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    Entries in strategy (25)


    Learn a new word Thursday: The BATNA

    I will admit when prowling around for ideas for the blog that I sometimes get lost in the weeds of Wikipedia. Sort of reminds me of how back in the day a 9-year old me would page through volumes of the Funk & Wagnalls Encyclopedia late at night when I should have been sleeping. Note to the kids out there, that is just one example of how miserable life was before the internet, and smart phones, and Snapchat. When I have some more time I will tell you about the 13-inch TV I had to watch in college. 

    But back to the point, (such as it is).

    While reading about a pretty interesting article on a Game Theory principle called the Nash Equilibrium, I came across a slightly less interesting but probably more relevant for the HR/Talent pros, an idea called the BATNA, or in the realm of negotiations, the 'Best Alternative to a Negotiated Agreement.

    From the 'Pedia:

    In negotiation theory, the Best Alternative to a Negotiated Agreement or BATNA is the course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA. 

    The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations.

    So the BATNA is kind of the fall back plan, the Plan 'B' so to speak if you are unable to reach a negotiated agreement - whether it is for the price of a new car, the starting compensation package for that new job, or if you are unable to convince your significant other that eating at Chili's does, in fact, constitute a 'night out.'

    But the idea that the BATNA isn't a safety net, or a 'bottom-line' is key to the entire concept.

    Usually, a bottom line signifies the worst possible outcome of a negotiation that you are still willing (or are forced to), accept. The bottom line is meant to act as the final barrier after which a negotiation will not proceed. It is a means to defend yourself against the pressure and temptation that sometimes exists to simply end a negotiation, even if the conclusion is self defeating. Although bottom lines definitely serve a purpose, they also inflexible, can eliminate more creative solutions, and decrease the likelihood of long-term satisfaction with the agreement.

    Let's go back to the salary negotiation example to see the difference between the BATNA and the 'bottom-line'.

    Candidate: I am looking to start at $125,000 with 5 weeks vacation.

    Employer: Our offer is a starting salary of $105, 000 plus 3 weeks vacation.

    Candidate BATNA - $115,000 with 4 weeks vacation

    Candidate 'Bottom Line' - probably something like $110,000 with the 3 weeks. 

    Notice the difference between the BATNA and the Bottom Line though. The BATNA gives up a little on the salary number, but represents a gain on the vacation number. It really is a 'Best Alternative' scenario for the candidate, and not just a surrender. The 'Bottom-line' however, is more or less a total loss from a negotiation standpoint. The candidate might be able to live with that outcome, (say if their current salary was $95,000), but if they accept the bottom-line deal they are going to be immediately dissatisfied with the outcome. But if they have the BATNA defined walking in to the negotiation, then settling on it will still represent a good outcome.

    It is a small, maybe even a subtle difference, but understanding the difference between the BATNA and the Bottom-line could be the key to drive better overall outcomes.

    So there it is, your new word of the day - BATNA - The Best Alternative to a Negotiated Agreement.

    Happy haggling.


    'We believe we can do anything'

    I get kind of bored with most of the conversation/writing about 'Company Culture'. Probably because at best the dialogue seems either a little empty or obvious or perhaps even derivative. Or at worst, it equates vague concepts like 'culture' and 'fit' with exclusionary hiring, promotion, and rewards policies. Used in this way 'culture' becomes the same thing as 'gut feel', which then allows some organizations and leaders to do whatever the hell they want ignoring data, logic, and even at times, the law. And finally, and something I have written and presented about, the 'culture' army confuses or at least substitutes 'culture' for strategy. When a company builds its business around say, providing the best customer service in their industry, that is a conscious strategic decision, not a 'cultural' one. But the 'culture' folks like to ignore strategy, conveniently.No. 61, Rust and Blue, Mark Rothko

    Anyway, a few weeks ago I was listening to a very senior executive at a large corporation discuss their organization's recent strategic acquisitions of a few smaller firms that competed in new, or at least adjacent markets to where the larger firm had traditionally competed. This (at the time still new to the company and in their role) executive expressed concerns to the CEO about their organization's ability to efficiently integrate these newly acquired companies and to effectively compete in these new markets. According to this new Exec, the CEO just leaned back and said something to the effect of 'Relax. This is ACME Company (not their real name, obviously). At ACME, we believe that we can do anything.'

    And to me, that little story was the best example of what, if such a thing really exists, a 'culture' can mean to what an organization does, how they approach challenges, and the types of people that will succeed (and hopefully be happy), working in the organization. As a philosophy it is simple, fundamental, and definiitive. It doesn't require lots of complex messaging or high cost communications strategies to articulate. It is pretty easy to evaluate decisions, actions, behaviors, and probably people too in comparison. Plus, and this is probably why I liked it, the 'We believe that we can do anything' approach sits in an opposite or at least an entirely different way to think about experiments and risk and competition than the 'embrace failure' crowd.

    Like I mentioned at the top, I am not that big on the 'culture' discussions but when it can be expressed in one sentence, in seven words like it was by that CEO, then you might get me to buy in, at least a little. ACME believes that it can do anything.

    What does your organization believe?

    Have a great week!


