Definition of Co-Creation
In my last post in the term definition series, I spoke about the confusion with the term mass customization, and that it leaves us “mass customizers” looking for a way to describe what it actually is that we’re doing. My friends at Blank-Label thus decided to use the term co-creation, announcing the “Co-Creation Custom Revolution”, or #CCCR on Twitter.
Co-Creation is foremost a very loose term, so I definitely can’t say that it “doesn’t fit”. I’d like to think as co-creation as an umbrella term for mass customization (including design your own and create your own) and open innovation (generally speaking the idea of listening to others when innovating). In essence, it means that companies and customers (and sometimes partners) jointly create products. “Design your own” websites are an example - the customer provides the specifications, the manufacturer actually makes the product. In the traditional product development processes, it basically means ‘increasing the number of ideas that go into the product innovation funnel’ - which leans more towards open innovation.
An amazing and fairly new example of the co-creation is Quirky. You can both submit product ideas, but also contribute to existing ideas - and quirky then actually makes the product. Examples include tea pots that keep the tea tag from dropping in, or gloves that keep you warm while allowing you to operate an iPhone. The company and the innovators are one community - probably the most extreme example of co-creation.
Another strong example for co-creation, where customers and manufacturers join forces, are the customized product market places: Spreadshirt, Cafepress and Zazzle - all three sites where you can design anything from t-shirts to mugs to aprons. I wrote an article on egoo-journal about this.
Definition of the Term “Mass Customization”
Mass Customization is an academic term, attributed to Stan Davis in his book “Future Perfect” where he writes about “mass customization, the production and distribution of customized goods and services on a mass basis.”
The term is often mentioned in connection with manufacturing and change management: After “Future Perfect” and then soon Prof. Pine’s book "Mass Customization: The New Frontier in Business Competition" big companies began considering customized versions of their existing products. The conversation turned to making mass production lines flexible, and creating a system that allows interaction between producer and customer.
Keep in mind that this was in the 90s! The internet had just hatched, social media still 20 years or so away. Manufacturing had just discovered Kanban and Just-In-Time production 10 years ago- mass customization required on demand production! I’m not saying that mass customization was completely impossible for the companies of that time - but it definitely proved to be a tough cookie.
So people thought of mass customization as a big promise - that didn’t end up coming true. A “nice idea”, but still an “oxymoron”. Today, mass customization is still associated with that chasm between theory and reality, despite reality being much closer to theory than ever before- leaving us “mass customizers” looking for a new term, and the rest of the world in confusion about all this terminology floating around.
Given the disappointment with the idea and the confusing about terminology, it might not be surprising that the term mass customization has been stretched tremendously. The biggest leaps in interpretation I’ve heard all relate to the customization of services - and if you think about it, of course a haircut at the hairdresser is “customized” to your head shape (thankfully), and yes, they do cut a lot of hair there - but can this really be mass customization? I think not. The term has also been used to describe rental bikes in cities (“customization of mass transportation”) and ATM’s (customization of service since you can tell it how much money you want out of it).
Personally, as much as I like getting a hair cut made for my head, the right amount of money, I think it doesn’t help to define a term like mass customization so loosely. My definition is more something like this: “Making customized goods on-demand with the efficiency of mass production.”. And yes, that term is still looking at the topic from a production point of you - so stay tuned for my other terms to get the custom[er] angle.
"Design Your Own" and "Create Your Own" are just a manifestation of mass customization - more about that in a later blog post.
Term Wars: Personalization vs. Mass Customization by Prof. Piller
Decrease the Sacrifice Your Customers Make
I’ve quoted Pine and Gilmore in my blog post “Mass Customization as a Revolution in Production?" before on this: "…as new mass-produced items rolled off the lines, most consumers gladly sacrificed what they wanted exactly in order to simply obtain one." (in the introduction of “Markets of One”)
Can we reverse that with mass customization? Can we make products available to consumers without making them sacrifice?
