Negotiations: Assignment #1

Introduction

The topic of this assignment is to analyse a negotiation that demonstrates the use the of Harvard Seven Element framework. Firstly, a brief outline of the case under negotiation which is based on real world events will be described. The assignment then moves onto an analysis of this negotiation, discussing what went well, what went badly and what can be improved. Finally, the assignment concludes with a brief description of what happened in the real world and what insights my negotiation provided to explain the outcome.

Negotiation Outline

This negotiation was based on a the Crossways Community centre case in the Mt Victoria neighbourhood (Johnson, A. 2008). This large house was owned by the Anglican Church and used by a large number of community groups including a crèche. The property was being sold in order to fund the restoration of St Andrews Church on The Terrace. The two parties negotiating the issue of the ownership and use of the building were the Anglican Church and Crossways Community Trust. For the purposes of this assignment, a negotiation was put together based on the facts of case and using two groups of two people from the local community who were volunteered to represent the parties in the case. The Harvard framework was used to generate the negotiation worksheets that are included in Appendix A.

Negotiation Analysis

The Anglican Church approached this negotiation with its primary interest in mind; it needs the money for the St Andrews restoration. St Andrews is a historic landmark in Wellington and is also used for community purposes so the state of the building already has a direct impact on the community at large. The Church representatives took the position right from the start that they needed the cash however much they empathised with the Mt Victoria community needs. Options that they explored included the provision of other Church property or coming to a rent-to-buy proposal that would transfer ownership of the property to the community but still meet the Church interests. The BATNA for the Church was to accept an offer for purchase from a private buyer of 1.3 million dollars. Based on this information, the Church really didn’t have to negotiate with the community at all, however their secondary interest includes maintaining their profile in the community and this was of importance to them.

For the Trust the primary interest was to maintain the status quo. Options for them included lobbying the council for money to support the Church interests and their BATNA was to buy the property outright. The community had independently raised 1 million dollars from various events for this purpose. When entering the negotiation the community immediately presented their interests and the options they had considered. The Church representatives pointed out that their criteria was very easily quantified, that the community would have to match the offer that the private buyer had put forward. As the two sides discussed their interests and the options, both parties quickly found that there was an option that would meet everyone’s interests and that was a rent-to-buy approach where the community could give the Church the 1 million dollars and then lease the property for the balance of the cash. The Church representatives thought this was a great idea because it satisfied their short term interests, provided future cash flows and resulted in a positive relationship going forward.

My experience with participating in this negotiation as a Church representative was that the two parties actually had a very strong common interest, to serve the larger community. The conflicting interest was really the issue of the short term cash requirements of the Church and the fact that we had an easy walk away BATNA. As such I felt the social interests of the Church were actually met by taking the BATNA and that we didn’t really need to negotiate at all. The community representatives had thought through a really good alternative and had used the media to bring attention to their plight. This media attention assisted the community with fund raising and they had a sizable chunk of cash to offer the Church. This alone caught my interest as a Church representative and the possibility of a rent-to-buy option seemed a real way to add value to this negotiation.

In both cases the parties acted like reasonable people with their interests firmly in mind. All four of us who were representing the parties concerned had not had a direct hand in the real world negotiation and we were all university educated people so there was no emotional baggage in our respective approaches. The discussion did not degenerate into squabbling and it seemed obvious after only a few minutes of discussion that the interests of both parties could be met. This aspect of the negotiation went really well and I believe that this was a result of using the Harvard framework to really get to the bottom of what each party wanted out of this deal. It is likely that a more unsophisticated community representative may have relied on playing emotive cards and the outcome of the negotiation would have been quite different. The community’s use of the media could have been seen as an attack by the Church and could easily have lead to a stand off between the parties. This issue was not brought up by the Church during the negotiation and probably saved the outcome. Because the community representative focussed on how the purpose of the media campaign was for fund raising it highlighted to me as a Church representative that the community meant to deal fairly with me and that there was not a public relations war going on.

Outside of the areas covered by the framework the community representatives were very keen to discuss how the relationship had been ongoing for 30 years and that the uses of the building had been changed over time to meet the needs of the community. This relationship was important to me as a Church representative and impressed me with how the community had acted as stewards for the building, ensuring that it was maintained and that it evolved to meet community needs as those changed over time. The outcome of these generalised, relationship building discussions was that the Church would continue to have a seat in the Trust that would operate the building and keep its activities on mission for the community in the future. This agreement insured that the negotiation ended with a solid ongoing commitment from both parties.

What really happened?

