El Curve

I’m thinking that it might be more useful to use the term El Curve rather than Long Tail when we talk about the things with a power-law like distribution. Long tail is a useful term when our focus is reaching out into the long tail; but it frames the discussion in a manner that ignores the role of the vertical portion of the distribution in the architecture of the systems we build.

I’m reading the cheerful provocative book “The Fortune at the Bottom of the Pyramid,” which is about this very question. How can we architect business models that span from the vertical edge down into the horizontal edge to create economic growth thru-out. The book is targeted at the leaders of multi-national corporations. It wants to sell them on the idea that selling into the long tail of the world’s poor is a great business.

Without question the most politically charged power-law curves are the distributions income/wealth curves. The data is sobering. If I pluck the data out of the book’s pyramid drawing and split the world population into two camps about .1 Billion (1.7%) make more that $50 dollars a day and 5.5 Billion make less. It’s easy to become hysterical.

This book declines to partake of that temptation; his audience doesn’t respond well to that. Instead it’s a set of case studies in classic B school style along with the grand rules of thumb required of such books.

The business models all involve elements all along the power-law curve. A distribution channel if you like, though he calls it a process design. Value generating activities along the curve are orchestrated by the firm that designs, builds, and owns a economic network implicit in the business models. This is analagous to the way a fanchise resturant chain architects a value chain that reachs from the individual store up and into centralized production and marketing facilities. Like all economically stable systems some customer problem is resolved and value is captured in exchange for solving the problem. The captured value is spread along the various stages along the power-law curve.

This book is facinating if your interested in business models that reach into the long tail. In spite of it’s overwrot enthusiastic MBA tone, I’m enjoying it.

1 thought on “El Curve

  1. Pingback: Selling out your Friends | Ascription is an Anathema to any Enthusiasm

Leave a Reply

Your email address will not be published. Required fields are marked *