MAN 320F exam 3 Aroian
Negotiation is known as
"the art of letting them have your way." Understand their problems and put yourself in their shoes
Access and legitimacy paradigm
"we accept and value differences... in its place": used to connect to important constituent groups and markets, cultural identity is a response at the interface between the company and its market, and progress is measured by achieving recruitment and retention goals in boundary or visible positions.
what consists of a balanced perspective in the Dave Armstrong case?
-New decision for Armstrong -Multidimensional -personal, family, professional -involves longterm objectives -needs to balance his wife's objectives -jobs are very difficult -would be easier if the jobs were similar -Risk-risking his personal wealth -trade offs -face up to the fact that he cant have it all -information (lacks experience, has little to base his decision on -uncertainties (many dimensions of which he can't control as well as normal business and operational businesses
Mistake 3 - Letting positions drive out interests
-With joint problem solving we can better meet both sets of interests and create something that will be of value to both parties
What does a "perfect" investment opportunity look like?
-an experienced/proven management team -a great idea/concept that is proprietary -something that cannot be duplicated -a product or service that 7 billion humans will buy -a great rate of return on investment -intellectual property that is protected by patents or trademarks -Zero risk, which does not exist (PERFECT INVESTMENT DOES NOT EXIST BC fundamental laws of business)
What do we need to prepare for the VC?
-an honest business plan with risks, challenges, opportunities, and issues -what key members you need to hire and where they will come from -clear strategic goals and what you plan on doing to achieve those goals -potential customers -a path towards liquidity
What do you do to "get the check"?
-competitive deals get funded because VC's don't want to miss out on what their colleagues view as a great bet -probably giving up majority of the stock -follow their advice (golden rule) -By the time of IPO (initial public offering/they can sell their stock to the public now) founders own 20% -Be ready for the fast lane
key influences on decision making are
-creativity -intuition; gut feeling -past experience -group dynamics and synergy
Rational decision making model:
-define a problem -identify decision criteria -weigh the criteria -generate alternatives -rate each alternative -compute the optimal decision
In the I&L paradigm, cultural differences are a resource for learning bc:
-different perspectives about work -different experiences at work
Mount Everest Case Study we:
-examined how teams make high-stake decisions in stressful situations -examine a catastrophic failure in detail -examine two leaders in action during a crisis
In the access and legitimacy paradigm diversity is: The results from this paradigm are:
-experience regarded as limited or specialized -career paths limited -people feel exploited
Business case for diversity at CitySide consists of
-increased profits, gain access to diverse clientele -two tracks, one for whites and one for blacks -approach to diversity rationalized as access the local community -Market oriented approach to diversifying the sales division has led to the problems
there were 3 levels of failure that occured in the 1996 everest tragedy. What are they?
-individual level - Group Level -organizational level
Mistake 4 - searching too hard for common ground
-sometimes differences can open up possibilities for joint gains and working too hard to find common ground may be detrimental when there is not much in common -the most overlooked value often comes from differences
Results of the integration and learning paradigm:
-standard practice not necessarily seen as best practice -differences embraced, discussed, disputed, evaluated -people feel valued and respected -work enhanced by insights, knowledge, skills grounded in people's experience, cultural and otherwise -cultural competencies learned and shared
What are the 3 laws of business?
1- it will always cost more than you thought it would 2- It will always take longer than you anticipated 3- things change continuously
Where do VC's invest?
close to home ("in their backyard"), 2 hour drive
Dave Armstrong three options
Job A: risky but higher reward & more fun Job B: safer, may only last a few years, not as fun, make good connections Job C: less salary than before grad school, wife issue
What really matters in business and investment?
MARKET OPPORTUNITY: being in a market with exponential growth with room for lots of mistakes and people with a high need for the product.
Studies conducted between 2015 and 2017 in the US and UK showed that
Organizations that are diverse generally produce better results than companies who are not diverse. Diversity includes race/ethnicity/gender/etc.
