Management And Accounting Web

Bonabeau, E. 2004. The perils of the imitation age. Harvard Business Review (June): 45-47,49-54.

Summary by Denisse Reguerin
Master of Accountancy Program
University of South Florida, Fall 2004

Behavioral Issues Main Page | Strategy Main Page

The purpose of this article is to describe the effects of imitation on our technologically advanced society. Bonabeau explains that “imitation is a fundamental element of human nature” and that people from all over the world influence our thoughts and actions. Technology and all the different communication channels available to us have made it very easy for us to find out what others are doing, thinking and believe, and almost instantaneously we are able to act on the information we compile. Businesses like Harley-Davidson and Mountain Dew, have realized that people care about their peer’s opinions and that many times word of mouth can be a more powerful tool than millions of dollars spent on marketing. Many times “what others do matters more to us than the facts” and we will imitate them and their mistakes as well.

Imitation has impacted business and finance tremendously; companies try to imitate the success of their competitors by following their strategies and avoiding their mistakes. Investors will sometimes follow a trend or bubble instead of making rational decisions based on analysis of available information. This type of behavior contributes to the volatility of individual stocks and can sometimes decrease shareholder value. Imitation however, is not always bad. It can be a “rational economic choice” when information is too expensive or hard to obtain, and it can provide a basis for learning. Nevertheless, imitation can create instability and unpredictability because it can “swell a single opinion into a mass movement or catapult the smallest player to the forefront of a market”.


The four principal drivers of imitation are:

Belief that the other guy knows better, and

The first driver, safety, affects people’s willingness to take risks. A company’s management would rather make a “safe” decision than to be the only one in the industry to make a huge mistake. The importance of the second driver, conformity, is the fact that people want to be accepted, they will conform to the norm and will surround themselves with other people who share their views and way of life. The third driver is self explanatory and infers that people will follow the actions of someone they admire or whom they believe is successful. Finally the fourth driver, greed, assumes that people imitate others because they have something the imitator wants. “The widespread fear of missing out is at the heart of all speculative bubbles” such as the dot-com bubble in 2000.


Today’s society has a greater knowledge of what others think and do and this is due in part to a combination of new technologies and feedback loops. Per Bonabeau’s definition, feedback loops are “mechanisms for collecting, sometimes aggregating, people’s thoughts, opinions, or preferences and then communicating them back to the public”. Best seller lists and movie rating are just two examples of feedback loops that have been around for many years, but now with the use of the internet the quality of feedback loops have changed dramatically to provide real time results. Because these real time results can sometimes impact subsequent opinions, some countries do not permit opinion polling before an election because they fear it will influence the outcome. Feedback loops are also customized by some online retailers, who will suggest items to buy based on the opinion and behavior of customers with similar opinions and behaviors. Click on any Amazon book link for an example.


Imitation is very unpredictable since people do change their views constantly and won’t always imitate the same behaviors or the same people or even continue imitating for long periods of time. This unpredictability is also increased by the lack of trusted references or beacons (e.g., role models, church and government leaders, the SEC etc.) due to incompetence, scandals or any other disappointing events which have changed the publics perceptions. Some people take a different approach by trying to predict the behavior of others in order to do the opposite and not imitate them which will add to the instability and unpredictability of the system. Small, random differences can also increase the instability or predictability of people’s behavior since an action can be taken due to something very insignificant. For example, a person walking by two cafes that are right next to each other and have the same décor, menu and prices, might pick one over the other just because there are two people sitting in the café they chose. This doesn’t mean that the café is any better, but to the person walking by it may seem that way since the other café is empty.


Bubbles and market frenzies occur frequently and are fueled by herding behaviors from other investors responding to rumors or big transactions, whether or not they are true or right. Analysts and investors will buy stock based not only on their opinion about the stock but also based on other people’s expectations. Investors will turn to trusted sources, such as credit rating agencies, before making a buy or sell decision. “A downgrade” from one of these agencies, “affects not only a company’s debt, but also its stock” which will make not only the stock but the rating more volatile since the agencies are incorporating market data into their ratings.


Below are some tools and strategies that the author says will “help us at least understand the possible outcomes of imitative behavior and exploit many of the opportunities it creates”.

Target the hubs

Not all consumers are equal, some act as “hubs in imitation networks”, and are able to influence thousands of others. For example the designers in the fashion industry will have popular celebrities wear their clothes so that the public will see them and want to wear that designer’s clothing as well.

Keep it simple

People are more likely to understand and remember simple ideas and become more suspicious of more complex ones. For example, low-carb diets have become very popular since they are easy to follow and many restaurants have even added low-carb meals to their menus.

Embrace the new channels

Companies must make the most of the new channels available to them and utilize them to their advantage. Even politician Howard Dean used the internet to recruit supporters and raise funds prior to quitting the (democratic) race in February.

Give it away

Even if you must give your product away at first, you must get it out to as many people as possible as fast as possible, since the “feedback loop is started by the first few customers”.

Model what you can

Trying to understand and better handle imitation based dynamics is very important and the author suggests using agent-based modeling “which simulates complex systems- such as behavior and feedback loops- from bottom up”.

Be a rock

Finally, the author suggest that companies should focus on quality so they will have a better chance their customers will return if they do decide to follow someone else.



This article looks at the imitation age from the strategy perspective, particularly the marketing strategy perspective. How can we apply the ideas in this paper to accounting? For example, are there implications of the imitation age for concepts and techniques such as ABC, ABM, JIT, TOC, benchmarking, and the balanced scorecard? Explain. (See the Ittner and Larcker 03 summary and Deming's deadly diseases and obstacles for some ideas).

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Malone, D. and M. Mouritsen. 2014. Change management: Risk, transition, and strategy. Cost Management (May/June): 6-13. (Summary).

Pascale, R., M. Millemann and L. Gioja. 1997. Changing the way we change. Harvard Business Review (November-December): 127-139. (Summary).

Porter, M. E. 1996. What is a strategy? Harvard Business Review (November-December): 61-78. (Summary).

Rafii, F. and L. P. Carr. 1997. Why major change programs fail: An integrative analysis. Journal of Cost Management (January/February): 41-45. (Summary).

Sull, D. N. 1999. Why good companies go bad. Harvard Business Review (July-August): 42-48, 50, 52. (Summary).