Long Tail refers to the demand curve tail (see above). Demand typically bulges at the ‘head’ with best selling products and market hits, but tapers off into an extended tail wherein lies demand for niche/specialist product or services. This long tail is now a very ripe and possible market due to the fall in distribution and products fuelled by the Internet. Anderson cites companies like eBay, Netflix, iTunes and Raphsody as examples of Long Tails (all examples of dematerialisation). And life gets even more niche than that when you start getting into the realm of blogging and MySpace etc. – people indulging in, and sharing, their very personal and sometimes idiosyncratic tastes.
So, why is this worldchanging (sic)?
One of Anderson’s favourite examples is Lego. And this is where the impact on muda is beautifully apparent. In Anderson’s words, the Lego Factory now only ships the pieces you need rather than expensive bags of too many assorted parts. Lego Factory is the company’s service that allows you to design your own models and have the parts you need sent to you. Then you can share your design in Lego marketplace.
Here’s how they do it, so describes Lego Brand Manager to Anderson. They pack the kits by hand, piece by piece, in a factory dedicated to this. The 520 pieces available in Factory are a number large enough to be interesting but small enough to be stored in bins that are no more than a step or two away for the packer. The idea was hampered in the past by fulfilment issues that inflated the cost of kits including too many pieces you don’t need or want. Now they only ship what you need
So all this is good news for the consumer – they no longer pay for what they don’t need – and for the business – it creates a new (service) market. And it’s also good news for reducing muda. Customisation designs out the waste inherent in commoditized markets (we no longer have to buy the bits we don’t want); it shifts the marketing model toward ‘pull’ – focusing on customer demand and eliminating poorly targeted marketing messaging and packaging to grab attention; it reduces the need to ship unnecessary product components that end up never being used; and it is co-created – designed with or by the customer thereby elminating the need to create by assumption.
I welcome mass customization. One-size-does-not-fit-all.
Thank you Chris Anderson for articulating this shift so eloquently. And for getting corporate business excited about this. Work to be done to get the megaliths to start thinking small and light.