We're now ready for the last segment in the unit on performance and evaluation. As mentioned earlier, if performance goes well there's really nothing to discuss. So, our focus is on where there is a problem with performance, and we started by looking at how to prevent disputes relating to contract performance and then we looked at concepts and tools that relate to alternative dispute resolution along with a deep focus on the two foundations, Arbitration and Mediation. We're now ready for the last step. Which is a look at reviewing your performance, and evaluating the performance. Let me start with a quick story relating to review of, contract performance. Several years ago an international consulting firm contacted me, and they told me that they were having major problems with contract performance. What basically happened is that one team from this consulting firm would negotiate contracts and then another team would enter the scene and work on performance. And because of the performance issues the so called engagement team had to do a lot of contract renegotiation. And so the consulting firm asked me to come to Paris to meet with their consultants and to conduct a seminar on contract renegotiation. Well, when they contacted me I heard the word Paris, I heard the word spring time and I quickly said yes. Before I thought deeply about what I was going to teach, because fundamentally, a contract renegotiation involves the same issues as a contract negotiation. And so, I wondered if I would be stuck with simply repeating concepts related to contract negotiation. As I thought about this more deeply, I decided to contact the leaders of the consulting firm. So, I sent email messages to the leaders who are based around the world. And I asked them to tell me what they thought the problem was. Why there was so much renegotiation. And this is typical of the response that I received. This is from one of the emails. More often than desirable, the persons responsible for original contract negotiations are only responsible for obtaining the contract and not for its implementation. Their incentives are more linked to closure of the negotiation. Then to ongoing implementation. So, I discovered through these emails that there's a fundamental tension between creating a contract and then performing it. And so with this analysis I was able to focus on how to deal with this tension when you will review a contract and I found an outstanding by Danny Ertel who discusses this issue, the articles found getting past yes. It is in the Harvard Business Review and in the article, he talks about the deals making mindset. Versus the implementation mindset. Deal makers use surprise to gain advantage, whereas focusing on implementation would like to raise all issues as soon as possible to allow a thoughtful response. Deal makers hold back information. Implementors share information to increase trust. Deal makers use tactics, such as false deadlines to close deals, whereas implementors spend as much time as necessary to develop an agreement that works. Deal makers try to protect themselves with penalty clauses, implementors focus on developing commitments that are realistic. And so this article and this summary, I think, provides a great tool. For situations where there's a conflict between the deal makers and the implementors, it's a great way to review performance and ask, are we in a deal maker mindset or an implementation mindset? Now in fact, even when there aren't two separate teams, all of us have two mindsets when we negotiate. The left hand side is basically the positional mindset that we talked about earlier, the right hand side is more of an interest based mindset, so this is a great tool even when you don't have two separate teams. Now, beyond this question of the conflict between the teams, there's a more general question of stepping back from any negotiation and doing an evaluation. And Ertel wrote another very useful article, again on the Harvard Business Review in which he contrasted negotiations that focus on deals, a deal focus versus a larger picture focus and here again you can see that on the left hand side the focus is more position based, on the right hand side more interest based. So the Deal Focus would focus on things like price discounts. Where as Big Picture Focus would look at the total cost of ownership, including reducing defects, supplier efficiency, and developing new products. A Deal Focus would look at the number of sales. A Big Picture Focus would focus more on the length of customer relationships. Referral business from the customer, innovations from the customer. The deal focus adapts mentality, well, we've never lost a customer. Where the Big Picture Focus would, instead, look at the deal that was made and contrasted with your BATNA. And the Deal Focus would only review deals sporadically whereas the Big Picture Focus would have a systematic review and improvement of process. So again, another great tool for evaluating your negotiations when you've finished. Did you use a Deal Focus or a Big Picture Focus? One last point here, and that relates to systematic review and improvement of the process, there are a number of management tools that enable you to do this, let me just give you one example. At Becton Dickinson, the attorneys used a six sigma process for improving, contracting, started with definition. A process map showing the steps in their negotiations. And then they did measurements. How many hours did it take to complete negotiations. How many hours for each step. And then they did an analysis. And what they discovered