Good simple stuff.
Monday, May 11, 2015
Negotiation in a nutshell
I find the vast majority of articles found on the web on the topic of negotiation to be shallow at best, and misguided and lacking in real world experience at worst. Here is a great one though.
Keep Time and Emotion from Killing a Negotiation
Anthony K. Tjan
JULY 21, 2014
https://hbr.org/2014/07/keep-time-and-emotion-from-killing-a-negotiation/
Time and emotion — these are the two things most often wasted during a negotiation. We simply spend too much time on items that don’t really matter, because we let our emotions override any semblance of logic. It is a natural human response to act negatively, reactively, and emotionally to any negotiation points that are counter to one’s pre-disposed positions. It is also poor negotiation practice.
The mere fact of having a position lies at the root of why we get caught up in the drama of a negotiation, rather than focusing on the plotline or ending (i.e. goal) toward which we are striving. In business school, students are sometimes taught the difference between position-based versus interest-based negotiation. When you focus on the differences between your positions rather than the commonality of your interests, little progress can be made. There is nothing necessarily wrong with having a going-in negotiating position, and we can’t really avoid having pre-existing assumptions and desires. But when we don’t get what we want and frustration ensues, what can we do? The key is to understand five areas that can both help move a negotiation forward and in doing so usually advance us to where we want to be:
Understand the common goal and common interest. Make sure you fully digest and articulate any areas of common interest. Is it simply to maximize value for the company or are there instances, for example, where the greater common goal may be to get a deal done to sell a business rather than optimize its value by waiting? One of the best ways of making this happen is to simply to have both sides articulate their goals and interests in writing and share them to ensure clarity and alignment.
Understand the underlying and ancillary motivations of the other side. Oftentimes there are conflating or conflicting interests at hand. As much as possible, you need to understand the total “motivational picture” of your counterparty. For example, at our firm we have been in negotiations where we ultimately learned that what appeared to be irrational negotiating by the other side was driven by how they were compensated for the deal. Where possible, uncover if those negotiating for other side have any personal remuneration at stake, and how that changes with different outcomes – it will drive behavior.
Be transparent and explain the why of your points. It can be surprising how seldom people explain the why of a position for which they are fighting. Take even the previous example on personal deal compensation. If something is going to impact you personally, it may be better for you to disclose it — at least the other party will understand. So often it is taken for granted that the other side fully appreciates why you are asking for a term or condition when they actually have little clue. Before you can do this, you also need to make sure you fully understand your own why for each of your points!
Calculate the materiality of each point. Much of the time sink of negotiations is unfortunately spent on elements that don’t really matter — things that will not materialize, or if they do won’t have a major impact. Legal and tax counsel is always critical and highly valuable, but can sometimes also be the tail that wags the dog. Once I was leading an important negotiation where we debated at length with legal and tax experts over “edge scenarios” that might negatively impact us. This went on for two days until I took a step back to actually calculate what our largest dollar exposure could be. It turned out to be less than the cost of of preparing a structure to avoid it and likely less than the professional and legal fees we had already accumulated thinking about it! Do the math and calculate how material a point is — then determine if it is really worth fighting for in the bigger picture.
Look for points that have an asymmetry in value. Once you understand the math of a negotiation, look where there may be asymmetry. There are always points where there is a fundamental difference in how each side perceives the value. To be effective in negotiation you need to comprehend the balance of trade on every key point. Basically, look where your currency is worth more. Consider, for example, the purchase of a house. If the eventual price is the most important currency for you, then see where there may be a different lever (a different “currency”) to trade for your desired lower price. Sometimes a seller may care more about the timing or certainty of a closing than the price. Taking out a financial contingency, or letting the close happen on whatever time frame the seller wants, may gain you disproportionate benefit in the price. Remember the bigger context and have the empathy and rationality to think about it from the other side.
