Innovation and Trends in Pe...

This is the first in a series of interviews with executives and academics in the field of mass customization.

1. Can you please tell me who you are and what your company does?

Dave Sloan, CEO of Treehouse Logic. We make a product configurator platform that enables mass customization.

2. What would be a good example of a website you've enabled for mass customization. Please tell me a little bit about the project.

Rickshaw Bagworks wanted a next generation configurator that didn't have issues seen with classic Flash configurators (slow, no guidance, not mobile friendly, expensive, expensive to maintain, etc.) They needed an affordable solution within a tight timeframe, and they wanted to stay lean and not invest in hiring engineers to build something custom. We built the first version in 3 months, and that included a new ecommerce platform. Now that our platform is more mature we can add new product lines as fast as 2 weeks.

3. What do you see as being an emerging trend in mass customization?

More…

Who hasn’t watched a favourite TV show of the past and been intrigued by the producer’s vision of the future? If you enjoyed Star Trek or The Jetsons, you probably anticipated that by 2010 we’d be driving flying cars, eating nutritional pellets, or manoeuvring around with our personal jet packs. It was also predicted that we would have personal domestic robots doing our chores, needle-less injections and have food replicated on demand. Of course, don’t forget that in the new millennium, we’d all be clad in silver jumpsuits with matching boots.

And so I was intrigued when the April issue of Canadian Business Magazine landed in my mailbox with a cover that read “An Insider’s Guide to the Future”. In addition to prognosticating what is to come, they also took a look at the past and reviewed a few predicted scenarios that were made back in the day.

In the 1920’s Scottish geneticist John Haldane surmised that the traditional method of child production would be virtually non-existent today.

What did he in fact predict?

Imagine a yellow rose that smells like lemon, or a white rose that smells like vanilla. Those are the options that could be available at your local florist shop, according to scientists at the University of Florida in Florida who are developing the flowers.

As reported by Discovery News, this research could lead to custom-designed flower scents and better smelling fruits and vegetables. What gives a flower’s aroma is found in its genes and now that that this gene has been identified, scientists can grow flowers with never-before scents, which include roses that smell like root beer, or petunias that smell like wintergreen. How interesting it would be to be able to purchase roses that smell like your favourite perfume.

But, don’t look for these flowers in your grocery store just yet…

I was recently at the Rotman School of Management, University of Toronto (my alma mater) to hear the Dean, Roger Martin speak about his latest book “The Design of Business: Why Design Thinking is the next competitive advantage.”

The main theme of his book is that innovation is about seeing the world not as it is, but as it could be. It’s about exploring really “wicked problems” whose solutions can’t be found in past experience or proven by data. Martin maintains that the problem with business is that most companies obsess over reliance and predictability, which stifles innovation. Instead, he offers a more intuitive approach, adopting the discipline of “design thinking” a process that accelerates the process from mystery (an unexplainable process) to algorithm (a replicable success formula).

This got me thinking about the innovations, or lack thereof, coming from large companies in the mass customization space. Most of the personalized, products, services and innovations that I have written about extensively come not from the major companies, but start-ups, which back-up Martin’s point.

Here is at least one exception from which the larger companies can learn…

With a new year, and also a new decade upon us it’s time to look into my crystal ball to see what the future may hold for personalization for the upcoming year:

1. Marketers will get fired for NOT doing one-to-one marketing

It was back in 2008 that the following statement was made by the president of a California based printing company at a Xerox Graphic Premier Partners program webinar: “No one’s losing their job yet for not doing one-to-one marketing – but they soon will.” Two years later, with custom multi-channel communications being the norm, his statement is truer than ever. Any objections that marketers give one-to-one marketing that include coast barriers, lack of quality data, and execution and campaign management difficulties don’t hold up now. If that’s the message you’re getting from your marketing team, or agency replace them! So what are you waiting for marketers? I definitely want to see more personalized marketing hit my mailbox.

