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We’re Leaking, and Everything’s Fine: How and Why Companies Deliberately Leak Secrets

Although the protection of secrets is often vital to the survival of organizations, at other times organizations can benefit by deliberately leaking secrets to outsiders. We explore how and why this is the case. We identify two dimensions of leaks: (1) whether the information in the leak is factual or concocted, and (2) whether leaks are conducted overtly or covertly. Using these two dimensions, we identify four types of leaks, which we term informing, dissembling, misdirecting, and provoking. We also provide a framework to help managers decide whether or not they should leak secrets.

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We’re Leaking, and Everything’s Fine: How and Why Companies Deliberately Leak Secrets

  1. We’re Leaking, and Everything’s Fine How&WhyCompanies DeliberatelyLeakSecrets. David R. Hannah Ian P. McCarthy Jan Kietzmann Beedie School of Business at Simon Fraser University As featured in
  2. Organizations are open systems: they continuously interact with their external environments and share information across their boundaries (Scott, 1981).
  3. One critically important type of information sharing is the sharing of secrets (Hannah et al., 2015).
  4. 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).
  5. The benefits of keeping secrets Coca-Cola Company has preserved the value inherent in being the only manufacturer of Coke and has benefited accordingly.
  6. The benefits of leaking secrets John Martellaro, a former senior marketing manager at Apple, acknowledged that the firm has engaged in controlled leaks.
  7. 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)
  8. 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).
  9. The Two Dimensions of Leaks
  10. Truthfulness of the information in the leaked secret the degree to which it contains factual or concocted secrets. 1
  11. The signaled intentionality of a deliberate leak overt 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
  12. The Four Types of Leaks
  13. 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
  14. Misdirecting Overt Covert Factual Conocted Leaking secrets to send others down the wrong path or course of action
  15. 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.
  16. Dissembling Overt Covert Factual Conocted Leaking secrets to misrepresent and deceive
  17. 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.
  18. Informing Overt Covert Factual Conocted Leaking secrets to be transparent, compliant and collaborative
  19. 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.
  20. Provoking Overt Covert Factual Conocted Leaking secrets to stimulate and test reactions
  21. 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.
  22. A Framework for Decision Making
  23. 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? Inform Y N = Do not leak Y Y If found out, will the consequences be prohibitive? Y N 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
  24. 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).
  25. Read the full paper here We’re Leaking, and Everything’s Fine HOW&WHYCOMPANIESDELIBERATELYLEAKSECRETS. David R. Hannah, Ian P. McCarthy & Jan Kietzmann ꘡ 2015 Beedie School of Business at Simon Fraser University
  26. Dr. Ian McCarthy Media Enquiries anilp@sfu.ca @toffeemen68 Professor, Technology and Operations Management Beedie School of Business Simon Fraser University Ian McCarthy

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