    Germany, Spurs: Welcome to the Machine

    The German men's national team won the World Cup with a 1-0 victory over Argentina yesterday, completing a march to the title that at times seemed almost incredible and surreal, (their 7-1 demolition of host nation Brazil in the semifinal), and absolutely workmanlike (the title match, their group stage tussles with Ghana and the USA).

    But no matter how any individual game for the Germans developed, in the end they were always able to find the right combination of talent, strategy and tactics, and individual moments of inspiration and excellence needed to raise the most prized trophy in all of world sports. For US fans, continuing to warm up to the highest levels of a sport that almost (it seems) every American child has played at least some in the last 20 years, watching the German team in this World Cup had to be at least somewhat reminiscent of the recent San Antonio Spurs NBA Championship.

    While there were certainly some differences between the two team's achievements, the similarities, at least to me were pretty clear, and might (apologies in advance to anyone already sickened by 'What can we learn about career management/leadership/workplaces from LeBron James returning to Cleveland' posts), I as a member of the 8 Man Rotation feel obliged to call out a few keys to both of these victories, and to take a stab at what broader application might be found therein.

    Talent and system are not the same as culture, (and are more important) - Tim Sackett had a great take at Fistful of Talent last week about 'system' hiring and it is well worth a read. Both the Spurs and Germany 'play the right way', i.e., organize their players and approach the game in a particular way in that each player understands their role, and how it contributes to the overall goals of the team. While each team has recognizable and extremely successful individual players, (Duncan and Parker on the Spurs, Muller and Klose for Germany), none of the games and the strategy ever seemed to be about these individuals. From beginning to end each team approached and played the games as a team. Not once in the NBA Finals or in the World Cup late stages did I recall hearing any commentator say something like 'The Spurs (or Germany), will only go as far as player XYZ takes them.' It was always a team effort, not one that relied on one or two talents. In fact, many of the players on the Spurs for sure, probably only succeed because they are in the Spurs system, and they have found the right fit for their talent.

    In the long run, discipline and belief trumps emotion - In the pre-game of the World Cup semifinal the home team Brazil had cranked up the emotional meter to 11 - they had 70,000 fans behind them, they 'felt' like it was their destiny to win on their home soil, and even held up the jersey of their injured and unable to play star Neymar in the pre-game line-up. It would have been easy for Germany to succumb to that emotional and psychological pressure, and give up and early goal or two. Instead, the German side stuck to their plan, withstood the first 10 minutes or so of Brazil's efforts, and then set on a goal scoring flurry not seem ever before in a World Cup semifinal. Similarly, in the final game of the NBA Finals, the two-time defending champion Miami Heat jumped out to an early lead against the Spurs, only to find the Spurs back to just about even by halftime, as the Spurs system and discipline proved more that Miami could match. When you have a system, and the right talent that has bough in to the system, then the lesson is to stick with it, don't panic when your opponent seems to have the upper hand, and double down on what you know will be successful in the long game.

    Most of us are really bad at evaluating talent - The Spurs had the NBA's best regular season record. The German side are full of top-level players from the world's most famous clubs. Yet neither was favored to win their respective championships prior to the final series or game. The Heat, with best player in the world LeBron James, and Brazil with their history of success (and home nation status), were expected to lift the trophies that ended up being held by the Spurs and Germany. We kept looking for excuses why the Spurs or Germany could not win (the Spurs were too old, Germany had not won the World Cup in 20+ years, and never outside of Europe), that we let ourselves be fooled. Even the leaders of these great teams might not understand talent completely. The World Cup winning goal was set up and scored by two players that were not even in the starting team of 11. I think this is is often the same thing that occurs in day-to-day talent assessment and evalution. We are trained to look for the reasons why someone won't or can't succeed, instead of focusing on the things that they are talented and strong at, and thinking about ways to leverage the skills they have. 

    Bottom line - Spurs = Germany = a great way to think about how systems and strategy lead you to find the right talent you need to succeed.

    Look for more sports takes later in the week, (I know you can't wait), from the NBA Summer League in Las Vegas.

    Have a great week!


    The machine gets its 'Seat at the table'

    At the risk of having a $100 fine/mandatory donation slapped down on me from Professor Matt Stollak, I felt compelled to crack out the (tired) 'Seat at the table' line, the often-repeated metaphoric goal or target for HR leaders, and that is still referenced by many a conference speaker, when I caught this interesting piece from Betabeat - V.C. Firm Names Robot to Board of Directors.

    You can probably tell where I am going with this take just from the title of the Betabeat piece, but in case you'd like some details, here is the gist of the story:

    In case you needed more proof that all our jobs will one day be occupied by robots, a Hong Kong V.C. firm has just named an artificial intelligence tool to its board of directors. The company’s also insisting the tool will be treated as an “equal” to the other board members.

    A press release from Aging Analytics UK, a company that conducts research on biotechnology and regenerative medicine, made two announcements this morning: first, that they’ve launched an new A.I. tool called VITAL (Validating Investment Tool for Advancing Life Sciences); and second, that they’ve licensed VITAL to Hong Kong V.C. firm Deep Knowledge Ventures, where the tool will become an “equal member of its Board of Directors.”

