The Bancrofts--in need of a "best alternative," apparently

Hot on the heels of yesterday's podcast, which encouraged anyone contemplating a negotiation to spend time formulating and agreeing on a Plan B--a "best alternative to a negotiated agreement"--comes today's latest news on the saga of the Bancroft family and their response to Rupert Murdoch's $5B offer to buy their family business, Dow Jones.

The Wall Street Journal (a Dow Jones subsidiary) features a story on one family member, Leslie Hill, who, after growing disenchanted with the Murdoch negotiation, has gone off on a road trip in search of investors to present as an alternative ("Bancroft Heir Pursues Alternative To Murdoch" - link - $$).

This after other potential suitors (including Pearson/GE, which appeared to be different but not necessarily better for the Journal's editorial excellence than Murdoch) have contemplated bids but backed away.

The Journal also reports that the Dow Jones board did not even prepare a "book"--an overview of the business and its prospects for potential bidders.

In sum, the Journal's board and the Bancrofts were caught unprepared by the Murdoch bid, despite (as Ken Auletta reports in this week's New Yorker) family members learning informally of Murdoch's intentions in late 2006, months before Murdoch's proposal to Dow Jones CEO Richard Zannino over breakfast this March 29.

There were months of time available for the Bancrofts and the Dow Jones board to have formulated a strategy, including a "best alternative." They chose not to.

Do you think there's a chance in hell that Murdoch won't win this negotiation?

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Tesco CEO on moving into a new territory--the USA

I've had the opportunity to help several companies set up shop in the USA. It's a very challenging process, even for companies that have had success in other foreign markets.

European companies can leverage the EC, the euro and geographical proximity when expanding to other countries in Europe. The USA is a different matter. It's massive in size, covers four timezones, has laws and tax rules that differ state to state, and its customers are used to getting their own way with products. Succeeding, however, can bring the company its largest market. Ask Toyota.

In Thursday's Wall Street Journal, the "Boss Talk" column featured an interview with Terry Leahy, CEO of Tesco, the largest grocer in the UK.

Highly innovative in its home market, Tesco has set its sights on the US--but not with its superstore concept. Instead, Tesco is building smaller, 10,000 square foot neighborhood stores. Leahy describes planning the US launch, doing market research, and competing with Walmart. A sample:

We didn't want to buy an existing business because what's the point of going to America and just doing the same as everybody else? There is already so much retail there. So what we tried to do is turn a weakness we had -- that we had no presence in America -- into an advantage: We can research and design the perfect store for the American consumer in the 21st century.

This interview should be required reading of any CEO who has dreams of conquering America.

(Photo: "Go and Buy" by lusi via stock.xchng)

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Shop Talk Podcast #2 - Barbara McFadden on "Best Alternative to a Negotiated Agreement"

It's the second edition of our podcast. This time, Barbara McFadden, one of the smartest attorneys I know (and I know a lot of them) talks with me about planning for the "best alternative to a negotiated agreement"--meaning, planning in advance what you are going to do if the deal you are trying to close doesn't (or shouldn't) happen.

You work on a deal for months, and then, something goes wrong. The other side changes the terms it wants. Or asks for another price concession. It may make sense to walk away, but if you haven't thought about Plan B already, you may feel forced to continue. At best, the deal will be less attractive than it could have been. At worst, you have gotten your company into a long-term, painful engagement that will take years and $$$ to unwind.

She also talks about how good negotiating teams work, and how to determine who will lead a negotiation.

So, listen to Barbara. The fifteen minutes you spend could save you a few dollars.

Download the podcast by right-clicking on this link.

If you want to get hold of Barbara, you can email me and I can help you connect with her.

(Photo: "Vintage 1" by coscurro via stock.xchng)

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Who you know may be more important than what you can do

I read something today that was so counterintuitive it just might be true. Patti Anklam, the author of "Net Work, A Practical Guide To Creating And Sustaining Networks At Work And In The World," quotes in her blog fellow knowledge management expert Stowe Boyd on the value of personal networks:

It will happen, he said (or I am paraphrasing; I did not take notes), that having a larger number of connections is more important at work than simply doing a job well, or in his words, on a great slide show from his site titled Flow): "Productivity is second to Connectivity: network productivity trumps personal productivity." That is, the more connections you have the more resources you have to bring to a task: all work can be co-work.

I read this on a day when I talked to people in Chicago, the UK, suburban Washington and Seattle. And when I emailed a former colleague in Texas to locate someone's phone number to get to the Washington contact. And... you get the picture.

I had always looked to my intelligence as the supreme asset I brought to the workplace. It's taken me nearly forty-five years to learn that my (virtual) Rolodex is far smarter than I am.

And it works harder too.

(Photo by Frances Twitty via istockphoto.com)
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More problems with Chinese partners

There's another depressing story in today's New York Times on a life-threatening quality problem with Chinese products. Now, it's a tire manufacturer who decided to forgo installing a gum strip inside the tire, an omission that makes the tire more likely to fail on the road, the tires' US distributor, Foreign Tire Sales, announced yesterday. The US National Highway Traffic Safety Administration is demanding a recall. Writes the Times:

...In September 2006, the Chinese manufacturer, Hangzhou Zhongce Rubber, a former state-owned company based in eastern China, acknowledged that a gum strip that prevents the tread from separating was left out of the manufacturing process.

