RV: Making Credibility Your Strongest Asset

Executive Summary:

Dealmakers often forget the power of a good reputation. In this article from Negotiation, HBS professor Michael Wheeler tells why having a storehouse of credibility will put you head and shoulders above the competition.

About Faculty in this Article:


Michael Wheeler is the MBA Class of 1952 Professor of Management Practice at Harvard Business School.

Negotiation is a breeze if you're selling a unique product or service that others desperately need: Just sit back and let the bidding begin. Likewise, if you're a buyer in a buyer's market, getting a bargain is a snap.

But what happens when lots of other people are selling what you've got, or many others are bidding for what you want? One solution to distinguishing yourself in competitive environments is to build your bargaining endowment—storing up credibility and resources by developing relationships, burnishing your reputation, and controlling key assets.

When you're trying to prevail amid fierce business competition, your bargaining endowment can spell the difference between closing the deal and being shut out. A healthy bargaining endowment explains how Darren Rovell won a job on national television while other journalism graduates were lucky to be doing programs on cable access. It's also how Tony Lucci got box seats for the World Series when thousands of others were shut out. And it explains how Bob Kraft positioned himself to buy a professional football team.

Although Rovell, Lucci, and Kraft operated in very different contexts, they all met their goals by enhancing their own credibility and discerning the interests of other key players. Their three stories illustrate different elements of the process of building your bargaining endowment: (1) grab someone's coattails, (2) foster a reputation for generosity, and (3) plan several moves ahead.
Grab someone's coattails

Lots of people have great ideas for new products and services, but most lack the imagination and doggedness to actually get them launched. Darren Rovell is a notable exception. As a college student, he had a passion for the business of sports—licensing deals, complex stadium financing, and hardball negotiations between free-agent players and teams.

Media coverage of this terrain had been haphazard. Rovell saw that omission as a great opportunity, but he had two problems. First, media giants such as Sports Illustrated and ESPN didn't think the business beat would appeal to the average fan. And—oh, yes—Rovell was just a kid in his teens.

Nevertheless, he launched a business-of-sports talk show on Northwestern University's student radio station, WNUR. His "producer" (actually, a roommate) aggressively pursued big-name players, general managers, and agents. Most declined, but a few said yes. Once Rovell recruited a celebrity, that person often would cheerfully give him another star's direct line. Rovell quickly built an impressive Rolodex.

You can succeed without explicitly swapping favors.

Tapes of the show enhanced his credibility as an interviewer and also demonstrated the power of his idea. But Rovell knew that T.V. and newspaper sports departments are flooded with resumes and demo tapes from thousands of wannabe reporters. To ensure that his material wouldn't be lost in the shuffle, he mailed it in the largest box that the post office would deliver.

The gambit worked. Right after graduating in 2000, Rovell landed a job at ESPN.com as its first business-of-sports anchor. He's now regularly featured on the network and writes prolifically for its online magazine.

On the surface, Rovell's story illustrates the value of confidence and persistence. Dig a little deeper, and important negotiation lessons emerge.

First, you can succeed without explicitly swapping favors. After all, Rovell had nothing of substance to offer successful sports figures. But by being respectful, persistent, and doing his homework, he persuaded them to appear for free.

Second, Rovell was careful to build and test a prototype. His college radio show was small potatoes in terms of listeners, but he proved his ability to pull off the new concept.

Finally, and perhaps most important, he rapidly built his own credibility by "coattailing" on the credibility of others. The athletes he attracted had never heard of him, but they knew the name of the All Star who had appeared on the show the prior week. As Rovell's reputation grew, his past success became a resource. Today his calls get answered, and people phone him with stories.

What's remarkable is that Rovell did all this without a patent or a copyright. In theory, anyone could try to horn in on his territory. Surely some are trying; there are no formal barriers to entry. Rovell's competitive advantage is his reputation.

