Psychic Prison

The psychic Prison was developed by Dr Gareth Morgan suggesting that organisations can act as and become psychic prisons.

If you have not heard the term “psychic prison” before, your first reaction is probably a negative one that invokes images of worker drones toiling away mindlessly in a dimly lit factory for as far as the eye can see. I guess I cannot blame you as that was the first thing I thought of when I was exposed to the idea that an organisation can be a psychic prison.

Rather than being fodder for a proletariat labour revolution, the purpose of the psychic prison metaphor is to illustrate how an organisation can become trapped in a favoured way of thinking to keep the peace, which restricts creativity, prohibits change, and limits its ability to progress into the future.

Organisations which have become trapped in a psychic prison often share a common set of the following traits:

  • Group think is pervasive – Humans have a natural tendency to conform. When team members conform and do not deviate from what the rest of the group thinks, ideas or processes are never challenged. Group think occurs to keep the peace, but keeping the peace is not always productive, which leads to the next trait of a psychic prison.
  • Conflict is avoided – Conflict in the workplace has got a really bad rap in recent years, and the avoidance of workplace conflict has had some pretty negative consequences. The truth is that productive conflict in the workplace is critical to the success of any business and helps prevents bad ideas from being implemented without serious discussion and consideration.
  • “We’ve Never Done it like that Before” – If these seven deadly words frequently find their way into the corporate board room, there is a good chance your organisation could be trapped in a psychic prison. If this is the case any attempts to create meaningful change are typically devoured with incredible voracity.

Below is a simple diagram of the Psychic Prison;

Image result for psychic prison diagram





The economic cycle is the natural fluctuation of the economy between periods of expansion (growth) and contraction (recession). Factors such as gross domestic product (GDP), interest rates, levels of employment and consumer spending can help to determine the current stage of the economic cycle. Economic cycle is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend.


Full Recession

This is not a good time for businesses or the unemployed. GDP has been retracting, quarter-over-quarter, interest rates are falling, consumer expectations have bottomed and the yield curve is normal. Sectors that have historically profited most in this stage include:

  1. Cyclicals and transports (near the beginning)
  2. Technology
  3. Industrials (near the end)

Early Recovery

In this stage, things are starting to pick up. Consumer expectations are rising, industrial production is growing, interest rates have bottomed and the yield curve is beginning to get steeper. Historically successful sectors at this stage include:

  1. Industrials (near the beginning)
  2. Basic materials industry
  3. Energy (near the end)

Late Recovery

In this stage, interest rates can be rising rapidly, with a flattening yield curve. Consumer expectations are beginning to decline and industrial production is flat. Here are the historically profitable sectors in this stage:

  1. Energy (near the beginning)
  2. Staples
  3. Services (near the end)

Early Recession

This is where things start to go bad for the overall economy. Consumer expectations are at their worst; industrial production is falling; interest rates are at their highest and the yield curve is flat or even inverted. Historically, the following sectors have found favor during these rough times:

  1. Services (near the beginning)
  2. Utilities
  3. Cyclicals and transports (near the end)


Steps to marketing research

1. Defining the problem. 

Defining the problem is more or less taking your product and service and finding out how that product or service will fit into the current marketplace. Part of this process may be a test market of a new product to see if the targeted audience responds favorably or unfavorably to it.

Defining the problem consists of two steps one is setting objectives, the measurable goals you wish to achieve. An example of an objective would be increased sales. The second is setting up specific measures of success,criteria used to figure out a solution to your problem.


2. Developing the Research Plan.

The next step in marketing research is to develop the research plan.  The research plan will allow you to sort out the details of which information you need to make a reasonable marketing decision.

First you need to identify the data you will need to make you marketing decisions.  Over the course of doing research there is always a lot of irrelevant data collected so you want to be sure to use just the right data or else your final report will be flawed.  This means that you will to develop the right concepts and methods for collecting your data.

In marketing concepts are those ideas that are formed about a product or service.  For instance when a car company wants to see if a new car model will go over with consumers they develop and show off a concept car.  This give the consumer a basic idea of what the car is going to be like.


3. Collect Information

Once you have the right concepts laid out and the methods you will use to collect data, you can start the actual data collection.  When collection data make sure you collect only the type of data needed to make rational marketing decision.  The data you collect will come from two sources; the primary data and the secondary data.

The primary data, which is the new fact and figures that you have collected specifically for the purpose of helping you with your current marketing decisions.  The secondary data is information that have had previously used or stored which is your internal data, or external data which is that data that can be found at other sources outside of your immediate resources.