    VITAL uses machine learning to predict which life science companies will make for successful investments, the press release explains. That’s why it’ll be of use to Deep Knowledge Ventures, which “routinely invest[s] in both private and public companies specializing in biotechnology, regenerative medicine, oncology, drug discovery, bioinformatics and personalized medicine,” according to their website.

    On the (board) meetings investors will firstly discuss the analytical reviews made by VITAL. All the decisions on investing will be made strictly after VITAL provides it’s data. We say that VITAL has been acknowledged as an equal member of the board of directors, because it’s opinion (actually, the analysis) will be considered as probably the most important one. So basically yes, it will be incorporated into meetings.

    Awesome, right? The robot, or really not so much a robot, but a smart machine with a bunch of algorithms is going to be an 'equal member' of the board of directors, and have its 'voice' heard at the ACTUAL TABLE, (no word if it will really have a seat as well, but so what?).

    You could just let this story go as kind of a goof or a publicity stunt, but if you take maybe five minutes to think about it, it once again validates everything we think we know about why so frequently HR leaders are not equal members and participants in the organization's strategic planning processes.

    VITAL, the robot director, only applies data and logic in making its recommendations. It has no inherent bias. It is not even aware of how the other directors perceive its abilities, even the crusty old directors that 'Don't get all this newfangled technology'. It is not scared to issue its advice, since robots probably can't get scared, and it 'knows' it is operating from facts and a kind of defensible set of processes. VITAL isn't out to 'prove' anything to skeptics, or people with 'business' sense.

    VITAL actually sounds like the perfect Director, when you think about it. 


    Dog food, champagne, and Email

    I am grinding through about 12,000 speaking proposals for the upcoming HR Technology Conference in October 2014, and in a recent review call, a rep from one of the vendors made almost a side comment about their own internal use as a company of the HR solution that they are offering in the market. The context was a discussion about a newer recruiting application the vendor was advocating and the vendor rep sort of off-handedly mentioned something like 'And we used the tool to source and help assess candidates for the 15 developer positions we needed to fill last quarter'. 

    Not a big deal right, that a HR technology company would use its own HR technology to help it solve its own HR problems and challenges. You would, as an observer or a potential customer of an HR technology solution sort of expect that the actual developer of a solution would have to naturally want to and be strongly motivated to use their own solutions in house. click to see what I am talking about

    This concept of a supplier company and its employees using the technology, products, or services that they produce is refrred to as 'Eating your own dog food' or for more sophisticated suppliers, 'Drinking your own champagne.' And typically, and especially in the minds of potential customers and prospects, when a company 'Drinks its own champagne' it is a sign that one, they are committed and passionate about the product, and two, the product actually works.

    This 'dog food/champagne' issue was in the news again recently when the President of PayPal, David Marcus, came down hard on PayPal employees who had refused to install the PayPal payments app on their phones, had forgotten their PayPal passwords, and essentially were not advocating for the product and brand by using the product (and using it publicly). 

    Here is a short excerpt from Marcus' email to the PayPal team to give you a feel for just how serious 'eating your own dog food' is from this Exec's point of view:

    As a matter of fact, it's been brought to my attention that when testing paying with mobile at Cafe 17 last week, some of you refused to install the PayPal app (!!?!?!!), and others didn't even remember their PayPal password. That's unacceptable to me, and the rest of my team, everyone at PayPal should use our products whenever available.

    Marcus goes on though, and this next part is even more interesting:

    In closing, if you are one of the folks who refused to install the PayPal app or if you can't remember your PayPal password, do yourself a favor, go find something that will connect with your heard and mind elsewhere.


    Marcus moves from, 'You really need to be an advocate for our products while you work here' to 'You probably should not be working here if you are not going to advocate for our products.'

    Lots of commentators came down pretty hard on Marcus for the tone and message (maybe it was a bizarre set of !!! and ??? mixed in), but I think I am with him on this one. Wouldn't you expect someone who worked at PayPal to actually use PayPal?

    I would. Just like I would expect a big payroll provider trying to sell payroll technology to my company to actually use that same technology to pay their own employees.

    If a company doesn't internally use their own stuff (where applicable) or can't convince its own employees to adopt their products, to me that is a big red flag about the viability of the product, the commitment of the employees and the long-term chances of a successful partnership with their customers.

    Postscript - If you click on the thumbnail image on the right side of this post, it will expand a 1977 advertisement for corporate email technology from Honeywell. If you read the fine print, (and it might be hard), after the copy that describes how wonderful this new email service will be, your 'Contact us to learn more' information contains a phone number and a postal or physical address. No way to contact Honeywell via email, even though that is precisely the service they are selling. Sure, in 1977 maybe none of the prospects would of even had email themselves, but to me that is not really the point. Honeywell would have looked really sharp and progressive if indeed, they offered email as a way to contact them about using email.

    Postscript 2 - I am a Diet Coke fan. Last year at a vendor conference I was about to moderate a panel that included a participant from one of Coke's competitors. This panelist noticed my Diet Coke and asked me kindly but seriously, if I wouldn't mind leaving the Coke behind as we took the stage. And I did.

    Have a great day!