Getting to YES: Negotiating Agreement Without Giving In

Let's face it. We have to negotiate everyday from trivial issues such as negotiating with your wife or children what to have for dinner to important negotiations at work, in personal lives, etc. Negotiation is a facet of life which we cannot ignore and some of us may dread the very mention of the word. I like this book by Roger Fisher and William Ury (with Bruce Patton, editor) as the objective of the negotiation by the Authors are to make sure the negotiated agreement is as fair as possible to the negotiating parties and the book always emphasize the importance of conducting negotiation with integrity, honesty and respect. What I liked most about the book is the message that we should never bargain over positions which is counterproductive and diminishes the prospect of an acceptable agreement for all parties. Instead of negotiating over positions, we should always deliberate on the reasons behind our terms and to work out creative solutions together which is acceptable to the negotiating parties.

 

 

The following are excerpts from the book which I am sharing with all of you (words in blue are my own opinion):

 

1) Any method of negotiation may be fairly judged by three criteria: It should produce a wise agreement if agreement is possible. It should be efficient. And it should improve or at least not damage the relationship between the parties.

2) When negotiations bargain over positions, they tend to lock themselves into those positions. The more you clarify your position and defend it against attack, the more committed you become to it. The more you try to convince the other side of the impossibility of changing your opening position, the more difficult it becomes to do so. Your ego becomes identified with your position. You now have a new interest in "saving face" - in reconciling future action with past positions - making it less and less likely that any agreement will wisely reconcile the parties' original interests. (It is important to bear in mind in negotiations that we should not start the negotiation over our positions but rather the interests/rationale behind our terms so that we are not locked in counterproductive argument in defending our positions)

3) ........ pursuing a soft and friendly form of positional bargaining makes you vulnerable to someone who plays a hard game of positional bargaining. In positional bargaining, a hard game dominates a soft one.

4) If your response to sustained, hard positional bargaining is soft positional bargaining, you will probably lose your shirt.

5) ........ alternative to positional bargaining: a method of negotiation explicitly designed to produce wise outcomes efficiently and amicably........... principled negotiation or negotiation on merits, can be boiled down to four basic points.

People: Separate the people from the problem.
Interests: Focus on interests, not positions.
Options: Invent multiple options looking for mutual gains before deciding what to do.
Criteria: Insist that the result be based on some objective standard.

6) To sum up, in contrast to positional bargaining, the principled negotiation method of focusing on basic interests, mutually satisfying options, and fair standards typically results in a wise agreement. The method permits you to reach a gradual consensus on a joint decision efficiently without all the transactional costs of digging in to positions only to have to dig yourself out of them.

7) Whatever else you are doing at any point during a negotiation, from preparation to follow-up, it is worth asking yourself, "Am I paying enough attention to the people problem?" (Negotiation involves people and as such, it is natural that we pay attention to people as well)

8) Their thinking is the problem. Whether you are making a deal or settling a dispute, differences are defined by the difference between your thinking and theirs.

9) As useful as looking for objective reality can be, it is ultimately the reality as each side sees it that constitutes the problem in a negotiation and opens the way to a solution.

10) The ability to see the situation as the other side sees it, as difficult as it may be, is one of the most important skills a negotiator can possess. (Important point!)

11) Agreement becomes much easier if both parties feel ownership of the ideas.

12) Face-saving involves reconciling an agreement with principle and with the self-image of the negotiators. Its importance should not be underestimated.

13) Many emotions in negotiation are driven by a core set of five interests: autonomy, the desire to make your own choices and control your own fate; appreciation,  the desire to be recognized and valued; affiliation, the desire to belong as an accepted member of some peer group; role, the desire to have a meaningful purpose; and status, the desire to feel fairly seen and acknowledged. Trampling on these interests tends to generate strong negative emotions. Attending to them can build rapport and a positive climate for problem-solving negotiation.

14) No matter how many people are involved in a negotiation, important decisions are typically made when no more than two people are in the room.

15) The more quickly you can turn a stranger into someone you know, the easier a negotiation is likely to become.

16) ....... however precarious your relationship may be, try to structure the negotiation as a side-by-side activitiy in which the two of you - with your different interests and perceptions, and your emotional involvement - jointly face a common task.

17) A common error in diagnosing a negotiating situation is to assume that each person on the other side has the same interests. This is almost never the case.

18) Inviting the other side to "correct me if I'm wrong" shows your openness, and if they do not correct you, it implies that they accept your description of the situation.

19) People listen better if they feel that you have understood them. They tend to think that those who understand them are intelligent and sympathetic people whose own opinions may be worth listening to. So if you want the other side to appreciate your interests, begin by demonstrating that you appreciate theirs. (Being a good listener is also important in negotiation)

20) If you want someone to listen and understand your reasoning, give your interests and reasoning first and your conclusions or proposals later.

21) You will satisfy your interests better if you talk about where you would like to go rather than about where you have come from.

22) If they feel personally threatened by an attack on the problem, they may grow defensive and may cease to listen. This is why it is important to separate the people from the problem. Attack the problem without blaming the people. Go even further and be personally supportive.

23) Show them that you are attacking the problem, not them.

24) Successful negotiation requires being both firm and open.

25) Skill at inventing options is one of the most useful assets a negotiator can have.

26) In most negotiations there are four major obstacles that inhibit the inventing of an abundance of options: (1) premature judgment; (2) searching for the single answer; (3) the assumption of a fixed pie; and (4) thinking that "solving their problem is their problem."

27) Outlaw negative criticism of any kind. (On brainstorming)

28) At the very least, if you and the other side cannot reach first-order agreement, you can usually reach second-order agreement - that is, agree on where you disagree, so that you both know the issues in dispute, which are not always obvious.

29) As a negotiator, you will almost always want to look for solutions that will leave the other side satisfied as well. If the customer feels cheated in a purchase, the store owner has also failed; he may lose a customer and his reputation may suffer.

30) Look for items that are of low cost to you and high benefit to them, and vice versa.

