Glad to be Negotiating?
A few weeks ago we saw videos of the Blue Angels starting (and ending) their briefing and de-briefing sessions with these words “Glad to Be here”. The members of the Sloan GSB class have taken them to heart, often starting meetings (or even emails) with: “Glad to be here”.
Ok maybe sometimes it’s said with a knowing smile and little bit of gritting of teeth, especially when we learn that we have even more reading to do for our classes, while we have midterms rapidly approaching.
We’re now entering our “busy” period: this week, every single evening after our normal classes finish, we have our 5-session intensive negotiations class from 5:15pm to 8:15pm. Which leaves us with plenty of time to study for our midterms, doesn’t it? Did someone mention something about a speed-reading course? That would be useful right about now…
For me, I’m just glad that it’s at 5 pm in the evening (which I can make) and not 5 in the morning (which I probably wouldn’t make it to).
Two Parties, Who Wins?
Even before our intense negotiations class started, we got a taste by doing a negotiation exercise last Friday in our OB (“Organizational Behavior”) class. This exercise was called a “two-party multi-issue negotiation”).
For each pair of students, one of us played the part of a proprietor of a family-owned Latin American food processing company; the other became a representative of a big international conglomerate that was going to acquire the company.
Points (“payouts”) were awarded to each side depending on how well they negotiated their position on each of the four issues we had to deal with: 1) amount of cash paid up front vs. paid later, 2) years of non-compete that the entrepreneur will have after the acquisition, 3) number of family members of the entrepreneur that would still be employed after the acquisition, and 4) which party would take on potential liability. Each issue had its own payoff structure, and we weren’t allowed to see the other party’s payoffs.
When I told an engineering friend of mine about our OB class recently and the exercises we do, she asked why we were just “playing games” every day in business school rather than studying!
I can assure all of my engineering friends that these games are actually serious academic exercises designed to teach us well-researched techniques. That they are also fun is beside the point!
The results ranged from shark-like (one party walked away with the store) to moderate (both sides ended up with about the same number of points). We quickly learned who the sharks and the pushovers were in the class (though that’s likely to change rapidly in the new negotiations class).
You might be thinking that this scenario is a little contrived. After all, in the real world, there aren’t any explicit points awarded for negotiating issues. But by being so explicit with the payoffs, it was possible for both parties to review each other’s payoff schedule after the exercise was done.
It was eye-opening. We realized (too late) that some issues were more important to the entrepreneur and not important at all to the conglomerate (Damn! You mean I could’ve negotiated more and the other side would have given in?). Some worked the other way around. And some were, rather counter-intuitively, such that both parties actually wanted the same outcome!
Turns out that by understanding the other side’s priorities, both parties could have gotten higher payoffs rather than negotiating each issue as if it was a zero-sum game.
How to do that? In a multi-issue negotiation, you can simply ask the other side to rank the issues by importance. You’d be surprised how many people are willing to answer that question since it’s innocuous enough.
To my chagrin, I didn’t ask this to my partner in the exercise, and he didn’t ask me, so we ended up with a run of the mill 50/50 compromise. Acceptable but as our modeling professor would say, sub-optimal.
Study Trip to the Valley
This week, we had our first Study Trip, to prominent Silicon Valley Companies. Study Trips are sort of like field trips in elementary school, except they’re for b- school students and we don’t get to go to any museums.
We visited three companies on our trip this week: LinkedIn, Google, and DCM. Our bus left at 8:30 am sharp (Yes, I made it on-time, believe it or not!) and drove all the way to Mountain View (where the first two companies are located) and then back to Palo Alto on Sand Hill Road where the third (a venture capital firm) is located. So what was it like?
LinkedIn. Our first meeting was with the CEO of LinkedIn, a well known business/resume/social networking company: Dan Nye. He told us a little bit about the history of the company. It was started by a number of founders, including one of the founders of PayPal (Reid). Dan was at an enterprise software company before taking over as CEO of LinkedIn, and he spoke about the differences in running a high-profile web 2.0 company vs. his previous jobs. Unlike some companies where the founders left when professional management, at LinkedIn the founders still work closely with the CEO, which has made it a great experience.
