Digital platforms vol. 2: Mass Customisation Strategies

The digital development towards connected products, or IoT, and platforms has led to realisation of a relatively new concept within the context of supply chain management known as mass customisation. Essentially mass customisation is creation of personalised and “customized products with production cost and monetary price simi-lar to those of mass-produced products’’ . In general, there are two main strategy approaches for achieving mass customisation, which are a tailoring strategy or a platform strategy.

Tailoring Strategy

A tailoring strategy implies that detailed information is analysed in order to create customised and personalised products for each individual user before entering the consumption space. An example of this are shoe manufacturers Nike and Adidas, with their tailoring platforms NIKEiD and miadidas (see featureing picture of this blog post). This means that intel on the real needs of the customer could be understood and utilised to fullest extent, in order to generate maximum value for the end user. This concept is obviously much more effective and valuable compared to how the traditional tailoring is done and performed, where the tailoring process is simply based on suggestion about existing varieties. However, note that the tailoring strategy is in this context closely related to the goods-dominant logic approach because of the focus on value-exchange.

Platform Strategy

A platform strategy distinguishes in that sense that it takes more of a service dominant logic, or value-in-use, approach compared to the tailoring strategy and that the customi-sation process can occur in the customisation space or postponed indefinitely. Thus the fundamental principle of a platform strategy is that the provider offers a standardized, or a “incomplete product”, that can flexibly be updated and boosted later on after the product has transferred and is being used by the consumer.

So What Are Incomplete products Then?

The concept of an incomplete product is an extension of a postponement strategy, which strives for producing standardized products and delaying much of the movement or configuration of the final product within the frame of the supply chain. The difference between postponement and incomplete products is that the customisation process can be executed even when the product has exited the traditional supply chain domain. In other words, the customisation takes place in the consumption space, which has been made possible thanks to the recent digital advancements. Thus an incomplete product is defined as “a physical product, design with a modular architecture, capable of dynamic reconfigurability allowing for the offering to obtain an optimal fit within the actors’ dynamic and ever changing context of use where the transaction boundaries are aligned with the context of use”. In the previous context the concept of “dynamic reconfigurability” for an incomplete product is referred to “the capability to modify their functionalities, adding or removing components and modify interconnec-tions among them”.That is to say, a software platform is the holistic core that provides with these new configuration features and customisations possibilities for the incomplete product.

An example of an incomplete product is Tesla cars. In 2013, there were concerns that the Tesla cars were to low, which resulted that the litium batteries could ignite and catch fire because of the heat. The solution to this problem was a code fix over “the air” which lifted the springs of the car by a few inches, so that the risk was fully prevented.


It can be concluded that both presented strategies may use a software platform for offering products and services with different variety. The actual distinction is in how the custom-isation and variety is executed: is it before the consumption space or in it? Therefore, the current school of mass customisation is mostly focused around tailoring strategies, despite the fact that numerous successful platform strategies already exist and has proven to be very profitable and effective, such as Apples iPhones in combination with the iTunes platform. Therefore, one can expect that more platform strategies and incomplete products concept will be applied on a greater scale in the future.


10 types of Innovation




The Periodical system for Innovation















Periodical tables might change…



Firms Cannot and will Never Deliver Value!


There is a general accepted understanding that firms deliver and create value…which is complete corporate bullshit. This is a radical statement, but as you read further you will come to understand this point of view.

What is Value anyway?

The definition of value is perhaps the most ill-defied and elusive concept within the field of service management and marketing. There are several holistic approaches that tries to conceptualize the concept of value, though without any further establishments. This means that even though the word value is widely used in our everyday life, nobody really know what it is. Taking this abstract concept for granted is pure hipocripsy that serves no one well.

“There frankly don’t exist a clear and transparent definition of what value actually is…”

So what is my proposal, then? How do we get out of this swamp of confusion? There is a solution. It has been suggested that the focus should shift towards the value creation process, which in general terms is defined as a “process that increases the customer’s well-being, such that the user becomes better off in some respect “.

Value in Use – The Customer Delivers the Value

According to Grönroos and Voima (Click for full article) value emerges from a value-in-use perspective. Where the concept of “value-in-use” refers to the idea that it is explicitly only the consumers of a service, who has the exclusive right to determine and control the final and true value of a service, not the providers (see video 1). Thus value is generated and “created by users (individually and socially), during usage of resources and processes (and their outcomes)”, where usage is referred to as physical, virtual, or mental process, or a mere possession attribute. However, the providers of a service do play an important role as a provider of potential value, or as a value facilitator.