31) To produce an outcome independent of will, you can use either fair standards for the substantive question or fair procedures for resolving the conflicting interests. Consider, for example, the age-old way to divide a piece of cake between two children: one cuts and the other chooses. Neither can complain about an unfair division. (I just like the example of children dividing a piece of cake. Simple and elegant solution)

32) Never yield to pressure, only to principle.

33) Silence is one of your best weapons. Use it. If they have made an unreasonable proposal or an attack you regard as unjustified, the best thing to do may be to sit there and not say a word. If you have asked an honest question to which they have provided an insufficient answer, just wait. People tend to feel uncomfortable with silence, particularly if they have doubts about the merits of something they have said.

34) When you ask questions, pause. Don't take them off the hook by going right on with another question or some comment of your own.

35) Making yourself open to correction and persuasion is a pillar in the strategy of principled negotiation.

36) A good negotiator rarely makes an important decision on the spot. The psychological pressure to be nice and to give in is too great. A little time and distance help disentangle the people from the problem.

37) One way to try to head off this problem (ambiguous authority) is to clarify early in the negotiation that "nothing is agreed until everything is agreed," so that any effort to reopen one issue automatically reopens all issues.

38) You must decide on your own whether you want to use tactics you would consider improper and in bad faith if used against you. (For me, we should not go down to the same low level as those who use dirty tactics. We must be aware though when dirty tactics are being used against us but we must not let it taint us)

39) No one, however, can make you skillful but yourself. Reading a pamphlet on Royal Canadian Air Force fitness program will not make you physically fit. Studying books on tennis, swimming, riding a bicycle, or riding a horse will not make you an expert. (From today onwards, I would embrace challenging negotiation rather than avoid it. This is the only way I can get better at it. Technical people such as engineer would do well to remember that our learning should not be confined to technical knowledge only and "other" skills such as negotiation will make us a better engineer, consultant and probably a better person as well)

40) Many people tend to measure success by how far the other party has moved. Even if the first figure is a wholly arbitrary assertion of "sticker price" or "retail value," buyers will often feel happy about getting something for less. They have not checked the market. They do not know what their best alternative would cost, so they derive satisfaction from paying less than the first "asking price." (This may be the same tactic used by retailers by promoting sales campaign or warehouse sale where on the surface, it appears prices have been slashed and unsuspecting customers thought that they have gotten themselves a good bargain. It is important for consumers to check the market price!)

41) The best rule of thumb is to be optimistic - to let your reach exceed your grasp. Without wasting a lot of resources on hopeless causes, recognize that many things are worth trying for even if you may not succeed. The more you try for, the more you are likely to get. Studies of negotiation consistently show a strong correlation between aspiration and result. Within reason, it pays to think positively.

42) Your reputation for honesty and fair-dealing may be your single most important asset as a negotiator.

43) On inventing an elegant option, consider the sealed-bid stamp auction. The auctioneer would like bidders to offer the most they might conceivably be willing to pay for the stamps in question. Each potential buyer, however, does not want to pay more than necessary. In a regular sealed-bid auction each bidder tries to offer slightly more than their best guess of what others will bid, which is often less than the bidder would be willing to pay. But in a stamp auction the rules state that the highest bidder gets the stamps at the price of the second-highest bid. Buyers can safely bid exactly as much as they would be willing to pay to get the stamps, because the auctioneer guarantees that they will not have to pay it! No bidder is left wishing that he or she had bid more, and the high bidder is happy to pay less than was offered. The auctioneer is happy knowing that the difference between the highest and second-highest bids is usually smaller than the overall increase in the level of bids under this system versus regular sealed-bid auction. (This is an elegant solution and I would think it will work beautifully for other bids such as construction contracts, consultancy works, etc. where currently, the lowest bid is usually awarded the works and many times, it ends up with less than satisfactory results)

44) Convincing the other side that you are asking for no more than is fair is one of the most powerful arguments you can make.


In summary, this is a good book on principled negotiation which has certainly opened my eyes. Previously, I tried to avoid tough negotiation as the experience is often unpleasant as it involves the test of will between two opposing parties. After reading this book, I would look at negotiation as a process to obtain a fair and satisfactory agreement for both parties and the process should not be viewed negatively. For without negotiation, there would never be a way to move forward.

That's all folks. Wishing you a Merry Christmas and Happy New Year. Let us hope that the year 2014 will be a peaceful year with conflicts resolved through principled negotiation.

The Prince by Niccolo Machiavelli (English translation by N.H. Thomson)

This literary classic is one of the most influential book ever written and for good or for worse, the name Machiavelli is synonymous with unscrupulousness, deviousness, and cruelty. For me, one have to understand the circumstances and time in which Machiavelli lives and I admire Machiavelli for his honesty about the subject. Are we a hypocrite if we label Machiavelli as unscrupulous and cruel even though we know that human beings are capable of such deeds? Anyway, the book is a must read even if it is just to understand how the term Machiavellian measures came about. As for passing judgement on Machiavelli, I will leave it to each individuals. For me, I am guided by the following quote:

"Emerge from the mud untainted; understand cunning but do not use it" - A Ming-dynasty writer.

The book does offer some relevant insights for management:

1) Injuries, therefore, should be inflicted all at once, that their ill savour being less lasting may the less offend; whereas benefits should be conferred little by little, that so they may be more fully relished (Same as restructuring, all painful measures must be quick and effective. After that, assures everyone that the company is on the right path and so that staff won't be at the edge of fear and not productive. This is usually difficult because we tends to delay making difficult decisions and this often prolongs the pain. This is a dillema because we sometimes tend to label decisive leaders who make quick but painful decision as heartless and cruel!)

