Catching the long tail

DQW Bureau
16 Feb 2006

The long
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 percent of all words are 'the' (while
'barracks' occurs less than one 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 tail.

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

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.

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