The curious case of Trust and Alliances

The first lesson you learn in ‘trust’ is as a child.  Your father toss you up in the air and catches you back. You enjoy the moment and laugh ecstatically. While as a child your understanding of fear is less profound, at the same time you trusted your father with this very act! As you grew older, your understanding of trust evolved. Personal and professional experiences shape this significantly. It would be fair to say by the time you reach the middle of your corporate career; you would have formed your own “theory of trust”.trust

This to quite an extent becomes the foundation of how we interact, agree, disagree and form relationships with our stakeholders, viz. customers, partners, colleagues and managers. Some have made reference to these relationships as ‘contracts’. Imagine this contract to be a machine giving the desired output, ‘trust’ then becomes the lubricant that guarantees it runs smoothly.

Trust deficit in business leads to friction, disasters and huge financial losses. While this is a common understanding, we frequently hear about trust issues between customers, partners, employees et al. Many leaders do not realize that lack of trust has a long term economic cost and the immediate gain will taper off in a matter of time.

A significant part of my role in alliances management, is resolving conflicts. I get to see trust in action every day. Alliances are aimed at achieving a common objective through joint actions. These joint actions form the building blocks of trust and hence significantly contribute to the performance of an alliance. In scenarios where trust has been established, collisions are fewer, sales cycles are smoother, and less time is spent agreeing on actions. The reverse is true for scenarios of trust deficit. Established trust helps alliance partners exchange resources faster, invest more in the venture and exchange information seamlessly.

But at the end of day, it is individuals’ motivations behind events that establish or do not establish trust. The question is “why do people do what they do?” I have tried to understand this using Game Theory’s Prisoner’s Dilemma. Assume a situation where a sales rep (let’s call him player A) from a principal company and a sales rep for a channel partner (let’s call him player B) are structuring a deal based on the price point at which the customer would buy. While doing so they have to consider factors like customer discount, the share it takes away from the partner’s margin (player B) and the impact on deal size which ultimately affects the principal sales rep’s sales quota (player A). prisoner's dilemma

Game Theory’s Prisoner’s Dilemma gives us a framework to understand, why sometimes two purely “rational” people (players A & B as mentioned above) may not cooperate, even if is in their best interests. The assumption is the case that people in general are rational and supremely selfish beings. From this standpoint, we have four states, viz.

  1. Temptation for non cooperation (A cheats, B plays fair): The principal sales rep deals directly with the customer, bypassing the channel partner, thus avoiding the margin to be given and maximizing his or her deal size.
  2. Reward for cooperation (A and B play a fair game): Both the principal and partner sales reps agree on a win-win margin, discount and deal size to ensure they get the customer on board.
  3. Punishment for mutual defection (Players A and B cheat): Both try to take control of the customer to carve out their respective benefits but they ultimately irritate the customer and the deal goes off.
  4. Sucker’s payoff (A plays fair while B cheats): A chooses to play fair, gives the partner his due margin and takes a hit on deal size, but B cheats by quoting an additional price component separately to the customer without the knowledge of A.

Going by our initial assumption, scenarios 1 and 4 look fine. Players A & B maximize their respective benefit depending on whether they defect or cooperate in a situation. The benefits would be short term though. In scenario 3 both get punished with the potential deal going off the table. It is only in scenario 2 that there is mutual reward and an opportunity to jointly establish a long term relationship with the customer. Prof. Raghunathan in his book Games Indians Play captures this beautifully.  He says the underlying problem that individuals do not understand is “You are as smart as I am and think exactly the same way as I do”. Ultimately both A & B end up defecting thus foregoing the potential long term reward for cooperation.

So if trust is the most critical element for a relationship or an alliance to perform, how can the same be effectively developed? Some strategies to consider:

Model the behaviors you expect: Kids soak up information like a sponge. They see our reactions and feelings on issues and imitate us. It is expected of parents to model the behaviors they expect from kids. This forms the very basis of Social Learning theory. Now extend this analogy to an Alliance relationship. If Alliance stakeholders consistently demonstrate behaviors of defection, they can expect to get the same in return. This consistently puts the transacting parties in the quadrant of least payoff i.e. mutual defection! The alliance leader plays a key role here.