2) He must therefore keep his mind ready to shift as the winds and tides of Fortune turn, and, as I have already said, he ought not to quit good courses if he can help it, but should know how to follow evil courses if he must (Again, a good leader is someone who remains unwavering towards his goal and at the same time, able to make difficult and painful decisions if he/she needs to)

3) As to how a Prince is to know his Minister, this unerring rule may be laid down. When you see a Minister thinking more of himself than of you, and in all his actions seeking his own ends, that man can never be a good Minister or that you can trust (Can this statement be applicable to selecting/promoting staff to management level? Can it be rewritten as follows? When you see an employee thinking more of himself than of the company/people he lead, and in all his actions seeking his own ends, that man can never be a good leader/manager or that you can trust)

This is only a simple summary and I will leave you with the following quote which I read from a newspaper article and I find it inspiring in how we should conduct ourselves:

"You can easily judge the character of a man by how he treats those who can do nothing for him" - Johann Wolfgang von Goethe

Property Market in Malaysia - Bubble or No Bubble?

In June 2011, in one of my earlier posting, http://businessmanagementbooksreview.blogspot.com/2011/06/from-asian-to-global-financial-crisis.html), I have predicted that the property market is due for a correction sometime in 2012 and one of the charts which I have shown in that posting is reproduced below:

Anyway, we all know that my prediction is WRONG and Malaysia continues to enjoy excellent growth in the property market (p.s. I have to admit that I am a pessimist). As such, I thought it will be a good time for me to do a review on the current property market in Malaysia. The first chart which I am sharing is an update of the above earlier chart as we now have information on the values of property transaction in 2011 and 2012 which is shown below: 

 

So, from the updated chart, it appears to show that property transactions have reached its peak in 2012 and is it heading for a correction?

 

Next, I would like to share a chart which shows the house price index from 1988 to 2012 for terrace and high-rise properties in Malaysia:

 

From the graph, I would interpret as generally, the rise in house prices for terrace houses are still ok while for high-rise, it is not sustainable. It sort of makes sense because I would think that high-rise properties are more popular to speculators. What do you think?

 

The above chart prompted me to analyse further the data and the two charts below show the 1-year percentage change of the house price index for terrace and high-rise respectively:

For terrace houses, it does appear the rate of increase is not too drastic but it does show some softening in 2012.

For high-rise, it does seem the recent run-up in prices is too drastic and steep correction is expected soon?

 

This makes me wonder which city is most susceptible to a price correction and for that, the chart below would offer some guidance:

 

At first look, we may have the impression that Pulau Pinang and KL are at risk of a steep price correction for high-rise properties but if we were to analyse the value of overhang properties, we can see some interesting numbers.

 



From the additional information, I would think that Selangor would be facing the highest risk of a steep price correction because of the following reasons:

 

a) The value of overhang properties increased significantly from Q1 2012 to Q1 2013, i.e. from RM394 Million to RM1.2 Billion!!!

 

b) To make matters worse, the unsold under construction properties is a staggering 9,077 units which increases from Q1 2012 where the unsold under construction units is 7,712.

 

As such, the value of overhang properties and number of unsold under construction units in Selangor have increased from Q1 2012 to Q1 2013 and for me, that is indicating some indigestion!!! And by the way, from an engineering point of view, the house price index for KL, Selangor and Pulau Pinang is increasing at an exponential rate since 2008/2009 and for fellow engineers or mathematicians, we all know how exponential increase will lead to infinity. So, we can interprete the chart in two ways, i.e. property prices will reach sky high or property price also cannot defy gravity and will need to fall down soon. I will leave the interpretation to you.

 

Have a good day.

Be Excellent at Anything: Four changes to get more out of work and life

At first look, I thought the book is about how we can improve our performance at work so that we can be excellent at anything. For instance, we may be good at technical aspects of our work but may be poor in terms of motivating and providing leadership to the team which we lead. Well, it was certainly a lesson not to jump into conclusion too fast especially just by looking at the surface. As the title (".......to get more out of work and life") suggests, the book is about how we can have a meaningful life and to have the best adventure during our short stay here on earth. The book is good where it provides guidance and practical examples on how we can improve our work performance while at the same time, have a meaningful and happy life outside of work. For me, more importantly, it prompted me to ask myself some questions which are neglected in the chaos and hectic lifestyle of all of us modern animals. I certainly do not want to only realize that I have not "lived" when I am fifty or sixty and it may be too late by then. It also prompted me to ask myself what would give me the most satisfaction and contentment when it was time for me to check-out from this adventure on earth. Would I have any regrets? Have you asked yourself such questions lately?

 

Actually, the book is well written and there is also summary/action steps at the end of each chapter. Anyway, the original intention of this blog is to share some excerpts from the book which I find useful/motivating and as usual, the followings are excerpts which I am sharing with all of you (Words in blue are my own opinion):

1) The way we're working isn't working in our own lives, for the people we lead and manage, and for the organizations in which we work. We're guided by a fatal assumption that the best way to get more done is to work longer and more continuously. But the more hours we work and the longer we go without real renewal, the more we begin to default, reflexively, into behaviors that reduce our own effectiveness - impatience, frustration, distraction, and disengagement. They also take a pernicious toll on others.

 

We live in a gray zone, constantly juggling activities but rarely fully engaging in any of them, or fully disengaging from any of them. The consequence is that we settle for a pale version of the possible.

 

(Are you suffering from the above or you noticed that someone which you are leading is suffering some of the behaviors described above due to over-working or burnt out? Are you passionately engaged in your work or you are doing it half-heartedly and not to the full potential which you know you are capable of?)

 

2) Human beings, on the other hand, need to meet four energy needs to operate at their best: physical, emotional, mental, and spiritual.

