[this post also appears in Mark Raskino's GBN Blog]
I was asked recently by Economist correspondent Ludwig Siegele, whether Chris Anderson’s ‘Long Tail’ is following the Hype Cycle. This might sound like a contrived conjunction of two abstractions but actually, it is a very good question. The Long Tail is a new management science idea, some might say ‘management tool’. If it is a powerful insight it will be turned into business strategy method and applied to make money. It is therefore a management science innovation which, business managers can either choose to believe and adopt, or not. We think such things do follow the Hype Cycle.
For the Hype Cycle to be in play, two conditions must be met. First there must be social excitement wave surrounding a new innovation that companies are considering adopting. Second, the innovation cannot simply work first time and every time ‘out of the box’ it must require evolution through application across markets to reach its potential efficacy. Both of these do appear to be in place for the Long Tail.
Chris Anderson’s original insight and subsequent book created a surge of interest in this new way of looking at sales and inventory business model dimensions in the Internet era. His suggestion was that the value of the vast virtual-store inventory tail of e-commerce would outweigh the head – those high volume products a store based retailer has shelf space to keep in stock. Many managers have been trying out the idea and researchers have been testing it. For example in 2005 a US retail CIO told me he thought the long tail effect was impacting his business. ‘Customers come in our stores expecting that we can stock every item in every size, because that’s what they are used to on the website – but there is no store format, no matter how large, that we could build to meet their expectation’. However in 2008 other researchers claimed that Anderson’s theory was disproved by e-commerce sales data and Chris has partly accepted their analysis. So the idea may be in the Trough of Disillusionment but it is not dead.
It’s bubble has been pricked, it is deflated but not done. The concept is now being refined by the market – as a big thought hits the reality of use. For example, in the original idea the long tail of inventory was more valuable than the short head. However data appears to suggest that is not the case for some of the online businesses that should clearly demonstrate it – particularly those in music and video retailing. That does not remove all value from idea – it simply conditions it.
Perhaps the tail will never outweigh the head – that doesn’t matter if many more managers extract more business value by focusing some of their attention on that tail, as a result of bearing Anderson’s eloquent mnemonic insight in mind. Perhaps there are secondary effects too – e.g. people attracted to the tail are cross-sold items from the popular head list, so both grow in proportion.
Why does it matter? Because you need to understand how ideas move through the Trough of Disillusionment even better than you understand how to deal with Peak of Inflated Expectations. Good new management idea viruses, apparently killed off by a few well aimed attacks, usually don’t die. They simply lay dormant for a while and morph. If your competitor is learning to adapt to them, you may suffer a nasty cold later on.
Chris Anderson has a new book out – its called Free: The Future of a Radical Price. This one is already creating some controversy and it has been attacked by Malcom Gladwell (of Tipping Point and Blink fame). If you are a middle ranking leader in a large company, trying to decide which of these management ideas to apply and when to get serious about using them- it does make sense to scrutinize their progress with you cast your ‘hype cycle eye’. Don’t jump in just because it’s ‘in’, but equally – don’t stay out just because it’s ‘out’.