The Long Tail and Innovation Blowback

Two business concepts that are going emerge from the blogoshere to the mainsphere in 2005 are Chris Anderson's The Long Tail and John Hagel's Innovation Blowback

Chris is an editor at Wired and wrote an article in October 2004 about the phenomenon of internet companies such as Amazon, eBay, and Google creating value from previously forgotten content or niche market segments.  The article is not revolutionary per se but does a great job of giving a concise description of how the community aspect of the internet as well as its low cost of distribution and interaction facilitate big new market opportunities.  One example he uses effectively is British climber Joe Simpson's book Touching the Void.  It was written in the late 80's and got good reviews.  However it disappeared from the book charts without much of an impact.  In the late 90's, Jon Kirkauer wrote the book Into Thin Air which became a bonafide best seller. The  interesting part of the story is that a combination of Amazon's algorithmic recommendations and the positive feedback loop of internet reviews resulted in Touching the Void becoming "rediscovered" and then selling twice as much as Into Thin Air and even being optioned to be made into a movie.

Innovation Blowback as explained by John Hagel is:

Innovation blowback refers to a phenomenon that's occurring in the global marketplace, particularly [in] emerging markets like China and India. My sense is that most companies significantly underestimate the importance of those economies. In part because they're viewing them simply as a growth market; they're rapidly growing markets, they help to compensate for lower growth in the more developed economies, and so you ought to invest in those markets.

In fact, that's only a small part of the opportunity. The real opportunity in those markets has to do with the pressure of very demanding customers who want more value at much lower prices and [who] are forcing product innovation in a variety of industries. It goes across from healthcare, to motorcycle manufacturing, to cell phone and wireless network equipment, where companies are being forced to fundamentally redesign products to deliver more value at lower prices. And guess what? Those products are not just going to serve those markets—they're going to blow back into the developed economies and become the basis for attacker strategies against products in these markets. So think about these emerging markets not just as growth engines in their own right, but as a seedbed for product innovation that will provide the basis for attacking strategies here in developed economies.

I will blog about both of these phenomenons shortly . . .