 

3) Perhaps no human need is more neglected in the workplace than to feel valued. (Employees need to feel valued! As leader, we need to let our employees know that they are valued)

 

4) The single most important factor in whether or not employees choose to stay in a job, Gallup has found, is the quality of their relationship with their direct superiors. (Different people may interpret this statement differently. For me, a good quality relationship is where we work for someone which continue to inspire us to reach higher and to grow as a person and not necessarily as your best friend at work)

5) Consciously cultivating a more realistically optimistic perspective refuels our emotional reservoir (Be positive. No one likes to be around a grouch)

6) Is the life you're leading worth the price you're paying to live it? (Powerful question isn't it? We have to constantly ask ourselves this question) 

7) "There is always an optimal value," explained the philosopher Gregory Bateson, "beyond which anything is toxic, no matter what: oxygen, sleep, psychotherapy, philosophy." The Stoic philosophers referred to this paradox as anacoluthia, the mutual entailment of virtues. No virtue, they argued, is a virtue by itself. Even the noblest virtues have their limits. (This is a philosophy which I strongly believe. Everything should be in moderation from money, work and even having fun. The same goes with management philosophy, there should be middle ground between compassion, making the hard decisions, etc.)

 

8) We create the highest value not by focusing solely on our strengths or by ignoring our weaknesses, but by being attentive to both.

9) Self-control, Baumeister hypothesized, operates the same way a muscle does during resistance training. Exposed to continuous stress, the muscle becomes progressively depleted of strength, until ultimately it can't exert any more energy and fails. If we have to rely on willpower to sustain a new behaviour, the overwhelming likelihood is that we'll eventually fail.

10) By defining precisely when we're going to undertake a behavior, we reduce the amount of energy we have to expand to get it done. Often, when we make a commitment to a new behavior such as exercising, we fail to recognize that unless we set aside a specific time to do it, it's unlikely we will.

11) Maintenance and refueling are as critical to victory as racing itself. That's because the higher the demand, the greater and more frequent the need for renewal. (Don't burn out yourself!)

12) Taking care of yourself physically won't turn you into a great performer - it's just one piece of a more complex puzzle - but failing to do so assures that you can't ever perform at your best. (Do you neglect your health in the pursuit of career advancement?) 

13) William Dement, the widely acknowledged dean of sleep researchers, argues that sleep may well be more critical to our well-being than diet, exercise, and even heredity. (It seems that modern workers are increasingly sacrificing sleep in the pursuit of career advancement and jeopardising their own long-term growth)

14) So how much sleep do we need? The National Sleep Foundation recommends between seven and nine hours.

15) Numerous studies of great performers suggest they sleep more than the rest of us, not less. (I should have used this book against my parents for complaining that I sleep too much during the day during my student days. Hehehe. Anyway, don't misinterpret the statement. It doesn't mean that the more you sleep, the better you are at whatever you are doing. It just means great performers knew the importance of sleep and pace themselves accordingly to ensure sustainable long-term performance)

16) Sleep is not simply cognitively restorative but also a time during which considerable learning occurs. Although the acquisition of knowledge occurs only during waking life, there is evidence that we process, consolidate, and stabilize memory during sleep.

17) Whether it's evenings and weekends truly off, longer and more regular vacations, brief breaks during the day at ninety-minute intervals, short afternoon naps, or a minimum of seven to eight hours of sleep a night, the overwhelming evidence is that our health and productivity are enhanced by a rhythmic movement between work and rest.

18) ....... three principles that we believe are fundamental to sustainable high performance. The first is that we cannot expect growth or improvement in any dimension of our lives without intentionally and regularly challenging our current capacity. The second is that intense effort for short periods, followed by intentional rest and recovery, is more efficient, more satisfying and ultimately more productive than moderate, continuous effort for longer periods of time. The third principle is that Aesop had it wrong in his classic fable about the tortoise and the hare. It isn't the tortoise, slow and steady, that wins the race. Rather, it's the hare, who balances intense burst of energy with intermittent periods of recovery.

19) Metabolism is the rate at which we burn calories, and eating breakfast stokes it and also gives us energy for the day ahead. (Breakfast is important!!!)

20) The third problem with negative emotions is their impact on others. The research is increasingly clear that all emotions are contagious, for better or for worse. (Be happy and positive and the world will be a better place)

21) We think of leaders as "chief energy officers." The core challenge for leaders, we believe, is to recruit, mobilize, inspire, focus and regularly refuel the energy of those they lead - to nudge them toward high positive. (For me, the greatest sense of satisfaction is when seeing the person which you lead grow together with you)

22) Our core emotional need is to feel secure - to be valued - and challenges to our self-worth do just the opposite. They make us feel devalued and insecure. Most of us find such feelings uncomfortable at best and intolerable at worst.

23) Whether inflated self-regard is a thin cover for inadequacy or an inflated and unwarranted confidence, it's at least as dysfunctional as insecurity.

24) When a trigger lands you in the "Survival Zone," the first key is to calm your physiology. That requires applying what we call the Golden Rule of Triggers: whatever you feel compelled to do, don't. Instead take a deep breath, and then feel your feet. Buy time until your body calms down, so that you can make an intentional choice about how to best respond to the trigger. (Helps prevent us from responding in a way which we regret later)

25) Expecting to succeed, in short, makes us more likely to succeed. "Each of us can be considered an active player in the quality of our experiences," writes Schneider, "with at least partial control of whether good things happen. Realistically, having a good attitude is likely to pay off." (Attitude, attitude and attitude determine our success)

26) ....... "the Stockdale Paradox."......."You must never confuse faith that you will prevail in the end - which you can never afford to lose - with the discipline to confront the most brutal facts of your current reality, whatever they might be."

27) In its 2007 study of 90,000 employees in eighteen countries, Towers Perrin found that the single highest driver of engagement was whether or not senior management was perceived to be sincerely interested in employees' well-being. An organization's reputation as a great place to work was the highest driver of retention; second was the satisfaction of employees with the organization's people decisions. The third was having a positive relationship with one's direct supervisor. The conclusion is inescapable: truly valuing people pays huge dividends.

28) We recognized that we needed to pause to celebrate our successes along the way, or else people get burned out and feel taken for granted.

29) Because the impact of bad is stronger than good, the first rule for an effective leader is simply to avoid devaluing emotions: anger, intimidation, disparagement, and shame.

30) Treat employees well, make them feel more valued, and they will treat their customers well.