Dan wasn’t present at the founding of LinkedIn, but he did tell us one obligatory Silicon Valley “startup” story – on the first day he joined LinkedIn, they were still in an old office in Palo Alto with a leaky roof and there was no one to call for maintenance so they had buckets set up to catch the water. Needless to say, they don’t have that problem today – their offices are quite plusch in a class A building in Mountain View just down the road from Google..
As an interesting aside, he mentioned that his brother worked for Bain Capital in Boston – turns out I pitched my last company to his brother a few years ago with my last company. They didn’t fund us, but as I remember, they gave us some pretty good feedback and advice…small world.
Google. The second company we visited was Google. I would really like to tell you what we saw and heard at Google, but they made us sign an NDA so I can’t tell ya nothin.
HINT: Both of the speakers were women, and both were among the first 20 hires at Google (no we did not meet with Larry or Sergei, the founders). One of the speakers, who spoke about innovation in general and how they innovate at Google in particular, looked a lot like, and spoke like the woman in this video (though the woman we saw had the presence of an in-command corporate VP, rather than the uber-geek presence in this video):
Kidding aside, the talk about innovation was actually pretty inspirational, and the stories of how Google iterated from just search towards its final model of "search, see ads, click, and ka-ching!" was pretty interesting.
We also got to eat lunch at the much-vaunted Google café, and even saw Spaceship One, which one of the Google founders bought after it won the X-prize in 2004. Google also added its own version of this prize, which involves giving $30 million to anyone who can launch a satellite to the moon and send a signal back.
DCM. In some way, this was the most interesting of the three stops for me. We met with David Chao, Cofounder and General Partner of this well-known leading Venture Capital firm. He told us how he started to invest in China and Japan in the nineties when people thought he was crazy for doing that and not investing in dot coms. He told us his thoughts about leadership, which seemed to be the result of a lot of professional reflection and self-awareness (something I have to admit I don’t see a lot of with Venture Capitalists; Wonder why that is?).
He said that to be a leader (especially an innovative one), it means that at some point you are going to get lonely. There is always that point when you are out front, going to have to be out front at some point, by yourself, when people are not following you. Eventually (after one day, one month, a year, or 10 years) people will eventually catch on. It can be quite lonely during that time.
He also talked to us about how he used his intuition to help guide decisions. As an example, he mentioned how an entrepreneur once showed him a spreadsheet that listed all the factors they were looking for in a VC. He said that probably wasn’t the right way – you had to go with your gut feeling of who you’d work best with. He also talked about “signs” – little things in the environments that inspire you in some way to follow a course of action. It could be a song you overheard on the radio, or some conversation you overhear that speaks to you. I found this intriguing enough since I had never a VC talk in these terms before. I believe that intuition is the most overlooked factor in making professional decisions which define an innovator and have started writing a book on it. Stay tuned for that.
Full Moon Over Stanford
In my brief year here, I’ve vowed to try to keep up with some of the undergraduate traditions at Stanford. This can be difficult, since graduate students are explicitly not invited to said undergrad traditions. And Sloans are even older than your typical graduate student. A few weeks ago I witnessed the “Band Run” (see earlier post on that). One of my friends who attended Stanford Undergrad, thinks it’s hilarious that I’m trying to re-live her freshman year. For the record, I’m only observing the undergrad traditions, not trying to be a freshman again!
One of the more famous (infamous?) traditions is Full Moon On The Quad, referred to by the student body affectionately as “FMOTQ” (yes Stanford students like acronyms, as does the faculty).
This long enduring Stanford tradition, started probably a hundred years ago, was historically a way for Senior boys to welcome the Freshman girls by giving them a rose and getting back a kiss on the cheek. Since then it has evolved (devolved?), becoming a way for undergrads to cut loose and get over their inhibitions at midnight by making out with other students when they are relatively new to campus.
A few business school students sneaked into the Quad to see what was happening around 11:30 pm. There wasn’t much happening, though there was clearly some anticipation in the air. Bands were playing on a make-shift stage, with groups of students dancing a little and otherwise enjoying being with friends. But no kissing.
I asked some undergrad girls nearby about what was going on – both of them, one of them a senior, one a sophomore (both of whom looked like they might have been straight A students in high school) said that they’d attended FMOTQ each of the previous years but hadn’t kissed anyone. They looked a little nervous about the whole thing but seemed determined to get over their trepidation this year!
