‘You’ve bought it now. The money’s gone.’ That snarky comment made by thousands of parents (mine included) to their reckless child encapsulates the meaning of sunk cost. Once you met the cost, it’s gone: sunk. You’ve sunk it into the investment for good or for ill.
This, then, could be the shortest Big Ideas article yet. Sunk Cost is a familiar and easy concept.
While to the general public, The Art of the Deal may be the best known book on negotiation, to anyone who needs negotiation to be a sustainable part of your professional toolkit, the first and best book to start with has to be ‘Getting to Yes‘ by Roger Fisher and William Ury. Indeed, for any manager or professional, this has to be one of the dozen most important books you can read.
Negotiation is conflict conducted in a civilised manner. And what Fisher and Ury tell us is that you are always going to be more successful if you carry it out with strong moral principles. They set out four powerful principles. But it is, perhaps, their solution to one of the biggest problems that negotiators face, which is their biggest contribution to doing a good deal.
Roger Fisher was born in 1922, and graduated from Harvard College in 1943, just before the United States entered the War. Fisher flew meteorological reconnaissance planes and returned to civilian life to complete a law degree at Harvard.
He then spent some time in Paris working on the European post-war recovery Marshall Plan, before returning to the States to join a Washington law firm. There he had the chance to present cases to the Supreme Court.
In 1958, he returned to Harvard Law School as a member of faculty, being appointed professor in 1960. There, Fisher became increasingly interested in how people resolve disputes, having lost too many friends during the War. So, in 1979, he and Ury co-founded the Harvard Negotiation Project.
Fisher spent a lot of time working on some of the biggest negotiations in global politics, including the Camp David summit between Israel and Egypt, and in South Africa, as Apartheid was finally ending. When not travelling, mediating and advising, he continued to teach, both at Harvard and many other prestigious institutions, as well as writing articles and books. In 1984, he founded the Conflict Management Group, which later merged with the Mercy Corps.
In 1992, Fisher formally retired as Professor and became an emeritus professor, continuing to teach and write into his 80s. Roger Fisher died in 2012.
William Ury was born in 1953. He studied Social Anthropology at Yale and went on to research his PhD at Harvard. In 1997, Fisher happened to read Ury’s research paper on the Middle East peace negotiations, and was impressed. He sent a copy to the US Assistant Secretary of State leading the negotiations, and invited Ury to work with him. They were to have a long and fruitful working relationship.
Working together in the Harvard Negotiation Project that they co-founded allowed the two to help each other develop their thinking and the 1981 book, ‘Getting to Yes‘ encapsulated their thinking at the time. It rapidly became a best-seller and remains so today. Both have written numerous additional books since.
Ury set up the Nuclear Negotiation Project in 1982 and also worked as a mediator and negotiation advisor alongside his teaching. In 2007, he also founded Abraham’s Path, to start on the journey of lasting Middle East peace. You can hear him speak about it at TEDx below.
In ‘Getting to Yes‘, Fisher and Ury set out two overarching beliefs for Principled Negotiating:
Participants are problem solvers
The goal is a wise outcome reached efficiently and amicably
They also set out four essential principles that make negotiations as effective as possible; especially when both parties adhere to them:
Separate the people from the problem
Focus on interests, not positions
Invent options for mutual gain
Insist on using objective criteria
Perhaps the best known concept from the book is the idea of a BATNA – the Best Alternative To a Negotiated Agreement. If you aren’t able to reach agreement through the negotiation you are in now, what is the best alternative available to you?
That’s your BATNA.
If you cannot reach a deal in your negotiation that is better than your BATNA, then any deal you agree to represents an incremental loss. So you should, at that point, walk away.
Today, we are proud to announce the launch of the latest addition to the Management Pocketbooks series:
The Post-Truth Pocketbook
This is the perfect book to prepare you for office politics, marketing, sales, or stakeholder engagement. It’s an invaluable tool for crisis and contingency planning, and for developing your corporate message calendar.
Written by accomplished communications consultant, Ruth Spott, the Post-Truth Pocketbook is available from today.
In four days, we are proud to announce the launch of the latest addition to the Management Pocketbooks series:
The Post-Truth Pocketbook
This is the perfect book to prepare you for office politics, marketing, sales, or stakeholder engagement. It’s an invaluable tool for crisis and contingency planning, and for developing your corporate message calendar.
