The success of trends cannot always be predicted as they rely on rare confluences of events and factors beyond rationalization.
Bubbles, whether in markets or viral phenomena, are fueled by a combination of money, marketability, accessibility, speculation, and chance, with positive outcomes such as innovation and ecosystem renewal.
Deep dives
The podcast episode recorded at Abbey Road Studios
In this special series of the Human Risk Podcast, the host invites three friends of the podcast – Rory Sutherland, Gerald Ashley, and Paul Craven – to join him in the world-famous Abbey Road Studios in London. Over the course of three episodes, they discuss various topics and share their insights. In the first episode, they explore the concept of what makes something go viral and the difference between trends that endure and those that burn out. They also discuss the importance of measuring sequential data rather than just aggregate data and the role of speculation and amateurs in creating bubbles. They touch upon the emergence of ideas and the value of raiding the fridge rather than following a predefined recipe. The conversation also delves into the dynamics of fairness, the ultimatum game, and the impact of perceived unfairness on decision-making. The episode concludes with an exploration of the value of effectuation and the notion that innovation often arises from unexpected connections and post-rationalization.
The challenge of predicting trends and the role of luck
The episode delves into the challenge of predicting trends and why some things become viral hits while others fail. The conversation highlights the role of luck and the inability to pre-rationalize successful ideas. It explores how early trends often start with slow growth before reaching a critical mass, using examples such as the emergence of air fryers or the adoption of mobile phones. The importance of measuring sequential data and understanding the difference between trends that stick and those that burn out is emphasized. The concept of portfolio effect in innovation and the need for a balance between speculation and accumulation are also discussed. The episode notes that while certain factors can contribute to the success of a trend, some events are beyond prediction and rely on rare confluences of events.
The dynamics of bubbles and market frenzy
The episode discusses the dynamics of bubbles in markets and draws parallels between viral phenomena and stock market frenzies. It explores the concept of bubbles as useful but limited metaphors and suggests the metaphor of fire to capture the dynamics of viral moments or booms. The importance of fuel (money, credit, interest rates), oxygen (marketability and accessibility), and speculation (amateurs' involvement) in creating bubbles is highlighted. The conversation delves into historical examples, such as the railway boom and the tech boom, to illustrate the patterns seen in viral phenomena. It also acknowledges the positive outcomes that can emerge from bubbles, such as innovation and ecosystem renewal. The role of complex systems, power laws, and the interplay of chance in the emergence of bubbles is discussed, along with the notion that some trends die out while others create lasting impact.
The role of post-rationalization and emergence in innovation
The episode explores the importance of post-rationalization in innovation and how ideas often emerge from unforeseen connections and opportunities. The conversation discusses examples such as the adoption of mobile phones, Dyson vacuum cleaners, and espresso machines to illustrate how ideas that may not make sense in advance can become successful. It emphasizes the value of raiding the fridge and the willingness to explore ideas that do not fit a predefined rational framework. The role of context, location, and social dynamics in trends and clusters is also highlighted. The episode touches upon the role of classical music branding, property purchases influenced by emotional factors, and the influence of fairness in decision-making, such as in the ultimatum game. It concludes with reflections on the unpredictability and serendipitous nature of innovation.
What happens when you bring three behavioural science gurus into a world-famous recording studio? Find out on three special episodes of the Human Risk podcast.
Rory Sutherland, Gerald Ashley and Paul Craven have all been on the show before (links below), both individually and as duets. As the show approaches its 250th episode, I thought I’d invite them all back together for a recording session in Abbey Road Studios.
For this first of three episodes, I asked Rory, Gerald and Paul a question that was inspired by our location: what makes things a hit? Why do some things go viral and others don’t?
What emerged was a wide-ranging conversation that explored:
why predicting hits is unpredictable;
how bubbles can have positive outcomes;
the role that emergence and chance play in driving innovation;
how trends evolve over time;
the role that labelling and branding play in determining what we like and don't;
how fashions and preferences change over time;
and much, much more...
If you enjoyed this episode and want to hear more: