding is the success of Shanzhai manufacturing in China. Originally, this is the name for the Chinese companies that design and market counterfeit electronic products. According to the Blog blogs.gxs.com,

"The term dates back several hundred years to Chinese mountain bandits which operated outside the purview of the local government."

On the website Shanzhai.com  these companies “operate a business without observing the traditional rules or practices, often resulting in innovative and unusual products or business models.” 

Today, the Shanzhai represent approximately 20% of the mobile phones sold in China annually!  And they go global. With exports, Shanzhai were estimated to represent 10% of worldwide phone sales in 2009.  And not all Shanzhai phones depend upon stealing the designs and brands of foreign brands, as blogs.gxs.com writes:

"Some manufacturers have become so successful that they are leveraging their own brand.  For example, Tianyu, which is referred to as the King of the Shanzhai, markets its phones under its own label.  Tianyu started off like much of the Shanzhai imitating global brands and evading government licensing requirements.  However, the company became so successful that it has adopted a new business model in which it obtains licenses, pays taxes, and sells legitimately on the commercial market.  Tianyu now enjoys 8% market share in China, more than Nokia, Samsung or Motorola!"

In his paper, Mitch Tseng describes very well how open collaboration enables these companies to compete with such an efficiency -- and his conclusion is that behind the success of Shanzhai is much more than counterfeiting  and stealing Western designs: It is the openness of their manufacturing and design network.

I find this case remarking due to two characteristics:

• First, the Shanzhai model shows a great way for robust processes for mass customization. Many of the models are highly individual pieces, created by a Shanzhai company to tap into a makret opportunity it realized. Production runs often are just a few hundred pieces, and often are starting with a special request by a customer or retailer.
   
• Second, it is a great model of what openess can offer. I have to strongly emphasize that I AM NOT in favor of stealing the IP of other companies or pirating and counterfying products. But the model shows that in a world where existing knowledge can easily being combined to new creations, a lot of creativity resides.

More information:

I have placed a full scan of Mitch's paper here. It has been published in a recent brochure by Peter Pribilla Foundation, summarizing the results of a conference in Munich in April 2009. (Download paper)

And a note for all management professors: Mich and Hau Lee from Stanford have published a great teaching case on the Shanzai model. It can be obtained here.

Mass Customization Friday on Facebook at August 6

20 startups in the mass customization space will advertise in a coordinated fashion on Friday (August 6) on Facebook to create awareness for design-your-own and customization.

While mass customization start-ups really are popping up all over the place, there still is rather little awareness about this new trend with the general public. 24 mass customization companies set out to change that! They have united in a great way to make August 6 "Mass Customization Friday" by all purchasing and running Facebook Ads with a "design your own" claim on that day.

The objective is to reach at least 8 Million impressions on Facebooks for the "design your own" trend. The core idea is "conversation not conversion" and to create some buzz and awareness for the customization trend.

Carmen Magar from Chorci USA describes her motivation to participate with er company in this project, "I think it's a great example of a collaboration, a "movement" if you may. Hopefully this will change the way people think about purchasing products and encourage them to co-create and actively look to have an input in the products they consume."

These are the "mass customization" companies participating -- many of these companies met on the MIT Smart Customization Seminar in May for the first time and started to cooperate!

• Blank Label- co-created dress shirts (style the collar, cuff, placket and really make it your own)
  
• chocri- co-created chocolate bars (pick your favorite chocolate base and mix in the toppings you love!)
  
• Spreadshirt- co-created t-shirts, sweaters and hoodies (add graphics or text and get it personalized for you)
  
• LaudiVidni- co-created handbags (for the woman that really knows style and is tired of the monotonous Coach and LV bags)
  
• Gemvara- co-created jewelry (one-of-a-kind gemstone jewelry with 16 different gem varieties and eight precious metal choices)
• Shoes of Prey- co-created women's shoes (style the heel (or no heel), tor, fabric, color andembellishments)
  
• Wagner Skis- co-created skis andsnowboards (uniquely suited to your style, strength, weight and mission profile)
  
• Gemkitty- co-created jewelry (customize semi-precious gemstone jewelry. Choose from seven necklace, five earring styles and hundreds of gemstones)
• Snaptotes- co-created totes (add photos to your bags to further cherish the memories)
• Element Bars- co-created nutrition bars (energy and protein bars with the ingredients you favor)
• YouBars-co-created protein bars, shakes, trail mix, cookies and cereal (mix the ingredients you love and need)
  
• Red Moon Pet Food-co-created pet food (for that particular pet with a special diet or just because your pet deserves more)
  
• Rooms By You-co-created bedding and soft goods (home décor customized on demand)
  
• Lindgolf-co-created golf clubs and bags (golf clubs for performance and looks)
• Artaic-co-created mosaics (build your own art by uploading the photos you love)
• Melboteri-co-created handbags (select the style, components, and color of each handbag)
• Indidenim-co-created jeans (jeans designed with your preferences in mind and made to measure)
• Kidlandia-co-created home decor and puzzles (from dozens of designs, your personalized creations make memorable puzzles, wall décor, and other unique, high-quality gifts)
• Maguba-co-created clogs and women's sandals (style your footwear however you want!)
  
• Personalwine-co-created wines (personalize award winning wines with your unique label)
• Proper Cloth-co-created luxury dress shirts (for the guy that loves Egyptian cashmere and is a luxury buyer)
  
• Design A Tea-co-created tea blends (blend the teas with the proper proportions you prefer and personalize the packaging)
• Selve-co-created women's shoes and boots (choose your style, color, suedes, leather and lining)
  
• Open Runway- co-created women's shoes (still to be launched)

I am curious to see how this is working and what buzz this generates --- at least it got me into blogging again after rather a long break.

Sad News: Bill Mitchell, Co-Director of the MIT SCG, dies at age 65

Very sad news: Our friend and colleague Bill Mitchell, Professor at MIT and one of the co-founders and a very strong supporter and intellectual stimulus of the MIT Smart Customization Group, among many other initiatives, died last Friday, much to early, in the age of 65. 

Bill really influenced my thinking and work on mass customization in many respects. He was among the first to see how mass customization thinking can be applied to much larger systems like homes, infrastructures, electric cars, and especially the city itself. His work on product grammers, sustainability, and personalization extended the methods and approaches of mass customization.  Luckily, he inspired many students and colleagues, so his thoughts and ideas will live and will be used in the future.

Bill also enabled us to host the MCPC 2007 Conference at the MIT Campus and to start the MIT Smart Customization Group as a research group within the Design Lab that Bill founded in the 2000s at MIT.

My thoughts and wishes are with his family and his close colleagues and students at MIT.

Bill, we all really will miss you!

The official obituary is at the MIT Homepage. A memorial service will be held at MIT at the new Media Lab Complex, 75 Amherst Street, Cambridge, MA, on Wednesday, June 16 at 10 a.m.

MCP-AP 2010: Present your work at the MCP Regional Conference in Taipei, Taiwan

The MCPC conference series is the premier event for the international Mass Customization community. Every two years, we organize the large global MCPC conference (the previous event was in Helsinki in 2009, the next one will be in Oct. 2011 in North America). But in the last years, a number of side events has been organized with a topical or regional focus. Since several years, a MCP event is organized for Central Europe, the MCP-CE  (the next conference takes place in Serbia in Sept. 2010, see the call for papers and participation)

Now, MCP is getting a new Asian-Pacific outpost with the MCP-AP, MCP-Asia Pacific. The first event of this kind will take place in December 2010 in Taipei, the capital of Taiwan. As a central manufacturing and innovation hub of the world, the Taiwanese economy has been focused since many years on flexible and customer-centric manufacturing strategies. But also in other countries of Asia, the concept of mass customization has been adopted to a large extend. Japan probably is the leading MC country in the world, and also China is rapidly adopting MC methods.

So if you can make it and are interested in networking with the Asian side of mass customization, consider to participate or even present at the MCP-AP.

The event is taking place on Dec. 6 and 7 at the prestigious National Taiwan University of Science and Technology, and will be followed by a business seminar on Dec 8 in Taipei. The MCP-AP has an open call for presentations, and next to scholars, especially managers are very much invited to participate and present their MC experiences.

Topics of the Call for Papers include, but are not limited to:

    * MCP Product and Process Design
    * MCP Manufacturing and Logistics
    * MCP Information Systems
    * MCP Communities and Personalization in E-commerce
    * MCP and Services
    * MCP and CRM/Branding
    * MCP Case Studies: Industrial Goods, Consumer Goods, Services
    * MCP for Assistive Devices/Technologies
    * Technology-enabled MCP
    * Strategy-aligned MCP

To participate and present, submit an abstract until June 15, 2010 to the conference organizers.

For more information, head to the conference website: http://mcp.im.ntust.edu.tw . or download the conference flyer and CfP here as a PDF.

Lessons for Start-Ups in Mass Customization, As Told by Blank Label to The New York Times

This week, The New York Times had a very nice documentation by Amy Wallace about Fan Bi from Blank Label, a Shanghai and Boston based mass customization entrepreneur in the apparel industry. While there are so many custom men's shirts site on the web already (next to t-shirts the most crowded category, as our Customization500 study has shown), Blank Label has found a place in this category.

The article very neatly summarizes some of the motivations and key learnings I have heard often from MC Entrepreneurs:

(1) Set up operations first: Blank Label shirts are sewn to customers’ specifications and delivered anywhere in the world in about four weeks from Shanghai. Before opening the business, he really invested in setting operations up, and also travels personally to the factory to oversee manufacturing (indeed, it seems from the website that in the moment he is living in the factory). This is, in my experience, a key success factor of mass customization start-ups: Focus on getting the stuff produced, not just sold! And this also at times, when the business picks up and you have to scale it.