Yes, it’s possible. But to understand this sacrifice is crucial in determining what should be customized - and what not. As you’re devising a new mass customization business, focus your attention on that exact sacrifice. A good way to identify them is by observing “work arounds” of customers. Whenever someone takes a mass produced goods and adjusts it themselves to their own purposes, it’s an indicator that there are more out there that would prefer the adjusted item over the standard item. Not everyone might be as crafty to invent a work around. Take your friends that buy jeans and then take them to the tailor to get the hem shortened or let out. There’s customization potential.
The tricky part though is to identify what sacrifices most of the consumers make. In the case of pants, is it that it “looks ok, but not perfect?”, or the length, or the way it sits on the hip? Only market research and interaction with those customers can really give you an insight into that. Often, a personal experience is a great start, but be sure to back it up - it might be that you’re the only one making that sacrifice.
But beware of the sacrificing consumer who has gotten so used to his sacrifice that he doesn’t notice it anymore. As Pine and Gilmore write: “[E]xpectations are conditioned by years, indeed decades, of settling for something less (and sometimes something more) than what each customer wants exactly.” But as more an more companies offer mass customization, as innovators triumph over having obtained exactly what they needed, the increased value provided to consumers will become the norm, and everyone calls out “Why didn’t we think of that?”
Scaling your Modularized Mass Customization Production
A production that makes mass customized goods almost always requires a modularized production. Example: To make customized chocolate bars, you must define the modules, such as 4 base chocolates and 100 toppings in the case of chocri. But not only the inputs are modules, the process has to be divided into modules as well. To define those process modules correctly is imperative for a successful mass customized business. For example, at chocri different modules could have been the size of the chocolate bar, the shape of the chocolate bar, we could have offered 100 base chocolates and four toppings, or customized packagings every time. There are endless possibilities to define those modules, and they might change over time (at chocri, we introduced a fourth base chocolate after two years, which of course caused an explosion of the possible chocolate bars you can make on the website).
As Pine and Gilmore write in their introduction to Markets of One:
"Modular capabilities are much more difficult to design than integrated products. … establishing such capabilities requires some down-and-dirty dealing with various operational details of one’s business."
I couldn’t agree more, and this particularly applies to scaling up the business. As more and more orders come in, you have to be able to deal with the complexity inherent in a module based production. Take chocri for example: The people who make our chocolate bars have to be trained to know every topping, how to put on the chocolate bar in relation to other toppings (so that it tastes and looks good). Once a new topping enters our list (e.g. our topping of the month), the production team needs to adjust, to learn vocabulary (for our international orders). When we have a theme Valentine’s Day packaging, they need to look for those orders that chose it. The more chocolate bars we make, the more people we need to make the chocolate bars, the higher the complexity in ensuring that every chocolate bar that leaves is made perfectly.
I think that the “down-and-dirty dealing with various operational details” requires you as a mass customizer to have your production in-house. Or at least that your supplier is as invested in its success as you are yourself. The added complexity in mass customization production cannot be handled by everyone, especially not by those who are used to mass production processes.
Mass Customization As a Revolution In Production?
There are several ways to look at Mass Customization:
- As a business model innovation that changes what type of products people consume
- As a thought model that applies to products, services, art and more
- As a production technique
While I’m most involved with the first bullet point (mass customization as a business model), which pays more attention to the external and the consumer, I find the research in regards to production fascinating. As I’m reading the book Markets of One by Prof. Joseph Pine and James Gilmore, I thought I’d share some points mention in its introduction that I think should be interesting to anyone involved in any facet of mass customization and that are a bit more related with the production of goods in a mass customized way.
In the science of production, mass customization is essentially another concept, and a very high level concept as that. It would be fair to say that it might be the next revolution in how goods are produced, following crafting and mass production.
