Foundational Traits vs. Accelerators: What Can and Can't Be Taught

Foundational Traits vs. Accelerators: What Can and Can't Be Taught
by David Peterson

"She's a born leader." We've all heard that phrase used to describe a colleague, subordinate or boss. But can someone really come out of the gates ready to take the helm of a project, a division or even an entire organization? Probably not. But those with the right foundational traits - those they were born with, such as mental aptitude, energy level and thought focus - have a much better chance of becoming successful leaders. 

Think of foundational traits like a rubber band. Leaders can stretch these
attributes, but only so far. For example, people can work to be more
independent if their natural inclination is not to be, but at a certain point, going out on a limb with their own ideas will fall beyond their comfort zones. 

In contrast, accelerators are experiences and interests that help leaders grow and prepare them for new challenges. Examples of experiential accelerators include participating in rotational assignments, being part of a team responsible for critical organizational change or being responsible for high-risk situations. In terms of motivations and interests, an ideal high-potential candidate is someone who is energized by increasing challenges and responsibilities, and motivated to acquire skills and experiences necessary to succeed.

When organizations analyze key talent, it is critical they first consider
foundational or hardwired traits. If a leader lacks core foundational traits, it will be hard to acquire him or her later for a role a few levels up from the leader's current position. However, leaders who are missing some of the accelerators can actively pursue them, increasing their odds of long-term success.

Another important factor is the type of role for which a leader is being
groomed. If someone is being considered for a mid- to upper-level accounting role, it may be all right if he or she does not have a high level of independence because the function is so clear. But at the highest levels of management, in all functions, including accounting, lack of independence can become a knockout factor.

Foundational traits and accelerators are especially important for organizations looking at long-term talent investments. How people perform today is not always a good indictor of how they will do in higher positions requiring different skills and aptitudes they may not have learned at lower levels. Some things are much more difficult to learn than others. Identifying people with the necessary foundational skills is essential when their current and past roles have not tested them on skills required for a new position. 

Picture two excellent hands-on managers who are receiving coaching. The first consistently delivered more than was expected of him and focused on achieving the objectives set by his superiors. The second manager delivered, too, but in a way that occasionally gave his supervisors heartburn. He challenged the direction he was given, preferring to question the status quo and pursue breakthrough ideas that had even greater impact than expected. 

When it came time for the organization to choose which manager would be better for a key senior-level position, top executives were leaning toward the first manager because he was seen as a real team player. Why did the executives automatically choose the easier candidate when higher roles call for increased thought agility and the ability to make quick decisions on one's own, without being told what to do?

This isn't to say someone who defies authority is automatically a good
choice. But organizations should think about talent on a spectrum - from
someone who will only do what conforms to those who think they have all the
answers. The perfect person should behave somewhere in the middle. Giving the second manager new experiences where he has to lead highly talented teams and rely on others - an accelerator - will help him achieve the organization's long-term goals. Former GE head Jack Welch, the consummate rebel, made it to the top because the previous CEO, Reg Jones, saw beyond the rough edges and understood Welch had the foundational traits to be enormously successful as GE's competitive landscape was changing.

There is an important lesson in this for large organizations. During the tech boom of the late 1990s, several large, rapidly growing companies were
aggressively hiring talented, entrepreneurial, independent leaders. The
managers of those free-thinking individuals often asked them to toe the line and do what they were told. The majority of those entrepreneurial spirits became discouraged and left to go out on their own rather than mindlessly conform. A few years later, those companies found themselves desperately searching for strong general manager candidates because so many innovative, take-charge people had left. The point, again, is to take a longer term view of talent. Give the right people the right accelerating experiences and be willing to coach them on their journeys.

Who Has the Potential?

It isn't always apparent who has the right foundational traits to be
successful down the road. An integrated measurement approach can help. Good
assessments measure cognitive ability, behavioral predispositions, past
experiences and key motivations to get the full picture of foundational traits and accelerators. Participants are assessed based not only on their results but onwhat is necessary for the role for which they are being considered.

The Basics and Beyond

Which traits move the needle and are good predictors of future success?
Personnel Decisions International research shows seven traits affect success as managers advance in an organization. As one moves up, they need more of the following at each level:

a) Energy
b) Influence
c) Risk taking
d) Thought focus
e) Vision

And they need decreasing amounts of these traits:

f) Micromanaging
g) Passive-aggressiveness

As leaders take on more and different responsibilities in higher roles, it is clear they need increased self-management and drive to do their jobs, which are exemplified through the energy, risk taking and power to influence traits mentioned above. They also need to have a greater breadth of thinking - the vision and thought-focus traits. The decreasing tolerance of derailers such as micromanaging and passive-aggressiveness is clear as leaders move up the ladder.