Following the five rules above will eliminate a large amount of futile negotiation on things that don’t matter, or things that matter much more for one side than the other. The goal of any negotiation is to reach agreement, but unfortunately the journey there is usually painful. We find ourselves “stuck” on terms or conditions we feel are must-haves, and lose perspective as to why we want the things we think we want. It does not need to be like that. Focus on the two or three scenarios that really matter for each side and have reasonable probability of being realized, as opposed to every edge scenario. In the end it probably won’t be a contract that saves you. It will be the quality of your relationship, your rationality, and, yes, your ability to do effective subsequent negotiation (definitive documents are rarely definitive). The reality is that you are more likely to get a fair deal — and even get the opportunity, from time to time, to have your cake and eat it too — if you stay disciplined on the underlying architecture and rationality of each negotiation point. Good luck, and happy negotiating.
Keep Time and Emotion from Killing a Negotiation
Anthony K. Tjan
JULY 21, 2014
https://hbr.org/2014/07/keep-time-and-emotion-from-killing-a-negotiation/
Time and emotion — these are the two things most often wasted during a negotiation. We simply spend too much time on items that don’t really matter, because we let our emotions override any semblance of logic. It is a natural human response to act negatively, reactively, and emotionally to any negotiation points that are counter to one’s pre-disposed positions. It is also poor negotiation practice.
The mere fact of having a position lies at the root of why we get caught up in the drama of a negotiation, rather than focusing on the plotline or ending (i.e. goal) toward which we are striving. In business school, students are sometimes taught the difference between position-based versus interest-based negotiation. When you focus on the differences between your positions rather than the commonality of your interests, little progress can be made. There is nothing necessarily wrong with having a going-in negotiating position, and we can’t really avoid having pre-existing assumptions and desires. But when we don’t get what we want and frustration ensues, what can we do? The key is to understand five areas that can both help move a negotiation forward and in doing so usually advance us to where we want to be:
Understand the common goal and common interest. Make sure you fully digest and articulate any areas of common interest. Is it simply to maximize value for the company or are there instances, for example, where the greater common goal may be to get a deal done to sell a business rather than optimize its value by waiting? One of the best ways of making this happen is to simply to have both sides articulate their goals and interests in writing and share them to ensure clarity and alignment.
Understand the underlying and ancillary motivations of the other side. Oftentimes there are conflating or conflicting interests at hand. As much as possible, you need to understand the total “motivational picture” of your counterparty. For example, at our firm we have been in negotiations where we ultimately learned that what appeared to be irrational negotiating by the other side was driven by how they were compensated for the deal. Where possible, uncover if those negotiating for other side have any personal remuneration at stake, and how that changes with different outcomes – it will drive behavior.
Be transparent and explain the why of your points. It can be surprising how seldom people explain the why of a position for which they are fighting. Take even the previous example on personal deal compensation. If something is going to impact you personally, it may be better for you to disclose it — at least the other party will understand. So often it is taken for granted that the other side fully appreciates why you are asking for a term or condition when they actually have little clue. Before you can do this, you also need to make sure you fully understand your own why for each of your points!
Calculate the materiality of each point. Much of the time sink of negotiations is unfortunately spent on elements that don’t really matter — things that will not materialize, or if they do won’t have a major impact. Legal and tax counsel is always critical and highly valuable, but can sometimes also be the tail that wags the dog. Once I was leading an important negotiation where we debated at length with legal and tax experts over “edge scenarios” that might negatively impact us. This went on for two days until I took a step back to actually calculate what our largest dollar exposure could be. It turned out to be less than the cost of of preparing a structure to avoid it and likely less than the professional and legal fees we had already accumulated thinking about it! Do the math and calculate how material a point is — then determine if it is really worth fighting for in the bigger picture.
Look for points that have an asymmetry in value. Once you understand the math of a negotiation, look where there may be asymmetry. There are always points where there is a fundamental difference in how each side perceives the value. To be effective in negotiation you need to comprehend the balance of trade on every key point. Basically, look where your currency is worth more. Consider, for example, the purchase of a house. If the eventual price is the most important currency for you, then see where there may be a different lever (a different “currency”) to trade for your desired lower price. Sometimes a seller may care more about the timing or certainty of a closing than the price. Taking out a financial contingency, or letting the close happen on whatever time frame the seller wants, may gain you disproportionate benefit in the price. Remember the bigger context and have the empathy and rationality to think about it from the other side.
