My wife thinks I am good at haggling.I have to admit that I am a better haggler than my wife. It has nothing to do with any skill, but the fact that I am not embarrassed to ask for the lowest price. But the haggling most of us do is called as position based bargaining. When I haggle with the road-side or footpath vendors, my formula is to buy things at half the quoted price. So my low-ball number will be much lower than half-price so that when we finally settle at the half-price, I make it look like a fair deal for both sides. The truth is that even the vendor is aware of this and his objective is to slow down the rate at which he concedes. He starts reducing the price in smaller steps, extending the time taken to come to a conclusion, and thereby testing your patience. He will also use psychological tactics to make you feel embarrassed. The moment you walk away, he would drop the price steeper. He will be observing the pace at which you are moving away from him. The moment he realizes you are slowing down, he will stop dropping the price. Haggling is a psychological contest. Now you know why you should leave your shame at home before you go for shopping. You should be even more shameless to haggle in China. My h-constant (not the Plank’s constant, but the haggling factor) for shopping in China is 10 : to settle a price that is 1/10 the quoted price. You need to be extremely unemotional and fully shameless. I realized while shopping in China that the calculator is more than a number crunching machine. It acts as a translator. The vendor punches his price and you shake your head sadly, take the calculator and punch in your quote. The calculator changes hands back and forth till a final price is arrived at. The Chinese vendor uses another psycho trick, of raising the voice and keeps uttering the word “No Joking”. You should be impervious to all of this if you want the best deal.
But doing negotiation based on positions is not a recommended option in business. Any negotiation may be judged by three criteria: It should produce a wise agreement; It should be efficient; It should improve the relationship between the parties. Any negotiation based on positions does not meet these criteria. As the person’s ego is associated with the position he takes, it is highly unlikely that a wise agreement can be arrived at. The more extreme the opening positions and the smaller the concessions, the more time and effort it will take to discover whether or not agreement is possible. Positional bargaining becomes contest of will and thus strains, and sometimes shatters the relationship between the parties.
In the book “Getting to Yes”, the authors suggest that for a better result, one needs to focus on interests and not positions. The book quotes the example of Egyptian-Israeli peace treaty. Israel insisted on keeping part of the Sinai peninsula. Egypt, on the other hand, insisted that every inch of Sinai be returned to Egypt’s sovereignty. Negotiating on position did not lead to any amicable agreement. Looking at their interests, instead of their position made it possible to develop a solution. Israel’s interest lay in security and did not want Egyptian tanks poised on their border ready to roll across any time. Egypt’s interest lay in the sovereignty. Knowing these interests behind the positions, the two countries agreed to a plan that would return the Sinai to complete Egyptian sovereignty and, by demilitarizing large areas, would still leave Israeli secure.
Reconciling interests, rather than positions works for two reasons. First, for every interest there usually exists several possible positions, that could satisfy it. Secondly, behind opposed positions lie many more similar interests than conflicting ones. So how do we identify interests? Ask “Why?”. Put yourself in their shoes. Examine each position they take, and ask yourself “Why?”. You can also ask the other party, why they take a particular position. Make it clear that you are asking, not for justification of the position he made, but for an understanding of the needs, hopes, fears or desires that it serves.
Ask “Why not?”. Think about their choice. One of the most useful ways to uncover interests is first to identify the basic decision that those on the other side probably see you asking them for, and then ask yourself why they have not made that decision. Which of their interests stand in the way? If you are trying to change their mind, the starting point is to figure out where their minds are now.
Realise that each side has multiple interests. To understand that negotiator’s interests means, to understand the variety of somewhat differing interests, that should be taken into account. The most powerful interests are basic human needs like security, economic well-being, a sense of belonging, recognition and control over one’s life. These are easy to overlook. To sort out the various interests of each side, it helps to make a list. It will help in the quality of your assessment, as you acquire new information, and to place interests in their estimated order of importance.
