The northern countryside of North Carolina is tobacco country. In the Piedmont Triad, named for the three bordering cities of Winston-Salem, Greensboro, and High Point, the farmland is interrupted only by the occasional prefab housing development with names like Hickory Creek and Weatherstone. In field after wide-open field, red soil still sprouts the broad leaves of the cigarette trade—a living tribute to the region’s economic heritage. But right in the heart of the Triad, on 100 acres in the middle of the nicotine crop, stands a gleaming 750,000-sq.-foot monument to a whole new economic future.
Dell Computer’s North Carolina operation is not so much nestled among the farm fields as carved from them—a two-storey, ultra-modern complex of glass and steel, built in 2005. Dell already had plants in Austin, Tex., and Nashville, Tenn., to go along with factories in China, Malaysia, Brazil, and Ireland. But here, the company envisioned something on a different scale: the world’s biggest and most advanced facility dedicated to producing fully customized products, built on demand.
The official goal is to churn out a custom-built desktop computer roughly every three seconds. In reality, they do better than that on most days, and the aim is for 12 to 20 per cent improvement in efficiency and speed every year. The factory shipped its first unit in September 2005—less than nine months after breaking ground. It shipped its one millionth computer eight months later, and its five millionth a little more than a year after that.
Inside, there’s no deafening roar of machinery—just a small army of casually dressed workers checking monitors and making adjustments to the black boxes quietly rolling by on the 3½ miles of conveyor belts that twist through the facility. Natural light spills from huge windows and skylights onto a sprawling and spotless shop floor. There’s nothing especially remarkable about the operation, unless you know everything that’s behind it—and then the word “remarkable” doesn’t begin to cover it. To those who’ve spent the past two decades imagining individualized sales and service on a massive scale, this is the future come to life.
Also at Macleans.ca: It’s all about you
There are 25 different computer platforms built here, from super-powerful PC gaming systems to the company’s Inspiron line of conventional desktops. And every system has roughly 20 interchangeable hardware components to be loaded and tested, depending on the customer’s specifications. Amazingly, the factory holds virtually no inventory. Dell orders replenishment parts every two hours and takes delivery twice each shift. It’s all designed to ensure that a company that pulled in $56 billion in revenue last year can turn on a dime and deliver a customized computer to a customer’s front door less then a week after the initial order, no matter what. Not even the forces of nature are permitted to disrupt delivery. In 2006, when Austin was hit by a freak ice storm, production was simply shifted automatically to Nashville and North Carolina, and every unit got out on time.
The Dell facility represents the cutting edge of an emerging economic model based on the notion that mass production can be turned on its head. Dell is certainly not the only company that has dedicated itself to building a custom economy, in which consumer goods can be targeted toward the individual wants and needs of millions, or even billions, of buyers. Gone are the days in which big companies worshipped at the altar of standardization.
Today, manufacturers across an ever-expanding swath of the consumer market are telling the world that they can have products designed “just for you, by you.” Clothing companies like Nike and Adidas will produce custom-made shoes and T-shirts, while others will produce romance novels where you dictate the character names and key plot elements. Even breakfast cereal can be customized and delivered to your home. That promise has proven deeply appealing to generations increasingly enamoured with their own uniqueness. As more and more of us stand up and demand to be the designer of every last corner of our lives, Dell and others have found extraordinary profits in a marriage of digital technology and the Internet, with ultra-flexible manufacturing techniques. That marriage is the basis of the emerging custom economy, and it’s being consummated in places like this, amid the rural tobacco fields of North Carolina.
Mehran Ravanpay is the friendly and unassuming engineer who oversees the whole operation. “With flexibility comes customization,” he says simply. His matter-of-fact delivery belies just how revolutionary that sentiment is in the world of manufacturing. In most factories the trick is to eliminate variables that lead to mistakes and slowdowns. Dell takes the opposite approach. Customers specify the size, speed, colour, and capabilities of the computer they want. This is what has come to be known, among business geeks and management consultants, as “mass customization.” This is the spectacular profit potential awaiting companies that manage to drill into their customers’ desire to feel special, to get involved, and to be treated like individuals.
Joe Pine wrote the book on the phenomenon back in 1993. He described a new industrial model in which flexible manufacturing technology could satisfy the public’s growing fascination with exclusivity, and the building realization that the primary means by which Western consumers express ourselves is through the products we buy. Today, he calls Dell a “shining example” of what mass customization can do.
The marketing pitch driving mass customization is what we call the “You Sell”—affirmational sales pitches that drive home a simple, powerful message: you are unique, an original—and as such, each and every choice you make should be a reflection, an amplification, of your essential, irreplaceable self. The power of the You Sell is such that even someone who doesn’t know the first thing about computers will get very interested in “building a PC to fit your life” in all its glorious singularity. Dell has gotten very good at pulling those strings. In 2006, it began blanketing websites and newspapers around the world with an ad campaign built around the tag line “Purely You.” Flyers and banner ads exhorted the masses to take charge: “You‘re unique. Your Dell desktop can relate.” “Pack your PC with your own personality.” “Your Dell PC: It’s what you make of it.”
Dell doesn’t just sell computers. It promises a fully networked, high-speed reflection of your very soul—and it can be had for as little as $16 a month on approved credit. Perhaps the greatest endorsement of its success is the way that its major competitors—Hewlett-Packard, Sony, and Apple, to name a few—have shifted their own strategies to mimic Dell’s powerful appeal to individualism. From custom-etched designs, to software and services that will adapt to your every want and need, computers are no longer sold as appliances but as life accessories. HP and Apple, in particular, have emerged as formidable rivals, even beating Dell at its own game lately. In 2008, Sony unveiled a series of ads built around the tag line “This laptop is Me.”
