Management Module 3
Negotiation exercise debrief: key things from the article
- "the art of letting them have your way" - something you are looking for but needs to be in a formate that looks desirable for both - if you want to change someones mind... - need to know whats on the persons mind to begin with (must have discussions) - understand and address hour counterparts problem - put self in the others shoes to allow you to solve both your and their problem - dont focus exclusively on price - more than that - most deals are 50% emotion and 50% economics - critical to be able to develop a working relationship with the client
Angel investors in the US
- .5 mil angel investors, 10,000 angel groups out there - invest quarter to a half a million dollars - invest in seed stage (idea stage) - usually invest in tech companies - invest from their back yard or neighborhood - most angel investors are willing to overpay to get into a deal
Venture capital industry track record
- 40% fail - 40% do okay - 20% succeed
Mt. Everest Case Study: Sunk cost effect examples in the case
- Fischer and Hall spoke of the importance of the Two O'clock rule - was egregiously ignored - climbers could not ignore the substantial prior investments they made - the cost of joining and training this expedition and costs of equipment - they wanted to make it to the top with everything they have
Mt. Everest Case Study: Over confidence Bias
- Hall and Fischer were very accomplished climbers - Hall had a tremendous record of successful ascents: 39 times - they had every reason to believe they could overcome every obstacle
Uber case study: Who is Arianna Huffington
- Only woman on the board of directors - said the culture of brilliant jerks must end - advised Kalanick to chill sleep more and meditate - 4 women went to her for harrassment
Uber case study: who is Susan Fowler?
- Uber engineer - joined in January 2016 - published "reflecting on a very strange year at Uber," January 2017
do organizations have a uniform culture?
- a dominant culture expresses the core values that are shared by a majority of the organizations members - subcultures tend to develop in large organizations - ex.: the Mccombs business school or different classes -
how to find the right VC
- allied professionals (need to have lawyers and accountants) - remember its not just what you know but who you know - industry specialization (VC has invested or specialize in your industry) - large corporations have dedicated VC funds
who will a VC fund
- an entrepreneur - the venture can be based on a totally new idea, a new way of doing things, or anything that is revolutionary
what do you need to do to prepare for a VC
- an honest business plan - key team members you need to hire - clear strategic goals - potential customers - path toward liquidity
Zappos case study: How did they view their vendors
- as business partners - vendors treated with respect (unheard of in the industry) - vendors treated as valued partners - they helped vendors control their inventory and branding - vendors in turn felt more committed to Zappos
Uber case study: After manager conversation what should you do?
- at least report it to HR (didn't go well for her as the manager was a high performer and was his first offense) (HR suggested she should find another team)
Zappos case study: zappos company information
- born in 1999 - achieved $1 billion in revenue by 2008 - sold in 2009 to amazon (1.2 bil) - key success factor - built their own unique culture that rivals couldn't replicate - many managers often think of culture as a soft topic unlike zappos
Uber case study: how can companies protect the workforce and employees
- by creating a culture that treats employees with respect - respectful words and action - see something say something type of culture - communicate and dont tolerate it - equal employment opportunity commissions report, 75% who feel harassed never reported it
what must you do to get the check from VC's
- competitive deals get funded (VC dont want to miss out on the next big thing) - probably need to give up majority of the stock - "golden rule" (need to follow the VC's advice, he who has the gold makes the rules) -by the time of IPO - founders own 20% (once the company goes public) - be ready for the fast lane (all about the return on the investment, when will they get it back)
Zappos case study: imitating Zappos...
- competitors can quickly imitate free delivery and returns - employee satisfaction cannot be forced - requires significant change within a company to implement things - it takes time to move away from the carrot and the stick mentality - without trust and commitment you cannot achieve the culture
Mt. Everest Case Study: in operations management what are the two characteristics of a complex system
- complex interactions (explains how different elements of a system interact in ways that are unexpected and difficult to comprehend especially before the fact) - tight coupling (time dependent process that time dependency is usually fairly rigid and there is only one dominant path to achieve the goal)
zappos case study: early day consumer challenges
- consumers concerned about the credibility of shoes and security of transactions - ordered products were sometimes out of stock - online shopping was functional not fun - shoppers [aid for delivery - shoppers often ran into difficulties - returns were a huge pain
Cityside financial services case study: in the integration and learning paradigm the way of thinking consists of
- cultural differences are a resource for learning - differences enhance the workplace - progress measured by the power underrepresented groups have to change organizations
why is culture strategy?