The role of the Alliance’s leader: The starting point for the alliance leader is to eliminate any hidden or conflicting agendas in the relationship framework. The leader has to ensure that any Image: Listensbehaviors that are opportunistic and contrary to the Rules of Engagement are discouraged. It is equally important for the leader to focus on issues and not personalities while resolving conflicts. Conflicts are hard to resolve, when focus shifts from skills and attitudes to personalities and attributes. There can’t be a better way of building trust than meeting people, asking open ended question and listening intently to gain understanding. Being consistent in both words and behavior goes a long way in building trust.

Define the Rules of Engagement (ROE):  Business scenarios require good judgment. It could be that last minute contract negotiation or a scenario of a customer asking for an aggressive discount. Many such scenarios involve uncertainty, risk and trust is put to the test. Clearly defined rules of engagement would guide towards decisions that establish mutual trust. What’s important though is to ensure that these rules live beyond being a page in the alliance’s agreement. They need to be communicated much more frequently, not just at annual reviews or quarterly updates.  The intent is not just to implement rules, but iteratively establish reasons for cooperation and long term rewards.

Establish Significance and Position: A question I get asked often by my alliance partners is “Where do we stand?” In any alliance relationship, the partners continuously assess their role, what contribution they are making and how they rank in the ecosystem. If alliance partners don’t feel valued, they can feel threatened. This reflects in behaviors either in the form of disengagement or the logic of action not being in alignment with the values of the alliance relationship. Hence rewarding and recognizing alliance partners for their performance goes a long way in building trust in the relationship.

Measure trust: The measure of an alliance success is its ability to achieve joint goals with least conflicts. The challenge though is alliance partners tend to measure their own gains rather than the joint ones. This needs to change. We need to look at overall profitability of the relationship, as the idea is of joint growth and not individual success. Establishing joint success metrics not just give a holistic view of relationship, but also fosters team work, collaboration and mutual trust.

Strategic and not just need based: Need based and non collaborative alliances are bound to see issues of trust. For example, a lot of times an organization forms alliance relationships based on an immediate need for coverage, expansion or costs. The other way of looking at it is to say “you have something I need” or as someone nicely put it once, “a pie expanding mindset”. I get Screen Shot 2014-04-03 at 11.50.18 PMapproached by many entities to establish alliances which have an opportunistic flavor. I discourage such engagements to best possible extent as the life of such alliances is shorter than the life of the opportunity itself.

Patience Pays: In a very interesting article on Strategic Alliances, Gerlach, Porst & Steiner put this across wonderfully. “Infinite patience produces immediate results”. Alliances are about two completely different organizations coming together for a joint objective. It will not just involve alignment on business but also aspects like culture and values that define the basic logic of actions. Hence it takes time to build trust and establish open communications. Easier said than done, it requires certain level of maturity and wisdom from the leaders managing the alliance.

Competition is a reality: Some leaders argue that competitive advantage (or sources of it) do not sustain for long as the source can be simply replicated. Trust in alliances cannot be replicated easily thus ensuring a performing alliance and trust as the key source of competitive advantage.LEADER FAILS Trusted partnerships perform far better than others and can be used to reduce competitive threats.

In my interactions, I hear a lot of leaders say ‘Start with trust, till you prove that you are unworthy of it’. I would rather say start with building the right foundations of trust, before it’s too late and loss is irrecoverable

Leaders guide to becoming an Artist

I graduated at a time, when all kind of bubble and bursts were on. Even the illustrious, IITians were having a tough time finding jobs. While that was humbling enough, I was fortunate to work with some of the best companies and leaders in the industry. This has helped me build a certain perspective on leadership in my corporate life of last decade or so.

I disagree to the common understanding that leadership is a skill that one can get trained on. I believe it is an ‘experience’ one attains by being in situations of success, failure, ambiguity, adversity and complexity. This need not be, the years spent in industry but the ‘experiences’ itself, both work as well as life. As rightly put across by Anil Sachdev (Ex Grow Talent Founder) in one of his interview,”Leadership is 70% experience, 20% right exposure and 10% classroom interventions”. I would like to think of leader as an artist who inspires people and their life with his or her creativity!

