HBR Dec 2015: The soft side of negotiation

Harvard Business Review

December 2015

Annotated table of contents

1. Adi Ignatius: The disruption conversation

Adi Ignatius, the Editor-in-Chief of HBR, highlights the article on disruption in this issue. Twenty years after Clayton M. Christensen first introduced the idea, he and his collaborators take stock of how the initial explanation has fared and how it remains useful as a tool for understanding the rise and fall of companies.

Idea Watch

2. HBR Team: Team building in the cafeteria

The evidence comes from surveys and observations of fire fighter teams. Their high performance is often linked to team building through communal preparation and sharing of meals. But the experience is relevant for many companies whether they offer free or subsidised meals in their own cafeteria or organize off-site cooking events.

3. HBR Team: How to prevent overbilling

How the invoice is structured makes a difference for the precision of billing. When you require an itemized listing of prices for tasks and/or hours used to carry them out, this creates a sense of ‘felt accountability’, ‘a sense that someone is carefully monitoring the details.’ As a result the overall amount charged tends to be more accurate and there is less incentive or opportunity to cheat and overcharge.

4. HBR Team: What makes a start-up an employer of choice?

Six non-financial qualities of jobs were tested for attractiveness for three types of prospective employees: hedonists, self-directed and security-seeking. It turns out that life-style perks – such as free food, yoga classes, day care – are now considered standard and widely expected. Depending on their overall outlook – pleasure seeking, interest in individual initiative or security – job seekers are also more or less interested in location, the credentials of the founder, encouragement to contribute and flat hierarchy, perceived level of innovativeness, recognition and legitimacy, such as a good name or backing from influential investors. If you are looking to recruit a particular kind of staff for a start-up, your offer might be more effective if you take account of the relative popularity of these factors.

5. Dave Smith: Most people have no idea whether they are paid fairly

Does pay work as a tool for employee engagement? What factors make pay more effective in this respect? While pay clearly matters for how employees feel about their employers, and whether they want to stay or leave, this research shows that most people, whether they are underpaid, paid at market levels or overpaid tend to underestimate how well they are paid. Thus, transparency about pay matters a great deal. Clearly, when you pay above market levels, it is important for employees to know this. But even when the pay is below market levels, openness about the reasons can still make a positive difference and encourage loyalty.

Defend your research

6. Kate Adams: Even women think men are more creative

How deep does prejudice about gender differences run? Very deep, according to this research from Duke University, showing that contributions by women are generally regarded as less creative than contributions by men, even by women. This is linked to profound assumptions that link ‘creativity with “agentic”, masculine qualities – boldness, risk taking, independence.’ Since women are less positively associated with such qualities, they also get less credit for their creative input. How influenced people are by such (often) unconscious stereotypes at any one moment depends on their level of energy: stereotypes kick in more easily when we are tired or depleted.

7. HBR Team: Resource management à la Ancien Régime

Several maps from Harvard Library show the forested areas on royal and non-royal domains in France, in the 17th century. Timber was then a strategic material, essential for the construction of ships and thus commercial and war competition between the emerging European empires.

How I did It

8. Jonathan Bush, the CEO of Athenahealth on the role of anger in starting new businesses

Jonathan Bush (a nephew of President George H. W. bush and a cousin of President George W. Bush) describes his journey from anger at poor and expensive health care provision to the $700 million plus business he runs today. Incensed that ‘health care is a $220-a-month product for which we are paying $570 because there’s no demand curve to squeeze out the excess capacity’, Bush set out in search of business ideas and models that would lead to more rational delivery of health care. He tried to organize an alternative ambulance service and more holistic maternity clinics. Both ideas seemed valuable but difficult to implement profitably. His journey finally led to his current company, Athenahealth, a provider of support for back room tasks for clinics and hospitals, freeing up to 50% doctors’ time allowing them to concentrate on patient care.

The Big Idea

9. Clayton M. Christensen, Michael E. Raynor and Rory McDonald: What is disruptive innovation?

Clayton Christensen revisits here ideas he first introduced in his famous book The Innovator’s Dilemma twenty years ago. In this analysis disruptive innovation has a very specific meaning; it refers to new entrants who offer relatively simple products for overlooked, low-end or new-market consumer segments, often at lower prices. With time, as they grow their consumer base and develop their products to attract mainstream buyers, these companies become a threat for incumbents who could be pushed out of business. An example would be Netflix destroying the demand for Blockbuster services by offering mail-order DVD rentals and then streaming. The article takes stock of how this definition of disruption remains relevant to understanding the rise and fall of companies and how it can guide the understanding of strategic choices faced both by new entrants and by incumbents.

Spotlight section: The soft side of negotiation

10. Alison Wood Brooks: Emotion and the art of negotiation

Anxiety, anger, disappointment and regret, happiness and excitement are natural emotional reactions that we all experience to various degrees as we prepare, carry out or conclude important negotiations. This article provides a careful discussion of how the experience and display of emotions can impact on our performance and ultimately the result of the negotiation. All of these emotions can be managed and their tactical display tends to have specific consequences. The aim is to help you develop ‘a poker face – not one that remains expressionless, always hiding true feelings, but one that displays the right emotions at the right times.’