Foster a reputation for generosity

Now consider Tony Lucci, who founded, and whose family still operates, a sporting goods store in suburban Boston. Having worked in business for decades, he was well known in his niche but not beyond it. In a telling anecdote, Tony relayed to me how, one October afternoon, he got a call from a stranger, a television producer frantically looking for a radar gun. The producer's network was broadcasting the World Series that night, and the radar gun—the device that tracks the speed of pitches—was on the blink.

The producer had made several fruitless calls, and many people had said, "Try Tony. He might be able to help." As it happened, Lucci didn't have a gun, either, but said he'd ask around.

He tried several coaches and the operator of a baseball camp, but these leads came up dry. Then, out of the blue, he got a call from someone else looking for a favor, a coach involved in a police athletic league for troubled kids. "Some Red Sox players have agreed to autograph baseballs that we can auction off for fundraising," the officer told Lucci. "Could you could contribute a couple dozen?"
"Absolutely," said Lucci. "By the way, Officer, could you look the other way while a radar gun leaves your precinct for the evening?" When Lucci explained the situation, the cop said he'd drop the equipment off in twenty minutes.

Lucci called back the television producer. "Good news!" he said. "You've got your radar gun."
In return, Lucci might have asked the network to cover the cost of baseballs or asked for free publicity for his store. Instead, Lucci said, "Do you have tickets for tonight's game?" That's how he got eight box seats for the World Series in Fenway Park.

This story offers two important lessons. First, the deal worked only because each party brought different resources and needs to the table.

Second, over time, Lucci built a reputation as someone who could get things done. There are lots of sporting-goods stores in Greater Boston and lots of radar guns, too. Yet Lucci went to the game while others watched it at home on TV.

Why? In part, because he was careful not to squeeze people. When the network asked if he could find a radar gun, he didn't ask, "What's in it for me?" Likewise, when the officer asked for baseballs, Lucci didn't say, "You can have them if you'll loan me a radar gun."

The fact that Lucci didn't condition his helpfulness made it more likely he'd get calls in the future. Much like Darren Rovell, Lucci built his bargaining endowment by stockpiling a network of valuable relationships. There probably are similar people in your company or community whom others turn to when they're under pressure. Odds are, they're willing to help even when they are busy, and they're unlikely to haggle about return favors.

The same dynamic applies to external relationships with longtime customers, vendors, and clients. Negotiating successfully in a competitive environment isn't just a matter of driving a hard bargain or maximizing joint gain. Also important is how each transaction enhances—or compromises—one's reputation for treating other people. Reputation is relevant, of course, only when people are known and past relationships are remembered. Yet even in e-commerce transactions, where negotiators rarely meet, rating systems have emerged to reward good service and integrity.

Plan several moves ahead

Bob Kraft owns the New England Patriots, one of the most successful franchises in professional sports. Notably, he didn't get the team by outspending other prospective buyers. Instead, years in advance, Kraft put himself in a position to make a smart move when the time was right.

When the Patriots first went on the market in the late 1980s, Kraft was wrapped up in other businesses and apparently didn't have the wherewithal to put a deal together. The team was purchased by Victor Kiam, then the president of Remington Products Co. However, Kraft and a partner did place the winning bid for the Patriots' stadium, which was sold separately from the football team.
The fact that [Tony] Lucci didn't condition his helpfulness made it more likely he'd get calls in the future.

Many people were surprised by Kraft's offer, as the Foxboro stadium was poorly designed and in terrible condition, and depended on the Patriots for most of its income.

Kraft and his partner were astute enough, however, to spot obscure provisions in the lease that not only stipulated that the team pay a reasonable rent but also required the Patriots to play in the stadium through 2001. Most real-estate investors wouldn't have cared about that latter clause; they would value the lease for its guaranteed rent, regardless of where the team actually played. But Kraft had his eye on eventually buying the team. Enforcing the operating clause would scare off anyone who might wish to buy the Patriots and move the team to another city. It would also deter local buyers who might have hoped to swing a public-private deal to construct a new facility.

For Kraft, it was a double win. With better management in place, the stadium deal was a profitable venture from the start. Several years later, when the Patriots were once again on the market, Kraft had greatly increased his leverage to buy the team by knocking out most of the competition.