in the analysis is that if the entire Becton Dickinson team was involved, then the negotiations were shorter. The problem was the numbers of the team were working on side negotiations along the way that delayed the process. And then finally they did some improvements, they charted responsibilities for each stage of the process and the results were fairly dramatic. They reduced negotiation periods by about 65%. And they concluded that a large company like this could quickly arrive at productivity improvement equal to millions of dollars. So, these are some considerations when your business is reviewing negotiations, but I strongly recommend that you also do a personal performance review whenever you're involved in any major negotiation. And, in that personal performance review, simply ask yourself what did I do well, and how can I improve? I also recommend that you develop a negotiation diary where you chart your results in various negotiations. That would help you identify areas for improvement down the road. Here's some questions to ask in your self-assessment. Did I work hard at establishing a relationship at the beginning? Did I search for underlying interests? Did I ask questions and listen carefully to the answers? Did I find out very early on in the negotiation whether the other side had authority to do a deal? Did I use an effective first price strategy as we discussed earlier in this course? Did I look at the negotiation from the other side. That element that separates great negotiators from good negotiators. Did I use reciprocity when trading interests? And did I keep a big picture perspective? So, that concludes our look at Performance and Evaluation: The End Game. I wanna leave you with one last thought that I think it's very important. And this thought originated a few years ago when I gave a talk at the annual meeting of the American Bar Association in San Francisco. And I felt very honored that they paired me with another speaker by the name of John Wade, who, I think is probably the best mediator in the world. He's a practicing mediator, but his writings are also fantastic. And during his talk, Chan mentioned a life goal analysis that he uses for dispute resolution. And let me give you an example. This is a situation that he used. We've got a battle between a husband and wife that are going through a divorce. They're members of the Chinese community and I think he said Sydney, Australia. John is from Australia. So the husband, 45 years old the wife, 36. The husband has a large income and lots of assets. The wife has. Small income and relatively few assets. The husband is a prominent physician, the wife runs a small shop. The husband has many supporters in the Chinese community, while the wife is isolated within the community. So they go through very emotional, positional negotiations. And they divide up their property and they're down to the last 40,000 Australian dollars. And they just can't seem to reach an agreement after this very hostile negotiation, so they brought in John as a mediator and he asked them both to step back and think of this negotiation in terms of their life goals. The wife agreed to do this exercise, the husband refused. So what I'd like you to do is put yourself in the position of the husband. If you were the husband here, what life goals might you think about to try to put this specific negotiation in context. Please press pause for a second and write down what you think the life goals of this physician might be. Well, when I did this exercise during John's talk, I thought of a number of goals. I thought, well he wants to increase his assets. He wants to increase his position in the medical community. Maybe head a medical center. Maybe be named to a professorship. In medicine, maybe head a medical society. Perhaps, he wants to develop a new relationship with somebody else. Perhaps he wants to enjoy life, as he becomes older and has worked hard throughout his life. You can think of a number of life goals that he might have adopted. What happened here as I mentioned, he did not do that. Eventually the husband and wife ended up splitting the 40,000 Australian dollars. And it came time for their court hearing. Picture the court room, we have the wife sitting on one side with a couple of her friends. She was again isolated in the community. We have the husband on the other side with a large group of his friends, some of them ridicule the wife, ready to celebrate. Ready to go out to a fancy dinner after the divorce is finalized. So, the judge finalizes the divorce. The husband and all of his friends leave in a very jubilant mood. They go out of the courtroom, turn right and head down to a fancy restaurant. The wife walks out of the courtroom by herself, and as she walks out she turns to the husband's attorney and says, now it is time to get even. She walked out of the courtroom turned left, and walked down to the offices of the medical society. She walked in and asked, is this the place where I can file a complaint against a physician? And they said yes. She said I'd like to file a complaint against, and then she named her husband. She said, number one, he performed an illegal abortion, on me. And number two, he has been sending drugs illegally to his relatives back in China. She filed the complaint and that destroyed the husband's career. So when you think about this dispute within the context of your life goals, a relatively a minor dispute in light of those much bigger goals. It gives you a perspective. Probably would have been a good exercise for the husband to complete, and he didn't hear.