Video 1. Grönroos on Value-in-use

This view is aligned with Lusch and Vargo who also emphasizes that enterprises cannot create value alone themselves, but are instead very capable of deriving new lucrative value propositions. Therefore, an all-encompassing process in the aspect of value creation emerges, where all parties involved are co-creators of value.

Grönroos and Voima elaborate and develop this idea further and forms a frame-work constituting of three distinguishable value spheres: provider sphere, joint sphere and customer sphere (Figure 1). Despite the fact that the framework is showing and implying a linear structure, it does not apply in practice because the value spheres are dynamic and might show different sequences and patterns for realising the value creation process. In addition, the framework does take into consideration the two perspectives of value delivery (production) and value in use (value creation), which are illustrated in Figure 1.
The provider sphere generates only potential value or a value proposition, which a cus-tomer hopefully later extract and converts into real value (-in-use). Thus, it is justified that the fundamental function of the provider is to work as a value facilitator.
value in use
Figure 1. Value creation spheres.
The joint sphere is a union formed between the customer sphere and the provider sphere. The sphere represents the value creating process that emerges from interaction and dialogs between the two aforementioned spheres, which interacts either through direct or indirect procedures. Above all, the customer is always solely in charge of the actual value creation, although the provider may influence the process as a co-creator but only by implementing direct interaction methods. Hence, it is important that the provider truly understand how the customer uses and combines resources, processes, and outcomes in its interactions. This in order for the provider to shift from a mere value facilitator to a co-creator of value.
In the customer sphere the value creation appears as sole or independent process. In reality it “may take several forms in multiple temporal, spatial, physical, and social customer contexts, and it can encompass both individual and collective levels”. Therefore, by independently accumulating experiences, resources, and processes into different contexts; the customer is able to generate value(-in-use) paradigm. In addition, it is worth mentioning that the value is influenced and affected (indirectly) by the presence of a wider customer network or ecosystem, although this is always beyond the providers control.

The Customer is Always Right

It can be justified that a company or a firm cannot create value. Instead organisations must realise this new perspective of value-in-use, where “the customer is in charge”. Therefore the cliché – “the customer is always right” – has more truth into it than one might think. This is especially true in today’s modern time, where the traditional goods-dominant-logic is rapidly losing foothold to the service-dominant-logic (see my last blog post- What is a Service). Mainly because consumers have more rights and have more to alternatives to chose from.

Finally, I praise the great professor Grönroos, whose inspiring video can be found in the beginning of this article.  He is truly a forerunner in the field of marketing and is a master at delivering his points, such as one cited below.

” ‘we deliver value’ is Garbage”


On that note, we cannot and will never be able to deliver value. However by being a Value facilitator or Co-creator, one can improve the probability and circumstances that will/may contribute to increased value.


What is a Service?

In recent decade we have observed a service revolution, where the advanced economies all have transitioned to so called service economies – servitazation. Cool, uh? But what is and are these services? It feel like the concept is one that everybody knows, but nobody when asked is able to define or explain it clearly. Often explanations are formulated like: “for example when eating att a restaurant there is a service…” etc. (In general, I can not stand explanations that starts with the phrase “for example” because often the one  explaining do not know the earth nor sky about the subject)

Thus the word “service” is a business lingo used in everyday life, without any concern to what it actually represents. This blog post will try to shred some light on this vague issue.

Putting It All Together…

The best fast definition I found was from the Information Technology Infrastructure Library (ITIL) which defines a service as:


However, the presented definition is not universal because many different contradictive opinions and views exists. Service as a concept remains elusive and has of yet not reached a consensus, although common ground is found and agreed upon in which ways services are different from goods or products. Likewise, a consensus regarding the distinctive features of a service have been reached, which are referred to as “IHIP” – an acronym for intangible, heterogeneous, inseparable and perishable.


The intangible feature points out that services are not physical things and are therefore humorously said to be “something that you cannot drop on your foot”. However, the intangible feature distinction between product and service is at times blurry. For example, both music and software have intangible features but the media files that are sold as tangible goods, therefore some ambiguity remains.

A service is “something that you cannot drop on your foot”


Services are complex bundles of activities, where each customer perceives and experiences a service differently. This is because there are numerous implementation varieties in the aspect of its context, nature, and requirements. In addition, services vary across different geographical regions, cultural backgrounds, and the char-acteristics of the providers. Thus, services are truly a multifaceted approach of delivering value to a consumer. Yet there are some discussions that some products are also gaining heterogeneous features, such as the Mercedes E Class car that is offered in 1024 different variations, and that some services in fact are homogenously similar to a product . For example, Mc Donald’s hamburger offerings are executed and performed in a standardised manner and has the same taste all over the world. Therefore, this distinction has flaws that needs to be considered.