An interesting fact is that the outcome of our simulated negotiation was quite different to what actually happened, providing some insights into how the real world negation may have left value on the table that was not realised. At the time of writing, the real outcome was that the house was sold to a private family and the community groups have been given six weeks to vacate the premises. Due to the nature of crèche operational requirements it is unlikely that there will be a suitable location for them to relocate too in the Mt Victoria area, thus the interests of the community were not met in any way by the negotiation process. It seems likely that the Anglican Church exercised its BATNA, suggesting that real world negotiators did not explore their options to the same depth as the contrived negotiators did.

The Church merely exercised its rights as the owner of the property and has done nothing that could be construed as wrongful. That being said there was value on the table in terms of the community interests and it seems that the outcome of this negotiation was not as optimal as it could have been. In the real world negotiation the council were approached by the community for additional funding which was granted. Later, the council changed its mind as their criteria were not met. The implication of this is that the community trust could have been better off not bringing a 3^rd party into this discussion and come to agreement with the Church directly.

References

Johnson, A. (2008). Homeless in Mt Victoria, City Life Wellington South & East,

APN News & Media, Wellington.

Appendix – Negotiation Worksheets

Adv Corp Mgmt: Poutama Trust Presentation

Creative Leadership: Teach Someone Something

I decided to teach my partner the Harvard Seven Element approach to negotiation. To make this a useful exercise I used the same methodology that I was taught in the Negotiations paper, which is to run a negotiation about something we both cared about. The idea was that I could teach her a practical negotiation framework by working on a real problem, specifically the issue of which family to spend Christmas with this year. This issue may sound quite trivial, but when you are married it’s more complicated than it appears on the surface. The nature of the lesson is to share with my partner a framework for negotiating that can work with almost any issue. I thought it would be useful to be familiar with this framework because we have had a property related issue that have arose earlier in the year and it had to be dealt with by legal specialists. I thought negotiation would be a strategic skill to have before we take the next dip into the property market, as well as being handy for all sorts of problems.

The manner of the lesson began with a negotiation, where the goal was to convince her that there was some value in this lesson. My partner is a school teacher so she thinks she is pretty good at negotiation already, but I convinced here that it was a good idea by telling her it would help me pass my MBA. She said she wanted to know what my methodology for negotiation would be for the future so she would know what I was thinking. After I had got agreement to do this lesson I pulled out my course folder, paper and pens so we could get started. To get the framework embedded in her head we did an open negotiation about a particular issue, in this case “where to go for holiday this summer”. To do this I demonstrated how I brain stormed my interested, options, alternatives, and ranked them. I then helped her to fill in her sheet with her interests, options and alternatives, explaining the purpose of each section as we went along. We then went through our respective interests to see which ones we had in common, which were different and which were in conflict. Thankfully there were not too many conflicting ones with this negotiation, however there were lots of different interests. I then showed her how the options related to the various interests we had, and that if we arranged the holiday in such as way as to take up as many of those options as possible then we would both have a better time. This I explained as the concept of adding value to the outcomes of a negotiation, or not leaving any value on the table which would make the deal less fruitful.

After that walk through we started on the Family Christmas issue and I gave her ten minutes in a different room to write up another negotiation worksheet for it. I worked on my sheet at the same time and came up with a bunch of options and alternatives. After ten minutes we got together and started negotiating but with our worksheets hidden. She was interested in helping out her mum on the farm in Hawke’s Bay; I was interested in seeing my Grandmother in Christchurch. Options that were discussed included spending Christmas in Christchurch and my Birthday (27/12) in the Bay, or taking my mother in law to Christchurch for Christmas as well. We also talked through the option of going away on holiday early to avoid the entire thing. In the end we still haven’t agreed as to what we are actually going to do, but what we have achieved is a discussion about what we both want and explored some options. This is the first step to forming an agreement so I am sure we will figure it out soon!

The first learning implication of this is that my partner now has an additional tool in her head when she is dealing with a situation at school or anywhere else and that’s a good thing. The other side of this is that she now knows how I think and process information so that should lead to better communication and a stronger relationship. The second thing I found was that if the student is willing to learn then it’s a lot easier to teach them. In previous situations where I have been mentoring people at work, I know how frustrating it is trying to figure out why a student isn’t interested in the material or changing the delivery style to suite their individual needs. I know what my partners learning style is like and it’s very hands on and kinaesthetic so the way we worked together on this mini project was the key to its success. The third implication of this is that I know I have learned something properly if I can teach it to someone else in such a way that they understand it and can taker it away and do it on their own. Lastly, I think it helps a lot if you know the person you are teaching really well. A lot of the implicit communication that goes on between couples would be difficult to understand from the outside, but to us it’s really easy to figure out what the other person means when they say something.

