How Do You Introduce New Information into a Negotiation? Five Thoughts

Situation: A company is negotiating an agreement to resell another company’s software. In due diligence the company encountered a customer who was offered a single user license for the same software at one-third the price that they have been asked to pay upfront. What is the best way to approach the vendor for additional information without divulging the source of his intelligence? Does this change the negotiation?

Advice from the CEOs:

  • There is no need to divulge your information source. Just say that you have done some research and quote the price that you found. Ask them to explain this to you. See how they respond. This may tell you a lot about how they operate.
  • What rights do you receive under the arrangement that has been offered by the firm? What exclusivity and guarantees will they offer? Will they write these into the agreement? How will they handle direct inquiries?
  • Perform a careful financial analysis of the opportunity. Model the market and the full cost of sales that you will encounter. What is customer purchase behavior? Is it changing?
  • Counter the vendor’s offer to you with a pay-down option that pays the vendor more over time, but allows you access to the software without a substantial up-front payment. This limits your exposure if sales do not ramp as you anticipate.
  • Visit the vendor and sit down with the President. See how this individual responds to your questions. You may get a much better deal through this approach than through the sales team. You also may develop other partnership options that can benefit you long-term.

Key Words: Reseller, Agreement, Price, Software, Due Diligence, Negotiation, Research, Exclusivity, Guarantees, Direct Inquiry, Analysis, Customer, Behavior, Counter, Visit

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How Will You Care for Aging Parents? Four Considerations

Interview with Barbara Smith, CEO, Ask Barbara

Situation: Many executives in their 50s and 60s have parents in their 80s and 90s. When parents can no longer take care of themselves, there are important decisions to make regarding long-term care. What considerations are important to these decisions?

Advice:

  • The most important challenge is that we often don’t want to think about these decisions.
  • There are three legs of the stool when it comes to later life planning.
    • Regular life insurance for family and final arrangements.
    • Financial planning to assure that you will have the assets to provide for yourself in later life.
    • Long-term care insurance can expand alternatives and help defer the cost of later life care.
    • Also, an estate planning attorney can shield assets if Medicaid will cover the expense of later life care.
  • The aging population is rapidly changing the demographics of later life care provision.
    • In Santa Clara County, California 16% of the population is currently 60+. This will go up to 25% by 2040.
    • Baby Boomers who waited longer to have children may have small children and aging parents at the same time. If a family member currently cares for elders, what will happen if they return to the workforce?
    • Medicare and Medicaid cover hospital and skilled nursing, but not assisted living. Long-term care insurance is important for those in their 50s and 60s and is less expensive if purchased earlier.
  • Needs and alternatives are changing as the generations change.
    • In contrast to their parents, Baby Boomers are more open to late stage options. They look for amenities and social environments that will enable them to stay active.
    • The village concept is gaining momentum – communities of like-minded seniors who will move into a community, often at a younger age than earlier generations.
    • Current elders are healthier than Boomers, and even more so than younger generations due to better diet and exercise habits. This has implications for both the care needs and options available to the younger generations as they age.
    • Technology will come into play in new ways. Current products assist in tracking and dispensing medications. There are also fall-alert devices and nanny cams to monitor parents in case of emergencies. Many more will be developed.

You can contact Barbara Smith at askbarbarasmith@gmail.com

Key Words: Long-term care, Generations, Planning, Urgent, Insurance, Financial Planning, Long-term Care Insurance, Estate Planning, Demographics, Baby Boomer, Depression, Family Care, Assisted Living, Village, Health

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Are Negative Incentives Effective? Four Perspectives

Situation: A company has been struggling to meet objectives. Financials aren’t completed on schedule, limiting the ability of the CEO to manage by the numbers. Milestones are behind schedule. The CEO was advised to consider stringent measures, including financial penalties, to force compliance to performance goals. In your experience, are negative incentives effective?