Services are inseparable in that sense that both the production and consumption process occurs simultaneously and cannot be separated or distinguished. Essentially, this means that services cannot be produced without an engaged consumer – a counterparty- similar to the yin and yang dualism and therefore services cannot be owned.


The last feature, perishable, refers to fact that service capacity cannot be stored for future use, like stocks or other fixed assets. For example, an empty unsold flight seat cannot be inventoried and sold in the future because it simply perishes after the flight.

Other Definitions

In Addition to these aforementioned features, Grönroos (2001) identifies further three basic characteristics of a service that is:

“services are processed using a series of activities (a business process) rather than things, services are to some extent produced and con-sumed simultaneously, and the customer participates in the service delivery process”.

This view shares many similarities with the postulates of IHIP, though complementing the conceptual understanding of services significantly.

What is Service Dominant Logic?

Professors Vargo and Lusch presented the idea in the beginning of the millennia, that marketers have transitioned from a goods-dominant logic (G-D) into a service-dominant logic (S-D) perspective. The G-D logic concerns primarily with value-in-exchange, where value is embedded into physical objects, also known as operand resources, on which an act or operation is performed to produce an effect. In G-D logic the consumer is also to be seen as a passive recipient of depreciating goods, whose production ends after its manufacturing process and where services are considered as a mere special cate-gory of marketing offerings.
In contrast, the S-D logic is a philosophy of reorientation that focuses on the actual value creation that is the process of co-creation with customers and other actors, rather than a conservative value production paradigm. A Similar view is shared by Grönroos who formulates himself as follows:

“The focus is not on products, but on the consumers’ value -creating processes, where value emerges for consumers, and is perceived by them…the focus of marketing is value creation rather than value distribution”

The S-D logic argues and contends that all products and services, both tangible and in-tangible, in the end are different vehicles for providing various services to the customer or consumer. In other words, service is the fundamental basis of all exchange activities because essentially “everything is a service” and thus all existing marketing offerings are applicable to the S-D logic. The concept of service can in this context be redefined as “the application of the knowledge and skills (competences) of one actor for the benefit of another”, hence S-D logic is a logic about “togetherness” where mutual benefits are generated through a foundation based on relationships, trust and a win-win exchanges.

Everything is a Service

The final explanation of  “what is a service” is a fairly simple one: everything is a service. Sounds like a cliché, eh? But as we have seen the are many opaque views that are at times very complex and even philosophical at times. Therefore it is easier to just apply the “keep-it-simple- stupid” (a.k.a. “KISS”) principle. And there is nothing wrong with keeping things as simle as Eistein points out:

― Albert Einstein


Digital Platforms

The word platform is defined by Oxford English Dictionary as:

 “a raised level surface on which people or things can stand, usually a discrete structure intended for a particular activity or operation”

The modern and present understanding of the concept has evolved through three different chronological, though overlapping, waves that focuses on prod-ucts, technological systems and transactions.
The first wave emerged from product developers, who used the term for product genera-tions or families for a specific firm, such as Samsung’s Galaxy phone series. This view meant that the platform functioned as a foundation for various customer segments, service and product variations. Therefore, the platform characteristics focuses on the high degree of modularisation and variation.
The second wave was brought by technological strategist who “identified platforms as valuable points of control (and rent extraction) in an industry”. This indicate that income was generated without producing any actual value, but instead at the expense of the whole economy network. One example of this was operating system Windows decision to make their own web browser a default, which distorted the browser competition remarkably.
The third wave is formulated by industrial economists, who describes the platform as a marketplace for products, services, firms, or institutions that mediate transactions among two or more parties. An example of this is Amazon, an e-commerce retailing company, who connects sellers and buyers of retail products.

Network Effects

In literature there are a lot of different interpretations regarding the term “platform”, but two perspectives remain predominant that is external and internal platforms. Gawer and Cusumano defines internal platform as a “set of assets organized in a common structure from which a company can efficiently develop and produce a stream of derivative products”, while external platform is “products, services, or technologies that act as a foundation upon which external innovators, organized as an innovative business ecosystem, can develop their own complementary products, technologies, or services”.
It is evident that the external platforms face challenges in terms of creating fruitful network effects. Network effects are defined as the additional utility that an economic agent benefit and gains when other agents are consuming the same good or service. Also network effect give cause to a “generativity” phenomenon, which is defined as “a technology’s overall capacity to produce unprompted change driven by large, varied and uncoordinated audiences” (Elaluf-Calderwood et al., 2011). In a platform context this refers to its ability to produce, create, and generate new content, without input or addi-tional help from its original creators.