Document publication project

Hi there,

As part of my "leader as teacher" I have decided to post all of the MBA assignments I have done over the past 2 years in Google Docs. I've also built a home page in Google Pages and started using Google Analytics to keep track of hits.

Google is the new Virgin!

Sam.

Leading Change: Sir Timothy William Wallis, a case study in sucessful change management and visionary leadership

Who is Sir Timothy William Wallis?

Hurricane Tim, as his friends nicknamed him, is recognised as the entrepreneur that created the deer farming industry in New Zealand. Born in rural New Zealand, the son of a Timber Merchant, he has made a significant business empire through gut instinct, learning on the job, common sense, seat of his pants flying and not a lot of formal education. His story is appealing to many New Zealanders because it is one of a man who works hard with his hands and his head, taking on the wild frontier of New Zealand and gathering a following of like minded and loyal individuals.

Despite the outward appearance of being a risk taker with an unsophisticated approach to business, closer analysis reveals a man who recognised opportunities and capitalised on disruptive technologies to exploit those resources. The history of his businesses shows an ability to see the problems of the future, envision a solution and bring together a team of people who share that vision. Even more than that, he not only set out to prove that deer farming was a viable industry in New Zealand but developed and exported the technology and processes that he had developed, influencing the development of the global deer products markets.

Wallis is that he is a determined fighter. He has had several crashes over the years in helicopters and vintage planes, some of which have left him permanently disabled but none of which have been able to subdue the energy and ambition of the man. He is a person who is very good at turning something he is passionate about into a business, from chasing deer in helicopters to creating the Wanaka International Air show.

Background, decisions and consequences

Wallis was a keen deer hunter, hunting alone cleared his thoughts and gave him time to think through some ideas of how to turn the deer plague into a potential business. Venison exports to the US had been on-going since1959 but the harsh, undeveloped landscape meant that hunting could only occur on the fringes of civilisation, leaving much of the wilderness to the ravages of the deer. Professional deer culling was the significant control mechanism of the time however the process was very slow. The hunter had to proceed on foot from the nearest road, through the bush and climb to the open tops of the mountains where the deer lived. After a kill the carcasses had to be dragged back the way the hunter had got before loading the carcass onto a transport to market.

Realising that he already had a truck fleet plying the roads, Tim decided to provide a carcass collection service to the deer hunters along the existing roadways and purchase the carcasses direct. The system was a hit with hunters and he developed the idea further by setting up chillers a various locations on the Haast road where the hunters could leave deer carcasses for collection and collect their payment. As there were limited processing facilities in the Wanaka area, Tim decided to build a processing plant and freezer facility at his Timber yard, preparing the deer products for sale to local butchers and Christchurch restaurants.

One of the consequences of this was that Wallis realised that there were other products that he could buy, transport and process. Crayfish were a lucrative export product, so armed with information on lobster prices from the U.S. markets, Tim would purchase crayfish directly from the West Coast fishermen based near Haast and transport the fresh crayfish to his processing plant. Another consequence of the deer operation came through a Chinese laundry in Christchurch. The owner turned up at the Wanaka processing plant with a suitcase of cash looking for a regular supply of deer velvet and tails to export to China. Wallis realised he was onto something now and his thoughts turned to the immediate problem: how to get the deer out of the mountains and into the market? The answer came in April 1963 on a trailer in a pile of pieces, a Bell 47 helicopter (Peat, N. 2006).

Wallis and a small group of hunting enthusiasts had decided to pool their resources and hire a helicopter. They wanted to prove that deer hunting using helicopters could be a viable commercial venture but they had a mountain to climb first. At the time there were only 10 helicopters registered in New Zealand, no pilots had ever been trained here the import licensing policy of the government made importing anything a complicated process. After hiring a helicopter and a pilot, Korean war veteran Canadian Milton Stills, the hunters trialled a system where they would establish a base camp in a area with high deer population density, then split into two groups, one lying in wait with the guns and another herding the deer down from the mountain tops. After the deer were ambushed, killed and cleaned, the helicopter would ferry the carcasses to the waiting trucks some miles distant. On the first day 11 shooters killed over 200 deer, flying out 110 carcasses to the waiting trucks which conveyed them to the processing plant before weather grounded the chopper. A few days later the venison was on its way to Germany and a small profit had been made. The proof of concept worked and the commercial deer industry in New Zealand was born (Peat, N. 2006).