The old ownership tried to force Kraft to put a price on the lease, and there were threats of lawsuits on all sides. Two other groups reportedly topped Kraft's bid, but, in the end, the seller reluctantly chose to settle for less rather than get involved in protracted legal battles. Afterwards, Kraft attributed his success to having recognized, years earlier, the advantages gained from controlling the stadium. "If we didn't have that lease," he said, "there's a high probability that the team would have gone to St. Louis."

As Kraft understood, credibility is essential to survival in hardball environments. Sometimes credibility is a matter of expanding what you can bring to the table; in other instances, it allows you to block the moves of potential competitors. Building your bargaining endowment requires accurate identification of key players and then taking visible action that sends the appropriate signals.

As all three stories reveal, deals can be both means and ends. Whether it was Rovell landing a guest, Lucci solving a caller's problem, or Kraft acquiring the stadium, each transaction made sense in its own right. But each one also enhanced the odds of making the next deal—and enhanced each player's bargaining endowment. How you negotiate today can determine what you end up with tomorrow. 

About the author

Michael Wheeler is the MBA Class of 1952 Professor of Management Practice at Harvard Business School where he currently teaches Negotiating Complex Deals and Disputes.

Want to Join a Corporate Board? 7 Tips

​By ​Kimberly Weisul​ | December 15, 2010​

​Everyone knows that getting appointed to a corporate board can be a huge boost to your career. What's less well-known is the role that flattery plays in getting nominated to a board seat. Now two business-school professors, Ithai Stern, of the Kellogg School of Management, and James Westphal, of the University of Michigan, have completed ​a research study about ingratiation and social interaction among high-level managers​ that uncovers the kind of subtle flattery most likely to land you on a corporate board.

​Stern​ and ​Westphal​ surveyed 134 CEOs and 765 board members, asking them to divulge their most effective tactic for boosting a boss' ego without arousing suspicion. Reassured that the study was backed by two prestigious business schools, the executives did just that. Ithai and Westphal then looked to sources such as Standard & Poor's and annual reports to track board movements and social affiliations among the CEOs and board members. That allowed them to get a handle on which executives managed to nab the most board seats, and which forms of flattery seemed to work best. Ithai and Stern now believe that the success of lawyers, politicians, and salespeople in landing disproportionate numbers of board seats is at least partly attributable to the fact that they need to be adept at currying favor just to get their jobs done.

Of all the tactics the executives used to ingratiate themselves, Stern and Ithai found these seven were most effective:

1.- Complimenting while asking for advice. Position the other person as your superior on some important matter, then ask their opinion. (i.e. "How were you able to launch that project so quickly?")

2.- Argue, then give in. Agreeing with your manager right off the bat, all the time, is far too obvious. So put up a little bit of a fight, then cave in. (i.e. "I didn't see what you meant at first, but now it's clear. I'm glad you explained it to me.")

3.- Compliment the manager to his or her friends. If you and your manager have overlapping social networks, you can talk about how great the manager is in hopes the praise will eventually get back to him or her-with your name attached, of course.

4.- Admit that flattery can be uncomfortable. Preface your obsequious remarks with a phrase such as "I don't want to embarrass you, but…"

5.- Emphasize similarities with your manager. Don't just agree, point out that you agree. (i.e., "I feel the same way. We should relocate the Miami office.")

6.- Point out agreements your boss didn't know existed. Research your boss's opinions by talking to third parties, then drop your own similar opinions into conversations with the boss.

7.- Find common social affiliations and talk them up. If your boss serves on the board of a cancer charity, make sure he or she knows how important cancer research is to you. (It is, right?)

Worried that these tactics are too obvious, too transparent? You can use them in moderation and still dramatically boost your chances of winning a board appointment. Ithai and Stern found that if an executive merely offered an unsuspecting nominating board member two ingratiating compliments a year and agreed with him or her enthusiastically twice a year, the chances of being nominated shot up an astounding 68%.

Now does it seem worthwhile to give sweet-talk a try?