Direct and Indirect Network effects

Network effects can further be categorised into direct and indirect effects, where:

“direct network effects are generated through a direct physical effect from the number of purchasers, whereas indirect network effects are market mediated effects”.

The generation of network effects is a very crucial and essential factor from a platform perspective, because without users the platform appears useless. This paradox gives rise to “chicken-and-egg” problem which all platforms need to tackle before their establishment.
Finally, a digital platform can be defined as a “IT systems and their common operating standards who different stakeholders – users, providers and other stakeholders across or-ganizational boundaries – together realise and embodies for value generating activities”. Also these platforms are characterized by its different actors whom create, provide, and maintain complementary products and services through different dis-tribution channels, but within the frame of common established platform rules and user experience requirements. In addition, a typical characteristic for these digital platform administrators is to encourage, attract, and commit various stakeholders to the platform; in order to generate network effects that produces overall economic gains for all interact-ing parties.
It can be concluded that in recent decade there has emerged loads of digital platforms that has proven to be extremely valuable. For example, half of the twenty most valuable cor-porations on the New York Stock Exchange (NYSE) considers themselves as digital plat-form companies. Henceforth, three main shifts in the aspect of competition that digital platforms are reckoned that are causing:

from resource control to resource orchestration; from internal optimization to external interaction; and focuses shifting from customer value to focus on ecosystem value.

Because of these shifts the digital platforms are showing the way for a new emerging economy, that is a platform focused digital economy.

Digital Platform Structure and Classification

There are identified four basic structural types of interacting actors that can be found in every platform ecosystem. The structure is divided into owners, providers, producers, and consumers. Where the platform actors are: the owner, exhibits control over the intellectual property and governance; the providers, who “serve as the platforms interface with users”; and producers, who create offerings that the final consumers use. Thus in order to manage digital platforms, it is of great importance to understand each of the different actors and their dynamic relationships.
Evans and Gawer (2016) introduces a framework that classifies platforms into four different types, or groups. These platform types can further be ordered and visualised into a 2×2 matrix illustrated in Figure 8, whose vertical axis refer to the amount of knowledge is known about the end customer and correspondingly the horizontal axis refer to the required network effects.

Figure. Matrix illustrating the classification of platforms.
The transaction platform can be a product, service, or technology that functions as an intermediary for exchanging transactions between different users, buyers, or suppliers. The basic principle is that the transactions result in reorganiza-tion of both resources and assets by digital means and that these platforms are character-ized by its tendency to monopolise its customers. For example, Uber and PayPal are transaction platforms.
An innovation platform is a “product, service or technology that serves as foundation for which other firms can develop complementary technologies, products or services”, for example both Amazon and Google are innovation platforms. In essential this means that anyone can use the platforms resources freely and no one are eligible to own the platforms customers.
Investment platforms are owned by companies that are developing “a platform strategy and act as a holding company, active platform investor or both”. The idea is to provide with a broader solution offering to its customers, e.g., Santander and Naspers.
The integration platform “is a technology, product or service that is both a transaction and innovation platform”. A typical characteristic for integration plat-forms is that it attempts to convince and attract various parties to join the platform because of its plausible economical gains from the arising network effects. The Apple iStore concept is an example of an integration platform.

Connecting People and Economics – A Bad thing?

Are the new emerging platforms a trampoline for growth and opprotunites, or more like a malevolent spider-webb with negative and polarlizing side-effects for the society as a whole? Platfoms, such as Apple; Amazon; and Ebay, surely makes our lives more practical/easier and improves the classical functionality of a market for exchanging goods. However, I am not so sure about the new platforms that concerns with intangibles, such as Facebook and Google. Do these improve our everyday life? The answer is clear as mud. On short term these do provide with improvements, but what about long term effects? Are an overflow of “bad” information and cyber-relationships good for us?

Time will tell, but one thing is sure that these issues needs more attention and discussion. Regardless, my strong personal view is that some intangible cyber platform “relationships” are align with the follwing qoute:

“F**in’ see why they call this bullshit a “relationship” – ships sink”



The Business Model Fuzz?!



Tactics is winning a battle, while strategy is winning the war

Knowing this, so what is a business model then?

Orgins of Business model






The Business Model Canvas













Final Evaluation of the Framework















Seven Laws of Information – A Foundation for “Digital Wisdom”



1. Infinitely shareable


2. The value increases with use


3. Perishability


4. Accuracy


5. Synergies of combined pieces of information


6. The more, ain’t better


7. Not depletable

The seventh and last law appoints that information is not depletable. At heart this refers to the fact that information is self-generating – the more one use it, the more one obtains of it (Uckelmann, 2011). This differs greatly from traditional assets and resources, who cease to exist the more it is used (Moody & Walsh, 1999).