Written by accomplished communications consultant, Ruth Spott, the Post-Truth Pocketbook is available from 1 April 2017.
Here are some of the reviews the advanced copies have received:
‘As your corporate communications bible, this is bound to surpass the bible in sales’
Pope Francis, 266th Bishop of Rome
‘I wish I’d had this book this time last year’
Nigel Farage, 267th Bishop of Rome
‘What a load of old %^&*’
Professor Brain Cox, Media Superstar
Watch for our formal publication announcement in four days’ time.
For the last of our solo*Management Thinkers… and Doers, we turn to a thinker on leadership and a politician supreme. His thinking has influenced 500 years’ of politicians, and has been influencing managers since the term came to have a real meaning in the mid 19th Century.
Niccolò Machiavelli arguably saw far into his future, and his writings hold genuine nuggets of wisdom and debate for today’s generation of managers.
Niccolò Machiavelli was born in Florence, in 1469. At the time, Italy was just a set of small, frequently warring, states. Florence was ruled by the powerful Medici family, so despite his patrician roots, there were few opportunities for a talented young man. However, the regime changed and when, in 1498, Florence became a republic, Machiavelli secured a senior administrative post as Secretary of the second Chancery.
He served Florence for 14 years in roles we may now recognise as collectively politician, civil servant, and diplomat. During this time, he travelled widely around European courts and met with powerful people.
However, in 1512, after another of Italy’s persistent small wars, and with Papal politics underwriting them, the Medici’s regained control of Florence, and Machiavelli’s career in public service came to an abrupt end. But before the tedium of exile came a short interlude (that probably seemed very long) of imprisonment and torture.
After his expulsion, Machiavelli turned to writing and very soon (1513) produced the book for which he is best known, Il Principe, or The Prince. A large number of other political books followed, along with dramatic and historical works. After another 14 years of working his land and writing in the evenings, Machiavelli died, at the age of 58, in 1527.
His name and his work, however, persist 500 years on. I wonder how many of our contemporary thinkers on politics and leadership will achieve that.
Themes from The Prince that Touch on Modern Management
I’m not the first to think of this idea. In an out-of-print book called Management and Machiavelli, Anthony Jay examines just this. Let’s look at three areas where Machiavelli’s writing offers us some food for thought.
I am not, by the way, inclined to think he necessarily offers us the ‘right’ answers. After all, although he did not use the phrase ‘the end justifies the means’, he is very much associated with that level of political pragmatism. And we all know where that can lead in the wrong hands.
And finally, before I kick off onto three themes, I want to emphasise that Machiavelli’s conception of a ‘Prince’ is not one of a royal personage, with hereditary rulership rights. Instead, it is one of a modern ruler who takes their place by election or power; rather like the modern day rulers of our corporations.
Above all, Machiavelli believed that skillful leadership is crucial for any endeavour to thrive. And yes, he does suggest that if you can’t have both, it is better to be feared than loved. But he also plays down the importance of luck and knowledge. He says it is often easy to gain power, but harder to hold onto it, and for that you need to be shrewd. Political acumen is still very much an essential part of managerial leadership.
But he also emphasises the importance of a well organised and well-practised team, so for him a shrewd organiser will trump a charismatic leader or a technocrat any day.
This is not to say that he didn’t see a role for technocrats. He was, after all, one of them himself. In the debate, still very current, between centralisation and decentralisation, he sees a need for skilled bureaucrats to go into the parts, and run them quasi-autonomously, because of the communication challenges the late mediaeval rulers faced.
However, there are limits to this quasi-atonomy. Machiavelli favoured bureaucratic structures where place-men run components of the distant territories, over federal structures of self governing territories. In the latter, he sees too much scope for these small leaders to build a power base and overthrow the overall ruler. In the bureaucratic structure, it is easier for the prince to exert control, and effectively divide and rule.
Two modern day examples illustrate these choices.
Berkshire Hathaway is a highly federal corporation. Each of its many divisions operates almost entirely autonomously. Its CEO and leadership team have total freedom to make the decisions they choose, to optimise their business. They can compete against one another, change direction when they need to, and need only provide the thinnest of reporting to the Berkshire Hathaway executive.