Paying attention to all these traits is critical at every level, but the weight each is given depends on the level and role for which someone is being considered. A side-by-side comparison of foundational traits and accelerators for key management positions of mid-level leaders and business-unit leaders provides insight into different priorities, based on the role.

A mid-level leader's role is tactical, with interpersonal challenges at its
center, while a business-unit leader's role is more strategic and requires
responding to competitive challenges and market opportunities, as well as
aligning the business unit for maximum profits and future success. Essentially, with different roles come different priorities.

Motivations and Interests

Even when leaders have the right foundational traits and a breadth of
experiences, they may not have an interest in moving into bigger, more
time-consuming roles unless organizations can determine what would motivate
them to take on new challenges. For most leaders, money and promotion are noton the top of the list. In fact, a recently released PDI research study found high-potential, mid-level and business-unit leaders ranked compensation and advancement as the most important aspects less than 10 percent of the time.

Each leader's motivation may be different. Supervisors need to sit down
with high-potential employees and determine their specific key motivators, or they'll lose key talent. 

Consider an extremely bright, efficient leader who most thought could lead just about any organization. But she repeatedly said she was happy in her current role and didn't really care about recognition or reward. However, she did care about getting bored. A couple years after the discussion began, she decided she needed a bigger playing field and made a move up. This has happened about every two years for almost 10 years.

Focus on the Future

In today's uncertain business environment, many organizations pay less
attention to developing talent and focus more tightly on current financial
challenges. However, that shortsighted approach can cost organizations dearly as they try to put the right talent in leadership positions to guide through the downturn and then prepare for growth.

[About the Author: David Peterson is senior vice president of executive
coaching for Personnel Decisions International.]

How to Align Hands-on Learning With Business Objectives

How to Align Hands-on Learning With Business Objectives

by Andrew Snider | Chief Learning Officer

 

Organizations today have to be agile. Change has become the new normal, and traditional learning strategies are no longer effective in helping leaders deal with turbulent times. To provide real, lasting leadership, they must adapt and respond to these external changes, even when there are unpredictable events or forces of nature in play. So companies are responding to these constant changes with a more hands-on approach to executive training - one that combines experiential learning with focused business facilitation.

 

Experiential learning isn't all that new. On its own, however, this method is rarely sufficient to drive effective change in leaders. Participants may feel disconnected from the immediate challenges of the workplace and revert back to old habits or strategies.

 

According to Robert Miles' January 2010 article in Harvard Business Review, "Accelerating Corporate Transformations (Don't Lose Your Nerve!)," corporate transformation requires "getting organizations to execute their bold new ideas quickly," and in many cases this requires a departure from the norm. The most valuable executive leadership training programs not only take people outside of their comfort zone but go a bit deeper - incorporating an emotional component and hands-on experience that translates directly back to the workplace.

 

For example, after conquering a physical and daunting task such as helping team members successfully cross high wires 25 feet in the air, even the largest business challenge can seem manageable. Despite the unpredictable environments in which they are operating, leaders from organizations of all sizes and across industries are finding that an integrated, adaptive approach to learning can help teams endorse change, apply new behaviors on the job and achieve strategic goals.

 

The following is a look at three companies, briefly exploring their specific challenges and the learning programs that helped them break new ground, launch a new strategy or expand into a new market. The methodologies they used combined experiential learning with highly focused business facilitation to accomplish the desired changes rapidly.

 

Legal Sea Foods Fishes for Leadership Guidance

 

Successful individuals and teams tend to repeat the behaviors that have worked for them in the past, even when the circumstances or goals have changed significantly.

 

Last February, Legal Sea Foods, which operates 30 restaurants across the country, prepared to open its first mega seafood restaurant on the historic Boston Harbor waterfront. Some would think this would be old hat for an experienced company that has grown over several decades from a small one-store operation to a major operator in the industry.

 

But the challenge in 2011 was different. The new restaurant concept was a complete departure from what Legal Sea Foods had done in the past. For one, the new restaurant was significantly larger - more than four times bigger - and more upscale than previous locations.

 

To quickly bring Legal Sea Foods' top dozen executives up to speed to successfully launch the 24,000-square-foot facility, the company had them participate in an extensive adaptive leadership program - a two-day offsite in New Hampshire. The integrated learning program, which included exercises like high-rope challenges followed by structured group meetings, kept the team engaged and aligned throughout the launch process and reaffirmed the need for employees from various areas to be aware and informed of how each department operates.

 

Before the program, Legal Sea Foods had identified a few of its top concerns, and each exercise in the program, whether physical activities or dialogue, worked to address these issues. For example, communication throughout the organization needed improvement. So during learning exercises, the restaurant's seating area's leader was paired with its head chef, as they needed to become more collaborative. By the end of the two days, the team had clearly defined roles and come up with reachable goals to be carried out at the launch of the new restaurant.