(2) Start very lean: "We’ve focused on being very bootstrap, very lean," says Fan Bi in the NYT article. This is important to finance a slow start: In the article, he says his business has sold about 450 shirts. Recently, it has seen a big bump in traffic, with orders of about 10 shirts a day. He says the company makes money on every shirt – but at $50 a piece, you need to sell a lot to really make a decent income.

(3) Focus on the the emotional value proposition: "how expressive something is": Fan Bi learned:
"People really like a Blank Label shirt because they can say, ‘I had a part in creating this". On the blank label website, this is called the "Co-Creation Custom Revolution" (just another fancy synonym for mass customization).

(4) Don't trust in venture capital: They first tried to get outside investments, but did not succeed. "To be honest, we couldn’t," Mr. Bi is quoted in the article "We were two very young guys who had no track record." So Fan Bi financed the site with about $10,000 in savings. But even if you have a track record, in my experience it is very difficult to attract venture capital to a manufacturing-based product business. So focus on other sources or private funds. And stay lean (see above).

(5) Be very customer centric: Communicate directly with customers is a number one goal at Blank Label. This sounds obvious, but is not: Only about 25% o all mass customization companies on the web offer direct customer support. Depending on the time of day, Fan Bi answers customers' calls himself.  And the article reveals another very good practice: "When he is awake, he also activates a feature that sends instant messages to customers who have been on the site for more than 90 seconds. Need help?, he asks. For several hours a day, he and his partners chat with customers about what they like and don’t like on the site.

Other success factors I would add which were not covered in the article:

• Get the market positioning right. What is the differentiation of your product ? (hint: just that fact that it can be customized is it not).
   .
• Make a great web-interface that is easy to use and represents your final product. We now have so much academic research about mass customization configurators. Put it in practice!
   .
• Think about a clever brand name that really sticks. While the majority of mass customization sites have a "my", "personal", or "custom" in their brand names, all category leader have not.

Read the full article here, or come to the MIT Smart Customization Seminar to meet 100 other entrepreneurs and managers doing mass customization!

How to scale up a mass customization business?

Most mass customization businesses are still rather small. Really small, if we compare their sales and volumes with the comparable category of standard products (I am just talking about consumer goods here, for industrial / BtoB-goods, this is a very different story!). This holds true for most start-ups and companies dedicated solely on mass customization, and the MC units of large established players.

While I do not believe that mass customization at any time will overtake mass produced (or better: high variety, build to stock) assortments, many MC businesses today face the demand to scale their business up. This also is a main topic we want to discuss during the MIT Smart Customization Seminar on May 20-21 at MIT.

While preparing for the seminar, and talking to some of our speakers, I drafted these four factors that influence the ability to scale customization up, i.e. increase the volumes:

  a) Short delivery times. This is what Zazzle and Spreadshirt learned: When you are able to deliver in 24h hours, you have an entirely new market segment, the gift and occasion market. Also take Chocri. With their custom chocolates they do not compete with Mars or Lindt, but with Hallmark and other greeting card companies, or also with book publishers that produce these typical gift books.

  b) Using affiliates and networks. Using your MC capabilities as a platform to enable advanced customers (retailers, country subsidiaries, and other distributors) to customize an assortment that then is produced in small batches (or on demand) to cover local market requirements.

This is what some sports companies do: Connecting mass customization and mass production into one model. In the end, a mass produced item is nothing else then a configuration in a solution space. The main driver for large scale customization in a consumer business will be not the average consumer, but some "customers" customizing for the mass. Like a local retailer that spots a market opportunity for her local market and wants customizes a special batch just for her school. The coach customizing for his team. Or even a country subsidiary of a firm that is creating a special assortment to meet the requirements of a local market.

While this has not been covered as "mass customization" in the past, I would argue, it is! One can apply exactly the same principles compared to customizing something "one to one" and on-demand for an individual consumer.

  c) Marketing communications for mass customization. This is a totally open point, see the previous posting!. There is no research at all (that I know) on how to "communicate" mass customization. What is the best communication policy for mass customization? (in the moment it seems to place "me", "my" or "individual" in front of the brand name).

Until today, researchers have focused on the interaction with customers once they have entered the system (there is plenty of research on how to design the interaction experience in a configurator etc.) But how to communicate customization? This is a major factor to reach new audiences. When I ask during a lecture or talk who in the audience has a custom product or knows about the ability to get one, the majority still has no idea!

  d) Internal change management. Often, the ability to scale mass customization up is constrained by the company itself (especially if you are a large firm like yours). In most companies, MC still is seen as a "pilot" or "something special", often just with a marketing / PR focus. As long as MC is seen internally as such an oddity, it will not scale up. I have seen this in many large corporations. In fact, I just do know very (!) few established large consumer good companies that really have a serious MC offering (serious being defined as "if I close it, I realize it on the balance sheet"). But as long as you don't have a business system that really can scale up (and also has the motivation to do so), it will be a difficult field to achieve.

What is the MIT Smart Customization Group?

While organizing the MIT Smart Customization Seminar, I frequently got asked, "What or who is the MIT Smart Customization Group"?

First, the MIT Smart Customization Group (MIT SCG) is a great group of individuals from the MIT community and some affiliates that came together in 2006 to organize the MCPC 2007 conference at the Massachusetts Institute of Technology (MIT). It then became an official research group at the MIT Design Lab with the focus on academic research that matters for the practice. To my knowledge, the MIT SCG is the only research group in the United States dedicated to research on the management and design aspects of mass customization and personalization.

The official mission statement of the group is as follows:

The MIT Smart Customization Group is an MIT-Industry collaboration devoted to improving the ability of companies to efficiently customize products, services, and experiences in various industries and for diverse customer groups. This industry interest group aggregates the key players in the area of mass customization and strives to become a vital community of practice in this field.

The group is part of the MIT Design Lab, an interdisciplinary center at MIT bridging design, architecture, engineering, and management research. The head of the SCG is Professor William J. Mitchell, Professor of Architecture and Media Arts and Sciences at MIT and director of the Media Lab's Smart Cities research group as well as the MIT Design Lab. He was formerly Dean of the School of Architecture and Planning and Head of the Program in Media Arts and Sciences, both at MIT.

Other prominent members include B. Joseph Pine II, Ryan Chin, Kent Larson, Marvin Minsky (Yes, THE Marvin Minsky, godfather of artificial intelligence) and myself (I act as a co-director). 

For more information on the group, head to scg.mit.edu.

BONUS MATERIAL: After you register at the SCG site (lower right corner of the page, free registration), you get access to plenty of resources on mass customization and personalization, including all full text proceedings of the MCPC 2001, 2003, 2005, and 2007 conferences !!! More than 400 papers and presentations! (You see: It sometimes pays to read long, apparently boring blog postings).

One question remains: What is Smart Customization?

Smart Customization is the understanding and development of the underlying principles to effectively and efficiently provide custom products, services and experiences - to master mass customization & personalization.  

Or, in other words, it is applying the capabilities of mass customization in an efficient way to profit from the fact that all people are different.

And a last question: Can I join the MIT SCG?

For academics and scholars, participation is by invitation only, and restricted to MIT affiliates. For companies, the group however offers a great opportunity for interaction and joint research with the MIT.

Following a consortium model, companies can join the SCG' as an industry member. This comes at a price (in the very lower end of typical MIT membership models), and includes the following benefits:

• Access to a productive group of researchers and executives who exchange information and network with each other, and furthermore, who efficiently use new models, concepts, and results of the latest research within the group.
  
  
• Industry members will become familiar with, and be able to articulate methods of mass customization; become familiar with recent research in the area of mass customization; to think critically in this area; and to articulate their own methods.
  
  
• Get access to the latest research from focused Smart Customization Group initiatives at MIT and other leading universities and labs.
  
  
• Group members will develop and extend their own mass customization capabilities more successfully.

On the 2010 Smart Customization Seminar, we will introduce a current opportunity for joint research. Participate at the 2010 SCG Seminar for more information on this opportunity. Or just go to the MIT SCG website for more information.

The Market for Open Innovation: First study to compare the offerings, methods, and competences of intermediaries, consultancies, and brokers for open innovation

Our executive report on the market for open innovation finally has been published. It is the first study comparing the brokers and intermediaries in the open innovation domain. How do companies like NineSigma, InnoCentive, Yet2.com, IdeaCrossing, or Hyve work? When to contract which of these OI experts -- or any of the other 45 intermediaries reviewed in the study?

The 2010 Open Innovation Accelerator Study, by Kathleen Diener and Frank Piller

Get the full report as an eBook (PDF) or order a hardcopy at http://www.lulu.com/product/6149440/  Or first download an extended extract of the report here (free PDF).

Behind the term open innovation is a powerful message: Successful innovation is often created in a cooperative mode with external actors.  But which is the right method for open innovation? Which are the criteria to plan an open innovation project? Which intermediary or service provider has specific knowledge and expertise in, e.g., crowdsourcing, the lead user method, Netnography, idea contests, technology scouting, or broadcast search?

For the first time, this report provides a comprehensive analysis of the service providers and platforms for open innovation. These intermediaries can help organizations to accelerate their open innovation initiative – this is why we call them Open Innovation Accelerators (OIA). We take a detailed look on their methods, cost, and project structures.

Our motivation to conduct the research for this report was to support a manager's decisions when planning an open innovation venture. Managers shall gain an overview of the intermediaries available for open innovation from a global perspective and will get advice how to identify partners for their project in a directed way.

The report is based on hundreds of interviews with experts and service providers, survey data and self reports from companies specialized in facilitating open innovation, and extensive secondary data. An extensive appendix provides detailed information about each particular open innovation service provider.

Our conclusions

The market space of Open Innovation Accelerators (OIA): We find that OIAs operate globally due to the virtual characteristic of the business. The broad distribution of open innovation application over industry sectors demonstrates that this approach is not limited to certain branches or sectors. However, most recent projects were targeted to the B-to-C market. Most OIAs focus their service on both B-to-B and B-to-C markets.