- culture is about intangibles (things you cant touch) - culture is the opposite of commodity (cannot be easily duplicated) - culture differentiates you from others
Dave Armstrong Case Study: rational decision making model:
- define the problem - identify decision criteria - weigh the criteria - generate alternatives - rate each alternative - compute the optimal decision
Negotiation exercise debrief: what to think about when considering your options
- differences in interests can be your friend - look for different values placed on time (rearrange the payoffs for those more or less patient) - look for differences in risk preference (take more risk should get more reward) - look for different predictions of uncertain future outcomes (designing some contingency plans, if you dont meet you goal you still get some of your bonus)
Negotiation exercise debrief: to reach the best agreements...
- dont just compromise on issues, make tradeoffs - consider several issues simultaneously
Mt. Everest Case Study: what grade would you give Fischer and Hall?
- during this time would you be able to find any better guides - what about the fact that people died - as a mountaineer an A - As a leader a D or lower
how can culture be a liability?
- environment is dynamic - hinders the ability to respond to changes - dilemma of hiring diverse workforce and having people that fit the corporate culture - cultural incompatibility in mergers and acquisitions
Cityside financial services case study: - access-and-legitimacy paradigm results..
- experience is limited - careers limited - people exploited - differences not leveraged or analyzed
What does a "perfect" investment opportunity look like
- experienced management team - great idea that is proprietary - something that cannot be duplicated - product/ service that 7 billion humans will buy - great ROI - intellectual property can be protected by patent or trademarks - zero risk
zappos case study: 1999 shoe industry
- footwear was a $40 billion market - online footwear sales were trivial - main benefits of online - price comparison, customer reviews, higher availability - main challenges of online - no personal consultation, delivery and time, return process difficulty, not fitting, limited customer sevices
Cityside financial services case study: businesses today...
- global business is about tech and talent transformation - business is an interconnected global and diverse market
Uber case study: postlude stats
- in 2016, 25% of engineers were women, by 2017 only 3% - 20 senior employees terminated - kalanick was forced to resign - 215 claims of sexual harassment - fowler brought Uber to its knees in a 3000 word essay - Eric Holders under Obama report on executive misconduct
Mt. Everest Case Study: stifling constructive dissent
- in a climate of psychological safety, individuals are more likely to express dissenting views - several conditions serve to diminish psychological safety and dissent - lack of any prior interaction decreases likelihood that team members will dissent - deferring solving problems through experts however experts aren't always right
Mt. Everest Case Study: individual performers vs. team leaders
- in many orgs technical and or functional expertise enables individuals to earn promotions - but the same set of skills are different for leading - leading a team requires a distinctive set of skills
Mt. Everest Case Study: sunk cost effect
- in organizational behavior this is called escalation of commitment - tendency for people to escalate commitment in which they have made a substantial prior investment (time, $, other resources)
Cityside financial services case study: how they rationalized this reality of getting none of the value of diversity and all of the problems of diversity
- increased profits - two tracks (1 for whites, 1 for blacks) - approach to diversity based on communities - sales division has led to the problems
Cityside financial services case study: there is another way to think about diversity... with the ____ paradigm
- integration-and-learning paradigm -"we work together with our differences, not in spite of them"
Zappos case study: what was Zappos personal touches to their customer service?
- invested heavily in customer service - calls answered quickly - no script or time limit - if they didn't carry it they would help find it somewhere else - customer emotional bond (birthday cards, flowers) - customers felt gratification - 75% of business was repeat customers
Mt. Everest Case Study: what is team psychological safety all about
- its okay to ask for help, admit an error or express a different point of view - function of trust and mutual respect
Cityside financial services case study: What are some benefits of diversity?
- larger pool of employees - increased adaptability and flexibility - global basis of service - more diverse orgs attract more diverse workers - creativity and innovation are stimulated - part of American culture
Cityside financial services case study: preconditions for the paradigm shift are
- leadership must truly value variety of opinion and insight - leadership is committed to persevering transition - the culture of expectation of high standards of performance for everyone - the culture must encourage learning from mistakes
Mt. Everest Case Study: learning from failures
- managers should try to learn from others' failures - individuals often attribute their own failures to external factors - but think personal characteristics and mistakes cause others' failures ^ cant have it both ways
Cityside financial services case study: how can we look at the diversity-and-fairness paradigm?
- moral imperative (right thing to do) - eliminate discrimination - treat everyone the same - recruitment and retention goals (looking for a quota)
Organizational culture vs. national culture
- national culture has a greater impact on employees than organizations culture (different countries run their businesses differently) - expect to hire employees who fit within the organizations culture - can have a negative effect on diversity - national culture is the center of gravity
Negotiation exercise debrief: what are the general principles of negotiations strategies for reaching agreements
- not all issues are distributive (when one party wins the other loses) - often there are compatible issues (both parties have same nterests) - and often there are integrative issues as well (more important to one than the other)
corporate partnerships
- often overlooked - key objective is to find a partner that benefits more than the firm does
Zappos case study: what was the Zappos approach?