If you want the other side to take your interests into account, explain it to them. Part of the task of impressing the other side, with your interests lies in establishing the legitimacy of those interests. You need to convince them that they might well feel the same way if they were in your shoes. Acknowledge their interests as part of the problem. If you want the other side to appreciate your interests, then demonstrate it\.
If you want someone to listen and understand your reasoning, give your interests and reasoning first and your conclusions or proposals later. Put the problem before your answer. Beware of arguing with the other side about the past, instead, talk about what you want to have happen in the future. Instead of asking them to justify what they did yesterday, ask, “Who should do what tomorrow?”
To summarise- focus on interests and not on position to result in a win-win solution. I wish I could use this learning to get an iPad with 3G and 32GB for $499 :-)
Happy Negotiating,
Ram
Sunday, January 31, 2010
Sunday, January 24, 2010
?B? - Question Behind the Question
Last week, I attended an off-site meeting of my group. One of the sessions, in the meeting, was to discuss “Personal Accountability”. We were asked to read the book “Question Behind the Question” by John G Miller. I found the concept explained in this book to be very profound. This blog highlights the summary and learnings from this book.
Anyone who has interacted with any government institution knows that, to get a job done one literally has to go from pillar to post. “It’s not my job”, “Go to that table”, etc., are the common phrases one hears. This problem is not restricted just to the government institutions. It can be seen in any organization. We call this malaise “passing the buck”. People take the functional boundaries very religiously and are not willing to go the extra mile, beyond the function to help others. These people do not have personal accountability. A few of the very many questions that can define lack of personal accountability are: “When is someone going to train me?” “Why do we have to go through all this change?”, “Who dropped the ball?”. The Question Behind the Question” (QBQ) is a tool that’s been developed and refined over the years, to practice personal accountability, by asking better questions.
The QBQ is built on the observation that our first reactions are often negative, bringing to mind incorrect questions, but in the moment of decision we can instead discipline our thoughts to look behind those initial questions and ask better ones (QBQs), the questions themselves will lead us to better results. One of the guiding principles of the QBQ is “The answers are in the questions”. If we ask a better question, we get a better answer. Here are the three simple guidelines for creating a QBQ.
1. Begin with “What” or “How” (not “Why”, “When”, or “Who).
2. Contain an “I” (not “they”, “them”, “we”, or “you”)
3. Focus on action.
Don’t Ask “Why?”. Why is this happening to me? Why am I not getting support? When one asks this question he feels powerless - like a victim. Questions with a “Why me?” tone to them say, I’m a victim of the environment and the people around me. Instead of “Why” question if you follow the QBQ guideline, the question can be rephrased as “What can I do to improve the situation?” “How can I support others?”.
Don’t Ask “When?” What we’re really saying is that, we have no choice but to wait and put off action until another time. Questions that begin with “When” lead to procrastination. Instead of “When will they take care of the problem?”, ask the QBQ “What solution can I provide?”. Notice the difference.
Don’t Ask “Who?” When we ask “Who” questions, what we’re really doing is looking for scapegoats, someone else to blame. Blaming others is always counterproductive. Instead of the question “Who made the mistake?” “Who dropped the ball?”, ask the QBQ “What can I do today to solve the problem?” or “What action can I take to ‘own’ the situation?”
Personal accountability begins with “me” not “you”.It is about, each of us holding ourselves accountable,for our own thinking and behaviors as well as the results they produce. This is why the second QBQ guideline contains an “I”,not “they”,”them” or “you”. Questions that contain an “I” turn our focus away from other people and circumstances and put it back on ourselves. We can’t change other people. We often can’t control circumstances and events. The only things we have any real control over are our own thoughts and actions. I can only change myself.
More often the term “we” is used to express the personal accountability. One should be careful not to mix-up personal accountability with team accountability. We can hide behind the team with thoughts – which become excuses- such as: “The team wasn’t given enough resources”. Personal accountability is not about changing others. It’s about making a difference by changing ourselves.