Methods of open innovation approaches OIAs offer: We distinguish three main service approaches for open innovation – managing communities, providing special (social) software, or operating as an open innovation consulting agency. The community approach is the predominant service offered among all surveyed OIAs (84%). Yet we find combinations. In 37% of the cases the accelerators tend to offer a minimum two different approaches. About 44% of the surveyed OIAs are mainly consultants and community managers. 43% of all OIAs run competitions (mostly idea contests). Nearly 34% of the accelerators apply workshops (mostly brainstorming), often of different workshop types. Most of the OIAs offer tools and methods from several categories to accomplish their services.

Average costs for OIA services: Most OIAs demonstrate a good level of experience when taking the average number of completed projects in relation to the time of business activities. In average, they execute 75-167 projects per year with an average duration of three month (up to 24 month).

We find five different approaches for structuring the OIAs’ profit models: Charging a product license fee, billing person days, a subscription based model, charging a service or success fee, or demanding a posting fee. Prices float within a wide range. The overall minimum stated in our survey is $15 for an account, the maximum $400,000 for a consulting project. In average, an open innovation accelerator asks $25,000 for one project.

The development of the OIA market: The market of intermediaries for open innovation is rather young. More than 80% of the OIAs have been founded later than 2000. Today, new providers of open innovation methods and services are constantly emerging. Others are going out of business at the same time. Some fields, like offering brainstorming platforms and access to user communities, are highly competitive. We find a few already well established accelerators like Hyve, Idea Crossing, InnoCentive, Nine Sigma, Your Encore, Yet2.com.

Yet in general, the entire market is still under development and far away from being consolidated. The future will show which OIA has the right business model and successful projects to survive on that market.


Publication details

The 2010 report "The Market of Open Innovation" provides decision makers strategic support when setting up an open innovation initiative in their organization:

• Different methods for open innovation,
• The dynamics and success factors of an open innovation initiative,
• Typical project structures and project cost of an open innovation initiative facilitated by external service providers,
• A comprehensive overview of 49 service providers specialized in open innovation.

The Market for Open Innovation: Increasing the Efficiency and Effectiveness of the Innovation Process. By Kathleen Diener and Frank Piller. RWTH-TIM Group 2010. 144 pages. Full Color. Published and distributed at lulu.com. €795* (discount available for academic institutions)*

Download the full report as an eBook (PDF) or order a hardcopy at http://www.lulu.com/product/6149440/  Or first download an extended extract of the report here (free PDF).

*Note: Why is this study so expensive? We invested about two person years in conducting the research underlying the study. So we believe this is a fair amount compared to the work a company would have to perform to get this kind of information. The proceeds from this report will support future research of our PhD students and sponsor their participation at international academic conferences. It will also support exchange visits of graduate students from and to Aachen. However, for students and academics interested in the report, there is a special discount. Please contact me for further information ([email protected]).

Tea with Chilli - dpa report on Germany's faible for custom-made food

 I reported about this topic here several times, but now dpa (the German Press Agency, the largest and most respected press agency in Germany), published a nice English language report about the German trend to mass-customize food. products This topic really became a major trend here in Germany during the last 18 months, with plenty of start-ups joining the field and quite some media attention (indeed, in all my 17 years of research on mass customization, there was never such a media blizz than recently around custom food. For some reports, look here).

Today's dpa article summarizes the players and thoughts quite well:

Berlin - Chocolate with ginger or pepper, brown bread with courgette or chick pea: whether it is coffee, muesli, bread, fruit juice or tea, custom-blended foods are proving very popular, especially with younger age groups. Individually designed food products can even be ordered online. The pioneers in this form of shopping in Germany were three students from the town of Passau, who started offering blended-to-order muesli three years ago.

But plenty of others have jumped on the bandwagon as well. While trying to think of a good birthday present Franz Duge had an idea: a bar of chocolate like no other in the world.

Together with his friend Michael Bruck, he founded the chocolate bar shipping company chocri.de in Berlin. Their concept is to offer customers three types of chocolate - milk, bitter and white - made from organic milk that can be combined with 80 different ingredients.
There are lots of possible combinations such as chocolate with aniseed or cinnamon cornflakes. "Our range can cater to every taste. It's not about buying just any product, it's about having an experience," says 23-year-old Bruck.

A 100 gram custom-designed chocolate bar costs 1.90 euros, or 2.50 dollars, plus post and packaging. "In the beginning we said if we sell 500 bars a month we would be happy. Now we sell at least 500 bars every morning."

Bruck and Duge employ 25 people and had sales of 1 million euros last year. Their unique blends of chocolate are now available in the US and the pair are planning to expand into Britain and France. Most of their customers are females aged between 19 and 39 years.
However, the undisputed leaders in custom foods in Germany are Max Wittrock and his two partners at mymuesli.de in Passau with their custom order muesli.

"We had the inspiration for mymuesli.de in 2005," says the 27- year-old. But the business did not get up and running until two years later.

Now, the three students employ 90 people and have opened a factory near Basel in Switzerland. The growth in eating organic food and the internet's development helped their business take off.

The basic idea of a modular system that allows raw materials to be combined in different variations is not new. Mass customization is a term long familiar in the world of businesses, such as Nike and Puma.

For years the sports shoe makers have been allowing customers to design and buy their products over the internet. Professor Frank Piller of the University of Aachen estimates there are about 600 companies offering mass customized products in Germany.

Sascha Fiene and his company candymix, however, are bucking that trend. Fiene offers his customers bags that contain only red, white or another colour jelly baby. "I had the idea two and a half years ago when I watched a report about mymuesli.de on TV," says Fiene. 

Fiene places wholesale orders for jelly babies with manufacturer Haribo and then sorts the different colours by hand. Haribo had already thought of the concept and had it tested but decided it was not practical for technical reasons. "Market research also revealed that our jelly baby colour mixtures are the most popular variety," says Haribo spokesman Marco Alfter.

Background info: What is the MIT Smart Customization Seminar?

Registration is open  -- more information is here!

After a big success in the last year, we just have finalized the set up of the next MIT Smart Customization Seminar. It will take place on May 20 and 21, 2010, in the brand-new Media Lab Building II on the MIT Campus in Cambridge, MA (Boston).

While the MCPC conferences are large networking events and focused on the latest research and a broader range of topics, the MIT Smart Customization Seminar is an Executive Seminar focused on implementing and managing mass customization and personalization successfully in a corporate setting. It is organized by the MIT Smart Customization Group, a research-industry group I co-founded with a bunch of great individuals at MIT in 2007.

If you want to get an idea of what the seminar is and what to expect, have a look at a great summary of the last seminar (Nov. 2008), as compiled by bestselling author Patricia Seybold:

Smart Customization Comes of Age: Best Practices from the MIT Smart Customization Seminar 2008. By Patricia B. Seybold, CEO and Senior Consultant, Patricia Seybold Group January 8, 2009.
Download Patricia's report of the November 2008 seminar here. (c) Copyright by Patricia B. Seybold, P. Seybold Group 2008.

Registration is open  -- more information is here!  It will become THE smart mass customization event 2010 in North America.

Finally published: Handbook of Research in Mass Customization and Personalization - 1200 pages in 2 volumes on MCP

It was a long process in making, but now it finally has been published and I got the first volumes in my hand:

The Handbook of Research in Mass Customization and Personalization. Edited by Frank Piller and Mitchell Tseng. Published in two volumes. Volume 1: Strategies and Concepts; Volume 2: Applications and Cases. World Scientific Pub Co. (ISBN: 9814280259). Download an extensive overview of all chapter.

The book is the third in a series of publications that present the latest advancements in research on mass customization and personalization. Starting with Tseng & Piller (2003) and continuing with Piller, Reichwald & Tseng (2006), we again could collect the thinking of some of the leading scholars and practitioners in the field.

In comparison to the previous editions, this is the most comprehensive collection of writings on mass customization ever. This inspired our publisher to name it the "Handbook of Current Research in Mass Customization & Personalization". And it indeed is heavy and voluminous: Almost 1200 pages on MCP!

The contributions in this handbook were inspired by the 4th World Conference on Mass Customization and Personalization (MCPC 2007), hosted by the MIT Smart Customization Group at the Massachusetts Institute of Technology (MIT) in October 2007. The participant roster of the conference represented the interdisciplinary nature of customization and personalization drawing from a wide range of interest from hard core engineering, fashion design, architecture, retail, business strategy to psychology.

The papers in this book reflect this richness and scope. The authors come from diverse schools in leading research institutions as well as from business practice or consulting firms.

For an extensive overview and the full table of contents, download this PDF.

This is the publisher's site on the book (where you can get the book already) and here you can get it an Amazon. The book, however, has a heavy price tag and is more targeted to the library market. So recommend it to your library now!

We are moving. RWTH-TIM at new address

We are moving. Today and tomorrow, our RWTH-TIM research group is moving into our new building in a research park in the suburbs.

The growth of the group within the last two years (from five to 18 people working full time in the group, plus about 25 student assistants and tutors) required that we need new space. And as often, new space only is available in new buildings.

The RWTH has acquired the old headquarters of AIXTRON, an Aachen high-tech company. Among other institutes and research centers, we can move into this building (and we are happy hat we got the former floor where the executive board was situated :-)

Our new colleagues will be material science researchers, civil engineers, textile engineering and electrical engineers -- so we are moving to a space where new technology is developed. While it really is a pity that we have to leave the core building of RWTH's School of Business & Economics, I am excited about these opportunities for cooperation. But most importantly, we will have sufficient space for our own researchers, and a more communicative office environment that should foster communication and creative exchange.

Our new building is close to Ford's European Research Center, Microsoft's Aachen Lab, and many further corporate research centers and start-ups. The building is well connected with many bus lines with the RWTH core campus.

