Thursday, November 29, 2007

Negotiating Florida Marlins' Style:
Beinfestival of Torture  

--bumper sticker seen by a college bud
on an H2 in suburban D.C.

[Podcast version link]

One of the foundation principles of negotiation is that many of the the rules change if you're unlikely to engage the other party in a collaboration or negotiation again. If you're not, then the ultimate win-win outcome, the fuel for face-saving and positive feelings that make starting and finishing the back-and-forth rasslin' closer to frictionless, isn't as necessary. Win as much as you can now, diminish or totally devalue the long-term returns you might get by giving away something you don't have to because you can get returns on it later.

In general, the exxxtreme opposite of the win-win negotiation, I'll call it The Beinfest, happens when:

  1. The pool of buyers and sellers is so vast that you can afford to kiss off any individual collaborator, 

  2. The natural likelihood of repeating a transaction is low.

So if you go to buy a car from a store on a strip of used car dealers, you're likely to go lot-to-lot, like a bee checking out a row of bottlebrush blossoms. The salesfolk know this, but they use it to their own advantage -- not only are you not likely to repeat a transaction with them if you're that kind of shopper, staff turnover tends to be pretty high in that field, so even if you want to go back to that lot, you may not find the negotiator who might have won your custom. So because of Angus' First Law of Organizational Behavior (All human systems tend to be self-amplifying), customers expect to be strip-mined and either resign themselves to it (amplifying the rewards, ergo the seller behavior) or riposte by playing strip-miner themselves. Even though the used car buyer is likely to buy another used car, the system is set up to prevent repeats by design.

Other purchases are close to once in a lifetime, like aluminum siding or a new roof for your home. The natural replacement cycle for those kinds of jobs makes it very unlikely a repeat collaboration/transaction is in the cards, so the sales behavior tends to be cheesier than normal. Regardless, if you like or don't like your siding job, it's not likely (not impossible, but probabilistically...) to affect another personal buying decision. Word of mouth might have some effect, but the seller puts that on the scale and it doesn't weigh enough to tip him to different behavior.

The assumption in the negotiation field that smaller systems and likely-to-repeat collaborations create gravitational fields that make strip-mining (I win, you lose) negotiation is widely-held, especially among followers of the cult of Economics.

Big systems, and socially-magnetic fields that make repeat collaboration unlikely is the standard environment for ugly negotiations that leave one party with a bad aftertaste evocative of Baltimore Memorial Stadium deep-fried burritos.

But a story in this week's Miami Herald (via Baseball Think Factory) is showing that an innovative negotiator can reverse the magnetic field in the opposite environment, one conventional negotiating wisdom would say would never lend itself to win-lose.

The innovator is Florida Marlin front-office honcho-maximo Larry Beinfest, and the report of the innovation by Herald reporter Clark Spencer came out thusly:

The Los Angeles Angels nearly reeled in Marlins third baseman Miguel Cabrera not once, but twice recently. But both times, the Angels said Wednesday, the Marlins raised their trade demands and the deals fell through.

''We felt we had a deal with them twice,'' Angels owner Arte Moreno said at a news conference to introduce outfielder Torii Hunter and pitcher Jon Garland. ``They came back and asked for more. They're doing it to everybody.''

And Moreno said the Angels aren't the only team the Marlins are using that negotiating strategy with to trade Cabrera. He said it is his understanding the Los Angeles Dodgers also nearly had a deal in place for Cabrera, only for it to unravel at the last minute because of the Marlins' increased demands.

A standard foundation of Western negotiation methods is the narrowing-difference, where the back-and-forth works something like this:

I'll give you 20. 

I can take nothing less than 35


If you'll pay cash, I'll give it to you for 30.

Throw in a volume buyer discount on my next purchase, and I'll give you 28.


Each party declares an opening offer, then works towards the other's point, sometimes offering something besides price to allow each side to compromise without losing face. ¿But what happens when one party simply enjoys seeing the other lose face, or doesn't have to fear serious consequences, or simply doesn't buy into the Western standards?

