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Why Trends Are For Suckers

2011 April 24
500x500_sucker2

It feels good to be trendy.  You can be sure that you’ll have a lot of company.  And that’s exactly the problem.  It’s easy to go wrong when everybody around you thinks it’s right.

Watch at a movie from the 80’s.  See how ridiculous people looked?  We all thought we were pretty cool back then.  And the recent financial crises? Nobody thought they could lose money in real estate!

All trends fail at some point because they sow the seeds of their own demise.  Here’s a quick guide to how it happens.  Learn the signs and don’t be a sucker!

The “S” Curve

One common way to look at new technologies is the familiar “S” curve, which describes how technology is diffused.

When something is new, only early adopters are interested.  It usually doesn’t work very well and isn’t compatible with other stuff that’s around.  Moreover, because not too many people are using it, there is very little pressure for others to adopt it. In other words, it’s a crappy innovation.

Eventually, critical mass starts to build and the trend hits an inflection point.  People start catching on and exponential growth ensues.  Though, at some point, growth will flatten out, either because enthusiasm peters out, adoption reaches near 100% or maybe just something better comes along.

Here’s the thing:  It is very hard, if not impossible, to know when the trend will falter.  That usually depends on factors that don’t seem important at the time.  So if you’re buying in near the 2nd inflection point, your growth assumptions will be widely off the mark.

The Hype Cycle

While the “S” curve is very useful in understanding how new things get adopted, it’s somewhat limited.  After all, trends aren’t driven only by what people do, but by what they talk about.  Gartner’s Hype Cycle very effectively shows how many trends die out only to be reborn later.

New trends usually start with a real event.  The possibilities seem boundless and people get really excited about them.  They start talking and eventually the media picks up on it.  Before you know it, expectations far outpace reality.

Of course, the new technology and the lifestyle changes that were supposed to go with it end up being not quite what we thought.  We’re understandably disappointed and insist that we knew all along that it was hooey. Then, after some time, it gets reborn in a more realistic way and the “S’ curve of adoption ensues.

The Flattening Curve

Another, more subtle way that trends fool us is they are often not trends at all, but an increase in diversity. As Stephen Jay Gould pointed out in his book Full House, while it may seem that evolution trends towards more complex forms of life, there is really no reason to believe that is true.

Look at the chart above and you can see what he means.  Just because some forms of life get more complex, that doesn’t necessarily mean that there is a tendency in that direction.  Simple bacteria are still amazingly abundant and continue to evolve without becoming more complex (which is why we always need to invent new antibiotics).

Many make the same mistake by assuming that there is a dominant trend towards new media.  In actuality, the real trend is toward greater media diversity.  Most of the old stuff will continue to prosper.

What The Kids Are Doing

Get into any discussion about future trends, and someone will surely bring up what the kids are doing.  They watch less TV, have short attention spans, spend their time differently than the rest of us and so on.

We hear a lot about the “Millennials” these days and they are purported to be strange new beings.  I found a list of their peculiar habits on this web site which featured the chart below:

Now according to the experts, while those of us in Gen X accepted diversity, the Millennials celebrate it.  While we rejected the rules, they want to rewrite them.  While we wanted a “killer life,” they now want a “killer lifestyle.”

Maybe I’m being obtuse, but it all seems like a load of crap to me.  Kids in their teens and 20’s tend to act like kids in their teens and 20’s.   That’s not saying that there aren’t generational differences, but they tend to be defined by events rather than indicative of them.

One thing that rarely gets pointed out is that kids grow up.  I’m a card carrying member of “Generation X”.  We were supposed to be slackers, and we were (me especially!).  Then something funny happened.  We got jobs, added responsibilities and before we knew it, we were working our asses off.

How Not to Be a Sucker

The problem with trends is that they are crowd driven phenomena and, as I wrote in an earlier post, crowds are often stupid.  Nevertheless, it’s easy to get taken in.  Here’s three strategies that can help you keep your head.

Build Weak Ties: We tend to seek out people with views similar to ours.  Therefore, it’s easy to believe that a local majority view is a global majority view.  I’ve lived in five different countries and it’s never failed to amaze me how local cultural preferences are assumed to be global norms.

If you work in social media, the people around you will be much more enthusiastic about social media and you will be too.   If you live in Russia, a series of 10 minute long toasts at dinner won’t seem odd to you.  Spend too much time in Manhattan and you might think you’re just being straightforward, while others may see it as being rude.

The only way to get a more balanced view is to actively seek out those from other social networks.  That’s easier said than done, and it’s often uncomfortable, but it’s probably the best way to avoid the trap of believing everything you think.

Be Value Focused: As I wrote in an earlier post, there is usually enough data around to figure out when a trend becomes invalid.  Too much money goes where it shouldn’t, extrapolating current trends leads to some ridiculous conclusion and explanations of “why it’s different this time” get pretty outlandish.

In his book, Irrational Exuberance, professor Robert Shiller showed why the stock market and then (in a second edition) why the real estate market would go bust.  He made clear, reasoned arguments and used publicly available data.  It seems obvious now, why didn’t it back then?  Because everybody was focused on the trend rather than underlying value.

Look for Problems to Solve: One person who seemed never to be fooled by trends was Richard Feynman.  While often skeptical about the various zeitgeists of his era, he nevertheless was able to see important developments, like nanotechnology and quantum computing, decades before they were possible.

He was, however, not the usual trendspotter.  He wasn’t predicting, but looking for interesting and important problems to solve.  And therein lies the difference between a trend and fundamental change.  Trends are useless unless they make our live better in some way.

So don’t get taken in.  No matter how many people are talking about the hot trend, unless it is creating true value by solving real problems it will die out soon enough.

