David Frederick's | iAIR BLOG

Consulting, Innovation, Strategy, Vision, Education, & Ideation

Archive for May 2011

Learn More from Your Proposals

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.

Written by David Frederick

May 31, 2011 at 10:43 AM

American Insourcing

OK, here is some potential good news for the resurgence of American manufacturing. Check out this article from Ben Forer at ABC news.

-DF

 Manufacturing in America: US Set for a ‘Manufacturing Renaissance’

By BEN FORER
May 13, 2011

In the next five years, the U.S. will experience a “manufacturing renaissance,” according to a new analysis.

As wages in China increase, flexible work rules and government incentives in the U.S. will make America one of the cheapest places to manufacture goods in the developed world, the Boston Consulting Group (BCG) analysis suggests.

“If the trend plays out, I think you’ll see manufacturing growing and expanding in the U.S.,” said Michael Zinser, one of the authors of BCG’s analysis on manufacturing. “What we’re expecting is that companies will step back and rethink their networks, rethink their supply chains.”

Chinese wage rates likely will continue to grow by 15 to 20 percent year over year, Zinser said. When the increase in wages is combined with the increasing value of the yuan, the wage gap between the U.S. and China is narrowing rapidly.

“China is no longer expected to be the default low-cost manufacturing location for those companies who are looking to supply the U.S. market,” Zinser told ABC News. “What we would expect to see is a convergence in terms of the wage rates to what we’re seeing in the U.S. today.”

Harold Sirkin, lead author of the analysis on manufacturing, expects the convergence to occur “by around 2015.”

“As a result of the changing economics, you’re going to see a lot more products ‘Made in the USA’ in the next five years,” said Sirkin.

Romain Wacziarg, an economics professor at the University of California, Los Angeles, sees other factors involved.

“I agree that it’s possible that manufacturing will come back, but I don’t think it’s due to rising costs in China,” he said. “I think it’s due more to the depreciation of the dollar … not that wage costs are rising in China and not the U.S.”

Currently, according to BCG, U.S. workers are three times more productive than their Chinese counterparts. But Wacziarg said the increase in wages indicates an increase in producitivy.

“It’s more expensive to use a unit of labor there [China],” he said, “but that unit of labor is getting more productive.”

As wages in China rise, Zinser said, some companies may decide to manufacture in the U.S., though others will look for lower wages in other countries.

But one of the advantages U.S. manufacturers have, according to BCG, is that the work force is becoming more flexible.

Kevin Sauder, president and CEO of Sauder Furniture, recently started sourcing component parts regionally, a process his purchasing team called “insourcing.”

“Supporting local and American jobs is one factor that gets considered,” Sauder told ABC News. “It’s not the main factor, but it’s one thing that gets considered. All things being equal, we would always prefer to go with a regional manufacturer. … Using regional components improved our ability to be flexible in new product development.”

The change allowed the company to get more contracts, Sauder said, because it was able to build prototypes more quickly for stores such as Walmart and Ikea because the component pieces arrived weeks earlier.

“Opportunities like that are worth a little extra money for the flexibility and speed,” said Sauder. “I think that’s where local and regional manufacturers do have an advantage … flexibility and speed to market.”

Even though the U.S. manufacturing sector maybe be poised for a comeback, Zinser cautioned that it did not mean China is on the decline.

“China is going to continue to be a major global player,” said Zinser. “China is still a large market and many companies are going to want to continue supplying that market.”

U.S. consumers should expect industries such as construction equipment and appliances to be impacted first, he said, while industries such as textiles and consumer electronics may never be affected.

“Where you have lower labor content as an overall percentage of your total costs and more modest volumes, we’d likely see those types of industries certainly having an impact sooner,” Zinser said. “For industries where you have very high volumes, higher labor content … we would expect that those are likely to stay in lower-cost environments.”

Written by David Frederick

May 17, 2011 at 5:00 PM

Online Filter Bubbles

Check out this very interesting video from Eli Pariser at a February 2011 TED Event. Very interesting on how search engines, content providers and other web providers are giving you what they think you need versus what you actually want. Eli makes a very interesting case that as web companies strive to tailor their services (including news and search results) to our personal tastes, there’s a dangerous unintended consequence: We get trapped in a “filter bubble” and don’t get exposed to information that could challenge or broaden our worldview. Eli argues powerfully, that this will ultimately prove to be bad for us and bad for democracy.

Check it out here!

$8 Billion Cash

$8 Billion Cash. Yup, that’s the price Microsoft is spending to purchase Skype.