Our new address:

RWTH Aachen, Lehrstuhl Technologie- und Innovationsmanagement
Kackertstraße 15-17, 52072 Aachen, Germany

All phone numbers and e-mail contacts remain the same !!!

How to find us: Go to Contact Section of our homepage. We hope to meet you soon in our new offices!

MCPC 2009: My Personal Conclusions and Learning from this Year's Conference

(updated on Oct. 17) After almost one week of discussions, lectures, keynotes and many personal interactions -- and four long postings about the conference --, what were my key insights from the MCPC 2009 (2009 Conference on Mass Customization & Personalization)?

(1) Don't mention the crisis: While still talking about the economic crises dominates the conversations of many business people, it was no topic at all during the conference. So is mass customization crisis resistant? Well, many of our participants told me that they saw it as unaffected or even an answer.

Take consumer goods. The more conventional retailers are coming under cost pressure, the more they are streamlining their assortments. The less likely it is that customers find exactly what they want -- the larger the appeal of customized offerings. This was a pattern reported frequently from participants from the apparel and clothing sectors. At the same time, mass customization is "affordable" luxury. When I am not sure about the future, I am postponing the purchase of my new car. But I still reward myself by paying a tad more for a pair of customized ski boots. This was a good sign – and a positive mood (To be honest, however, there also may have been a self selection effect: Branches of industry interested in mass customization but affected by the crisis did not show up – and so there was no one to complain).

(2) Configuration Technology: A new generation of customization logic is coming up: While Joe Pine, Lars Hvam, and myself still preach that modularization and product family structures are the key to efficient customization, Dr. Yusel from Certusoft Inc. and Konstantin Krahtov from the Open Experience GmbH both provided presentations that turned the common argumentation upside down:

I normally tell my students that for manufacturing companies mass customization means to move from ETO to MTO or ATO (engineer- => make- or assemble-to-order). But in these presentations, the idea was presented that instead of combining pre-defined modules, the configuration toolkit will engineer the components on the fly in real time. As Dr. Yusel said: "Conventional configurators replace what engineers do. Our system replaces how engineers think." He has implemented his configuration system within large US truck makers with amazing results -- and really opened my eyes to a new way of thinking of configuration. Similar Open Experience from Karlsruhe in Germany. Their vision is that in the end you just doodle what you like, and the system turns this into a component.

Perhaps the future of configuration is indeed beyond arranging pre-defined modules to a product, but developing components and production patterns in real time (you need, however, a very flexible manufacturing system for this).

(3) Customization & Personalization are becoming "the new imperative of business". In our MCPC community, we have to make the connection to industries like financial services, health, computer gaming, media, etc ... All these industries are very much driven by personalization but have not really been part of the mass customization debate (and community) yet.  This is one of my goals for the next 2011 conference: Broaden the conversation of mass customization from the domains where we are today into these new fields of applications.


(4) Customization is the true luxury – no matter the price. There is a long debate about the future of luxury goods. But a repeating theme during the conference was the notion that for many consumers, being able to customize a product is the true luxury, whether it is a chocolate bar for $4 or a custom trunk by Louis Vuitton for $25K.

Positioning mass customization in the "mass market" and regarding it as a "democratization" of manufacturing perhaps has misplaced the concept – and also has communicated it wrongly towards consumers. Even if mass customized goods still should be affordable and should not lift the offering into different market segments, its appeal for consumers still is the luxury and personal service connected with it (see the report about the MCPC 2009 Fashion Lab for more).

Mass customization means to "take away the need of products which are full of stuff and replace it with products full of meaning", as one of the participants of the discussion during the business seminar said. We have plenty of research on this meaning for consumers in mass customization offerings, but still have to find better ways to communicate and transport it to consumers.


Concluding, the MCPC 2009 again was a great experience. It really became a gathering of friends and colleagues, many of them joining the conferences since 2001 and becoming a great community of practice. Our community has started several companies, made important business connections, created many PhDs and master students, and really advanced the thinking in an important field!

What is next?

The next MCPC World Conference will be in October 2011, probably at a convenient East Coast location in the U.S. We will extend the name MCPC to "Mass Customization, Personalization & Co-Creation" to acknowledge the larger scope of the conference.

In 2010, a number of focused, smaller events will take place:

• We are planning again a German language MC event. My idea is to focus on the new wave of entrepreneurs that we find in Germany in the moment.
• I envision a similar event for the US, perhaps in connection with the next MIT Smart Customization Seminar, planned for late Spring 2010.
• Stefan from "Milk & Sugar" is planning a MC event in the Netherlands.
• Finland will continue to host an important MC meeting with the FIMCP 2010 in Tampere.

Context Information: More reports about the MCPC 2009 conference:

==> Twitter reports about the MCPC.

==> Great reports by Mass Sinclair in his blog no-retro.

==> Personal impressions of our keynote speaker Bruce Kasanoff.

==> Ran Machtinger, CEO of Optitex, about his presentation on Virtual Fashion.

==> Raul Lansik has a great new blog on customer co-creation in general, and a nice posting about the MCPC.

==> Teemu Arina, a speaker at the business seminar about real-time business, shares the ideas of his presentation.
==> Uche, Author of Luxury Online and panelist in the business seminar, will report about the conference at her new blog.
==> Mikkel Thomassen wrote a blog (in Danish) about the MCPC. And Robert Freund in German. And Chris Chatzopoulos has a report for everyone understanding Greek. Satu Miettinen wrote a nice report about the conference and service customization, in case you can read Finish.
==> Kate Herd has some pictures on Flickr.

(please let me know if you also have a blog post about the conference)

My previous reports about the MCPC 2009:

- Part 1: Day 1 of the Research Conference
- Part 2: Day 2 of the Research Conference
- Part 3: Business Seminar
- Part 4: MC Fashion Lab

MCPC 2009 Report Day 2: Benedict Dellaert, Zazzle, and Joe Pine

The first day of the MCPC ended with a great dinner in the center of Helsinki and one drink too much in the bar later. Still, everyone was back in time for the second day.

For more impressions and summaries, also check out the many Twitter feeds on the MCPC 2009 that report live!

MCPC 2009 Day 2: Prof. Benedict Dellaert from Erasumus University in Rotterdam started the second day with a great keynote on "Designing the gateway -- gateways to product spaces". He provided a very good overview of the state of research in marketing on the space where customers and suppliers interact today.

He started his differentiation of personalization and customization: Personalization is often a strategy of retailers to passively support customers to find the right selection, e.g. by using profile data or collaborative filtering. At the same time, mass customization is seen as a strategy by manufacturers to actively integrate customers in a co-design process. Along this line (a continuum, not two alternatives), Benedict then addressed the crucial question how to match solution options available in general with the capabilities of customers to make the choice: "It is nice to have the flexibility [to mass customize], but consumers also have to have the capabilities to make the right choice."

James Johnson from Avery Dennison and Jeff Beaver & David Gross from Zazzle followed with the second plenary presentation. The project that they presented was actually initiated during the Business Seminar of the Smart Customization Group at MIT last November: There at our meeting, the multi-billion incumbent  Avery Dennison met the much smaller Zazzle.com and started a cooperation that was launched last Thursday.

Custom binders are the first product that shoppers can customize under the new business alliance. Shoppers will be able to generate custom binders for contests, promotions and sales, or business binders for the office. They can select from thousands of templates, or start from scratch with a blank canvas. Like with every Zazzle designs, people can create stores and make money by selling designs in the Zazzle marketplace.

The interesting thing is that Zazzle is not offering its manufacturing system. "At Avery, we've been looking at Mass Customization for several years. Our focus on Enterprise Lean Sigma has allowed us to develop the expertise in manufacturing to be able to provide custom-made one-off products while still enjoying the benefits of mass production," said James Johnson who is the Director of Business Development at Avery Dennison Office Products. "Zazzle's software capabilities plus their partnerships with leading branded content owners complement our manufacturing core competencies." So it takes more than flexible manufacturing to do mass customization successfully.

Consider what the cooperation with a MC platform provided for Avery. The company was offering custom binders already since about one year over their own website. In just three days on Zazzle, there already were 60 times more designs created than in 365 days on their own website.

After these exciting keynotes, the conference participants again spread out into parallel sessions on all issues being custom and personal. Again, it is impossible to cover the breadth of discussion here.

After lunch, Fabrizio Salvador and I provided a plenary presentation based on our recent Sloan Management Review paper. I am sure some blogging participants will cover it soon, and will refer to them for a review.

After many exciting more parallel sessions, the day ended with Joe Pine, who provided some outlook.

His last slide probably was the most memorable:

• In 1987, when Stan Davis coined the term, mass customization = oxymoron.
• In 1993, when Joe wrote his first book, mass customization = "the new frontier".
• In 2009, when we all came together to the MCPC 2009 in Helsinki, mass customization = imperative!

I believe that the first 2.5 days of the provided great evidence that now mass customization and personalization are really becoming an imperative for businesses of all kinds -- and also for other organizations like education, public management, or non-profits.

The conference continues tomorrow with the business seminar at the Helsinki School of Economics.

MCPC 2009 Report Day 1: Joe Pine on the Future of MC and Bruce Kasanoff on Personalization

Just coming back from a long conference dinner and drinks (so excuse the typos), but here a first report from the MCPC 2009:

The main MCPC conference today took off with an opening presentation by the CEO of KONE. Matti Alahutha very neatly showed that for a multi-billion company like KONE, mass customization in an  essential driver of value and competition.

Next, Joe Pine -- brilliant as usual -- inspired us with some ideas on the "Future of mass customization"

He started with his famous 4*4 picture of process change / product change, placing invention (craft businesses), mass production, continuous improvement, and mass customization in it (if you haven't seen this argument, look up for Joe's speeches in YouTube).

