Wednesday, April 12, 2006

You keep using that word. I do not think it means what you think it means.

There’s been something bugging me about a buzzword I’ve been hearing for years. People refer to “verticals” all the time. What they actually mean is “industries,” such as travel, auctions, clothing, whatever. You might think that I’m just mad people are using an economic term to sound smart when there’s a perfectly good familiar word to use. Oh, if only that were all.

The problem is that they’re using the word wrong! In Economics, they taught us that vertical integration is the practice of buying up companies that are further upstream or downstream in the product process than you are. That could be an oil refinery buying up gas stations, or a clothing store getting into manufacturing their own lines. Horizontal integration is the practice of buying up companies that serve different segments of the same market you’re already in. Examples include AOL buying TimeWarner as another media company, or Honda deciding that they need to make an SUV too. If you’re talking about marketing web services to the travel industry, you’re only concerned about people selling to actual travelers. You don’t care about selling to Boeing because they make the planes or GM because they make the rental cars! Verticals is the wrong word! It’s horizontals!

Of course, people who use the term “verticals” can’t even tell you what a “horizontal” is. They’re stupid and they deserve to be punished. Or as Anton Le Vey said, "It's too bad that stupidity isn't painful."



PeteGunn said...

Listen up, people!!!!

Verticals, you own the product AND the process! You have more control of the process, which is making raw product to finished product; now you're owning different stages of production, like Appy says!!! The oil industry is a good example, so were the old movie studios.

Horizontals, you're controlling more of the market segment, with different companies. Sorta like GM, with their Big 5, then buying up more companies like Hummer and Saab.

Do what Appy says and stop using wrong terms!!!

achiappanza said...

PG, it's nice to know that at least one person would do the wave if I asked for it.

You're inspiring me to write more and then send out the blog URL to more people. I guess it's time to bust out of beta.

scory said...

oh mr. chiappanza -

I have the same problem of the use of the word "portfolio". I can't tell you how often I hear it misused.

Many people really don't understand that concepts like vertical and horizontal integration are metaphors meant to describe by comparison -- and simplification -- much more complicated definitions. They've read the cliff notes, so to speak, but don't understand the actual text.

I'll stop being a curmudgeon now.

achiappanza said...

The other one that gets misused all the time is "enormity." People hear it in context and they assume it must mean "enormousness." But in fact, enormity can only refer to something necessarily tragic or ghastly.

Again, using big words they don't understand for the cache of it. Losers.

Anonymous said...

G - there is a quote from Bertrand Russell slightly related to this: "The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.". Good to read your blog & nice to stay in touch after all these years.

Tobias R. from Germany

Anonymous said...

IMHO, you're tilting at windmills on this one.

Sure you're right. But so what. This is done so often (at least in my work domain) that by now it has meaning and communicates concepts effectively. It's not going away.

But keep the faith.