Key learnings from my second project

I got a new “boss” and temporarily I report to him. I don’t know him before and he leaves quite positive impression by a looking-judgement. He looks integrate and trustworthy.

I had very unpleasant experience from my second rotation project. No matter how hard I worked, I just feel unaccepted by the team. And the suggestions and ideas I brought up were usually ignored or unwelcomed. I have been frustrated for quite a while and I really don’t want to carry this negative feel forward. So I think seeking the counseling from my new boss might be a good idea.

Looking back, in the hope of reversing this situation, I did a very straightforward conversation with my project leader. The key message I got was that as a high-profile management candidate, the attitude/feeling of my peers toward me would be at best neutral and commonly distasteful because I would be assumed to take a managerial postion in about two years whereas many colleagues might need to take much longer time to get that kind of promotion. The hidden words- you should stay low and be cautious, otherwise you will just be shot down.

After the conversation, I did watch my mouth and tried to be more diplomatic and political. However, the situation seemed not much improved. I mentioned earlier in my blog “Negotiate smartly”. I think I am not paid by my company to shut up. I wanted to give help and put out my out-of-box thinking. But again, I was hitting the war and catapulted back. I could not understand why is that? Is it that once perception has been shaped, it would be hard to change. The hunch on my back is that the team dislikes me much more than my ideas.

After hearing my grievance, the new boss reacted with two points. First, I should keep being proactive and intiative. But when I sell my ideas across, be humble and polital. It is more about how you say it than what you say. Second, our company’s main stream culture is quite open, so the situation I was in is not common.

Regarding point 2, I hope it is true, otherwise I made the wrong decision to join this company. Regarding point 1, I thought I might have said something like “ we should do this rather than that” but I never rolled over my colleagues and under estimated their ability. I really doubt it is my wording in the e-mail triggered the resentfulness to me. It is still probably my identity, as a management candidate with a short working history with this company arouse the distastefulness from my chinese colleauge. And the lacking of leadership from the project manager worsened the situation. Instead of coaching me and help me, he just protected his ego by ignoring my voice or simply shutting off.

In retrospect, I think what I am look for is not an advice but a sympathy from my new boss. Although I think I didn’t get what I really want, the conversation provided me a chance to self-reflect on what have happened and generate some key learnings:

1.When you join the team, obserse your boss first speak second. If your boss is close-minded, you’d better cautiously utter your voice and make sure untouch your boss’s big ego, no mention hurting it.
2.If you are a team leader, never muzzle the voices different from you. Keep an open team atmosphere is essential to fulfill everyone’s potential in the team. Otherwise, a team work will always end up with one man show or one voice. Consequently, the productivity will be suffered.
3.If you are mistreated, don’t blame and never try to revenge. Check on yourself and see what you can do differently to change the situation. Learn the lesson in a postive way and never carry the negative feel forward. In my case, I will continue to be proative and initiative in the future no matter where I am. But I would be more wary of the boss with a close mindset. In the real life, Someone likes us and someone doesn’t. Most of all, like yourself always and never let other people’s opinion bring you down.

Butterfly Effect

The butterfly effect is a popularized interpretation of one of the key elements of chaos theory and has its roots in something that mathematicians refer to as extreme sensitivity to initial conditions (small and seemingly insignificant changes at the start of a process can produce wildly different and practically unpredictable results). In 1961, American meteorologist Edward Lorenz was working on some of the first computer simulations of weather and wanted to repeat the last steps of a previous simulation. Because computers at that time were slow and difficult to use, Lorenz tried to save time by using the intermediate output from a previous simulation as input for a new simulation. The print out, however, rounded the results to three numbers past the decimal point and so he input .506 instead of entering the full .506127. Lorenz assumed that this minute difference in numbers would not significantly affect the results. To his surprise, the results of the second simulation were vastly different than the first, even though they should have been almost identical. The tiny difference in starting values produced completely different results. Lorenz’s work emphasized how important sensitivity to initial conditions can be in real-world applications such as weather forecasting. In 1963, Lorenz published his findings for the New York Academy of Sciences and spoke at several scientific conferences. He quoted a colleague who said that if Lorenz’s theory were correct, the flap of a seagull's wings could change the weather. He eventually changed this metaphor from a seagull’s wings to a butterfly flap and the butterfly effect was born.