From there, he moved into four themes where he sees mass customization is going. Here are his key thoughts in a nutshell (as I believe they are the roadmap for his next books :-):

1) From mass customization to continuous innovation: In order to build a sustainable mass customization business, you cannot stop with an existing MC solution space.  So what Joe sees next is connecting mass customization with tools of user co-creation and user innovation to continuously work on the solution space of a MC offering.

2) From markets of one to "one of markets": The traditional notion is that mass customization serves super niche markets, up to the market of one. But Joe thinks this is not the end, and we will move to "one-of markets". This very neatly addressed our conference theme of "mass matching". Consider you as a traveler. When YOU are traveling for business, your needs with regard to hotel selection, plane scheduling , or eating are very different compared to the (same) YOU when are traveling with your family for vacation. So the same YOU are representing different markets.

This is where personalization and mass customization meet. And a large future of mass customization will be to work not just on creating new products, but bundling (matching) them according to different "markets'"needs.

3) From reality to virtual reality. This is the theme of the next new book of Joe coming up. When the physical world is not offering enough variety, you move to the virtual space. Here, not only ultimate variety is possible, but also variety with regard to the self. Just as you are different person in front of your children as you are in front of your spouse, you can be a different person in a virtual world. So virtual reality is offering the opportunity of personalizing the self.

4) From MC of offerings to MC of management. This probably was the largest development Joe suggested. His idea: Why not take the tools and thinking of mass customization and transfer them to the way of managing a company. For this idea, Joe referred to Kim Korn of Business Architecture who originally came up with the idea of the Progression of Innovation Value. It reminded me also to a number of similar lines of thinking on "management innovation", as sketched for example by Gary Hamel. We today know that there is not "one best way" to manage a company. But at the same time, also "craft customizing" an organization may be not the best way. So I am curious to see what our community takes out of this and how "mass customization of management" will look alike. Johann Wallin, for example, in his presentation already was building on a similar idea, called "mass-co-configuration" of a value chain.

With so much food for thought, we entered into the parallel sessions. There was too much to listen to and to learn that I can summarize this here, so I just invite you to browse through the conference abstracts.

After lunch, Bruce Kasanoff, got everyone excited with his keynote: "Personalization will be THE driver of the economy within the next 8 years!" (yes, not "a", or "one of", but "THE"). He very much broadened the perspective of everyone but illustrating that the theme of customization and personalization is much larger than we cover today here.

His argument: the basic mechanism of personalization, "sense - reason - respond", can be applied for many markets -- or are already being applied. Consinder the revolution in media.DailyMe, MeeHive, DailySnooze, or FanFeedr are all start-ups that recently started with offerings for the future of media. All these companies' core is an algorithm to match user preferences to existing content. Still no one in this industry uses the term mass customization or personalization to address this.

Bruce made a second very interesting case about the development of personalized medicine ... go to hi blog for the full argument!

His second main point was: "To work on personalization means that we need much more interdisciplinary work". Well, in innovation management, the cure for all problems is seen in the interdisciplinary team. But Bruce has a point here that to understand the full consequences of personalization and customization, a firm really has to bring together people from inside and outside and different disciplines to make personalization happen. Sounds difficult? Yes, but when personalization is THE driver of competition, this effort is well invested.

I am looking forward very much to the second day of the main conference tomorrow!

Context information: ==> Great report on Day 1 also by Mass Sinclair in his blog no.retro.

Cracking the Code of Mass Customization: New MIT SMR Paper

Most companies can benefit from mass customization. The key is to think of it as a process for aligning an organization with its customers’ needs.

In the current issue of the MIT Sloan Management Review (Spring 2009 Issue), Fabrizio Salvador, Pablo Martin de Holan and I discuss how mass customization should be not any longer seen as a specialized business strategy but as a bundle of capabilities that could make sense for most businesses.

In the paper, we suggest that mass customization is not some exotic approach with limited application. Instead, it is a strategic mechanism that is applicable to most businesses, provided that it is appropriately understood and deployed. This kind of thinking also is the underlying logic of our upcoming Mass Customization Executive Education Class at IE Business School.

In the paper, we suggest three common capabilities that will determine the fundamental ability of a company to benefit from mass customization thinking:

(1) Solution Space Development.  A mass customizer must first identify the idiosyncratic needs of its customers, specifically, the product attributes along which customer needs diverge the most. (This is in stark contrast to a mass producer, which must focus on identifying central tendencies so that it can target those needs with a limited number of standard products.) Once that information is known and understood, a business can define its “solution space,” clearly delineating what it will offer -- and what it will not.

(2) Robust Process Design.  Next, a mass customizer needs to ensure that an increased variability in customers’ requirements will not significantly impair the firm’s operations and supply chain.  This can be achieved through robust process design -- the capability to reuse or recombine existing organizational and value-chain resources -- to deliver customized solutions with near mass-production efficiency and reliability

(3) Choice Navigation. Lastly, a mass customizer must support customers in identifying their own problems and solutions while minimizing complexity and the burden of choice.  It is important to remember that, when a customer is exposed to myriad choices, the cost of evaluating those options can easily outweigh the additional benefit from having so many alternatives. The resulting syndrome has been called the “paradox of choice,” in which too many options can actually reduce customer value instead of increasing it.  In such situations, customers might postpone their buying decisions and, worse, classify the vendor as difficult and undesirable. To avoid that, a company can provide choice navigation to simplify the ways in which people explore its offerings

But a company does not have to apply all three capabilities in full scope together. For many companies, it already is a great step forward to just work on one of these capabilities to get more customer-centric without, however, having to master the full complexity of a mass customization system.

Read the full article and learn more how these capabilities can be implemented in practice. MIT offers the full paper for free after registration on the SMR website. You also can purchase it there  ($6.50) for further distribution.

Context:

• Posting about the paper in the MIT blog.
• Reference to the article: Fabrizio Salvador, Martin de Holan and Frank Piller: Cracking the Code of Mass Customization. MIT Sloan Management Review, 50 (2009) 3 (Spring 2009): 70-79.
• Free online access to the paper.

Democratization of Manufacturing: Great Article in ASME's "Mechanical Engineering" Journal

In the recent issue of Mechanical Engineering (April 2009), the journal of the powerful American Society of Mechanical Engineering , Associate Editor Jean Thilmany has published a great article on mass customization. His conclusion: Mass customization is part-way here; when the rest will arrive is anyone’s guess.

The article provides a great comparison of traditional consumer-co-design driven mass customization (you designing your shirt in an online-configurator), traditional engineer-to-order and small-batch production, and the new opportunities provided by 3D printing and rapid manufacturing.

As Thilmany observes in the article:

"Pine’s definition [of mass customization] can get a bit muddled, what with the growth of rapid prototyping and related technologies such as 3-D printing. Is a rapid prototype an instance of mass customization? Does an object printed on a 3-D printer qualify?

If the printed piece is meant to be used as an end product—not a prototype—it’s an example of a mass customized product, Pine said.

“I always believe words have meaning,” he said. “It’s called rapid prototyping because you’re making a prototype.”

But say you design an object using an online service like Shapeways of Eindhoven, the Netherlands? That company allows you to upload your own 3-D models. Shapeways prints your object on a 3-D printer and sends it to you. You’ve created your own custom product, Pine said."

But what is the future of mass customization?

Donal Reddington, who runs the Web site MadeForOne.com, is quoted in the article on this:

"So far mass customization—of varying degrees—has supplemented mass production, Reddington said.  So why, in this age of the Internet, hasn’t it come closer to replacing mass production in both the retail and engineering sectors?

“The consumer society is very much based on the idea of gratification. I walk into a shop, see something I like, and walk out with a sense of satisfaction at having bought it,” Reddington said.

“But the predominant mass customization business model that’s gained root since the mid-1990s is the online model, which provided customers with the facility to go online and configure the product, order it, and get exactly what they wanted delivered after one week. Or maybe two or three weeks,” he added.

And where will this lead to?

Despite the impediments to adoption, all the experts interviewed expect mass customization to grow.
“Going into the future, the Internet will facilitate a new wave of mass customization, where customers will create and trade designs for physical products in the same way they trade music files,” Reddington said.  

And not only will consumers find ever-more Internet-based design tools at their disposal, they’ll continue to see advances in the capability to build their own products to their specifications, Piller said.

For the full article, available for free online, head to:
http://memagazine.asme.org/Articles/2009/April/Democratization_Manufacturing.cfm

Building a Customer-Centric Organization: IE Executive Education Program

IE Business School's Executive Education Division is one of the world's leading institutions to educate managers on recent business trends. Their Open Enrollment Programs have been ranked no. 5 worldwide according to the Financial Times ranking, May 2008.

Within this scheme, we are offering again our program

Building a Customer-Centric Organization: OUTPERFORMING YOUR COMPETITION IN PROFITABILITY

IE Business School, Madrid, Spain
9, 10 and 11 March 2009. [PDF of Program Brochure]

The program features all three facets of building a truly customer-centric organization:

- Mass Customization and strategic capabilities of offering truly customer-centric offerings
- User innovation and customer co-design
- Relationship marketing

It recently is the only program of its kind worldwide! So register now to participate!

About the content:

Heightened competition is forcing business leaders to recognize that the new foundation for profitability is establishing loyal, long-term customer relationships; to conceive themselves not as a group of products, services, territories, or functions, but as a portfolio of customers; to know how profitable each of their customers or customer segments are, and to understand why; to continuously innovate in order to improve their customer value propositions.

The challenge then arises when trying to manage the organizational complexity that surfaces when trying to implement a truly customer-centric strategy. Organizations must align all aspects of their business with the target customer-value proposition. In order to be successful in implementing a sound customer-centric strategy, everyone in the company needs to make decisions consistent with this strategy.