A Leader…..

  1. Listens:  This was written by a kid on the wall of our health club “5 communication skills areImage: Listens Listening , Reading ,Writing, Speaking ,Presenting”. I was about to pass it on as ‘oh how nice’, but realized, a lot of us follow the reverse of it. Tom Peter sums it up well in one of his videos, “Leaders should shut up and Listen” .There is a tendency to substitute listening with knowhow. Listening patiently to vendors, employees and customers is must for a market that changes faster than your Facebook update.
  2. Rolls up the sleeve: My first boss was a 60 year old sports crazy, corporate veteran. His enthusiasm to get hands on, while solving problems was Screen Shot 2014-04-03 at 11.43.18 PMcontagious.  We were bunch of 20 something and would always be amazed at the excitement with which he would say, “let me help you here” or “why don’t we try this?”  I love leaders who can show how it is done, rather than “I can only show you the direction” kinds. Great example of this is demonstrated in my favourite movie “Matrix”, where Morpheus makes ‘Neo’ believe in his skills by actually showing how it is done through simulations. Going a step beyond is by helping people discover ‘why’ they might want to do it.
  3. Has the Patience of a Mother: Mothers go through 9 months of labor, followed by a painful delivery. All this while she does everything to nurture the child. She knows there is no shortcut and waits patiently. The idea is to have a healthy child which will grow and live for long.  Like adisposition mother, the patience of a leader is put to test constantly. Unfortunately, for many, the focus shifts from nurturing to achieving quarterly numbers. This quest for short term growth kills the process of nurturing, resulting in a weak child ready to fall sick any time.
  4. Thinks Blue Ocean: W. Chan Kim and Renée Mauborgne summarize their 238 page book on Blue Ocean strategy in one phrase “Don’t compete with Rivals – make them Irrelevant”. Leaders have a choice to either focus on the obvious i.e. competition, constraints and contracts or on Blue ocean which is uncontested market space, ripe for growth.   You can actually extend this thought process beyond markets to everything that Leaders do. The otherScreen Shot 2014-04-03 at 11.50.18 PM way to look at it is, Leaders have to align their resources to opportunities rather than problems, as rightly said by Peter Drucker in his iconic book “Managing for Results”.
  5. Disconnects from Work: I recently interacted with Krish Ashok, who is an Innovation Leader at TCS. He is also an open source enthusiast, an amateur Rubyist, a classical violinist, guitarist, an amateur cellist, ex Radio Jockey and so on.  In one of his talks, Ashok emphasizes, how active interests promote fresh thinking and creativity. Studies also confirm the same, that engaging in hobbies develop multiple parts of our brain and flexes the muscles that helps while facing complexities at work. No doubt, some of the best work ideas I get, are during my music sessions!
  6. Is a perennial learner: Satya Nadella, CEO Microsoft, buys more books than he can read and signs up for more courses than he can complete. In his letter to employees Satya says, “I fundamentally believe that if you are not learning new things, you stop doing great and useful things”. Learning is a lifelong act and continuous learning ensures that the Leader stays Screen Shot 2014-04-03 at 11.53.32 PMrelevant and ready! One way to learn for life is, to be a follower first, as admitted by S. Dhanabalan, the high profile ex Chairman of Temasek Holdings, in one of his interview.
  7. Puts People before Profits: According to a survey conducted by PWC & Sratoga, India Inc’s investment in people is just about 1.6% of cost of wages. This is half of what is being done in US. “Given the realities it should be the opposite” says, Ravi Venkatesan in his book “Conquering the Chaos”. He further points out that, while talent management should be the priority for every CEO, the reality is very different. Hence the gaps in succession planning are evident and external hiring becomes the only choice, with companies chasing for the same talents. By Investment in talent, I don’t just mean training, but also caring for the team members to ensure they grow and unleash their real potential. John C. Maxwell, the author of 360 degree leadership sums it up really well “People don’t care how much you know until they know how much you care”
  8. Is not failure proof: I asked a friend from head hunting firm; “What are key areas she asses in a potential candidate?” She said “Work Experience, Competency and Job Fit”. I further probed, “What do you mean by Work Experience?” Her answer was “how successful the candidate has been in education and work?” More than 90 % of recruitment happen basis this principle. No one assess candidate’s failures in right context, leave alone the life LEADER FAILSexperiences. The idea is not to uncover why he or she failed, but to see, if they jumped back from it! The world is filled with such examples of Leaders who first failed. Bill Gates (Microsoft), Henry Ford (Ford), Colnel Sanders (KFC) to name a few. Tea Bag analogy in Prakash Iyer’s book “The Secrets of Leadership” explains it wonderfully. The way the true flavor of a tea bag comes when put in hot water, the true character of a leader shines through adversity and complexity.
  9. Believes in disposition and not position: “I am looking for leadership role” said one of my peers during an informal chat. While I wondered what he meant, he rattled about open positions and titles like Director, VP et al. John C. Maxwell in his book 360 degree leadership puts it across rightly, “Leadership is not about titles, positions or flowcharts. It is about one life influencing another.” Leadership is about disposition. The primary objective of a leader exhibiting disposition is to inspire and motivate the team. Ability to provide for the future, known as visioning, respecting diversity, accepting differences and being open to feedback are few other ways.
  10. Trusts like a child: As an alliances professional, I get to see the importance of trust almost every day, especially while managing conflicts. In scenarios where I see an established trust, the conflicts are less, sales cycles are smoother, and less time is spent on emails and arriving at agreements. The reverse is true for scenarios of Trust deficit! What is scary, which some leaders don’t realize, is that lack of trust has an economic cost.  It impacts every part of the business value chain (employee, vendors, customers’ et al). For a Leader, there can’t be a better way of building trust, than meeting people, asking open ended trustquestion and listening intently. Dhoni, the celebrated Indian cricket captain has exemplified this. Most cricketing enthusiast would remember India’s match in 2007 ICC World T20 final against Pakistan, where Dhoni gives the last over to Joginder Sharma who doesn’t have much of a track record. India goes on win that crucial semi final match. It takes lot of guts to make such a decision. While most leaders are good at spotting good talent, it’s only the extraordinary, who trust them and give a chance to prove.

