Apology day continued: Gary Bettman of the NHL

This apology exceeded my expectations. Gary Bettman, commissioner of the National Hockey League, in an announcement after the owners ratified a new collective bargaining agreement, apologized to all affected by the 113-day-long labor lockout. There was not a trace of defensiveness, and quite a bit of grace in Bettman's words. Of course, the NHL players and fans may not fully agree.


Transcript:
To the players, who were very clear they wanted to be on the ice, and not negotiating labor contracts, to our partners who support the league financially and personally, and most importantly to our fans, who love and have missed NHL hockey, I'm sorry.

I know that an explanation or an apology will not erase the hard feelings that have built up over the past few months, but I owe you an apology nevertheless. As commissioner of the National Hockey League, it sometimes falls upon me to make tough decisions that disappoint and occasionally anger players and fans. This was a long and extremely difficult negotiation, one that took a lot longer than anybody wanted. I know it caused frustration, disappointment, and even suffering to a lot of people who have supported the National Hockey League in many different ways. In the end, neither side got everything it wanted, and everyone lost in the short-term....

As I said, we know that no words of apology or explanation will soften the disappointment. I read the letters, followed the tweets, read the blogs. We have a lot of work to do. The National Hockey League has a responsibility to earn back your trust and support....

Ultra-competitive mindset leads to acquisition mistakes

Deepak Malhotra (co-author of "Negotiation Genius," one of 2007's top 5 books) and colleagues have once again dived into the psychology of negotiators and dealmakers in May's Harvard Business Review ("When Winning is Everything").

They find that certain factors present in many deals can drive irrational thinking and, ultimately, overpaying for acquisitions. The factors are:

1. Rivalry - animosity toward a competitive rival for an acquisition, say, can create a "win at all costs" mentality.
2. Time Pressure - racing to meet a stated or internal deadline can lead to accepting a poor deal
3. The Spotlight - if people are watching--coworkers or the public--a dealmaker may act less rationally than if the spotlight were off.

Malhotra et al write: "Rivalry, time pressure and a bright spotlight can each fuel competitive arousal. Collectively, they can lead to decision disasters." They point to the Boston Scientific acquisition of Guidant and Viacom's purchase of Paramount as two costly examples of this type.

What to do? As in "Negotiation Genius," Malhotra urges dealmakers, first of all, to be aware that these factors exist. Mere awareness of a feeling of time pressure is a tool to prompt reflection: "Is there a reason this has to be done this week?" Almost always, the answer is no. The world won't end if the deal is delayed.

As for rivalry and the spotlight, companies can put approaches in place to manage them. Often, it means spreading the responsibility among teams of dealmakers rather than allowing individuals to shoulder the entire burden. [Microsoft might have managed 2008's Yahoo engagement better if it had not allowed it to become Steve Ballmer's deal. The jury will be out for a while, of course, on the Skype acquisition.]

Malhotra and his colleagues are probing into new and important territory in business research. By bringing behavioral economics and psychology into the forefront of dealmaking and negotiation, they are providing a valuable service to businesspeople everywhere.

Most refreshingly, their focus on the costs of dealmakers' irrationality and aggression is a welcome antidote to the lionizing of ultracompetitive CEOs and moguls elsewhere in the business press.

(Photo: a still from the infamous Steve Ballmer monkey dance)


Related posts:
"The Best Negotating Book I've Ever Read"

Royal Little: not going the last $500K to buy a great company

Another story from Textron founder Royal Little (1896-1989), author of "How to Lose $100,000,000 and Other Valuable Advice."


This is from a section called "Lost Opportunities":

In addition to losing money for Textron through mistakes, I lost millions for the shareholders by not paying the asking price on several most attractive acquisitions. There must have been at least a dozen cases where the seller and I were a few hundred thousand dollars apart, where I would not budge and refused to meet the seller's price....

JOSTEN

The outstanding case of where I got stubborn and would not meet the offering price concerned Josten. Josten was a competitor of Balfour in making rings for students in schools and colleges. Balfour originally was the leader in this industry, but Josten [as of 1978] now far exceeds them in volume and profits. The offering price was $13,000,000, and I finally came up to $12,500,000 but wouldn't go the last half million dollars. As a result of this lost opportunity, this mistake on my part undoubtedly cost the Textron stockholders over $30,000,000 in lost values. Dan Gainey, who controlled the company and was at the time treasurer of the Republican Party, then made a public offering. In 1976, sales were $163,700,000, net profit after taxes $9,525,600, net worth was $43,000,000, and their 5,040,000 common shares at $25 had an aggregate market value of $126,000,000.

Josten would have been an ideal acquisition for Textron since it fitted our basic concept if being a leader in a relatively small industry. Today Josten is the undisputed leader in the school ring business, and their performance is so superb that their shares are selling at a price/earnings multiple of 12, whereas Textron stock has recently been selling at only 6 times. In retrospect, of the many situations that Textron missed by being too conservative in the price we were willing to pay, the outstanding examples would have to [include] Josten.

ADVICE: If you have an opportunity to purchase a company as outstanding as Josten, don't let a mere $500,000 stand in the way. If a business such as Josten's with its tremendous future potential is worth $12,500,000 it certainly is worth $13,000,000. Refusing to meet the firm offering price in this case was one of the worst mistakes I ever made at Textron.


[pp. 187-188]

Excerpted from How to Lose $100,000,000 and Other Valuable Advice, by Royal Little, (c) 1979 by Royal Little and the Harvard University Graduate School of Business Administration.

Tina Brown's New Newsweek features "My Favorite Mistake"

OK, it's official. Mistake stories are the new black. Don't believe me? Celebrity editor Tina Brown (a hell of an editor, by the way - I think the New Yorker was much improved by her tenure there) just published her first version of Newsweek magazine. And on the back page is a new feature called "My Favorite Mistake." The first guest of honor, Harvey Weinstein. Here's a snippet of Harvey's story:

But my favorite mistake happened two years ago, when I had the opportunity to buy The Girl With the Dragon Tattoo. Two friends in London told me there was a book they loved. I read the book and thought it was great. Then I heard they were making a movie out of it. I got the people to show us the movie to see whether we’d want to distribute it in the United States, and everything about it in my gut said, “Do this—there’s a franchise here.” But my team said, ‘No, we should focus on bigger movies,’ and I let the committee overwhelm me. I didn’t listen to my very significant gut, and when I say significant, I mean size, geographically. And that was a big bloody mistake—an economic mistake, a company mistake. If you’re going to be in the business we are, it has to be because you want to champion movies that are different. This year, we got The King’s Speech, Blue Valentine, Company Men, and part of The Fighter. Small movies are intensive, but they’re so worth it. It’s what we have to do to be who we are.

Now I have to say that this is a particular type of mistake story that may not be the most instructive. As I read it, Harvey's mistake was listening to his committee. In his eyes, he would have been better served ignoring their advice and buying the movie anyway. I guess this is the deepest personal reflection you can expect from a Hollywood mogul.

I wonder if there wasn't a different mistake here: perhaps he wasn't able to articulate his love and passion for the project clearly enough to convince his committee to change its decision. I think of the neat arguments of John Kotter in his new book "Buy-In: Saving Your Good Idea from Getting Shot Down" (here's a summary of one of the arguments)- perhaps some of them would have been useful to Harvey in this situation.