 

"What my team accomplished in two days would have taken months otherwise," said Roger Berkowitz, president of Legal Sea Foods. Legal Harborside Restaurant opened its doors in May with few surprises, exceeded initial profit forecasts and remained on budget. In this case, the Legal Sea Foods executives learned about new strategies for a specific event - the launch of the new restaurant. But there are times when leaders are faced with even deeper challenges, like shifting from old modes of operating to new approaches of flexibility. As the saying goes, you're only as strong as your weakest link. This is magnified when a company seeks expansion into other markets.

 

Ridemakerz Toys with Growth Potential

 

Ridemakerz, a custom toy company that works with Disney/Pixar, Dodge, Ford, General Motors and NASCAR, faced this issue head on. The organization was growing dramatically, primarily distributing its toy cars - everything from mini-monster cars to Disney/Pixar's Lightning McQueen cars - through a few specialty stores such as Disney outlets.

 

After a fast start, growth stalled, and executives were not sure why. Ridemakerz was progressing much slower toward its objective to double sales by rapidly penetrating other major retail outlets. To reach this ambitious goal, the whole organization needed to be aligned behind significant shifts, all in the midst of some unknowns like where it would end up and how much it would grow.

 

The Ridemakerz executive team of 10 people participated in a highly focused off-site retreat, which spanned a two-day period, where it engaged in outdoor team-building exercises and even cooked dinners together between intense facilitated sessions.

 

During this two-day process, the company was able to pinpoint weak areas that may have been preventing it from growing. It identified gaps in how the team was functioning and in the abilities of some team members. For instance, one member in particular was not pulling his or her weight, leading to a host of other problems. Once Ridemakerz identified this as one of its barriers, it was able to work together as a team to reassign work and develop a detailed action plan moving forward.

 

"This was a critical step to build and proactively transform our business for the next level," said Larry Andreini, chief executive officer of Ridemakerz. As a result, the company has already penetrated one of the world's largest retail outlets and is on track to grow by 50 percent this year, while also breaking into additional distribution chains.

 

Another specific challenge in the learning space is effecting change across multiple departments and ensuring it's not just one business unit that's benefiting from learning programs. When the business is large, this issue can become even more complex.

 

Grand Circle Travel's Grand Challenge

 

Grand Circle Travel, a privately held tour operator of international vacations for older Americans with more than 2,000 employees based in more than 30 countries, experienced this challenge when shifting to a new marketing model. The company had historically depended on direct mail marketing to generate business, but the environment had changed, and loyal customers now expected more, such as highly personalized contact through Web, phone and mail.

 

Alan Lewis, the company's chairman and chief executive officer, recognized the issue extended well beyond a single team or department. To shift the organization's focus from the old marketing model there needed to be more communication across department lines. Lewis brought together more than 40 executives in the company's marketing, IT and operations departments who engaged in a number of facilitated off-site programs and a series of retreats.

 

Employees left the learning sessions equipped with specific short-term objectives and energized to move the company in a new direction. As a first step, the company recently launched a new highly interactive website and is working collaboratively on other deliverables that were mapped out with a clear-cut 90-day action plan.

 

Getting Started

 

People and organizations naturally resist change. For any program to be successful there must be a structured process that aligns people on common ground and appeals to them on a meaningful, more emotional level. It's hard work and will not happen overnight, but does facilitate change when the following are present:

 

a) Engaged, authentic leadership.

b) Commitment to developing people.

c) Ability to learn from crises and mistakes.

d) Clear, measurable 90-day plans.

 

Executive learning is no easy task, and sustaining change is even more complicated. There are countless adventure programs where learning is paired with physical activities, but what many of these fail to incorporate is the larger tie to specific business challenges. When done properly, the learning process can be life-changing and have great results, but only in as much as the company is able to tap into the participants' emotions - their fears, strengths and weaknesses - and then link them directly to business challenges.

 

 

[About the Author: Andrew Snider is managing director of off-site training program provider Grand Circle Leadership, a division of Grand Circle Corp.]

 

Job Descriptions for the 21st Century

Job Descriptions for the 21st Century
by Irving H. Buchen


Job descriptions are often a weak link in the talent-management chain. The challenge for HR is to make job descriptions more dynamic and reflective of job change on the one hand and to create a more rigorous and accurate process of job qualification on the other.


Job descriptions are generally the monopoly of HR and have been a staple of that division for generations. Created as part of the scientific-management movement of Frederick Winslow Taylor, and others, it applied to workers the same process of analyzing stages of work and making production more manageable.


At about the same time, it also added what is so prized today -- metrics -- or job descriptions structured by evaluation time tables and scope, built-in anniversary dates and job range.


In more recent times, it has met compliance needs for affirmative action, becoming the official means of ensuring equity of recruitment access, just as a set number and kinds of questions from which no deviation was permitted was developed to ensure equality of interview.