In 1965 Tim decided to sell his share of his family timber business and incorporated Luggate Game Packers Ltd. He gained his helicopter pilots license, the 2^nd person in New Zealand to do so, and bought a brand new Bell 47 helicopter from the factory in the United States. Tim would fly the hunting team up to the areas where herds were spotted, drop them off use the helicopter itself to herd deer towards the guns. This technique was highly effective but the helicopter crashed the first year of operations in what was to be the first of several near misses in Tim’s aviation career. In 1966 the first aerial shooting began, despite laws that forbade firearms from being carried by a aircraft, let alone firing from one. This technique involved a crew of 3, 1 pilot, 1 shooter and a gutter. After the first deer of the day was shot, the gutter would leap out and prepare the carcass while the shooter and pilot would fly off to find their next kills and then bring them back to the gutters location. (Peat, N. 2006).

The next two years saw growth in the company to 3 choppers and crew operating every day the weather allowed, but as a consequence the deer herds in the areas around Wanaka were in danger of being hunted to uneconomic levels. Hearing about the vast deer herds running wild in Fiordland National park, Tim decided to put together a tender for the license to hunt there from 1967-1970. Given that there was no road access to the park Tim decided to convert a coastal freighter into a floating freezer and helicopter pad. Mooring the ship in the sounds allowed the helicopters to get to any part of the park. The consequence of these decisions was a monopoly rights to hunt the biggest wild deer herds in New Zealand and the creation of a supply chain to allow for efficiency required to make the project profitable. A further consequence of these decisions was that he could run parallel operations on the infrastructure, such as crab and lobster fishing (Peat, N. 2006). The net result was control of the supply chain in a variety of products from the wild to the end users and exporters.

During the success of the Fiordland years, Wallis had been approached by Lincoln University on a project that had started in 1968. The capture of live deer for farming was an experiment being run by the university to see if sustainable deer farming was viable in New Zealand. Deer farming was illegal at the time as they were seen as a feral pest that was good only for destruction. Tim decided that there was potential in this idea and enthusiastically set about capturing live deer for the project, by jumping on them from moving helicopters. This strategy was very successful but was not for the fait hearted, however the university has access to technological innovations in the form of rifles modified to fire tranquilizer darts, stun guns and even spears tipped with tranquilizer needles. Further innovation followed as radio transmitters were attached to the darts allowing the animals to be tracked, then net guns were developed which are still in use today. Despite the risks the technology worked and soon 400 deer were being farmed at Lincoln. The consequence of this partnership was that the study demonstrated the viability of deer farming as a control mechanism for feral deer herds and the government legalized deer farming in 1969 (Peat, N. 2006).

With the beginning of deer farming the time of wild deer capture and hunting was drawing to a close. Wallis decided to transform the helicopter hunting fleet into a scenic flight company and refocused his efforts on deer farming in Wanaka. A consequence of this was that the supply of raw product was secure and less labour intensive, allowing him time to develop the marketing side of the business. Wallis decided the best way to do this was to establish relationships with the customers and traders in the target markets so he travelled extensively through Asia, Russia and North America. A consequence of this decision was the export of farming know-how to the target markets as well as the acquisition of processing know-how that would allow processing plants for high value deer products to be established in New Zealand. Another consequence of this networking was the formation of joint venture deer farms in target markets and the growth in an export trade of live deer to Korea, China, Canada and Russia from the 1970’s through to the 1990’s.

To develop the deer farming industry in New Zealand In the 1980’s Tim founded the New Zealand Deer Farmers Association. This group helped to spread the farming techniques in New Zealand with the objective of building a sustainable deer product industry as well as co-ordinating marketing efforts and acting as a lobby group with government and meat processing companies. As the industry matured in New Zealand Wallis continued to innovate, first with the importation of Canadian and Russian deer to improve the feral gene stock and later the trade in live deer semen as the technology became available. The consequences of Wallis’s vision and decisions to keep trying applying new technology to the industry have made it the significant export industry we see today. (Peat, N. 2006).

Business Lessons

There are many business lessons that can be learned from Tim’s story.

Firstly, he used existing resources to build new businesses in parallel to the existing ones. Using his timber company trucks to carry deer out of the wild was a good way to get extra utility out of that transport infrastructure. In the Fiordland days he used the deer ships to exploit other opportunities in crab and lobster capture. The lesson here is that he diversified his income base without having the change his core business processes.

Secondly, he is very good at recognising opportunities from resources and applying technology to make the opportunity pay. The development of helicopters and ships for the purposes of deer recovery had never been done before and he did it on a significant scale. The lesson here is that he knew how to make technology work for him to open access to resources that were untapped.

Thirdly, he was good at recognising the need for change and cracking on with doing it. As the deer numbers began to dwindle and competition began to hot up as others entered the market, he developed live capture and deer farming to get control over his supply chain and move the industry forward. The lesson here is that by working down and up your supply chain in a targeted way, you can get a lot more efficiency and free up resources for other projects.

