When there’s a lot on the line, companies expect executives to be expert negotiators and finesse a delicate compromise with board members or close a vital but tenuous deal with a strategic business partner. But sometimes things go awry even for veteran participants, as evidenced by the infamous botched merger talks between Yahoo! and Microsoft a few years ago, when Microsoft walked away from the deal after the Yahoo! CEO set the price too high.

Negotiators can be afflicted by a winner’s curse, overestimate their abilities, or fall prey to the common misconceptions and mistakes that can derail an entire session. Executives must constantly refresh and refine their negotiation skills to prevail, because when the stakes are this high, the opponents are formidable.

“We live in a society where everything’s negotiable,” says Dr. Asha Rao, professor of management for the College of Business and Economics at California State University, East Bay. “So if you don’t play the game well, you’ll lose.”

Smart Business spoke with Rao about the techniques that lead to successful negotiations and the common misconceptions and mistakes that may derail executives.

What are common misconceptions about the negotiation process?

We believe in fairness. In negotiations, professionals sometimes equate this with equality and assume that a good deal offers similar benefits to the participants, but it’s rare that both parties are equal coming into the session, and insisting on equality can shut down the talks without producing an agreement. One party may get a lot more out of it than another, but as long as each side achieves its primary goal, the gains don’t have to be equal.

Another common misconception centers on the notion that he who speaks first loses. If you’re prepared, why not make the opening offer? Doing so gives you the power to anchor the session and set the direction for the talks. And it provides a strategic advantage because it forces the other party to counter your proposal.

How can negotiators avoid typical mistakes?

These frequent errors will work against you, so avoid them at all costs.

  • Failing to do your homework. You need to take a position that’s supported by facts, and failing to understand the issues before you enter a session can lead to misplaced confidence. Fastidiously research the issues before you begin, because great negotiators never wing it.
  • Failing to identify interests behind positions. It’s easier to reconcile your differences if both parties realize why the other party wants something, and then focus on their common needs and interests. Rallying the participants around a common goal is a great way to break a stalemate and it keeps complex talks on track when the going gets tough. With common interests, negotiations can reopen as in the new successful deal between Yahoo! and Microsoft, where they integrate their businesses and build on common interests to challenge the market leader Google Inc.
  • Succumbing to the winner’s curse. You may get what you ask for! Setting your aspirations too low may get you what you ask for but you end up overpaying or leaving money on the table.

What are the fatal flaws that derail experienced negotiators?

Don’t stand on false principle or let your ego get in the way, because negotiations aren’t about validating your self worth or advocating your beliefs. Your purpose is to get a good deal. Another grave error is adopting a take-it-or-leave-it position. Because it’s not an effective use of power, it sets the stage for confrontation, ends the discussions and forces the other party to walk away.

So what are the best practices and most effective techniques?

First, explain the reasons behind your position. Some experts maintain that this isn’t an appropriate technique, but the other party benefits when they understand your logic, and the information you provide may encourage collaborative problem-solving and fuel a compromise. Second, focus on multiple issues, not just one, because it allows the participants to set aside difficult problems, consummate small wins and build on their success. Third, always contemplate multiple scenarios in advance and prepare a series of fall-back positions. Develop your BATNA — best alternative to a negotiated agreement. A BATNA helps you build power, negotiate with confidence and recognize a good deal when you’re in the midst of an intense session.

Are there special techniques that help executives negotiate with a large group or board?

Identify your allies and the opposition. You definitely want to map the power and interests of each member, develop a strategy for approaching key players and focus your efforts appropriately. Plant your ideas and negotiate with individual members before the agenda is submitted to the forum, otherwise a group session can quickly deteriorate into an auction.

Dr. Asha Rao is a professor of management for the College of Business and Economics at California State University, East Bay. Reach her at (510) 885-4517 or Asha.Rao@csueastbay.edu.

Published in Northern California

Given the right environment and abundant executive support, cross-functional teams can lift organizations to new heights by pooling their knowledge, penetrating internal silos and devising innovative, holistic solutions. But without the proper leadership and guidance, teams often languish and become dysfunctional, while failing to achieve their all-important mission.