Simply put, the butterfly effect is the notion that something as small as a flap of a butterfly’s wings can make a big impact – like causing a tornado on the other side of the world. The flapping wings move the air and the effect reverberates. If the butterfly hadn’t flapped its wings or had flapped in a different direction or with more or less force, the tornado may not have occurred in the same place or time, or at all.

I never expected that a meeting with another PF graduates would end up with a job offer. Last year, when I was enlisted in the company’s high-profile training program, I know there are a bunch of alumni who already graduated and are taking management position in the company now. So Mr. WD is one of the alumni I met in Beijing.

Frankly speaking, I didn’t hold any special purpose to meet him. I just felt it would be good to know some people in the company.Anyway I am new in the company and MBA education teaches me that networking is important. We spent less than one hour talking in a starbucks coffee shop. He just arrived China and still in a sort of culture impact period. He whined about the worker who should have installed the curtain for all the windows in his hourse but actully only did part of job. Of course, I tipped him how to deal with those naughty workers and it seemed that he liked my ideas. Afterwards, we didn’t speak with each other anymore. Suddenly, serveral weeks ago he phoned me and recommended me to his boss. To make the story short, I went thorugh the interviews and his boss likes me, the a job is offered.

What interested me is that the job offer proves the correctness of Butterfly Effect. I flapped when I met Mr.WD. Then he flapped when he recommended me to his boss. BAM, the flap reverberate and leads to a big effect. The effect reminds me of another fascinating aspect of the butterfly effect – we don’t know which flaps will catalyze things the most. We act hundreds of times each day and some of those actions will grow legs and reverberate more than others. Why? We are not the only ones flapping! We might go to a coffee shop on Monday and have a coffee. On Tuesday, we might go to the same coffee shop and meet our soul mate.

Actions lead to reactions - sometimes. We flap our butterfly wings and things happen that we cannot predict or control. If we look back on our lives over the past five years we might be able to piece together the small changes that impacted the larger ones, but often we have no idea. People we don’t know and who don’t know us are flapping today in directions that will change our circumstances next week.

Complex systems – they’re fuzzy, enigmatic and wonderful. And we can put the imperfect unpredictable nature of humanity to work to improve our lives and the planet. The key to harnessing the power of the butterfly effect is that small, daily, directionally correct actions can change the world. Our goals define the futures we want to create. When our flaps are focused and frequent, our energies reverberate in a direction aligned with our goals.

Remember Lorenz’s calculations? The tiniest of changes of the initial inputs – from .506127 to .506 – resulted in two very different weather predictions. Each day is an initial input for our future. Sensitivity to initial conditions means that actions taken today create the sunshine and storms of tomorrow. Therefore, keep doing small but right things will reward you in the near future. Sometimes the simplest answer is the answer. Flap, flap, flap.

MBA clone and how to de-clone yourself

The article is actually borrowed from Dr. Dan Herman. As a MBA myself, I think this article is a warning to myself in applying the MBA arsenal to the real business practice. Business is complicate and dynamic, not every business model I learned in the classroom would repeat its power in solving daily management problems. In addition, as a MBA, I am more proned to shooting the MBA jargons to my colleagues, somehow it makes myself feel good but the response from the colleagues is either puzzled or distasteful. I would not go to the extreme to deny all the training I got from a MBA education, but I should not pitfall myself into the MBA clone and forget about the real needs of the business. Below is the articles from Dr.Dan Herman.

In our hyper-competitive markets, MBA clones pose an imminent and tangible threat to the competitiveness of the companies they work for. Many executives today attend the same MBA programs, study the same books, read the same newspapers and magazines, and go to the same conferences and workshops. Standardization in MBA programs results in a similarity in the professional approach and managerial thinking of their graduates. It also shapes the vocabulary and agenda of all the business media and training activities. Thus many executives today turn into "MBA clones."

What's wrong with MBA-graduate managers who apply the professional knowledge and skills they have learned? All those managers who are supposed to compete with one another and create that very differentiation which gives consumers a good reason to prefer one brand over another, end up using the same data; they conduct the same focus groups and draw conclusions from the same surveys using same methods; they analyze the same data with the same tools, and use same concepts and approaches in order to create products and brands. The result? Inevitably, most products, and even most brands, eventually evolve to appear as "same" to the consumer. These managers are not even playing me-too. Without consciously imitating each other, they achieve the same results, simply because they think and act the same way.