Microsoft confirmed its $8.5 billion purchase of Skype on Tuesday, adding that the software giant would support the service across the Xbox, Kinect and Windows Phone platforms, according to a report in MarketWatch. Analysts called the move the most aggressive yet by Microsoft to combine the worlds of communication, information and entertainment.

Buying Skype — a service that connects millions of users around the world via Internet-based telephony and video — will give Microsoft a recognized brand name on the Internet at a time when it is struggling to get more traction in the consumer market.

What does this mean for millions of Skype users? Hopefully, nothing. It would be ideal if Skype will continue to work well on all platforms – mobile, Mac, and PC and be based on the same price/usage model. I hope that MS does not try to mess with a good thing i.e. deep –  tight integration into Windows OS, MS chat, etc. MS has a tendency to not only screw things up when they acquire and integrate technology, but also disrupt in a negative way a proven and widely used and accepted solution i.e. Skype.

It will be interesting to see how and if MS can successfully integrate and leverage this brand and technology. Regrettably, based on history I am not optimistic. Full disclosure here, since 2005 I made the mind expanding, productivity boosting, stress free, and virtually problem free jump to Apple solutions both personally and professionally, so I readily admit I am fully an Apple and Mac product/services supporter and view all MS consumer solutions as toxic waste that should be avoided at all times. Sorry MS.

-DF

Read more: http://www.foxnews.com/scitech/2011/05/10/microsoft-nears-possible-8-billion-deal-skype/#ixzz1Lx9Nag9H

Written by David Frederick

May 10, 2011 at 8:55 AM

More Magic 9

In the spirit of this weeks discussion on the importance and effectiveness of certain numbers used in marketing, I wanted to share another short piece of information on the use of numbers and the psychological effects they have on consumers buying habits.

According to Science Direct – The Journal of Retail and Consumer Services, sellers of high-priced goods such as hotel rooms tend to price their offerings with round numbers, but research indicates they should take a lesson from grocers and create prices ending in odd numbers — especially 9 (Remember my previous postings on the magic of using number 9? – DF).

In a study of tourists, Sabine Kleinsasser of Vienna University of Economics and Udo Wagner of the University of Vienna found that even when it comes to expensive goods, consumers prefer prices ending in 9. In food retailing, 60% of prices end in 9 and 90% end in either 9 or 5.

Further, this investigation considers how consumers of higher-priced goods (i.e., tourism services that are neither cheap nor luxurious) perceive odd and even prices and reveals whether these perceptions differ from previous findings that have nearly exclusively related to low-priced goods (e.g., food). This study therefore addresses a new realm and contributes several findings on price endings in reference to goods priced at higher levels. First, consumers of higher-priced goods might be influenced by price endings, just as consumers of low-priced goods are. Second, personal involvement and price interest have a moderating effect on perceptions of such price endings. Third, odd prices also make sense for sellers of higher-priced goods.

-DF

To read the full report click here!

Written by David Frederick

May 4, 2011 at 10:39 AM

Most Americans Unwilling to Pay for Online News

Here is a very interesting and new report from Adweek/Harris poll that shows American’s are unwilling to pay for online news content. Pretty interesting from a content monetization stand point. This could change the thinking of how to monetize news content in the digital age. I wonder if there is a parralell with Europe and Asia. Hmmm.

-DF

Most Americans Unwilling to Pay for Online News

Harris Poll finds number is even lower than 15 months ago

05/02/2011 | Truman Lewis | ConsumerAffairs.com

Newspapers and other traditional media outlets have spent a lot of time and money trying to figure out how to sock their online readers, who they perceive are getting a free ride when they read online news content.

But the latest Adweek/Harris finds a large majority of Americans (80%) say they are willing to pay exactly “nothing” to read a daily newspaper online. Of the one in five who would pay, 14% said they would pay between $1 and $10 per month while very few said that they would be willing to pay between $11 and $20 (4%) or more than $20 per month (2%).

The New York Times recently put up a paywall, charging online readers who view over 20 articles per month.

But while online paywalls are becoming more common, fewer people say they would be willing to pay to read content online now, than said so in late 2009 — 20% say they would be willing to pay for a daily newspaper’s content online today, compared to 23% who said so in December 2009.

Other findings of the recent poll include:

  • Younger adults are more likely than those older to pay for a daily newspaper’s content online — over a quarter of adults aged 18-34 say they would (26%) compared to between 15% and 18% of all other age groups;
  • Men are more willing to pay than women are — a quarter of men say they would (25%) with 18% saying they would pay between $1 and $10 per month, while only 15% of women say they would pay anything to read a daily newspaper’s content online; and,
  • The more education a person has the more likely they are to be willing to pay to read a daily newspaper’s content online — over a quarter of college graduates say they would pay (28%) compared to one in five people who have attended some college (19%) and just 15% who have not attended any college at all.