Honeywell also has a small (though nowhere near as small) centre. But its trading divisions are largely shells, served by highly technocratic functions. All the power resides with functional leads at multiple levels. Profit and Loss accountability may sit with general managers and managing directors, but their goods are designed by engineering verticals, their marketing sits with a marketing function, and cross brand sales teams sell their products.Look inside the ‘business’ that represents a go-to-market brand, and there’s little to see.
Of course, both Berkshire Hathaway and Honeywell grew by acquisition, and Italian states grew in much the same way – but with more casualties. Machiavelli points out that subjugating a whole population is not easy. You cannot rule from afar, with the threat of oppression as your local implementation.
Instead, he tells us to swap in some of your most trusted people as key managers to replace those whom you cannot trust. Get them out of the way, and the rest of the population will fall in line, according to how well those managers meet the concerns of the populace.
And of course this leads us to every manager’s favourite quote from Machiavelli (you’ll see my own favourite next week).
‘It must be considered that there is nothing more difficult to carry out ,
nor more doubtful of success, nor more dangerous to handle, than to
initiate a new order of things.’
* We may add a few additional solo representatives to this list, from time to time, but with well over 150, we are starting to find new candidates of genuine quality thin on the ground. So we are going to turn instead to Management Pairs; thinkers and practitioners whose best work was done or is being done in collaboration. Watch out for that series to start in a couple of weeks.
Robert Greenleaf was a successful corporate manager, who read a book that crystallised his thinking. But he only started to change the world once he retired. His thinking goes against the grain for many corporate and political leaders, who want to exert control. Instead, he argued, leaders need to be servants first.
Very Short Biography
Robert Greenleaf was born and grew up in rural Indiana, and studied mathematics at Carleton College in Minnesota. He graduated in 1926, and went straight into a career at the American Telephone and Telegraph Company (AT&T as it now is). He stayed there, playing a series of important managerial roles, until his early retirement in 1964.
From the earliest days, Greenleaf was aware that big corporations did not serve their employees well. He strove at AT&T to change that from within, and had some notable successes. But in 1958, reading Herman Hesse’s novella, Journey To The East, Greenleaf had a revelation. The pivotal character Leo, whilst seeming to only serve a group of travellers, is in fact, taking upon himself the role of motivator, teacher and guide. When he leaves, the group flounders. Leo has, in truth, been leading the group.
This led Greenleaf to form his concept of Servant Leadership.
He strived to live according to his philosophy of ethical leadership, and died in 1990. The Greenleaf Center continues to promote his work.
The Genesis of Servant Leadership
Arguably, Greenleaf’s work has been based on a mighty misinterpretation of Hesse’s message. For Leo tells the central character that, in abandoning their goal when he left, the group failed its test. Enlightened people need to sustain their own self-leadership.
However, Greenleaf’s interpretation is coherent and would, I believe, have found favour with Hesse. He argues that Leo, is, in serving the group, its leader. From this, Greenleaf goes on to deduce that leaders need to serve those who follow them, as Leo served the group in Hesse’s novella.
Why do I suggest Hesse may have favoured this interpretation? For two reasons:
In the book, Leo does indeed provide leadership to the group, though none recognise it at the time. (I shan’t say more – read the book)
Secondly, in Hesse’s finest work (in my view), the The Glass Bead Game, the central character, The Master of the Game, is called Joseph Knecht. In Hesse’s language, German, Knecht means ‘servant’. The master is servant. Curiously, Hesse is not alone in this insight: etymologically, the English word knight originates from the Old English, Cniht, meaning servant, rather than from the French, chevalier (horseman) or the Latin, eques, also meaning horseman. Knecht and knight are the same word!
What is Servant Leadership?
Servant Leadership is a model of leadership based on the ethical principle that leaders must first of all serve those who follow them. They have a moral responsibility to help the people they serve grow and thrive, as people. There are therefore a number of behaviours that are characteristic of a servant leader. Thus, Greenleaf’s concept is a behaviours, or roles-based, model of leadership. He argued that we can all become servant leaders by making these behaviours the centre of our practice.
Some of the behaviours a servant leader needs to exhibit are: listening, empathy and healing relationships, awareness, foresight and conceptualising the world, building communities and stewarding resources, influencing through persuasion, rather than control, and finally, a commitment to the growth and wellbeing of the people they serve.
