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Critical Thinking Case
Facebook, Inc.
Facebook has been in the news with criticism of its privacy policies, sharing customer information with Fusion
GPS, and criticism regarding the attempts to influence the 2016 election. In March 2014, Facebook released a
study entitled “Experimental evidence of massive-scale emotional contagion through social networks.” It was
published in the Proceedings of the National Academy of Sciences (PNAS), a prestigious, peer-reviewed scientific
journal. The paper explains how social media can readily transfer emotional states from person to person
through Facebook’s News Feed platform. Facebook conducted an experiment on members to see how people
would respond to changes in a percentage of both positive and negative posts. The results suggest that
emotional contagion does occur online and that users’ positive expressions can generate positive reaction,
while, in turn, negative expression can generate negative reaction.
Facebook has two separate value propositions aimed at two different markets with entirely different goals.
Originally, Facebook’s main market was its end users—people looking to connect with family and friends. At
first, it was aimed only at college students at a handful of elite schools. The site is now open to anyone with an
Internet connection. Users can share status updates and photographs with friends and family. And all of this
comes at no cost to the users.
Facebook’s other major market is advertisers, who buy information about Facebook’s users. The company
regularly gathers data about page views and browsing behavior of users in order to display targeted
advertisements to users for the benefit of its advertising partners.
The value proposition of the Facebook News Feed experiment was to determine whether emotional
manipulation would be possible through the use of social networks. This clearly could be of great value to one
of Facebook’s target audiences—its advertisers.
The results suggest that the emotions of friends on social networks influence our own emotions, thereby
demonstrating emotional contagion via social networks. Emotional contagion is the tendency to feel and
express emotions similar to and influenced by those of others. Originally, it was studied by psychologists as
the transference of emotions between two people.
According to Sandra Collins, a social psychologist and University of Notre Dame professor of management, it is
clearly unethical to conduct psychological experiments without the informed consent of the test subjects.
While tests do not always measure what the people conducting the tests claim, the subjects need to at least
know that they are, indeed, part of a test. The subjects of this test on Facebook were not explicitly informed
that they were participating in an emotional contagion experiment. Facebook did not obtain informed consent
as it is generally defined by researchers, nor did it allow participants to opt out.
When information about the experiment was released, the media response was overwhelmingly critical. Tech
blogs, newspapers, and media reports reacted quickly.
Josh Constine of TechCrunch wrote:
“ . . . there is some material danger to experiments that depress people. Some people who are at
risk of depression were almost surely part of Facebook’s study group that were shown a more
depressing feed, which could be considered dangerous. Facebook will endure a whole new level of
backlash if any of those participants were found to have committed suicide or had other
depression-related outcomes after the study.”
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The New York Times quoted Brian Blau, a technology analyst with the research firm Gartner, “Facebook didn’t
do anything illegal, but they didn’t do right by their customers. Doing psychological testing on people crosses
the line.” Facebook should have informed its users, he said. “They keep on pushing the boundaries, and this is
one of the reasons people are upset.”
While some of the researchers have since expressed some regret about the experiment, Facebook as a
company was unapologetic about the experiment. The company maintained that it received consent from its
users through its terms of service. A Facebook spokesperson defended the research, saying, “We do research
to improve our services and make the content people see on Facebook as relevant and engaging as possible. .
. . We carefully consider what research we do and have a strong internal review process.”
With the more recent events, Facebook is changing the privacy settings but still collects an enormous amount
of information about its users and can use that information to manipulate what users see. Additionally, these
items are not listed on Facebook’s main terms of service page. Users must click on a link inside a different set
of terms to arrive at the data policy page, making these terms onerous to find. This positioning raises
questions about how Facebook will employ its users’ behaviors in the future.
Critical Thinking Questions
1. How should Facebook respond to the 2014 research situation? How could an earlier response have helped
the company avoid the 2018 controversies and keep the trust of its users?
2. Should the company promise to never again conduct a survey of this sort? Should it go even further and
explicitly ban research intended to manipulate the responses of its users?
3. How can Facebook balance the concerns of its users with the necessity of generating revenue through
advertising?
