INFORMATION TECHNOLOGY works.We have shown a lot of commitment Leveraging the Long Tail for Rapid Innovation to [Global Bank]in terms of making The long-tail strategy can help multinationals tap investment[s]in people and time. into the latest technologies,but in order to do so more rapidly than the competition,this strategy re- The final piece of this new approach was that pro- quires strong technology design and architecture gram managers evangelized their success stories capabilities.Toyota Motor North America Inc.has across the organization,promoting"their"successful outsourced 80%of its IT workforce,which has suppliers among other business units.Through this enabled the company to cut information-systems distributed decision-making process,a portfolio of support costs.s Several strategic partnerships are preferred suppliers emerged.The portfolio was regu- critical for maintaining the organization's com- larly evaluated by the bank's sourcing-management modity technologies and implementing office,which identified the top-performing suppliers incremental improvements.However,Toyota across the company.The top suppliers were then Motor North America's management recognized shortlisted in subsequent contracts.Over the years, that,while their core partners consistently pro- some of these"new"suppliers were promoted to the vided efficient infrastructure services and legacy list of key strategic partners.This set of strategic part- systems support,the company also wanted to lever- ners still accounted for the majority of Global Bank's age emerging technologies-often based in the IT-outsourcing activities. public cloud-to offer new services to dealers and This distributed,internal championing process consumers.Thus,management looked to smaller, enabled Global Bank to foster and proactively more agile suppliers to address their pressing need manage an influx of diverse suppliers that offered for innovation,especially in customer-facing areas. unique value propositions.Instead of seeking The consumer portal delivery(CPD)group at Toy- a static portfolio with an“optimal”number ota Motor North America was responsible for the of limited suppliers,the long tail of suppliers consumer-facing Web portal一a“big ecosystem” continually brought in new capabilities and tech- accommodating users with diverse digital devices. nologies.The diversified portfolio also helped CPD's unique technology requirements led to new hedge the risk of lock-in with strategic partners. kinds of supplier arrangements for Toyota-in The long-tail strategy,however,incurred a signifi- particular,working on one-off projects with na- cant total cost to coordinate a large set of suppliers.? scent startups instead of long-term engagements This cost was somewhat mitigated by the fact that with major partners.As Zack Hicks,chief informa- the sourcing-management office not only man- tion officer and group vice president of Toyota aged the core group of strategic partnerships but Motor North America,said: also provided support for contracting with new suppliers. CPD needs vendors that can build very quickly, As a result of the long-tail strategy,Global Bank and then tear it down the next day.And we are was able to rapidly tap into nascent supply markets dealing with smaller shops.When you were first in the mid-2000s,obtaining a first-mover advan- able to spin a car graphic,there were only a cou- tage in the global race for capability and talent.As ple of shops that could do it,and most of those digital disruption became a key concern in the last guys were working out of their garage. decade,the long-tail strategy enabled Global Bank to proactively scan and experiment with new tech- Such sourcing arrangements have demanded nology offerings from smaller,more agile suppliers, new governance approaches,because integrating allowing it to emerge as an industry leader of digital the services of these small suppliers into a seamless innovations such as enterprise social media,cloud customer experience requires access to enterprise computing,mobile technologies,and crowdsourc- data.In the past,developers supporting Toyota ing.Today,Global Bank continues relying on the Motor North America's consumer portal delivery long-tail strategy to stay at the cutting edge of group tended to create multiple new databases for global technological innovation. the applications they created locally.In the new 84 MIT SLOAN MANAGEMENT REVIEW WINTER 2016 SLOANREVIEW.MIT.EDU84 MIT SLOAN MANAGEMENT REVIEW WINTER 2016 SLOANREVIEW.MIT.EDU INFORMATION TECHNOLOGY works. We have shown a lot of commitment to [Global Bank] in terms of making investment[s] in people and time. The final piece of this new approach was that pro￾gram managers evangelized their success stories across the organization, promoting “their” successful suppliers among other business units. Through this distributed decision-making process, a portfolio of preferred suppliers emerged. The portfolio was regu￾larly evaluated by the bank’s sourcing-management office, which identified the top-performing suppliers across the company. The top suppliers were then shortlisted in subsequent contracts. Over the years, some of these “new” suppliers were promoted to the list of key strategic partners. This set of strategic part￾ners still accounted for the majority of Global Bank’s IT-outsourcing activities. This distributed, internal championing process enabled Global Bank to foster and proactively manage an influx of diverse suppliers that offered unique value propositions. Instead of seeking a static portfolio with an “optimal” number of limited suppliers, the long tail of suppliers continually brought in new capabilities and tech￾nologies. The diversified portfolio also helped hedge the risk of lock-in with strategic partners. The long-tail strategy, however, incurred a signifi￾cant total cost to coordinate a large set of suppliers.7 This cost was somewhat mitigated by the fact that the sourcing-management office not only man￾aged the core group of strategic partnerships but also provided support for contracting with new suppliers. As a result of the long-tail strategy, Global Bank was able to rapidly tap into nascent supply markets in the mid-2000s, obtaining a first-mover advan￾tage in the global race for capability and talent. As digital disruption became a key concern in the last decade, the long-tail strategy enabled Global Bank to proactively scan and experiment with new tech￾nology offerings from smaller, more agile suppliers, allowing it to emerge as an industry leader of digital innovations such as enterprise social media, cloud computing, mobile technologies, and crowdsourc￾ing. Today, Global Bank continues relying on the long-tail strategy to stay at the cutting edge of global technological innovation. Leveraging the Long Tail for Rapid Innovation The long-tail strategy can help multinationals tap into the latest technologies, but in order to do so more rapidly than the competition, this strategy re￾quires strong technology design and architecture capabilities. Toyota Motor North America Inc. has outsourced 80% of its IT workforce, which has enabled the company to cut information-systems support costs.8 Several strategic partnerships are critical for maintaining the organization’s com￾modit y technolog ies and implementing incremental improvements. However, Toyota Motor North America’s management recognized that, while their core partners consistently pro￾vided efficient infrastructure services and legacy systems support, the company also wanted to lever￾age emerging technologies — often based in the public cloud — to offer new services to dealers and consumers. Thus, management looked to smaller, more agile suppliers to address their pressing need for innovation, especially in customer-facing areas. The consumer portal delivery (CPD) group at Toy￾ota Motor North America was responsible for the consumer-facing Web portal — a “big ecosystem” accommodating users with diverse digital devices. CPD’s unique technology requirements led to new kinds of supplier arrangements for Toyota — in particular, working on one-off projects with na￾scent startups instead of long-term engagements with major partners. As Zack Hicks, chief informa￾tion officer and group vice president of Toyota Motor North America, said: CPD needs vendors that can build very quickly, and then tear it down the next day. And we are dealing with smaller shops. When you were first able to spin a car graphic, there were only a cou￾ple of shops that could do it, and most of those guys were working out of their garage. Such sourcing arrangements have demanded new governance approaches, because integrating the services of these small suppliers into a seamless customer experience requires access to enterprise data. In the past, developers supporting Toyota Motor North America’s consumer portal delivery group tended to create multiple new databases for the applications they created locally. In the new