Infrequent occurrences together make up a mass greater than the
frequent occurrences. Organizations that apply this mantra, have the business
tail in statistics is the infrequent occurrences that together make up a mass
greater than the frequent occurrences. ‘The’ is the most common word in
English language. About 12% of all words are ‘the’ (while ‘barracks’
occurs less than 1 out of 50,000 words), but cumulatively, words roughly as rare
as ‘barracks’ make up about a third of all text. These rare words are the
long tail in English vocabulary as per Wikipedia.
More recently, Wired Editor-in-chief has used this phrase in relation to
blogs and businesses.
The four billion poor,
with $1,000 a year to spend on an average, make a $4 tn marketplace in sharp
contrast to the top spenders who constitute a $1 tn market place says CK
Prahalad in ‘The Fortune at the Bottom of the Pyramid’.
In the past, most
businesses were organized to handle the tip of the pyramid. They catered to the
needs of the consumers who were at the top of the disposable income bracket.
They were easier to reach and, per contact, they spent more. Now technology is
making it possible to reach the long tail in a more efficient manner. In the
past, standardization of products to achieve economies of scale and cater to the
mass was the way to go. Now technology is making it possible to customize
products and services to individual needs. Business advantage with the aid of
technology will, therefore, go to those organizations that can catch the long
|Now technology is making it|
possible to reach the ‘bottom of the pyramid’
Dell has been
supplying computers customized for personal needs for sometime. Rare books that
have few takers can now be shipped electronically to a few customers. Clothes
can be custom designed with the use of the Internet and shipped across the world
in a matter of days-faster than the average tailor may take. Music/video CDs
with personalized collections are shipped in a matter of 48 hours. They can even
be created on and played from the Web instantaneously. ATMs are making it
possible to have banking services for people whose average transactions are
small, but together they make up a huge volume. Mobile phone companies are
scrambling to explode the marketplace with low cost options that even a daily
wage earner finds attractive. Credit card companies ring you up every day to
offer loans on your transactions because they have the ability to monitor each
transaction and the ability to make cheap telephone calls to each customer-
sometimes four times a day. Yes, it can be construed, as an invasion of privacy,
but it is a marketing gambit. To write this piece I browsed the Forrester
Research website and left my name and email ID there. Within 24 hours I got a
personalized mail from their Pune office inviting me to get into a business
relationship with them. I may or may not turn out to be a big customer for them.
But they were able to reach me.
There is a long tail
for most businesses. And sooner, rather than later, they will all be devising
ways and means to catch it. And, at the heart of the process will be computing
and communication technologies supported with information management systems.
This is the customer
side story of business innovation. There is an organization side story also.
Similar technologies and their application are creating collaborative landscapes
in virtual organizations, to work more efficiently and gain business advantage.
The applications include farming out complex R&D projects to places that
have the best talent, loosely knit workgroups working on global projects without
the limitations of time and geographical boundaries, real time collaboration for
internal and external meetings that use audio, video, data, and much more. The
common thread in all these are better products and services at lower cost.
Business innovation for the future would be based on
virtual, collaborative organizations working hard to catch the long tail. And
the time to start on this, is now.