Historically, the only major concept on how to produce goods was crafting. Somebody would go to the tailor and give a shirt in order. The shirt would be made right then and there by the tailor, to the measurements taken by the customer. Since everything was made on demand and specifically for a customer coming into the shop, making the shirt (or the shoes) according to the specifications and measurements of the customer wasn’t much more effort. It was normal. This production method can still be found today of course, but either they’re in countries with low labor costs (get your own shirt made in China and you’ll see), or they are extremely expensive (get your own shirt made in London and you’ll see). Amazingly enough, Robert T. McTeer Jr., the President and CEO of the Fed in Dallas summarized this before (as quoted in Markets of One):
"Things used to be made to order and made to fit. But they were labor-intensive and expensive"
Then the industrial revolution happened, and with it came machines, modern methods of transportation, and Henry Ford. Suddenly, goods were produced on assembly lines: Mass Production. Shirts and shoes were made in standardized sizes and standardized designs. It became much cheaper to produce these goods, and suddenly everyone was able to afford a pair of shoes. As Gilmore and Pine write in their introduction to Markets of One: “…as new mass-produced items rolled off the lines, most consumers gladly sacrificed what they wanted exactly in order to simply obtain one.” Amazingly enough, this standardization is even celebrated today, and it’s what brands exist for. Most consumers are influenced by what others around them have, and they want the same. Brands are “in”, and suddenly everyone needs, let’s say, an Apple product. Robert T. McTeer Jr. please:
"Mass production came along and made things more affordable, but at a cost - the cost of sameness, the cost of one-size-fits-all."
Gilmore and Pine suggest that the computer and the internet have the same “revolutionary” effect on us today that the industrial revolution had on our predecessors. Suddenly, amazing amounts of data are available, and even better - we have the means to process them, and to translate them into actions. Everyone is connected to everyone, and since the advent of social media, it’s normal for consumers to interact with companies, as if they were a tailor on main street in the village again. Machines, no, let’s call them robots, can make things just as well as humans did in the past (maybe even better), but at a much larger scale, and in a flexible manner that was unthinkable in Ford’s times. It is finally possible to combine the low cost of mass production with the individualization of crafting. Enter: Mass Customization
"Technology is beginning to let us have it both ways. Increasingly, we’re getting more personalization at mass-production prices. We’re moving toward mass customization"
Yes, that’s Robert T. McTeer Jr. of course. At this point I have to admit that he said that in 1998 - 13 years ago! The Markets of One is from 2000. But let’s keep in mind that it took a good while for mass produced cars to become the norm as well. The first T-Model cost the equivalent of $20k modern-day-USD in 1909, and by 1920 the price had decreased to $3000 in modern-day-USD [source] As prices decreased gradually, more consumer demand was created, and more companies started offering mass produced goods. We as consumers have gotten fairly used to standardized goods, and companies have invested in complex and integrated systems that are difficult to break up. Therefore, we might have to rely on small companies to drive this “new age of production”, and startups take their time. It’s up to you, dear reader!
The Tyranny of Choice and Mass Customization
The December issue of the Economist has an interesting article on the disadvantages of overwhelming choice. The problem is known, but the article is extremely well researched and ties the topic very well together, so I want to summarize it here and then comment on why it’s relevant for Mass Customization.
Choices have exploded
Many of you know this very well as mass customizers, but even in the mass produced world, choices have exploded. The article mentions that an average American supermarket has five times as many items on shelves today (about 50,000) than it had in 1975 (about 50k today).
Many of these options have improved life immeasurable in the rich world…”
But: Is it too much choice?
However, research has proven many times that too much choice is demotivating. In a study in California, shoppers offered one group 24 jams to sample, another only 6. The shoppers with the larger choice ended up being less likely to buy though - only 3% of them purchased a jam, compared to 30% of those who had had only 6 jams to sample from. The same research results held up when they tried different products (interestingly enough - chocolate was one of them). There was one outlier: Germany! “German researchers, by contrast, found that shoppers were not put off by too much choice, whether of jams, chocolates or jelly beans…”.