11. Deepak Malhotra: Control the negotiation before it begins

Malhotra, a Harvard Business School professor, draws on his consulting experience to explain how deal making is affected by a plethora of factors, quite aside from the substantive aspect of the quality of what you have to offer. He identifies four guiding principles: negotiate process before substance; normalize the process; map out the negotiation space; and control the frame. Their underlying logic is explained and illustrated with examples. If you think that being small always means having to make concessions, for instance, you might be pleasantly surprised to find that it is possible to shape expectations and perceptions of equality in relation to a particular deal even when you are dealing with a multinational corporation.

12. Erin Meyer: Getting to Si, Ja, Oui, Hai and Da

Of course, we may suspect, in general, that cultural differences matter in a negotiation between companies from different countries. This article identifies two important dimensions – emotional expressiveness and comfort with confrontation – and places 18 national cultures in a space defined by them. Knowing a cultural style along these dimensions provides powerful lenses for interpreting the behaviour of your counterpart during the negotiation process. The article discusses in particular their impact on building trust, recognising closure and writing contracts. There are many gems here, in the form of examples of disasters and averted misunderstandings which cannot but hone the subtlety of our perception and build savoir faire.

Research articles

13. Tony McCaffrey and Jim Pearson: Find innovation where you least expect it

If you have ever wondered where to start in thinking about novel solutions to a particular problem, this article will come in very handy. It presents a very clear analysis of how our imaginations might become stuck with particular definitions of functionality, design, or goal. Having provided the diagnostic, it then moves us from being stuck to exploration of new possibilities through a well-defined process. Brainswarming, the clever answer to brainstorming, starts with a clean sheet of paper, with a goal defined in general terms, at the top, and a list of resources aligned along the bottom. Whether you are a general thinker and want to start at the top, or you are a detail-focused thinker, preferring to start at the bottom, anyone can contribute according to their strengths to create links and paths between goals and resources. The result is a richer range of possibilities from which to choose one or two with the greatest chance to provide a path-breaking innovative solution.

14. Mark Bertolini, David Duncan, Andrew Waldeck: Knowing when to reinvent

One of the authors, Mark Bertolini, is the CEO of Aetna, the third largest medical insurance company in the US, in 2010, when the process of realignment of business strategy described here started. The article reports on their experience of thinking through changes in the business environment, their expected impact on Aetna and the measures taken by the company in response. They offer a framework that might be useful to any company trying to assess whether it is time to think about reinventing itself. It is a framework that looks at five core aspects of any business, five fault lines: serving the right customers; measuring performance for the right kind of value; industry position; business model appropriateness; and capabilities of employees and partners. Each of the fault lines is defined, described at Aetna and with other examples and comes with a diagnostic to allow you to work out whether it is a relevant issue for your company.

15. Roger L. Marin and Alison Kemper: The overvaluation trap

If you think that high stock market valuation is (always) a good thing, this article might persuade you to think again. It homes in on a paradox, in fact, a kind of ‘Catch-22’ for listed companies. At high stock market valuation, companies are under pressure to keep increasing the valuation, to create value for their shareholders. But, the larger the valuation and the company the harder it is to grow the profits by a margin that will keep up the momentum. However, the appearance of momentum has to be kept in order to avert catastrophic collapse in share price, a collapse (or readjustment) that CEOs know is ultimately unavoidable. This living on borrowed time, as it were, is described in relation to the finance industry, pharmaceuticals and the big oil companies. It is unclear whether there are any tactics CEOs could employ to lessen these tensions or they just have to ‘keep dancing while the music is playing’.


16. Keith Rollag: Succeed in new situations

‘Success almost always requires putting yourself into new situations’, says Rollag. He focuses here on three tasks that people find most daunting and anxiety-provoking in new situations: introducing yourself, remembering names and asking questions. Basic issues you might think, but it is surprising how many of us avoid new situations simply because we are not confident in these basic skills. The article provides a useful reminder that such fears are normal and provides a run through the tried and tested ways to overcome them.

Case Study

17. Chekitan S. Dev and Peter O’Connor: Should a hotelier invest in a new kind of online travel agency?

This is a fascinating example of the many aspects that a company might need to consider when making an investment. How value is created and captured, what strategies are available for maintaining or improving one’s position, in this case in the hotel industry, are questions that require constant monitoring and evaluation. The case study shows the play of facts, the construction and evaluation of scenarios, and asks: what would you do in the circumstances?

18. Lisa Burell: Lives we can learn from

This is a brief review of three biographies, by Richard Dawkins, Jimmy Carter and Oliver Sacks, a scientist, a politician, a doctor and writer, who offer ‘sharp and resonant’ perceptions about their values and their chosen fields of endeavour.

Life’s Work

19. Daniel McGinn: An interview with Katie Couric

Katie Couric, a TV news anchor for 15 years, and one of the most respected TV journalists in the US, now produces online content for Yahoo. In this interview she talks about the transition and the changing demands of the different media. Managing up, success and failure, Maryssa Meyer, and the professional pressures on her two grown daughters also come up.