Guest Post – The New Long Tail: Platforms and the Rise of Mass Differentiation

Every so often a new way of conceiving markets emerges, and it dawns on participants that something has fundamentally changed. Chris Andersen wrote about the long tail in 2006 and suddenly we started to see, yes, there are long-tail markets and long-tail aggregators like Amazon who were redefining how business gets done. Today, there’s another super-concept out there, mass differentiation.

Mass differentiation should be on every company’s strategic radar. And mass differentiation is a major advantage of using platforms.

A few years ago mass customization enjoyed the same spot in the sun. In 1998 Fortune magazine called mass customization the organizing principle of the 21^st century:

Mass customization is more than just a manufacturing process, logistics system or marketing strategy. It could well be the organizing principle of business in the next century, just as mass production was the organizing principle in this one.

Companies as diverse as BMW, Levis, Mattel and Dell adopted it. But a lot’s changed in the last 15 years.

In the past, customers have been satisfied with mass produced products – that’s how companies like Nike grew. But going forward what customers want is for a product to serve a variety of their needs, without compromise. Users want to elect themselves to a particular kind of profile and identity, not have enterprises do it for them. You, the market of one, create the product mix.

This is where mass differentiation stands apart from mass customization. Mass customization allowed customers to adapt a mass-produced product. But mass differentiation allows companies to serve many thousands of micro-markets from one platform. This new strategy is what’s driving the success of today’s leading companies.

Apple was one of the earliest to adopt it. With the iPhone, Apple didn’t create dozens of apps and try to market them to you, nor did it try to predict all the apps you might want. Instead it created a platform where hundreds of thousands of developers created hundreds of thousands of options for you. Apple knew this was a big part of the iPhone’s success. They identified as their phone’s key selling point, with their now ubiquitous tag line, “There’s an app for that.”

Since then, plenty of other companies have adopted mass differentiation with great success, including Google, Amazon and Salesforce – in fact anyone that has built a healthy development platform.

But it’s not just tech companies that are taking advantage of this new principle – even Nike has recognized the power of mass differentiation with its attempts to jumpstart the developer ecosystem around its Nike+ platform.

Forbes is another example. Forbes.com is the new online platform of Forbes magazine. One of the priorities at Forbes is to seek and serve new audiences. But that was almost impossible to do with their existing staff. Employee-journalists could never learn all the different slices of knowledge that audiences need – from APIs, to African entrepreneurs, to Hadoop and Nigerian telecom start-ups, game consoles and hardware modularization. Business today is too big a beat to staff up for.

But it is doable with a mass-differentiation strategy. The Forbes.com platform allows the magazine to give access to any number of specialists – about 1200 as of now. With 1200 people selected to address different narrow specializations, it is suddenly possible for a big brand to serve micro-markets.

That’s mass differentiation. And platforms are what make it possible. They enable big brands – and smaller companies – do what they couldn’t in the past: serve at the scale and scope the market needs.

It doesn’t matter if you are in software (apps), services, content or hardware. Mass differentiation is necessary. It’s the new long tail.

Filed under: Platform Innovation | Topics: iOS, Maker Platform, Nike, platform economics, Platform Startup Advisory, platform thinking, platforms