Archive for April, 2008|Monthly archive page

MIT 100K & Sales Club

Week7: On Thursday (6th March) evening we had a social gathering with students from MIT’s Entrepreneurship & Innovation Program, which is a new offering within their MBA Program. It was interesting to hear about the various motivations of the students doing an entrepreneurial MBA, most of whom seemed to already have PhDs or similarly impressive postgrad qualifications.

Following this event we went to watch the semi-final of MIT’s annual 100K business plan competition. As the world leader among university entrepreneurship competitions, the Competition, which was born in 1990 as a $10K Competition, has facilitated the birth of over 85 companies with aggregate exit values of $2.5 billion captured and a market cap of over $10 billion. These companies have generated over 2,500 jobs and received $600 million dollars in Venture Capital funding.

We were particularly interested in the keynote speech by Jonathan Seelig Co-Founder of Akamai and now Managing Director of Globespan. Seelig gave quite a humorous talk based on the presentation he gave 10 years earlier as Akamai’s 10K competition entry! It was a great event with a few hundred in attendance, showing the calibre of the competition and how popular the hard working volunteer students who run the event have made it.

After this we did some more socialising, this time in MIT’s students’ union bar where I bumped into the eccentric Joost Paul Bonsen. I had a pre-conceived plan to ping Joost on a social entrepreneurship project I’ve become involved in called Practical Small Projects (see previous HBS blog) so I quickly took the opportunity to sit and buy him a few beers. Joost also introduced me to a few of the MIT 100K judges who showed a lot of interest in my eco-homes project (one of these contacts led to comms with an MIT based company also working in residential greenergy), including one lady from the US DOE.

On Friday 7th George, James, Rasmus and I had a meeting with the Presidents of MIT’s Sales club – Nathan Williams and Ishan Bhaumik. Nathan introduced us to Basho Strategies for sales and gave each of us a handbook by M. Jeffrey Hoffman who founded Basho Technologies in 2002. Nathan quickly went through Basho’s techniques for getting a response to a high profile email pitch which included a few simple guidelines:
– Go to the top and work your way down, i.e. exec’s, managers etc…
– make the subject line about them, include the word ‘You’ or ‘Your’
– call them what their world calls them – familiarity
– make the 1st line about them
– make the 2nd line a connection or common goal that connects you to them, but which also intrigues them enough to keep them reading
– in the 3rd line specify the ask/purpose/reason for the email with clarity. Not wasting their time will build trust immediately

Nathan WilliamsIshan BhaumikNathan mentioned an acronym for sales in general whilst stating that hope is not a strategy! AIDA is an acronym used in marketing that describes a common list of events that are very often undergone when a person is selling a product or service:
Attention (Awareness): attract the attention of the customer
Interest: raise customer interest by demonstrating features, advantages, and benefits
Desire: convince customers that they want and desire the product or service and that it will satisfy their needs
Action: lead customers towards taking action and/or purchasing
Nowadays some have added another letter to form AIDA(S):
Satisfaction: satisfy the customer so they become a repeat customer and give referrals to a product



Week7: On Thursday 6th March we had a seminar with David Ager who discussed IDEO (WiKi) with us and their unique approach to innovation. David holds a Ph.D. in Organizational Behavior from Harvard University. His research focuses on the intergroup nature of post-acquisition integration in the context of high growth entrepreneurial firms. Dr Ager has several years experience in the areas of joint ventures and alliances, and has also assisted a number of companies address issues of organizational development such as leadership development, talent management, change management, team building and succession planning.

Silicon Valley-based IDEO has sparked some of the most innovative products of the past decade — the Apple mouse, the Polaroid I-Zone Pocket Camera, and the Palm V, among others. But IDEO staff don’t just sit around waiting for good ideas to pop into their heads. The company has institutionalized a process whereby ideas are coaxed to the surface through regular, structured brainstorming sessions. At Ideo, idea-generation exercises are “practically a religion,” says Tom Kelley, general manager of IDEO Product Development. David discussed IDEO’s approach to innovation under 4 distinct headings: Process, Organisation, Culture, and Leadership. In order to do this we watched the IDEO Deep Dive that was aired on ABC’s Nightline program in 2000.

