Bumping over the Malacca Straits (but 40,000 ft up, well away from the sea pirates below), relaxed after a great few weeks surf and sun holiday, I was pondering about the engineering implications of the "Long Tail" coined by Chris Anderson in his recent book. A long tail is a statistical distribution plotting sales or usage against products, with a short spiky head located to the left and a long tail of the curve drifting off far to the right and being very long and low relative to its short spiky head. Tails are everywhere: from the most obvious such as Google (selling advertising) and eBay (auctioning) - both having no inventory whatsoever, to sports and engineering. In the past with products and services, we have tended to focus on winners which are located at the left or head of the distribution. We put an enormous effort into designing, manufacturing, marketing and distributing a few products in the hope that they will be very successful and carry all the unsuccessful products that are located in the tail of the distribution.
Think of hit movies, music, cars and domestic appliances. Until recently we have lived in the purely physical world; and had to expensively carry stock of everything in warehouses; promote and market intensively at enormous cost. If a product promotion failed, we would write it off and hope the hit product would carry us through. But with the advent of the web; we can now afford to promote all our products at minimal cost - including those far on the right of the long tail distribution where we would only sell a few products but now can actually make money from these products. In the old days; these low selling products would be doomed to oblivion as we couldn't market them (too expensive) and certainly couldn't stock them in a physical warehouse. And none of our customers out there could find them, as we couldn't afford to market to them.
But increasingly today, people are demanding niche products and services. They don't want to be restricted or squeezed into the so called “hit products”. We have to provide them with variety which fulfils their rather complex needs. If we didn't have the internet, we wouldn't be able to do much about this, but now we have an incredible opportunity to serve our customers better and to make money from our marginal products. And in catering to the niche market; we actually strengthen our market position of our products. For example, there is considerably less competition in selling these niche products. Obviously we have to use the internet at lowest cost as possible to market them. And having niche products and skills raises the entry barriers to other competitors.
How can we apply this concept to our day-to-day engineering work? According to Anderson:
• Offer an enormous variety of products for your customers to purchase but in a minimal cost way using the web. Minimise the physical storage of your offerings and focus on using "bits on the web rather than atoms" to offer your products and services.
• When designing, manufacturing and selling your products and services get your customers to help you. Let 'em do the work; mostly for free. Customers are often more knowledgeable about the application of your products than you are. Get them to write the application notes of how they have applied your latest instrument or lubrication oil or gadget and give them wide credit for this.
• Make the distribution of your products multidimensional to cater for your varied customers needs. Via the web/CD or from your warehouse.
• Don't force a one-size-fits-all-product on your clients. Allow them to fit it to their requirements. Obviously without making a rod for your own back with a horrendously complicated product which you have to maintain. If you are selling a new engineering design suite of products; ensure that the client only has to purchase and use what they need. And the same applies to price. Adjust the price to the market and application. Be flexible here.
• Share information about the strengths, weaknesses and uses of your new engineering widget. Present the information in a way that is idiot-proof, easily understandable to your customer and freely available.
• Allow the customer to choose as much as possible in the creation of the product. Let him assemble the product on line before purchasing it.
• Let the market drive your products as to what it requires. Give it as big a selection as possible and help it to search successfully for your niche products.
• Give away free components of your great new engineering widget or software for your users to test out. If the product is as good as you say; they will upgrade to the paying version.
Obviously it’s important to automate the selection, shipping and maintenance process as much as possible to avoid being sucked into millions of customised variations of the product requiring an infinite and impossible support process from real people. A situation we have been in before which would roar up the costs and destroy any profits. And of course, it is likely that being a niche product with small sales we need to insulate against any drop off in demand with other alternative offerings being developed all the time.
The long tailed distribution applies to everything. Whether it be skills or design and sales of engineering products and services. Take your engineering skills for example. Ensure that your collection of skills appeals to a range of employers who have difficulty in finding people with these attributes, and you have a way of marketing yourself to these global clients through the you will be hired. Probably at higher rates than your peers. So when offering engineering services to customers ensure you offer an enormous rich niche solution and do it on a worldwide basis. Thus satisfying clients who were often constrained to use limited services locally they perhaps weren't quite happy with.
Another example is industrial automation. Until the advent of the web and open software, we were severely restricted in the design of our plants in terms of giving our users and operator’s choice and information at far more locations. Now if we can involve our users and operators in the design of the plant and get them to take ownership; we can make an enormously more flexible offering with a far more niche product. With an emphasis on more safety than ever before.
As Anderson concludes: "The question tomorrow will not be whether more choice is better, but rather what do we really want?”
Yours in engineering learning
I must give full acknowledgement and thanks to Chris Anderson who wrote the illuminating: "The long tail". Equally applicable to engineers and techies as to music executives. The interpretations above are all mine and he shouldn't be abused for these.