Conference Report: Observations and Conclusions from the MIT Smart Customization Seminar 2012

Over the past months we have reported a lot on the latest preparations of one of the most important meetings of the customization community in 2012: Smart Customization Seminar, hosted by Smart Customization Group, MIT. Now that the event has taken place and we got some time to breath again we want to take a look back and share some of our experiences with you. 

WorkAtSCGWith the general topic being Micro | Macro | Customization it has been a really broad range of experts giving insight and views on customization from the point of view of their respective field of profession or research. From internationally renown scholars like Joseph Pine, Eric von Hippel or Alex Pentland to experts for (custom) architecture, food individualization or top-notch sports cars: This years lineup of speakers brought some centuries of combined experience into one room. 

Overall there was a great agreement that customization will continue to and play an even more major role in implicit and explicit design of our all's common living space, especially in large cities, and the way we interact, produce, buy and consume. 

FerrariOne highlight of the seminar was when Marco Mattiacci, CEO of Ferrari North America, presented what could be called the glass ceiling of automotive individualization: A Ferrari 599XX EVO, in red, of course. Unfortunately we could not take the 1.500.000 USD car for a short test drive around Boston highways, but at least many auto enthusiasts got the chance to get photographed with this little gem of the four-wheeled world. 

Of course, the car did not just serve as a background for nice souvenir photos. In fact it did underline one very important message: the desire for individualization is an important part of human psychology. While a car for
10.000 USD would get you from A to B just fine, one for over a million Dollar will still leave room for individual desires. And to fulfill these, be it in regards to admittedly exclusive sports cars or "just" individually produced nutrition bars, is not only a big step towards a new age of consumerism but also a business opportunity that could revolutionize many branches. 

MattiacciAs Mattiacci explained in his keynote speech, implementing (the right kind of) customization in an established company is not necessarily an easy undertaking. But once you have overcome potential barriers and worked out a system that fits your product and corporate philosophy, you can majorly benefit from your entrepreneurism: Ferrari managed to increase orders of individualized elements on their cars from a few thousand to about 80.000 USD per new car that is being bought, "just" by tweaking the way they offer customers to personalize their car in Farrari showrooms. That is rather impressive. 

Another great example of how the future of both retail and urban planning could potentially look like was outlined by Prof. Alex Pentland of MIT. He demonstrated how data mining can be employed to optimize shopping experience for customers, making it more convenient to find what you (likely) want to buy, making the process less tiresome and more efficient at the same time. 

As Alex Pentland showed, using a large enough database of location data from cell phones, one can make actually rather precise predictions of the buying behavior of customers, what they are interested in, individually, and which product offer might be benefitial to them. 

Of course, this is a really double-edged sword. Not everybody is comfortable with his location data being used for marketing purposes (or even stored). And while privacy concerns are very much understandable, this technology still has a lot of potential, certainly not against the will of customers but, with their agreement, advertising could see a real revolution. Imagine only seeing product ads about things you really care about on television. No more generalized campaigning but specific offers for every individual, fitting his or her interest and needs. This kind of customization will need a lot of further development until it will become as universally accepted as today's broad-range advertising, but it at least has the potential to play a big part in tomorrows retail world. 

Also very interesting was a finding presented by MIT's Ryan Chin: Employing modern RFID technology his group could prove in a research scenario that mass customized dress shirts are being worn more often or used over a longer period of time as compared to non-customized shirts. This is certainly explainable with not only a better fit but most importantly the customer's increased affection to a product he individualized himself. 

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This, and other presentations, deliver a clear message: customization is far more than a trend for those with a special interest in personalized products. It will be one of the most important aspects of living and conducting business in the coming decades. And while we are still far from a fully customized world, this is an excellent time for innovative entrepreneurs to get into the market and secure themselves market shares, like Anthony Flynn did with his venture YouBars, producing custom nutrition bars. And sometimes, its just a small idea that sparks something large

But customization is not only a matter of business opportunities. At least evenly important, it will be part of our future society. More individualism will change the face of urban living, personal traffic, media consumption and many more fields of life forever. And while this development will be driven by consumers and supported by industry, it is also academia and administration who is asked to get a custom world into their focus of attention and do their part to make the future fit the nature of humans better by creating an enviroment that allows individuals to do what makes them individual: Taking and living their choice. 

About the Author:

Frank T. Piller is a Co-Director of the MIT Smart Customization Group at the MIT Media Lab, Massachusetts Institute of Technology, USA, and a chair professor of management at the Technology & Innovation Management Group of RWTH Aachen University, Germany, one of Europe’s leading institutes of technology. Before entering his recent position in Aachen, he worked at the MIT Sloan School of Management (2004-2007) and has been an associate professor of management at TUM Business School, Technische Universitaet Muenchen. Frequently quoted in The New York Times, The Economist, and Business Week, amongst others, Frank is regarded as one of the leading experts on strategies for customer-centric value creation, like mass customization, personalization, and innovation co-creation. His recent analysis of the crowdsourcing business model “Threadless” (co-authored with Susumu Ogawa), an innovative crowdsourcing business model in the fashion industry, has been elected as one of the Top-20 articles in MIT Sloan Management Review.