Following the five rules above will eliminate a large amount of futile negotiation on things that don’t matter, or things that matter much more for one side than the other. The goal of any negotiation is to reach agreement, but unfortunately the journey there is usually painful. We find ourselves “stuck” on terms or conditions we feel are must-haves, and lose perspective as to why we want the things we think we want. It does not need to be like that. Focus on the two or three scenarios that really matter for each side and have reasonable probability of being realized, as opposed to every edge scenario. In the end it probably won’t be a contract that saves you. It will be the quality of your relationship, your rationality, and, yes, your ability to do effective subsequent negotiation (definitive documents are rarely definitive). The reality is that you are more likely to get a fair deal — and even get the opportunity, from time to time, to have your cake and eat it too — if you stay disciplined on the underlying architecture and rationality of each negotiation point. Good luck, and happy negotiating.
Sunday, May 10, 2015
Negotiation - give a range, not a fixed number
Source: http://qz.com/356612/you-are-almost-certainly-starting-salary-negotiations-wrong/
First, a range shapes expectations about an acceptable counteroffer. When there’s a number explicitly framed as a floor, people assume you’re unlikely to take something below it. They don’t necessarily make the same assumption with a single number.
Second, there’s the politeness effect. People are much less likely to go way below the bottom number of a range because they feel like it would be insulting. Similar qualms aren’t nearly as strong with single-point offers. And offering a range is generally seen as a sign of flexibility, even when the actual numbers are relatively high.
The researchers conducted a series of five experiments. In each case, a bolstering range led to better counteroffers, higher estimates of the lowest price someone would take, and a resolution—whereas starting with a single extremely high number had the negative effect of simply shutting down more negotiations or having them end in an impasse.
They also found that a bracketing range, where you put a floor below the number you really want and a ceiling above, doesn’t work nearly as well.
An experiment pitting two people negotiating over the sale of a used car found that a bolstering range led to an average counteroffer nearly $200 dollars higher than a single-point offer, and a higher-end settlement ($6,985 versus $6,776). Bolstering ranges also outperformed bracket ranges and extremely high, single-point offers.
But the bigger payday isn’t the only benefit of offering a bolstering range. People sometimes forget that it’s not all about money, that the relationship with a superior afterwards matters as well.
Across the experiments, people offering the higher range weren’t seen as any more aggressive or obnoxious than those who offered a single point, even though the high end of their range was a much larger amount. They were also seen as more flexible and confident.
So if you’re not making the first offer in a negotiation, consider doing so (the research on how that anchors negotiations is well established), and once you do, make it a bolstering range.
Psych study abstract re. 1st offers:
J Pers Soc Psychol. 2001 Oct;81(4):657-69.
First offers as anchors: the role of perspective-taking and negotiator focus.
Galinsky AD1, Mussweiler T.
Abstract
Three experiments explored the role of first offers, perspective-taking, and negotiator self-focus in determining distributive outcomes in a negotiation. Across 3 experiments, whichever party, the buyer or seller, made the 1st offer obtained a better outcome. In addition, 1st offers were a strong predictor of final settlement prices. However, when the negotiator who did not make a 1st offer focused on information that was inconsistent with the implications of the opponent's 1st offer, the advantageous effect of making the 1st offer was eliminated: Thinking about one's opponent's alternatives to the negotiation (Experiment 1), one's opponent's reservation price (Experiment 2), or one's own target (Experiment 3) all negated the effect of 1st offers on outcomes. These effects occurred for both face-to-face negotiations and E-mail negotiations. Implications for negotiations and perspective-taking are discussed.
First, a range shapes expectations about an acceptable counteroffer. When there’s a number explicitly framed as a floor, people assume you’re unlikely to take something below it. They don’t necessarily make the same assumption with a single number.
Second, there’s the politeness effect. People are much less likely to go way below the bottom number of a range because they feel like it would be insulting. Similar qualms aren’t nearly as strong with single-point offers. And offering a range is generally seen as a sign of flexibility, even when the actual numbers are relatively high.
