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Professor Nelson Phillips discusses the ramifications of online rumour communities and their influence on consumer products

He collaborated with Victor Seidel at Babson College and Tim Hannigan at the University of Alberta to review the theories and mechanisms behind rumours and their circulation.

Before the launch of a new iPhone, a mock up ‘turns up’ in a bar in Silicon Valley. Is this an unfortunate accident or a deliberate move by Apple to influence the flurry of rumours and speculation that precede an Apple launch? There is no way to know but it is clear that the only way to have any control over rumours is to upstage them with the product itself. This will end the rumours but may not be possible if the firm doesn’t want to share the information before launch or if decisions haven’t been made yet.

But companies want a ‘buzz’ before they launch a product – and buzz is all about rumours.

Speculation about the new iPhone 8 this year has been feverish: the look, feel and technical details of the phone have all been the subject of extensive rumours. And the latest leak to hit Apple in the last few days has revealed details about a new operating system and facial recognition technology for future devices, ahead of the launch on September 12. Two Apple-related websites were given access to code that reveals the new technology – speculation suggests this may have been a leak by a rogue Apple employee.

Products that generate high emotion and attachment – celebrity products – tend to generate intense speculation as well. You’ll see similar levels of interest in cars (Tesla, for instance, has legions of fans) or cameras and bikes – people are crazy about their bikes. You don’t see this level of interest in household cleaning products or in less successful technology products. There are few rumours about the Segway.

The only way to have any control over rumours is to upstage them with the product itself

Rumours can help shape a product. By our nature, we are drawn to rumours, we love to gossip. During World War Two, governments realised the impact of rumours upon ordinary people and the danger of them circulating out of control – “loose lips sink ships” and so on. Rumours could raise false hopes, or depress the public unnecessarily. Both the US and UK governments commissioned social scientists to investigate. But authorities were disappointed: scientists found rumours were almost impossible to control when people had a high degree of interest in the topic and facts were hazy.

This still holds true. If the public were to sense a corporation was releasing or controlling rumours about a product, they’d no longer pay attention. But why are rumours important for business?

They matter now more than ever because of the internet. And this is particularly pertinent when it comes to consumer products. Before social media, people still swapped opinions and speculated. A magazine or paper might review the launch of a new bike or car, and report how it had been received by users. Rumours were swapped around the watercooler and in bars. But consider what happens now. Long before a celebrity product is launched, bloggers on various dedicated websites anticipate design modifications, extra features and so on. Their thoughts are read and shared by many more interested and active bloggers – and thousands more passive consumers of information who don’t interact but do read and assimilate.

By our nature, we are drawn to rumours, we love to gossip

This happened in 2009 before Apple’s formal entry into the tablet computer market. There was so much speculation that a dedicated blogger even put together an exhaustive guide to iPad rumours.

Bloggers operate differently from traditional media: there’s more interaction, repetition and dissemination. And more importantly, people now have access to rumours on an unprecedented scale.

These ‘rumour communities’ – websites, forums and so on – now exist across many product markets from electronics to sports clothing – and of course, smartphones. The more ambiguous and complex a consumer product, the more intense the speculation. There’s just not so much to say about simpler products.

What’s happening now is something we call ‘conceptual prototyping’. For while consumers discuss the merits of such and such modification, companies can eavesdrop on these conversations. And this is incredibly useful. It allows corporations to gauge the popularity of potential new features before they’re launched. So consumers were aware the new iPhone 7 last year wouldn’t have an earphone jack – Apple had ‘managed’ the response to this by leaking the information in advance. This online speculation allows companies both to gather useful user-led insights, which could feed into the design of future products, and also foresee potential negative response to a change in design. Social media can boost the level of interaction between people and the speed at which they react – both enormously helpful for companies.

These consumer markets certainly aren’t the first to make use of user-led design. In fact, many other groups of users have been involved in innovating the products they adore. Surfers have been doing this for decades, shaping and customising their boards to their own personal preferences. Board manufacturers watched on as water sports enthusiasts tinkered with rails, volume, fin size and so on. It happened in other sports markets too: skiers tweaked the curve of their skis, cyclists adapted their bikes and, in some cases, companies implemented some of the new designs.

While consumers discuss the merits of such and such modification, companies can eavesdrop on these conversations

The examples we’ve highlighted in various markets don’t even involve the tangible product – it involves a group discussing an idea of what it might eventually be. But it also speeds up consumer acceptance of a daring or novel design feature, especially if consumers judge that a design actually exceeds expectations. Take the case of Tesla. Rumours were rife that the company was planning to introduce ‘gullwing’ style doors for the Tesla Model X. Fans of the brand worried in advance that this would cause problems in tight parking conditions. In fact, Tesla introduced hinged gullwing doors that delighted the online community – the preamble to their unveiling contributed to the speed at which they were welcomed.

So how can companies harness the power of these online rumour communities? It’s an area that deserves much more research and attention. Larger companies such as Apple generate sufficient interest to allow bloggers and social media journalists to make a living from garnering and repackaging rumours and managing the general chit chat. Apple, for instance, has around 10 substantial social media platforms focused on discussing current and forthcoming innovations they can observe and even try to influence. But if a company isn’t quite that substantial, it may want to start looking at ways it could help create an independent space where these conversations could take place.

What impact rumours have upon the development and acceptance of new products is known, but not yet well enough understood – it’s is an area ripe for investigation and exploitation. It’s in our interests to understand how they function.

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Nelson Phillips

About Nelson Phillips

Abu Dhabi Chamber Chair in Innovation and Strategy, Associate Dean of External Relations
Professor Nelson Phillips holds the Abu Dhabi Chamber Chair in Innovation and Strategy, having been Acting Dean the Business School. He has published more than 100 academic articles. He is Programme Director of the Executive Education course, Leadership in a Technology-Driven World.

Professor Phillips’ research interests lie in four main areas. First, he has become increasingly engaged in a program of research looking at a range of different but related issues in entrepreneurship. From a more practical perspective, he is interested in how to scale up new, high-growth ventures and in how scaling up social enterprises differs from scaling up more traditional companies. He is also interested in how new ventures “pivot” as this activity remains highly undertheorized. He is also involved in a project investigating how the idea of an incubator has been adapted to different cultural setting. When studying entrepreneurship, Professor Phillips often uses ideas from organization theory to help him theorize and he has found this approach to be particularly fruitful.