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Thursday, February 28, 2013

Some Notes on Mass Customization

A few years ago, I started writing a piece on mass customization. How do well-funded companies make consumers feel like individuals? Recently I was in Palm Springs and wondered, how did the Alexander Company, developer of all those modernist tract homes, figure out this challenge? Most of these small houses (about 1,200 square feet each) had the same plan yet felt unique and even spacious. My friend Jill Pilaroscia, a colorist, has been hired to carefully plan the coloring of new subdivisions in Silicon Valley so homebuyers feel that they are purchasing a unique product. But in this age of advanced algorithms, developers are probably using a great deal more than color and design to make us feel special.

You have to admit, the phrase “mass customization” seems like an oxymoron. Indeed, the concept captures the benefits and drawbacks arising from technology’s evolution. During the industrial revolution, economies of scale in production and distribution led to mass production. Yet the Internet era, with texting, tweeting, and blogging, appears to celebrate the individual voice. Retailers are embracing the concept of mass customization, but how might it apply to the real estate development world?

There are probably all kinds of software that help developers determine where the “heat” is, whether for condo developments or retail centers. But do developers understand that the basic issue is existential in nature? In an era of corporate homogenization, how does the individual feel recognized or seen? Are we all going to be victims of someone who understands us better than we understand ourselves?

Mass customization specifically refers to a process that allows providers of goods and services to enjoy the economies of scale that mass production allows while appearing to customize the product or service to the individual’s preferences. Well-known examples include the Mini Cooper, which allows customers to select options for the automobile they are ordering, and Adidas tennis shoes. Fundamentally, these kinds of customization are limited because they offer predetermined mass-produced products that the consumer can alter slightly. Middlebrow clothing manufacturers such as L.L. Bean, Land’s End, and My Virtual Model allow buyers to customize different outfits for a sense of greater control. Even high-end designers such as Louis Vuitton have also embraced the new technology—at premium prices. Perhaps the most familiar twist has been Amazon’s website, which analyzes browsing and purchasing habits and suggests a book or other product to purchase. It feels custom, although of course it is done entirely by a computer program.

Monogram collection
courtesy louisvuitton.com

Developers and manufacturers can differentiate themselves in a depressed economy by applying ideas drawn from the concept of mass customization. In the simplest of terms, this means listening to consumers and respecting their opinion and their need for individuality. Frank Piller, a German professor and founding faculty member of the MIT Smart Customization Group, wrote on his blog, Mass Customization & Open Innovation News, that attendees at the 2009 Conference on Mass Customization and Personalization (MCPC) see mass customization as the solution to the downturn. This recession differs from the depression of 1929 because there is cash waiting to move. While banks may be restricting lending, wealthy families and individuals are just waiting for real estate prices to drop to even lower levels before they act. This means there will be a new generation of developers, and they will be likely younger and more technologically savvy.

Daniel Schodek, a professor at Harvard and coauthor of the 2004 book Digital Design and Manufacturing: CAD/CAM Applications in Architecture and Design, wrote in some detail about mass customization in the construction products market in a 2005 article for Architecture Week. He brought up the challenge of legality issues, shop drawings, and volume. It’s one thing to modify a high-end handbag, but quite another to alter a window assembly. But this may not be the right scale of intervention. Real estate developers don’t need their clients digging that far into the details, they need more information on basic preferences, which may be more amenable to a process like mass customization.

We have already seen some desire to move away from homogeneity with retail centers moving downtown or becoming pedestrian oriented. The fickle public, glued to rapid visual entertainment, tires of anything gimmicky and wants what it imagines as authentic. However, Berkeley’s famed Fourth Street, studied by retail developers all over, cannot be reproduced in an exurban convergence of highways. With the bankruptcy of major players in the development field, like General Growth, a new generation of land developers will likely arise who are going to be able to cherry-pick preferred demographics and locations and who will begin using new ways of thinking about communicating with their constituencies—perhaps while they are designing.

courtesy fourthstreetshop.com

courtesy fourthstreetshop.com

The obvious opportunity for the development community is in the sale of multifamily housing. Internet sales tools could allow potential buyers to see the views from a unit and the quality of light as well as select various developer finishes and aligned furnishings (such as Design Within Reach or Ethan Allen) to generate an accurate rendering of their potential home.

Single-family home developers have been reluctant to allow their purchasers to select color or alter architectural styles. What would happen if they used new technologies to inform buyers as they began selling homes? Can they move some decisions further along the supply chain in order to partially customize the product and gain valuable information for future projects? In other words, the customer becomes a participant in the design process. According to an article in the MIT Sloan Management Review, when Italian automobile manufacturer Fiat was developing its hip new/old 500 model, it created a forum where thousands of customers commented on the emerging design and engaged in dialog with each other. What if developers reached out to their potential audience in this way before building? There has been some move in the direction of mass customization in Europe and Asia. In Almere, Netherlands, in the early 2000s, district planners created an extension to the city by bringing in more than a dozen builder/architect teams, each assigned the task of creating flexible housing types that would take into account buyer preferences. The idea was that buyers could choose to add or subtract predesigned extensions to their unit. Building regulations did not allow full implementation of the concept, however.

courtesy afewthoughts.co.uk

The next obvious step would be high-end prefabrication that permits several permutations. Might manufactured home companies like Santa Monica–based LivingHomes move into the development business? Philadelphia-based architecture firm KieranTimberlake put forward Cellophane House, included in the New York Museum of Modern Art’s Home Delivery: Fabricating the Modern Dwelling exhibit a few years ago, as a potential model for mass customization of housing. The house’s design is intended to accommodate a variety of options in materials, layout, and size. Likewise, Los Angeles firm Marmol Radziner has come up with its own versions of customizable prefabricated housing that have attracted some press attention. But modifying a few unique houses won’t offer the kind of test that developing an entire community will.

courtesy marmolradzinerprefab.com

courtesy marmolradzinerprefab.com

New developments in technology will allow developers to reach out and gain information about potential clients. For example, Web morphing is a process that allows a site to identify a user’s cognitive styles and adjust the site to adjust to those styles. This may help the developer to both attract the interest of the buyer and also gain information on his or her preferences.

Applying mass customization to real estate development will likely require developers to see a longer horizon and to include feedback from buyers. If new developers are not publically traded companies, they have more flexibility in terms of the timing of returns.

This will require a new mindset, one that understands mass customization first as a process rather than a product. This will likely take place with new actors who bring new ideas to a recovering market. Hopefully, some of them will still want to communicate to individuals.

1 comment:

Raphael Sperry said...

Kenny - just was reading Jane Jacobs's "The Economy of Cities" where she compared mass production to the new technologies of "differentiated production" (her term for mass customization) and the older style of production, craftwork. Writing in 1968, she said, "the construction industries have emerged only recently from the craft-manufacturing stage, of which many vestiges still linger.... construction was a case of arrested development." (p. 243 if you must know) We’re still stuck. There is very poor integration of design, contracting (i.e. building), building product manufacturing, real estate financing, real estate brokering, and all the other parts of getting stuff out there. Then again, isn’t real estate -- taken as a whole including architecture and construction -- a bigger sector of the economy than even health care, so why would we expect coordination and efficiency?

The dream of pre-fab modernism seems never to go away yet never to overcome such obstacles as site costs and maintaining work flow in a factory. Tract developers have overcome those, and could move on to offering greater color and furnishing options to customers. As you suggest, I too suspect that the medium-sized non-publicly traded development companies will be the first to make the leap, rather than mini-companies lead by designers. The outcome will offer less design, but a more reliable business: a reflection on the American way?