Any one of these elements that Fischer faced was not a huge deal but when together...
it created a huge problem
When accidents happen or an organization fails, we often engage in a search for the _____
key factor that caused the catastrophe
What is the Sunk Cost Effect
tendency for people to escalate commitment to a course of action in which they have made a substantial prior investment of time, money, and/or other resources
If someone is a great worker that doesnt always mean that they
will be a great leader
Discrimination and Fairness paradigm
"we are all the same and differences do not matter"
Conditions that affected safety on Everest
- lack of candid discussion among team members -Fischer's deteriorating health -Hall's turnaround rule -each of these conditions impaired-decision making effectiveness
Mistake 2 - letting price bulldoze other interests
- price is rarely the only important factor, don't focus exclusively on it -most deals are 50% emotion and 50% economics - you need to try to get compensation elsewhere and let price go when it comes down to the wire
Mistake 6 - failing to correct for skewed vision
- you may have a clear view on the right negotiation problem but you cannot solve it correctly without a firm understanding of both side's interests, BATNA's (best alternative to a negotiated agreement), valuations, and likely actions
Mistake 1 - Neglecting the other side's problem
- you need to understand the problem from the other side's perspective -agreement requires understanding and addressing your counterpart's problem as a means to solving your own
Overconfidence with regard to Hall and Fischer's judgements led them to believe -
-Hall wasnt concerned with himself but instead concerned he was going to have to save another team's ass -fishcer was so confident that he "knew" he was coming back because he would make all the right decisions on the mountain
How does overconfidence bias fall into the mount Everest scenario?
-hall and fischer were very accomplished climbers and they had every reason to believe they could overcome any obstacle -hall, in particular, had a tremendous record of successful ascents to the top of Everest -Hall had reached the summit 4 times and guided 39 clients to the top
Team Psychological Safety
-its ok to ask for help, admit an error, or express a different point of view -risk of looking ignorant, risk of looking incompetent, risk of being seen as intrusive, risk of being seen as negative -psychological safety is a function of interpersonal trust and mutual respect -people feel safe and tend to be more vulnerable with someone they are close to. They would feel less judgement and know that that person meant well
What are the benefits of Diversity?
-larger pool of skills, talents, and experiences -increased adaptability and flexibility -provide service to customers on a global basis -more diverse workers want to become a part of your team -creativity and innovation are stimulated
Preconditions for the paradigm shift:
-leadership must understand that a diverse workforce has to start at the top and work its way down. If not- the company cannot adopt that sort of culture -the organizational culture must create an expectation of high standards of performance from everyone -the organizational culture must encourage openness
How do you find the right venture capital??
-need to talk to allied professionals such as lawyers, accountants, and entrepreneurs (its not just what you know but WHO you know) -find the venture capitalist who have invested or specialized in your industry -many large corporations have dedicated VC funds to invest in companies strategic to their core business
What is the escalation of commitment?
-one of the greatest decision making biases in business -in spite of negative information, commitment actually increases -tendency to continue to commit resources to a failing course of action Examples: country (iraq or vietnam war- we are so far in on these wars that we have to continue to fight them because we are so deep) Personal (gambling - we get sucked into this continuous gambling and we get wrapped up in the one more game idea) Company (projects gone bad but we are so far on the project we feel as if we cannot turn back)
Organizational constrains to decision making:
-performance evaluation -reward systems -formal regulations -time, money, resource constraints -historical precedents
Personal qualities it takes to reach the top of everest
-persistance -flexibility -self discipline -money -synergy -physical/mental strength
In the discrimination and fairness paradigm diversity is a moral imperative which results in:
-pressures to assimilate -differences were undiscussible -conflict is suppressed -people felt undervalued -performance often undermined
what are the challenges of diversity?
-resistance to change -may require greater effort to integrate diversity -perceptual, cultural, and language barriers may exist -loss of efficiency (we would prefer effective vs efficient) -overcome stereotypes, discrimination, and harrasment
What qualities is Dave Armstrong looking at when he looks for a new job?
-salary -fun -family -networking -equity (equity is the most important for him)
Bounded Rationality and Satisficing Model make decision making tough because:
-seek the first alternative that solves the problem - the limited information-processing capability of humans makes it impossible to understand all the information necessary to optimize -so people seek solutions that are satisfactory and sufficient, rather than optimal
Main Points about CitySide
-the approach the organization takes to managing its diversity derives primarily from how its leaders view diversity -many business leaders have understood diversity in ways that do not allow them to manage as effectively as they could
Tight coupling of Everest consists of
-time dependent processes -rigid sequences of activities -one dominant path to achieving summit -very little slack these all have to fall into place to make the summit to Everest possible
Things to know about VC:
-when you make a promise, they will hold you to it and penalties will be stiff -Most VC's want to make at least 10X their money -As an entrepreneur remember that the name of the game is not what you start with but what you end with -VC's will not make emotional decisions (look at the first bullet) You can lose your money only once but can make it a thousand times
Mistake 5 - neglecting BATNA (best alternative to a negotiated agreement)
-your willingness to walk away from the deal depends on the deal being handed to you -if it is a bad deal then you have an option to turn back and say no thank you which might save you from taking a bad deal -know your "walking away" limit
What are the 6 mistakes negotiators make
1) (N) Neglecting the other side's problem 2) (P) letting price bulldoze other interests 3) (P) letting positions drive out interests 4) (CG)Searching too hard for common ground 5) (NB) Neglecting BATNA (best alternative to a negotiated agreement) 6) (S) Failed to correct for skewed vision
What is the percentage of successful deals for VC?
