Chapter 02

Key Work feature: Tipping points and discontinuities and their impact on industry structure

The idea of tipping point was popularized by the New Yorker magazine staffer Malcolm Gladwell. It is about trying to discover what will be a turning or tipping point that causes individuals to take action or change their opinions.

The theory of tipping points has its roots in epidemiology, the branch of medicine that investigates the cause of epidemics. The contention is that in any organization, once the beliefs of a critical mass of people are engaged, acceptance of a new idea will spread like an epidemic. The critical mass, or tipping point, occurs at a crossroad for the organization. That is, a point at which there are sufficient individuals to adopt a new idea so that, for instance, a proposed change becomes self-sustaining. Or, conversely, the idea fails to gain acceptance and the organization returns to its default position. Understanding tipping points helps an organization to overcome the forces of inertia that are likely to prevent change.

With a tipping point organizational change may occur suddenly rather than slowly and little causes can have big effects. Gladwell suggest three rules of epidemics. The first rule is the Law of the Few, or that a minority of people will account for the majority of the phenomenon. This clearly has similarities with Pareto’s principal commonly referred to as the 80-20 rule. For example, in an organization 20% of its customers may account for 80% of its revenues. The contention is that a few strategically placed and motivated individuals who promote a new idea may be capable of starting a social epidemic, or a change in customer buying habits. For example, in November 2007 clothing stores in Thailand saw a rush to buy pink shirts, thanks to a fashion craze sparked by the country's King Bhumibol Adulyadej. Thais were queuing in their hundreds to buy the shirts ever since the King left hospital wearing both a pink shirt and blazer.

The power of translation is another way to reach a tipping point. This is achieved through mavens, connectors, and salespersons. The mavens, connectors, and salespersons are what are referred to in marketing as the innovators and early adopters. They are the first individuals to adopt and share ideas. However, if an idea is too outlandish for a majority of people, it will not be accepted. These early and late majorities are where the ideas need to take root. If the early and late majorities do not embrace the new idea, then no sustainable change will occur. Therefore, what Gladwell calls mavens, connectors, and salespersons need to disseminate ideas in ways that the majority of people can relate to and are willing to adopt. The power on mavens, connectors, and salespersons is that they interact with a wide circle of people and deliberately try to influence their behavior.

A second rule of epidemics is called the Stickiness Factor. For instance, why do some advertisements work while others do not? The stickiness factor is about communication; how an organization might attract attention and make its messages memorable. This is often accomplished through a memorable catchphrase. The third law is the Power of Context. Gladwell asserts that ‘epidemics are sensitive to the conditions and circumstances of the times and places in which they occur.’ The power of context asserts that as individuals we are all sensitive to our environment which provides signals as to how we should behave. It is this surrounding context of behavior which can play a motivating role in shaping the actions of large numbers of people. As a result the nature and speed of a social epidemic can be a function of the environment only, or, the environment in conjunction with a small number of connectors.

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Oxford University Press, Online Resource Centre, Chapter 02.

Chapter 02