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Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

The Phenomenon of Business Momentum

Momentum: you see it in team sports often, as one team executes a great play or there is a stroke of sudden luck, and the momentum changes. You see it in life too, like when getting more exercise helps you to eat better, which helps you to sleep better. What about business?roller coaster

It’s physics. Momentum vs. inertia. It’s something we know, we recognize, but we don’t fully understand. Or at least, I don’t.

Over the last generation we’ve seen big momentum shifts, such as the swing from Mac to Windows in the 1990s and back to Mac in the last five years; the momentum shift from Yahoo! to Google in 1999; and shift to Facebook from Myspace in 2005.

I’ve posted here about the startup momentum of the Silicon Alley in the last five years.

And here’s a challenge: how to codify business momentum. How can we measure it? Sudden shifts in page views, tweet mentions, Facebook fans, Yelp or Amazon reviews? Klout.com has its secret algorithm for measuring online influence, which starts me thinking … what about momentum?

I googled “business momentum” and there’s not much there. The third item is this one, which I posted here on this blog.

Are we content to say we know it when we see it? Is that enough? Or can we know it better, analyze it, and understand it?

Your suggestions are welcome. I’m fascinated by this, but is it just me?

(image: bigstockphoto.com)

  • Sidney Williams

    I wonder if the first step to measuring is quantifying what is truly momentum (and what this even means) and what is a good analogy for momentum? From an economics viewpoint, we might attribute much of what we refer to as “momentum” as random chance. Other common momentum explanations might be cognitive processes. And of course some might just be momentum. My nerdy neuroscience background is kicking into action.

    From my perspective, we can see momentum as an intersection of illusion and reality. As an animal, our thinking begins at square 1 with the brain. We’re ingrained with many cognitive biases that we don’t even know exist because of how hard they are to spot; namely, supplying causal relationships at free will. Mathematics comes in handy here.

    Here’s an example: I’m an avid sports fan (and a Dallas Cowboys fan at that, so I’m a sad sports fan) and can spot a “hot hand” because I see and feel it. But it’s an illusion and even after knowing it, I still see it. Regression to the mean creates the illusion, but mathematically shows that when a team/player is doing well (which is one common attribution of the “momentum” term), they will actually be expected to do worse on following plays – completely counter-intuitive. We see upswings and downswings over a handful of plays, but what we’re referring to as momentum, are actually perfectly normal deviations from the mean that don’t make the player/team more successful on subsequent plays. In cases such as this, momentum is illusionary. As humans, we’re super quick to supply causal relationships.

    I have trouble wrapping my head around this, so one of the best ways for my mind to contemplate this is thinking of getting hit by a bus. As if the hit wasn’t enough, post-hit, I’ll notice buses left and right – kids might even start throwing rocks at me as I’ve begun to break down and cry at the sight of a school bus. Although these kids are clearly not nice, the point is that an illusion now exists that there are more buses than what there once were. Untrue of course.

    Sports is similar: when a team makes 1 great play, we fail to notice the majority of the time when the other team merely catches up and “answers” this play. However, we always notice the plays where one team consistently scores. Our memories remember the high-points of games (and the ending), vs. the overall details and since the mind is causally-inclined vs. mathematically-inclined, we don’t see the reality, which is that these shifts in momentum fit perfectly well into statistical norms of expectation.

    Inertia (which I continue to type as intertia for some reason) works well as a type of momentum – at least in physics. It might lead people astray when used as an analogy.

    Large technological shifts are supremely fascinating, akin to our own natural selection, which coincidentally has seemed to skip many of my family members. This natural selection (and I think the case can be applied to technological shifts) is left to a certain amount of chance via random mutation; however, the outcome of random mutation will strongly be affected by 1. The system this mutation occurs in and 2. The environment external to the organism. Most mutations are neutral, sometimes harmful, and rarely beneficial, but the same mutation on the same organism can be beneficial in one environment while not in another environment. Shifts will occur because of predecessors as well as current environment, but ultimately can be led back to random mutations caused by chance. Is this shift caused by random chance considered momentum? Perhaps. Something is filling a void in this case, almost certainly on a mathematical upswing (momentum) of growth; however, like in the sports example, most people will see deviations as momentum when they are merely deviations from the mean (that is the average of the growth).

    In our daily life – anything forming a habit, such as diet and exercise, might be less of a causal relationship (or momentum) and more along the lines of how the brain works. It not only imprints habits the more times we do something, but it also becomes more efficient. Something is very stressful and difficult the first few times we try, but the brain will shift a task from the energy-inefficient system 1 (conscious brain) to the energy-efficient system 2 (the rest, and majority of the brain). Or maybe we just think we’re getting sexy when we exercise so we decide to double-up by eating healthy as well – ladies?

    The role of leadership is critical whether most momentum is an illusion or not – simply because everyone will see & feel the momentum. One of the successful things a leader might be able to do is incorporate mathematical charts to show whether a deviation from the mean is expected or a true momentum shift (which might be growth in one direction or the other).

    A Fun Read: Thinking Fast and Slow by Daniel Kahneman

    • Sid thank you very much, this adds so much to the post, I really appreciate it. I think the background fundamental are fascinating, and very hard to accept, which adds to the fascination. Tim

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