The Importance of Being Earnest (Originally Posted 30 May 2012)

I am really glad I found this one – in some ways was one of my favorites!

From 30 May 2012:

The title of this post is, of course, a tribute to the great Irish playwright Oscar Wilde and his play of the same name.  As the plot unfolds, the title is, as expected, a play on words.  Before writing another sentence, I can say with certainty, that this post will by no means be as clever or as poignant as the original title holder.

Anyone who knows me well can confirm that among my character traits (some might say flaws), one that may be most noticeable is that I am extremely competitive.  I’m not sure where that comes from because I don’t see the same competitive nature in my mother.  I never really knew my father very well, so maybe it is the case that he was very competitive, and I just don’t know it.

Another key trait is a ridiculously good memory.  This can often be a blessing, such as when you walk into an English lit class unaware of the test that’s about to drop in front of you, but are still able to conjure up enough of the facts from the bits and pieces of your memory to pull the highest grade in the class.  And yes, I’m fully aware of the disdain that many/most people had and/or have, for the people like myself, who are blessed with such a skill.

There are, however, times when having a memory like that can be a curse.  Especially when combined with that hyper competitiveness on an occasion where, say, the outcome was not to my liking.

One such moment occurred for me a little more than 16 years ago when I was in business school at Columbia.  One of my favorite courses during the program was Negotiations.  Like most courses, it had it’s doses of lecture and reading time, but the real meat of the class was structured negotiation simulations.

The negotiation that eats at me, that still haunts me 16 years later, went like this:

  • There are 3 teams (A, B, and C) of about 6 members each
  • Each team meets individually with the other two teams to try to reach a deal on how they will split the pot
  • If A and B reach a deal, they split 100% of the pot however they agree between the two teams
  • If A and C reach a deal, they split 80% of the pot, again however the two teams agree between them, and the remaining 20% is lost
  • And if B and C reach a deal, they split 60% of the pot, with the remaining 40% lost
  • There are 3 rounds of meetings between the teams.  The time for these meetings is controlled and kept very short to keep the pressure on.  And only one person is allowed to speak for the team when meeting with the other teams – but you can switch spokespersons between rounds.

Okay, so hopefully you get the set up.  You start with an internal session with your team, trying to figure out your strategy, then go into the meetings with the opposing teams to see if you can make a deal.  And, of course, even though the numbers were small potatos (I think each person put $5 into the pot), everyone is looking for that little edge to come out on top, simply as a matter of pride.

Well each team quickly starts thinking about what they believe to be their relative positions of strength in this negotiation.  What would your assessment be?

  • Team A typically thinks they are in the strongest position, because they are dealing with between 80 and 100% of the pot
  • Team C perceives themselves to be in the weakest position, because a 100% of the pot scenario is completely off the table, and the best they can get is a portion of 60 to 80% of the pot
  • Team B is somewhere in between – because they can share as much as 100% of the pot if they reach a deal with Team A or as little as 60% of the pot if they reach a deal with Team C

So you can see the negotiator for Team A taking a position in meetings with B and C sort of like this:

Listen C, if I make a deal with B, we can split the pot 50/50.  So why should B do a deal with you where they’re taking less than 50%.  That means B will want 50/10 on a deal with you.  So I’ll give you a little more than that, say 65 for me, 15 for you.

And then when A meets with B – Listen B, C is afraid they’re going to get cut out of this thing completely.  I can do a deal with them where I get 55% (which is better than I can get in a 50/50 deal with you) and C gets 25%.  And in that scenario, you get zip.  Instead, let’s say I give you 30% (which would be what you would get in an even split with C) and I keep 70% for team A.

Now A can try to play B and C off each other to take most of the pot.  But since there is only 3 rounds, and if a deal isn’t reached by the 3rd round the whole pot is lost, it’s just a question of how aggressively A wants to play it.

