Monday, April 18, 2011

The Paradox of Pareto’s Principle and Genealogy’s Long Tail

Some people call it the “20/80 (or 80/20) Rule” and it seems to get used in all kinds of situations.

Italian economist Vilfredo Pareto’s classic observation in 1906 that 80% of the land in Italy was owned by 20% of the people is often reduced to the somewhat simplistic explanation that 20% of “something” is directly related in a meaningful and causal way to 80% of “something else”.  For example, people who conduct time/motion studies of office workers and their environments have long noted that about 20% of the paper files in a filing cabinet are the ones that are consulted and used 80% of the time.  The rest just sit there, taking up space in the file drawers. Time/motion solution: be sure the ones most used are the easiest to reach.

Similarly, sales businesses often observe that – over time - 20% of their product line generates 80% of their revenue.  This is especially true in businesses like publishing (music and dvds included) where the hot new stuff that everybody wants right now makes up only 20% of the entire product line, but sells fast and furious.

 Main point?  Push the stuff that sells; ditch the rest.

Even educators will suggest that 20% of the stuff you learn at school is the stuff that gets used 80% of the time.  The other 80%?  Well, not so much.

For booksellers like us, it’s painfully obvious when we go to load up the vehicle after a conference, seminar or book fair, lugging those dozens of 35 to 40 pound boxes, that about 20% of the books we brought got sold while the other 80% just went along for the ride.

Simple, isn’t it?

20% of the folks on a committee do 80% of the work.  20% of the time spent researching onsite often produces 80% of the results. 20% of the reference books we buy are the ones we use 80% of the time.
So, why not just eliminate the 80% of the stuff we don’t need, don’t learn from, don’t generate revenue from or won’t sell and in the process save ourselves a whole lot of time, toil and tears?

Turns out, things aren’t quite as simple as they seemed at first.

Welcome to the wonderful world of “long tails.”  

The “long tail” concept is used to describe that 80% (or more) of something that appears at first glance to be unimportant, unproductive, unprofitable, or unnecessary.  In other words, the stuff that seems to be just taking up space.  The time we spend seemingly without a worthwhile result. 

These are the things that make of the “long tail” of the curve – the things that 80% of the people (or more) are not interested in using or buying.  The 80% of stuff that nobody wants.

That is, until somebody does.

A good part of genealogy and of genealogy businesses is made up of “long tail” items and events.    For example, this morning we processed book orders for three customers (four relatively rare out-of-print books total).  The books had been on our website –fully catalogued and findable using a Google search – for at least five years.  Until today, nobody needed, wanted or had even inquired about them. 

Last week, we processed an order for an original edition 70 year old rare genealogy that has never been reprinted. It too had been on the website for more than five years.  Two days later, we got an email query from somebody else asking if the book was still available.  Five plus years – no interest.  Nada. Last week – bingo – we could have sold the book twice.  

The second potential customer asked if I could find another.  I replied that the copy we had just sold was the only one I had seen for sale since 1977.

All of those books were “long tail” items – not “hot”, not “new” and certainly not quickly salable in large multiple quantities.  In almost any other kind of business, they would have been consigned to perdition years ago as “unsalable.”  In the genealogy book biz, they’re part of the 14,000 plus single-title “long tail” items we keep in stock, waiting for folks to “discover” them.

In fact, that was one of the things I stressed in my talks at NERCG earlier this month and again in my talks at the event in Central New York last Saturday.

There’s a temptation that all researchers have: we want to devote most of our time and effort to the “low hanging fruit”, so to speak.  That would be those easily searchable, easily findable record groups and databases that produce relatively instant gratification.  

But, when push comes to shove, it’s highly likely that you’ll make your best finds – the ones that break down brick walls – in those had-to-find, hard-to-access records that few people use.  These are the “long tail” records that require more time and effort than all the others.

They’re rarely microfilmed, hardly ever digitized and, frankly, not much talked about.

That’s why I called it “Pareto’s Paradox” in the title.  You just never know exactly which 20% of the records that are out there will produce 80% of what you want to know.  Or which 20% of the books you haul to an event will actually sell.

It doesn’t really matter, though.  The fun is in the doing!

Special Note: The term “long tail” rightfully belongs to Chris Anderson, who first used it in this fashion way back in 2005 in his “Wired” magazine article to explain why Amazon was making so much money.  He later expanded and embellished the concept into a book called The Long Tail: Why The Future of Business Is Selling Less Of More.  Here’s a link to his article called (appropriately)  “The Long Tail.”

1 comment:

  1. "Sadly, this is a blind spot for many modern managers who are heavily influenced by the concept of the Pareto Principle, which observes that 80 percent of the leverage lies in 20 percent of problems. The dark side of the Pareto Principle is that we tend to focus excessively on the high payoff 20 percent. We overmanage this 20 percent, and undermanage the other 80 percent. This leads to what we might call the Pareto Paradox: There is usually more actual opportunity in the undermanaged 80 percent than the overmanaged 20 percent.
    For example, consider the problem of cycle time in a traditional factory. Such a factory might take 100 days to do what a lean factory could do in 2 days. Where was the extra 98 days? Was it in two or three big 30-day queues? No! It was actually caused by 98 little 8-hour delays. Each individual delay was too small to manage, but collectively, they accounted for virtually all of the delay." - from The Principles of Product Development Flow - Second Generation Lean Product Development - Donald G. Reinertsen