“Cross-functional teams are responsible for knitting the pieces of the organization together and solving today’s big, wicked problems,” says Dr. Sharon Green, associate professor of management for the College of Business and Economics at California State University, East Bay. “It’s critical that executives re-image their roles and embrace the collaborative process, so teams can flourish and surmount these difficult challenges.”

Smart Business spoke with Green about the role of executives in fostering a collaborative environment and nurturing cross-functional teams.

What is the role of cross-functional teams?

Today’s problems are multi-dimensional, so it takes a group of employees with diverse functional expertise and different perspectives to work across disciplines and devise holistic solutions. In many cases, these teams are being asked to develop new products or implement vast changes that impact the entire company. They often encounter resistance, because many companies are a collection of fiefdoms, so team members have to bridge the divide between departments, or even collaborate with other teams, in the quest for comprehensive solutions. Another reason the teamwork concept is gaining momentum is that it suits the work-style preferences of Generation Y, who are very social, even tribal by nature, and crave a collaborative process and a variety of projects.

How is the team structure evolving to meet new challenges?

To meet the growing need for global solutions and lower operating costs, companies like Hewlett Packard are implementing virtual teams, which connect home-based, high-level professionals from around the world. We’re also seeing the emergence of multicultural teams, especially here in California, because they focus on products and services that satisfy our diverse population. Finally, companies have so many teams in play, there’s a growing need for intra-team collaboration and extreme consensus-building as teams channel their energies toward a common goal.

How can business leaders assess team effectiveness and head off problems?

Traditionally, executives have evaluated teams by monitoring outcomes, cost versus budget and the time required to develop solutions. But these types of high-level assessments don’t expose the underlying issues that point to future problems. Executives need to get down in the weeds and talk to team members, because stress, low energy, absenteeism and poor morale are symptoms of dysfunction and, if left unabated, often lead to turnover and the loss of critical institutional knowledge, particularly in high-tech companies. Also, be sure to evaluate the effectiveness of team leaders, because underperforming teams are often led by veteran, mid-level managers, who rely on command and control techniques and tend to over-manage the process. These managers need training to mentor and coach cross-functional teams, which thrive on empowerment and equality.

How can executives support effective teamwork?

Executives should embrace these techniques to build, nurture and support teams.

• Conduct a personal audit. Leaders must audit their own behaviors and expectations to see if they are enabling or hindering the teamwork process. Do you embrace collaboration? Do you truly trust the team to develop great solutions? Do you see yourself as a team member? Executives must set the tone by embracing the teamwork philosophy and modeling appropriate behaviors.

• Be a great storyteller. To be successful, teams need to understand their mission and role. Why is the project critical and how will their solutions impact the company? Leaders must provide the framework for success through effective storytelling, and then define and communicate the expectations, before backing away and refraining from controlling the process.

• Provide training and development. Teamwork skills are not innate. To groom team players with the ability to work across multiple disciplines, executives must task human resources with creating a training curriculum that covers communication and collaboration skills, as well as conflict resolution, and teaching team members how to play various roles and draft team agreements.

How can executives embrace and support the teamwork process?

First, teams need coaching, encouragement, mediation and impartial feedback to deliver quality outcomes. It’s up to executives to fulfill these needs and provide emotional support. Many executives were star individual performers before moving up the corporate ladder, but they should refrain from doing the work or supplying the answers, and instead offer guidance and counsel so the team members can struggle, persevere and overcome obstacles on their own. Second, team members need to raise their hands and ask for help when they hit an impasse, without worrying that their actions will be viewed as a show of weakness. Finally, executives need to be active participants and provide mentorship, so teams don’t feel like they’ve been assigned a difficult task and set adrift without adequate support.

Dr. Sharon Green is an associate professor of management for the College of Business and Economics at California State University, East Bay. Reach her at sharon.green@csueastbay.edu.

Published in Northern California

The global economy is undergoing a sea change. While American markets languish and deficits snowball, the global market has continued to grow in size and importance. Whether it is for technology or consumer products, the global market is now the best place to grow sales and profits. To fully realize the potential of these opportunities, executives must undergo a paradigm shift, strategically analyze data and build alliances before the first dollar changes hands.