Process: Fail often in order to succeed sooner. Enlightened trial and error succeeds over the lone genius. Heterogeneous team with quirky & clashing ideas. Prototyping facilitates learning about the product. Prototype multiple ideas on a small scale to demo – build on something you can see. Market research – use anthropologists & engage end users – deadly if taken for granted; also immerse yourself in the associated product environment.
Organisation: Flat structure focused on learning. No type-casting allowed -> heterogeneity essential.
Culture: Don’t listen to the “boss”. Do the contrary! Trust in team members is core.
Leadership: Team leader only facilitates – not an expert. They solely coach the process, but not involved in ideas. This allows freedom. This process is consistent. The fact that Tom Kelley leads this approach by example only serves to increase respect and trust.

A poorly planned brainstorming session could cause more harm than good, and more frustration than anything else. That’s why Silicon Valley design firm IDEO follows strict rules for sparking good ideas: morning meetings work best; 3 – 10 participants should take part. Some guidelines are more refined. Below are 7 ways to help brainstorming from ‘The Art of Innovation’ by Tom Kelley:
1. Sharpen the focus: start with a well-honed statement of the problem at hand. Edgy is better than fuzzy. The best topic statements focus outward on a specific customer need or service enhancement rather than inward on some organizational goal.
2. Write playful rules: IDEO’s primary brainstorming rules are simple: “Defer judgment” and “One conversation at a time.” The firm believes in its rules so strongly that they’re stenciled in 8-inch letters on conference-room walls. “If I’m the facilitator and somebody starts a critique or people start talking, I can enforce the rules without making it feel personal,” Kelley says. Other rules include, “Go for quantity,” “Be visual,” and “Encourage wild ideas.”
3. Number your ideas: “This rule seems counterintuitive — the opposite of creativity,” Kelley says. “But numbered lists create goals to motivate participants. You can say, ‘Let’s try to get to 100 ideas.’ Also, lists provide a reference point if you want to jump back and forth between ideas.”
4. Build and jump: most brainstorming sessions follow a power curve: They start out slowly, build to a crescendo, and then start to plateau. The best facilitators nurture the conversation in its early stages, step out of the way as the ideas start to flow, and then jump in again when energy starts to peter out. “We go for two things in a brainstorm: fluency and flexibility,” Kelley says. “Fluency is a very rapid flow of ideas, so there’s never more than a moment of silence. Flexibility is approaching the same idea from different viewpoints.”
5. Make the space remember: good facilitators should also write ideas down on an accessible surface. IDEO used to hold its brainstorms in rooms wallpapered with whiteboards or butcher paper. Lately, however, the group has started using easel-sized Post-it notes. “When the facilitator tries to pull together all the ideas after the session,” Kelley says, “she can stack up nice, tidy rectangular things instead of spreading butcher paper all the way down the hall.”
6. Stretch your mental muscles: brainstorming, like marathon running, should begin with warm-up exercises. IDEO studied various methods of prepping for a session. For a project on the toy industry, for example, IDEO divided the group into three teams: The first team did no preparation. The second listened to a lecture on the technology involved and read background books. The third team took a field trip to a toy store. Far and away, the toy-store team produced ideas in greater quantity and quality than the other two.
7. Get physical: at IDEO, brainstorming sessions are often occasions for show-and-tell. Participants bring examples of competitors’ products, objects that relate to the problem, or elegant solutions from other fields as springboards for ideas. IDEO also keeps materials on hand — blocks, foam core, tubing –to build crude models of a concept.

