Remember mass customisation? If you don’t, it’s likely you weren’t in the employment market in the 90s.
Coined by Joseph Pine in Mass Customization: The New Frontier in Business Competition, it advocated that companies tailor products to meet unique customer needs. Or as some put it — give customers what they want, where they want, and when they want.
Wait a moment, I hear you ask. “Isn’t this the mantra of digital, a quarter-of-a-century later?”
Mass customisation originated in an era when supply-side economics ruled: consumers benefited from a greater supply of goods and services at lower prices. This, the theory went, stimulated growth. Unfortunately the downside of oversupplying consumers has been all too apparent.
According to the WWF, in 2017 the Earth’s Overshoot Day occurred on August 2, which means “In less than eight months, we used more natural resources than the planet is able to produce in a 12-month period. For the remainder of 2017, we will be living on resources borrowed from future generations”.
In 1971, the overshoot day occurred on December 21.
Mass digitalisation doesn’t solve the problem of oversupply and over consumption, but arguably it is steered by demand-side economics, where output is determined by effective demand. Why is this important? We’re seeing digital technologies being used to deliver outcomes demanded by consumers.
For example, I need to get from point A to B. Proponents of supply-side would sell me a car. Demand-side advocates would provide me a service. Uber is a classic case of demand-side economics.
The more passengers (demand) who join the platform, the more output (drivers) become available. The more drivers who become available, the more passengers join. I would contend mass digitalisation presents an opportunity to reverse the trend of oversupply and over consumption.
Manufacturers of washing machines are considering selling consumers’ washes, not the machine itself. After all, the outcome consumers seek is clean clothes. They don’t care about the washing machine, and most may choose not to buy it.
The machine is owned and maintained by the manufacturer who builds it to last as opposed to designing it for planned obsolescence, that is creating a product with an artificially limited useful life. The result is less raw materials are used by the manufacturer in the overall supply-chain.
Transmitting real-time data
Mass digitalisation means the washing machine is installed with an operating system, sensors and a connectivity (Wi-Fi, 4G) device, which allows the machine to transmit real-time data back to the manufacturers cloud, where there is a product database and analytics engine. The manufacturer remotely checks on the performance of the machine, runs diagnostics, sends software and application updates, and deploys an engineer in advance of any problems occurring.
Digitalization enables washing-as-a-service, which creates a positive externality for the environment. Elsewhere in energy distribution, firms are looking to see how by using blockchain, which creates a secure distributed ledger, drivers can recharge their battery powered vehicle at a stranger’s home.
For example, I might be out during the day, and you could be passing by and need to recharge your vehicle. If I permit it, my charging meter will show up on a public grid, stating it can provide your vehicle with a charge of 5 hours at a cost of a couple of dollars. You can re-charge your vehicle and I get paid.
The positive externality is that utility companies don’t need to invest in building thousands of charging stations, which would have a detrimental impact on the environment.
Equally, we’re seeing the sustainable effect of mass digitalisation in the field of technology. Traditionally an IT department would go out and purchase hardware, such as a router, switch, security device, and so on. Now with BT’s ability to provide network functions virtualisation (NFV), we can deploy one physical device and all the services as software.
Think about the reduction of air-conditioning costs, as well as removing the physical delivery costs of sending hardware around the world. Customers want a secure agile network, not racks of physical hardware.
The next time a company offers to give you what you want, where you want, when you want; remind them that mass digitalisation, driven by demand side economics, should be about creating outcomes, ideally sustainable ones.
— The writer is Consulting & Innovation Director — MENA at BT.