Throughout, it has remained the province and jurisdiction of HR to the point where a job search no matter how urgent has to await the sanctioned appearance of an officially approved job description as a precondition for going ahead.


But, of late, that old war horse has been challenged.


First, job descriptions are often dated. Typically the files have not been reviewed for years. In one Silicon Valley company I visited as an HR consultant, I pointed out that the job had been eliminated; on another occasion, that the job title had been changed to such an extent that it defied even being alphabetically found.


Minimally, then, the first lesson for HR is to clean up its act -- compliance requires currency.


Second, even if updated, many hiring managers have complained to me that, as currently composed, most descriptions are guilty of serious sins of omission and thus compromise finding the right fit.


The checklist of what is left out is generic and includes stretch goals, cross-overs, multi-tasking, telecommunicating -- all have rendered many job descriptions more a work in progress or an operational draft than a final official version.


But perhaps the most serious objection of all is that job descriptions as presently constituted and delivered may be a basic obstacle to effective recruitment and retention of talent. So much so that Tom Peters has recommended destroying them all!


Although a radical remedy, the value of his condemnation is that it forces re-examination of this basic mainstay and takes us back to square one. What is the basic nature of the job description, what does it do well and what are its limits?


1. A job description is an information document.


2. Its focus is to inform and screen.


3. It seeks to accomplish that double task by accurately defining the job and profiling its qualifications.


4. But traditional job descriptions are static and one dimensional.


5. Current jobs are evolving and multi-dimensional.


6. Minimally two serious failings thus emerge: lack of job fidelity and inadequate process of job qualifying.


The challenge then is two-fold: how to make job descriptions more dynamic and reflective of dynamic job change on the one hand and how to create a more rigorous and accurate process of job qualification on the other?


Oh, yes, and ideally, how to do both so that it does not have to be done again and again? Taking an experimental approach, a number of tentative changes come to mind:


1. Render the job description as both a descriptive and evaluation PDF document, ideally posted on the company Web site.


2. Tie it from the outset to performance-evaluation criteria and timetables to ensure currency of updating and upgrading.


3. Design it as an interactive and responsive form available to applicant inquiry.


4. Build in a series of gatekeeper qualifications for each major area of responsibility and skill set.


5. Create prompts to guide access to, and optimum use by, prospective applicants.


But, as simple and basic as that sounds, it is perhaps more complicated than it appears.


An interactive job description requires a lot more information and background than the standard version.


For example, many manufacturing companies compete intensely for plant managers. They are hard to get and even harder to keep. Why? Because plant managers are know-it-alls.


Nothing to them is too small, trivial or distant to be ignored. They want to know everything about the job. A typical flat, familiar and predictable job description turns them off. They are aggressive.


For example, they particularly push to know the extent to which their decisions may be checked by marketing or finance. If there are multiple sites, they want to know whether multi-disciplinary or virtual teams provide cross-lateral functions.


In short, what I have found is that if HR is going to attract the best-of-the-best plant managers, it has to offer them steak not pablum.


That means that HR has to put together and preside over an intense internal collaborative team that miniaturizes the whole of that job and that is typically way beyond the limited and often self-serving input of a single hiring authority.


Moreover, to be truly 360, the job profile has to pair description and qualification up and down the whole line if it is also to function as a screening device.


But what may finally may be the most difficult hurdle of all is the willingness to accept and develop a job description that replaces or becomes the first interview -- that requires turning over exclusively to prospective applicants three basic initial fact-finding questions: 'Is this the kind of job I am looking for?' 'Do I have the qualifications to do it?' and 'Where does it take me?'


Unless a job description offers honest and thorough answers to these driving informational needs, it is more an obstacle than an avenue to effective recruitment and retention.


As a consolation, all this extra up-front work may generate a number of offsets.


The first and most obvious is to collectively raise the knowledge level of the culture, not only about jobs but also their operational dynamics. Then, too, by becoming smarter about the job's interoperability, what needs to be built into the applicant self-qualifying process becomes known. Most important, a key trade-off is accepted: greater access to more information is accompanied by self-assessment of whether or not minimum qualifications are met to justify applicant going ahead or withdrawing.


In other words, gate-keeping criteria are built-in at key decision points to facilitate a do-it-yourself job-screening process. In the process, all or most unqualified applicants would be weeded out; optimally a relatively short list of prospects would emerge primed for the kind of more in-depth exchange characteristic of later face-to-face or phone interviews.


Does it work? I have adapted it with success to a number of competitive situations and even to executive-level searches that have been hard to fill. One basic change for the latter is to have the interactive job description behave and perform more like an executive coach, prompting dialogue rather than unilateral input.


Why? Because outstanding candidates love to tell war stories about their successes and because they pride themselves on their due diligence. This is thus particularly welcomed by candidates who do their homework.


