If you do not know what precision is, it's time to get up to speed. This is the goal of our new series of articles to explore this new idea and to figure out which industries it might transform in the future.
What is "precision"?
Precision, in common life, is the fact of being exact and accurate. This is also a new business trend, that some might call "hyper-personalization": it means that you offer precisely the product that your customer needs, based on his/her unique profile. Examples of this are precision medicine or precision food. Offering the exact treatment that you need, the precise food that you like and that your body needs and which is different from other people's needs.
By extension, precision also means adapting the delivery of the product to the exact situation that you have to handle - for instance, in agriculture, should you add more fertilizer - whether bio or not is another question - to this furrow and this side of the field rather than this one, whereas in the past, you would have applied the same treatment to the entire parcel of land. This is what most traditional farmers still do: they tune what they do based on experience, but they do not get to that level of precision based on data analysis.
Precision at scale, where does it come from?
Since Henry Ford, businesses have been looking mostly for scale, trying to expand, reducing their production costs with volume, and offering solutions to the mass market. With his Model T, Henry Ford even said: “any customer can have a car painted any color that he wants so long as it is black". The beneficial aspect of this approach was to make new technologies affordable to the masses, thanks to standardization and economies of scale. And to be fair to Henry Ford, the Model T was also available in green and red...
Some companies could decide to differentiate by lower prices or higher quality, either on broad or narrower markets, as Michael Porter told us in his "generic strategies". Most companies were aiming at making their product unique, to achieve some competitive advantage, but did not consider their customer as unique, and deserving of a unique product. At best, they were targeting some segments and sub-segments, sometimes niches, but with a given product for a given audience.
Early on, the automotive industry offered options, that you could order in advance with your car, in order to personalize it: mainly color, but also some more technical features such as braking system, automatic vs. manual, etc. Still, personalization was coming as late as possible in the manufacturing process, to minimize disruptions, and the number of combinations was limited.
A trend toward mass customization then developed in the late 90s, to better fit the needs of smaller groups of clients. However, there were different ways to customize a product, which did not necessarily mean that the product itself was really different, it could be just a feature, an element, the finishing or even the marketing, the channels, the branding, etc. that differed.
Whereas Mass Customization involves providing tailored content to a group with similar interests, with the next trend, mass personalization, which has been growing since the late 2010s, the idea is that you can still produce at scale, to serve a mass market, but with a deeper level of personalization, closer to the individual level. It meant that rather than customizing an element at the very end of the process, the entire manufacturing or servicing process is designed to personalize the product or service. This requires being able to manage many variations of the product or the service while maintaining a reasonable cost structure. On-demand manufacturing requires very flexible production systems. It raises also some challenges in terms of shipping and tracking different versions of the product or service.
(Credit: Genetic Literacy Project)
When you push that personalization a step beyond, you get to "hyper-personalization" or precision. Precision is the use of AI, machine learning, data analytics and real-time data to better know your customers at an individual level and predict what they need or appreciate. With this level of precision and personalization, you can reach the next level of customer experience, taking into account who people are, what they do, what they need, where they are, their job, their level, their medical condition, their environment, their geo-location...
According to a Deloitte survey about mass personalization, price is not really a barrier: 20% of consumers are ready to pay a premium for personalized products. On the same note, 22% would be ready to share some personal data in order to get a more personalized product or service.
Without the technologies of the 4th industrial revolution, there would be no precision.
Personalization and even more precision can be reached only by making the best use of some tech enablers, such as:
- AI and machine learning, data analytics, and predictive analytics, making possible an in-depth analysis of customer needs, based on their profiles and behaviors
- additive manufacturing / 3D printing, which makes much easier the production of small series with very precise
- satellites, which make for instance precision agriculture possible
- digital commerce, that can reduce the cost of commercialisation and distribution
- genetic engineering and DNA sequencing.
Some say that with hyper-personalization, you turn the "personas" used in marketing - such as "the young tech addict", the "health-focused family mother", the "active young retiree" - into actual individual persons that you will try to serve as individuals, not as representatives of a persona.
Precision will impact more and more industries in the future, which is why we decide to dedicate a series of articles to that topic in the upcoming weeks and months.
In this series of articles, we will focus on precision in various fields:
- precision food
- precision medicine and precision drugs
- precision agriculture
- precision in retail and advertising
More to come soon!