(originally written Q3 2007)
In hindsight, it’s easy to spot a fad.
Remember the 90’s? Remember the cool “tween” and teen shows of the decade? Remember names like Brian Austin Green, Tiffani Amber Thiessen, Sarah Michelle Gellar? These were all stars of popular youth shows: Beverly Hills 90210, Saved by the Bell, Buffy the Vampire Slayer. Usage of a person’s full name—in teen Hollywood at least—was all the rage.
In the 2000’s, one word names have become the thing—Pink, Rhianna, Nas, Beyonce…even “P. Diddy” is now just “Diddy.” Just by looking at “name architecture,” we can see the power of fads.
How do fads play into business? The short version of this article: fads come and go. Long version: businesses that cling too tightly to fads, “marrying” them instead of “dating” them, will get burned in the divorce.
The domestic auto manufacturers are a prime example. Effectively, the “Big 3” gave up the “car” business and ended up marrying the SUV and truck fad of the 1990’s. Don’t get me wrong… these vehicles haven’t gone anywhere. However, they were all the rage in the 90’s—the large SUVs in particular. In fact, U.S. light truck sales (which include trucks, SUVs, and minivans) surpassed car sales for the first time in history at the close of the decade.
There was big money in these vehicles, too, with average grosses of $3,000 – $5,000, vs. half that for most cars. Furthermore, the competition was not in this category—yet. Now, the domestics have fallen victim to the emergence of at least three factors: 1) rising competition, 2) higher gas prices, and 3) the new “green”ethic taking over the national conversation and conscience.
Other examples abound regarding people and businesses clinging too tightly to a fad. Remember “Web 1.0”? Remember the sock puppets? The Internet is NO fad, but the idea that it would become THE primary economic engine THAT quickly was. Some people placed an unnerving amount of faith in that fad despite the lack of solid business plans. In the end, many investors fell victim to marrying a fad instead of dating it.
So what’s the difference between dating and marrying a fad? Marriage is total commitment to a fad, despite any flaws the fad may have. Dating a fad means enjoying the benefits of the fad, but being ready to move on once the fad passes. From a business perspective, there is much to be gained by cautiously associating with a fad. The danger comes when a business builds itself on a fad. That is shaky ground, for sure.
In your business, stay aware of the latest fads and use them to your advantage. Just don’t get too close. If you do, keep your eye out for the divorce papers—and the expensive alimony payments.