By: Dominik Walcher / Fabrizio Salvador / Frank Piller
Whenever customers are not getting what they need, business opportunities are opened. When properly implemented, mass customization has the potential to provide a long lasting competitive advantage through better, more adapted products and services that can be sold at premium prices. This final article in the Customization500 series sums up the conclusions and key learnings.
In this series of articles, we have argued that mass customization can be regarded as a response to today’s opportunities of heterogeneous demands and the need of companies to become truly customer centric. When properly implemented, mass customization brings about across-the-board improvements in all dimensions of operations strategy: responsiveness, price, quality, and service.
Mass customization needs to be customized, too
But mass customization is neither a “one size fits all” approach nor the right strategy in all contexts. A recent survey by FedEx Corporation in the apparel industry found that more than 90% of the respondents agree that mass customization will play a significant role in the next five years. Yet mass customization implementation has not necessarily been positive in terms of its outcome. Levi’s Original Spin program (custom jeans) or Procter & Gamble’s Reflect brand (custom cosmetics) are prominent examples of mass customization efforts in large and powerful enterprises that failed to fulfill their promise and were thus terminated.
…even small improvements can reap substantial benefits.
In the previous part of this series, we have outlined a number of challenges that many companies face when introducing mass customization. We believe that these obstacles can be overcome by using a variety of approaches, and that even small improvements can reap substantial benefits. A trick is to remember that there is no one best way to mass customize: managers need to customize the approach of mass customization thinking in ways that make the most sense for their specific businesses.
Companies that have found individual means to implement methods and approaches to match these three capabilities are succeeding in their mass customization endeavor. Other companies are just working along one of these capabilities. This is a good strategy as well. Mass customization should be considered a journey rather than a destination. It is not about achieving a “perfect” state of mass customization. What matters to most companies instead is to continuously increase their overall capabilities to define the solution space, to design robust processes, and to help customers navigate through available choices. A company may already profit tremendously from just implementing better, say, choice navigation capabilities to match diverse requests of customers not familiar with the product category.
Three fields for action
Mass customization has the potential to provide a long lasting competitive advantage through better, more adapted products and services that can be sold at premium prices. We also know that there are many difficulties associated with the pursuit of mass customization, but our research indicates that the problems lie mainly in the way it has been implemented so far. Indeed, our research has led us to the following conclusions:
- Successful mass customization must be understood as a process by which organizational capabilities are built: Solution space definition, robust value chain design, and choice navigation. These capabilities cannot be perfectly acquired: what matters is the capacity of the company to differentiate vis-à-vis its competitors in the level of these capabilities.
- Successful mass customization requires significant managerial attention, but also continued commitment. Since empirical evidence tells us that inertial forces in organizations are difficult to counter, the process by which these capabilities are implemented requires a strong sense of strategic vision from the management team. The journey is difficult, but no strategic advantage comes easily.
- Mass customization is not simply about increasing the number of choices: it is, or can be, a platform upon which the strategy of the firm can be built, and one of the main contributors to its success. There is not a standard platform for mass customization: Each company has to select the appropriate tools and approaches and to align them to its business and corporate strategy.
In sum, we believe that mass customization can be a source of competitive advantage for most firms. By increasing the flexibility of the organization and reinforcing the connections with its customers, a mass customization strategy can be one of the core components of a larger competitive strategy, and one of the central pillars of its sustainability. Whenever customers are not getting what they need, business opportunities are opened. And as our research has demonstrated, the pursuit of this goal yields great results. We invite you to enter the age of mass customization!
By Frank Piller; Fabrizio Salvador and Dominik Walcher
About the authors
Frank Piller is a chair professor of management and the director of the Technology & Innovation Management Group at RWTH Aachen University. He also is a founding faculty member and the co-director of the MIT Smart Customization Group at the Massachusetts Institute of Technology, USA. Frequently quoted in The New York Times, The Economist, and Business Week, amongst others, Frank is regarded as one of the leading experts on mass customization, personalization, and open innovation. Frank’s recent research focuses on innovation interfaces: How can organizations increase innovation success by designing and managing better interfaces within their organization and with external actors.
Email: [email protected]
Fabrizio Salvador is Professor of Operations Management at Instituto de Empresa Business School, Adjunct Professor at the MIT-Zaragoza Logistics Program and Research Affiliate at the Massachusetts Institute of Technology. His research focuses on operation strategy in uncertain environments and customer-centric organization design. He has been researching such topics as mass customization, concurrent product-process-supply chain design and organization design for efficient product configuration. His research has been published in many prestigious academic journals, and he is co-authoring the book “Information Management for Mass Customization” . He received a Ph.D in Operations Management from the University of Padova, where he also graduated in Industrial Engineering.
Email: [email protected]
Dominik Walcher is professor for marketing and innovation management at Salzburg University of Applied Sciences / School for Design and Product Management. He studied architecture and management at the University of Stuttgart, the Technical University Munich (TUM), and the University of California at Berkeley. His doctoral thesis about mass customization and ideation contests was awarded with several prizes. In the last years, he has extended his field of research to brand management, business creation and sustainability marketing. He was a co-founder of a startup company in the field of customizable and eco-intelligent products.
Email: [email protected]
Further information / Links:
mc-500.com: More information on the Customization500 study and a list of the 500 companies included.
mass-customization.blogs.com: A blog on mass customization and customer co-creation.
bit.ly/mcpc-proceedings: Access to the proceedings of the last MCPC conference, the largest event in the area. These proceedings cover many dozens of case studies, latest research, 2500+ slides, and 15+ hours of video of the plenary presentations.
More articles in this series:
Introduction: A special series of articles on mass customization and customer co-design
Part 1: 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