It brings to my mind a question of alliances. If my business depended on an alliance with a Chinese manufacturer, I would be very nervous. Because there is growing anecdotal evidence that faraway partners are willing to cut corners without regard for the impact of those cuts on the end-user.

Which means those partners can't be trusted. While alliances are full of mistrust (am I getting paid what I'm owed? Is my partner selling my product as hard as he should? etc.) at their core is a profound trust--that the product works to its specifications and is of acceptable quality in the market in which it is to be sold.

Because when you sell someone else's product, you do so because you don't have (or don't choose to have) the capability, experience or resources to do it yourself.

(Think of what would happen if I sent this blog to be translated into the Czech language by a company in the Czech Republic. I don't know Czech, and would be reliant on them to do a proper translation.)

And without trust, these relationships are doomed. We can't inspect every tire, can we, to make sure the gum strip is installed? But if Hangzhou Zhongce Rubber, or the company that added an antifreeze ingredient to the toothpaste, or the companies that made the tainted pet-food ingredient, feel free to implement that little change that makes the product at least substandard, or even a danger to its users, you simply can't do business with them.

Foreign Tire Sales will likely go bankrupt as a result of the tire recall. Let's hope their replacement selects better partners.

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What's really interesting about the iPhone

It's finally coming out this Friday. Instead of just reading about the iPhone, we can try it.

Lost in all the hoopla is what the iPhone can do for us, the end-users. It's a GSM phone, plus a video iPod, plus a touch-screen. But what's most interesting from my perspective is how the iPhone is the first US mobile phone that has a full-featured browser and allows unfettered access (thanks to Apple's insistence and AT&T's consent) to internet sites. Prior attempts have been hampered by small displays, poor data-entry capability, the tyranny of the operators' walled gardens, or all three.

As of Friday, the mobile internet will be unleashed. What will it be like? How will we use it?

(Photo courtesy of Apple)

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The power of "weak ties"

"Smart World," a fascinating new book by Richard Ogle, paints a carefully-wrought, exhaustive picture of how creative breakthroughs happen. The persistent myth of the solo inventor, toiling alone in her workshop, is forcefully put to rest. In vibrant examples such as Crick's and Watson's discovery of the structure of DNA, to Gutenberg's invention of movable-type printing, to architect Frank Gehry's reinvention of modern architecture via the Guggenheim Museum Bilbao, Ogle makes the case that true breakthroughs come from immersing oneself in the ideas of the day, drawing inspiration from fields near and far, and synthesizing something new from these.

One area Ogle focuses on is the value of so-called "weak ties." In the same way that your most-distant connections can be the best source of a new job, given that their distance connects you to many you couldn't otherwise reach, so weak ties in the invention network serve as a potent energizer to creators. Writes Ogle about the invention of cubism by Picasso and Braque in the first decade of the twentieth century:

Cubism broke with a five-century-old tradition of figurative art by reaching out to a science [physics, where the theory of relativity was just gaining adherents] that was becoming radically more abstract and geometric, and in the process overturning our commonsense view of the world. This move created a weak tie that connected art with a whole domain of thought that was far removed from it.... Connecting to the hotspot of early-twentieth-century physics and the focus on abstract geometric form that it triggered released an avalanche of new ideas that spontaneously multiplied and are still playing themselves out. ("Smart World," p. 135)

What he means is: new ideas in one area + creative people searching for innovation in a distant one create the potential for a weak tie. Once the tie is made, the creators draw inspiration or analogies from the new area into their area of expertise. The stage is set, then, for breakthrough creativity.

And think about this. Most ideas that have changed the world were labeled crazy or heretical at one stage. So when people who hear your ideas shake their heads, dismiss you or say you're reaching too far, they may be right.

Or you may be onto something.

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"Quiet Fixers" are the enemy of learning

This is the last post, I promise, on "x-teams." The authors neatly describe a phenomenon that I've witnessed at every company I worked for. I dare say I was guilty of it a bunch of times.

It's called "quiet fixing." Here's how it's described in the book:

At Toyota, for example, when a new car comes off the assembly line with a defective door handle, the person responsible for that part does not fix the problem quietly without the assembly team leader noticing. Instead, the team comes together to identify the root cause of the problem to ensure that it does not happen again. This process often gets noisy, and it requires psychological safety. Without it, quiet fixers would rule the day--leaving the source of the problem and its consequences to crop up again and again. (Ancona and Bresman, "x-teams," p. 93)

When at EDS we were studying the Learning Organization, I used to joke that we weren't a Learning Organization, we were a Forgetting Organization, like the guy in "Memento" who has lost his short-term memory.

What I was saying, in essence, was that we had a culture of "quiet fixers." In the last ten years, I've seen how common, in fact, that is.

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More learning from mistakes

I saw my hairdresser the other day. She's one of the most impressive entrepreneurs I know. We were talking about this idea of learning from others' mistakes. And she said, oh yeah, when I started this place the first thing I thought about was all the things my previous bosses had done that I didn't want to repeat.

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