Tag Archives: Arts

Art & Politics

11 Sunday Nov 2012

Posted by in Negotiation, Uncategorized

≈ Leave a comment

Tags

, , , , , , , ,

This recent article from the New York Times questions whether art museums should be more involved in current political issues.  Do museums have a moral obligation to address the political climate as part of their educational mission, or is it better for them to eschew this controversial arena to avoid offending their supporters?

http://www.nytimes.com/2012/11/04/arts/design/american-museums-tend-to-tiptoe-around-politics.html?_r=0

I welcome your comments on this!

Real-Life Negotiations: Lessons for Artists

14 Sunday Oct 2012

Posted by in Auctions, Negotiation, Uncategorized

≈ Leave a comment

Tags

, , , , , , , , , , , , , , , ,

Has my October 2nd post about the possible merger between T-Mobile and Metro PCS left you wondering what this has to do with artists?  Let me explain.

1.  Artworks are often sold at auction, a situation that involves competing bids.  We see from the research that if two or more people are bidding on something, the final price might well exceed the estimated top price.  Case in point:  the recent sale of Edvard Munch‘s “The Scream“, which – at approx. $120 million – set a record for the highest work sold at auction.  If you have two or more parties interested in your work, play it to your advantage.

2. Artists may want to try re-structuring some of their works from “for-sale” items to auction items.  Consider trying it at an art fair or gallery opening.  The internet offers numerous possibilities for that, as well.

3. Beware of this human tendency when you are the buyer in a competitive bid situation.  Before you start bidding, be sure you have a top price in mind, and don’t let your emotions cause you to exceed that price when the bidding begins.

Real-Life Negotiations: T-Mobile’s Bid for MetroPCS

09 Tuesday Oct 2012

Posted by in Negotiation, Uncategorized

≈ Leave a comment

Tags

, , , , , , , , , , , , , , , , , , , ,

Real-Life Negotiations:  T-Mobile’s Bid for MetroPCS

In Negotiating Rationally, Professors Max H. Bazerman and Margaret A. Neale maintain that in competitive bidding situations, often the buyer falls prey to the “Winner’s Curse.”  In practical terms, this means that the winning bidder often ends up paying more than necessary – frequently more than the actual value – for the thing that s/he acquires.

Why would someone voluntarily pay more for something than it’s worth, you ask?  Some common reasons follow:

  1. Bidders often don’t have enough information; therefore, they may overestimate the present value of what they’re bidding for.
  2. Acquirers frequently don’t consider that the other bidders may not have any more information than they do.
  3. Bidders may think the synergy created between something they already own and what they’re buying will make the acquisition worth the inflated amount they paid for it
  4. Fear of competitive offers often leads bidders to be content with less information than is truly needed for a thorough analysis.

Let’s examine these reasons within the context of a real-life negotiation situation:

Last week, T-Mobile announced its intent to purchase Metro PCS for the equivalent of $11.28 per share.  Two days later, Sprint said that it may consider trumping T-Mobile’s offer.  According to Pacific Crest analyst Michael Bowen, Sprint’s bid might value Metro PCS’ shares at something between $12.50 – $15.00 per share.

In February, Sprint considered buying MetroPCS at a price that, according to analysts, would have generated savings of $8 billion to $9 billion for the combined entity.  This is much greater than the synergies expected from the deal between T-Mobile USA and Metro PCS, which are estimated to generate savings of $6 billion to $7 billion on a net present value basis.  Ultimately, Sprint opted out of the deal in February, choosing instead to invest in its own network.  But on the news of T-Mobile’s offer, they’re considering jumping back into the game.

It’s doubtful that either T-Mobile or Sprint has more information than the other regarding the true value of MetroPCS.  What reason would MetroPCS have for giving more information to one than the other? It’s clearly in their best interest to let the bidding go higher.  Is Sprint stepping in because it assumes that T-Mobile knows more than it does about the value of MetroPCS?  If Sprint does make an offer, will T-Mobile fall prey to a similar, possibly erroneous, assumption and make an even higher offer?

