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Management Fads
Professor Bainbridge put up an excellent post about management fads.
Is it possible that rational managers would chase fads? Herd behavior, which refers to the tendency to imitate the actions of others, ignoring one’s own information and judgment with regard to the merits of the underlying decision, provides an answer. Corporate managers are scarcely immune to herd behavior; to the contrary, the faddish aspects of participatory management suggest the possibility that herd behavior is relevant to the demand side of the equation. ...
Herd behavior is partly attributable to cognitive biases, especially the conformity effect. When one’s decisions are publicly observable by peers, conformity has a positive psychic pay off, whose existence has been experimentally demonstrated.
These are brilliant observations. I might have said the exact same thing, but Professor Bainbridge beat me to it. Actually, Scott Adams, the creator of Dilbert, beat us both, because his cartoons have for many years made fun of the clueless pointy haired boss using the latest management fads each week.
Herd behavior influences a lot of social phenomenon, such as stock market bubbles. The stupidity of human behavior was pointed out in the 1841 book Extraordinary Popular Delusions And The Madness Of Crowds by Charles MacKay (that's a link to a free online copy of the book). Sadly, not much has changed since 1841.
posted Sunday, November 09, 2003
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