Not every MBA graduate necessarily becomes an MBA clone. But MBA graduates definitely constitute an at-high-risk population. What about you? Do you have the symptoms? Let me reassure you that being an MBA clone is not a condition beyond cure.

De-cloning is possible and rather painless. But first please take this short test to assess your situation. All you have to do is answer with candor, courage and integrity the following 10 questions with a "Yes" or a "No". I promise not to tell anyone if you won't…

Question 1:

Do you often use concepts such as "striving for a sustainable competitive advantage", "segmenting the market", "assuming a niche strategy", "fostering customer loyalty", "developing a corporate vision", "adopting brand values"?

Question 2:

Do you prefer courses of action that already worked for others?

Question 3:

Do you focus on blocking competitors from gaining an advantage more than on attempting to achieve one yourself?

Question 4:

Would you agree that both you and your competitors segment the market in a similar manner and then focus on the same attractive groups?

Question 5:

To gain a competitive advantage, do you strive to be better than your competitors in providing clients with benefits that are known to be important in your market?

Question 6:

Do you consider strategy to be an analytic process of research, analysis, setting objectives and planning?

Question 7:

Do you address mostly direct competitive threats, while disregarding other product categories in which future competition could emerge such as substitutes?

Question 8:

Do you try to think outside the box and consider out of the box thinking as an important capability for managers?

Question 9:

Do you think that customers generally know what they want and where their preferences lie, and consequently if you keep them satisfied (even delighted) they will remain loyal to you?

Question 10:

Do you believe that all brands are created for the long term and become stronger as they stand the test of time?

If you gave an affirmative answer to more than 5 of these questions, I am sorry to inform you that you are, at least to some extent, an MBA clone. I hope that it is of no consolation to you that many of your colleagues and competitors alike suffer the same condition. De-cloning yourself will not only set you free but also do wonders for your ability to thrive in competitive markets. You might even be able to take advantage of MBA clones' biases and achieve an "unfair advantage": the successful differentiation that your customers will be wild about - and your competitors will not imitate, ever!



Are you an MBA Clone? Was your business education more like "business programming"? If your answer is yes, you are probably not fully aware of the fact that you have been "produced", together with many other executives, to think and act in a similar predictable manner, as many MBA programs around the world gravitate towards standard no-diversity sets of default concepts and tools. As a result, many executives have been turning into what I call, MBA Clones, thus undermining the competitiveness of the companies they lead.

I challenge you to read my article titled: "Test Yourself: Are You an MBA Clone?". Take the short test and find out if you are an MBA Clone. If you've been diagnosed as one, I strongly suggest that you consider de-cloning, ASAP. De-cloning is possible, painless and very lucrative.

How can you de-clone yourself? The process entails realizing that typical MBA thinking is not an ultimate truth but just one way of interpreting business reality and operating in the marketplace. You will need to coach yourself in alternative concepts and tool up accordingly. Soon you will discover that your view has broadened and you managerial capabilities will have improved dramatically.

The following 10 tips are meant to be a first aid kit as well as a tasting from my alternative approach.

The long-term, it's dead, caput, bygones. Deal with it.

In our accelerated and hypercompetitive world, there are no more long term strategies from which you may never digress. Most of the rules of strategy, marketing and branding that you learned are no longer relevant. They were created for the long term, but the long term has expired. The way to succeed over the long term is to succeed in the short term, time after time. For example: you do not "own" a market share, it is only an indication of your current situation.


Feel the fear of strategy and strategize anyway

Research has shown unequivocally that the secret of companies who succeed is well differentiated strategy and uncompromising implementation. Yet, like most of your colleagues and competitors, chances are that strategy gives you the shivers. It's called "Strategephobia". Strategy has two terrifying characteristics. First strategy is a choice, which is terrifying because you will have to let go of all the "could-have-been"s first: "We are going to target customers X, and leave out the rest" or "The major benefit we will offer consumers is Z and leave out the rest." When you adopt a strategy, you have to "give up" stuff you don't actually have in order to formulate something tangible, something you can sink your teeth into. The second characteristic of strategy is differentiation from competitors, which is terrifying because most of the managers feel more comfortable being similar to their competitors; therefore they busy themselves on trying to block competition's attempts to create an advantage, rather than on striving to be different.


Goals are goals, strategy is strategy - do not confuse

MBA clones often refer to their goals (e.g. "achieve a large market share") as "strategy". The guiding principle is: What you want to achieve is your goal. What you are doing to reach that goal is your strategy. From my experience, it's best to be very clear about the distinction between them.