​​Kimberly​ ​Weisul​ is a freelance writer, editor and editorial consultant. She was most recently a senior editor at ​BusinessWeek​ and founding editor of ​BusinessWeek SmallBiz​, an award-winning bimonthly magazine for entrepreneurs. Follow her on ​twitter.com/weisul​.

Ten Things that Make Me More Productive

I was in my teens the first time I read Benjamin Franklin's Autobiography and the wonderful chapter that's in it titled "The Bold and Arduous Project of Arriving at Moral Perfection." I loved Franklin's idea about tracking his performance so he could improve it.

From then on, that's what I've been doing. I'm not after moral perfection, I just want to do more important things better. Here are some things that I've found work for me. Some of them may work for you, too.

1.- Schedule important work for when you're at your best. I work best in the morning. I get more done when I schedule important, especially creative, work for that time of day.

2.- Carve out blocks of uninterrupted time. I learned this one from Peter Drucker. It's a strange calculus, but you won't get as much done in six fifteen-minute blocks as you will in an hour and a half of uninterrupted time. Shut, the door, turn off the phone, close your email program, and work.

3.- Follow the Raymond Chandler Rule. Chandler's rule for writing was simple. If he set aside time to write, he didn't have to write, but he wouldn't allow himself to do anything else. When it's time for important work, don't check your stock portfolio, decide where to go for lunch, or catch up on your email. Work. Or just sit there. You'll work soon enough.

4.- Take breaks. Human beings were not meant to work all the time. We break down when we do. You can take a break by switching tasks or changing position. Take big breaks, too, for time with family or to pursue other interests.

5.- Feed your head. Every day you're offered opportunities to feed you head with quality ideas, or Charlie Sheen's latest rants. Guess which are more likely to help you succeed. If you aren't disciplined about this, it's not likely to happen.

6.- The body counts, too. I'm at my best when I'm exercising regularly, eating sensibly, and (especially) getting enough sleep. I also do a lot of work at a standup desk where my physical energy feeds my mental energy.

7.- Have a limited To Do list. I limit mine to five items a day that will help me make progress on goals and projects. Because I'm very self-competitive, I score my performance on the list. The top item is worth 50 of a possible 100 points.

8.- Checklists will set you free. There are all kinds of things that you have to do every day or week or month. I use simple checklists to remind me what should be done. Checking off items makes me feel good.

9.- Automate everything you can. Virus scans, bill payments, backups and more are automatic and I'm looking for more things to handle that way.

10.- Capture your good ideas. You're human and that means you'll come up with ideas. Some of them will be good ones, but you won't be able to evaluate and use them if you don't remember them. I use a small digital recorder and index cards to capture ideas as they fly by.

I don't think that anything here is magical. What I know is that they all work for me. Your mileage may vary. As with anything, you will improve your personal productivity if you make a conscious effort, track your performance, and make changes based on what works and what doesn't.

Now, what has worked for you?

Preguntas Poderosas

Las preguntas más poderosas suelen ser preguntas que el otro no se haría a si mismo.

5 Things to Do Every Day for Success

"You get up at what time?" I hear that a lot along with "you are so lucky." So, I'm going to help out here and let you in on the secrets of my success. Well, not all of them but enough to show you the foundation I build on every day.

1. Wake up early. For the next week, get up a half an hour earlier that you normally do--and get going. If you get a few more things done, then get up even earlier the next week. Early in the morning is a great time to get work done because most of your associates have not started emailing, tweeting, IMing or posting yet.

2. Read the headlines and watch the news. Not only should you know what is going on in the world, you will also be the first to recognize opportunities (if you followed #1) for you and your business--long before the competition has even had their first cup of coffee.

3. Send something to one person who can hire you or buy your product--something you promised to follow-up with, a quick email with a link to something relevant or a "hey just checking in to see how thing are going" email.

4. Touch base with an old friend or associate you haven't talked to in ages. Ask how they are, what are they working on and ask or suggest how you might help. You'll make their day.

5. Write a handwritten note to someone. Seriously. It is a lost art and makes quite an impression. There is always someone you can send a thank you note to--or you aren't doing things correctly.