31) Herbert Simon, a polymath who wrote more than a thousand scientific papers and won the Nobel Prize in Economics, saw our current attentional crisis coming forty years ago. "What information consumes is rather obvious," he wrote in 1971. "It consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention." (I think many of us can relate to this. The quality of our attention seems to be deteriorating due to information overload. We are bombarded with constant information from TV, smartphone, etc. to the extent that it is also affecting our attention to our loved ones and our surroundings. This is the same with work that too much information can be paralysing and we are so busy replying e-mails, phone calls, etc. that we are rarely focused on the more important task)

32) If you want those in your charge to be effective at delaying gratification and focusing their attention effectively, it goes a long way to make them feel cared for and secure.

33) Obvious as that may seem, the act of prioritizing - focusing on what's likely to add the greatest value over the longest term - doesn't come to us naturally. It requires both awareness and intentionality. At a practical level, it means setting aside regular time to reflect on and define priorities, rather than simply plunging into the next task that comes into your mind or reacting to the next request that flashes up on your computer screen.

34) Control your attention, and you control your life. I truly believe that.

35) ..... many analytically gifted, left-hemisphere-driven leaders who lack the capacity to connect emotionally with those they lead. At the opposite end, extreme empathy may lead to an inability to create boundaries with others, while high creativity may be accompanied by a spacy inability to follow through and translate ideas into actions. (This explains why technical people like engineers are usually lousy businessman because technical people are dominated by left-hemisphere of our brain and engineers lack the ability to connect emotionally with others such as Clients. At the other end, highly creative people which is dominated by right-hemisphere brain lack the efficiency of getting things done systematically unlike engineers. So, the key here is to realise our inherent biological weaknesses and how to overcome it, e.g. perhaps engineers need to spend more time socialising to develop our social skills)

36) While working on The Last Supper, Leonardo da Vinci regularly took off from painting for several hours at a time and seemed to be daydreaming aimlessly. Urged by his patron, the prior of Santa Maria delle Grazie, to work more continuously, da Vinci reported to have replied, immodestly but accurately, "The greatest geniuses sometimes accomplish more when they work less."

37) Arie de Geus, a former head of planning at Royal Dutch Shell, conducted a studies of companies that have lasted the longest. "The ability to learn faster than competitors," he argued, "may be the only sustainable competitive advantage." (The challenge for a company is then to instill a culture of learning within the organization and to treat every unique job as an opportunity to learn. The same applies to individuals)

38) Any organization that fails to build a robust learning program for its employees - not just to increase their skills but also to develop them as human beings - ought to expect that its people won't get better at their jobs over time and may well get worse.

39) "He who has a why to live for," said Nietzsche, "can bear almost any how." When something really matters to us, we bring vastly more energy to it in the form of focus, conviction, passion, and perseverance.

40) ...... that once our basic needs are met, money has little to no impact on our happiness. Nonetheless, the typical pattern in any addiction is to progressively do more of whatever the addictive behavior may be, in an increasingly futile effort to recapture the initial pleasure it provided.

41) We derive the most powerful sense of purpose when our values fuel behaviors that serve something beyond ourselves.

42) "Your time is limited, so don't waste it living someone else's life," Apple CEO Steven Jobs told Stanford's graduating class in 2005, just a year after he was diagnosed with pancreatic cancer at the age of forty-nine.

43) The limitations we set on ourselves are mostly our own. The willingness to delay immediate gratification in the pursuit of excellence is the surest way to achieve rich, deep, and enduring satisfaction.

44) "A person with ubuntu," explains Archbishop Desmond Tutu, "is open and available to others, affirming of others, does not feel threatened that others are able and good, for he or she has a proper self-assurance that comes from knowing that he or she belongs in a greater whole and is diminished when others are humiliated or diminished."

45) A review of more than 150 leadership studies found that integrity is the value employees care most about in their leaders. Honesty is second, and humility is third. The other qualities employees most value include care and appreciation, respect for others, fairness, listening responsively, and reflectiveness.

46) If you lead or manage others, here are the sorts of questions you might ask yourself and request others to answer about you:

a) Do you actively support people in taking care of themselves physically? Do you model these behaviors yourself?
b) Do you truly value, regularly recognize, and express appreciation to those who work for you?
c) Do you respect and trust your employees and treat them as adults capable of making their own decisions about how best to get their work done?
d) Do you believe passionately in what you're doing, and do you give people who work for you a compelling reason beyond a paycheck to come to work every day?

47) "Before my illness, I had considered commitment king among virtues. After I was diagnosed, I came to consider consciousness king among virtues. I began to feel that everyone's first responsibility was to be as conscious as possible all the time....Looking at how some of the people around me had managed their lives, I lamented that they had not been blessed with this jolt to life. They had no real motivation or clear timeline to stop what they were so busy at, to step back, to ask what exactly they were doing with their life. Many of of them had money; many of them had more money than they needed. Why was it so scary to ask themselves one simple question: Why am I doing what I'm doing?" (written by Eugene O'Kelly, the former CEO of accounting firm KPMG in the last months of his life, before he succumbed to brain cancer at the age of fifty-three)

I think the last point best sums up the lessons from the book. Do we know our priorities? If we say that we needed more money for our loved ones but we are now sacrificing our time with them, is this the correct path? Do we know why we are doing what we are doing?

Good luck and have a good and happy life ahead!

Housing bubble in Malaysia?

10,000 Milestone

Well, this little blog have hit a small milestone last week with 10,000 hits. It is in fact nothing to shout about but it does signify a milestone for me personally. Anyway, looking at the journey so far, it is good to look back and ask ourselves some questions. In this posting, there would be no answer, only questions as I believe the key to finding the right solutions is to ask the right questions in the first place.

1. To be a good leader, do you engage with your co-workers such that you have more than just a professional relationship? There seems to be two school of thoughts here:

a) Keep your distance and maintain the relationship as strictly professional so that when it comes to tough decisions, you are not influenced by personal emotion.
b) Be more than a colleague and get to know your colleagues personally so that you know what is his dreams, life values and aspirations.