Your company does not need a vision

Establishing a company's vision is a very trendy process. But be aware that your vision is not remarkably similar to your competitors'. Personally, I don't think you need a vision at all, but if you must have one, you should place two qualifications on the process to make it effective. First, your vision must be differentiated, not only in your eyes but most especially in the eyes of your consumer. Second, your vision must offer consumers some important benefit that they can't get from the competitors. In other words, your vision has to be a differentiation-based competitive strategy.


A satisfied customer is not necessarily a loyal customers

Customer satisfaction does not assure customer loyalty. Customers will move on to new products when turned on by a new and exciting benefit. Therefore, we must move from satisfying, subservient marketing - that gives consumers what they want and expect - to what I call Electrifying Marketing: dazzling them with what they never thought they wanted - until you offered it to them.


Think of your strategy's success as an occurrence of consumer behaviors

The most essential insight to strategic business thinking is the fact that customer behavior is the reason for strategies' success or failure. Moreover, a deep understanding of consumer psychology is crucial to successful strategizing. I advise you, therefore, to think of your strategy's success in terms of the specific consumer behaviors that will bring it about.


Market segmentation is a waste of time. Move on to Contextual

The traditional market segmentation doesn't work with today's consumer, who refuses almost completely to abide by segments that create homogeneous groups according to demographic, socio-economic variables, or even according to lifestyle. An alternative approach is "Contextual Segmentation", i.e. segmenting according to contexts of purchasing or using/consuming, in which consumers can participate from time to time (e.g. the "We celebrate grandpa's birthday" segment of the restaurant business).


Remember "The Marketing Approach"? Forget it!

The "marketing approach", based on identification of unsatisfied needs and how to satisfy them, is no longer a key to success for two reasons: first, there are few unsatisfied needs left. Second, in a competitive market, it is undesirable that all marketers act in the same matter. The alternative "competitive approach", is based on creating new ways to satisfy needs that are already satisfied.


Raise your prices - sell more

No market is price driven and neither are most consumers. It's the marketers who are price-driven. In practically all categories most consumers never buy the cheapest brand. The same consumer who in relation with your product is "price-driven" has no trouble spending high prices for other products and services. In many formerly "price-driven markets", a competitor came along who one day stopped talking about price and began offering an added value, the kind that turns consumers on.


Do not expect "Branding" to build brands

Managers often believe that a good name, a logo, a professional "corporate identity" design and some positive brand values, will suffice for winning competitive advantages, and that any effort required in order to create real differentiation or to develop a valid competitive edge should be spared. Wrong! Your differentiation creates the anticipation of a unique benefit that your brand provides. This anticipation is your brand.

How to retain your star employees

Most people don't work solely for money. They want respect and feel being important in an organization. To retain your star Chinese employee should start with a thorough review of the company's management and leadership skill. Most of the time, the employees leave the boss instead of the company. An abusive and abrasive boss cause prodigous damage to the company's most valuble asset-human resource.

In my point of view, the three "R"s, respect,remuneration and recognition should be the three pillars of a company's talent retaining strategy.

Without respect, people feel their work and existence are not appreciated. Then the connection between the employees and the company will be seriously debilitated.

Remuneration is also extremely important. Especially in a developping country like China. Money is not only an important tool to lift the standard of living, but also a measurement of success.

Recognition make employee see the future of their careers. When the employee feel their contribution is recognized by the company, they know the earn the credit to advance their careers. They will keep doing good things to win more recognitions. What else company can do is always to put an employees's stellar performance under the spotlight, as a motivation to the star employee and also as the goad to inspire more other employees.

Happiness is not that hard to achieve

In Pope John XXIII’s “daily decalogue”:

Only for today, I will be happy in the certainty that I was created to be happy, not only in the other world but also in this one.

But most people think differently, especially in China. There is a measurement of happiness called happiness index. Chinese scores very low in the index, which implies that Chinese are the most unhappy people in the planet. It is quite easy to understand that though. The pressure for living in China is quite high. Education, medication, employeement, housing and living in general all seem to be quite hard in this most populous country. People eke out to make their ends meet.