Barry Schwartz, who really made the topic a conversation when he wrote the book “The Paradox of Choice”, says in it:
At this point, choice no longer liberates, but debilitates. It might even be said to tyrannise.”
The article further says that what makes choice so overwhelming is the downside: The cognitive dissonance, after the purchase, the possible regret of having chosen the wrong thing.
What does an aversion to choice mean for businesses?
The traditional answer to people’s aversion to choice are brands. Brands that are well marketed and that hence feel like a “safe choice”. Indeed, as a German I remember being surprised upon my first visit to the US how brand conscious consumers are in the US. The article sums up:
Indeed, in a wolrd that celebrates individualism and freedom, many people decide to watch, wear or listen to exactly the same things as everybody else.
But let’s look at what choice does for sales. The article has several examples:
- Tropicana introduced a greater variety of fruit juices (20 instead of the former 6), and increased sales (albeit in Great Britain) by 23%. Choice led to higher revenues.
- P&G reduced the choice in the Head & Shoulder assortment - instead of 26 different options, they offered 15. Sales increased by 10%
- A 2006 Bain study recommends that lower complexity and choice can increase revenues by 5-40%, while cutting costs at the same time
Finally, I want to highlight the quote of a life coach in the article, who says “Young people have grown up with masses of choice.”
Implications for Mass Customization
With mass customization, choice explodes much more than a tenfold increase of items in a supermarket. Take chocri - on the website, you can create 27 billion different chocolate bars, each single bar requiring you to choose from over 100 modules. When I first joined chocri, one of my first questions was “But what about the paradox of choice?”. Now that I know more, I think there are 4 implications for mass customization businesses from the findings highlighted by the Economist article:
- Navigation of choice: This is something that Prof. Piller has been saying for a while. Within the 27 billion chocolate bars, there’s one that’s more likely to make the consumer happy than others. I can think of two ways to facilitate navigation of choice. The first is a recommendation engine, similar to the recommendation engine on the chocri page that recommends you toppings based on your previous selection. But a recommendation engine could also be an integration with hunch, the internet’s personalization machine. It takes for example your Facebook profile and can recommend you the perfect combination in an instant. Also, smart process design is a way to help consumers navigate too much choice. NikeiD’s success is partially due to the fact that many customers discover a product on the Nike website that’s 90% perfect - if only it had a differently colored sole. In comes NikeiD, you can make a product 100% perfect and don’t have an excuse not to buy it anymore. Similarly, the process on a customization website can ask a few questions and, according to the answers given, narrow down the choices presented on the next pages. Finally, keep in mind that function is a way to navigate choice: Taste in customized chocolate bars, fit in the case of jeans, whether customized earrings match your wardrobe…
- Reduction of choice: An easy one, and something we’re doing at chocri: cutting away toppings that too few customers demand. It’s something that has to be done carefully so as not to lose the appeal of an offering that fully covers a niche, but many of the toppings we’ve cut haven’t been missed much.
- Branding: Just as it applies to mass produced goods, branding is a task for mass customization companies as well. Keep in mind that consumers are not only choosing from your custom sneaker, they’re also choosing from the entire array that’s in Foot Locker. If a brand helps them sift through the overall choice, you should have a strong brand to reduce the choice from all the sneakers in the world to only your billions of options.
- Target market selection: I have written about mass customization in Germany vs. US vs. other countries before, and the article finally seems to offer up an answer: Not every consumer in the world is open to choice in the same way. It appears that Germans demand more choice than Americans, and maybe the British (see the Tropicana case) like it a tad more, too. Also, young people who grew up with it are less intimidated by it. What that implies to me as an entrepreneur is that there are different types of consumers who are more likely to respond positively, if not even demand the choice that comes with a customized product. So choose your target market well.
First article on caseable, ever! :)
We are happy to announce that today caseable was mentioned in the egoo-journal. The egoo-journal is a cool blog about the latest trends and newest companies in mass customization.
Here you can find the full article: http://egoo-journal.com/2010/11/04/new-customization-company-launches-beta-caseable/