we’re leaking, and everything’s fine: how and why companies deliberately leak secrets
TRANSCRIPT
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We’re Leaking, and Everything’s Fine How & Why Companies Deliberately Leak Secrets.David R. HannahIan P. McCarthyJan KietzmannBeedie School of Business at Simon Fraser University
As featured in
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Organizations are open systems: they continuously interact with their external environments and share information across their boundaries (Scott, 1981).
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One critically important type of information sharing is the sharing of secrets (Hannah et al., 2015).
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It appears that some of the most prolific and careful leakers are also among the most profitable companies in the world (Hannah et al., 2015).
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The benefits of keeping secretsCoca-Cola Company has preserved the value inherent in being the only manufacturer of Coke and has benefited accordingly.
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The benefits of leaking secretsJohn Martellaro, a former senior marketing manager at Apple, acknowledged that the firm has engaged in controlled leaks.
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The benefits of leaking secrets“A senior exec will come in and say- We need to release this specific information. John, do you have a trusted friend at a major outlet? If so, call him/her and have a conversation. Idly mention this information and suggest that if it were [to be] published, that would be nice. No e-mails!’”
John Martellaro (2010)
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Ultimately, a firm’s choice regarding whether or not to leak secrets involves weighing the risks of a leak against the potential returns (Hannah et al., 2015).
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The Two Dimensions of Leaks 2
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Truthfulness of the information in the leaked secret
the degree to which it contains factual or concocted secrets.
1
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The signaled intentionality of a deliberate leakovert the company freely admits it purposely leaked the secret
covert the company falsely claims the leak was a mistake or pretends not to know it has occurred
2
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The Four Types of Leaks
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Dissembling
Misdirecting
Informing Provoking
Truthfulness of the
information in the leaked
secret Factual
Conocted
Overt
Covert
The signaled intentionality of a
deliberate leakHannah et al., 2015
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Misdirecting
Overt
Covert
Factual
Conocted
Leaking secrets to send others down the wrong path or course of action
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Misdirecting
Overt
Covert
Factual
Conocted
In the 1980s, pet food manufacturer Ralston leaked a conocted strategy to bait competitors into engaging in a price war for low margin products, thus allowing Rolston to consolidate market share in the high-margin, premium market.
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Dissembling
Overt
Covert
Factual
Conocted
Leaking secrets to misrepresent and deceive
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Dissembling
Overt
Covert
Factual
Conocted
Lululemon was forced to recant claims of the health benefits of its seaweed-based clothing. Consequently the company’s stock price and reputation suffered.
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Informing
Overt
Covert
Factual
Conocted
Leaking secrets to be transparent, compliant and collaborative
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Informing
Overt
Covert
Factual
Conocted
These leaks can have marketing value by getting customers excited about upcoming product offerings, such as the new Star Wars film.
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Provoking
Overt
Covert
Factual
Conocted
Leaking secrets to stimulate and test reactions
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Provoking
Overt
Covert
Factual
Conocted
Prior to launching the iPad, Apple reportedly was considering a price point of $1000 and leaked the information to gauge public reaction.
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A Framework for Decision Making
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To leak or not to leak?
Are there transparency requirements or benefits?Do you perceive other value in leaking?
Do you wish to covertly learn from others?
InformY
N
= Do not leak
Y
Y
If found out, will the consequences be prohibitive?
YN
Provoke
N
N
Do you wish to covertly lead others astray?
Do you wish to covertly deceive others?
If found out, will the consequences be prohibitive?
If found out, will the consequences be prohibitive?
N Y
Misdirect
YN
Y
N
Dissemble
Y
N
Hannah et al., 2015
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Firms should recognize that deliberate leaks can sometimes create value.
The evidence suggests that firms that leak secrets may be doing very well; it appears that some of the most prolific and careful leakers are also among the most profitable companies in the world(Hannah et al., 2015).
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Read the full paper here
We’re Leaking, and Everything’s Fine HOW & WHY COMPANIES DELIBERATELY LEAK SECRETS.David R. Hannah, Ian P. McCarthy & Jan Kietzmann ꘡ 2015Beedie School of Business at Simon Fraser University
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Dr. Ian McCart
hy
Media [email protected]
@toffeemen68
Professor, Technology and Operations Management
Beedie School of Business Simon Fraser University
Ian McCarthy