… seems disappointingly slight in the upper echelons of modern business, public service (yes, I know) and politics. Whilst a former British Prime Minister referred to servant leadership, I doubt he will be remembered for it. The current crop of world leaders hardly exhibit any signs of it (and neither do some of the prominent candidates for future roles).
Where I see servant leadership in my work, is in many of the small business entrepreneurs and among middle managers. These people are where deep care for colleagues and staff are most manifest in my experience. It would be lovely if our culture allowed these qualities to thrive as those people rise to top leadership roles on national and global platforms.
Robert Greenleaf in his own Words
I can only find one video of Greenleaf himself. Here he is, in later years, talking about the role of institutions.
Fiona Reynolds may have little profile internationally. She may even be little known in her home country of the United Kingdom. But her contribution has been hugely valuable and her approach to change offers a simple lesson we can all learn from.
Fiona Reynolds was born in Cumbria, in the North West of England, in 1958. She studied Geography and Land Economy at Cambridge University, graduating in 1979. She then took an MPhil in Land Economy, before taking her first job at the Council for National Parks. This is an umbrella organisation for a range of campaigning conservation organisations and amenity-holding organisations (now called Campaign for National Parks). She rose to Secretary to the Council, before moving, in 1987 to The Campaign to Protect Rural England, where she remained until 1998.
It was, perhaps, a surprising move, when Reynolds left the conservation sector and joined the UK Cabinet Office (serving Government) in 1998. There she took the role of Director of the Women’s Unit. Of her time as a senior Civil Servant, Reynolds say she found it frustrating. But she did learn how to make things happen without authority, by working with and around people. This was to serve her well in her next – and most important – role. She was honoured with a CBE for services to conservation, in 1998.
In 2001, Reynolds took up the post of Director General of The National Trust, where she stayed until 2012. She felt she had been brought in to make changes and indeed she did. At the end of her tenure, in 2012, she handed over a very different organisation to her successor. In 2008, she was awarded a DCBE and became a Dame.
In 2012, she became the Master of Emmanuel College, Cambridge – one of the oldest educational institutions in the UK, some of whose alumni founded Harvard University. Around the same time, she also accepted a number of non-executive directorships including Wessex Water and, most notably, the BBC. In 2014, she became Chair of the Green Alliance, and in 2015, became Chair of the Cathedrals Fabric Commission for England.
Changing the National Trust
When Fiona Reynolds took over as Director General of the National Trust, it was a much loved institution that felt like a club for those who loved it most. For the majority of visitors, the experience of visiting one of its buildings was very much of their being privileged to be allowed in. There was a sense that the Trust tried to hold its assets in a vacuum and visitors were, at best, a necessary source of funds and often, were seen as a distraction and a nuisance.
But the Trust’s role is to hold its land and property assets in Trust for future generations – and our own. Reynolds set about reforming the Trust to create more visitor friendly and engaging experiences. She sought to involve families with ‘open arms conservation’. She restructured the Board, allocated funds for developing renewable energy sources, and placed children at the heart of visitor experiences. Easter egg hunts, Santa trails, craft and dressing up all came to the Trusts properties, and so, increasingly, did visitors.
At the heart of her conservation philosophy was localism, so the cafes and restaurants at attractions featured local produce, and more of this was grown on the properties’ own land and in their gardens. The Trust is now a thriving institution with full car parks for many weekends, and a real influence over Government policy, that comes from over 4 million members (membership almost doubled during Reynolds’ tenure).
Reynolds has said little publicly about how she led the changes at the National Trust. However, what seems clear is that she did so by recognising that people and conservation are mutually interdependent. She is a gregarious person, who has become comfortable and adept at persuasion and negotiation, as well as deploying strong, evidence-based arguments.
While her role as Master of Emmanuel is not explicitly as a change agent, this ancient institution needs to continue to change, as it has done for hundreds of years. And it seems that Reynolds is an ideal person to lead this. Her management style looks simple, but never confuse simple for easy. She simply likes people and enjoys working with them. And if you want to understand how to make change happen, there is little more you really need.
By far the majority of the top roles in politics, not-for-profit and corporate life are shared among fifty per cent of the population, and that cannot be good for society. One of the women who has achieved a leading role in business is Sheryl Sandberg, and her book and movement, Lean In, are an attempt to prompt, stimulate and support the change we need.