I admit that life is hard, but is life that hard ? We are quite short-sighted when we are looking at ourself in the real life. Human being is greedy. We desire things we don’t have. Consequently what we always think about is what we don’t have not that has already been in our possession. We want more money, bigger house, luxary car, higher position in the company, pretty wife or rich husband. Whereas we blindside ourselves over what is within our arm’s reach. A small but cozy apartment, a plain looking but devoted wife, a husband lives on salary but gets bread back to home etc. I could give a much longer list, and you can too if you just sit back and think what you have instead of what you don’t.

Of course events will sometimes derail us. Of course we won’t get everything we desire. Of course there will be real tragedies and tragic-seeming setbacks. But we can be happy — joyful-down-underneath — even in the face of these things.

Life is often hard. But it’s not supposed to be that hard. There’s supposed to be room there for happiness and enjoyment, not in the notional future, but in the here-and-now.

Define the strategy in a palpable way (2)

I received some comments over my blog from a friend. I quote it as follows:

I read one article of your blog named as define your strategy ...., I noticed that your wrote such sentences:
A good strategy should be articulated in a manner that every employee understands it, aligns with it and acts on it. In essence, a strategy should have three critical components, objective, scope and advantage.

I have some different views towards this: in my view, strategy is a result that got from very carefully analyzing a company's objectives ( or can be said as mission) combined with a company's self-resource and industry environment such as competitor, supplier, buyer and so. The result can be thought as code of business action.
The same thing seems as happened to scope and advantages. Unquote

And my counter comments would be

Probably we hold different definition of strategy thereof arrives at different conclusion.

The industrial environment analysis and internal resource evaluation are necessary, and they are useful when you try to figure out the advantage of your company (the advanage I defined in my article is that something you do different and where you strength lies on).

My point is that strategy should be on the top of company's operations. it is palpable and it put everyone marching in lockstep toward the same direction. whereas nowadays, many many strategy formulation becomes too dynamic and unstable, a company's strtegy could be re-defined every year. The arguement is that strategy should follow the path of market and the market is always dynamic. I don't agree so. I think this ever-changing strategy symptom either comes from the illusion of self-assessment or from the wrong judgement of the industry.

At tactical level, company has many options to adapt and fine-tune its operation. But at strategical level, company should hold one core strategy that could be existing for long. As I mentioned in my article, a strategy is a direction to guide, a magnet to unite. If it could not keep stable, the momentum toward the vision/mission will be scattered, then the company's performance will be tattered.

Define your strategy in a palpable way

Tell you a secret, when you ask the CEOs to describle their company’s strategy in less than 35 words, most probably they will get stumbled. If you raise the question to their employees, most of them will have no clue to answer it. Although strategy might be the most frequently used word in the buisness sphere, it also might be the most obscure concept to be communicated.

To put one organization in a nutshell, we see the hierchies like the following:

Mission: Why we exist.
Vision: What we want to be.
Value: What we believe in and how things are done here.
Then Strategy.

Mission and vision of the company can be very broad concepts and not specific. However, most of the companies fall into the trap to define their strategy in the same manner, like we want to privide xxxx in a cost-efficient way to add value for our customer. This kind of out-of-touch strategy could stand for anybody, so what is good for?

A good strategy should be articulated in a manner that every employee understands it, aligns with it and acts on it. In essence, a strategy should have three critical components, objective, sope and advantage.

Objective

Objective gives a direction and a goal to realize. It must be specific, measurable and in a time frame. Like We would be the market leader of ABC before year 2015 with market share over 40%.
An unclearly defined objective will lose people’s attention and focus, not mention the sense of urgency.

Scope

In what region and in what area, vertically and horizontally speaking, the business should compete and grow. No company can excel in every business and with a clearly stated scope, every employees knows what business should take and what shouldn’t. So the company’s resource can be concentrated on the core business and set on the right path toward to the objective.

Advantage

Advange is the company’s distinct (distinct here means something you do differently. I truly disbelieve the copy of buisness model because any built-in model in a business has thousands of factors at the back to buttress it) strenth to propel and grow its business. This is the power of the company can wield to thrive in the market and fend off competitors. It is something no one can do better than you and something you can always count on to hit your objective.
If employees are likened to a handful of pins, when you throw them on one paper, the pins will point to different direction. But if you place a magnet near them, magically all the pin will point toward the same direction. That is also a clearly defined strategy would do. CEOs should wear a elevator strategy statement in their sleeves and communite it rentlessly to the employees. When this is done, the success is just around the corner.