“The $500 billion current account deficit and the trillion-dollar-plus U.S. budget gap are not sustainable and can’t be financed much longer,” says Dr. Glen Taylor, director of MBA Programs for Global Innovation at California State University, East Bay. “If we keep printing money to cover our debts, it will lead to inflation, devaluation of the dollar and diminished purchasing power, so our future depends on global expansion.”

“To sustain growth and allow the next generation of Americans to have a better life, we have to rethink globalization, identify opportunities and be contributors to the global economy, rather than consumers,” says Dr. Yi Jiang, associate director of MBA Programs for Global Innovation at California State University, East Bay.

Smart Business spoke with Jiang and Taylor about the process of identifying and making the most of ripe opportunities in the global marketplace.

What prevents U.S. executives from capitalizing on the best global opportunities?

Taylor: U.S. executives need a changed mindset and a different approach to analyze and select global opportunities, because our country is no longer the dominant market in the world. Our loss of supremacy means that we need to learn how to do business in other countries that don’t always comply with our culture and business practices. We must put ourselves in their shoes and see things from their perspective in order to identify and capitalize on the best opportunities.

Jiang: We’ve had a tendency to view globalization in simplified terms and think of other countries as a resource for outsourced services and cheap labor. But when executives apply a different perspective to the analysis process and develop innovative products and solutions, they stand the best chance of succeeding outside the U.S. For example, PepsiCo recognized an unmet need in India, and capitalized by identifying itself as a provider of well-being services, rather than a supplier of food and beverages. The CEO’s paradigm shift and innovative marketing approach has led to greater success than simply transferring the U.S. strategy to another culture.

What’s the first step in the identification process?

Taylor: The first step is demographic analysis, but unless executives take a deep dive into the data, they may overlook emerging trends and actually target the wrong customers. For example, a superficial analysis of Chinese demographics reveals no net population growth, but an in-depth study shows that social change is underway and people are urbanizing at the fastest rate in the world, adding tens of millions of new global consumers each year. This creates unprecedented demand growth for all kinds of products and services. The country’s rising affluence has made the Chinese auto market the largest in the world, the largest market for mobile communications technology, and the largest market for consumer products and services of all kinds.

Jiang: Don’t take a cookie-cutter approach to the analysis process, because each country has regional and generational differences that create unique opportunities. While cultural and generational differences often drive demand on the consumer side, U.S. executives must consider dynamic industry cycles and a county’s openness and resources before attempting to position each country in the holistic picture of global strategy.

What’s the next step?

Jiang: After analyzing the data, travel to the country to experience the culture, validate your hypothesis and establish strategic business partnerships and networks. You’ll need seamless collaboration to understand the cultural nuances and build a supply chain. Infusing yourself in the culture will help you identify additional opportunities, since the best ideas often come from prospective partners, suppliers and customers.

Taylor: Meeting people is an important part of the evaluation process, and business relationships are like a marriage, so prospective partners must get to know each other before making a commitment. And your travels may yield additional opportunities, especially if you view things with an eye for the innovations being developed in other markets. Even though the U.S. may not be able to compete in labor-intensive manufacturing, we have endless opportunities to develop and export intellectual property, and there’s an unmet need for clean tech infrastructure in many parts of the world.

What else must executives do to succeed in the global marketplace?

Jiang: Remember that global opportunities and situations are fluid, so what seems like a great idea today may not work tomorrow. Conduct extensive scenario analyses so you are prepared to perform under a variety of circumstances, and keep your finger on the pulse of prospective customers by garnering feedback through open source social networking.

Taylor: There’s every reason to be extremely optimistic about our future, if we make changes in the way we conduct business and get our deficits under control. The key is to search out opportunities in global markets to develop innovative products and services that build on our strengths while embracing new ideas from other countries

Dr. Glen Taylor is the director of MBA Programs for Global Innovation at California State University, East Bay. Reach him at glen.taylor@csueastbay.edu.

Dr. Yi Jiang is the associate director of MBA Programs for Global Innovation at California State University, East Bay. Reach her at yi.jiang@csueastbay.edu.

Published in Northern California
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