2. More mass customization initiatives launched by major brands

As I had written about back in December, the one class of retailers that thrived despite the recession was those that offered customized and personalized products – growing about 10 times as fast as online retail in general. While such start-up sites such as Zazzle, CafePress, Scrapblog, Spreadshirt and Blurb were examples mentioned, I’ve also seen examples of personalization initiatives from Adidas, Prescriptives, M&Ms, and Hallmark. I predict that we’ll be seeing more mass customization initiatives from the major brands, as they realize they have explore other areas for innovation and growth. They should be thinking of mass customization as a brand extension, just as they do other lines. Yes, there is some risk in being too far ahead of the curve, as I’ve written about both previous mass customization initiatives from Barbie and Proctor & Gamble. I can only hope we’ll be seeing true creativity from the big players who will be forced to become more nimble.

Three more trends...

I’ve been blogging about mass customization and personalization since 2006, and in that time I’ve never been at a loss about what to write because different products, services and business models present themselves with regularity - almost on a weekly basis.

And when I search for stories to cover, I have to choose the best from a number of options. It is my observation that the topics of mass customization, personalization and one-to-one marketing are increasing in popularity, so I needed some objective facts to prove that this was in fact true.

I visited Google Insights for Search and typed mass customization into the search field. What I found was quite surprising. Since 2004, interest in mass customization has actually decreased! Huh?

According to Google, the numbers in the graph at right “reflect how many searches have been done for a particular term, relative to the total number of searches done on Google over time. They don't represent absolute search volume numbers, because the data is normalized and presented on a scale from 0-100; each point on the graph is divided by the highest point, or 100. The numbers next to the search terms above the graph are summaries, or totals.”

I scrolled further down the page to find other data, and this is where things started to make sense…

In his book What Would Google Do? author Jeff Jarvis looks at the factors have made Google the fastest growing company in history so successful. Then, he reverse-engineers this one company that he feels truly understands how to succeed in the internet age, and takes those lessons and laws and applies them to a number of industries and companies.

For example, he asks, “What would a Google car company look like”? Well, the design process would be both transparent and collaborative. It would allow other companies to create after market accessories for the car. And, of course there would be online communities built around the entire process. This traditional company knows best business model is turned on its head to embrace the fact that consumer knows best about his or her own wants and needs.

Just as Google’s projects are on an open source platform and are constantly in beta, ready and willing to tweaked and improved, so too should the auto industry learn from this model. With everyone designing and creating their car slightly differently, we move away from mass produced cars to niche produced cars and towards mass customization - and the ultimate market of one.

Here’s the vision…

With the current economic crisis hitting everyone hard, people are cutting back, spending less, and trying to buy smart. However, even in these bad times, an opportunity to move the way of the future can be found in personalization. Now might be the perfect time for businesses to embrace the idea of a mass customization strategy. For consumers, that means rather than wasting money on things that aren’t quite right, to custom-design their own products or services for something that is truly a perfect fit.

According to author and customer experience consultant Patricia Seybold of Outside Innovation, “Smart Customization is a really shrewd strategy to jumpstart or revive during a recession. You can start small. You can leverage the many platforms and ecosystems that already exist. You make money by streamlining operations, eliminating inventory, and reducing time-to-cash dramatically. You boost and differentiate your brand by injecting excitement and emotion into it. Customers become invested in the experience of customizing and personalizing. They come back to do it again. They tell others.”

Other reasons for adopting such a strategy are noted in a blog post I made back in 2007 titled Why Your Business Needs a Mass Customization Strategy. I highlight the fact that such initiatives attract a highly desirable consumer. Forrester Research maintains that these consumers could be your most important customers.

Why?

It may be likely you will not necessarily be familiar with PURL marketing. Simply put, the acronym means Personalized URL (web address) marketing, and it’s the integration of personalization, direct mail, and the internet.

Here’s how it works. It all starts with a segmented customer database, then out of that is generated a personalized direct mail piece with a PURL printed on it. If a customer visits the web address, they are provided with their very own personalized website that contains information that is tailored specifically for them.