Practicing personal accountability calls for taking actions. If I don’t ask what I can do or make or achieve or build, then I won’t do or make or achieve or build. Only through action is anything accomplished. Action, even when it leads to mistakes, brings learning and growth. It leads us towards solution. It builds confidence. It is better to be the one who is told to wait, than one who waits to be told.
The spirit of QBQ is personal accountability: No more victim thinking, procrastinating, or blaming. I can only change me. Take action!.
Happy reading,
Ram
Anyone who has interacted with any government institution knows that, to get a job done one literally has to go from pillar to post. “It’s not my job”, “Go to that table”, etc., are the common phrases one hears. This problem is not restricted just to the government institutions. It can be seen in any organization. We call this malaise “passing the buck”. People take the functional boundaries very religiously and are not willing to go the extra mile, beyond the function to help others. These people do not have personal accountability. A few of the very many questions that can define lack of personal accountability are: “When is someone going to train me?” “Why do we have to go through all this change?”, “Who dropped the ball?”. The Question Behind the Question” (QBQ) is a tool that’s been developed and refined over the years, to practice personal accountability, by asking better questions.
The QBQ is built on the observation that our first reactions are often negative, bringing to mind incorrect questions, but in the moment of decision we can instead discipline our thoughts to look behind those initial questions and ask better ones (QBQs), the questions themselves will lead us to better results. One of the guiding principles of the QBQ is “The answers are in the questions”. If we ask a better question, we get a better answer. Here are the three simple guidelines for creating a QBQ.
1. Begin with “What” or “How” (not “Why”, “When”, or “Who).
2. Contain an “I” (not “they”, “them”, “we”, or “you”)
3. Focus on action.
Don’t Ask “Why?”. Why is this happening to me? Why am I not getting support? When one asks this question he feels powerless - like a victim. Questions with a “Why me?” tone to them say, I’m a victim of the environment and the people around me. Instead of “Why” question if you follow the QBQ guideline, the question can be rephrased as “What can I do to improve the situation?” “How can I support others?”.
Don’t Ask “When?” What we’re really saying is that, we have no choice but to wait and put off action until another time. Questions that begin with “When” lead to procrastination. Instead of “When will they take care of the problem?”, ask the QBQ “What solution can I provide?”. Notice the difference.
Don’t Ask “Who?” When we ask “Who” questions, what we’re really doing is looking for scapegoats, someone else to blame. Blaming others is always counterproductive. Instead of the question “Who made the mistake?” “Who dropped the ball?”, ask the QBQ “What can I do today to solve the problem?” or “What action can I take to ‘own’ the situation?”
Personal accountability begins with “me” not “you”.It is about, each of us holding ourselves accountable,for our own thinking and behaviors as well as the results they produce. This is why the second QBQ guideline contains an “I”,not “they”,”them” or “you”. Questions that contain an “I” turn our focus away from other people and circumstances and put it back on ourselves. We can’t change other people. We often can’t control circumstances and events. The only things we have any real control over are our own thoughts and actions. I can only change myself.
More often the term “we” is used to express the personal accountability. One should be careful not to mix-up personal accountability with team accountability. We can hide behind the team with thoughts – which become excuses- such as: “The team wasn’t given enough resources”. Personal accountability is not about changing others. It’s about making a difference by changing ourselves.
Practicing personal accountability calls for taking actions. If I don’t ask what I can do or make or achieve or build, then I won’t do or make or achieve or build. Only through action is anything accomplished. Action, even when it leads to mistakes, brings learning and growth. It leads us towards solution. It builds confidence. It is better to be the one who is told to wait, than one who waits to be told.
The spirit of QBQ is personal accountability: No more victim thinking, procrastinating, or blaming. I can only change me. Take action!.