The process reflects the kind of digging and research good candidates routinely do anyway. As to candidates claiming they are qualified when they are not, that turns out to be the ultimate disqualification -- and usually can be forestalled by indicating that such accurate self-judgments determine whether one, in fact, is really qualified for the position.


What are the downsides? HR has to take on the initiative of more collaborative and interactive internal job definition than typically is involved in just updating a job description.


In the process, HR may have to oversee and manage internal negotiations and conflicts especially about qualifications.


Above all, HR has to champion job knowledge access and transparency over control and imprecision, and move up the entire process so that it engages applicants early on in direct exchange.


But the gains are substantial: better understanding by all -- hiring personnel and applicants -- of what the job is really about and all that is required to get it done, and the rare focusing of the collective knowledge of the culture.


Above all, it reaches HR's goals of raising the level of engagement to the next step, not losing or turning off good candidates, upping the ante of finding the best fit and challenging candidates from the start.


Should this be done across the board? For many companies involved in number of hirings per year, it may appear too much to undertake especially for run-of-the mill-vacancies.


My basic advice has been to limit it initially to highly competitive hard-to-fill jobs and see whether it makes a difference -- measured both by the level of applicants attracted and the degree to which they self-qualify.


But two factors need to be remembered. First, weeding out takes time and often involves costs. Eliminating the unqualified or underqualified at the outset thus saves both and should not be minimized.


But, second and more important in the final analysis, this has to become an HR strategy because it alone is the keeper of the job-description repository, represents the only companywide across-the-board spokesperson of the work culture and can exercise leadership change to a total talent-management system.


Even a relatively few well-chosen and well-placed new hires speaks volumes about a culture that values talent and is willing to devote its time and intelligence to their acquisition, retention and promotion.


[About the Author: Irving H. Buchen, Phd., is a member of the doctoral business faculty at Capella University and associate vice president for IMPAC University. An active HR researcher and consultant, his most recent book is Partnership HR (Davies-Black, 2007). He has served as a management consultant, trainer, and executive coach here and abroad for numerous corporations. He secured his doctorate from Johns Hopkins and has been a professor and an academic administrator at Cal State, University of Wisconsin, and Penn State.]

Negotiating in Three Dimensions

Negotiating in Three Dimensions
by Martha Lagace (HBS Working Knowledge / October 02, 2006)


Tactics, deal design, and set-up are three crucial components of the most effective negotiations. Yet many negotiators focus only on the tactical part, running the risk of undermining their own best interests. How can you negotiate more skillfully and confidently with clients, partners, and adversaries as well as with colleagues within your organization?


In this Q&A, James Sebenius and David Lax, authors of 3-D Negotiation: Powerful Tools to Change the Game in Your Most Imported Deals, discuss the common mistakes of negotiators, the power of a three-dimensional approach, why negotiating is an essential skill, and where the science of negotiation is headed.


Negotiation is a core competence for life, "not merely an important skill to be wheeled out for special occasions," they argue.


James K. Sebenius is the Gordon Donaldson Professor of Business Administration at Harvard Business School and a principal of Lax Sebenius LLC, a negotiation strategy firm. He also serves on the Executive Committee of the Program on Negotiation at Harvard Law School. David A. Lax, a former faculty member at Harvard Business School and investment banker, is now principal of Lax Sebenius LLC.


Martha Lagace: 3-D Negotiation presents a multi-dimensional approach for people who thought negotiation was only about what happens at the bargaining table. What common mistakes do you see and what typical assumptions about negotiation are you challenging?


James Sebenius and David Lax: Even experienced negotiators make mistakes in all three dimensions. Let us start with the least familiar kind of mistake. Flaws in our third dimension, the set-up of a negotiation, can take many forms: wrong parties, wrong issues, wrong walkaways, wrong sequence, wrong basic process choices. Here's one common set-up error (among many): It is easy to make one kind of mistake in your choice of negotiating agents. You know the importance of using a skilled and knowledgeable negotiating agent as well as crafting a contract that aligns your agent's incentives with your own. Yet a well-structured contract with your agent may not be enough.


For example, top executive pay attorney Joe Bachelder once took his client aside after the first negotiating session. The board had selected his client to be its next CEO and was working out his compensation package. Bachelder informed his client that he would end up with everything he wanted from the negotiation. Why was Bachelder so confident of total victory? Because, he explained, the board had put the firm's well-regarded general counsel in charge of the negotiations. Why was this a mistake? It was not an issue of effectiveness: The general counsel was undoubtedly a skilled negotiator. Yet, as Bachelder happily informed his client, "When this is over, you're going to be that guy's boss. He knows that. He can't fight you too hard on anything."