A simple yet highly effective list. Try all five every weekday for a month. Then, tell me I'm right. If I'm wrong, I'll buy you a cup of coffee. When you finally wake up ...

11 leadership styles to avoid

11 leadership styles that you must avoid if you want to succeed.
 
1.  Providing Too Much Info. You look like a know-it-all. People are less likely to share their ideas, because you will just roll over them with your own "better" ideas. The Fix: Next time you have a better idea, don't just share it. Instead, invite your colleagues to build on the idea and come up with an even better solution.
 
2.  Using "But" or "However." These words simply mean that you don't approve. "I like your idea, but..." "I will consider what you are saying, however...." Your intention may be to try to soften the blow. But in reality you are not. Instead of jabbing a knife into their gut, you are stabbing it into their back. The Fix: Stop using those words, and don't look for another work-around to pass down your criticisms. Just stop using the words.
 
3.  Sharing Your "Smart" Stories. If you add to discussions by sharing the smart stuff you have done, you are pointing to an inferiority complex. You feel you need to puff out your chest in order to get noticed. No one likes a bragger. The Fix: Recognize that the most successful leaders have an "air" around them. They don't need to brag and show off. They simply bring confidence to the table.
 
4.  Communicating When Angry. Sharing your thoughts when you are angry can be dangerous. Emotions will cause outbursts and may do irreparable harm. The Fix: Remove yourself physically from a situation that makes you angry. Then give yourself a 24-hour break. (You need to get one sleep cycle in.) You will be in a better position to talk when your emotions are not dominating.
 
5.  Withholding Helpful Knowledge. Keeping secrets that adversely affect other people's performance is another sign of an inferiority complex. And when people find out you held them back, you will lose their trust. The Fix: Ask yourself what else you can share to help others. Then share it.
 
Want more leadership tips? Check these out:
10 Unexpected Ways to Improve Your Leadership Skills Jack Zenger's Top 10 Leadership Rules Identifying Good Managers Through Leadership Competencies  
6.  Failure to Give Individual Recognition. This is simply another version of "all for me, none for you." You are keeping all the credit, and others don't feel that you value them. The Fix: When a project is completed successfully, publicly recognize the individual contributions everyone made.
 
7.  Claiming Credit You Don't Deserve. This may be even worse than not giving credit to others. In this case, you are actually stealing it from them. Not only are you a jerk, you are a thief, too. The Fix: It is far better to give someone else credit for something you have done than the reverse.
 
8.  Making Excuses. The buck stops with leaders. If a leader makes an excuse, they lose credibility and integrity. When Bill Clinton was president and had the Monica situation, what were your thoughts about his excuses and denials? (And I quote "It depends on what the meaning of 'is' is.") Kind of lost his credibility and integrity, right? Don't do the same thing. The Fix: Next time you are thinking of an excuse, instead make it a declaration of what you will permanently fix.
 
9.  Refusing to Apologize. Everyone makes mistakes. And everyone hates someone who can't admit to their own. The Fix: Apologize quickly, apologize fully, and mention an action that you are going to take to fix – or at least improve – the situation.
 
10.  Not Listening. This is a problem of many leaders (and something I admittedly struggle with). It is a bad problem. It says only one thing, loud and clear, to the person speaking: that you don't care. The Fix: Remove yourself from physical distractions (e.g., e-mail, crackberry, etc.), lock eyes with the person, and repeat back the stuff they tell you.
 
11.  Punishing the Messenger. Bad news can be reported from any source, and bad leaders attack the source. These leaders lose trust, and bad news gets pushed under the rug. The Fix: Recognize that bad news is critical to your success, because you need it in order to improve and fix problems. The next time bad news is reported to you, be extremely grateful that that person was willing to tell you.
 
Dancing your way through all the leadership styles that you should avoid may take some practice, but you will become a more effective leader, once you are able to do it and focus more attention on what it takes to be a great leader.
 
John Quincy Adams said it best, when he reminded us: "If your actions inspire others to dream more, learn more, do more and become more, you are a leader." If you fall short of that – and many entrepreneurs make the mistake of doing so – then your business will suffer.