Advice from the CEOs:

  • There are at least three potential roots of this problem. Have your hired people who lack the skills to perform their functions? Is there a clear plan and set of priorities in place? Or are you as the CEO being consistent in your demands of the team? You need all three to meet your objectives.
  • Be sure to set SMART objectives: specific, measurable, achievable, realistic and time-bound. In addition, make sure that everyone understands how their performance impacts not only the plans of the company, but their salary and benefits as an employee. Be sure that everyone has the resources to complete what is expected of them.
  • Be careful if you are considering financial penalties, and negative incentives.
    • Many studies have shown that positive reinforcement is more effective than negative reinforcement.
    • If an employee is chronically behind on deliverables, ask what is happening and why they are not getting the job done.
    • If the response is not satisfactory, and performance doesn’t improve, you are better off terminating the employee than using negative incentives.
  • Often the question is not one of motivation but one of focus. Focus has to start at the top, and has to be maintained through departmental and team leadership. Make sure that there is proper training in setting and monitoring achievement of objectives throughout your leadership team. It helps if everyone clearly understands what the company is trying to achieve.

Key Words: Objectives, Achievement, Failure, Schedule, Manage, Numbers, Penalties, Compliance, Positive, Negative, Incentive, SMART, Resources, Achievable, Motivation, Focus, Training, Great Game of Business, Jack Stack, Understand

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How Do You Aggregate an Audience? Three Strategies

Interview with John Hollar, President & CEO, Computer History Museum

Situation: Traditional media for reaching audiences – television, newspapers – have broken down. Audiences are atomized and increasingly “what you want when you want it.” How do you aggregate an audience in this environment?

Advice:

  • Develop partnerships that align with you both in terms of audience and purpose.
    • We just finished a $20 million expansion. With 1.5 million technology workers in Silicon Valley, how do we spread the word?
    • We work with corporations in the tech sector, corporate alumni groups, tech retailers, convention centers, hotel concierges, and schools.
    • Our new campaign – Silicon Valley Starts Here – encourages Silicon Valley visitors to start their Silicon Valley journey with us.
    • School field trips are booked through the end of the year. Local foundations support transportation costs.
  •  Leverage the digital world to expand your presence.
    • Everything physically present in the museum is also available digitally to a global audience.
    • We use Facebook, Twitter and LinkedIn to generate viral networking.
    • Live events are captured in HD and broadcast through our YouTube channel to 2 million viewers.
    • We update our Facebook page and tweet daily. Facebook is fun and playful with “Today in Computer History” and Friday YouTube films.
    • Tweets include a quiz – “Who Am I?” – of famous figures in computer history with prizes.
  • What are the implications for companies and institutions?
    • We must embrace the notion of living in parallel worlds – having both a physical presence and a broader digital presence.
    • Expert knowledge is here, but we must be able to access an increasingly digital audience that is global.
    • Digital capabilities can’t just be bolted on to an old structure. This must be a marriage that connects our knowledge and expertise organically to our audience, their needs, and the knowledge and expertise that is happening in the world.

You can contact John Hollar at jhollar@computerhistory.org

Key Words: Media, Audience, Partnership, Purpose, Awareness, Campaign, Digital, Presence, Facebook, LinkedIn, Twitter, YouTube, Inflection Point, Digital Lifestyle

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How Do You Take a Guilt-Free Vacation? Seven Suggestions

Situation: A CEO has not taken a vacation for years due to focus on the company. He knows that he needs a vacation and wants to take one. However, he feels guilty taking time off. How do you take a guilt-free vacation?

Advice from the CEOs:

  • For your general health, you need to take time off to refresh and recharge!
  • Think of the vacation as your CEO Test – have you created a team that can perform in your absence?
    • You may be amazed at the initiative that some will take given the freedom to do so. As a corollary, initiative is accompanied by risk and your employees may make some bad choices. Be patient. Congratulate them for taking initiative and coach to improve choices.
    • Stay out of touch. Don’t call in daily and see what happens. If and when you do call in, don’t solve challenges that come up – let your people solve the challenges. Keep a few notes. On your return see where you need to adjust procedures to allow employees to make independent decisions.
    • More than one CEO has found that taking 3-4 week vacations each year has had very positive results. The company actually performs more efficiently and with more energy upon their return than it did when they left!
  • To ensure that you take a vacation, schedule it in advance. Let everyone know that you are going to take it and Just Do It!
  • If you can’t take the time to plan a vacation, have your spouse or a loved one plan the vacation.
  • If you need to feel in touch during your vacation, take your laptop. You may never even use it, but it will be there as a security blanket. Once you are on vacation, let family and personal priorities rightly take precedence over your need to stay in touch.

