Book Summary Preview : How Hits Happen

The Big Idea
Winslow Farrell applies the theories of complexity to modern business systems. How Hits Happen explains how media hits like the film “Titanic”, or high-demand phenomena like Tickle-Me-Elmo dolls or Tomagotchi occur, much like predictable natural phenomena as weather. Farrell’s group specializes in building market behavior simulators on computers. PriceWaterhouse Coopers clients come to Farrell and the Emergent Solutions Group, asking for strategic models of their new products and ideas, to scientifically study and test whether their business idea will become the next big thing, or an expensive flop.

Introduction

Economist Brian Arthur calls it a theory of “increasing returns”, which governs the Web, where a
networked economy operates following laws of the same dynamic: like-minded individuals flock to the same Web sites, becoming the niche that companies target.

Human behavior and response to a new idea or product can be predicted in a simulated or artificial world of consumers.

The Internet has changed the metabolism of product life cycles and has made the patterns we find in markets move faster, reflecting the music, clothing, and lifestyle choices of markets worldwide.

Fads, Fashions, and Failures

Consider the 1990’s Seattle grunge movement or the hit phenomenon Hootie and the Blowfish. These bands became popular when the buzz about them was created through alternative college radio programs and rapid word-of-mouth. In one year, Hootie and the Blowfish sold more than 13 million copies of their album.

Managers prefer simple choice rather than an essay question when responding to how we are to surf the waves of demand. Just like real surfing, business leaders need to watch the waves before they rise, and intuitively know exactly when to get on it, and how to make adjustments to ride the wave for as long as possible.

The Complexity Theory draws from a postmodern view of the world. It is based on quantum physics and existentialist philosophy rather than Newtonian physics and Cartesian thought. When analyzing market fads and flops, we throw away the conventional scientific method, and use a non-linear theory as complexity, which embraces randomness and chaos.

Complexity is the study of complex adaptive systems. From how a standing ovation starts and moves through an audience, to an embryo dividing and subdividing to become a human fetus, these are systems that take on a life of their own.

The three key principles revealed in the study of fads and fashions in these artificial worlds of consumers are: . . . . . .

 

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