Mark Roeder, the erstwhile Global Head of Advertising at UBS, has written an excellent analysis of how momentum has become the “zeitgeist of our times”. He argues that the highly connected nature of our world, coupled with advances in technology and reckless media attention, ensures that once generated, momentum of any kind could quickly spiral out of control. What makes it lethal though is the increasing lack of friction (regulations in the world of finance). He uses this framework to explain not only the origins of the recent financial crisis, but also developments from various spheres of life including the ever-shifting geopolitical environment.
Roeder sets the stage by extending the classical definition of momentum: “in Newtonian terms, it could be argued that today we are dealing with increasingly weightier issues (mass) and a world that is moving at a much greater speed velocity) than at previous stages in history, which generates more momentum.”
He then discusses various factors that contribute to this phenomenon; this list consists of all usual suspects — technology, internet, media, deregulation and globalisation. He presents fascinating evidence from various fields (primarily behavioural sciences) to explain how this surge of momentum influences human behaviour. He argues that executives are increasingly becoming momentum surfers — people who are finely tuned to shifts in momentum and leverage this ability to maximise their myopic objectives.
Using publicly available information on the Second Iraq War, Roeder argues that the culture of healthy dissent (a natural source of friction) has all but vanished; it has paved way for an age of conformity.
It is but natural that a work as ambitious in scope as this makes the odd slip or two — The Big Mo is not an exception. The author occasionally tries hard to stretch his framework; for instance, in the chapter ‘The Rise of the Momentum Surfer’, he attributes the controversial outcome of 2000 Florida election to momentum generated by George Bush’s campaign. To Roeder’s credit, such incredulous assertions on causality are very few.
Momentum doesn’t manifest itself only in financial markets, the author argues. Citing reports from both popular media and academia, he illustrates how it has left its footprint in fields as diverse as environment, celeb culture, technology and international politics. These discussions have the potential to greatly enhance the reader’s perspective. For instance, the warning that he issues on wireless technology should act as a wake-up call to all stakeholders — regulators, firms and consumers. Unfortunately, this opening example also turns out to be the best part of the concluding section. In the final analysis, as the author admits, the idea that momentum influences our world is hardly a revelation.
However, the framework that he builds to fit these ideas is quite interesting. Also, the supporting research is extensive and makes the argument a fairly convincing one.
If the success of such a work were to be measured by how well it explains contemporary events (out-of-sample testing, as we academics refer to it), The Big Mo is a resounding success. It helps us better appreciate the underlying dynamics of say, the uprising in Egypt or the surge against corruption in India. On a lighter note, if you are amused with reports declaring MS Dhoni as being more influential than Barack Obama or Mukesh Ambani, don’t be — it is just another manifestation of Celebrity Mo, one of the many faces of Big Mo.
(The writer heads the Centre for Advanced Financial Studies , IFMR, Chennai)