A while back commenter "Tom" asked: "Why is the Tech industry so quick to fall into the latest buzzword?", and I promised a post-length answer. Here it is. First, I am going to grant the premise that tech is probably inclined to cling to buzzwords and phrases more than your average industrial sector - though there are others equally or more susceptible [ahem] media and journalism [/ahem]. So why?
Zero Order Answer
Because technology is hard.
First Order Answer
Because detecting and analyzing a pattern in development of technology, to the point where it is a useful predictive tool, can require skills ranging across analysis of a platform's APIs, the prospects for nanometer scale fabrication, transactions costs economics effects, user's acceptance of new interfaces and form factors, Internet impacts on distribution and supply channels, just to name a few. It's a rare head that combines skill in enough of these domains to grasp all the factors likely to drive the trajectory of a particular technology. When that knowledge is combined with business sense, you get a Bill Gates. The rest of us need to find a way to speak to others whose knowledge is in different domains, who can't understand the minutiae, or command the intuition, that we have in our fields, and vice versa.
Let's take the hoary buzz phrase "Moore's Law" as an example. Why is it so powerful?
First, because it has worked. The original paper, back in 1965, had a few years of history behind it. We've now accumulated forty years more, and others have found the same observations on doubling times of processing technology to also be valid if extended backwards into pre-LSI times. When you're in a business as uncertain as this, and find a principle that works that well, you hang onto it.
Second, because it spans multiple disciplines. Moore's is of course no law of nature, but an observation about the simultaneous action of technologists and technology companies, semiconductor customers, and capital markets. To make the cycles go round, you need invention and engineering, willing buyers able to pay a sufficient margin to recoup investment, and financiers to put up the scratch for the inventions and ever-more-expensive fabs. Miss a beat, and it's going to get unpleasant for some. But with the Law as a point of reference, the chances of that are reduced, and a real economic benefit is created. The notion of Moore's Law served to synchronize technologists, markets, and capital.
So for a buzz word/phrase to work, it needs several characteristics. It should represent a theory that makes useful statements about technology, about markets, and about finance. Implicitly, it must be comprehensible to such diverse disciplines. And, it should be True, in the sense of being predictive over some period of time. (It would be nice if such a theory made some statements about how fast any changes will happen, how far they will reach, and when the change will diminish, but that's a rarity.)
A Case In Point
Now let's talk about The Long Tail, Chris Anderson's phrasing of the citizens' media erosion of the mass media market. It was my busting of inappropriate use of that phrase that caused the original post and comment.
Anyone who's been reading this blog for a while realizes that the fundamental behaviors behind the Long Tail have been known for some time. Huberman and Adamic did empirical work showing a power law distribution in Web browsing, over five years ago, practically pre-blogosphere. Anyone keeping an eye on the Ecosystem or Technorati could do their own little experiments on the shape of the distribution over the past few years. For that matter, the existence of power law (Zipf's Law) distributions in aggregate human action is no surprise at all to those with minimal grounding in quantitative sociology or other behavioral studies.
This, and the interaction of characteristics of the technical platform with the shape of the power law curve of attention, have been obvious to those closely following new media for some time. I even had my own little try at metaphorizing it over 18 months ago.
So why does Chris have the big book advance, while I'm still watching my mailbox for the publishing contract? Is there no justice in this capitalistic world? Well, actually, there is in this case. His formulation is better than mine, along the axes I defined above: technology, market, finance. My little exercise in dynamic, 3D visualization hopefully had some merit for its intended audience: innovators in citizens' media platforms and content, and (secondarily) those who might finance them. At the cost of a complex metaphor, it hopefully highlighted the nichey nature and dynamism of the new medium.
Anderson's formulation loses the dynamism, and sacrifices the visualization of niches to give us the one grand Long Tail curve. (To his credit, he is quick to point out the implicit differentiation of attention in his talks, and presumably will do so in the book.) What that does is make it obvious to even the thickest reader that the attention going to the ever-lengthening Tail must come from somewhere - since hours in the day remain constant - and the only place available is the incumbent, mainstream media. Whether or not you read or care about blogs, that is big news, because it speaks directly to the health of a major industry, one that mediates much of our political, economic, and cultural discourse. It provides a synchronizing vision for the multiple interests I identified. To the technologist, an über-goal for design: Help extend the tail by reducing entry and transaction costs for new media creators. To the financier: Here's why your major media stocks are in trouble, here's where to hedge, or play the new opportunity. To the customer (the advertiser): Here's where your target demographic is hiding, how do you plan to reach them now? To the customer (the reader): You don't have to settle for one-size-fits-all coverage any more.
That's why Chris is writing a book, and I'm typing out this post between meetings.