What about the estimated savings generated from the synergistic value of the combined companies?  In studies of past M&A’s, there’s no evidence to support that the excessive price paid was equal to the synergistic value.  According to an article published in the Wall Street Journal in September 1981, approximately 1/3 of acquisitions prove to be failures;  another third fail to live up to their expectations.

Often, bidders’ willingness to accept less information than they would have liked, stems from their fear of competitive offers.  Is Sprint’s last-minute bid simply a case of “I didn’t want it before, but if you want it, then I want it, too, because I don’t want you to have it?”

Potential acquirers would be well served by guarding against over-confidence in their own judgment. Bazerman and Neale maintain that, “Potential acquirers should temper their optimism by recognizing that the winning bidder is likely to pay a far greater price than the target is actually worth.”

It will be interesting to watch the outcome of the bidding between T-Mobile and Sprint in the coming days, and, in the coming months, to see how much value was actually created for the winning suitor.   Will the final outcome be a match made in heaven, or another classic case of the Winner’s Curse?

Copyright Nancy J. Fox, October 2012 – All Rights Reserved

Improve Your Negotiation Satisfaction

29 Saturday Sep 2012

Posted by in Uncategorized

≈ Leave a comment

Tags

, , , , , , , , ,

According to research[1], our satisfaction with the outcome of a negotiation doesn’t depend solely on how much we objectively gained or lost, but rather on four factors:  our measurable gains and losses, how the negotiation made us feel about ourselves, whether the negotiation process was collegial and fair, and whether we developed a productive working relationship with our counterparts.[2]

Therefore, in order to maximize satisfaction and build a strong working relationship, we want to control what we can in a negotiation.  This may include the negotiation process.  Take the time beforehand to discuss with the other party how you will negotiate before talking about the issues to be negotiated.

One question you might ask yourself is:

Where will we negotiate? Don’t assume that the other side plans to meet at your location or vice versa.  As good negotiators know, assumptions may be erroneous and, consequently, detrimental. Your counterpart may have a different idea about where you should negotiate.

Negotiating on your home court can be advantageous, because it allows you to control the environment and feel at ease. But traveling to the other party’s turf can send a message that you are serious about making a deal. It also gives you opportunities to observe your counterpart in his surroundings. If you’ve not visited your counterpart before, you may learn more about his/her interests and have the opportunity to meet others who are indirectly involved in or affected by the negotiations. You might also consider negotiating on neutral territory, such as a hotel or restaurant conference room.[3]

Here’s a true story that demonstrates the impact that choice of site can have on the outcome and satisfaction in a negotiation.

A former student, Ted, was the new Executive Director of a not-for-profit organization.  As is often the case when someone new takes the helm, there was resistance on the part of some employees.  With one employee, Donna, this resistance escalated to the point of insubordination, breach of confidentiality and disloyalty to the organization.  Ted was finally forced to call her on it.  In response, Donna, who had worked for the organization for many years, complained to the Board President about Ted’s reprimand.  Feeling that he had to mediate, the Board President scheduled a meeting between Ted, Donna and himself.  He assured Ted that he would support Ted’s authority to manage the organization and its employees.  Ted assumed the meeting would take place in a casual setting, such as a coffeehouse.  Imagine his surprise when he was informed, thirty minutes before the meeting, that it was to be held in the conference room of a large law firm!  This choice of venue and setting sent a loud message to Donna that her complaint was valid and worthy of serious consideration, rather than a reprimand for her inappropriate behavior; the meeting appeared to be more of a reprimand to Ted for his management style.  The discussion was so overshadowed by the implications of the location that Donna left feeling vindicated, and Ted left feeling that his authority to lead the organization had been severely compromised. Ted left the organization after only three months.

The important thing is to talk about the negotiation location in advance so you will be aware of and prepared for it.   If you have a preference of place for your negotiation, frame your preference in terms of the benefits for the other party.  On the other hand, if the other party’s location preference won’t negatively impact you, keep in mind that conceding to your counterpart on relatively minor process issues, builds trust and goodwill.  This may pay off to you when it’s time to discuss issues of substance.