That is the essence of the You Sell—an outright appeal to the creativity, but also the narcissism, of the modern consumer—the notion that no computer could ever really live up to your expectations unless you were guiding its very creation. Of course, there’s a significant gap between the promise and the reality of what you’re getting. Deep down, we all know that picking the 17-inch monitor with the pink case, instead of the 15-inch monitor in a black case, isn’t really the same as designing a computer that is “purely you.” But that doesn’t seem to dilute Dell’s seductive pitch. It’s about mindset. And that mindset is what took the company from zero to $50 billion in sales in less than 20 years, and made Michael Dell “the Henry Ford of mass customization.”
In 2004, Frank Piller and an associate, Nikolaus Franke at the University of Vienna, set out to test the economic forces behind customization. The professors wanted to get a better handle on the financial limits of the urge to “co-design.” Such things tend to be pretty hard to measure.You can ask people why they buy the things they do, but the answers aren’t of much use.
Most of us don’t really think too deeply about that stuff—we buy because we want. And often the stuff we say we value is very different from what we spend our money on once we hit the mall. Piller and Franke already had plenty of evidence that consumers were interested in playing a role in the design of products they buy. Businesses promising various forms of customization were popping up and thriving everywhere. But is this a measurable economic phenomenon or a novelty that quickly wears off? And perhaps more importantly, is it worth the trouble and cost? Are our tastes really as unique as we like to think? Or, given the chance to design something just for ourselves, will our mass-market training win out, driving most of us toward predictable “mainstream” designs?
The researchers decided to focus their study on wristwatches, using a make-your-own tool kit provided by a Hong Kong company called Idtown, which let customers configure their own mid-market Swatch-type timepiece. The study involved 165 university students, who were told that if they agreed to participate and answer a few questions, they’d get a free watch out of it. The researchers gave each student a broad selection of design alternatives to pick from: 80 different bands, 60 different cases, 150 unique faces, 30 styles of hour/minute hands, and 30 different second hands. The range of possible designs ran into the hundreds of millions, and the students were asked to use this tool box to design their ideal watch. The point, the researchers explained, wasn’t necessarily to stretch their creativity or to make something intentionally outlandish, but rather to come up with a design they would really like to wear. The creations were tracked, and at the end the researchers asked what the subjects would be willing to pay for their creation if they found it in a store.
The first important lesson gleaned from the study was enough to chill the hearts of traditional retailers: personal taste is wildly divergent. The 165 participants came up with 159 different designs for their ideal watch. That suggests that stores would have to stock an almost infinite variety of models in order to be assured that they had the perfect watch for every customer who walks through the door. The researchers found that if you wanted to satisfy 80 per cent of the 169 people in the study 80 per cent of the time, you’d still need to offer 101 models. If you wanted to limit your stock to a more manageable 31 models, you’d only be satisfying about 40 per cent of those 165 students in the study. What’s more, the researchers weren’t able to identify any usable patterns from the designs. There was no “mainstream” design element that shone above others. So it’s not like you could put on just any strap, as long as you had a particularly popular combination of face and hands. Once you turn customers loose with a broad range of options to choose from, the collection of design choices is chaotic.
Lesson number two was even more important, and not terribly surprising to those familiar with the narcissism of today’s consumer: we love the stuff we make, and we think the products of our creativity are worth big money. When asked how much they’d be willing to pay for their watch, the designers came up with an average value of 48.5 euros. That compared with a value of 21.5 euros when they were asked to value similar, mass-produced watches, and 23.1 euros when asked to value the creations of others in the study. Even controlling for the fact that study participants often exaggerate their willingness to pay for goods, the results still pointed to a huge price premium for the self-designed watches. “An analogous effect can be found in people who hang up 5,000-piece jigsaw puzzles they have completed themselves instead of hanging up pictures, although objectively jigsaw puzzles look less attractive than simple (and much cheaper) posters,” the study concluded.
Aside from this insight into the decorating habits of jigsaw lovers, the study put its finger on a key economic force behind customization. In 2006, the global consulting firm KPMG released a report focused on the clothing industry which cited polling data showing that about 20 per cent of North American adults want customized apparel, and are willing to pay, on average, 30 per cent more for it. Several other studies have suggested a willingness to pay at least an extra 25 per cent for the chance to “co-design” and ensure a perfect fit.
Just as important to the businesses looking to cash in on the custom economy, those most interested tend to be the most desirable customers. Last year, Forrester Research issued a report showing that consumers who search out and buy customized products tend to be significantly younger, better educated, and wealthier than the average shopper. And a 2007 study by J.C. Williams Group found that younger consumers, who’ve grown up immersed in MySpace, iTunes, blogs, and chat rooms, are far more likely to favour shopping in the world of infinite choice promised by e-commerce.
The result of that marriage made in cyberspace is an accelerated kind of commercial Darwinism. Out of the triumph of individualism and the near-universal embrace of the You Sell has evolved a breed of super-consumers, whose spending habits are driven by the desire to express themselves. In this world, consumption becomes a kind of performance, limited, not by talent or creativity, but by the availability of credit—a fact reflected in the soaring loads of consumer debt racked up over the past decade.
On the other side of this evolutionary breakthrough in consumer culture are the thousands of businesses that are getting more and more efficient at enabling and stoking the appetites of the masses—on an individual basis, one über-shopper at a time. The real question is why we are so eager to take part, and to pay for the privilege?
An adapted excerpt from The Ego Boom: Why The World Really Does Revolve Around You (Key Porter) by Steve Maich and Lianne George, available on Jan. 27