- only sold what they had - no drop shipping - encouraged customer interaction with their customer service - fast and free delivery - 365 days to return
In venture capitalist industry, where do they get all their money
- pension funds - insurance companies - endowments - foundations - high net worth individuals
Cityside financial services case study: diversity-and-fairness paradigm results..
- pressure to assimilate - differences un-discussable - conflict suppressed - people felt alienated - performance undermined
Your value to a large corporation
- quick and nimble (hard for a large company to do) - can offer the corporation access to new markets offer new sales channels - provide innovative technologies that help a large corporation - can help improve the brand image - startups can act quicker - test a relationship (how do we work together with a large corporation)
Cityside financial services case study: What are some challenges to diversity?
- resistance to change - effort to integrate diversity - barriers may exist (cultural, language) - lost efficiency - overcome stereotypes (discrimination and harassment)
how do you keep a culture alive?
- selection (choice of new employees) - founders and senior management (how they act) - socialization (process people get acclimated to their work environment)
what is organizational culture
- set of key characteristics that the org values that distinguishes itself from others - org culture is who we are
Uber case study: why didnt the victims/ witnesses speak up ealier
- sexual harassment thrives in a culture of silence - victims often in a low power position vs perpetrator - biased view of leadership
why find a corporate partner?
- source of funding -can leverage your engineering by what the company can provide (product development capabilities) -leverage the large corps assets - access to customers and distribution
Cityside financial services case study: results one can expect with the integration and learning paradigm are
- standard practice not best practice (practices need to change) - differences evaluated - people feel valued - work enhanced by insights into diversity - cultural competencies learned and shared
Negotiation exercise debrief: How to negotiate to the right
- start early and develop relationships on your own with those who are experts in what you're interested in - ask for another individual to have another connection - let people tell you all about themselves
Mt. Everest Case Study: what conditions affected the psychological safety on the mountain?
- status - leadership styles - prior interactions, lack of familiarity - lack of candid discussion about Fischer's deteriorating health or halls turn around rule being ignored - each impacted decision making effectiveness
Michael porter on strategy
- strategy is developing a unique position in the market place and gaining a competitive advantage that sustainable over a long period of time -org culture doesn't beat strategy - org culture is strategy
Cityside financial services case study: McKinsey & company findings
- the executive team had an increase in females from 2% to 14% - executive team cultural and ethnic diversity increased from 1% to 13% - companies who are in the top quartile for females 21% are more likely to outperform profitability and 27% higher market cap; higher performing companies had higher percentage of females - firms in the top quartile for cultural and ethnic diversity were 33% more likely to lead their industry in profitability
Negotiation exercise debrief: what to concentrate on when negotiating
- the issues - key areas of importance - address the problem not the personalities - avoid interpersonal conflict/ downward spiral - be creative - emphasize win-win
Negotiation exercise debrief: common ground
- the most overlooked value often comes from differences - know your "walking away" limits
Strong cultures facilitate performance because...
- they are characterized by goal alignment (all have same goal, all work towards same goal) - they create high level motivation - they provide control
Zappos case study: how did Zappos create such a culture?
- they did not use traditional management techniques - they believed the universal value of intellectual and emotional recognition (you pay people fairly and treat them well creates a good work environment) - no carrot and the stick approach
Few need to knows about VC's
- they hold you to your promises - stiff penalties - most VC's want to make 10x their investment - "its not what you start with but what you end with" - VC's do not make emotional decisions (all about rate of return)
Zappos case study: what was their mentality?
- three legged stool mentality: treat employees well, they treat customers well, customers treat share holders well - instilled a high level of confidence and commitment in its employees - engagement: involve people in the company culture - explanation: 10 core values clearly articulate so all understood them - expectation clarity: employees knew core values were the sole criteria
Mt. Everest Case Study: 4 characteristics of tight coupling
- time dependent - rigid sequence - one path - no slack tight coupling + complex interactions = disaster
SAS video takeways
- treats employees like royalty - started having free m&ms every Wednesday that grew into a collection of vast perks - they provide a 50,000 sq/ft fitness center - can shoot pool and go to the on site gym during work hours to keep the employees happy - employees work flexible schedules, as they encourage employees to get work done in 35 hour week - there is not dress code - on site car detailing - on site putting green and masseuse - Jim Goodnite cofounder and CEO says good treatment of their employees has worked for them - have never laid off a single employee - there is no stock but there are extraordinary perks keeping turnover low - Jim Goodnite answers to no one as he is privately owned - they have 4 SAS day care programs at 1/3 of the cost - their culture keeps employees content and from leaving (most software companies turnover 20% and SAS turnover is 3%) - creativity is extremely important to the CEO - SAS has a country club that employees get a 90% discount to - the amenities and perks are not required
Negotiation exercise debrief: do your homework
- understand the challenges the company faces - explain how you will help them solve their problems - underscore the impact you will have on your co-workers - how your involvement will have a positive impact on the organization
Cityside financial services case study: how we can look at the access-and-legitimacy paradigm
- use diversity to connect to markets - cultural identity interface between the company and its markets - progress measured by recruitment and retention (whether in retail or external deposits)
Zappos case study: why did the employees feel valued
- valued not only as human resources but as human beings - inspired strong intrinsic motivation to prompt employees to go above and beyond - employees engaged in voluntary events - employees not concerned about power - employees felt they were treated as capable
Mt. Everest Case Study: team effectiveness...