I believe leadership is an art and every leader is an artist. So like art it is very difficult to confine leadership to boundaries and its style varies depending on the context the leader operates in. But the fundamental principles I elaborated remain the same. It is about one life influencing other.

Become a bad manager in just 8 steps

CorporateMortal

bad managerThere is enough about  the good manager. Everyone is striving to be good, but no one has tried uncovering the other side. Here is  a blueprint which will help you succeed in becoming the worst manager on the block.
1. Maintain the pecking order: The first step is to add as many levels as possible between the you  and the team.  Flat organisations are just fad. Why should a team member be able to approach you easily? You already have so many things to do. Approvals should go through at least  5 people before reaching you. Your team member needs to look at the brighter side. The process enables the employee to know more people and build working relationship. And if an employee complains, just blame it on Hofstede. He is the one who spoke about power distance and culture.
2. No-confidence motion: The Trust business is all good for…

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OCS: Obsessive CCing Syndrome

emails2Mr. Sharma started his career in manufacturing and email was not mainstream yet. Official  communications used to be on paper, brief and focused addressed to select set of people. One would review the same, make their comments and pass it on to the next receiver. It was when Mr. Sharma joined the IT industry, he was exposed to rampant use of what they called “email”.  Having experienced the labor unions and the associated politics, he initially thought it to be a big scam by the management to keep track of what their staff is doing.

Mr. Sharma accepted this form of communication over years. In due course, he was also introduced to short forms like CC, BCC, TO et al. A basic inquiry made him discover that one would add a person to  “TO” if it’s for their attention and action. And if some one needs to have a copy of the information he is kept in “CC (Carbon Copy)”. And if you are sending them a Copy and you don’t wish the other recipients to see that you sent it to this contact then BCC ( Blind Carbon Copy) is used.

