Outside Innovation

Attractive Business Model for Customer Innovation: Peers Inc.

In September 2012, at the Business Innovation Factory annual confab, BIF-8, I had the opportunity to hear Robin Chase tell her story. She talked a little about what she learned from co-founding Zipcar, and a lot about how she wanted to push the envelope with her newest company, Buzzcar.

Robin conveys infectious enthusiasm, not just about car-sharing and environmental sustainability and making our cities livable communities. She’s also enthusiastic about a “new” business model which she has studied and adopted. She calls it “Peers Inc.” I really like the way that Robin has “unpacked” a business model that has become very popular in the past decade. Her main point is this: if you want to grow a sustainable business really fast, you should COMBINE a peer-to-peer network with a company. The company does what companies do best: It provides economies of scale, it invests in long-term assets and intellectual property, it mitigates risk, it provides recourse, and it wraps that all in a brand promise. However the company doesn’t provide the products. The products and services are provided by the customers. That means they can be highly customized, specialized, localized, and diverse. Customers use their own social networks to promote their wares and to attract other buyers and sellers.

Robin exhorted her audience to consider using a Peers, Inc. model not only to grow businesses, but also to solve big complex problems (like climate change). As she says, a Peers Inc. organization “delivers the speed of collective action while preserving the ingenuity and creativity of individuals. It’s a fabulous partnership. The internet has empowered people. Peers, Inc., takes it up a level with the power of companies.”

Here's the case study I wrote after hearing Robin's talk at BIF-8:

BuzzCar—Peer-to-Peer Car Rental
Building a Platform for Participation for a “Peers Inc.” Business Model

 

 

Expect a Sea Change in Application and Information Architectures

Intersecting waves of technology are converging: Cloud computing, massive parallel processing, distributed file systems like Hadoop, dynamic provisioning to the cloud, embedded computing, open mobile platforms and APIs, and semantic publishing, to cite just a few. Patty’s Pioneers (technology architects) have been talking recently about how these phenomena will profoundly change the way we do business, use computers and address problems. We already have the ability to send huge volumes of information to the compute cloud to perform long-running, compute-intensive pattern detection. Google works that way. The genome project and many other scientific endeavors are enabled by this capability. You can solve BIG problems. You can offload bursty, compute-intensive applications. You can enable new capabilities like high-frequency trading.

Information, data types, and file formats are changing too. Scientific and technical data isn’t always organized in relational databases or spreadsheets. There are huge flat files, analog files, arrays, sequences, 3D models, and a myriad of data types and patterns that most business IT was never designed to address. We are sensing and detecting real-time changes in everything from weather to ocean pH. We perform chemical analyses, create molecular models, and find interrelationships among everything. We have massive amounts of genetic sequence data, with genome browsers, model organism databases, molecule- or process-specific databases.

Information that we want to share and have customers find and use is increasingly being tagged to accelerate semantic processing. Many of Patty’s Visionaries (customer-centric e-business leaders) have already embarked on large semantic tagging projects. They are convinced that, in their fields of endeavor, important concepts need to pop out of the sea of words and data so that these concepts can be linked to the appropriate behaviors and services. A company name came be linked to news, financial data, personnel information, products, patents, geography, partners, and customers. A chemical formula or a gene sequence can be linked, viewed, and acted upon with a staggering array of tools.

This next generation of distributed computing and pattern matching will unleash a new economy – with new opportunities for value creation.

As I contemplate the tremendous and revolutionary changes that will hit all of our businesses as a result of the new ways in which we can now detect patterns and process information, I am grateful for the magic of the human brain. Our intuition and emotions combine with our sense-making and pattern matching to make magical leaps across disciplines.

This next generation of computing architectures is upon us. It’s time to take the plunge. Say goodbye to Microsoft Word, say hello to N-dimensional arrays and patterns. Say goodbye to PDAs and laptops. Say hello to holograms you can gesture through.