In retrospect, the board made a simple set-up error; it got the parties wrong in this negotiation. For its representative in these critical talks, the board should have hired an outside specialist, with properly aligned interests and incentives. More generally, you should look hard at a potential agent's other interests and relationships to determine whether he or she is part of the right negotiating set-up.


Now let's move to some errors in our most familiar first dimension, face-to-face tactics "at the table." Negotiators listen and communicate poorly, make cross-cultural gaffes, fail to respond effectively to hardball styles, and so on. One of the most common tactical errors arises when people become fixated on their bargaining "positions" rather than probing for the full set of underlying "interests," or what each side really cares about. Failure to uncover interests often leads to mistakes in our second dimension, deal design, such as treating potentially more cooperative agreements as pure price deals in which the interests of the parties are strictly opposed.


Consider an example of both kinds of mistakes from the U.S. Midwest. In this case, environmentalists and farmers opposed a power company's plans to build a dam. On the surface, the parties appeared to have deep, irreconcilable positions, which had resulted in a long stalemate. Yet a superior deal could be designed if the parties looked past their stubborn bargaining positions to their underlying interests.


By stepping back and mapping the parties' real interests, it emerged that the farmers were worried about reduced water flow below the dam, the environmentalists were focused on the downstream habitat of the endangered whooping crane, and the power company urgently needed new generating capacity and a greener image. After a costly legal impasse that threatened to last for years, the three groups designed a better deal that included a smaller dam built on a fast track, water-flow guarantees, downstream habitat protection, and a trust fund to enhance whooping crane habitats elsewhere.


Working solo or jointly at the drawing board, negotiators sometimes can discover hidden sources of value and then craft agreements to unlock that value and overcome barriers created by poor deal design. Here are some questions to ask the next time your talks seem stalled for deal-related reasons:


1. Is price truly the only issue?


2. Can we unbundle different aspects of what looks like a single issue and give each side what it values most - at low cost to the other side? Are there other high-benefit, low-cost trades?


3. Should we add value-creating contingencies and risk-sharing provisions to the contract?


4. Can the contract cope not only with economic issues but also with the egos involved?


These are but a few of the many common negotiating errors we see in practice.


Q: Your 3-D alternative draws on three dimensions: tactics, deal design, and set-up. In a nutshell, what do these elements mean individually and together? Should a negotiator weigh them equally, especially under time pressure?


A: Whether your focus should be on one or a combination of tactics at the table, deal design, or set-up moves away from the table depends directly on the nature of the barriers that you face. When you have a potential deal in mind, we have developed a set of tools to quickly perform what we call a "3-D barriers audit" to determine what barriers stand between you and your desired agreement. While there are many specifics, the broad diagnostic questions follow our three-dimensional scheme. 


First, you should ask whether it is a tactical or people-related barrier like communication, trust, misperceptions, or the like. Second, you should ask whether the problem is deal-related: Does the proposed agreement offer sufficient value to the parties to be more attractive than no deal? Does it accomplish their objectives? Third, are there set-up problems such as wrong parties, interests, no-deal options, sequence, or basic process choices?


When talks stall, it's tempting to jump to conclusions: "It's purely a price gap." "They're being unreasonable." "We're not communicating well." "We're in a weak position." Instead of focusing on the first explanation that leaps to mind, you should critically diagnose the key barriers to the kind of agreement you have in mind; this will then allow you to devise the most promising approach to overcoming them. Without an accurate barriers assessment, the strategy and tactics you craft may address the wrong problems.


Imagine that a supplier is negotiating with an important but difficult client who adamantly refuses to budge on certain contract terms. Assuming that they face an interpersonal or tactical barrier, suppliers often seek training on the principles of persuasion, joint brainstorming, how to make advantageous initial offers, body language, and so on. 


Yet apparent tactical or interpersonal barriers may actually be another type of problem. More broadly, the best response to a barrier in one dimension may be moves within other dimensions. As the purchasing agent calms down a bit, for example, he mentions that cash is very tight, "especially this quarter." Is this a deal-design barrier? Perhaps a delayed payment schedule would do the trick, with the bulk of the payment due when procurement budgets are replenished.


The frustrated supplier also may be overlooking a fundamental set-up barrier. While top management from both firms might speak of the importance of "partnership" and "quality," the purchasing agent may be motivated by monthly targets and pennies ground out of suppliers. To succeed, the supplier may need to create a more promising set-up with more sympathetic parties involved in the negotiation.


This can mean finding and nurturing an influential internal champion on the other side who would truly benefit from added quality and service. The supplier might induce such an advocate to persuade the agent on her behalf, directly or via links to senior management. Beyond a good proposal and the effective interpersonal skills needed in the initial two-party negotiation, a three or four party set-up - internal champion plus senior management in addition to the supplier and agent can maximize the odds of the supplier's success at the ground level.