As some one who is particular about etiquette of official communication, he expected his colleagues to use CC, BCC and TO as per the above definition. To his shock he found CC and BCC being used and abused by many people including himself in the organization! As a result Mr. Sharma decided to make a note of this and circulated the below. He kept every one in TO, as he believed this is something they all needed to act on right away:

When is some one added to CC?

  1. If some one needs to have a copy of the information he or she is kept in  CC (Carbon Copy). This is the fundamental principle for using CC
  2. There could be select scenarios under this viz. cases where you are not getting a response even after follow ups and hence need to escalate it to the persons manager / senior
  3. Rare scenarios where its absolutely essential to keep the senior management/bosses informed around developments in a project one is working with the persons addressed in TO
  4. OR you have a  some one  in your organization who feels they need to be “kept in loop” for all your communication (though you can always ask him/her why is that required?)

When  NOT to add some one to CC? 

  • The information that you have in email is non essential or  just “good to know” for people marked in CC! And you have the option of informing the people in CC during your weekly call, across the table conversation
  • Using “reply all” when you know that the subsequent mail communication would be a 1: 1 between individuals in TO field! Discretion is must here or else you are essentially spamming others! The sanity check here is to ask the question ..is this a multi-person conversation?
  • Using CCing for reasons of  Visibility . While its completely OK to share a great result or a key success, it does not make any sense if its to just to inform an activity is done.
    Your job is doing what you promised, by the date you promised you’d do it

Emails unfortunately have replaced a good part of our verbal / face to face conversations. The 100s of unread emails only leaves us frustrated. Hence there is a strong case for using CC and BCC very sparingly…may be TO as well!

Four things that need to change in Indian MBA education right away!

business_school_472605
The Magic Wand!
It’s almost a ritual for most commerce, science and engineering graduates in India to consider MBA as the next career option. One can attribute this popularity to the growing Indian economy and the promise it presents in form of a great career.  The reasons to enrol for an MBA program are mostly that of peer group influence, percieved career success and parental pressure . The result 1000s of youngsters out of Business schools with limited real world skills. For one to appreciate the nuances of business, they have to experience it first hand and then put the theory in right context. Off late, there is some sense prevailing and I see more people opting for MBA education after spending a reasonable time working in the industry. The responsibility also lies with educationist, academia and parents to guide the youngsters on these lines.
Euphoria around placements
We can not get rid of this at least in India. Lets accept it, the primary motive for higher education in India is to get a good job & financial security. Definitely not for reasons of passion or interest in a subject area, unlike the developed world. But somehow I always felt the MBA programs in India are designed only around getting employed rather than building capabilities to become employable. I thinks that’s because of focus B schools put so much on placements, as if it is the nirvana of the corporate career!
Students should be encouraged to build their own networks and get jobs on their own (like in most top global schools). What is concerning also is the low number of B school graduates taking up entrepreneurship as an option? Some how the job option is perceived to be less riskier and more acceptable in the community. I would partly blame this on the pedagogy and euphoria built around campus placements
Pedagogy
Amongst the teaching faculty, you will find mostly those who chose academic career early on, did their Phd and took up teaching positions.  While the ones from academia come with great analytical skills and acquired industry insights, their ability to relate with and articulate corporate realities is challengeable. So one way to ensure they bring in real corporate perspectives is to make industry assignments mandatory in their doctoral programs. We should also encourage candidates from the industry apply for Phd programs in management. Career in academics would sure be a different track for these corporates, but I am sure there are many souls who would love to jump in to this for lack of intellectual stimulation in their work life. The challenge though is how to attract such talent to academia?
Majoring the Minor and Minoring the Major
Ask any MBA candidate at the end of their first year and there are just two things on their mind, one is of course placements and second is the specialisation/major.  This generally gets decided by the number of electives he or she chooses to study in a particular area like Finance, Marketing, HR et al. This approach, I believe goes against the fundamental objective of MBA program which is to create Business Managers / Leaders and not functional specialists. While there is nothing wrong in concentrating in a set of electives, but to think that one would be working in the same area for rest of work life is flawed. Here is where the pedagogy plays a vital role in explaining to students they need to see things holistically and try to get a hang of most business topics they would need to navigate their careers effectively.