Key Words: Vacation, Company, Focus, Guilt, Health, Refresh, Recharge, Initiative, Patience, Coach, Problems, Valuation, Performance, Planning, Priorities, Family, Stress, Support

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When Do Marketing Partnerships Make Sense? Four Considerations

Situation: A company has an opportunity to form a marketing partnership with another firm. The primary potential benefit to the company from this partnership is gaining access to new customers. On the other hand, partnerships may bring complications. What is your experience with marketing partnerships, both positive and negative?

Advice from the CEOs:

  • Marketing partnerships can certainly work, provided that both parties see benefit to the relationship, and both are committed to make it work.
  • Be sure to clearly define boundaries with the partner.
    • If either company can perform a particular service, whose customers are who’s?
    • Is there alignment throughout the partner’s organization regarding the partnership? Or are their conflicting priorities within different branches of that organization? Test the waters ahead of time and assess how these will potentially impact the partnership.
  • There are potential pitfalls:
    • What is the in-house/outsource attitude of the partner? If there are strong voices for in-house production or service provision, these will not be supportive of the partnership.
    • Watch the quality of the partnership over time.
      • Successful partnerships are based as much on friendly cordial relations as on business priorities. Are your business cultures and ethics compatible?
      • Who is the champion for the partnership on the other side? What will happen if the champion leaves? Is there a back up champion?
  • Build an exit strategy into the partnership that will allow you to leave gracefully and mitigate financial or good will consequences if the partnership sours.

Key Words: Marketing, Partnership, Customer, Access, Pros, Cons, Benefit, Commitment, Support, Boundaries, Priorities, Pitfall, Quality, Relations, Culture, Ethics, Champion, Exit

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How Do You Negotiate a Tricky Merger? Five Thoughts

Situation: A company is considering a merger. The other firm competes with customers who account for 25% of the company’s current revenue. How do you maximize the value of this merger to the company while mitigating the negative impact on current business?

Advice from the CEOs:

  • The maximum risk from the combination is loss of 25% of current revenue. The merger makes sense if you believe you will gain upside which more than counters this risk.
  • Both companies have brand equity. Maintain both brands and to continue to promote them. Maintaining both brands will buy you time to replace business which is potentially at risk.
  • Talk to customers and get their perceptions of the pros and cons of the potential combination. Ask about any concerns that they may have. Understanding the pros, cons and concerns will help you to mitigate negative fall-out.
  • Legally, in a 50/50 split, the Chairman will call the shots. You will have little recourse to counter the Chairman if he decides to fire you. This individual has built his company through previous mergers. Visit and break bread with those who were principals of these companies at the time they were merged or acquired. This will tell you a great deal about the individual with whom you entrusting your future. You will also learn what the others did during their mergers to help plan your own moves.
  • Give yourself a back door or Golden Parachute after six months if the merger does not go as you anticipate.

Key Words: Merger, Competition, Value, Mitigate, Upside, Risk, Market, Access, Brand, Equity, Customers, Pros, Cons, Concerns, Control, History, Golden Parachute

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How Can Business Contribute to the Future of Technology Education?

Interview with Muhammed Chaudhry, CEO, Silicon Valley Education Foundation

Situation: A critical component for the future of technology in the US is a workforce trained in math and the sciences. In Santa Clara County, California – the heart of Silicon Valley – only 49% of high school students complete University of California/CSU qualifying courses, and only 26% of Hispanic students. How can private industry contribute to the improvement of education and the training of future workers?

Advice from Muhammed Chaudhry:

