Monday, August 9, 2010
15 Steps for Successful Strategic Alliances
1. Be open to romance, but court carefully. At the beginning of new relationships, selective perceptions reinforce dreams, not dangers. Potential partners see in the other what they want to see, believing what they want to believe. Hopes, dreams, and visions should be balanced by reality checks.
2. Know yourself. Build your strengths. An organization seeking partners should identify assets that have value to partners and strengthen them. Networks of the weak do not survive. The best alliances join strength to strength.
3. Seek compatibility in values. In rapidly changing environments, compatibility in values, philosophy and goals is more important than specific features of an immediate business deal. The basis for collaboration must be more enduring, and there must be a foundation for mutual trust to help weather inevitable changes or problems.
4. Treat the 'extended family' respectfully. Include other partners and stakeholders. Rapport between leaders of partner organizations is not enough. Other people and organizations who are the 'relatives' in each organizations' extended family must also be won over.
5. Put the lawyers in their place. Leader-to-leader relationships are important. Partnerships and network formation shouldn't be turned over to third-party professionals, such as staff analysts, lawyers, consultants, or deal-brokers.
6. Vow to work together until business conditions do us part. Commit to a first project, to exploring growth in the relationship, to monitor change, and to remain friends if changing conditions require a graceful exit.
7. But don't count on the contract. Formal agreements can't anticipate everything, and interpretations of the agreement vary — even within the same organization.
8. So keep communicating, face-to-face. Matters are more easily sorted out when partners' leaders keep talking long after their initial deal-making and dedicate people to watch over the relationship — a partner or alliance 'ambassador' (the equivalent of key account managers).
9. Spread involvement. Create more ties for more people. Alliances begin with a few direct connections among top leaders. As projects unfold, more people at more levels must get involved, and they need to feel connected, too — that they know their counterparts in their partner organization. The more people feel included, the more they have a chance to see the others face-to-face and come to know them, the easier it will be to implement partnership activities.
10. Build organizational bridges — formal structures. Active collaboration occurs when organizations develop structures, processes, and skills for bridging organizational and interpersonal differences and getting value from the relationship. Bridges include formal governance (a partnership board), joint project teams, and alliance ambassadors.
11. Respect differences. Alliances, partnerships, and networks are most helpful when they involve differences — when partners give each other something they do not already have. But differences in "specialty" desired by partners are accompanied by more "inconvenient" differences in behavioral style, motives and goals, operating methods, or cultural assumptions. Respect is essential. Time must be invested in understanding differences and transcending them.
12. Teach partners. Learn from partners. People from across the partnership network must become teachers as well as learners. Often the ultimate value of a partnership is the new knowledge and skill it brings. Organizations that derive greater value from their alliances tend to have greater communication internally, share more information, and promote an atmosphere of learning.
13. Be prepared to change yourself. Partners must be willing to be influenced by one another. To make linkages possible requires operating compatibilities, project by project and sometimes even in a larger sense. This can mean learning the other's language and style or inventing a new one; changing to the other's system or creating a joint one.
14. Help everyone win. Mutuality is the hallmark of organizational collaboration. Balancing benefits so that each partner gets something of equivalent value can be hard to do in the short run, but it is essential in the long run. The best alliances try to maximize the value of the whole relationship, which then makes it more valuable to each partner.
15. Get closer, change course, or exit gracefully. Like living systems, relationships evolve. Change should be expected. But the best guarantee that organizations will be closer in the future is success in what they try to achieve today. Success strengthens relationships.
To ensure that your partnerships are effective, apply these principles at every stage of the relationship.
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Rosabeth Moss Kanter is a professor at Harvard Business School and the author of Confidence and SuperCorp.
Connect with her on Facebook or at Twitter.com/RosabethKanter.
Wednesday, June 2, 2010
The Impact of the Irrelevant on Decision-Making
Economic View
The Impact of the Irrelevant on Decision-Making
Published: May 28, 2010
By ROBERT H. FRANK
Even so, when people confront opportunities to improve their position, they’re generally quick to seize them. When energy prices rise sharply, for instance, consumers are quick to adjust their thermostats. So most economists are content with a slightly weaker assumption: that people respond in approximately rational ways to the information available to them.
But behavioral research now challenges even that more limited claim. For example, even patently false or irrelevant information often affects choices in significant ways.
Consider the people who set their watches a few minutes ahead, to prod themselves to arrive at appointments on time. When asked what time it is, they effortlessly perform the required subtraction before answering. So, in one sense, the false image on the watch face doesn’t fool them at all.
But that same image is fed into their brains through multiple neural pathways. Some lead to the circuits that do the subtraction. But others lead directly to emotional circuits, which react to the image at face value. The resulting anxiety is why the practice works.
An intriguing example of transparently irrelevant information that affects behavior comes from a 1974 report on an experiment by the psychologists Daniel Kahneman and Amos Tversky. In the experiment, subjects first spun a wheel that supposedly would stop at random on any number between 1 and 100. Then they were asked what percentage of African countries belongs to the United Nations. For one group of subjects, the wheel was rigged to stop on 10; for a second group, on 65. On average, the first group guessed that 25 percent belong to the United Nations, but the second group guessed 45 percent.
All subjects would have insisted, correctly, that the number on the wheel bore no relation to the correct answer to the question. Yet, obviously, the number profoundly influenced their responses.
In short, even demonstrably false or irrelevant information can influence judgments, which in turn influence decisions. In such cases, Professors Tversky and Kahneman wrote in 1981, “the adoption of a decision frame is an ethically significant act.”
Policy makers have long recognized the potential danger of false statements by advertisers. But in the belief that most adults are suitably skeptical about promotional puffery, Congress has tried to prohibit only the most blatantly false or explicitly misleading claims.