The researchers conducted a series of five experiments. In each case, a bolstering range led to better counteroffers, higher estimates of the lowest price someone would take, and a resolution—whereas starting with a single extremely high number had the negative effect of simply shutting down more negotiations or having them end in an impasse.
They also found that a bracketing range, where you put a floor below the number you really want and a ceiling above, doesn’t work nearly as well.
An experiment pitting two people negotiating over the sale of a used car found that a bolstering range led to an average counteroffer nearly $200 dollars higher than a single-point offer, and a higher-end settlement ($6,985 versus $6,776). Bolstering ranges also outperformed bracket ranges and extremely high, single-point offers.
But the bigger payday isn’t the only benefit of offering a bolstering range. People sometimes forget that it’s not all about money, that the relationship with a superior afterwards matters as well.
Across the experiments, people offering the higher range weren’t seen as any more aggressive or obnoxious than those who offered a single point, even though the high end of their range was a much larger amount. They were also seen as more flexible and confident.
So if you’re not making the first offer in a negotiation, consider doing so (the research on how that anchors negotiations is well established), and once you do, make it a bolstering range.
Psych study abstract re. 1st offers:
J Pers Soc Psychol. 2001 Oct;81(4):657-69.
First offers as anchors: the role of perspective-taking and negotiator focus.
Galinsky AD1, Mussweiler T.
Abstract
Three experiments explored the role of first offers, perspective-taking, and negotiator self-focus in determining distributive outcomes in a negotiation. Across 3 experiments, whichever party, the buyer or seller, made the 1st offer obtained a better outcome. In addition, 1st offers were a strong predictor of final settlement prices. However, when the negotiator who did not make a 1st offer focused on information that was inconsistent with the implications of the opponent's 1st offer, the advantageous effect of making the 1st offer was eliminated: Thinking about one's opponent's alternatives to the negotiation (Experiment 1), one's opponent's reservation price (Experiment 2), or one's own target (Experiment 3) all negated the effect of 1st offers on outcomes. These effects occurred for both face-to-face negotiations and E-mail negotiations. Implications for negotiations and perspective-taking are discussed.
A simple truth to leadership
Simply put, compassion makes the difference between understanding and caring. It’s the kind of love that a parent has for a child. Cultivating it more broadly means extending that to the other people in our lives and to people we encounter.
I think that in the workplace, that attitude has a hugely positive effect, whether it’s in how we relate to our peers or how we are as a leader, or how we relate to clients and customers. A positive disposition toward another person creates the kind of resonance that builds trust and loyalty and makes interactions harmonious. And the opposite of that — when you do nothing to show that you care — creates distrust, disharmony, and causes huge dysfunction at home and in business.
Source: https://hbr.org/2015/05/what-the-dalai-lama-taught-daniel-goleman-about-emotional-intelligence
I think that in the workplace, that attitude has a hugely positive effect, whether it’s in how we relate to our peers or how we are as a leader, or how we relate to clients and customers. A positive disposition toward another person creates the kind of resonance that builds trust and loyalty and makes interactions harmonious. And the opposite of that — when you do nothing to show that you care — creates distrust, disharmony, and causes huge dysfunction at home and in business.
Source: https://hbr.org/2015/05/what-the-dalai-lama-taught-daniel-goleman-about-emotional-intelligence
Monday, February 23, 2015
Monday, January 26, 2015
Office politics
LINKED IN ARTICLE.
In my view, one of life’s greatest ambitions is to remain authentic. Never underestimate the many circumstances, however, that will challenge your ability to be yourself – particularly early in your career.
Navigating office politics is one of these challenges. It is a high-ranking test of one’s character and belief.
The view of politics from the CEO’s helicopter seat is predictable and vivid. It is much easier to see personal agendas, competition, ‘backstabbing’ (a word I loathe), and false relationships at play amongst those eager to succeed. But for the less seasoned professional, workplace politics can be a costly and demoralising distraction.
