Awareness of peer influence helps managers orchestrate the actions of others -- and interpret their own behaviors.
If everyone else jumped off a cliff, would you do it, too? In many ways, it’s a ridiculous question. People don’t follow one another, lemming-like, off cliffs. Moreover, although teenagers may be notorious for mimicking whatever their peers seem to be saying, doing or wearing, intelligent adults don’t do something simply because others are. Or do they?
Scholars of various kinds have long documented the degree to which people are influenced by similar others,1 and social commentators have recently registered this phenomenon as well. For instance,Time magazine recently bestowed its coveted “Person of the Year” designation on an unsuspecting winner — us! In defense of the selection, theTime editors chronicled the extent to which consumers are abandoning traditional expert sources in favor of the perspectives of their peers. And because of the vast reach of the Internet, the range of “one anothers” now available is unprecedented. As a consequence, bloggers have become fonts of political wisdom; user groups dispense insights on everything from tea to technology; scholarship is entrusted to next-door-neighborWikipedia contributors; book sales are heavily influenced by Amazon.com customers’ reviews; and the dominant restaurant guide in the United States — theZagat Survey — recruits its raters exclusively from the ranks of nonprofessional critics.
Given all that, it’s surprising how little business executives take note of the potency of peer influence at two crucial (and often-encountered) times: when, as tacticians, they seek to influence the actions of others, and when, as observers, they attempt to interpret the causes of their own actions. A close examination of these two failings reveals a number of ways in which they hamper effective managerial decision making.
Influencing the Actions of Others
Savvy managers are aware of how people can be affected by the actions of similar others, but even they can fail to appreciate the full power of peer influence or to anticipate its unintended consequences. Such mistakes can be costly. Consider the Petrified Forest National Park in Arizona, which loses more than a ton of petrified wood each month because of theft. In hopes of preventing the vandalism, the park has instituted a deterrence program in which prominently placed signs make visitors aware of past thievery: “Your heritage is being vandalized every day by theft losses of petrified wood of 14 tons a year, mostly a small piece at a time.&