4. What processes or structures should Facebook establish to make sure it does not encounter these issues
again?
5. Respond in writing to the issues presented in this case by preparing two documents: a communication
strategy memo and a professional business letter to advertisers.
Sources: Kramer, Adam; Guillory, Jamie; and Hancock, Jeffrey, “Experimental evidence of massive scale
emotional contagion through social networks,” PNAS (Proceedings of the National Academy of Sciences of the
United States of America). March 25, 2014 http://www.pnas.org/content/111/24/8788.full; Laja, Peep. “Useful
Value Proposition Examples (and How to Create a Good One), ConversionXL, 2015 http://conversionxl.com/
value-proposition-examples-how-to-create/; Yadav, Sid. “Facebook - The Complete Biography,” Mashable, Aug.
25, 2006. http://mashable.com/2006/08/25/facebook-profile/#orb9TmeYHiqK; Felix, Samantha, “This Is How
Facebook Is Tracking Your Internet Activity,” Business Insider, Sept. 9, 2012 http://www.businessinsider.com/
this-is-how-facebook-is-tracking-your-internet-activity-2012-9;
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Introduction
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
Understand the importance of planning and why organizations need to plan and control.
Outline the planning and controlling processes.
Identify different types of plans and control systems employed by organizations.
Explain the individual and organizational effects associated with goal setting and planning.
Understand how planning occurs in today’s organizations.
Discuss the impact that control has on organizational members.
Describe management by objectives as a philosophy and as a management tool/technique; describe its
effects.
Differentiate between the execution of the planning and controlling activities under control- and
involvement-oriented management practices.
Exhibit 17.1 (Credit: marcusrg/ flickr/ Attribution 2.0 Generic (CC BY 2.0))
Elizabeth Charbonnier: ChezPastis.com
ChezPastis.com, the brainchild of Elisabeth Charbonnier, specializes in selling French and other gourmet
foods online. Before starting ChezPastis.com, Elisabeth and her partners were professional chefs, and
their goal for their company is to make gourmet products available to the world. ChezPastis.com began
with a bang, and before long Elisabeth and her partners were too busy to plan for the future and were
EX P L O R I N G M A N A G E R I A L C A R E E R S
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17
Organizational Planning and Controlling
17.1 Is Planning Important
1. Understand the importance of planning and why organizations need to plan and control.
Planning is the process by which managers establish goals and specify how these goals are to be attained.
just trying to survive. After six months, ChezPastis.com experienced growing pains similar to other
Internet start-ups.
One of the partners, Zack Fortuna, was online one day trying to order some books for his daughter’s
birthday. The message he got after attempting to place his order was frustrating: “Sorry! The items you
have requested are currently on back order and will not be available for two months.” Zack needed the
books in two weeks, not two months. He decided to drive to the bookstore and buy books that were in
stock rather than waste time online searching for items that might not be in stock. Suddenly, Zack
realized that ChezPastis.com frequently runs out of items as well and this delays customer orders.
Perhaps ChezPastis.com’s growing pains have something to do with their supply problems.
Question: Are ChezPastis.com’s inventory problem attributable to poor planning, poor control, or both?
How can Elisabeth, Zack, and the other partners improve the situation?
“If you are good enough, it isn’t necessary to set aside time for formal planning. After all, ‘planning time’
takes away from ‘doing time.’” Managers often make such statements, possibly as a way of rationalizing
their lack of a formal planning program. These claims are simply not valid—planning does influence the
effectiveness of the entire organization.
Some years ago, the Calico Candy Company developed and produced a highly successful saltwater taffy
Santa Claus. Buoyed by this success, the company planned and manufactured a saltwater taffy Easter
Bunny and produced the Santa at Christmas again. This time, however, Calico got stuck with its taffy
through faulty planning. Market research clearly showed that consumer preferences had shifted from
taffy to chocolate. Rather than plan its products to meet this new preference, the company stayed with
what had worked in the past and lost a “ton of money.” Yes, planning is important.