Nothing is as irritating as to come to a point in a negotiation that is a rough agreement and have the opposite party make a counter that ignores previous components of the agreement, something like: I'll give you 20. I can take nothing less than 35. Twenty-five. Forty-five... 

If you feel your opposite is desperate, or you don't have to make the deal, or if there are other buyers, you might try The Beinfestival of Torture. If the person across the table is desperate or merely impatient enough, she might let you get away with it. Baseball is a closed enough system that conventional wisdom would argue it's a losing proposition to try a Beinfestival of Torture, but the extreme closed-system nature of Baseball (limited-supply of excellent talent, limited number of possible needs patterns) means a negotiator might be willing to burn others, calculating that if he has something valuable a few years later, the burned party would be more likely to overlook the prior tort and do business again.

I saw the Beinfestival approach unfold up close about seven years ago and I'm still getting even with the opposing party. I was helping a family member negotiate the sale of her condo. She lived in one of those near-suburb apartment complexes that has a bunch of identical, adjacent big buildings, and the market was a bit soft. The agent she signed up with to represent her lived in her building, a super-nice old guy I'll call Beauregard, and he basically only worked on properties in the complex. I was concerned he was "too nice", but I thought I could counterbalance that with some unemotional involvement.

They got a very quick offer for the apartment for the selling price. My relative was thrilled, which, it turns out, was the plan of the buyer's agent (let's call him Walter Briggs). In Briggs' mind, that's when the negotiation opened, not closed. He stalled for time, coming back with a lower offer combined with a demand for repairs, some useful, some just random, all aggressively delivered in a way designed to be intimidating, and every time he did this, the agent on our side, Beauregard, encouraged us to comply in full to get the deal done, knowing that his dollars-made per time allocated to the deal was as likely to stabilize by acceding as it would trying to get a better price (plus, as it turned out, Beaureagrd thought if Briggs "liked" him enough, Beauregard would make it up for this bloodbath on with further sales) . This cycle happened either three or four times, my relative getting more and more desperate not to start from scratch, feeling her time/energy investment in the deal slipping away (In for a dime, in for a dollar). And, of course, Walter Briggs recognized that smell. Against my counsel, she met the increasing demands 100% of the way 100% of the time, and while she didn't actually lose money on the deal, she had a serious life need to make some on it, and she didn't.

And Beauregard has sold a few more condos to Briggs clients (with no better results for his own clients), but, like GMs negotiating with Beinfest, he knows what to expect and how to limit the pain of the torture (to himself, anyway). He can go back and collaborate on a deal with Briggs again; the market for condos in that complex is constrained enough -- limited supply, limited number of potential buyers' needs patterns -- that he's willing to jump through flaming hoops he knows will be there.

On the surface Briggs' calculation worked out for him just as, I suspect, Larry Beinfest's ploy will work for him in this negotiation for Miguel Cabrera's services. The only difference is Briggs has been suffering an inexplicable multi-year parade of minor but costly and irritating business problems ever since that negotiation, a torturous counter to his Beinfestival methods.

As Joe Sarno said: "Karma's nothing but justice without the satisfaction. And justice doesn't exist."

Saturday, November 24, 2007

Management By Baseball By Podcast: Experiment  

A few, though not an overwhelming number of, readers have asked to have a podcast version of the entries I write and publish here. I think the motivation is either:
  • The long nature of my essays make them easier to listen to than to read on-line, or
  • Wanting to take advantage of commute time, or
  • People just love to hear my Jim Dandy Mangrum-evoking voice.
Anyway, I'm trying an experiment. I've turned my latest entry into a podcast, and made it available at PodBean, a podcast portal with cool tools that remind me a lot of what Blogger has done with Blogspot. And I will be, for a while anyway, recording each entry and posting over at my podcast account: Blogtastic.PodBean.Com.

If the demand justifies it, I'll continue.

Let me know what you think. I think it's redolent of
Dr. Octopus' Roller Derby of the Mind.

