David Frederick's | iAIR BLOG

I found this article of great interest and value. Having studied at Harvard’s PON and negotiated global business deals, this article will provide some very interesting and valuable insight into creating value and mutual gains outcomes when working on complex international business deals. If you conduct, participate in or plan and execute complex business deals, this will be of interest to you. Check it out!

-DF

Learn More from Your Proposals

Adapted from “Lessons from Abroad: When Culture Affects Negotiating Style,” by Jeanne M. Brett (professor, Northwestern University) and Michele J. Gelfand (professor, University of Maryland), first published in the Negotiation newsletter, January 2005.Harvard Law School – PON.

Imagine that you have identified a great opportunity to expand your business by negotiating a joint venture with another company. You need to get information about this company’s needs and priorities. Which of the following options would you prefer?

A. Ask the other side about their priorities and give them only a little information about your own.
B. Do not ask direct questions; instead, be indirect and try to deduce what the other side’s priorities are by listening to their reactions to your proposals.

Around the world, negotiators understand the need to find wise tradeoffs that improve outcomes for all. But how do you get the other party to reveal the information you need about preferences and priorities?

Research shows that Western negotiators typically share information by asking questions about each other’s preferences and priorities—assuming the other party is trustworthy and answering truthfully—and giving information to reinforce the exchange. This direct approach can be used to identify tradeoffs that can be accumulated into a final, multi-issue proposal. It reflects the American preference for explicit, context-free communications.

Now consider how managers in Japan, China, Hong Kong, Thailand, and Russia glean information about one another’s preferences and priorities. Research conducted by Wendi Adair of Cornell University’s Johnson School of Management, Tetsushi Okumura of Shiga University in Japan, and Jeanne M. Brett of Northwestern University found that Japanese managers made many more proposals than did U.S. managers.

Subsequent research by Adair and Brett indicates that, beginning in the first quarter of their negotiation, non-Western negotiators were using proposals significantly more frequently than were Western negotiators. This difference was sustained until the last quarter of the negotiation, when Westerners’ proposal rate rose to match that of non-Westerners.

Gathering information about relative preferences and priorities from proposals requires highly developed inferential skills and a “big picture” approach. Doing so is common in collective cultures, where context matters and indirect communication is the norm. When proposals include all the issues in a negotiation, Western negotiators should be able to work effectively in this environment. But consider that Asian negotiators do not limit themselves to multi-issue proposals; they also make more single-issue proposals than Western negotiators.

Drawing inferences from a pattern of single-issue proposals requires a heavy focus on context. Imagine a two-issue negotiation over price and delivery. The other side offers a delivery date that you don’t explicitly reject; you then offer a price. Now it’s the other side’s turn to build toward a settlement based on his delivery date and your price. Suppose the other party makes an alternative offer on price, keeping in mind its prior offer on delivery. If your counterpart tracks your reaction to these alternative proposals, he can start deducing your priorities.

Westerners can do this cognitive work, of course—it is just a matter of preference regarding how to exchange information during negotiation. The message from Asian cultures: there is more than one way to get information in a negotiation. When negotiators are reluctant to share information directly, try proposals and look for the pattern of preferences revealed by changes in the proposals over time.

Hi Folks,

Just posted some new podcasts and articles to the www.instituteair.org and iairconsulting.com websites. Check it out!

-DF

I will be interviewed live on Mike Krause’s  SalesSense Radio Program on September 15 at 12:00. You can tune in at: http://www.blogtalkradio.com/salessense

During this interview we will be talking about strategic sales and marketing topics. Hope to see you then!

-DF

Here is a great article from MIT Sloan Prof.’s Erik Bynjolfsson and Michael Schrage. Its a great article that discusses the role technology is playing in innovation and aligns perfectly with what I consult my clients on. The only area that I have an issue with here and in the real world is execution. Conceptually, hypothetically, etc. I am 100% agreement with Erik and Michael’s position and article. But…. the biggest challenge here is getting clients and organizations to fully invest across the board with resources, time, effort, etc. to execute.

Most companies today talk a good game when it comes to innovation. They all want to do it or think they already do. But the reality is much different. In most cases, where practical innovation falls down is in the execution. Why? Because most organizations large and small dont have the time, risk acceptence, or resources to do the things Michael and Erik point out. They are to busy and frantically trying to close business, deliver product and services, meet customer demands. market expectations, etc. They can’t or are unwilling to experiment and potentially risk their business even though they know they need to innovate. So what they do is punt. The pretend to innovate by motivating people to think outside of the box, but in actuality really dont execute.

In some cases, the larger Fortune 500 companies or really small niche firms can afford to experiment. This is usually when they own the supply chain, distribution channel and market share. They can afford to tinker with ideas on segmented brands, products, services, isle placement, features, pricing models, even experiment in the store think Wal-Mart. But what about the rest of the world?

This is the crux of the matter with innovation. There are so many ways to distract your efforts under the guise of innovation. Real innovation is ultimately a discipline that requires experimentation, results and KPI definition and measurement, creativity, etc.. All of Erik and Michael’s points are valid, important and effective. But bridging the gap between conceptual and executional will always be the real challenge when trying to innovate.

Take a read of this article. I think it will be well worth your time. Also think about how to plan and execute the things discussed for your own business.

-DF

The New, Faster Face of Innovation
By Erik Brynjolfsson and Michael Schrage

Thanks to technology, change has never been so easy—or so cheap

CALL IT INNOVATION on steroids. Or innovation at warp speed. Or just the innovation of rapid innovation.

But the essential point remains: Technology is transforming innovation at its core, allowing companies to test new ideas at speeds—and prices—that were unimaginable even a decade ago. They can stick features on Web sites and tell within hours how customers respond. They can see results from in-store promotions, or efforts to boost process productivity, almost as quickly.

The result? Innovation initiatives that used to take months and megabucks to coordinate and launch can often be started in seconds for cents.
And that makes innovation, the lifeblood of growth, more efficient and cheaper. Companies are able to get a much better idea of how their customers behave and what they want. This gives new offerings and marketing efforts a better shot at success.

THE SPEED OF CHANGE

The Evolution: Technology is allowing companies to test new ideas at speeds—and prices—that were unimaginable even a decade ago.
The Effect: Innovation, the lifeblood of growth, is growing more efficient and cheaper.

What’s Ahead: Innovative companies will shift away from traditional research-and-development methods. Managers will change the way they solicit ideas. And much, much more.

Companies will also be willing to try new things, because the price of failure is so much lower. That will bring big changes for corporate culture—making it easier to challenge accepted wisdom, for instance, and forcing managers to give more employees a say in the innovation process.
There will be even better payoffs for customers: Their likes and dislikes will have much more impact on companies’ decisions. In globally competitive markets, they will ultimately end up getting products and services better tailored to their needs.
Already, this powerful new capability is changing the way some of the biggest companies in the world do business, inspiring new strategies and revolutionizing the research-and-development process.

“In the U.S., we do the vast majority of our concept testing online, which has created truly substantial savings in money and time,” says Joan Lewis, global consumer and market knowledge officer at Procter & Gamble Co.

TO READ THE FULL ARTICLE PLEASE CLICK THIS LINK TO MIT SLOAN MANAGEMENT REVIEW