The perils of the imitation age.
Imitation exerts enormous influence over society, and business and finance in particular. And its influence has grown as the avenues by which people imitate--and are imitated--have multiplied and the process has gotten faster. Thousands of communications channels make it possible for virtually anyone in the developed world to know, almost instantaneously, what others do, think, believe, claim, or predict. More significantly, we can and do act upon such knowledge. The resulting fads and fashions, bubbles and crashes are ever more frequent, severe, and complex. The information age has cast up more than its share of paradoxes, including this one: When information is plentiful, we often use it not to make better decisions but to imitate others--and their mistakes. In consumer purchases, financial markets, and corporate strategy, what others do matters more to us than the facts. When there's too much information, imitation becomes a convenient heuristic. This is the basis for a self-referential society. Imitation has its virtues, but it also promotes instability and unpredictability. That's because, by definition a multiplier, it can swell a single opinion into a mass movement or catapult the smallest player to the forefront of a market. Mastering the dynamics of self-reference won't ensure mastery of its consequences. But businesses that understand how imitation works can at least attempt to gird themselves against its worst effects--by accounting for it in their forecasts and risk-management plans, by becoming more sensitive to unexpectedly changing circumstances, and by avoiding mindless imitation of other companies' moves. In some instances, they may even be able to build strategies around self-reference and use the tools of imitation to capture new business. That won't make the world any less confusing. But it may make it more profitable.
Bonabeau
Eric
E
Icosystem, Cambridge, Massachusetts, USA. eric@icosystem.com
D003132:Commerce / Q000458:organization & administration*; D004059:Diffusion of Innovation; D004465:Economic Competition; D006801:Humans; D007100:Imitative Behavior; D033181:Information Dissemination; D040541:Marketing; D012308:Risk Management; D013672:Technology / Q000639:trends; D014481:United States