2. Do you discuss and explain every management decisions with people who you worked with or in some cases, there is no need for them to know as they may not be ready or mature enough to handle the information?

3. In a company, just like in a football team, we need goalkeepers, defenders, midfielders and strikers. Of course, the strikers will get most of the attention but how do we ensure the goalkeepers and defenders of a company understand their role and is happy with their contributions in the company rather than envious of the strikers?

4. In leading a company, does 100% democracy work where decisions are based on consensus or it should be based on the wisdom of the management in making tough and unpopular decisions but good for the company's long-term growth?

5. Does absolute freedom works where we treat our co-workers like adult rather than children and let them work freely, e.g. not necessary for fixed office hour, as long as they deliver the final product within the fixed timeline or people always need discipline in order to perform?

What do you think?

Happy Father's Day.

p.s. My father is my biggest inspiration and I strive to be just like him. I remember that whenever I tell him that I did not do so well in my studies, he will just ask me: "Have you tried your best? If yes, there is nothing to be ashamed of. If not, then you should try your best the next time".

Management Lessons from Football: Inspired by Sir Alex Ferguson's Retirement

As much as I hate to admit it, Sir Alex Ferguson is indeed one of the greatest, if not "the" greatest football manager in the modern game. With his recent decision to retire, it somehow struck me that football does indeed offers us many management lessons which we can adopt in our organization:

1. A team full of star players would be useless unless they can function as a team. Look at Manchester City. With all the money which they have spent, one would have expected them to perform better. As such, it is important to get players (or workers) who wanted to play (or work) for the team (or organization).

2. In any organization, it is important to have players (or workers) of different skills and personalities. You certainly cannot have a team with strikers only. As such, it is important to place equal emphasis on workers of different skills, e.g. the manager (i.e. workers who is good at managing teams and getting things done who is like the hard working midfielder such as Roy Keane, Michael Carrick, etc. - not spectacular, but get things done) and the technician (i.e. workers who provides the spark in the organization or someone with in-depth technical knowledge who is like Robin Van Persie, Eric Cantona, etc.).

3. Every now and then, an imported player (or personnel from outside the organization) would be good for the team (or organization) if the imported player (or personnel) adds value to the team (or organization) and does not jeopardize the team's (or company's) harmony. Look at what Eric Cantona and Robin Van Persie contributes to Manchester United. Similarly, player who disrupts the team's harmony should be kicked out as soon as possible.

4. It is important to develop the right culture in any organization. With the right mentality, challenges can be overcome together rather than resort to negative in-fighting. One of the traits which makes Manchester United so successful is their belief, determination and never say die attitude. I don't think it is a coincidence that they can grind out results when they have an off-day or perform last minute heroics which are features of champions from the Liverpool team of the 80's to the Manchester United team of the 90's.

5. It is important to develop the organization to the extent that it is able to attract junior talents. This is the same for a company as well as for a football team. Manchester United would not be so successful if it did not manage to attract young talents such as Ryan Giggs, David Beckham, Paul Scholes, etc. and develop them into world class talent.

Finally, I also find it amazing that Sir Alex Ferguson is "only" a manager for 26 years. If we were to compare with other organization in the private sector, it would be considered a failure if someone is "only" a manager for 26 years and not promoted to Director or something like that. This struck me because I have encountered challenges where one of the reasons given by a colleague for leaving a company is because of not promoted to Director even though remuneration, working environment, etc. is not an issue. What he wanted is only the title and recognition. So, if we were to use football manager as an example, can we give job satisfaction irregardless of the title as long as the person feels he is in control and given due recognition of his role/contributions? The Directors should also be happy to be out of the limelight and let the manager handle the spotlights. Or maybe it is just because Directors are paid less in a football club compared to a Manager (I really don't know)?

Happy inspiring and looking forward to Brendan Rogers vs David Moyes.

Adapt: Why Success Always Starts with Failure

The latest work from Tim Harford who is one of my favourite authors is another good read and perhaps, explain in an easy to understand manner the importance of adapting and why we should not be afraid of failure. For those who have read Tim Harford's works, you will know that Mr. Harford always manages to get his message across with good arguments and real life examples. It is such good story telling skills which makes his works such a joy to read. This book with the simple title of "Adapt" explains why we should always be brave enough to try new things and to embrace failure as part of the process. The title of the book is apt as the most important part of embracing failure is the ability to learn from the failure and move on, i.e. adapt. If we did not learn anything from the failure, well, we will just keep on tripping on the same mistakes and I am sure, that is not something which we look forward to.

Again, I have selected some excerpts from the book which I find useful especially when things don't seem to be going to plan. It is good to remind ourselves that experiencing failure is part of the "joy" of life and to remind ourselves to move forward with the lesson/experience gained. Words in blue are my own opinion.

1) To survive and be profitable it is not enough to be good; you must be one of the best. (This is especially true in the age of the internet where information is readily available including your company's track records, customer satisfaction, etc.)

2) In a complex, changeable world, the process of trial and error is essential. (The point here is that the world is getting more complex and we cannot wait for the ideal solution, if ideal solution can be devised in the first place.)

3) But whether we like it or not, trial and error is tremendously powerful process for solving problems in a complex world, while expert leadership is not. (As a leader, our role is to guide our people towards a process of solving problems and not providing direct solution where the direct solution may be completely wrong! As a follower, we should not also expect our leader to provide the solution but we should devise a process towards solving the problem with the leader stepping in whenever the process is veering off its course.)

4) The great economic psychologists Daniel Kahneman and Amos Tversky summarised the behaviour in their classic analysis of the psychology of risk: 'a person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise'. (Some of us may have experienced this first hand before. I think the most common place where we can observe this behaviour is in a casino. For example, we have loss considerable money and we tend to place one last bet of the same amount that we have loss with the hope of recouping our money. This happens because we have not accepted the loss and we ended taking huge gambles which we would not have taken in other circumstances.)