The program features three core modules:

• Strategic capabilities for customer-centricity, taught by Fabrizio Salvador:  Building a customer-centric organization is appealing but also difficult because it involves profound changes in virtually all the value-adding processes of a firm. Yet the payoff is potentially enormous. This module examines the fundamental capabilities that a company has to develop in order to become more customer-centric, and offers a birds-eye view of the scope and content of the organizational changes associated to customer-centricity. Special attention will be devoted to the issues associated to connecting front-end and back-end areas of the firm for fast and efficient adaptation to customer needs.
• Placing the customer at the center of the innovation process, taught by Frank Piller: A key challenge in new product and service development (NPSD) is to match new designs to customer preferences. The growing heterogeneity of demand, the advent of "long tail markets", exploding product and service complexities and the rise of the creative consumer are making this task more difficult than ever. This module will explore new strategies to navigate NPSD more efficiently by utilizing the firm's periphery for innovation.
• Focusing on the individual customer relationship, taught by Martin Boehm: Delivering what customers' value provides competitive advantage in today's business arena. No matter in which sector it finds itself competing in each company needs to focus on the customer's point of view not only to improve the customer experience, but also to increase the customer's contribution to the business. This module will explore how to determine the value of each individual customer for your business and how to retain the ones that offer the highest value, as well as, switching costs associated with their loss.

For more information, download the program brochure, or head to IE's website. http://www.execed.ie.edu/internationalprograms

Interview: Frank Piller about Mass Customization and Customer Co-Creation

Reverse order: Interview the interviewer: While rather infrequent, the postings with interviews are the ones getting the most hits in my blog. And I am really enjoying them a lot, as this is where I learn most. But while normally I am asking the questions, Duann Scott, editor of the Ponoko Blog, asked me to switch sides and answer his questions. And so, reprinting from the PONOKO blog, here is what we talked about.

For the full interview, published in two parts, head to blog.ponoko.com: Part 1 and Part 2

Duann Scott: Frank, what brought you to focus on Mass Customization in the first place?

Frank Piller: I first realized the mass customization phenomenon by reading Joe Pine's book as a graduate student working on a paper for my master's degree (in 1993). One year later, I was in New York City, visiting one of the first Levi's stores selling its first version of mass customized jeans. There I thought, "Hey, they are doing it really" and was hooked by the concept. When I continued my education with a Ph.D. in Operations Management, I decided to study mass customization from a management perspective in more detail. After placing the first article on it in the German edition of the Harvard Business review (1996), I also got some great feedback from managers on the topic. Since then, I am continuously working on this topic.

DS: So you have been researching, writing and working in the field of customer co-creation for almost 15 years! What do you see as the greatest advancements or most innovative progressions in your time observing the field?

FP: Over the years, I recognized three cycles of mass customization. This first was in the 1990s when people looked on it as a production technologies, still yery much rooted in the CIM-Thinking that originally lead Alvin Toffler to deliver the first modern description of mass customization in the late 1970s.  During this time, mass customization was very much rooted in business-to-business markets. Machine tool makers like Sandvik from Scandinavia opened the first large scale mass customization businesses.

The second wave happed with the internet revolution (starting in 1998). Finally firms could connect their flexible manufacturing technologies with customers efficiently. This cycle brought us many great examples of mass customization, but also quite some disappointments. Often, start-ups during this time just opened, as you could do it, not as customers needed it. But some great examples of mass customization survived, like NikeID (opened for the only reason as former Nike CEO Phil Knight wanted to "something in the internet", and so they selected mass customization as this promised to cause little channel conflicts with established retailers).

In the following years, the internet-based mass customization offerings matured, and many more followed. The third wave of mass customization is happening now: It is driven by companies like Ponoko, Zazzle, Spreadshirt, Lulu, Shapeways, and many others, which offer design, manufacturing, and retail capacity to everyone. So in this third stage, people are not just customizing to fulfill their own needs, but to create (micro) niche markets and serve them efficiently. Here, I think, we are just at the beginning and will see many more application soon.

DS: What are the most common shared factors in mass customization business models that fail? Is there one thing you would recommend a start up to avoid?

FP: I believe many mass customization start-ups fail for the same reasons other start-ups fail: Lack of financing, inexperienced management, or just bad luck. What I can recommend for mass customization start-ups is, first of all, really decide where your system provides customer value. This may sound simple, but I saw too many start-ups that were build on the promise "when we customize, they will come". Think of BookTailor, a site where users could customize travel guide books. Sounds like a great idea, but when you have to become your own editor of a guide book, you loose the most important value of a good travel guide: To think of the unexpected, to surprise, and to provide input in a situation not planned (say, an entire week of rain). BookTailor considered customization as a value per se. But this is not true. Customization is just the vehicle for customer value, but not its origin.

A second advice is to see whether your mass customization business is scalable once success will come. Often, mass customization is based on large work shops or sample room operations. But when you want to succeed with mass customization, you have to have stable processes for each customer order.

DS: The use of online 'configurator' software seems to currently be the most common format for mass customization, what do you see as the benefits and drawbacks of this model and how do you see this evolving in the future?

FP: Yes, that's correct. It was the broader development of online configurators that made mass customization happens in a larger scale. Have a look at our web-site "http://www.configurator-database.com" for the scale and scope of configurators today.

The core drawback of most configurators, however, is that they are still parameter (option) based. Customers have to make their own decisions out of a list of pre-defined options. This often demands a large number of decisions and also knowledge of the user about the product. While this may be perfect in the business-to-business context where configurators originated, in consumer markets this is not always the best option.

Here, need-based configuration often is better. This means that users have to tell something about her preferences, requirements, or expected outcomes. This input then is transferred by an algorithm into a product configuration. There is a great paper by three scholars that compared the use of a parameter versus need-based configurator for Dell (asking people what graphic card they want versus asking people what games they play). In this paper, the authors clearly find that most users prefer the need-based solution, mimicking the behavior of a good sales person (T. Randall, C. Terwiesch, and K. Ulrich, User design of customized products. Marketing Science, Marketing Science, 26 (2007) 2 (March-April): 268-280). Here, I believe, industry has to invest much more in developing better configuration systems that minimize "mass confusion".

DS: Are there alternatives to mass customization?

FP: Absolutely! I recently see better matching-systems for standard products as a strong alternative to mass customization. Within an assortment (of pre-fabricated products), customer specific choices/options are recommended. Consider My Virtual Model (mvm.com), a matching service for fashion retailers and the appliance industry. MVM enables consumers, either on its own site or on the sites of its clients, to build themselves in a virtual model (an avatar), by selecting different body types, hair styles, face characteristics, etc. Consumers also type in their basic measurements so that the virtual model represents their body measurement. In addition, customers can specify what kind of “fit” they prefer (loose, comfort, tight, etc.) so that the recommendations provided do not only fit the customer in terms of sizes and appearance, but also in terms of how they do feel inside the garment.

When MVM started offering virtual avatars in 1999, they looked more like a curious oddity. But now their avatars are used by more than 12 millions individual users. Companies such as Adidas, Best Buy, Levis, Sears and H&M are using these virtual models to generate business and stronger ties to their customers, lured by the increase in such metrics as average order value and conversion.

DS: Any other example of such a matching service?

FP: Sure. A great example is Zafu.com. Finding the right size of a pair of jeans is a challenge for many women. The answer of mass customization is taking a customer's measurements and making a custom pair of jeans for her. Zafu offers a different approach. From the customer perspective, the experience starts similarly. Zafu asks women shoppers eleven questions about how they prefer jeans to sit on their hips or waist to create a body profile. In addition, they ask for some basic body measurements.

But instead of using this information to create a custom cut, they match it with a large database of proprietary fitting information about the jeans of more than 30 major brands. This database contains hundreds of styles, from broadly marketed Gap to pricey designer labels. The consumer then gets a list of ranked results, linked with the brand's website to purchase.

I predict that we will see many more examples of these matching services as they offer companies to profit better from what they already have: vast assortments of existing goods. The result may be a new understanding of mass customization, beyond its roots in on-demand manufacturing and product design. In the end, it is the customer who drives the business. And customers are not differentiating between personalized, customized, or standardized offerings. I believe that we will need a broader understanding of mass customization. And I am excited to work on this challenge in the coming years.

For the full interview, head to blog.ponoko.com: Part 1 and Part 2

MIT Seminar on Mass Customization - Meet the Thoughtleaders in the Field

MIT Faculty Club, MIT Sloan School of Management, Cambridge, MA, November 10-11, 2008

Another event ... but one that we believe will matter and create value: We are inaugurating the MIT Annual Smart Customization Seminar. Its foremost idea is to connect managers in peer-to-peer interaction to foster an intense discussion, facilitated by presentations from industry leaders and the Smart Customization Group faculty. The seminar's core faculty consists of Mass Customization guru B. Joseph Pine II, MIT Design Lab Director William Mitchell, and myself (Frank Piller).

The seminar provides a unique opportunity everyone working on, implementing, or considering mass customization and personalization strategies and technologies (note: it is organized in the style of the MIT Executive Education, so there are no student discounts, etc.).

The MIT Smart Customization Seminar is the only event of its kind in North America and provides an in-depth coverage of one of today's most important business trends. The objective of the 2008 seminar is to take an intensive look on the success factors and "how to do it” aspects of mass customization and personalization.

For more information, the preliminary agenda, and registration please refer to the agenda in the attachment and our seminar web site: http://stellar.mit.edu/S/project/smartcustomization/

Space in the seminar is limited, so reserve your seat today, and also enjoy the early registration discount until October 24, 2008.

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

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

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

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

What did motivate your research on mass customization?

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

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

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

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

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

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

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

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

Guest article: Why Mass Customization Fails

A Guest article by Ben Moore & Clint Lewis

Adapted from their book "The Consumer’s Workshop: The Future of American Manufacturing"

Ben Moore is the Founder and President of Agent Technologies, Inc. a firm specializing in eCommerce 4 Manufacturing (sm) through manufacturing consultants and software applications. His prior experience has included managing global software projects with Procter & Gamble and leading the Pampers.com e-Commerce initiatives.