The broader point is to do a 3-D barriers audit, then craft a 3-D strategy to overcome those specific barriers. A 3-D strategy is an aligned combination of set-up moves away from the table, deal design moves "on the drawing board," and tactics "at the table" all tailored to overcome the barriers you've identified.


Q: One-on-one negotiations are often tough, but the complexity is magnified during multiparty negotiations, especially when some of the interested parties are not obvious. How do you advise flagging all key influencers?


A: To get the set-up of a negotiation right, you need to get parties right. You might think that the parties are simply you and the person on the other side of the table, but it is often much more complex, requiring an act of disciplined imagination rather than a mechanical list. In our new book, we systematically work through ways to get the right "all-party map." In a nutshell, you need to take a disciplined look beyond the usual suspects to figure out who might really matter: potential and actual parties, internal and external players, principals and agents, decision makers and influencers, allies and blockers, and high and low value parties, as well as those who must approve and implement the deal. Map the relationships among those on your all party map by assessing the informal as well as the formal decision and governance processes.


For example, to improve the odds of your ultimate target saying "yes," we often use a process called "backward mapping." Start by trying to discern who influences the target player and to whom that player defers. For example, when we were advising a client who was eager to sell his company, we counseled him against his instincts to quickly open serious negotiations with a potential acquirer's CEO. Instead, we researched whom the CEO would turn to regarding acquisitions. Of course, his CFO would be pivotal. Continuing to map backwards from the CFO, we turned up an analyst in the finance department whom the CFO deeply respected and who would almost certainly do the valuation work on this somewhat unorthodox deal. After initial contact with the CEO, we spent a great deal of time ensuring that the key analyst bought into the deal. When intensive negotiations finally began with the CEO, the groundwork had been laid. The CEO turned to his CFO, who turned to his key analyst, who
made our case from the inside.


Q: You've asserted that negotiation should be a core skill for virtually all managers. Why? How can managers who are not directly involved with deal making assess and hone their own skills on a regular basis?


A: Most important managerial problems involve people whose interests and perceptions are in some conflict. Effective management and leadership often depend on the capacity to envision and bring about sustainable agreements among these parties. This is true with respect to discrete transactions such as mergers, labor contracts, and out-of-court settlements. It is true when working out new supplier and customer relationships, dealing with large shareholders and creditors, as well as initiating and managing cross-border strategic alliances. It is true inside the firm where people from different functional areas and divisions need to reach and implement new cooperative arrangements in response to change. It is true with respect to conflicts arising from the interaction of businesses with governments as well as with environmental and other nongovernmental organizations. It is true as workforces become more diverse and business increasingly crosses borders and cultures. And it
is endlessly true for entrepreneurs who must come to productive terms with investors, potential employees and board members, technology partners, distributors, and possible acquisitions as well as would-be acquirers.


Yet beyond such formal deals, negotiation is increasingly a way of life for effectivemanagers for at least three sets of reasons.


First, formal authority, hierarchy, and command are less and less able by themselves to ensure productive cooperation and genuine commitment. This is the case internally where cross-functional and inter-unit coordination is crucial and where greater professionalization means that key employees and colleagues both have and value more autonomy. It is also true externally with an increasing number of influential stakeholders outside the traditional chain of command. Newer and flatter organizational forms - strategic alliances, joint ventures, tightly-knit supply chains across different firms, virtual corporations, network entities, as well as team-based processes - generally require almost continuous negotiation to function effectively.


Second, the sheer pace of change in markets, technologies, and competition puts a sharply increased premium on the capacity of organizations to flexibly respond by devising new arrangements and renegotiating the old ones. Salient examples requiring some truly complex negotiations include the convergence of computing, telecommunications, and information/entertainment sectors as well as a steady flow of restructurings, especially in heavily leveraged parts of the corporate, financial, and real estate sectors. Operationally, "flexibility" in the face of a faster pace of change - combined with an increasing number of influential stakeholders - means that yesterday's arrangements must be reworked into today's, and that today's will have to be altered to meet the needs of tomorrow. Persuading key stakeholders to abandon familiar practices and perceived entitlements can severly test a manager's negotiation skills.


Third, increasing demographic diversity of the work force and genuine globalization of business raise the risks of unproductive cultural misunderstandings and costly conflict. These outcomes can often be prevented or mitigated by effective negotiation. In short, negotiation has always been a useful skill for managers to deal with disputes and to make deals. But with more influential stakeholders, with authority and hierarchy necessary but decreasingly sufficient, with looser organizational forms, with an increased pace of change, and with greater diversity and global reach, negotiation assumes greater importance. For effective managers, it is a way of life, a new core competence, not merely an important skill to be wheeled out for special occasions.


To hone their negotiation skills, the first requirement is to recognize the prevalence of formal and informal negotiating situations. Then, naturally, we suggest becoming familiar with the framework of 3-D negotiation. Much like the job of a manager, 3-D negotiation is not merely and an architectural one (getting the set-up right to induce maximally productive cooperation).