5) The economist Terrance Odean has found that we tend to hang on grimly, and wrongly, to shares that have plunged in the hope that things will turn around. We are far happier to sell shares that have been doing well. Unfortunately, selling winners and holding on to losers has in retrospect been poor investment strategy.

6) Faced with a mistake or a loss, the right response is to acknowledge the setback and change direction. Yet our instinctive reaction is denial. That is why 'learn from your mistakes' is wise advice that is painfully hard to take.

7) ...... recipe for successfully adapting. The three essential steps are: to try new things, in the expectation that some will fail; to make failure survivable, because it will be common; and to make sure that you know when you've failed.

8) ..... organisations which ignore internal criticism soon make dreadful errors.......

9) ..... bright ideas emerge from the swirling mix of other ideas, not from isolated minds.

10) But once a new idea has appeared, it needs the breathing space to mature and develop so that it is not absorbed and crushed by conventional wisdom.

11) And in the quest for truly original research, some failure is inevitable. (This not only applies to research. To create a responsive and dynamic organisation, it is important that the management accepts that some failure is inevitable and what is important is how we learn from the failure and move on. If the organisation do not expect failure at all, it will paralyse its own people as no one would dare to try new things which benefit the company or make  important decisions and the company will end up with the motto: "The less we do, the better as there will be less chance of a failure". After all, the best way to avoid failure is to do nothing.)

12) Correlation is a treacherous guide to causation. (Don't rely on correlations too much!!!)

13) In a lecture of 1755, Adam Smith declared that 'little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes and a tolerable administration of justice: all the rest being brought about by the natural order of things.' In other words, if the government can just get the basics right, everything else will gradually follow in time, and foreign aid can help - if only it is properly tested. (I would think that the same principle applies to a company. If a company or its management manage to get the basics right, i.e. condusive working environment for employees to thrive and contribute, clear reward system and a system of check and balance, the organisation will probably take off on its own. What do you think?)

14) ..... three different types of error. The most straightforward are slips, when through clumsiness or lack of attention you do something simply didn't mean to do.

15) ..... violations, which involve someone deliberately doing the wrong thing.

16) Most insidious are mistakes. Mistakes are things you do on purpose, but with unintended consequences, because your mental model of the world is wrong. (This reminds us of the famous statement by General Von Manstein on the German Officer Corps:

There are only four types of officer. First, there are the lazy, stupid ones. Leave them alone, they do no harm......Second, there are the hard working intelligent ones. They make excellent staff officers, ensuring that every detail is properly considered. Third, there are the hard working, stupid ones. These people are a menace and must be fired at once. They create irrelevant work for everybody. Finally, there are the intelligent lazy ones. They are suited for the highest office.

I guess General Von Manstein also realise that the most insidious of errors are mistakes and hard working but stupid people tends to do the most mistakes. This is just to put the message across in a direct manner but for me, hard working is an important trait which I value the most. This is because there is no way for us to know whether we are stupid or intelligent as some good decisions are probably due to luck. Anyway, if we are hard working, we can certainly fulfill our own potential and if we are lazy, no amount of talent in the world will make us successful.)

17) There are three essential steps to using the principles of adapting in business and everyday life, and they are in essence the Palchinsky principles. First, try new things, expecting that some will fail. Second, make failure survivable: create safe spaces for failure or move forward in small steps. As we saw with banks and cities, the trick here is finding the right scale in which to experiment: significant enough to make a difference, but not such a gamble that you're ruined if it fails. And third, make sure you know when you've failed, or you will never learn. As we shall see in the next chapter, this last one is especially difficult when it comes to adapting in our own lives.

18) Being willing to fail is the essential first step to applying the ideas of Adapt in everyday life.

19) ..... three obstacles to heeding that old advice, 'learn from your mistakes': denial, because we cannot separate our error from sense of self-worth; self-destructive behaviour, because like the game-show contestant Frank, or Twyla Tharp when marrying Bob Huot, we compound our losses by trying to compensate for them; and the rose-tinted processes outlined by Daniel Gilbert and Richard Thaler, whereby we remember past mistakes as though they were triumphs, or mash together our failures with our successes.

20) The ability to adapt requires this sense of security, an inner confidence that the cost of failure is a cost we will be able to bear. Sometimes that takes real courage; at other times all that is needed is the happy self-delusion of a lost three-year-old. Whatever its source, we need that willingness to risk failure. Without it, we will never truly succeed. (Fortune favours the bold?)

In summary, this book reminds me to be brave and to try new things, adapt and move on. Which one do you think is better? To have tried, failed and try again or to live in regrets that you have never tried and you can only wonder, what if? I think most of us know the answer to that question.

'Ever tried. Ever failed. No matter. Try again. Fail again. Fail better' - Samuel Beckett.

Top 3 Recommended Authors

My recommended top 3 authors on subjects ranging from economy, business, finance and general management/philosophy are based on the following criteria:

1) After reading the book, you would have a great feeling of being "enlightened" or prompt you to have a complete re-assessment of your views of the world or approach to life, finance or management, i.e. the book has a profound impact on me.

2) The Author has produced more than one good work and every book which you have read by the same Author gives you the same excitement.

3) The book is grounded in practicality and is based on real-life experience, i.e. practical and realistic.

Based on the above criteria, my list of top 3 authors are as follows (with no order of preference):

1) Nassim Nicholas Taleb

The words that I would use to describe Nassim Nicholas Taleb is brilliant, frank and unconventional. His two books, "The Black Swan" http://businessmanagementbooksreview.blogspot.com/2011/04/black-swan-impact-of-highly-improbable.html and "Fooled by Randomness" http://businessmanagementbooksreview.blogspot.com/2012/06/fooled-by-randomness-hidden-role-of.html are simply brilliant and he certainly explained a lot of questions which have always puzzled me and opened up my mind. To me, an Author who is able to open up my mind and made me questions a lot of the established rules/norms are very important and for that, Nassim Nicholas Taleb's books are a must read for me.