For over 17 years Clint Lewis was instrumental in the start up and expansion of many product lines at Procter & Gamble such as Pampers, Rely, and Luvs. Clint is the Founder and President of Lewis Group Consultants (LGC), an operations and technical manufacturing consultancy with a business philosophy that centers on "Maximizing the Merger of People and Machinery."

We all know that Mass customization aims to provide goods and services that meet individual customers' requirements with near mass production efficiency. We also know the importance of Systemization, the process of defining what range of products will be made and what range of production processes will be employed and Standardization, the process of defining what specific products will be made and what specific production techniques will be used to make these products.

We even know how to build product configurators and structure the product choices we present to the customer. Since we know all these things, then why after the incredible financial justification has been made that many mass customization/product configuration projects fail and/or don’t provide the anticipated return on investment? What is typically missed is the HUMAN FACTOR.

No matter how great the systemization, standardization, product configuration implementations are, it still requires PEOPLE to run the system. Most of these major technology projects give more emphasis on the technology than the people and hence are more likely to fail and/or underperform.

I know what you are thinking…We provided customized training so the workforce would know how to use our product. However, systems that transform a company require much more than just training, but changing how the workforce actually works together. People can MAKE a system work or people can LET a system fail. Yes, the system NEEDS people and people can’t be managed like things….they must be led, engaged and energized.

Now how do you engage your workforce (which is typically our largest ongoing costs) to MAKING your systems work. This is not a foreign concept, as many of today’s leading corporations discovered many years ago, the key is creating an environment where employees are:

Valued: Employees are not only fairly compensated but also routinely solicited for their ideas regarding day-day business activities, growth opportunities and innovative concepts.

Empowered: This environment flourishes as a result of an “institutionalized” work system that actively recruits, hires and develops people who demonstrate superior people, technical and leadership skills. Workers are expected to make keys decisions at the lowest possible level and are accountable for results. They make production, quality and improvement decisions. Teams police each other and develop their own team and individual improvement strategies.

Educated: Workers are immersed in the continuous improvement philosophy from day one. They are provided “state of the business” information in a timely fashion both through their own initiative as well as through formal business discussions. They are provided the most current technology training and also given the necessary tools to allow them to effectively utilize this training.

Stakeholders: Simply stated, team members execute the running of the day-day business as though they are the primary owners. Their philosophy is to always provide a product or service that is consumer focused and as consumers, they would be first to purchase.

Sounds so simple….but it’s not. Some companies can’t make this change because of the culture that has been setup within the company. There is a science to setting up these types of systems to support major systematic changes within an organization. The answer to the future of American Manufacturing and manufacturing in all developed countries is full utilization of each human resource due to the global pressures from lower cost workforces around the world.

For a practitioner’s guide on implementing a major initiative like mass customization within an organization, read Ben and Clint's book – The Consumer’s Workshop. http://www.theconsumersworkshop.com

Context: Interview wit the authors.

Trend Map 2008: See where personalization, open innovation, and mass customization are in 2008

Last year, I often showed in my presentations the great trend map created by Nowandnext.com and Future Exploration Network. They position in form of a subway map the major trends in society, policy, technology, and economy and thus provide a fresh look on these themes. And in case you need any buzzword for your talk or paper, they are all there.

Recently, the 2008 trend map has been published. It is derived from Shanghai’s underground routes. Limited to just five lines, the map uncovers key trends across Society, Politics, Demographics, Economy, and Technology.

Trends mentioned in the map include:

Simplicity, Reality mining, 3-D printers, Personalization, Geospatial web, Networked risk, Data visualisation, Open Innovation, or Constant partial attention.

But it also has nice ideas like Celebrity worship, Female chauvinism, or even Karma capitalism.

For all students, an important disclaimer from the trend map's authors: "Remember that our trend maps are generally for stimulation rather than being taken too seriously… :-)"

The trend map again is released on a Attribution-ShareAlike Creative Commons license, so readers are free to improve or modify the map!

Download the 2008 trend map as PDF here. The old 2007 trend map can be found here.

Video interview on mass customization and open innovation

In case you understand German and prefer to watch a video instead of reading a paper or book, this video is for you: Förderland, a large German Blog on Entrepreneurship, has conducted a nice video interview where I explain the basic concepts of mass customization, user innovation, co-creation and how this all belongs to each other (for a more detailed version of this, read our book).

In the video, I define the the basic concepts, give some examples, talk about the challenges, discuss, how entrepreneurs and start-ups can profit from these concepts, and name my personal best practice of a company in this area. And: The video also offers a view into my not really tidy and organized university office (note: I recently have ordered nice new office furniture, but as this industry is not doing any mass customization at all, delivery times for this are more than two months ...)

Here is the video (or go here to the full link and summary):
Thanks to the Exciting Commerce Blog where I noticed that my interview has been published first!

MCPC 2007: Finally a Conference Report & Review

The MCPC 2007 now is over since almost a month, and finally I get the time to restart blogging. Immediately after the conference, my teaching period at RWTH started, and I was very busy in keeping my students happy.

What to write? The MCPC 2007 was a terrific and very rewarding event. We were a great bunch of several hundreds of people at MIT and HEC Montreal, and the depth and quality of discussion was amazing. To get an overview, you can download all abstracts of the conference here. You also can order the full-text proceedings here.

I will not provide a long conference report here but let our participants talk. We received this quotes after the conference, and they summarize very neatly what was special about this conference:

"Thank you for organizing the best conference I have ever attended. This conference gave me a lot of power, ideas, and inspiration for my future research. I have been struggling in my research regarding MC for footwear for ten years. Few researchers are studying MC for the footwear industry in the US, but learning that many researchers and firms are tackling this issue in other countries, gave me inspiration. In addition, many colleagues don't realize the enormous potential of MC. Now I can perceive of a clear future direction for MC after attending this conference." Sage Endo, School of Business Administration, University of Mississippi

"Excellent conference. I thought Joe Pine's talk was enough to make the
conference worthwhile (it was) but then the rest of it was beyond my
expectations as well. Congratulations." Suzanne Loker; Cornell University

"One of the best, if not the best conference I've ever been to. Right mix of
theory and practice." Oinonen Sami, Nokia

"It has been one of the most rewarding conferences I've have attended. It was really
well organized as it brought together a heterogeneous group of people
who usually don't interfere with each other. The complementary competencies make an ideal arena for some really exiting stuff to happen." Christian Thuesen, NCC Construction Denmark

"It was an eye opener and I can't remember a time when so much new information (at least for me) was crammed into such a short time." Art St Onge, President, St Onge Company

"Seeing so many people trying to forward mass customization across so many different disciplines was very inspiring and I'm already looking forward to the next conference!" Monika Desai, Footwear Entrepreneur, Boston

And one note made all of us very proud:

"Thank you so much for getting me to speak at this week's event! I thoroughly enjoyed it, and seeing what a great group of folks you have brought together to push forward the state of art in Mass Customization." B. Joseph Pine II, Author of "Mass Customization"

Joe gave a really inspiring talk to start the conference. It almost was a journey though his life, starting with the very first research on mass customization and ending with its most recent book (just published this month) on Authenticity.

Joe agreed that we can share his slides and so you can follow his thoughts at least partly on paper. Download his presentation here. (Including Joe's personal comments on screen during the presentation!).

For more conference reviews, several blogs have provided feedback:

A great large and extensive conference report can be found here: http://no-retro.com/home/category/mass-customisation/

Ronal Reddington from the Made For One Blog collected a selection of feedback from our visitors posted in several blogs. He could not make it in person to the MCPC; but contributed with this selection! Thanks a lot, Ronal!

Based on his original summary, here are some quotes and links to more extensive reports:

First off, Peter Semmelhack of Bug Labs, who spoke at MCPC 2007, wrote briefly about the event on the company’s BugBloggers weblog. For some pictures, just look here.

As Ronal Reddington wrote, Bug Labs is producing an open source, modular consumer electronics platform which will allow individual users to customize gadgets. I am really looking forward to their launch at the end of this year.

Elaine Polvinen, Professor of Fashion Textile Technology at Buffalo State University, published her thoughts on the MCPC Business Seminar in Montreal on her Virtual Fashion Technology blog. Her conclusion:

"The conference was short, and jam packed with interesting presentations highlighting the latest developments in mass customization and personalization. Someone mentioned at the conference that an obstacle preventing wider scale use of mass customization and personalization was a system to input and save standardized measurements. As I listened to these comments I remembered that such a system was recently developed in Korea called i-fashion."

I-Fashion was represented with several talks during the MCPC research conference at MIT.

Michael Galpert, Chief Operations Officer of Worth100.com, shares his notes on MPCP 2007 Pre-Conference Workshop at MIT. Real notes, but interesting to read (especially for me to see what people note while I am talking :-).

Adrian Bowyer of the RepRap digital manufacturing machine (3D printer) project, posted about his journey to Boston and how he set up one of the ‘Darwin’ 3D printers in the conference lobby. This was one of the great exhibits we had a MIT !! And one of the most interesting discussions we had a MIT: The upcoming world of user manufacturing where cheap manufacturing infrastructure will allow users to make directly what they want ... without having to wait for a manufacturer to set up a traditional mass customization system for them.

Another home fabbing device we had on the conference was the famous Fab@Home machine from Cornell university (I wrote about this before in this blog).

Robert Freund reports in German, but larger detail on his impressions from the conference and the feedback he received.

Ruben Robert of open innovation accellerator FellowForce has published a short summary of his MCPC presentation ‘The Business Smarts of Strangers’ on the FellowForce blog. And FellowForce also gave us their innovation widget for free to gather feedback and ideas for the next MCPC 2009 ! (See it on the conference web site),

The writers of the OPENeur blog also participated át the MCPC 2007 – here is their preview.