Six surefire ways to KILL a brainstorm. Coming up with good ideas, even in an ideal environment, is hard work. But the 6 tactics/strategies below are absolute no-no’s below and will guarantee failure:
1. Let the boss speak first: nothing kills a brainstorming session like a dominating CEO or the brownnosers who rush to agree with his every statement. IDEO recommends that bosses lock themselves out of idea-generation sessions all together. Send him out for doughnuts, and you’ll get better results.
2. Give everybody a turn: Kelley remembers packing 16 people into a room for one particular meeting. Each person had two minutes to speak. It was democratic. It was painful. It was pointless. It was a performance, not a brainstorm. “In a real brainstorm, the focus should never be on just one person,” Kelley says.
3. Ask the experts only: when it comes to generating truly innovative ideas, deep expertise in a field can actually be a drawback. “In a brainstorm, we’re looking for breadth,” Kelley says. Cross-pollination from seemingly unrelated fields can lead to authentic breakthroughs.
4. Go off-site: by conducting off-site brainstorming sessions, you only reinforce the concept that great ideas only come on the beach or at high altitudes – not in the proximity of your daily work.
5. No silly stuff: Kelley remembers one brainstorming session doomed by the boss’s opening remarks: All ideas had to result in something the firm could patent and manufacture. The silence that followed was deafening. Silly is important. Wild ideas are welcome. Brainstorming should be fun.
6. Write down everything: obsessive note taking is toxic to brainstorming. It shifts the focus to the wrong side of the brain. It makes the session feel like History 101. Doodles and sketches are fine. A short note that preserves a thought is acceptable. But detailed writing destroys momentum, dissipates energy, and distracts from the main purpose of the exercise: unfettered thinking. Each session should have an assigned scribe who records suggestions. And that person should not be the group facilitator.

We had our farewell lunch today with our Harvard hosts- Hugo Van Vuuren (Lebone startup, Kirkland startup) and Paul Bottino. Special guest was Noam Wasserman who queried our new understandings of the ‘Founders as CEOs’ issue. following our various company visits around the States.

Later in the day we visited IDEO‘s Boston office near Harvard. This was an extremely interesting trip as we got to throw all sorts of questions at the IDEO management present, including one from me comparing them to DEKA and Continuum, which seemed to leave them without a definitive answer! We also had a nice tour of their premises to see various aspects of what a famous innovative work environment such as theirs actually looks like. To be honest I expected more disorganisation and messiness from the non-stop innovation and brainstorming! It was actually quite organised and formal looking which I didn’t associate with a idea generating atmosphere. However this is their new office so perhaps the maverick knock-on effect hasn’t kicked in on the place yet. There was a very distinct difference to the work setup at DEKA and IDEO. DEKA had a huge dedicated workshop with machines manned prototyping various products/components. Whereas at IDEO there was one unused rapid prototyping machine, which seemed almost out of bounds.

Getting to Win-Win

Week7 Mar 3-7 2008: On Wednesday 5th we had an all day workshop on negotiation skills hosted by the Harvard School of Engineering and Applied Sciences. The workshop was given by Melissa Manwaring, Director of Curriculum Development for the Program on Negotiation at Harvard Law School. Melissa has taught negotiation theory and skills to thousands of clients around the world, including executives, attorneys, public servants, educators and students.

Melissa introduced us to a framework of negotiation called The Seven Elements, which consists of 7 independent, non-sequential, dynamic elements, as shown in the diagram. The framework can be used at any stage during a negotiation including as part of preparation prior to the negotiation, in analysing/diagnosing issues occurring during a negotiation, after the negotiation to evaluate aspects of it. The framework itself is the result of research carried out by Bruce Patton and his colleagues at Harvard Law School. You can read about it in chapter 18 (‘Negotiation’ by Bruce Patton) of ‘The Handbook of Dispute Resolution’. If you’re interested the best selling negotiation book in history would be worth reading also: ‘Getting to yes: Negotiating Agreement Without Giving In’ (Google Books, Amazon, WiKi).

It’d be impossible to detail everything we learned throughout this workshop but I’ll detail some of the main lessons and take-aways which I think will prove useful to others during negotiations. My favourite part of the was learning about how people perceive concessions and compromises during negotiations, as discussed below under the 4th element – Legitimacy. Check out the small graphic which represents in a very simple way how I perceive this process (of particular interest to me is where you place the ‘pseudo bottom line’ and the difference between that and your real bottom line).

Alternatives are considered away from the table and don’t require the other party’s agreement. You need to determine your BATNA (Best Alternative To a Negotiated Agreement) and try to discover the BATNA of others in a negotiation. Try to improve your own BATNA and worsen others (in appearance or in reality)! During negotiation compare any potential agreement to your BATNA and realise that the other party will likely do the same.