2) Malcolm Gladwell

Books by Malcolm Gladwell is so easy to read and insightful. That is not surprising since he introduced the concept of tipping point to the world. His four books books, "The Tipping Point", "Blink", "Outliers" http://businessmanagementbooksreview.blogspot.com/2011/10/outliers-story-of-success-by-malcolm.html and "What the Dog Saw" http://businessmanagementbooksreview.blogspot.com/2012/01/what-dog-saw-and-other-adventures.html are all classics and should be in everybody's book shelf.

3) Tim Harford

Tim Harford made economic relevant to everyone and explained economic concepts using simple language and practical examples. His works are also easy to read, practical and insightful. The book, "The Undercover Economist" http://businessmanagementbooksreview.blogspot.com/2011/07/undercover-economist.html is one of my must read book. His other works such as "Logic of Life" http://businessmanagementbooksreview.blogspot.com/2012/04/logic-of-life-uncovering-new-economics.html and "Adapt" continue Mr. Hardford's previous good works on how to present important but sometimes "dry" subject in an easy to read format.


That's it folks. Just my humble opinion on three of my favourite Authors. You may have different opinions and I would like to hear your opinions and look forward to be introduced to other great works.

Take care and may the year of the snake brings you good health and joy. Happy Chinese New Year.

Inspiration from JAL CEO

When it comes to crunch time, can we be like JAL CEO? Only time will tell whether we can rise to the occassion.

http://youtu.be/AqFxK3GMEkA

The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money

First of all, a happy belated new year to everyone. A new year will give us renewed hope and ethusiasm as we strive to further improve ourself and to further enjoy our lives. I picked up this book by Carl Richards in a book fair and it was a bargain as the book only costs RM10. The book is about how we can improve our behaviour with respect to money as the title of the book suggests. The book is easy to understand and is quite readable. It strikes me as I am also a victim of my own irrational behaviour with money and as such, I find the book a timely reminder to not follow the herd with respect to investing and how I manage my money. I guess the sketch shown in the book cover describes most of us.

As usual, I would like to share excerpts of the book which I find useful (Words in blue are my own opinions):

1) But in the end, financial decisions aren't about getting rich. They're about getting what you want - getting happy. And if there is a secret to getting happy, it's this: be true to yourself. (Do you know what you REALLY want in life to be happy? Are you following others definition of happiness?)

2) The more expensive stocks (or houses) are, the more risky they are - yet that's when we tend to find them most attractive. (We are all worried that we might miss the train - if we don't buy now, we would not be able to afford it.)

3) ....... as the historian and philosopher George Santayana said (more or less), those who don't remember the past just get hammered again and again.

4) The next time you're about to make an investment decision because you're sure you're right, take the time to have what I call the OC (Overconfidence Conversation). It's been a truly powerful tool to help people in their decisions. Find a friend, spouse, partner, or anyone you trust, and walk them through your answers to the following questions:

- If I make this change and I am right, what impact will it have on my life?
- What impact will it have if I'm wrong?
- Have I been wrong before?

5) Before you invest your hard-earned money, ask yourself: Are you buying a particular investment because you think it's a good investment? Or are you relying on a Greater Fool to come along? If so, doesn't that make you - no offense - a bit foolish yourself?

6) It turns out that fees are the only factor that reliably predicts a fund's performance. The higher the expense ratio - the cost of owning the fund - the worse the performance for shareholders. This is a case where you actually get what you don't pay for.

7) Trying to figure out which fund will lead the pack during the next quarter or next year or next decade is a fool's game. Focus instead on finding a low-cost investment that you can stick with over the long haul.

8) (On a friend who wrote stock-picking stories): He eventually quit writing stock-picking stories. "It's a little like writing about horse racing," he says. "It's really fun, and you learn a lot about how companies operate and how people try to value stocks. Sometimes you can help weed out the worst stocks, and once in a while you come across something that works out and you think it's because you're smart. But in the end most of it is just entertainment. You know that, and you hope no one takes it too seriously. But you know some people do."

9) This reminds me of another problem confronting every investor. We have a tendency to assume that what we do know is more important than what we don't know.

10) My point was that decisions should be based on principles, not on our feelings about what's going to happen.

11) If people make enough guesses, they are bound to get at least a few of them right. Even a broken clock is right twice a day. So don't take it too seriously when someone calls a market turn correctly. Most likely, it's luck.

12) (On life planning): First, imagine you are financially secure. How would you live your life? What would you change? Next, imagine a doctor tells you that you have only five to ten years to live - but you won't feel sick. What will you do in the time remaining? Finally, this time the doctor says you have twenty-four hours. What feelings arise? What did you miss?

13) I don't know what constitutes a bad or good time to invest. The point is that it's always a good time to stop the cycle of selling low and buying high.

14) Set a course, realize that you'll certainly be wrong, and plan on making course corrections often. Remember: the ongoing process of planning - not the plan - will keep you headed toward your goals and out of the behavior gap.

15) ..... Jim Rogers: "Any economy which saves and invests and works hard always wins out in the future over countries which consume, borrow, and spend."

16) While making wise decisions about how you invest your money is important, it doesn't have nearly the impact of working hard and saving more - let alone starting a business, going back to school, or reinventing yourself in any number of ways.

17) Investment decisions should be made based on what we know, not how we feel.

18) Slow and steady capital is far more concerned with avoiding large losses than with chasing the next great investment. Being slow and steady means that you're willing to exchange the opportunity of making a killing for the assurance of never getting killed.

19) Moral: if you decide to be slow and steady, remember to take with a huge grain of salt all those stories of people getting rich quick. Slow and steady capital is short-term boring. But it's long-term exciting.

20) The goal isn't to make the "perfect" decision about money every time, but to do the best we can and move forward. Most of the time, that's enough.

In summary, a good book but I guess it won't make it into the best sellers list. Don't get me wrong, it has got nothing to do with the content but the message. People like to hear advise on how to get rich quick and easy with the least of hard work while this book highlights the importance of hard work and slow and steady investing. Not exciting but in my own humble opinion, it is the truth and the earlier that we accept it, the better our lives would be.