By midnight, there still wasn’t much happening. There was one dorky looking guy walking around with roses handing them out to undergrad girls, who smiled sweetly but as far as I could tell, he wasn’t getting anything in return; the girls would take the rose and wander closer to their girlfriends, who were typically dancing next to some of the frat boys, who were clearly not handing out roses but were obnoxiously bragging about how they were going to kiss more girls that night than they had the previous years.
After 12;30, things started to change, slowly. A small portion of the student body was mingling and bumping into each other in the middle of the well-decorated and grandiose Stanford Main Quad, eyeing each other to decide who would get a kiss and who wouldn’t.
By about 1am, things had changed radically. Let’s just say that there was an even smaller subset of students (mostly undergrads with a few shady grad students who sneaked in, I’m sure) out on the floor, doing some serious making out with their fellow students.
At some point, I don’t remember exactly when, the nudists arrived (yes, there’s a group of about 80 nudists at Stanford who I’m told run around campus naked on special occasions like this one). They didn’t actually look like they were naked, since they were covered with body paint that in the middle of the night looked like it could have been clothes. Plus it gets really cold in Palo Alto after midnight, so it would be really stupid to run around campus with no clothes on, or so I thought. When one bumped by me, I took a closer look. Yup, they were definitely naked…no doubt about it.
Now who would have thought Stanford students, among the most academically minded geeks in high school, would be out kissing random strangers on the Quad under the first full moon of the school year? Krutos.
We left shortly thereafter, but I’m sure that for the ambitiously minded, the party continued well into the night! No, I didn’t participate, but as I walked back with some of my classmates I was clearly thinking maybe, just maybe, it might have been more fun to be an undergrad at Stanford than at MIT!
What’s Your Type?
Speaking of a totally different type, on Friday, we had as part of our leadership series, the MBTI personality test and workshop, which stands for Myers Briggs Someting Something. It’s basically a personality test, where you answer questions (used to be on paper during the time of two people named Myers and Briggs; now they’re online) about your preferences in life.
Here are some examples (not real questions, just what I remember being on the test):
Do you like to have your schedule planned out to the minute or do you like to wing it?
Are you flexible with time or do you like to have everything planned out?
Do you get annoyed with people who are flexible with time or do are you like them?
The eventual goal of the test is to classify you into various quadrants of the MBTI graph (are you introverted or extroverted? Are you more likely to be thinking or feeling? Are you perceptive or intuitive?).
The workshop started at 8 am on Friday after a very busy week. Needless to say, since I thought it was an optional workshop, I missed it.
Honestly, I have never been a big fan of categorizing people into buckets, since in my humble opinion, each person has very unique characteristics and doesn’t always fit nicely into one bucket or another. Throughout high school and even college, there are some people who, believe it or not, would classify me as clearly introverted, while others would have clearly said I was extroverted. So, which am I? An E or an I? To quote our accounting professor, It Depends.
Categorizing reminds me a bot of Astrology (I’m a Sagittarius, what’s your sign?) or numerical types in the Enneagram (I’m a 3, what number are you?). Now there are certainly people who swear by these categories, and maybe they’re right. I just tend to have an initial skeptical reaction to them (though I’m willing to be convinced).
By about 10 am that Friday, I was facing the by-now familiar Engineer’s Dilemma – do I go to the workshop, having missed the first half, or do I just wait until it’s over? I decided to get some work done and show up to the next item in our jam-packed schedule – a brown-bag lunch during which some classmates were making presentations, followed by our OB class all afternoon.
Turns out that my MBTI type was “ENTP”, a fact which the teacher shared with the class. Apparently, people in this category, as far as I’m told, are very flexible with time and may even occasionally show up late to things.
The teacher was looking for an example of someone in this category and (as I’m told) called my name. I wasn’t there. A fluke?
Since I wasn’t there, she went to the next name of a classmate whose answers to the test also fit him into the ENTP category. Characteristically, it turns out he wasn’t there either! Only 50% of the four people in this category had bothered to show up for the workshop… which proved to be instructive in its own right.
Hmmm… that's a pretty big coincidence. Maybe there is something to this MBTI thing after all…
SPECIAL DISCLAIMER: the opinions and experiences recounted in these blog entries about my year at Stanford Business School for the Sloan Program are my own personal observations and ranting. This blog is not endorsed by either the Stanford GSB and definately not by any of my fellow Fellows