A discussion of mass customization belongs in any book about customer-led innovation. When you give customers tools to configure their own customized products, and set up your production processes to quickly produce those products at a cost that is near the cost of mass-produced products, we call that practice mass customization.

DESIGNING PRODUCTS TO BE CUSTOMER-CONFIGURABLE AND BUILT-TO-ORDER

When you enable mass customization, you’re designing all of your product development and manufacturing processes from the customers’ point of view--from the outside in. In order to be able to deliver customized or personalized products cost-effectively, you must first ensure that you have a manufacturing or production facility that can cost-effectively produce products that are custom- designed for each individual.

Producing customized digitally-delivered products--software, information, music--appears simpler than the process of providing customized physical products, like cars, computers, or apparel. Yet there are challenges in both situations.

In the case of digital goods, you need to ensure that you have the rights to produce the creator’s work in customizable ways--e.g., chapters, sections or pages of books, tracks of music, designs, blueprints, etc. You also need to be sure that you have the rights to distribute those works in the territories in which the customer chooses to consume them, the rights to translate those works and the rights for the works to be used (e.g., performed, read out loud, broadcast, turned into a screenplay, create derivative works) in the ways in which customers intend to use them (commercial, non-commercial, with or without restrictions).

In the case of physical goods, you’ll need to set up, or contract with, a lean manufacturer whose production processes are optimized to make it easy to assemble or to build-to-order one-off goods. That means that you also need to design your products to be easy-to-configure and assemble. The “make products easy to configure” part of the equation will usually require major changes in the way you think about and design your solutions. All of a sudden you begin to think about products in the ways your customers view them. You only need to enable customization for those attributes that matter most to customers.

Providing Configuration Toolkits

The constraints within which customers can select options and configure their own customized products are typically built into the tool used to capture the customer’s customized design. These tools are usually, but not always, software-based configurators that are presented to the customer on a Web site, an in-store kiosk or computer, or on a hand-held device. Often, the customer may choose to configure and customize his/her solution in partnership with one of your sales associates, dealers, or knowledgeable customer service representatives.

Increasingly, we’re seeing customization become a group effort. Customers often need to be able to save their configurations, discuss them with others, share them with others and let other people provide input or changes, before they finalize their designs. Sometimes you’re configuring a solution that has to meet the needs of a variety of people--like a shared travel itinerary for a group of people traveling together but coming from different cities.

Customers also change their minds or think of new criteria or context after they’ve committed their designs. It’s good practice to enable customers to rework their configurations, without penalty, even after they’ve placed their configured orders. Cisco discovered that 95 percent of the change orders it received occurred within the first 24 hours after a configured order was placed. By enabling customers to make changes after the order was placed but before the actual assembly process began, Cisco dramatically reduced customers’ aggravation, increased customer satisfaction, and reduced its own overhead and return-handling costs.

How Innovative Are Custom-Configured Products?

There is definitely a trial-and-error, learn-by-doing behavior involved when customers download their own games and ring tones, create their own travel itineraries, specify the dimensions and details for their clothing, select the colors and textures for their backpacks, select the characteristics of the shoes that will meet their needs best, custom-configure their cars or motorcycles, or put together a custom playlist or podcast.

Sometimes customization is a “nice-to-have” feature of a product--as when kids can select the colors for their backpacks and add monograms and logos, or when users customize their own portals, configure their blogs, and design their avatars for a computer game.

In other situations, customization is a “must have” characteristic in order for the products to meet the customers’ desired outcomes. For example, Getty Images’ advertising customers must specify whether the professional photos they are licensing will be used in all of Europe or only in France, whether that image will appear on billboards, subways, and park benches as well as on TV, and for what period of time they want to have exclusive use of that particular image. An athlete often must have shoes that are custom fit and optimized to maximize her performance.

The constraints within which customers can design their own products are set by the brand owner and/or copyright holder who offers the customizable products. Clearly, customers are not inventing new products or solutions when they configure a product based on a set of predetermined constraints. They aren’t even improvising. Yet by enabling customer-configuration for those products and solutions that customers want and need to be able to configure, you are becoming a more innovative company. You’re enabling your customers to control the things that matter most to them. You’re opening up your own design and production processes from the outside in. It’s an important step.

Making a New Genre of Products Customer-Configurable Is a Process Innovation

If yours is the first company in your industry to respond to customers’ desire for mass-customized products, and you make it possible for your customers to customize or configure a product or service that has previously not been customer-configurable, you are engaging in process innovation. When you give customers control over the selection of the attributes that matter most to them, you are opening up your company’s internal, heretofore closed (and often proprietary) product and solution development activities. This makes you a leader in innovation. But don’t stop there. If you are successful in meeting customers’ needs for custom-designed products, you can expect your competitors to be fast followers.

Advice for Fast Followers in Customization

What if you aren’t the process innovator? Once one player in your industry has launched a popular “build-your-own” or “custom-design-your-own” capability, you may need to follow in order to keep the most creative of your customers engaged and loyal. If you do customization and build-to-order well, you will increase your margins on those products, so it’s usually worth the investment even if you aren’t the first.

Where to Learn More about Mass Customization

There are now dozens of customer-customizable solutions emerging in many industries. We offer just a few examples in these pages...