Interests define a party’s true needs/desires/concerns. Not always the same as stated positions. Positions = what parties say they want. Interests = why they want it. ID & prioritise your interests and try to ID theirs. To determine their interests (when they’re not stating them): make a proposal; if not accepted deduce their interests from their criticism of this proposal (e.g. ethics, timing, finance, value). Look for areas of potential clash and/or overlap. Distinguish interests from positions. Offer ‘yesable’ proposals that address their interests. Look for ways to trade on differing interests.

Options are the deals on the table which you might make or agree on with parties in the negotiation. Different options may exist for different issues. Before the negotiation: generate options for meeting both parties’ interests. During the negotiation: separate inventing from deciding; & package options on different issues.

Legitimacy is one of the most powerful elements. It describes external criteria, standards & norms that can support the fairness of what you/they are proposing. Can help select among many options – to support a proposal, & also to protect against an unfair proposal. Research these norms in advance, e.g. market price for a specific product.

– During a negotiation when a party is making smaller compromises/concessions => closer to bottom line (real selling price/limit)? As a seller narrow your compromises long before your real bottom line. As a buyer know your market and the standard bottom line or value for the product (e.g. house)! Compromise does not imply value. If SP is fair to start with then deal is fair despite lack of concession. Don’t measure success based on how much you/they concede- measure the deal objectively based on value. Identify the ZOPA – Zone of Possible Agreement. Amount paid has NOTHING to do with budget, only market value.

¦———Starting Selling Price———-¦
¦——————-Ideal SP——————-¦
¦——-{Smaller compromise units}——¦
¦————Pseudo Bottom Line———–¦
¦-{Diff of units enabling effective Neg}-¦
¦————–Real Bottom Line————¦
¦                                                                   ¦
¦—————–Cost Price——————¦

Relationship is the element that defines how a negotiation affects relationships between parties/their agents/their constituencies. Before a negotiation: compare current relationships with preferred relationships; diagnose cause of any existing gaps; ID steps to change the relationship. During the negotiation: consider effect of various moves/options on relationships.

Communication includes all types of verbal & non-verbal information exchanged between parties. Before the negotiation: decide what you want to listen for/ask about, disclose/say; ID possible communication barriers (diff background/language). During the negotiation: test for efficient communication – demo you understanding, and inquire about theirs. Real listening -> responsive to interests & concerns. Don’t prepare response when should be listening. Internal voice distracting as result of lack of prep and being nervous, both of which can be combated using 7 elements.

Commitment is all about the agreement. Before negotiation: confirm levels of authority (Have authority to agree/commit? Require input from BoD or business partner?); ID your preferred level of commitment. During negotiation: ensure any commitment are operational and durable (if desired); consider building incentives/penalties into commitment to ensure agreements are met, and in timely manner; determine how to confirm the agreement – writing/handshake/etc.

Having studied the seven element framework for negotiation we put our new found haggling abilities to the test. Half of the 20 person group took one side of a sales negotiation and the other half took the other side. The case study for this involved a corporate drinks company negotiating a deal with a distributor in the Middle Eastern country. This exercise was a great testbed for our understanding of the 7 element. It proved difficult to employ all the new techniques simultaneously during a heated negotiation but a lot was learnt regardless.

Melissa discussed lots of other topics during the day including Anchoring. This is the theory that the first figure on the table during a negotiation has a disproportionate affect on the final agreed figure! However this first figure must obviously be well researched & justifiable, presumably based on market value; similar to when buying a house. Determine if it’s a buyer’s/seller’s market. What alternatives exist for each party? Who’s in the dominant position?

Some difficult tactics during negotiation include:
– Ultimatums – “take it or leave it!”
– Say nothing – “make me an offer”
– Demanding advance commitment
Responses to these tactics should be purposive, not just reactive. Don’t react without careful consideration. Some possible responses include:
– Surrender/quit/play the game…
– Change the game by reframing interests (ask for reasoning), options (incentives) and criteria (justification).
– Change the game by naming & engaging: describe my experience of the dynamic; inquire about their experience/purposes; joint problem solve for new approach
– Change the game by changing the players: add/subtract/change parties