But what about merely irrelevant statements, or only implicitly misleading ones? Standard economic models say such claims are, well, irrelevant, so there should be no need to regulate them. But according to recent behavioral research, it’s a distinction without a difference.
Although cigarette advertisements, for example, typically portray smokers as young, healthy and attractive, smoking can make people look older and less healthy. Such ads make no explicitly false claims, but that doesn’t make them less misleading, even for informed consumers.
More troubling are instances in which politicians employ patently false statements to shift the terms of important public debates. Decades before President George W. Bush tried to privatize Social Security, for example, Democratic presidential candidates regularly frightened Florida seniors with groundless accusations that their opponents would gut the program.
Of course, politicians of both parties have long taken liberties with the truth. But as even conservative political commentators have begun to point out, Republicans have lately been far more aggressive in stretching traditional boundaries. When Sarah Palin said that if health care reform legislation were adopted, her parents and her child with Down syndrome “will have to stand in front of Obama’s ‘death panel’ so his bureaucrats can decide, based on a subjective judgment of their ‘level of productivity in society,’ whether they are worthy of health care,” most people probably realized the president had made no such proposal. Her statement nonetheless shifted the terms of the debate, making it harder for legislators to focus on genuinely relevant issues.
CAN anything be done? For a variety of practical reasons, legal sanctions promise little protection against blatantly false statements. It is helpful, to be sure, when journalists call out politicians who stray too far from the truth. But merely knowing that a statement is false doesn’t nullify its impact. To be effective, a remedy must act prospectively. It must discourage people from making false statements in the first place.
Economists have long recognized that social sanctions are often an effective alternative to legal and regulatory remedies. As Adam Smith argued, moral sentiments are extremely powerful drivers of human behavior. People who know they’ll be ridiculed for telling untruths are more likely to show restraint.
Some social sanctions are less effective than others. In recent years, the most conspicuous public falsehoods have been ridiculed by independent bloggers and Comedy Central’s faux news hosts. But television and Internet audiences are highly segmented. Many of Jon Stewart’s targets may never hear his riffs about them, or may even view them as badges of honor.
That’s why it’s important for the circle of critics to widen — and why we need to remember that framing a discussion appropriately is “an ethically significant act.”
Robert H. Frank is an economics professor at the Johnson Graduate School of Management at Cornell University.
A version of this article appeared in print on May 30, 2010, on page BU5 of the New York edition.
Noah Kagan on Building a Valuable Business
| Building a billion-dollar business | ||
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| By NOAH KAGAN EVER since I was a little kid I wanted to be rich. I think most of us do; however, we might not think about how to get there. I once had a friend who was a child prodigy, highly respected by the Silicon Valley community. His sole goal was to create a billion-dollar business - nothing else mattered. Because of this, he rejected ideas that were either way too small or did not monetise well enough. He took one year to develop different ideas and one idea in particular grew very large. However, at the end of the year, he threw it all away. This was because despite having millions of users, he had no real product, no value, no love and no engagement. His main problem was that he put the business before the users. Having spent a lot of time both failing and succeeding, I have assembled some advice for aspiring entrepreneurs on how to build a billion-dollar business. 1. Focus Focusing on how you can become a big business is the first mistake. Instead, it is better to focus on creating something ultra-valuable to your users. Focusing on large billion-dollar exits only sets your business too far in the future and misses all the details you need to get there. The question you should be asking your users is, 'How would you feel if we were not around any more?' It is when they answer that they cannot live without it, that you know you have a winner. 2. Start small IBM, Facebook, Google, Mint, Microsoft - all these companies started out small and were run by just a few people. They were not overnight billion-dollar companies. They started with a few people who came together to solve a problem. I doubt that the founders planned from day one to make a billion dollars. Large things form from small beginnings. So do not worry if your idea is not immediately worth a billion dollars. Instead, plant the seed and help it to grow. 3. It takes time The vast majority of companies do not create over a billion dollars in value in less than three years. Building a billion-dollar business will take significant time and resources, be prepared for this. 4. Validate It is also best to make sure that before you start building something, you have an idea of the problem that you are trying to solve. Not validating the problem was one of the mistakes my colleagues and I made when we spent six months building up a new company. Time and money wasted then could have been spent on validating the problem. For instance, by questioning potential users, conducting surveys online and putting up advertisements to test the market and identify how likely tentative interest is to translate into actual buyers of your product or service. One of the best ways to validate your business is to ask for an upfront contract with potential users. You could go even further and ask them to pay you ahead of time. 5. Learn The best thing you can do is fail and make many mistakes. However, after doing so, make sure you ask the right questions in order to learn from your mistakes. 6. Organisational behaviour While I would admit to not always being the most-organised person, here are some tips on what organised, successful companies do:
7. Define the objective Once the objective is clearly defined, you can then work backwards to see how to meet it. For example, I had a friend who wanted to be a New York Times best-selling author. When I asked how many books he needed to sell in order to make it to the best-sellers' list, he had no idea. But once we had figured out this amount, it was easy to work backwards through marketing channels, priorities and strategies, in order to guarantee that he would get that specific number of sales needed. And he did! In addition to the above-mentioned tips, there are also a range of different tools out there to help entrepreneurs save precious time. Time which they can then spend on growing their companies. These include:
And, of course, you should turn off all instant messengers so you can focus on the work you are doing. While it is important to put the users in front of the business, it is also important not to just end up doing things to please only your end users. Remember to build something that you want for yourself. If you create something that you would actually pay money for, then it is hard to go wrong - even if you end up just with one customer. This article was first published in The Business Times. |