Adam Fletcher from Spreadshirt also reported from its MCPC 2007 trip which took place while he was very busy in running the "Open Logo project" for Spreadshirt: Posting 1 and Posting 2

So: A great event with great people and really interesting discussions. The next conference will be in Europe in September/October 2009 –we have not decided yet where and are taking proposals from interested universities who want to host the 2009 conference. if you are interested, you drop me a line!

Update: On configurator-database.com, you find a number of MCPC 2007 conference pictures, but -- first of all -- a number of great videos with some prominent participants.

More information:

You still can order the proceedings: They are a pretty expensive 149 USD for the booklet and CD-Rom, but the price included VAT (19% sales tax) and international shipping. The proceedings include many of the papers in full text or extended abstracts, plus access to a special web site with about 40 slide sets of the presentations and the pre-conference workshops.

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 http://www.mass-customization.de/mcpc07/

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.

MCPC 2007 -- Latest Program Information -- Registration Is Now Open

I did not blog for a while about the MCPC 2007 conference. But in the meantime, we did organize the program and really stepped forward in making this conference happen.

Here are some general information on the conference. In the coming weeks, I will feature in individual postings some special presentations that will be given at the event!

The 2007 World Conference of Mass Customization & Personalization (MCPC 2007) will become a high profile and truly interactive event for the mass customization research and practice community on the MIT campus on Oct. 8 and 9, 2007. On Oct 11, a special business seminar will be held in Montreal.

(1) Program Overview

Our program committee selected from the submissions of more than 400 authors about 150 papers and proposals for presentation at the conference. Besides the latest research on mass customization, personalization, and related topics like user innovation, we are very glad that also a large number of managers from leading companies will share their success stories and challenges from running a MCP business.

In addition, we will have academic keynotes of several top MIT researchers, including
- Eric von Hippel (Sloan School of Management),
- Marvin Minsky (“inventor” of artificial intelligence), and
- William Mitchell (Professor of Architecture and Media Arts and Sciences at MIT Media Lab).

Also the expert who made mass customization known and developed the original concept in detail, B. Joseph Pine II, plans to attend and keynote the conference.

In total, we will have much more than 200 participants on the program!

The business seminar on Oct. 11 in Montreal -- a one-day focused event of high-profile invited management presentations -- gets in great shape in the moment. We will have companies like Dell, Google, Rebook, Nike, Fidelity, among many others, presenting their latest customization and personalization initiatives. Montreal is an easy 4-5 hour drive away from Boston; and the trip though the New England Indian Summer should be a great experience at this time.

More information on the Montreal program will follow very soon in a separate posting. Please make your own travel arrangements, there is no central group travel organized by the conference.

(2) Registration

Conference registration is now open online.

Participants can register until the beginning of the conference. On-Site registration is possible as well. The early registration discount however ends on Sept 1, 2007 !! You can either register for the MIT event only or enjoy a special discount when registering for the Montreal business seminar as well.

(3) Program and Scheduling

The final program will be ready at the end of August once we have the feedback and commitment by all authors to come and present. General presentations will be scheduled either on Oct 8 (between 10.15-6.15) or on Oct 9 (between 10.15-4.45).

The MCPC 2007 will start with our opening keynote session on Sunday, Oct 7, at around 3:30pm, followed by an opening reception. Earlier on this day, there will be s special interactive workshop program. More information on this will follow soon.

The MIT part of the conference ends on Oct 9 with a closing keynote panel at about 6pm.

The Montreal part will start on Oct 10 with an evening reception and go until Oct 11 night.

(4) Sponsorship Opportunities and MIT Smart Customization Group

If your organization, company, or consultancy is interested in supporting the MCPC 2007 conference at MIT and exhibit your services, products, or MC offerings during the conference, please contact Betty Lou McClanahan who will discuss any possible arrangement with you (contact data at the end of the posting).

Also, for corporations who want to continue to work with MIT after the conference, the MIT Smart Customization Group, part of the MIT Design Lab, is a great initiative to join. You find more information on this group here: http://design.mit.edu/smartcustomization/

There will be a special information session on the MIT Smart Customization Group during the conference, and again Betty Lou is glad to discuss any options of working with MIT students and researchers on mass customization.

(5) Hotel Booking

On the conference web site, you find a list with hotels. We got a special room block at the Marriot Cambridge, which is just on the MIT Campus.

Also, the Renaissance Cambridge and the Kendall Hotel are within steps from the conference site. The Hotel Marlone, the Royal Sonesta, and the Hotel@MIT are in easy walking distance (<10 min.). As October is a busy season in Boston, hotel prices are not cheap. So as an alternative, you may want to stay in a cheaper motel outside Boston (e.g., at Route 1 north of Boston) and drive to the campus (parking is available at public garages for about 15-20 $/day).

Or check Craigslist where you may find a cheap room sublet (listings for Oct will not be in before mid of Sept).

There also is a helpful site at MIT with guest houses and B&Bs.

Context: MCPC 2007 contacts and more information:

Registration and Payments:
Nicole Silva
MIT Conference Services
Phone: 617-253-0116
Fax: 617-258-7005
Email: conferences-www AT mit.edu

Sponsorship and Organization:
Betty Lou McClanahan
Program Manager, MIT Media Laboratory
20 Ames Street, Room E15-228
Cambridge, MA 02142-1308, USA
Phone: 617-253-0630,
Fax: 617-258-6264
E-Mail: bl AT media.mit.edu

Abstract / Paper Updates and Modifications:
Dina Franzen
RWTH Aachen University, TIM Group
Phone: +49 241 809 3577
Fax: +49 241 809 2367
Email: franzen AT tim.rwth-aachen.de

Program Planning and All Other Questions:
Frank T Piller
RWTH Aachen University, TIM Group
Phone: +49 241 809 3577
Fax: +49 241 809 2367
Email: pillerAT tim.rwth-aachen.de

Report on State of Mass Customization Implementation and Cost Drivers

Only 67% of BTO/ETO manufacturers know how much it costs to produce customized products, and 73% don't know the cost of engineering change orders

A new report on mass customization and build-to-order manufacturing has recently been published by Cincom Systems, a manufacturer of configuration and quote-to-order solutions. The study is based on 72 interviews with senior engineering managers at manufacturers of complex industrial, electrical, and transportation equipment and systems between January and February 2007.

While such an industry-driven report is biased by the perspective if its sponsor (and also its interview base is pretty small and probably not representative), the study contains a number of interesting data which, from my experience, represent the state of many companies offering customized industrial products (b-to-b).

The report found that only 67% of build-to-order and engineer-to-order manufacturers know how much it costs to produce customized products, and 73% don't know the cost of engineering change orders. Only 27% had figured out the cost of engineering change orders. But despite the lack of cost information, more than half of the survey respondents believe that they have the ability to charge a 10-25% or higher premium with a product customization strategy.

Customization rates will increase in the future

The disconnect between pricing assumptions surrounding product customization and traceable costs becomes a barrier to sustaining momentum with mass customization strategies into the future. This is especially true as the broad majority of managers interviewed by Cincom for this report state that requests for customized products have been increasing over the last five years, and 26% anticipate that the growth rate will be between 25% and 50% in the next two years. Managers quote the following corporate objectives which are driving customization efforts (in ranked order of importance): (i) Meet specific customer requirements, (ii) Demonstrate product leadership, (iii) Improve positioning against lower-cost competitors, (iv) Improve internal efficiencies, and (v) Enhance margins or price premiums.

Some other key findings, as quoted from the report:

“Product customization strategies are predominantly relied on by manufacturers to both increase production efficiencies at the low end of their product lines and drive up premium pricing at the high end. 73% of total respondents see product customization as critical for products over $100,000; 25% also see them as critical for products under $1,000.

There is a significant knowledge gap between what engineering needs to contribute to a mass customization strategy and what existing systems are delivering. While only 50% of respondents use any type of software for managing the product customization processes, 56% do not have service information, 55% do not have catalog and selling information, and 50% do not have product development information critical to support product customization.

One of the greatest risks to mass customization is the intensive amount of intellectual capital that engineers have, yet it is not captured anywhere (64%). Additionally, 35% of respondents report that there is no method in place for sharing knowledge throughout the company.”

Automated Product Configuration

The study asked managers about the tools they use to support mass customization. Not surprisingly, CAD is the primary tool used to support the customization process (92%). The implication is that the customization process is primarily drawing-driven based on tribal knowledge with heavy engineering involvement in the specification process. Beyond the CAD system, most manufacturers are using ad hoc technologies such as spreadsheets (51%) or manual processes supported by documentation (41%) to support the customization process. Few companies utilize automated configuration systems. Of those who do, 30% use homegrown systems and only 24% use third-party packages.

These numbers indicate that there is rather little integration of tools within the customization process, and the level of integration decreases significantly as you move from manufacturing (ERP at 30%) through engineering (CAD at 24%) into the sales channel (Selling Systems at 14%). The lack of integration implies that there is a significant amount of manual intervention within the customization process requiring time and resources, and leaving opportunity for errors.

Barriers to Mass Customization

According to the study, most engineers believe that product complexity is not the primary barrier to customization. They cite lack of knowledge of options by the customer (67%) as the primary barrier to customization efforts. The implication is that the knowledge required to effectively sell customized products is not being effectively transferred to the customer. This is not surprising given the often technology-focused implementation of configuration systems. There are huge opportunities for improvement in sales and operational effectiveness to be gained by addressing this issue. Of the surveyed respondents, 43% indicated that inadequate systems are also a barrier to customization.

As written before, these numbers and findings have to be interpreted from the perspective of its originator: a company selling exactly those systems to improve the gaps identified in the survey. But despite all sales buzz, the study shows that many companies still have a long way to go to change their (craft) engineer-to-order systems to true mass customization operations.

Context:
Download the report.

A special issue of the IJMassC (4/2006) has a number of case studies that demonstrate how MC pioneers closed these gaps. Read especially the paper by Lars Hvam on the configuration system of APC, a provider of data center equipment.