A while ago, I noticed that there are a lot of success stories about startups taking on the adventure of mass customization, but that some of the big companies ceased their mass customization efforts.
Levi’s used to offer custom jeans - no more.
Land’s End allowed you to design your own clothing - merely dress shirts are offered tucked away into a corner of their website.
General Mills still owns the domain mycereal.com - yet it only redirects you to their corporate homepage. What happened?I decided to ask an authority on the subject - Professor Frank Piller (also see his blog on mass customization here).
He was so kind to send me a paper from 2005^, where he discusses exactly what I’ve been wondering about. Below my summary of his take on why big firms have a disadvantage at mass customization:
Basically, Prof. Piller states that firms have to do two things in order to enable mass customization:
- A: Companies have to achieve flexibility in their production of goods
- B: Companies have to create an interaction system to learn about the preferences of their customers
Many big companies benefit from immense scale, and it is challenging to allow mass production to churn out billions of different products in addition to the ongoing mass business. This requires change management capabilities and an agreement throughout the organization that few big companies can achieve - it is a lot riskier than betting on another mass product!
When was the last time you engaged in a real dialogue with a mass producer? These companies have too many customers to start a real interaction process. I believe that in order to allow your customers to co-design a product, you need to (1) understand their general preferences to determine which modules you offer as customization options, and (2) you need to provide a toolkit to let your customers customize your product. Many big companies are not used to being this close to their customer without a market research firm or an advertising agency in between. Again, small and agile startups in their respective niches have an advantage.
It seems to me that social media might be a remedy to this problem. Also, we shouldn’t ignore that there are success stories, such as NikeID!
What do you think - do startups have an advantage in the mass customization arena?
^ Frank Piller (2005): “Mass Customization: Reflections on the State of the Concept”, The International Journal of Flexible Manufacturing Systems, 16, 313–334
I think there are a range of examples, from Amazon’s Personalization on one end (the merchandising is customized for you but the products being sold are standard) to CafePress (create your own merchandise printed on standard slates using their machinery) to custom sneakers (you choose the materials and colors and they create it for you).
You would know better than I, but it seems like customization problems solved by software are inherently scalable, whereas solutions that require manual labor are the ones businesses have difficulty scaling (because humans are expensive). So if you can automate the customization process, you should be able to make customization much cheaper and scalable.