- was this really a team or just a group of individuals - as team members demonstrate high levels of trust and mutual respect (didn't have that) - team members do not believe that the group will penalize individuals for speaking up (also didn't have this)
MBA hacker case: incrementalism
- we may start with small unethical choices and incrementalism is how ew slip down the slippery slope
Zappos case study: what were Zappos key differentiators
- were never a price leader - no clearance or promotions - wide show selections - had many different photos of shoes - integrated vendors into web site - free shipping, free and easy returns - and - their secret sauce - 24/7 great customer service
what are the key elements in managing culture?
- what leaders pay attention to - how leaders react to crisis - how leaders behave - how leaders allocate rewards
Mt. Everest Case Study: examining catastrophic failures and natural tendency
- when orgs fail, we often search for the key factor - our natural tendency is to blame one person or specific event
Cityside financial services case study: is cityside diversified?
-50% women -50% middle managers are African American - 25% of executives are African American - statistically yes, but it is segregated
Crowdfunding
-is exploding worldwide
Uber case study: what happened on the first day of the job
-manager says inappropriate disturbing things about his open relationship to Fowler - says he's been looking for a woman to have sex with
Mt. Everest Case Study: what personal qualities does it take to reach the summit of everest?
-need money -training - mental aptitude - physical strength - risk willingness - perseverance - emotional strength - little but crazy
Cityside financial services case study: What are two common perspectives on diversity
1. discrimination- and- fairness paradigm -"we are all the same; differences do not matter" - differences do matter and we are not all the same 2. Access-and-legitimacy paradigm -"we accept and value difference... in its place"
Uber case study: what are the two moments when a organization is at greatest risk?
1. first moment is prevention - prevention these actions 2. second moment is reaction - what did you do? without these employees do not feel safe to work for the organization
sources of capital for start - ups
1. venture capital (unique to the U.S. mostly) 2. state funds (increase tax space) 3. angel investors (informal, individuals with a lot of money) 4. Friends, Family and Fools (most funding)
Mt. Everest Case Study: What were Fischer's logistical problems
Before the summit push: - customs problem (Russian boarder) - poor weather in Nepal - labor unrest among porters ^ accumulative effect During the summit push: - assumption that rope lines in place - lead sherpa not at front of pack - Fischer was supposed to serve as the sweep but lost contact with the team once compounded they become a larger deal
Kleiner Perkins
Mecca for the venture capital industry. invested in huge companies.
Cityside financial services case study: diversity is...
about counting people, being invited to the party
Cityside financial services case study: inclusion is..
about making people count, being asked to dance
why are what a venture capitalist wants and what they get two different things?
because of the fundamental laws of business: 1. will always cost more than you thought it would 2.always take longer than anticipated 3. things are always changing
MBA hacker case: what is the fundamental ethical dilemma in business
can have great cheap products and satisfied employees with huge sale margins to make shareholders happy
what is venture capital
equity investments made to fund the launch, or early development, or expansion of a private, and usually quite young company - to offset the risk of investing in a young company, venture capitalists have an expectation of a higher than average return on the investment
how important is corporate culture?
its everything. - single most important facet of any company - about how we manage human energy in the organization
what is culture?
many different things, language, food, differences, commonalities, etc.
Cityside financial services case study: does increasing diversity increase effectiveness?
no, how an organization harnesses that diversity and whether its willing to reshape its power structure is what matters
Uber case study: title 7 of the civil rights act
sexual harassment violates this act
Negotiation exercise debrief: integrative issues
something is more important to one party than the other party
Cityside financial services case study: what is the main point?
the approach an organization takes to manage its diversity derives primarily from how its leaders view diversity
6 key factors of what really matters for a venture capitalist
the market opportunity x6
pre- money valuation
value of a company before any investors have invested in a company
Mt. Everest Case Study: "We are both listening"
what character is all about
companies financed by venture capital
whole foods, ebay, starbucks, google
whats the worst thing that can happen if you fail?
you get to start all over again