Q: Given geopolitical tensions today, what are the complexities of the challenges facing professional negotiators whose work is very high-stakes? If it's possible to generalize, how do you view the skills and practices of most negotiators working on high-stakes issues? Are there large or different "skill issues" compared to previous periods of time you've witnessed?


A: There is a fruitful dialogue underway between people negotiating business, legal, and financial deals and their international counterparts faced with life-and-death negotiating challenges. Each group can learn important lessons from the other since there are remarkably many similarities.


Here at Harvard, we have initiated and hosted an annual Great Negotiator Award series over the past six years, sponsored by an inter-university consortium of Harvard, MIT, and Tufts through the Program on Negotiation. Honorees have included such figures as George Mitchell, Charlene Barshefsky, Richard Holbrooke, Lakdhar Brahimi, Stuart Eizenstadt, and Sadako Ogata. We've written detailed cases on the most challenging negotiations faced by these remarkable men and women - whether ending the war in Bosnia, creating an interim government in Afghanistan, crafting a U.S. - Chinese trade deal over intellectual property, or getting Protestants and Catholics in Northern Ireland to come to terms. By spending intensive time with these great negotiators, writing cases on their most challenging deals, and relentlessly probing their thought processes and approaches to some of the world's most difficult negotiations, we are able to add even more valuable source material to our
intellectual and practical treasury.


For example, when you asked above about how to get the right parties involved to set up the most promising negotiation, we might have drawn on the experience of one of our awardees, veteran U.N. diplomat Lakdhar Brahimi. Prior to his recent efforts negotiating interim governments in Afghanistan and Iraq, he took the lead in ending the bloody, seventeen-year civil war in Lebanon. Should the negotiating set-up simply include the leaders of the warring factions? No. As Brahimi recalls:


...we met in Jedda [Saudi Arabia] to discuss our plan. We needed the Americans with us. We needed the United Nations with us. We needed France with us because France was very close to the Christians and we needed the Vatican, which is very important player there. So we went to Beirut, Damascus, Baghdad, Paris, Rome, Washington, New York, London, Moscow, and Beijing. That is the first step to make sure that all the people who carry some influence are really on board.


You'll find the counterpart of Brahimi's thought process in many complex private-sector deals. And this is but one relatively straightforward example. 


Q: You have a chapter coming out in the new book Advances in Decisions Analysis called "Negotiation Analysis: Between Decisions and Games." Please tell us more about the emerging field of negotiation analysis and what it could mean formanagers. Where do you see this field going in the future?


A: This fairly technical chapter, mainly written for scholars and specialists, is Jim's current take on the field increasingly referred to as "negotiation analysis" that was pioneered by HBS emeritus professor Howard Raiffa, to whom both of us owe a great deal. 


Raiffa's approach essentially joins two initially separated intellectual traditions, the descriptive and the prescriptive. For many years, cognitive and social scientists performed careful laboratory experiments to determine what subjects actually do in negotiating situations, typically where better performance is rewarded with good money. This work led to many insights, but was fundamentally descriptive in nature. Meanwhile, largely in parallel, decison and game theorists typically analyzed what ultra-rational people would (or should) optimally do when interacting with other similar beings in negotiations. Of course, real people do not typically act in the ultra-rational manner assumed by such "symmetrically prescriptive" models.


Howard Raiffa's intellectual innovation, since furthered by others such as HBS professor Max Bazerman, was to make his highly rational prescriptive advice conditional on the most empirically accurate description of what people actually do, often as studied by behavioral scientists. In a nutshell, this is the intellectual approach of negotiation analysis: to generate the best possible advice to one side given the most faithful possible descriptions of likely behavior of the other side or sides.


We have contributed to all aspects of this negotiation analytic quest, both theoretical and empirical, but especially by extensive fieldwork studying great negotiators and challenging negotiations. We've also spent years, as part of each of our nonacademic careers - as investment bankers, entrepreneurs, and in government agencies such as the State Department - both doing deals directly and advising on them. This long-term engagement with deals and dealmakers has left us increasingly dissatisfied with the "one dimensional" model that dominates most current thinking about negotiation. This model is primarily focused on the face-to-face tactical interplay "at the table." Extensive field observation and analysis has led us to codify the 3-D approach in which moves away from the table set up the most promising situation.


Of course we are hardly alone. Exceedingly popular negotiation courses for MBAs and executives abound at major business schools. Negotiation analysis, in all its three dimensions - tactics, deal design, and set-up is the province of a wide range of scholars. We're very bullish on the field.




[Excerpt from "Get the No-Deal Options Right," 3-D Negotiation: Powerful Tools to Change the Game in Your Most Important Deals, by David A. Lax and James Sebenius.]