The September 2006 issue of the Harvard Business Review has a brief piece by Columbia sociology professor Duncan Watts and Steve Hasker of McKinsey about marketing in environments where social influence is important. Watts and Hasker argue that when a consumer’s interest in a given product is driven by how popular the product seems to be with others in the consumer’s social network, predicting whether a product will be a success or not becomes very difficult. To cope effectively with this uncertainty, marketers should spend less time and money trying to predict big-budget blockbusters, and instead develop “portfolios” of products, and the ability to rapidly shift marketing resources to emerging successes based on customer feedback.

The implication for marketing executives is that they should de-emphasize designing, making, and selling would-be hits and focus instead on creating portfolios of products that can be marketed using real-time measurement of and rapid response to consumer feedback.

The aurhors recommend five measures for more effective marketing campaigns which take social network effects into account:

1. Increase the number of bets, and decrease their size
2. Focus on detection, measurement, and feedback
3. Follow through with flexible marketing budgets
4. Exploit naturally emerging social influence
5. Build flexibility into supply chains and contracts

Their results are based on academic work published earlier this year by Watts as well as Matthew Salganik and Peter Dodds: Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market

Read more: Marketing in an Unpredictable World, by Duncan J. Watts and Steve Hasker

UPDATE: I’ve heard from some readers that the Harvard Business Review link didn’t work for them. Here is an alternate link to the paper, hosted by Columbia: Marketing in an Unpredictable World

UPDATE 2: For discussion of a very similar “portfolio” approach to dealing with complex or uncertain environments, this time in the context of business strategy, see my earlier post Strategy in an Unknowable Universe

The Economist has a somewhat skeptical review of The Origin of Wealth posted on its site. Their final word on the evolutionary approach to economics:

For the moment, then, evolutionary economics remains a niche pursuit, not the intellectual revolution Mr Beinhocker predicts and hopes for. It is ironic that evolutionists, of all people, should have such trouble reproducing themselves.

My quick reaction: I would expect more from such a magazine than to confuse the immediate popularity of an idea with the amount on insight contained therein.