It is up to you how you collect the primary data, surveys, questionnaires etc., but no matter how the data is collected primary or secondary make sire that it reliable and useful to your research.


  1. The Final Report

The final report is simply a detailed document where you present your research findings and make recommendations based on those findings.

The final report will give you the information you need to either move ahead with marketing your product or service or to say enough is enough and you realize that it just won’t work.  Remember marketing research must be done whether you are an independent business person or a company making millions of dollars.



The equilibrium price is where the supply of goods matches demand. When a major index experiences a period of consolidation or sideways momentum, it can be said that the forces of supply and demand are relatively equal and that the market is in a state of equilibrium.
A market is in equilibrium when no economic agent in the market has any reason to alter his or her behavior. This is the case at the equilibrium price. That is, there is no reason for Price to change unless either the supply or the demand changes.

An increase in demand causes the demand curve to shift out, which generates a higher price and induces suppliers to increase the quantity supplied. What can cause demand to shift? Demand shifts when income, the price of a substitute or complement, consumer expectations, population, or consumer tastes change.



The supply curve is always upward sloping left to right, with the demand curve downward sloping. The intersection of these curves indicate the equilibrium price point, or the price at which a supplier can offer goods and a consumer is willing to purchase them.

Introduction of a New Technology changes cause shifts along the supply and demand curves, which effectively moves the equilibrium price point up or down. For example, new technology developed in 1999 resulted in a reduction in the cost of manufacturing flat screen televisions that used liquid crystal displays. The  new technology cause an increase in the supply of flat screen televisions and a decrease in price of flat screen televisions.

An improvement in technology tends to reduce the costs of production; cheaper production costs generate an increase in supply, this leads to an increase in demand.

If a good becomes obsolete because technology has produced an effective substitute good that performs the same function at a lower price, demand will drastically shift inward from right to left. This lowers the equilibrium price point to levels where suppliers cannot profitably supply the good.

As the number of firms in a market decreases, the supply curve will shift to the left and the equilibrium price will rise.



Tastes are assumed to be relatively stable over time.A change in demand cannot be attributed to a change in tastes before other possible reasons for the change are carefully considered. The law of demand states that the relationship between price and quantity demanded is an inverse relationship, i.e., that fewer units are demanded at higher prices than at lower prices. Demand reflects consumers’ willingness and ability to buy the commodity.

A change in consumer tastes can cause a shift in demand, thereby causing a decrease in supply, resulting to a reduction in price. Again, make sure you understand the difference between a change in the quantity demanded and a change in demand. A change in quantity demanded is caused by a change in the price of the good itself; a change in demand is caused by a change in one of the other factors of demand.



Taxes reduce both demand and supply, and drive market equilibrium to a price that is higher than without the tax and a quantity that is lower than without the tax.

If buyers have many alternatives to a good with a new tax, they will tend to respond to a rise in price by buying other things and will, therefore, not accept a much higher price. If sellers easily can switch to producing other goods, or if they will respond to even a small reduction in payments by going out of business, then they will not accept a much lower price. The incidence of the tax will tend to fall on the side of the market that has the least attractive alternatives and, therefore, has a lower elasticity.

Without a tax, the equilibrium price will be at Pe and the equilibrium quantity will be at Qe.After a tax is imposed, the price consumers pay will shift to Pc and the price producers receive will shift to Pp. The consumers’ price will be equal to the producers’ price plus the cost of the tax. Since consumers will buy less at the higher consumer price (Pc) and producers will sell less at a lower producer price (Pp), the quantity sold will fall from Qe to Qt.

Diagram illustrating taxes effect


A subsidy shifts either the demand or supply curve to the right, depending upon whether the buyer or seller receives the subsidy. If it is the buyer receiving the subsidy, the demand curve shifts right, leading to an increase in the quantity demanded and the equilibrium price. If the seller receives the subsidy, the supply curve shifts right and the quantity demanded will increase, while the equilibrium price decreases.

Marginal subsidies on production will shift the supply curve to the right until the vertical distance between the two supply curves is equal to the per unit subsidy; when other things remain equal, this will decrease price paid by the consumers (which is equal to the new market price) and increase the price received by the producers. Similarly, a marginal subsidy on consumption will shift the demand curve to the right; when other things remain equal, this will decrease the price paid by consumers and increase the price received by producers by the same amount as if the subsidy had been granted to producers. However, in this case, the new market price will be the price received by producers. The end result is that the lower price that consumers pay and the higher price that producers receive will be the same, regardless of how the subsidy is administered.




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