August 2006


Strategymaps

I picked up this book after I sensed some similarity between the book and my new assignment, value maps. It was definitely a worthwhile exercise, in the sense that it gave me a thorough understanding of Strategy maps and Balance scored card. The understanding does put a lot of my experiences and learning’s in a holistic perspective. To begin with, I was always skeptical of the word, ‘strategy’, not only because it figures out as a prominent word in the bull fighter software, but also because it is used by so many people in so many circumstances that it had lost significance to me.

Surprisingly, the framework put forth by Kaplan and Norton summarizes the strategy in a one pager and helps one to connect the various metrics that a company tracks and the overall strategy of the firm. It helps the metrics tracked by Balanced Scored card method to be viewed in such a way that it all ties to the overall strategy of the organization.

The following summarizes the entire book, though the book covers each of the element in a very comprehensive detail.

Strategy_map_1

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Long_tailMost of us are familiar with the famous Wired magazine issue which had a cover story titled -The Long Tail. It was written by the editor of Wired magazine, Chris Anderson. The article became immensely popular among the business and geek community for it offered a simple framework by which the various forces were shaping the internet market place. The author also started a blog and I had managed to read quite a few of the entries. Given this background, I really did not want to read a full fledged book on "The Long Tail" which came out recently. But the fact that the entire framework, logic and examples would be at once place was enough to lure me in to buying it. It turned out to be a No-Regrets decision.

For the first time I was reading a book whose content resonated with my taste of readings. The book had examples of Clay Shirky’s ontology essay which I had come across earlier, Barry Schwartz – ‘The paradox of Choice’ which I happened to read a year ago, and a hell lot of stuff which I had come across earlier. Since there were a lot of known and read things that were used to explain Long Tail phenomenon, I just loved the book. Its so very different from a lot of economics related books that I have read recently. For example, "The Undercover economist" by Tim Harford  revolves around the principles of scarcity and incentives. But the Long Tail economics thrive on the principle of abundance.

What is Long Tail ? It is a collection of millions of micromarkets. It is complete contrast to the hit driven markets and cultures. The types of goods sold in Long Tail Businesses are

  • Physical Goods – ebay, Amazon
  • Digital Goods – itunes
  • Information goods – google, wikipedia
  • Community – myspace, bloglines
  • Advertising – Craiglist

The Long Tail has come to existence because of three forces

  1. Democratization of Production – Dave Winer in a presentation says consumers are producers . The enabling tools like garage in Mac, blogging, utube, wikis, are enabling people to be producers rather than only consumers   
  2. Democratization of Distribution – The cost of distribution of goods has become next to nothing
  3. Aggregators / Filters  who match the Supply and Demand of the goods

The book then goes on to give umpteen examples to lay out the business model of the Long tail companies.Netflix,Amazon,Rhapsody,Mp3.com,salesforce.com,LEGO,Wikipedia,Garageband in Mac, Kitchenaid,BitTorrent are a few cases which find a mention in the book. The economics of abundance is brought in each of the above cases and thus bring home the point that traditional economic theories are no longer useful in explaining the Long Tail Markets.

The book leaves a lot of open questions in the book

  • Is more choice better or worse ?
  • Does more content translate to more sales ?
  • If the tail becomes longer, does it mean the shorter head ?
  • In the Long tail, is there a demand shift or an overall increase in demand ?

I am deadsure that there will be many many more businesses that will follow the Long tail economics. Its just a matter of time when entrepreneurs use this new economic framework and apply in various industries to create gazillions of markets.