So what?

Currently several major publications charge readers for their content online including the Wall Street Journal, Financial Times, and most recently The New York Times.

Unfortunately it seems that as these companies are adapting to a business environment increasingly dominated by the Internet, their readers are slower to embrace, or are resistant to, certain changes, especially when it comes to paying for something that has been free for so long.

This raises several questions and areas for more research, including: how many Americans rely on the Internet for their news content, how particular are Americans about what publication or source they go to for their news, and, how do people think that media companies with large online presences should pay for the work that they do.

TABLE 1
PAYING FOR NEWS CONTENT ONLINE
“How much, if anything, would you be willing to pay per month in order to read a daily newspaper’s content online?”
Base: All U.S. adults
Total Dec. 2009 Total Age Gender Education
18-34 35-44 45-54 55+ Male Female H.S. or less Some college College grad +
% % % % % % % % % % %
Willing to pay (NET) 23 20 26 18 15 17 25 15 15 19 28
  More than $20 1 2 3 2 1 1 3 1 1 1 3
  $11-$20 4 4 6 2 4 3 5 3 3 3 5
  $1-$10 19 14 17 14 11 13 18 11 10 15 20
Nothing 77 80 74 82 85 83 75 85 85 81 72
Note: Percentages may not add to 100% due to rounding

Methodology

This Adweek/Harris Poll was conducted online within the United States between March 29 and 31, 2011 among 2,105 adults (aged 18 and over). Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Where appropriate, this data were also weighted to reflect the composition of the adult online population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated.

Written by David Frederick

May 3, 2011 at 1:28 PM

Media multitasking is really multidistracting

It’s an interesting topic. The self delusional idea of multitasking. There really is no such thing. What is commonly misunderstood as multitasking is really something called switching – the ability of the brain to rapidly switch from one task to another. This can happen in milliseconds and can actually seem and feel like “multitasking” but unless you have an Intel processor wired to your brain, it aint happening.

Don’t get me wrong, many people can switch so fast that is truly seems like they are multitasking, but from a physiological and cognitive/processing stand point they are not.

Further complicating the cognitive challenges of switching/multitasking is the interesting introduction of multi-media i.e. trying to type a paper and listen to music or type a report and watch TV at the same time. This brings me to an interesting article from Boston College on media multiasking. As such, I thought I would share it with you.

-DF

Media multitasking is really multidistracting

Multitaskers who think they can successfully divide their attention between the program on their television set and the information on their computer screen have proven to be driven to distraction by the two devices, according to a new study of media multitasking by Boston College researchers.

Placed in a room containing a television and a computer and given a half hour to use either device, subjects in the study on average switched their eyes back and forth between TV and computer a 120 times in 27.5 minutes, nearly once every 14 seconds.

The researchers used advanced cameras to track where research subjects were looking to understand the physical demands and likely disruption caused by switching between the television and computer.

The researchers said that the subjects were not even aware of their own actions. On average, participants in the study thought they might have looked back and forth between the two devices about 15 times per half hour. In reality, they were looking almost 10 times as often. Even if quick “glances” (less than 1.5 seconds) were removed from the equation, the subjects were still switching over 70 times per half hour.

Brasel and Gips, Egan Professor of information systems and computer science, determined that when it comes to the dominant medium in this side-by-side challenge, the computer comes out the winner, drawing the attention of the study participants 68.4 percent of the time. But neither device proved capable of holding the attention of study participants for very long, regardless of their age. The median length of gaze lasted less than two seconds for television and less than six seconds for the computer, the researchers found.

Understanding the physical behavior of multi-media multitaskers raises questions about the level of comprehension among people who switch their eyes between the devices, specifically the impact on productivity or on children doing their homework. And for companies that rely on TV or the Internet to communicate with consumers, the findings raise questions about the effectiveness of the two channels as means to garner the attention of potential customers.

Note that the study doesn’t address your cell phone, tablet, and other devices.

Ref: S. Adam Brasel, James Gips, Media Multitasking Behavior: Concurrent Television and Computer Usage, Cyberpsychology, Behavior, and Social Networking, 2011; : 110307160334058 DOI: 10.1089/cyber.2010.0350

Written by David Frederick

May 3, 2011 at 10:46 AM