  • Silicon Valley Education Foundation’s objective is to make Silicon Valley the number one region in California in student readiness for college and careers. It has been shown that the top predictor of college success is the completion of Algebra II in high school.  Our primary program – Stepping Up to Algebra – focuses on students and teachers to increase the number of students who are ready for Algebra I in 8th Grade. To date 2,500 kids have gone through our program.
  • We actively encourage private industry to get involved in our programs and to invest in solutions that work. We call this involvement Work, Wealth and Wisdom.
  • Let’s talk about Work:
    • Our aim is for every business person to make it a priority to invest time in public education. This takes an investment – we ask for a consistent investment of 4-5 days a year.
  • Next is Wealth:
    • We encourage every business person to sign up to our Sustainer Program. The commitment is modest – only $5 per month to support our activities.
    • We encourage corporations to Adopt a Classroom for $10,000.
  • Finally we have Wisdom:
    • We encourage business people to get involved. We need help designing technology products that enhance learning and in formulating a blended learning approach.
    • We need to improve the enabling of technology in our schools to improve individualized learning to maximize the potential of each student.
    • We need support and involvement in policy work by contributing business thinking. Education has lessons to learn from business.
    • There is room for innovators who are interested in social benefit and long-term investment with profit as a secondary consideration.

You can contact Muhammed Chaudhry at muhammed@svefoundation.org

Key Words: Technology, Future, Education, Workforce, Math, Algebra, Science, College, Preparation, Work, Wealth, Wisdom, Investment, Engineer, Software, Funding, Learning, Policy, Innovation

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How Do You Identify Good Job Candidates? Four Views

Situation: A company needs to hire several upper level managers to support growth objectives In the past they have selected candidates based on referrals from existing employees or management’s “gut feel” of candidates. The results have been inconsistent. What have you done to identify good job candidates?

Advice from the CEOs:

  • The answer depends upon the success of your hiring in the past, both for areas where you are comfortable with the skill sets and those areas you are less comfortable. For example, you may be good at identifying candidates for technical positions, but not for sales and marketing.
  • One CEO’s “gut feel” hires have been consistently wrong. The solution has been to have recruiters screen and evaluate candidates. Once candidates are prequalified, only the best are presented to the CEO for final selection.
  • Another CEO uses a two-step process:
    • A recruiter selects and ranks their final two or three candidates.
    • Then the CEO gets a second opinion from another recruiter on the recommended choices of the first recruiter.
    • If both recruiters agree on the best candidate, the CEO meets the person and offers a job provided that they are compatible. If the recruiters disagree, the CEO probes the differences between the evaluations and decides whether to meet with one of the candidates.
  • Another CEO involves staff and uses a ranking system to evaluate candidates in areas of competence and fit. This produces composite scores that assist them in identifying the best candidate.

Key Words: Hiring, Manager, Selection, Referral, Gut Feel, Process, Skills, Head Hunter, Recruiter, Ranking

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How Do You Manage Opportunities in This Economy? Five Ways

Interview with Keith Merron, CEO, Avista Consulting Group

Situation: Ongoing uncertainty makes it difficult to clarify strategies going forward. What are the bases for these uncertainties and how do you manage opportunities in this economy?

Advice:

  • The world is moving so rapidly that they key to success is differentiation. There is so much information about how to do this that companies start to look similar very quickly. The ability to stand out as different is critical. Ask yourself:
    • What is my target market?
    • What are the needs that my offer will satisfy?
    • What is my unique approach that is distinct from other solutions which meet these needs?
    • Once you identify the answers, you need to back these up.
  • One has the opportunity to write the future. If you can get one step ahead of the curve this is a huge advantage.
    • Products that died were often two steps ahead.
    • Successful visionaries see patterns that are emerging, sense what is next, and speak to that.
  • Because information is at your fingertips through the Internet anyone can set up a business. The Challenges are viability and sustainability. If these are present the opportunities are huge.
    • The web is a place where you can share information. How to monetize this is unclear.
    • Once you have a following you can offer things for sale that are valued by your following. When this happens, the potential for fast growth is more available than ever. So is the flip side. If a restaurant gets trashed on Yelp this can kill it!
  • In a recession, M&A activity is faster. This enables one to establish a presence much more easily.
    • There are many virtual companies. You no longer have to be in the same place to work together! There are also many ways to partner or co-brand via the Internet.
    • What’s hard is to create tensile strength in the relationship. Because it is so quick and easy to cobble together relationships, the biggest challenges are creating loyalty and commitment.
    • The needs are communications, motivation, commitment and follow-through – just like in a traditional company but in a virtual space. This creates a true bond.

You can contact Keith Merron at keithmerron@comcast.net

Key Words: Uncertainty, Opportunity, Differentiation, Target, Market, Needs, Approach, Timing, Patterns, Visionary, Internet, Following, Community, M&A

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