Outcome: Zack comes to work the next day excited about his insight. The partners know that inventory
has been an ongoing trouble spot but hadn’t realized the effect it could be having on potential
customers who get frustrated with delayed orders and go elsewhere. After collecting data on customer
requests and back orders, the partners discover that they fill customer orders immediately only 50
percent of the time! Jolted by this thunderbolt, the partners decide to hold regular strategic planning
meetings where they will view the big picture and plan for the future. The first things they decide to do
are install better control systems over their inventory process and collect data on customer online
experiences with ChezPastis.com.
Elisabeth proposes setting a goal of never having to tell a customer that requested items are on back
order. Zack agrees that this is an admirable goal; however, he thinks they should set a daring but
reachable goal of immediately filling customer orders 80 percent of the time. After all, they are a small
business in an unpredictable environment, and they don’t want to frustrate employees with a potentially
impossible goal.
The essence of planning is to see opportunities and threats in the future and, respectively, exploit or
combat them as the case may be. . . . Planning is a philosophy, not so much in the literal sense of that
word but as an attitude, a way of life.1
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Plans have two basic components: outcome or goal statements and action statements. Outcome or goal
statements represent the end state—the targets and outcomes managers hope to attain. Action statements
reflect the means by which organizations move forward to attain their goals. British prime minister Theresa
May is determined to change the way that public companies’ boards are comprised by advocating that
employees be part of every board. As a part of her action statement, she advocated putting an employee
representative in every boardroom, just like Mick Barker, a railway worker since the 1970s, has been quietly
helping to shape decision-making as a member of the board of directors at the top of transport giant First
Group.2
Planning is an intellectual activity.3 It is difficult to see managers plan, because most of this activity unfolds in
the mind of those doing the planning. While planning, managers have to think about what has to be done,
who is going to do it, and how and when they will do it. Planners think both retrospectively (about past events)
and prospectively (about future opportunities and impending threats). Planning involves thinking about
organizational strengths and weaknesses, as well as making decisions about desired states and ways to
achieve them.4
Planning for organizational events, whether in the internal or external environment, should be an ongoing
process—part of a manager’s daily, weekly, and monthly duties and a routine task for all members of high-
involvement organizations. Plans should be continually monitored. Managers and other organizational
members should check to see if their plans need to be modified to accommodate changing conditions, new
information, or new situations that will affect the organization’s future. Plans need to be administered with
flexibility, as organizations learn about new and changing conditions. Clearly, the Calico Candy Company failed
to monitor its plans in this way. By thinking of planning as a continuous activity, methods can be formulated
for handling emerging and unforeseen opportunities and threats. Planning is one process through which
organizational activity can be given meaning and direction.
Why Should Managers Plan?
Managers have several reasons for formulating plans for themselves, their employees, and various
organizational units: (1) to offset uncertainty and change; (2) to focus organizational activity on a set of
objectives; (3) to provide a coordinated, systematic road map for future activities; (4) to increase economic
efficiency; and (5) to facilitate control by establishing a standard for later activity.
Several forces contribute to the necessity for organizational planning. First, in the internal environment, as
organizations become larger and more complex, the task of managing becomes increasingly complex.
Planning maps out future activities in relation to other activities in the organization. Second, as the external
environment becomes increasingly complex and turbulent, the amount of uncertainty faced by a manager
increases. Planning enables organizations to approach their environment systematically.
A study out of Cornell University and Indiana University found that absenteeism cost companies $40 billion per
year; the absence of planning was one of the biggest problems businesses face. Firms that follow a clearly
defined plan in their day-to-day operations will be more successful than those that do not. The authors state,
“organizational controlled consequences that would tend to deter absenteeism.” Interestingly, this may be as
simple as inspecting the organizational policies that provide the “rules” for employee absenteeism.5
Do Managers Really Plan?
Managers should plan formally, but do they? Some observers contend that managers typically are too busy to
Chapter 17 Organizational Planning and Controlling 551
	Chapter 16. Managerial Communication
	Critical Thinking Case
	Chapter 17. Organizational Planning and Controlling
	Introduction*
	17.1. Is Planning Important*