20% make up for 80% that dont matter
Size of investment?
250,000 - 500,000
Firms in top quartile (14%) for ethnic/cultural diversity have
33% more likely to lead their industry in profitability
UT diversity AA pop:
4% while AA make up 68% of sports pop
In Cityside what ratio of the community was black and women?
50% black, 50% women
Team Effectiveness but NOT on Everest:
A) team members demonstrate a high level of trust and mutual respect for one another B) team members do not believe that the group will rebuke, marginalize, or penalize individuals for speaking up or challenging prevailing opinions
If we had to grade Hall and Fischer what would we grade them?
As climbers we would have to give them a good grade seeing that they were some of the most experienced climbers of their generation but as leaders we would have to grade them poorly seeing that they made poor decisions as leaders which cost them their lives as well as the lives of their clients
Dave Armstrong Case- why is the decision facing dave armstrong a difficult one?
Because he has to choose which job may be the best for him and the jobs are very different
Hall was very adament about his 2 o'clock rule which basically meant that if you couldn't summit by 2 pm then you had to turn around and descend. This was ignored in 1996. Why?
Climbers could not ignore substantial prior investments the had made such as: -the cost of joining the expedition ($70,000) -the time spent training and preparing -the investment in equipment -the time spent on the mountain itself
Who will a VC fund?
Entrepreneur; someone who assumes the financial risk of beginning and managing a new venture
quit,disclose
In conclusion, we strongly believe it is best for McCaskey to ___ Praxis and find other employment that more accurately aligns with her personal values, and if, the situation ever arises where she is questioned about the practices at IAD later on, she should comply and ________ any information on the practices.
information,values
Martha McCaskey works for a division of Praxis that specializes in industry analysis. McCaskey's current project requires her to obtain proprietary __________ about the competitor of her client. All solutions to successfully complete the project result in a compromise of McCaskey's _____.
slope
Martha has started to go down that slippery ____.
honest,unethical
Martha is an _____and upright person, but has done something that are _______.
changing
Martha's boss _____information on her slides to change what their research is about.
Top 3 investment categories?
Medical devices & equipment, Software, biotechnology
Fischer's logistical battles were burdensome and exhausting:
Prior to summit push: -customs problem at russian border -charter plane flight problem -poor weather in Nepal during trek to Base Camp -labor unrest among the Nepali porters During summit push: -assumption that ropes were affixed -lead sherpa should have been at front of pack -fischer was supposed to serve as the "sweep" but lost contact with the team and had no radio
Cityside may be statistically diverse but they are actually
SEGREGATED
What is the golden rule when it comes to investors?
Take their money, follow their rules (he who has the gold, makes the rules)
Devon,4000,uncomfortable
The first alternative includes setting up another meeting with ______ and paying him the $____ for the information needed. McCaskey feels ___________ with this alternative because it compromises her personal values of honesty and integrity. However, she is also lacking confidence in whether this really is just a "gentleman's industrial espionage" - something that sounds less dishonest.
leave
The last alternative includes McCaskey deciding to not finish the project and _____ Praxis completely. She feels the company has put her in a difficult position where she is to compromise her values. Consequently, she may choose to leave Praxis and seek a company with corporate values that better suit her personal values. In this alternative, McCaskey also must decide whether to still inform her direct superiors, Praxis executives, and possibly the companies that the proprietary information is being gathered about. Again, in these decisions, McCaskey may be committing herself to drawn out investigations or possibly hurting her reputation in the industry.
