Opinion and Return on Technology

ALTOM: When it comes to big purchases, don’t follow the crowd

May 18, 2013

As I write this, The New York Times has announced that tablets running Google’s Android operating system are about to overtake the market share Apple’s tablet has enjoyed for some years now. Android phones have already topped the market share of Apple’s iPhone, thanks in large part to a rapidly surging Samsung that’s making Android phones cheaply and marketing them well.

I love the cut-and-thrust of business competition as much as the next working pundit. But when it comes to buying something, I don’t really care who’s seizing market share.

Columnists both in print and online breathlessly track Apple versus this or that opponent. They treat the market for devices as a blood sport, following each top contender with such manic interest that I keep expecting articles about them to show up in People Magazine, between articles about some movie star’s baby bump and a politician’s secret girlfriend.

Yet almost none of the columnists give any consideration to how useful the devices are in business. In the endless daily competition we all face, there are only two criteria to evaluate a gadget, in my view: Does it save me money? Or, can it make me more money?

I’m a little atypical in this, I’ve discovered. A good many colleagues rely on market share to help them make buying decisions. It’s not surprising. When uncertain about what to do, humans tend to look at other humans to see what they’re doing.

Children facing new situations watch their parents’ faces to see how the adults are reacting. We adults do the same thing with one another. An age-old adage of business is that “nobody ever got fired for buying from IBM.”

Despite our supposed individualism, we humans follow the herd, because it’s safer and often more entertaining.

You can find videos on YouTube of people standing on busy street corners looking up and rapidly attracting other rubber neckers who want to see what’s so interesting up there. It’s a mainstay of “Candid Camera”-type shows.

The same principle gives us canned or live audience laughter for TV shows, prompting us when something is funny and convincing us to laugh along at home. Robert Cialdini in his book “Influence: Science and Practice” has an entire chapter devoted to what he terms “social proof,” the tendency of humans to lapse into slavish copying.

The herd usually forms around the first offering to appear, which is why developers of new technologies are so eager to get to market even if their products aren’t shaken out. Economists and statisticians refer to this as the “Chinese restaurant process.” There’s a huge amount of study devoted to this effect. Geoffrey Moore elaborated on it at length in his bestseller “Crossing the Chasm.”

The beliefs of the many are often useful to know. One recent recycling of the idea is “crowd sourcing,” making decisions based on what crowds of people contribute online. Put a question to a cyber-crowd and see what answers pop out. Polls have long been used to elicit the beliefs of the masses to make better decisions on the basis of the findings.

Sometimes the results of crowd sourcing are startlingly impressive. In 1967, John Craven helped the U.S. Navy find the wreck of the nuclear submarine Scorpion partly based on an aggregation of guesses made by a collected host of old salts. Focus groups operate on the same principle, as does social media. There’s a reason why product pages on e-commerce sites have room for comments and rating scales.

Does all this imply that market share is a good basis for making buying decisions? Not to me. The center of gravity for crowd coalescence can all too easily be a momentary and random point that shifts to somewhere else almost overnight without any concern for business functions.

For small purchases, such as entertainment, this is fine. Use the same hot dog vendor the rest of the gang does, and see the same movies. It makes for interesting water-cooler conversation, if nothing else. But more important acquisitions deserve some analysis.

Popularity is a poor substitute for thought when you’re signing the checks. Market share can indicate superior products, but it can be misleading, too.

Make sure you know why that gadget is attracting admiring crowds before you buy one for yourself. That may require you to do an ROI analysis, but that’s OK if the purchase is central to your business or comes at a high cost. As your mom told you, just because your friends are jumping from the bridge doesn’t mean you have to.•

__________

Altom is an independent local technology consultant. His column appears every other week. He can be reached at taltom@ibj.com.

ADVERTISEMENT

Recent Articles by Tim Altom

Comments powered by Disqus