[1] research by Jared Curhan and Hen Xu of Massachusetts Institute of Technology and Hillary Anger Elfenbein of the University of California at Berkeley,

[2] Adapted from“Start Your Talks Off On the Right Foot,” first published in the Harvard Negotiation newsletter, September 2009.

[3] Adapted from“Start Your Talks Off On the Right Foot,” first published in the Harvard Negotiation newsletter, September 2009.

ALL RIGHTS RESERVED – Nancy J. Fox 2012

The Power of a Reason

09 Sunday Oct 2011

Posted by in Negotiation, Uncategorized

≈ Leave a comment

Tags

, , , , , , ,

Studies show that the word because can have a powerful influence.  In this video, you’ll get the details on this interesting research done by Ellen Langer.  The implications of it are that, when trying to persuade someone of something, we should remember to justify our request.  As you’ll see in the video, the reason doesn’t necessarily even have to make much sense.  However, note that this tactic works best when the request is comparatively small.  When the request escalates to something substantial, a weak reason doesn’t bring nearly as much positive response.

I welcome your comments on the study, and on your personal experience.

The Confidence to Ask

29 Thursday Sep 2011

Posted by in Negotiation, Uncategorized

≈ Leave a comment

Tags

, , , , ,

Many people don’t take advantage of opportunities to negotiate better deals, because they are afraid to ask.  They may be concerned about offending the other party, thereby damaging a relationship, or perhaps they fear rejection.  But not all relationships are equal.  Here are two tips on how to overcome this obstacle to getting more in life.

1.  Differentiate between personal relationships and transactional relationships;  the former are friends and family, people with whom you interact frequently in your private life, often on a more emotional level.  The latter are people with whom you do business;  this category includes vendors, contractors, service providers, retail establishments, and even colleagues at work.  A salesperson may try to come off as your best friend, because s/he knows that creating confusion in your mind about the nature of your relationship may cause you to  accept a less lucrative deal.  Don’t become prey to this tactic; keep in mind that you may  never see this person again.  Even if you do business with someone on a repeat basis, it’s important not to confuse the nature of the relationship.  In a transactional relationship, asking for what you want is just good business practice.  With regard to colleagues at work, consider that despite rapport you may have established, you still compete for promotions and raises, i.e., the relationship is transactional.

2.  Ask yourself, “What is the worst that can happen if I ask for what I want?”  Assuming that you give a reason for your request and don’t threaten or insult the other party, the answer is probably that the other party says no.  You are in no worse position than before.

Everything can be negotiated, but you have to ask.  I hope these two tips will give you the confidence to ask for what you want.

Nice Guys Don’t Negotiate

13 Saturday Aug 2011

Posted by in Negotiation

≈ Leave a comment

Tags

, , ,

There are many misperceptions about the process of negotiation.  Often people associate it with labor union contracts.  They envision picket lines and angry people shouting across the table at one another.  It’s not surprising, therefore, that those in the arts sector might shudder at the thought of any association with it, i.e., nice guys don’t engage in such distasteful practices.  But labor negotiation is just one of many types of negotiation situations.

We negotiate daily with nearly everyone we encounter, in business and in our personal lives.  Procuring a donation from a wealthy patron is a negotiation; so is deciding whose turn it is to walk the dog.  Because resources are so precious in the
arts sector, it’s critical to acquire good negotiation skills in order to stretch those resources as far as possible.

WHAT IS NEGOTIATION?

Simply put, negotiation is seeking agreement.  We could all use more agreement in our lives, right?

William Ury, author of Getting to Yes, says negotiation is a discussion leading to
agreement or to the decision to walk away and pursue other alternatives.  Another definition: Negotiation is the art of persuading someone to do something they don’t want to do.  My personal favorite:  it’s letting other people have it your way.  However you define it, people are negotiating every day.

THE COMPETITIVE EDGE

Because of its universal applicability to work situations, many employers give preference to candidates with negotiation training.  If you read my August 6 post, you saw the impressive results achieved by students in that negotiation class.  If you are seeking employment in the arts sector or advancement in your current position, good negotiation skills can help your profile cut through the clutter.