Spreadshirt: Making It Easy to Be Your Own Brand

Like sneakers, custom-designed and printed T-shirts are a huge category in mass-customized products. Spreadshirt is one of the most mature companies in this space. It was founded in Leipzig in 2002 by Lukasz Gadowski and Matthias Spiess, and quickly became a European market leader in personalized clothing. The original idea wasn't a direct-to-consumer play, but an online shop partner that would empower small retailers to create and sell their own branded goods. With the combination of a well-designed Web infrastructure and custom manufacturing expertise, the firm grew from a prototype to a multimillion Euro global company.

CNN Partners with Spreadshirt

 

Make a Statement

CNN partnered with Spreadshirt to enable customers to make T-Shirts out of CNN headlines.

Refocus on Shirts and My Brand

Jana Eggers is now the CEO of this company, which has offices in Leipzig and Boston. "We're a creative, personalized apparel company. We have millions of direct customers and over 300,000 shop partners."

Jana told the story of the refocusing of Spreadshirt. "About a year ago, we refocused. We were producing a lot of custom merchandise: puzzles, clocks, lanyards, mugs, and, of course shirts. We went through a transition from "you think it, we'll print it" to a laser focus on making it about them—the customers and the products that carry the most emotional impact for them."

They did a lot of soul searching and research. "We asked our employees first; then we went to our customers." They asked customers: "What made it "your own label?" Jana explained. What they discovered is that wearable apparel packed a lot more impact than any other customizable object. And that telling a story or making a statement about yourself is the key emotional driver. Jana said that the phrase that really summed up the customer research for her was: "I wear my shirt every time it's clean." This was the big epiphany. "Shirts are very personal to them. People comment on them. They wear them proudly. We also learned that the process of creation is a really important part of the perceived value of the experience. Many customers commented that they wanted to spend more time in creating their customized shirts; not less."

CustoMax: Platform & E-Market for Custom-Tailored Apparel

Learning by Doing

Bas Possen is a mass customization veteran. He has been designing and selling made-to-order business suits and shirts for men and women since 1969 through his company, Possen Made-to-Fit Fashion.

After growing up in the fashion industry with a background in custom-tailoring, Bas Possen wanted to take advantage of the latest technology. "In 1998, we started with body scanners from Human Solutions. We were the world-first fashion retailer with a 3D body scanner in Amsterdam as well as in a mobile store visiting clients. We were the world's first, but not the world's best. For example, during the first year of operation, we scanned 10,000 people, but we had to give money back to 30 percent of them. We realized that we were tapping an unmet need, but the scanning software was immature and the logistical control wasn't there."

Bas also experimented with online design and ordering of custom tailored apparel. "We wanted to be an Internet player, but we found we needed to be brick and click. We had no clue about the proper distribution model."

CustoMax provides a total mass customization ecosystem for apparel retailers

 

Retailers use the configuration software to capture customers' measurements and apparel specifications. Custom manufacturing is outsourced.

Use Smart Customization to Recession-Proof Your Business?

 

Ever since I attended the MIT Smart Customization Seminar in November, I've been aware that a switch has flipped inside my gut. For me, this is a sign that there's an important shift in the technology-enabled business strategy landscape that my clients need to act on! It also reminds me of the visionary clients I have who are already way ahead of me in adopting (and probably shaping) the transformation that's upon us. People like Phil Gibson at National Semiconductor, Pat Kerpan at Cohesive FT, and Jonathan Clark at Elsevier are among our clients who have been pioneering in smart customization for years (although they may not have called it that).

My "gut feels" usually occur just before the knee of the adoption curve. Sometimes it's several years before, but, recently I notice that the lag time is decreasing... My instincts are slowing down with the rest of me as I age.  These days (as I near 60!) my inner alarm only blares a few months ahead of the tipping point. So there's even more urgency to pay attention!

Smart Customization is BIG! I now believe that if you don't switch your business operations and processes to embrace this paradigm, you're going to left in the proverbial dust. Smart Customization is when you empower customers and partners to custom-design their own goods, services, experiences, and approaches and you deliver these customized products quickly (within minutes or days) and cost-effectively (at only a small premium above mass-produced or standard products). You can apply smart customization to information, apparel, food, manufacturing—virtually any industry or practice.