– Greg

14 Responses leave one →
  1. April 24, 2011

    Great post Greg.

    To take your last point further I would add that we must also learn to spot ‘Napster Moments’. In other words, when a system is stuck and you along with it.

    Much like what the publishing industry is going through, it happened to the music industry with the rise of P2P sharing and hence the ‘Napster Moment’. It’s been almost a decade since and they still don’t get it.

    Cheers,

    Jorge
    Jorge Barba´s last blog post ..Innovation posts of the week- Innovation for real growth

    [Reply]

    Greg Reply:

    Jorge,

    If you mean book publishing, I agree wholeheartedly (magazines a muddling through, but they are experimenting and making progress).

    I’m not sure why book publishers are so slow to innovate. I was at a publishing course at Stanford about 5 years ago and there was a book publishing track in addition to us magazine folks. The book publishers seemed to fully understand their situation, but nevertheless been able to make much progress.

    The odd bit is that, although the magazine business is still making good margins, they seem to jump on every new idea that comes along (sometimes foolishly). Book publishers, on the other hand, see their core business declining but are unable to break out. My guess is that the book decline is a slow burn while magazines take a big hit every decade or so that keeps them on their toes.

    – Greg

    [Reply]

  2. April 26, 2011

    Excellent post Greg! Instead of trends you should be looking at ways of challenging status quo with the clients you are working with. Really looking at the conventions your clients businesses are used to often enable being different, looking like a hero riding with a white horse changing the business model and increasing value for customers. It’s all about creating greatest value which is not just rational, but can be really emotionally engaging proposition too. Companies business conventions are not always customer friendly, sometimes they are actually rather unfair. Taking that in account, it is possible to help challenger break status quo and turn markets over. There’s nothing else you can do in business that create such satisfaction, apart from getting paid for it :)

    [Reply]

    Greg Reply:

    Great points Toni!

    Thanks

    – Greg

    [Reply]

  3. Silviu permalink
    June 1, 2011

    Hello Greg,

    Can u help me with a tip for my clients?

    Can i define the advancement axe as timing and the effort axe as CTR %?

    [Reply]

    Greg Reply:

    Sorry Silvio. I don’t know what those are.

    – Greg

    [Reply]

    Silviu Reply:

    I want to know if is ok to applied the S curve theory to online optimization planning.
    How?

    Is convert the “measure of advancement” axe in delivered views ( % ) and the ” measure of applied effort” axe in CTR % and when i touch the “apogee” of S curve for a website, a change it with another :)

    Do you feel right my test?

    [Reply]

    Greg Reply:

    Silviu,

    Oh. Okay, now I get you.

    Not really. The “S’ curve” is technically a logistic function which applies to lots of things. I’m not sure about CTR’s, you would actually have to do the regression, but I think they would more likely follow a quadratic function.

    In any case, it’s best to stick to the math and get the best conceptual and mathematical fit rather than trying to make analogies to something else. Incidentally, excel doesn’t calculate logistical functions in graphs very well, so you’re better off either using a power law or a 2nd degree polynomial (i.e. a quadratic function).

    Hope that helps.

    – Greg

  4. July 10, 2011

    Hi Greg,

    only just got to the party!

    Your sumation is pretty good and a very interesting read. Yet, there are other ways to look at the trend in novelty.

    For instance, we might take the Schumpeterian view that all novelty is both creative and destructive at the same time (mostly in asymmetric quantities). In this view, trends are a recognition of the constant overhaul of the ‘system’ of applied innovation.

    A précis of your position is that not all trends deliver progress. This is true. But, in a different logic of wisdom, this is not as problematic as you make out. Although a novelty may be of less utility than the previous stage of innovation, it confirms that it was inadequate to meet the needs of the ‘crowd’, which is why they have moved-on. So, even though the novelty is not a solution, it opens up the innovation landscape to new niche because as replacements try and build their way in.

    OK, its not that efficient. But that’s the blindness of evolution for you.

    [Reply]

    Greg Reply:

    Garry,

    I don’t disagree with you, but I think you missed my point. The problem with trends is not that they are novelties, but that they are continuities. By the time a trend is established, it is often in the late stages and on the precipice of decline.

    It’s discontinuities that we need to watch out for. Those represent serious change. If you’re only following trends, you’re sure to end up a sucker.

    However, I think you’re right about novelties. Every tradition started out as something new.

    – Greg

    [Reply]

  5. xdg permalink
    July 10, 2011

    If you’re curious about differences between generations, the most compelling explanations I’ve ever seen have been by Strauss and Howe, e.g. http://amzn.com/0767900464

    It posits four generational “types” that are (usually) cyclical — which the mores and behaviors of each giving rise to the (different mores and behaviors) of the next. The historical examples they give ring true more than any other pop-psych explanations I’ve seen for Gen-X, Gen-Y behaviors, etc.

    [Reply]

    Greg Reply:

    Thanks. I’ll check it out.

    – Greg

    [Reply]

  6. July 10, 2011

    ah Greg. Yes, I see your point. I think! Are you suggesting that the lag between instigation of the novelty and its adoption by the crowd is often longer than lag between consequent novelties? If so, I agree with you.

    The tipping point for ‘switch’ may come after the instigation of its replacement. It’s like some great didactic, perhaps like Volterra’s predator-prey model. The cycle (which is not cyclical in the sense of a perfect sine wave) must have a lull where the predator-collapse allows for the re-population of the prey. Without the lag, the system will terminate. So, ironically, the lag is optimal.

    I wonder how else it might transpire?

    [Reply]

    Greg Reply:

    Not really. I’m saying that the really exciting stuff isn’t in the data yet. If we’re just following trends, we’ll always be behind.

    – Greg

    [Reply]

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