Smart Customization Comes of Age
Best Practices from the MIT Smart Customization Seminar 2008
Smart Customization, an implementation of mass customization that is both profitable and sustainable, is gaining traction. The MIT Smart Customization Seminar, held November 10-11th, 2008, was a business best practices event, with practitioners from the U.S., Europe, and Asia providing glimpses of what they have done and what they’ve learned along the way. This report looks at these best practices as well as the drivers for gaining competitive advantage by offering smart customization: 1) increased customer demand for customer products and experiences; 2) interactive toolkits have come of age; 3) mass-customized manufacturing costs and turnaround times are dropping; and 4) organizations are redesigning themselves around mass-customization.
NETTING IT OUT
What is smart customization and why is it important to your business? Joe Pine defined Smart Mass Customization in 1993 as: “developing, producing, marketing and delivering affordable goods and services with enough customization that nearly everyone finds exactly what they want.” Smart customization gives customers the ability to select and/or contribute the product or service attributes that matter most to them.
Smart customization is an implementation of mass customization that is both profitable and sustainable.
It’s profitable because customers are happy to pay more for the customization experience as well as for the outcome of customization.
Smart customization is sustainable because products are built to order and assembled close to the customer, limiting inventory carrying costs and reducing transportation costs. What follows is my “trip report” from The MIT Smart Customization Seminar that was held November 10-11th, 2008. The seminar was co-chaired by William Mitchell, Joseph Pine, and Frank Piller. Unlike many of the academic meetings that have been held on the topic of mass customization, this was a business best practices event, with practitioners from the U.S., Europe, and Asia providing glimpses of what they have done and what they’ve learned along the way.
SMART CUSTOMIZATION GAINS MOMENTUM
There’s a “new” way to design products and services as well as the businesses that produce them. Your starting point is the conviction that customers want and value products, services, and experiences that are custom-designed for them and/or by them.
Your business case is that customized products, services, and experiences can be produced quickly and cost-effectively and yield a much higher margin than mass-produced and/or custom-designed products and services.
Different Types of Smart Customization
There are several kinds of customization that were discussed at the MIT Smart Customization 2008 seminar:
1. Custom-configure products from a set of standard components
2. Custom-tailor products to meet specific dimensions or tolerances
3. Personalize products to include artwork or other intellectual property the customer contributes
4. Use personal “manufacturing” solutions to enable customers to produce their own custom-designed products
We also discussed the power of pseudo-customization:
5. Select previously-made products based on customized requirements
What I find personally gratifying is how well the smart customization “movement” fits with my own world view of customer-driven innovation. Customer co-design is an essential characteristic of smart customization. To be successful, you have to (re-)design your organization, your products, your infrastructure, and logistics to respond to customers’ changing needs. You need to listen deeply and observe the patterns of how customers design and use their solutions. You need to let customers learn from and build upon one another’s creativity.
Why Is Smart Customization Gaining Traction?
After spending two days with 60+ practitioners of smart mass customization from the U.S., Europe, and Asia, I became convinced that there is no longer any question about whether or not smart customization is a viable business strategy in most industries. The practitioners are convincing, successful, and hard to dismiss. There were many proof points and success stories from a wide vari-ety of industries.
The professors who led the discussions and provided the conceptual frameworks all con-veyed the impression that smart customization is in its adolescence; not its infancy.
The questions that remain aren’t about whether or not to take the plunge; they are more about how to do it. What are the best practices? What works well? How do you design or change your organization’s culture and processes to embrace smart-customization?
The report continues...
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