Greenspan defends his legacy.

Once it appeared that Greenspan wrapped up his legendary career when his autobiography “the age of turbulence” published. Whereas now the ripple effect of the subprime crisis now second-guessed his previous shing 18 years as the chairman of federal reserve bank.
(Quoted from WSJ)
The prevailing view among critics faults Mr. Greenspan on two main counts

First, they say, his Fed lowered rates too much from 2001 to 2003 to cushion the economy from the bursting dotcom bubble. Then it took too long to raise them again. Low rates fueled mortgage borrowing, driving home prices to unsustainable heights.

Second, they say, the Fed was lax in its regulatory role. The central bank failed to press for stiffer rules for underwriting mortgages to people who ultimately couldn't afford them, they say. Also, they say, the Fed failed to anticipate banks' exposure to risky home buyers, leaving them with too little capital to absorb the eventual losses on those mortgages.

(Unquote)

I don’t want to judge who is wrong and who is right here. However, what rankles me is that whenever there is a trobule, some people (especially people always speak more than do) will play the blame game and ride on the critics. Hindsight is easy to pick but what these guys were doing when the decision was made back then. What makes me even furious is that many Greenspan’s peers now are also pouring their anti-Greenspan rhetorics. The question is why they didn’t not use their wisdom to challenge Greenspan back then ?.

Greenspan says “I was praised for things I didn't do, I am now being blamed for things that I didn't do." Even the agruement is right, Greenspan did lax to make those decision who probably led to this credit crisis. But who can gurantee that if Grennspan proposed something else, the economic condition will be better rather than worse?

Greenspan endorses laissez-faire regulatory oversight. I agree with him. I don’t believe heavy-handed government relation can eradiate financial or economic risks, if not make them higher. Market has its own self-correction mechanism, which is beyond human-being’s meddling. The history proves it in the past, and it will do now and in the future. What government should do is to ensure the play in the market is compliant with the rule.

Boeing takes schadenfreude back on itself

From Wall Street Journal, Boeing is scrambling to solve its own delay problem for its new dreamline 787. The memory of the delay of Aribus Jumbo A380 is still fresh. And once cheering furtively, Boeing has to swallow the same bitter pill by itself.

Boeing took a different strategy to develop its new airplane model. In short, it spread billions of dollars in development costs among a large number of suppliers, while also streamling its own manufacturing. But the web of suppliers crisscrossing the globe has contributed to several delays for the twin-aisle aircraft, hitting Boeing's share price and stirring concern among customers.

Boeing, in its new bid to get the 787 Dreamliner back on track, said Friday that it will buy out Vought Aircraft Industries Inc.'s interest in an assembly plant in North Charleston, S.C. The facility, called Global Aeronautica LLC, is a joint venture between Vought and Italy's Alenia Aeronautica.

Dallas-based Vought is a key player in Boeing's attempt to reinvent its production process for the 787 by giving more responsibility to suppliers who design, produce and integrate large sections of the jet. In this case, Vought and Alenia join large sections of the jetliner together before they are shipped to the Seattle area for final assembly.

Some suppliers, including Vought, have struggled with the new responsibilities, contributing to chronic delays in the 787 production process. Boeing is trying to overcome those problems by taking a direct stake in the assembly plant.

The fiasco hitting both Boeing and Airbus reminds me the other giant project stumbling occurred in the Heathrow Airport expansion project and others. It appears to me that the mistakes seems to be inavoidable when the size of the project becomes large. It is like the more complicate the machine is, the easier it will malfunction.

The lessons have been learned:

1.Never make a promise when the uncertainty is too high. Remember, the forecase to the furture could never be correct.
2.Be wary of your innovative idea bears potential risks that will bite at later stage
3.Always do what-if analysis in the project planning. Having a plan B never hurt you.
4.When the schedule is slipping, don’t expect the problem would solve by itself. Jump over it immediately and sort it out before it festers

Negotiate smartly

Our negotiation with a potential acquision target hit the snug. All the team members are very frustrated except me. It is true that our counterparty is tricky and he rolled back some common understanding both sides achieved in the last round negotiation. His sincerity to make a deal with us is questioned and at our side the energy to pursue this option is sapping, apparently.