So, the earlier you learn how to navigate your surrounds, the quicker the career you deserve begins. It took me longer than it should've to work this out. I incorrectly focused on the moments of politics, not the long term game to benefit my career. I was guilty of being distracted by futile, ‘in the moment’ politics. Don’t let that happen to you.
Be better than me – try these tips:
1) Learn how to influence
Influencing is an invaluable asset of leadership, but it is also complex to attain and wield. At the core of effective influencing is the art of building authentic relationships in your work environment. This involves the simple principle of being genuinely curious about people – for instance, their interests, motivations and ambitions. This curiosity should extend beyond just those that you may directly work with. My effectiveness as an influencer came from building broad and honest relationships across the business. While we didn’t always agree on issues, there was a genuine respect for each other. Legitimately getting to know people will more often than not smoke out disingenuous political agendas.
2) Don’t resent others success
This is a sleeping giant. A really important habit to get into is to play your long game – focus on your career, not that of others. In almost every work environment I have been in, the least gracious people are the most unsuccessful. You must learn to appreciate and acknowledge other’s success. I know that can be tough for highly competitive people, but be generous – people will notice. There is nothing more appealing than the genuine support of colleagues. These moments can change the nature of relationships for the better. It also sends a signal that you are above any petty jealousies.
3) Toughen up
As you know in life and business, things are not always fair and reasonable. As a CEO, I always observe people’s reactions to difficult scenarios, such as missing out on a promotion, dealing with confrontation or personality clashes. This is important because if someone exhibits calm, respectful objectivity in such circumstances, it tells me they are building the maturity for greater success into the future. They are developing objectivity. They are toughening up.
4) Ignore the pack
From the moment you walked into the schoolyard, the challenge to be yourself began. To this day, your perception of yourself is, to some extent, shaped by your experiences with people. In almost every work environment, whether it’s a result of a poor work culture, or the convenience of jumping on the bandwagon of popular opinion, pack mentality exists. The most successful people are able to manage and build relationships with many and varied individuals, without ever being pressured, coerced or influenced to join a destructive pack. Always seek to remain a collaborative individual, rather than a compliant groupie.
5) The long game
Don’t let office politics distract you from the long game. Ultimately, the goal of your long game should revolve around three things. Firstly, take every opportunity to build and maintain relationships across the business. Secondly, expose yourself to a variety of environments both within and outside your place of work (through volunteering, for instance). This will provide you with a greater capacity to work alongside people who face different issues and challenges in their respective roles. Last of all, make it your business to position yourself as the person who will help conclude a difficult project, step in to assist when disagreements arise, or provide a positive perspective when others are no longer capable of doing so. By focusing on these three long game objectives, your context and judgement will continue to improve, and you will further insulate yourself from the petty politician(s).
***
Alex Malley FCPA is the chief executive of CPA Australia and the host of the Nine Network television series The Bottom Line. Alex is also a regular contributor to The Huffington Post and he is a regular business commentator on the nationally syndicated programs The Money News on 2GB and Sky News Business.
You are an intern. Always
How to be successful in a corporate environment?
Act as if you are your boss' intern (ie. work you ass off to make his life easy, and learn everything you can). Always. Put yourself in that position, learn and grow like that.
Whether you are actually an intern, or a General Manager reporting to a board or a CEO.
Also: modesty and ambition.
Act as if you are your boss' intern (ie. work you ass off to make his life easy, and learn everything you can). Always. Put yourself in that position, learn and grow like that.
Whether you are actually an intern, or a General Manager reporting to a board or a CEO.
Also: modesty and ambition.
99% of Networking Is a Waste of Time
HBR article, by Greg McKeown. Original is here: https://hbr.org/2015/01/99-of-networking-is-a-waste-of-time
Building the right relationships — networking — is critical in business. It may be an overstatement to say that relationships are everything, but not a huge one. The people we spend time with largely determine the opportunities that are available to us. As venture capitalist and entrepreneur Rich Stromback told me in a series of interviews, “Opportunities do not float like clouds in the sky. They are attached to people.”