Fourthly, he set about developing the industry and the product markets. Deer farming in New Zealand is a significant industry, as is the processing of deer products for export. Instead of talking about it, he went and visited the deer farms of Russia, and the processing plants of Korea to see what they did and what was possible. He overcame government red tape in New Zealand and other countries with a simple approach of good humour and an honest and friendly disposition that built trust. The lesson here is that an industry in it’s infancy needs people who are good relationship builders to go out and create the networks to sell the products.

Finally, at every step in his progress to developing this industry he has used technology as a disruptive force to break the existing status-quo. Using helicopters and ships, rifles to net guns, hunting to farming, all of these innovations have changed the industry. The lesson to be learned here is that new technology should to be reviewed in order to see if it’s opening up new opportunities for your existing business. Additionally, Tim has proved you can be the first in a brand new industry and make money which is not something that all great innovators have been successful at.

References

Peat, N. (2006). Hurricane Tim, The Story of Sir Tim Wallis, Longacre Press,

Dunedin.

Leading Change: Presentation, Sir Timothy William Wallis

Leading Change: Handbook entry, Week 5

That was a good session! This week we went through the business leader presentations and a few things leapt out at me as being rather important.

Firstly, academic achievement is not a pre-requisite for success as a business leader. Almost all of the leaders presented, including my own Sir Timothy William Wallis, were people who had dropped out of college. This may sound like bad news for MBA students but I think there is more to it that saying that there is a rule of thumb about academic achievement and business success. For example, in the creative leadership paper I studied Colin Harvey as a business leader and he has two university degrees, a Bachelor of Agricultural Science from Massey and a Bachelor of Commerce from Auckland Universities. His business is animal healthcare products so they relate directly to what he does for a living. Contrast this to Bill Gates who dropped out of Harvard Business School to start his own company doing programming which was his favourite hobby. I think the lesson to be learned here is that all of these leaders are smart people with good cognitive skills, but it’s their learning style that makes them a success or not in the academic arena. Some people learn better by doing, some people learn better by researching. It’s certainly food for thought and make me think that when I build my empire I’m going to have to come up with a better way of determining who’s got potential that looking at their academic qualifications. Maybe aptitude testing or psychometric testing is a better way of getting the right people. The HR paper suggested that selection panels with selection programs were the best way of really seeing what a person is capable of. I guess the military had it right all along; test them every which way and then take the cream of the crop.

Secondly, the ability to take advantage of opportunities is a sure fire winner in the success game. This seems to me to be a combination of vision and risk favourability. Vision is important because a successful leader needs to be able to imagine the opportunity that may not be obvious to others as well as visualising the plan of action to achieve those objectives. This is the creative, visionary and imaginative side to successful business leaders. The other element of this is to be able to pull together followers who share this vision of the future and who are emotionally committed to it. Obviously, this implies that the leader needs to be committed to the vision and to the people he is leading. Returning to the other previous point, you don’t need a degree in accounting to be able to have a vision and get others to buy into it. The lesson here is to make a conscious effort to explore options and brainstorm. If you don’t dedicate time to this function then you will miss opportunities to make some cool changes.

Thirdly, most successful leaders break the mould or the rules in some way. Perhaps this is a symptom of the lack of academic achievement but I think it’s more likely to come from the visioning ability. For example, Richard Branson doesn’t pick around the edges of an industry looking for a way to tap an underserviced part of the market, he goes for the big guys while playing an underdog game in the eyes of the public. A virtual white knight is a strong image and creates a powerful emotional commitment to his brand and products. Ricardo Semler is a maverick that break all the rules of control and structure in an organisation, but creates spectacular results. I love this guy, but speaking from personal experience it doesn’t work everywhere and some people don’t feel comfortable with being empowered. The problem with being educated in the academic system is that you get given lots or rules and frames to use when dealing with problems. The issue is that everyone else who went to business school has the same frames. The lesson here is rules are there to be broken and that busting out of frames is a source of competitive advantage and can lead to industry dominance.

Lastly, a key component of being a successful leader is to maintain ownership control of your company. This implies that you are the chairman of the board because without this control you can’t drive through the radical changes required to achieve success. The problem with economic theories around governance is that they assume that the shareholders will have the best interests of the company at heart and will drive success by control of the capital. Semler can get away with his style of management policies because he doesn’t have to worry about pleasing other shareholders. Branson owns 60% of Virgin Group so he tells the board and the executive how things are going to be run and what the values of the organisation are. Going public would effectively end the success of the company. The lesson here is that pushing radical change in a company or industry involves having a controlling stake in the company.