Smart Customization is a sustainable approach to practicing customer-led innovation. It's a form of iterative customer co-design that causes you to profoundly rethink your business architecture. To be successful, you need to decompose your offerings into modules. The boundaries (or APIs) of these modules are defined based on the characteristics or attributes that matter most to customers in specific contexts.

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.

If you miss the smart customization bus, there may not be another one.

This week, I offer a "Best Practices Report"—Smart Customization Comes of Age—based on the case studies presented at the MIT Smart Customization Seminar. It's a great place to begin your journey.

Celebrating Doug Engelbart's Influence on Society & Computing

Thanks to Eileen Clegg and Valerie Landau for this great mural depicting the evolution of business, technology and society. This timeline is a portion of the mural. (Click to see and scroll the whole thing). "The Demo" is Doug Engelbart's original Demo in 1968 of "Augmenting Human Intellect" using Personal Computers, the Internet, Windows, Mouse, Online Collaboration—he foretold and demo'd just about everything we are now doing!

I'll be attending the 40th anniversary celebration at Stanford University hosted by SRI on December 9th. Tweet or email me if you want to meet up. There are (at least) two events. One is the celebration itself. The second is the Program for the Future Summit and Workshop on Collective Intelligence at the Tech Museum of Innovation at San Jose (December 8-9).

Customer Scenario® Patterns

For many years, I’ve been aware of the value locked up in the design patterns that have emerged as business and consumer customers have co-designed their ideal approaches to everything from how they’d like to invest for retirement, to how they’d like software to install, to how they’d like to make a purchasing decision in our Customer Scenario mapping sessions. We published our first Customer Scenario pattern in 2004 (B2B Select & Buy: Part 1 and Part 2). Nobody seemed particularly interested. But I believe the time has come to put these out into the world. It may be that nobody will notice (Christopher Alexander’s work, which is very profound, is still under-acknowledged 30 years later, even among professional architects).

There are (at least) three different genres of Customer Scenario patterns:

• Customer Lifecycle Customer Scenarios. These are closely connected to customers’ discovery, acquisition, and use of your products to fulfill a need they have. How do customers ideally want to interact with your brand and your ecosystem through their product lifecycle?
  
  
• Event-Triggered Customer Scenarios. These relate to life events or business events that customers need to deal with. For consumers, these might include buying a new home, retiring, welcoming a new baby into the family, sending a child off to college. For business people, these scenarios may include things like launching a new product, opening a new branch, or downsizing the business.
  
  
• Outcome-Based Customer Scenarios. Some scenarios are focused on a specific outcome, such as losing 20 pounds, getting a promotion, or increasing your revenues by 20 percent while retaining or improving your current profit margins.

Why Are Design Patterns Valuable?

Design Patterns are valued by software designers, usability experts, and architects—both technology architects and building and landscape architects. Patterns tell us how to design a construct so that it works effectively and efficiently to achieve its end. Patterns are esthetically pleasing as well. Simplicity. Form meets function.

I believe that good patterns emerge from the confluence of three things:

1. Watching what people do and noticing what works and what pleases them.

2. Discovering what people want to do but have difficulty doing.

3. Thinking carefully about, and testing, designs that make it easy for people to accomplish their goals (both tangible and emotional goals) in a pleasing manner as efficiently as possible.

Skip Walter turned me onto design patterns in the 1980s. At the time, Skip was the product manager for Digital Equipment’s very successful All-in-One office systems. He was also an early practitioner of customer-led innovation. The design of All-in-One arose from customer co-development to meet the needs of a small group of customers in the field.

When Skip told me about design patterns, he referred me to the works of Christopher Alexander, who published The Timeless Way of Building, in 1979, A Pattern Language: Towns, Building, Construction in 1977, and, in 1975, my favorite, the small gem of a book, The Oregon Experiment, in which Alexander and his co-authors describe their work with students, faculty, and community members in redesigning the campus of Oregon University in Eugene.  in 1977, and, in 1975, my favorite, the small gem of a book,  in 1977, and, in 1975, my favorite, the small gem of a book,