To say Stromback is a great networker is an understatement: he was introduced to me as “Mr.Davos” for good reason. He has spent the last ten years attending the Mecca of networking events — held by the World Economic Forum every year in Davos-Klosters, Switzerland. The New York Times described him as the “unofficial expert on the Davos party scene.” Every year, he knows where the big events will be because he has so many people feeding him information, and he makes sure to be at the center of the action. Over time, this has turned into a surreal set of relationships. When a Middle East Prince was asked to meet with some Fortune 500 CEOs, he reached out to Stromback to attend and facilitate the meeting; when the Vatican was trying to negotiate a peace treaty of sorts they asked Stromback to help.
People also come to him because they feel they’re not getting enough value at Davos. “They chase for more and get less,” says Stromback, who finds the notion almost unimaginable. “The forum is the most influential community in the world. It’s the United Nations, G20, Fortune 500, Forbes List, tech disrupters and thought leaders all brought into one.”
Much of what he has learned from a decade at Davos flies in the face of generally-accepted networking advice. Below are snippets of my conversations with Stromback about his counterintuitive advice. Use it at Davos — or any other networking event:
Don’t care about your first impression. “Everyone gets this wrong. They try to look right and sound right and end up being completely forgettable. I’m having a ball just being myself. I don’t wear suits or anything like that. I do not care about first impressions. I’d almost rather make a bad first impression and let people discover me over time than go for an immediate positive response. Curiously, research I read years ago suggests that you build a stronger bond over time with someone who doesn’t like you immediately compared to someone who does. Everything about Jack Nicholson is wrong, but all of the wrong together makes something very cool.”99 percent of any networking event is a waste of time. “99% of Davos is information or experience you can get elsewhere, on your own timeframe and in a more comfortable manner. When I had my white badge access [an official pass to the conference center] — which I don’t bother with anymore — my friends would laugh because I never went to a session. [But] that’s not where the highest value is. What you can’t get outside of Davos is the ability to have so many face-to-face interactions which either initiate or further key relationships.”
Sleep from 4-8PM every day. “I nap every day in Davos sometime between the hours of 4-8pm. It’s the most efficient time to catch up on sleep so I can be fresh when the time is opportune. The opportune moments happen while dancing at one of the nightcaps or at a chateau where only a select group of people is invited. The conversations there can go on until the early morning hours.”
The key to networking is to stop networking. “Nobody wants to have a ‘networking conversation,’ especially those who are at the highest levels of business and politics. They are hungry for real conversations and real relationships. It just has to be authentic, genuine and sincere. I don’t look at people’s badges to decide if they are worth my time. Davos is 3,000 influential people and I need to be selective, yet authentic — focused, yet open to possibilities. In the end, I put myself in the most target-rich area and then just go with the flow and spend time with who I enjoy.
You’re not required to go to the big-name parties. “I maintain a broad and deep global network of C-level relationships without wining and dining face-to-face with people 90% of the time. But you need to know where people will be. For example, one year I told someone, “Don’t go to the Bill Gates party this year.” He asked me why? And I told him, “Because no one will be there.” He went and couldn’t believe I knew ahead of time. But I just knew the party was at the wrong time in the wrong location. It’s all about understanding where to be and when.”
Live in Detroit (or somewhere like it) the rest of the year. “Most people who are focused on building relationships at the highest levels live in London, New York City and Washington, D.C. They are immersed in the scene 24-7. I prefer to be disengaged 90% of the time. I live in Bloomfield Hills, in the Detroit area, and I don’t do anything social there. I love Detroit because no one comes to visit, and there are very few distractions. This is my escape for crucial family time. Being removed from the fray 90% of the time reduces a lot of drama.”
As Stromback — a self-declared essentialist — put it, “Davos is 99% distractions; you have to know what to avoid.” When asked how he would respond to the idea that most people don’t like networking because it’s time intensive and distracting from their “real work” he said, “The answer is to be extremely efficient and focus on what is truly essential.” This jibes with my own personal point of view on the world: Almost everything in life is worthless noise, and a very few things are exceptionally valuable. This is as true in networking as it is in almost every other area of life.
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