According to MindFireInc., just one company that provides this integrated marketing solution, personalized URLs are the hottest thing in 1:1 marketing. The benefits of such an approach is that it improves marketing responses rates, identifies more qualified prospects and converts high quality leads into revenue – all while results are monitored in real-time.

I’ve written before about great examples of personalized direct mail from Rogers, Volkswagen, Cadillac, Women’s College Hospital and Capital One, but none of these campaigns went so far as to offer a personalized web address. In fact, I don’t think I’ve ever received such a piece of direct mail. But let me tell you that it would certainly get my attention if I did. And that’s the point. We’re exposed to thousands of marketing messages a day, so when something crosses your desk with your name on it and an intriguing call to action, you’ll be more likely to respond to it.

If you’re interested in exploring the topic a little further, I’d suggest you check out the following resource:

The Future of Media Summit will take place on July 14, 2008 in Silicon Valley, USA and simultaneously in Sydney, Australia on July 15, 2008 - linked by video. Even though the conference is next week, The Future of Media Report 2008 has already been published and can be downloaded in PDF format here.

The case is made that there are 7 driving forces shaping media:

1. Increasing Media Consumption
2. Fragmentation
3. Participation
4. Personalization
5. New Revenue Models
6. Generational Change
7. Increasing Bandwidth

Of course what caught my eye was the personalization aspect. I’ve written numerous posts about the personalization of goods, services, and marketing communications -- and now it’s coming to media.

Personalization in this context has two aspects. From a user perspective, they want to control how they receive media: what, when, and where, in its formatting, filtering and presentation. From an advertiser’s perspective, real-time information on viewers enables highly targeted advertising based on behaviours and other profile data. But, the fate of personalized advertising will be determined on how user attitudes to privacy evolve.

What are the implications?

It’s the end of December, which means the annual prognostications by the pundits…

This month, McKinsey released “Eight Business Technology Trends to Watch” mostly internet related technologies that “change how companies innovate, managers make decisions, and businesses lower costs, tap talent or realize new business opportunities."

The trends are grouped into 3 sections: “Managing relationships”, “Managing capital and assets, and “Leveraging information in new ways”. I was most drawn to the section “Leveraging information in new ways” and in particular Trend #7 - “Putting more science into management”. Because of the proliferation of vast amounts of information generated by a corporation’s data system, new tools and processes and even new business models have to be developed to both harness and make sense of it all.

Managers are now better able to use information that can be used to engage their customers. The more a company knows about them, the better able they are to create offerings and target them effectively with messages, and therefore to extract a greater value from them. After all, isn’t that the essence of marketing - the process of determining what a customer wants, then delivering it to them?

The article goes on to assert that the “holy grail” of deep customer insight – “more granular segmentation, low-cost experimentation, and mass customization – becomes increasingly accessible through technological innovations in data collection and processing and in manufacturing". Again, no surprise here, especially when it comes to mass customization. Give the consumer the power and the tools to choose the colour, fabric, taste, smell, size, content , or whatever, of their products, and they will most likely be happier with their choices – at a premium of course. I certainly agree, and have written about it before, that companies who employ a mass customization strategy will generate deeper customer relationships, while reaping the financial rewards.

On a similar note...

Take a look at this photo — I mean REALLY look at it. (Click here to see a larger version of it.) This image appears in the December 2006 issue of Wired Magazine as an Artifact from the Future. Do you know what it depicts?

It's a personal fabrication machine. What this photo shows is a user visiting the Create @ Home Page - Make It Yourself with Wal-Mart. The user has purchased one-time fabrication rights for a Spalding Classic NBA Basketball for $199.98.

You will also notice that on his desk the user has a 3D printer that actually creates the basketball. An additional note on the computer screen indicates that he can purchase replacement 3D printer cartridges online for all materials ranging from elastomers to photo-polymers.

Think this is some far-off fantasy?