Managing the Grapevine

The formal system is not the only communications network found in organizations. There is also an informal one which is called the Grapevine. Although the grapevine informal, this doesn’t mean that it’s not an important source of information.

According to Stephen Robbins, the Grapevine has three main characteristics: First, it’s not controlled by top management. Second, it is perceived by most employees as being more believable and reliable than formal means of communications issued by top management. And third, it is largely used to serve the self interest of the people within it.

What conditions foster an active grapevine? What gets the rumor mill going? It is frequently assumed that rumors start because they make titillating gossip. This is rarely the case according to various studies. Rumors emerge as a response to situations that are important to us, when there’s ambiguity and under conditions that arouse anxiety. The fact that work environments frequently contain these elements explains why rumors flourish in organizations.

Certainly, the grapevine is an important part of an organization’s communications network. It gives managers a feel for the morale of their organization, identifies issues that employees consider important and helps tap into employee anxieties. It acts, therefore as both a filter and feedback mechanism. Rumors cannot be eliminated entirely but management can minimize the negative consequences of rumors by limiting their range and impact.

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In Favor of Company Meetings

George Mason University Economics Professor and Author Tyler Cohen makes a strong case for the value of company meetings in this article from Forbes.com

Most meetings drive us crazy. They drive productive people especially crazy. Scribbling, fantasizing and wishing it would end help only so much. But there is good news for the legions of meeting haters: Most meetings aren’t as wasteful as they seem.

Face-to-face gatherings serve valuable if hidden functions. For example, meetings publicize information about status. Who speaks? Who finds it necessary to praise whom? Who displays a confident demeanor? Meetings help managers and employees figure out how to build necessary coalitions. They bestow social intelligence.

Meetings also confer a sense of control. Attendees feel like insiders who have a real voice in decisions. This boosts their motivation to implement ideas discussed as a group. For this reason it is especially important to listen to the blowhards and the obstructionists, who otherwise would pursue their own agendas rather than support a common plan.

I bet the next time you attend a meeting, you’ll consider the process from a different perspective … perhaps as fundamentally a form of “social theater”.

Realism and Perception

In 1927 Werner Heisenberg shocked the world of classical physics by claiming that when we measure the world, we change it. He called this the uncertainty principle. This concept gave the scientific community credibility with what philosophers had gradually come to understand over the preceding hundred years: Human beings cannot ever know what is “really real”. We participate more deeply than we imagine in shaping the world that we perceive.

Philosophers have coined the term “naïve realism” as the world view that defines reality as a given entity outside our perception and see language as the tool through which we describe this external reality. But Heisenberg suggests that whenever we articulate what we see, our language interacts with our direct experiences. Therefore, the “reality” we bring forth arises from this interaction.

In a sense, we tend to confuse the maps for the territory. We develop a sense of certainty about our perceived reality that robs us of the capacity to wonder and develop new interpretations and new possibilities for action. Who we are becomes our beliefs and our views. This is why some people will defend an attack on their beliefs as if it were an attack on them. When I’m confronted with multiple interpretations of “reality” I seek those that are most useful to a particular purpose, understanding that there’s no ultimately “correct” interpretation and value can be derived from a multiplicity of views.

Thoughts on the Apple iPhone’s Price Drop

According to a theory called Diffusion of Innovations (DoI) formulated by Everett Rogers, early adopters (those eager to explore new options in technology) make up 13.5 percent of the population. Other models and theories on technical diffusion have proposed concepts of early adopters using new technology and helping move it to the point where it needs to “cross the chasm” and become mainstream. These ideas also suggest that early adopters tend to negotiate at the high point of the cost curve.

 

When the Apple iPhone was introduced two months ago, most early adopters were willing to pay up to $599 for the product. While Apple’s recent announcement of the price drop to $399 was quite surprising to most, others including myself understood this pricing strategy as a reasonably necessary method used by companies to increase revenue. Still others have argued that the short time frame in which the price decrease occurred was unprecedented and unfriendly to customers. Surely these points deserve some consideration.

 

The corporate strategist in me however, tends to favor the cost vs benefit opportunities presented by the scenario. My first consideration is the technology adoption life-cycle, a sociological model originally developed by Joe M. Bohlen and George M. Beal in 1957. The concept was later broadened by Everett Rogers to develop DoI; the study of how, why, and at what rate new ideas and technology spread through cultures.

 

As shown in the figure below, according to Rogers’ theoretical framework and the research evidence supporting the Diffusion of Innovation model; the first group of people to use a new product are called “innovators,” followed by “early adopters.” Next come the early and late majority, and the last group to eventually adopt a product are called “laggards.”

 

 

 

The strategic perspective suggests that Apple Inc. may believe that the early adopters market for the iPhone has been sufficiently exhausted. Therefore, the next Logical step is to advance toward the sweet spot of the curve. Notice that early majority and late majority make up about 68% of the potential market. At this level, a price reduction is necessary to capture the mainstream in order to maximize profits and increase revenue. Indeed, it’s a numbers game. Of course, I’m sure additional quantitative and qualitative analysis as well as gut-level logic played a role in their decision model but in the end, this is about value creation for the long term.