Sheryl Sandberg was born in 1969, in Washington DC, but her family moved to Florida when she was an infant, so she grew up in North Miami Beach. A strong performer at school, she went to Harvard in 1987, graduating with a BA in economics, in 1991, as the top student in her year. While at Harvard, she co-founded Women in Economics and Government.
After a short stint working at the World Bank, Sandberg returned to Harvard to take an MBA, which she was awarded in 1995. After a year with management consultants McKinsey and Company, Sandberg returned to the public sector in 1996, as Chief of Staff to the US Secretary of the Treasury.
Her big move came in 2001, when she was appointed VP of Global Online Sales and Operations at Google – the year it received its patent for Larry Page’s PageRank mechanism and just a year after Google first started selling advertising.
During her tenure at Google, Sandberg first met Mark Zuckerberg who quickly became convinced she would make an excellent Chief Operating Officer for Facebook, which he had founded in 2004. Over the next year, they got to know one another better and he made her a job offer in 2008. She negotiated hard and came to work for Facebook. Her main brief at the outset was to make Facebook profitable, which she achieved in 2010. In 2012, the Board of Directors invited her to join the Board.
During the years from 2010, Sandberg became an increasingly prominent public figure, advocating compellingly for more women leaders in all walks of life. Her 2010 TED talk, ‘Why we have too few women leaders’, has been watched over five million times – you can see it at the bottom of this post. In 2013, Sandberg released her first book, ‘Lean In: Women, Work, and the Will to Lead‘, which she co-authored with Nell Scovell. It focuses on the reasons why so few women (proportionally) reach leadership positions in business, and some of the things that need to change, to redress the balance. It has been hugely successful, selling well over a million copies.
Magazines and newspapers like Time, Fortune, Forbes, The Wall Street Journal and The Financial Times repeatedly place Sandberg high in their top lists of powerful and influential people.
What is Lean In about?
The core thesis that Sandberg puts in Lean In is that, whether you are a woman or a man who cares about genuine equality, complaining and making excuses won’t get you to where you want to be. There are barriers to women achieving their leadership goals and we need to address them… as a society and as individuals.
These barriers clearly start with systematic and individual cases of sexism and discrimination, and the realities of harassment that women face at work. Sandberg recounts Frank Flynn’s Howard / Heidi experiment. In this, he took a case study about successful entrepreneur, Heidi Roizen. He gave the unaltered case study to half of a student group, while the other half received the identical case study with just a change of name to Howard Roizen, and changes to pronouns. He asked the students to rate their impressions of Roizen and students were much harsher in their assessments of Heidi than of Howard. They rated her as equally competent and effective but they did not like her and, crucially, they would not hire her, or even want to work with her. There is an in-built bias that we have, that women who are assertive are aggressive and we extend that to dislike of them.
The second big barrier that Sandberg acknowledges is the real desire many women have to put a lot of their energy into their home life and she concludes that the solution is not for women to value this aspect of their lives less, but for their male partners to contribute to it more.
Finally, and most controversially with some commentators, is an implicit acceptance by women of discriminatory stereotypes of women. This, she argues, leads women to have lower confidence in themselves – with higher incidence of ‘imposter syndrome’, and therefore to set lower expectations for themselves. Men are far more adept at faking capabilities they don’t have and benefit systematically from more promotion based on expectation than women receive. Women need far more to demonstrate achievements before being promoted.
Sandberg says we need to break down the societal barriers and women who choose to, need to address their personal barriers and strive for leadership roles. She acknowledges that her message will be easier to act on for women with the privileges of education, wealth and status, but points out that any progress will increase the prominence of women, make their leadership more common and therefore ‘normal’, and add their voices to public debate. This can only open up greater opportunities for the many women lacking the advantages that she herself had, early in her life.
Why we have too few women leaders
Sheryl Sandberg looks at why a smaller percentage of women than men reach the top of their professions — and offers 3 powerful pieces of advice to women aiming for the C-suite.
Sandberg’s talks about her experience of speaking at TED and her book Lean In with journalist Pat Mitchell, in So we leaned in … now what?
Also on the board of the Lean In organisation Sheryl Sandberg co-founded with Rachel Thomas, Debi Hemmeter, and Gina Bianchini, was her husband Dave Goldberg. He died far too young, in May 2015. Ms Sandberg’s public expressions of her grief have been dignified and thought-provoking. We can do nothing more than offer our genuine condolences for a loss that must still be raw.