Sunday, November 11, 2007

Dancing With The Stars:
Baseball's General Managers Side with Innovation Over Comfort  

Those of us who do change management or kaizen or Lean as part of their practice know the greatest barrier to positive change is comfort. The status quo allows the players within the system to repeat past behaviors and have a higher (not perfect) expectation of how the interaction will work and what the range of results will be. Baseball is better at change, and better at balancing the benefits of change against the benefits of tradition than most endeavors in business, government and the non-profit sector, and the best recent example of that superiority emerged last week.

At the General Managers' annual meetings last week in Orlando, GMs voted 25-5 to start in motion the process towards getting instant replay in Baseball. According to a story on MLB.com

Instant replay may now become a factor on a limited basis in Major League Baseball games.

The collective general managers voted 25-5 during their Tuesday morning session to at least explore the possibility of using the video technology to help decide disputed home run calls: fair or foul, in or out of the ballpark.

"We've talked about replay for borderline calls -- safe and out, home runs or non-home runs -- for a number of years," said Bob DuPuy, MLB's president and chief operating officer, about a proposal handed down by the technology committee headed by Colorado GM Dan O'Dowd. "The umpires, particularly in a four-man crew, in many instances are 150 feet from the outfield fence where the ball crosses the line.

{SNIP}Calling movement in MLB "glacial," Jimmie Lee Solomon, MLB's vice president of baseball operations, said he didn't expect the proposal to be cast into a rule and implemented in time for the 2008 season.

Solomon, by the way, doesn't know glacial. If dude had worked at DoD or Boeing or a University or even Dell Computer, he'd feel the frelling wind whipping past his face with Baseball's "glacial". 

It's not that Baseball is lightning-fast. The beginning of the argument about whether or not to have some forms of instant replay happened ten seasons ago, when Mark McGwire was chasing Babe Ruth's home run record; late in the season when it was clear he was in contention for it, he hit a shot with home run distance the umps couldn't determine clearly as fair or foul. The crew chief went to the television camera nearest 3rd base (best view of the shot) and watched in slow-motion several times to watch the ball move past the pole and determined it was fair. He wanted to get the call right and he used available technology to get it right.

This violates Baseball tradition (using technology, not "getting it right"). There were ripples in the force...if my memory serves me right here, this was the game, the crew chief was Frank Pulli, a very senior and respected ump, and that he was reprimanded, although that may have been for a call in this game, one Pulli was definitely reprimanded for. When the umps union had a job action the following year, Pulli was one of the 22 whose careers vaporized faster than Joe Lieberman 's short-lived appearance on Dancing with the Stars (¿why did he choose Kara Wolters as a partner, anyway?), and a couple of insiders have told me they believed his termination, certainly not about the quality of his abilities, was more about one or both of those tools-using episodes than it was about how deeply embedded in the union he might have been.

So it's taken a while to internalise the idea that "getting it right" trumps the comfort of tradition. That weighting is not universal; the last couple of years, I've attended the General Managers' November meets, and I heard plenty of Bitgod (Back In The Good Old Days) rants from babseball people and reporters opposed to changing the tradition. The arguments were typical of comments on proposed changes beyond baseball (most frequent = Well, you'll still get some wrong; most pointless = It'll take too much time which is a tactical implementation issue, not an argument against it's value in {correctness-delivered divided by time+resources applied}.

Baseball is also going to have some serious advantages in the tactical implementation, because they have eight years of NFL experience to take advantage of. And the NFL had some great advantages because the U.S. Football League wrote the the blueprints 14 years before that, and the USFL was taking advantage of technology that had been completely internalized for fans and coaches because it had been invented 30 years before that.

Tactical implementation will not be a significant barrier, only the comfort of the existing standard operating procedures. And baseball's approach is going to be very informative for managers in all fields. I only wish Sandy Alderson was still at MLB-HQ to implement it -- he is, as I've mentioned before, North America's superstar management-from-any-field practitioner. But they'll get it right sooner or later regardless.

The comfort of not-changing is endemic, even in the best, kaizen-drenched organizations.