Happy reading,
Ram
Saturday, January 2, 2010
India Shining - Breakthrough Innovation
I have the habit of roaming around book stores at any airport before check-in. Lately I have noticed many management books written by Indians. Subrato Bagchi, with his trilogy of books, has captured the attention of both Indian and foreign readers. One of the recent books, I picked up, was on "Making Breakthrough Innovation Happen" by Porus Munshi. It talks about how 11 Indians pulled off the impossible. A very refreshing read, it makes every Indian proud of the innovations that are happenning in India. If the last decade made the world notice "India shining", the next decade will be even more prosperous for India. I pick the strides made by Cavinkare as the topic for this blog. Cavinkare has innovated to take on giants like Unilever ( Hindustan Lever in its previous avtar).They break the myth that R&D and technology-led innovation can happen only in large organisations. They have demonstrated how entrepreneurs can create winning ideas, even in markets dominated by giants.As we begin the new year, I felt it is apt to share these learnings on Innovation.
CK Ranganathan who started Cavinkare came from the family that pioneered the satchet marketing revolution in India by introducing the famous Velvette shampoo. He branched off and setup his own company and produced Chik shampoo sachet to be sold at 1 Rs. In creating his marketing network, he decided to change the norms. He did not enter into arrangements with established players, but with stockists who had no prior experience in selling FMCG products. He did this so that the stockists would work on his terms. Though the Chik business grew, it did not command the share Velvette shampoo had. Ranga came up with an out-of-the-box strategy to make consumers come back again and again and ask for Chik shampoo. He came up with the innovative marketing idea : he would give one sachet of Chik shampoo free for every four empty sachets of any shampoo. This scheme was the first of the kind and it took the market by storm. Later he changed the strategy and began giving one free sachet for every four used Chik sachets. The sale of Chik shampoo soared and it became an established brand. It had become second-largest selling shampoo in Tamilnadu behind Velvette.
Ranga realised that the penetration of shampoos in India was only 14%. He found out the rest of the 86% were using soap. The strategy of educating the people of disadvantage of using soap and advantages of using shampoo was not helping. One of the insight he had was that, if the consumer believed strongly in something, then don't attack it. Instead find the barriers to their using your product. Indeed, he found price as the barrier. So he came up with yet another innovation of making a concentrated version of the shampoo that was half the size of the original Chik shampoo. The size perception would make the Rs 1 consumer feel that it was a small size, therefore not for him. The existing consumers would, he believed, continue with the Re 1 sachet, while hordes of new customers, who were earlier locked out, would come in at the fifty-paisa price point. The Rs 1 shampoo was improved to have more conditioning and fragrance. With these types of, and more innovations Ranga tapped huge untapped markets and increased the market share of Chik from 5% to 22%. Today it is the second largest selling shampoo in the country.
He further found out that there were many people who were using natural products like shikakai, hibiscus leaves etc., He then created the shampoo "Meera" which had reetha nuts and almond. It was an instant success and still sells at a premium. He then launched Meera with shikakai in Tamilnadu, with hibiscus leaves in kerala. Because of the innovative initiatives, Cavinkare is the largest overall hair wash company in South India. Hindustan Lever and P&G are behind them.
He then took on the "Fair & Lovely" fairness cream. This was the business with higher margins and was dominated by a single player - Fair & Lovely.He realised that he needed to build credibility in the minds of his customers and make his products appeal to them. He found that pregnant women were given saffron and milk as they felt this would make the child fair and healthy. He used this fact and created the fariness cream that has milk and saffron in it. He also wanted to position this cream as something that could help change one's life/future forever. So he branded the fariness cream as "Fairever" and priced the product at a premium, based on insights that told him that the customers were willing to pay more as they knew that saffron was expensive. Again Fairever was able to wrest upto 18% market share in the first year of its introduction in South India.
What learnings can one can take from the success story of CavinKare? Go beyond market segmentation. See how to grow the overall market share. Listen to the customers. If it is the high price that is the barrier then innovate and create products that are low in price and tap into markets that did not exist. Keep prototyping in real time: do limited launch, let customers use the product, get feedback, make changes and launch again. Prototyping is one of the highest forms of insighting. Co-evolve the product working with the customers. Playing fields of the giants can be leveled by using insights that lead to innovation.
Wishing you a happy new year and that it bring lots of opportunites for innovation.
Happy reading,
Ram
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