I happened to be on Team B for this negotiation, and in hindsight, this is the best seat to be in, at least in my opinion.  My solution was to try to reach an alliance with Team C, whereby they would refuse to negotiate with Team A.  Now the tables are turned on A.  Instead of those cocky assholes thinking they have all the power, and that they should be getting at least 70% of the pot, I tell them: listen A, B and C control 60% of the pot through our alliance.  So best case scenario for you is 40%.  But why should we let you take everything above what B & C can get without you?  Instead, we’ll give you something from an A – B deal, say, 20%, and we’ll (B & C) split the other 80% however we choose.

Now this all sounds good in theory, right?  And you can probably tell that I’ve been obsessing over this for the past 16+ years.  But given the parameters that I outlined earlier (limited negotiation time, only one person talking per team) I found that it is actually very difficult to pull off – especially when you are figuring it out on the fly as opposed to having 16 years of planning and preparation.

Now, if you’ve managed to read this far into this post (not an easy feat), you’re probably wondering – so is there a point to all this, or is this guy just going to go on forever about some failed negotiation exercise that he can’t forget about?  Next he’s probably going to tell us about the pass he dropped against the Bloomfield Vikings in 5th grade!

Okay, so now after this long and boring set up, to the point.  We probably learn more in life and about life through our failures than through our successes.  I didn’t learn much by acing that English lit test without preparation.  And I haven’t thought about it much/at all since then.  On the otherhand, I’ve had a long time to think about that negotiation class and what I might be able to learn from the failure to see my grand plan come to fruition.

First and foremost, given the perceived weakness and vulnerability of Team C, in order for the negotiator for Team B to pull off the alliance that I envisioned, it would be necessary for the members of Team C to view the negotiator for Team B as being sincere, honest, and trustworthy.  And given the time constraints of the simulation, it isn’t possible to convince Team C of that fact through the course of the negotiation.  The only way it would be possible to establish that understanding would be for the lead negotiator of Team B to have developed that reputation and credibility in advance.

Hence, the title of this post.  For Wilde the word “earnest” is a play on words, since the play is a farcical comedy about a man named Earnest who lives a double life.  But in the real world, being seen as sincere, honest, and trustworthy – in a word Earnest – can make all the difference between success or failure in a given situation.  And you don’t just show up in the classroom one day and convince people that you are, on this occasion, earnest.  That is an asset that you can only develop over time, by living those values every day.

There are other lessons learned as well, such as being clear in the communcation of your intentions and having consistency of message (which probably means keeping the same point person throughout the negotiation).  And being fair with the other side.  One key mistake my team members and I made upfront was in viewing Team C as weak, and consequently trying to keep more of the pie for ourselves, rather than viewing them as an equal partner if the alliance strategy was to be successful.  But it all comes back to that concept of being, and being seen as being, earnest.

I thought about this experience a couple weeks ago (I swear, I don’t really obsess about this negotiation on a daily basis) because I recently reconnected with a business school classmate of mine named Peter Bregman.  Peter is a published author and independent business consultant and from what I can tell, very successful on both fronts.  Whereas I excelled in school in the classes with clear answers – corporate finance, accounting, statistics – Peter’s speciality was the soft subjects such as organizational behavior, which were more nuanced and fuzzy and where there wasn’t always a “right” answer.

Peter also happened to be the lead negotiator for Team C in the above described simulation.  For years afterwards, I lamented how if only he had been able to grasp the logic and rationale of the alliance structure I was proposing, we could have teamed up to put those bastards from Team A in their rightful place.  Why didn’t he understand?  Why did they need to put up someone who didn’t know the difference between a discounted cash flow model and a corned beef sandwich as their representative?

It was only after much thought that I came to realize that the failure was not Peter’s (although I’d still challenge him to explain the concept of the time-value of money) but my own.  If he had viewed me as being earnest, maybe the outcome would have been different.  Instead he probably worried that he was going to get screwed either way, so he took a crappy deal from Team A, rather than getting cut out entirely.  And my team ended up with Zip.

Live by the principles of sincerity, honesty, and trustworthiness everyday.  It is the importance of being earnest in everything you do.  There is no telling when that reputation will differentiate between success and failure.  But it will.  And when that time comes, you won’t be able to create that perception or reality out of whole cloth.

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