If you actually followed the link to the original question, you might have noticed that it was in a skeptical vein, and here I am going on about the value of buzz phrases. What's with that?
So far I've given you the upside. I am in venture capital, right? There are downside risks associated with buzz phrase addiction.
The failure mode best known to the VC is the drift of the buzz phrase and theory from tool for analysis, to substitute for analysis. In the best of worlds, the theory becomes a interrogative model for a business or technology vision. Does this explain what's happening to me? Is this a movement I can exploit? Can I spot a new opportunity that I'm uniquely suited to fill?
In the worst of worlds, I get a business plan littered with catch phrases, where there has been no analysis applied to make sure that the conditions precedent to the underlying theory actually apply. Not only is that annoying, but it's an immediate black eye to the entrepreneur who seems to believe buzz wording is an easier way to funding than actual understanding of the business. VCs get tired of this sort of thing quickly.
While it was this failure mode that inspired my original post, the phenomenon is hardly new. Another instance within the memory of most readers is the whole 'network effects' and 'increasing returns' notion of the late 90s. Nothing wrong with it on its face, it encapsulated many consequences of platform layering and standardization, electronic distribution, and the creation of markets by reduction of transaction costs. But soon those touting their own little network effects were forgetting to note that the same effect can work against you, increasing selling and adoption costs until the magical tipping point is reached. When this flaw was noted, soon every wannabe plan was 'viral' - the whole point being not to have to pay those costs. And a little further on, those buzz phrases ceased being magical at all. Not that they are any less true at root: Ask Microsoft, or eBay, or Amazon. But somewhere along the road, the majority of the usage of these notions changed from analysis tool to crutch, and in so doing 'jumped the shark' as a useful synchronizing vision.
One can argue that sort of semantic degradation is a nearly inevitable outcome of Valley hucksterism of various sorts. An equally frequent failure is miscalling the rate or extent of a change. Remember another buzz word of the bubble - "disintermediation"? All of the real world merchants, and most of the wholesalers and distributors, were in deep trouble. Jeff Bezos had shown the way with Amazon, and the whole dot-com world and its investors were mentally parceling up the virtual marketplace among themselves. It happened, but partially, and not soon enough to rescue most of those businesses. Many markets, industrial verticals being notable, turned out to have a trust and relationship element that was not abrogated by a newcomer with a web server. Instead, the incumbents had time to integrate the new technology, and their customers were willing to wait. Not even all consumer goods actually fit the pattern, once one looked more closely at the fundamentals of the particular trade. Sock puppets, anyone?
Granfalloons of Silicon Valley
Then there are the buzz phrases that are just wishful thinking, that don't actually stand for any True pattern of human behavior and technology possibility. They tend to come and go a bit faster, since market validation never arrives. But they can take quite a lot of money and effort down with them.
Remember the whole interactive television "industry" of the early 90s? As far as I could tell, this arose from two sources. First, by proposing a business model simple enough that cable TV and phone company execs could grasp it: "Oh! You mean I get to eat Blockbuster's lunch? Sign me up!". Second, a trade press and conference sector hungry for something new to tout, since CD-ROM based multimedia was fizzling out in a disappointing stagnation. Call me a cynic, but I was there and could name a few names if I wanted.
So much for the financial side of the interactive TV theory. It's when it had to meet the technology and market tests that things went quickly awry. That very simple vision of 'interactivity' - push a button and start a movie - turned out to be quite hard to implement with then-current hardware, protocols, and networks, particularly with the circuit monopolizing DSL approach that the telcos would be forced to take. Simplicity in service vision unfortunately equated to a major headache on the technology front. And no one had asked the actual users if they wanted or would pay for this service. Eventually Time-Warner Cable, one of the well-heeled MSOs, paid for the famous 'Orlando trial', in which hand-built settop boxes far more expensive than practical were given to consumers, who were then exposed to video on demand and a number of other 'interactives'. Response: Yawn!. End of buzz phrase and incipient bubble.
Some of those same end users were likely playing around with this toy program called 'Mosaic', probably using cruddy 28.8kb dial up lines. Not compelling, insignificant adoption, no business model. We all know how the story comes out. "Interactive" turned to be about something completely different - not another channel for old content, but a profound challenge to the entire market structure and customer value proposition. Not only was the buzz phrase wrong, but it was seriously damaging to those who adopted it uncritically.
Wanna Do Some Hot Buzz?
So, yes, buzz phrases and their attendant theories are a bit like drugs. Taken in moderation, they can be beneficial to your business analysis and model. But they carry the same warnings: Make sure they fit your symptoms. Take only as directed. Throw away when expired. And beware of quacks.