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!
Funny enough, after I just recently posted my article about why mass customization is so much bigger in Germany than in the US, a German online magazine went so far as to describe mass customization nearly normal in Germany today. Here a quick summary/ translation of the article:
The article begins by saying that in order to remain competitive, businesses have to make their customers’ dreams come true. While mass customization has been the exception in recent years, “it now seems to become fit for the masses”. “Personalized products have great potential, are becoming ever more popular with customers, and increasingly startups cover niches with it”
Examples: It then mentions Woonio (online configuration of furniture) as an example for an extraordinary application of mass customization, and states that mass customization in food seems to be really taking off (mentioning, not surprisingly, chocri, since we just tripled capacity with our recent move).
The article then quotes Prof. Piller (whose blog you should read too, by the way), who gives the example of Harry Potter as a very successful mass product, saying that there will always be successful mass products. Prof. Piller also mentions the complexity and costs in e.g. apparel and fashion companies that design clothing that they can not be sure that their consumers actually want them. Later in the article, Prof. Piller is quoted again, arguing that loyalty is increased when consumers design their own product online, due to higher switching costs once the perfect configuration is found.
In an outlook to the future, the author Susan Roenisch makes four major points:
1) 3D printing will become ever more powerful as it becomes cheaper
2) Mass Customization is Web 3.0 - instead of just interacting with customers, companies now integrate their customers into product development and production
3) Mass Customization is still a Long Tail matter - there will be room for mass as well as customized products
4) The limit of Mass Customization is to a large degree production scalability , which is caused by the fact that mostly small companies are successful in the space, but also enabled by the fact that small companies have more flexibility in their production
In my recent presentation at the Smart Customization Seminar I made the point that Mass Customization is much bigger in Germany by showing the following image, comparing the number of mass customization companies in Germany vs those I could find in the US:
Note that I even included Burger King in the list of U.S. mass customizers because they advertise as “have it your way”, which is a stretch of the definition of a mass customizer.
Two observations can be made by looking at this list:
a) There are a lot more mass customizers in Germany than in the US!
b) Among the mass customizers in the U.S. are more large companies - like Nike, Dell, and M&Ms
This was underscored by the fact that it seemed that at the conference half of the attendees were German, and that in a benchmark analysis of 500 (as many as are known) mass customizers (RWW), 34% had a .de domain (which is only a portion of all German mass customizers).
So why is mass customization so much bigger in Germany? Here are two potential reasons as to why:
1) In European countries, there’s just less “mass” (production) “Everything is bigger in America”. The Americans were the first ones to master mass production - think Ford and the T-Model, and a product mass produced for/ in the US has a much larger scale than say in Germany because it serves a market of 300 million, not 80 million people. Hence, consumers in the US are used to big brands and standardization across 50 states. In Europe, that is not the case. What you see in a German supermarket is likely to be very different from say an Italian supermarket. I believe that that probably primes Europeans to be more likely to adopt unique, mass customized products that are not all exactly the same.
2) The funding environment for startups The drivers of mass customization in Germany are startups. Tiny startups, mostly founded by Generation Y entrepreneurs. The European marketplace of investors and ventures to invest in is much smaller and not as efficient as the one in the US, which requires many of these young entrepreneurs to start a business that they can self-fund with little capital. Mass Customization does that - it requires little investment because you can start with customization on a small scale, and it is cash flow friendly
Finally, it is a fact that some trends just get started outside of the US - like the “green movement” that is bringing quite a European behavior to the United States. Maybe in a similar way, mass customization is now coming to the US? As to why it started out in Germany in the first place - I’m sure there are other reasons but the two mentioned above, and I’m eager to hear your thoughts on it.
