Work, business & professional services

A self-referential society

Imitation has always been part of human nature but recent technology like instant messaging, together with a globalised media, has significantly amplified its effects. Why is imitation such a powerful force? The main reason is safety. If someone else is doing something how harmful can it be? Another key driver is conformity. Individuals (and companies) like to be accepted and therefore tend to imitate either the majority or those who are deemed most successful. The third factor is greed. People imitate other people simply because they don't want to miss out. You can see this in action with how some people slavishly copy trends. In theory you might think that if we're all copying each other then our opinions and actions would all be converging and there is some evidence that this is the case. However, the opposite is actually more likely. The more networked we become - and the more instant feedback loops we add to the system - the greater the level of unpredictability and uncertainty. This is because we don't copy each other in the same way and sometimes we copy the wrong people. Moreover, the more we place our trust in the majority, the less likely we are to listen to instinct or fundamental principles. From a purely business point of view constant imitation (e.g. benchmarking) also means the death of innovation as companies prefer to launch 'me-too' products and copy the strategies and differentiation tactics of market leaders even when this instinctively feels like the wrong thing to do.

Paying people to tell you the time

A working paper by a post-doctoral fellow at Harvard Business school says that companies pay more attention to advice when they pay for it. They are also more likely to act on information when it's not free. This news should be music to the ears of management consultants the world over.

Profiting from risk

INSEAD says that low-risk innovations - like line extensions and face-lifts to existing products - typically generate around 1/3 of company profits. In contrast, radical innovations - new technologies, categories and markets - typically generate 2/3 of company profits. 86% of all new product launches are defined as low risk.

Five trends for the US

According to Inc magazine (US) the five biggest trends affecting small companies in 2005 will be the following:

1. High prices for basic materials
2. Logistical problems caused by inventory delivery bottlenecks
3. Employee benefits (health, child care, flexitime etc) increasing labour costs
4. A crisis in State funding and spending
5. The return of early stage financing from venture capital companies.