In my perspective, I think otherwise. (But the problem is that I don’t know whether I should present my idea to the team at the point of time because I am going to leave the project soon. Besides, I had the precedent of putting out my ideas without a positive response from my teams). Anyway, I should write another blog about the survival rules in a Chinese-German team. Back to the topic, I think we should not let our emotion to make our rationale get hostaged. So far, we only get two plausible options, and this one is the most wanted. I exchanged some ideas about it with my MBA classmate. Her words enlighten some unknown aspects, to me and surely to my teammates too. She told me that usually the assets with intrinsic value would be inevitably in the radar screen of a few value seekers. So we are not only approaching them. The owner might be in the talk with multiple parties. Therefore, his behavior of rolling back has a good explanation. Probably he is buying time to decide his best option.

The focal clash between two sides are the asset owner’s request to secure a price premium over the market average price. (the hidden assumption is that the premium will gurantee his profit in the deal). Frankly speaking, it is understandable at the first glance (benefit maximization). However, one question dwelling in my head is that as long as we are on the same boat (JV), the profit us will also means the profit for him, why he wants this kind of insurance in the contract which seems unrealistic? (at the end of the day, no such a business can gurantee profitable, not mention the price pre-fix in a M&A deal. The common sense is that the price should be set according to the market condition)　My guess is that since our company will act as the sole sales agency to sell the product in the market, he worries about part of the profit we might block before it transfer to the JV. (actually this would be the case, because all the revenue will go back to JV directly). I raised this topic and want the team to calarify it with the asset owner, but my suggestion is ignored.

A fruitful negotion requires patience, hardwork and a somber mind. But what I can see is that the emontion is taking the front seat. The stamina is in short to bring the negotion into the direction we prefer. The team is too judgemental on the countparty’s personality to lose the sight of the big picture, what we want to get from this deal.

On 12-12-2007, I made my proposal in an e-mail as follows:

Refocus on the big picture
It looks that we are wrestling with T－H on the price premium the JV should impose over the average market price. We all know that Mr.owner’s goal is to be better-off after the formation of the JV. Better-off can be defined as the net value outcomes (NVO) created in the cooperation with Company X . And we have many ways to bring the NVO for Mr. Owner, like selling the capacity that can not be sold by themselves alone,reducing cost through Company X ’s management expertise, the good-will we are willing to pay, the sharing of business risk and of course the price-premium too. In light of the foreging, the price premium is only one the means to realize the NVO but it is not the NVO itself. I think now the means and the goal are mixed up, consequently we are battling for a tiny part of the whole big picture.

To break the stalemate, rather than tangle with Mr. Owner over the single issue----price premium, I think we can make a all-dimension scenario comparasion beween pre-deal and post-deal to Mr.owner by which to convince him that first, there are many roads leading to better-off instead of levying price premium only; second, a price premium commitment might not always work for him, if the volume is influenced negatively and thereof undercut the total revenue, the price premium will just backfire.

What is Mr Owner’s bottom line?
Up to date, Mr. Owner actually raised two issues, 3X3% Company X ’s surcharges and selling price premium. Without doubt, more issues will be coming along the way, but for any issues, we need to know what is Mr.owner's bottom line and what is negotiable? Bidding high and selling low is the common practice in a negotiation, there is always distance between the ideal situation and the minmium the negotiators want to accompish from a deal. So I think what Mr. Owner is asking for now might be something ideal in his mind, not the bottom line. We need to compromise, Mr.owner needs too. Then the consensus can be reached. But by any means, we should probe Mr Owner’s reservation price/bottom line in order to shape our offer in a best possible way.

Shall we craft a negotiation strategy?
What we are doing now in the negotiation is more responsive rather than pre-emptive. Maybe because we are still at a very early stage of negotiation and many things are unclear to us, therefore we don’t form a strategy yet. Nevertheless, since we have seen how fickle Mr.owner is and the impassee he placed right in front of us, probably it is time for us to give a thorough review on the building blocks of this negotiation, like the parties(Mr.owner), issues, postions, interests, priorites and BANTA(Best Alternative To a Negotiated Agreement). Afterwards, we can think about how to deal with him and move the negotiation toward our favoralbe direction.

To sum up, we could not the owner’s words just by their face value. We should fathom what is meaning behind. Chinese are high-context, right? When the countparty’s concerns, worries and motivation are all understood, then our strategy can be easiy developped to remove the roadblocks in the negotiation and get what we want from a deal, maybe with some compromise. A responsive approach in a negotiation won’t work because it is passive and too dependent on the