Kauffmann,information,honesty,integrity,less
The second alternative includes her handing over the second interview with Devon to Kaufmann.__________ has much experience in obtaining information that is considered proprietary in the past. In addition, McCaskey will still be promoted to group manager if she does not conduct the second interview with Devon herself. As long as Praxis collects the necessary ___________ about the manufacturing processes and costs for building a new type of computer chip McCaskey will be promoted. The main problem with this course of action is that it still conflicts with McCaskey's personal values of ________ and __________. The main benefit is that she can rationalize that her hands are slightly ____dirty in the process.
reporting,behavior
The third alternative includes McCaskey __________ this unethical ________ to a superior of Praxis. Because there are no formal written guidelines that discourages a Praxis employee to gain what may be considered proprietary information by paying a large sum to a contact, McCaskey must present this information to upper management that will enforce regulations to be met. In addition, Praxis is made up of four divisions with the Industry Analysis Division very separate from the other three branches. These branches may be unaware of the practices taking place in Industry Analysis Division; therefore, McCaskey may feel it is pertinent to inform them of such practices. This would be a courageous move for McCaskey and may carry great benefits. If guidelines are set she may feel her personal values are more compatible with Praxis's and more importantly Industry Analysis's values; thus, she will continue working for Praxis. However, it is possible even though, Praxis' company regards itself highly in terms of "professional standards" (page 2), they may be uninterested in hearing McCaskey's side and handling the situation. McCaskey is also putting her job on the line if she chooses this alternative to the dismay of her IAD superiors. She may also be committing herself to engaging in a long, drawn out investigation of IAD's practices.
talk,display
They ___about ethics, but do not actually _____ethical behavior.
What are the 3 top sources of start up funding?
Venture Capita ($18 B), State Funds ($4 B), Angel Investors ($35 B), Three F's (friends, family, fools - $60 B)
Quantitative Analysis of job
Weigh 5 aspects and display their weight. Ex: UT vs Harvard; Alumni, Prestige, Money, Culture, Location
add,unethical,unethical
When you have ___all those little _______behavior, it makes the organization _______.
Decision Tree
a graph of decisions and their possible consequences; it is used to create a plan to reach a goal
What is the worst thing to happen if you fail in an investment?
bankruptcy: opportunity to learn lesson and reassess. (have to be passionate about what you're doing and ready for failure if entrepreneur)
Why do Angel groups often pay over value for investments ?
bc potential ROI
Overconfidence bias
believing too much in our own ability
Complex systems are made up of
complex interactions and tight coupling
representative bias
considering current situation as identical to past situation
Complex interactions are
different elements of a system come together in a different way or unexpected way then they thought they would Ex: how you take a medication but before they prescribe it they ask if you are on a medication because sometimes two medications mix in an odd way
City side financial is getting none of the value of ______
diversity but getting all the problems that come with diversity
What is a Venture Capitalist?
equity investments made to fund the launch or early development, or expansion of a private and quite young company.
General negotiation principles
everything is not win/lose, often elements where each party wants the same thing, make tradeoffs "I'll give you this, if you give me that"
Groupthink:
group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative ideas
What kind of return does a VC expect?
higher than average return
The Satisficing Model is:
managers seek alternatives until they find one that is satisfactory, not optimal
Progress in the Integration and Learning paradigm:
measured by the power traditionally underrepresented groups have to change an organization
Errors in decision making can be based on many biases which include
overconfidence bias, anchoring bias, availability bias, confirmation bias, representative bias, and groupthink
Where do I get the money to invest?
pension funds, insurance companies, endowments, foundations, HIGH NET WoRTH INDIVIDUALS (not what you know but who you know)
What is important to note about the seed/early stage?
preferred investment/company stage
There is another paradigm that is favored however... what is it?
the integration and learning paradigm
Tight coupling is
time dependent processes, fairly rigid sequence of activities, one dominant path to achieving the goal, and very little slack "it is the nature of systems to break down with a vengeance" this quote is talking about everything that works together to make Everest such a huge battle
anchoring bias:
using early, first received information as the basis for subsequent judgements
availability bias
using info that is most readily at hand
confirmation bias
using only the facts that support our decision, discard other facts
Bounded Rationality (developed by Herbert Simon) is:
we make decisions by constructing simplified models that extract the essential features from problems w/o capturing their complexity
The Integration and learning paradigm is looked at as:
we work together with our differences, not in spite of them
There is not a SINGLE root cause but instead a couple of reasons why -
why the catastrophic failure and deaths occurred on the mountain top of mt. everest (the poor decisions of the guides/weather/etc. led to their dismay)