I'm doing a consult right now with a logistics and transportation company in Seattle, one of my oldest clients, and certainly my cleverest about change. Four of their companies use independent contractors as couriers to pick up and deliver all kinds of objects around the state. Their processes have evolved over time, but mutate in response to how heavy demand is at a given time, how much time each of the jobs has left on it, how many drivers are on the road and where, and a half-dozen other factors. Procedures have tended to build up over time, many of them to advance fairness between the couriers and to make sure none hogs opportunities while always making sure the customer gets their jobs delivered safely and on-time. The most complex, compound set of rules are wrapped around the harvesting of jobs that originate in Downtown (the plurality of jobs).

To document procedures and recommend tweaks to the workflow, I immersed myself the daily flow of work. I can tell you the courier work is the second most-complicated and demanding job I've ever seen outside of Baseball, requiring project management skills, spatial memory, some physical abilities, excellent clerical skills, air-traffic controller caliber twitch decision-making capabilities, driving skills, and the magic thing I call "judgment".

Their official procedures can change on any day (I won't explain the mechanics here), and they have to adapt. But even for these cleverest of non-baseball professionals, it's easier to add rules than remove them. To claim a job for downtown you need to know not only where you are in a virtual queue that changes at least every 10 minutes, but you need to know which of 28 permutations your current situation put you. The people who live in this can simultaneously see how difficult it is for new talent to internalize, feel the pain of having to do real-time technical support even for some experienced drivers who haven't/can't master the drill, and resist simplification. I'd like to cut the permutations at least by a third as an experiment, but I have little support from front-line supervisors.

I have empathy for them. They want to "get it right", and in this case, I'm trying to cut learning time by half, and they would yield some fairness (I suspect about 4% of fairness in that in about 1-in-25 cases someone would do something that would benefit themselves at the cost of the team' overall welfare, to a significant enough degree to cause discomfort).

If even the most capable kaizen outfit I've worked with struggle with change, then anyone will. You have to be willing to listen to legit (and not-legit) concerns with respect, test, tweak, follow-up and tweak again.

It'll be exciting for managers to observe how Solomon and his team at MLB implement these changes in the most tradition-drenched AND most changing (by the season, by the game, by the inning, by the play) endeavor in North America. Significantly more exciting than a Joe Lieberman Dancing with the Stars pratfall.

Saturday, November 03, 2007

Dave Kurlan: Prepare Your Sales Staff Boston Red Sox Style  

My buddy Dave Kurlan, a leading mind who uses science and hard data to help organizations hire and train successful sales staff, posted an entry to his weblog about using the World Series-headed Boston Red Sox as a template to remake your own talent management.

Here's one essential point from his entry we both lead with in our methods:

The Red Sox were more prepared. They didn't get rattled. They didn't feel the pressure. They did what they have practiced, did it consistently and did it well. Before every game, each player has balls hit to him at his position, makes practice throws and takes batting practice. Isn't he already one of the best 700 players in the world? Why is he practicing? To be prepared for whatever might take place in the game. {SNIP}

Based on what I've seen from evaluating 8000 sales organizations and 300,000 salespeople, your salespeople are probably no better or worse than those at the 8000 other companies. However, what would happen if they were more prepared? What would happen if they prepared for every possible scenario? What would happen if they practiced every day, like the Red Sox?

When it comes to processes that involve the potential for unpredictable variation or human choices (but I repeat myself), just because your staff is already good at it doesn't mean simulation and other forms of practice won't make them better. Quicker to respond. Surer in their experience. Sounder in their actions.

Coaching should be active. Not merely built around off-site training. One good idea: Whenever there is non-vital time you can harvest, practice scenarios, simulate situations, cross-pollinate salesfolks' skills by letting them play out alternatives to efforts that failed -- with the individual who missed a successful effort playing the prospect. I'm sure Dave has a half-dozen better ideas.

And if you're interested in sales methods, take a look at his book, which is actionable, understandable...and built around a baseball metaphor (what could be better than that?).

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