Saturday, March 08, 2008

Think Win-Win

Win/Win is one of six total philosophies of human interaction.

1. Win/Win - People can seek mutual benefit in all human interactions. Principle-based behavior.

2. Win/Lose - The competitive paradigm: if I win, you lose. The leadership style is authoritarian. In relationships, if both people aren't winning, both are losing.

3. Lose/Win - The "Doormat" paradigm. The individual seeks strength from popularity based on acceptance. The leadership style is permissiveness. Living this paradigm can result in psychosomatic illness from repressed resentment.

4. Lose/Lose - When people become obsessed with making the other person lose, even at their own expense. This is the philosophy of adversarial conflict, war, or of highly dependent persons. (If nobody wins, being a loser isn't so bad.)

5. Win - Focusing solely on getting what one wants, regardless of the needs of others.

6. Win/Win or No Deal - If we can't find a mutually beneficial solution, we agree to disagree agreeably - no deal. This approach is most realistic at the beginning of a business relationship or enterprise. In a continuing relationship, it's no longer an option.

The most appropriate model depends on the situation. When relationships are paramount, Win/Win is the only viable alternative. In a competitive situation where building a relationship isn't important, Win/Lose may be appropriate. There are five dimensions of the Win/Win model: Character, Relationships, Agreements, Supportive Systems and Processes.

1. Character is the foundation of Win/Win. There must be integrity in order to establish trust in the relationship and to define a win in terms of personal values. A key trait is the abundance mentality that there is plenty for everybody (v. the Scarcity Mentality). The abundance mentality flows from a deep inner sense of personal worth and security.

2. Relationships are the focus on Win/Win. Whatever the orientation of the person you are dealing with (Win/Lose, etc.), the relationship is the key to turning the situation around. When there is a relationship of trust and emotional bank account balances are high, there is a much greater probability of a successful, productive interaction. Negative energy focused on differences in personality or position is eliminated; positive, cooperative energy focused on understanding and resolving issues is built.

3. Performance agreements or partnership agreements give definition and direction to Win/Win,. They shift the paradigm of production from vertical (Superior - Subordinate) to horizontal (Partnership/Team). The agreement should include elements to create a standard by which people can measure their own success.

1. Defined results (not methods) - what is to be done and when.
2. Guidelines - the parameters within which the results should be accomplished
3. Resources - human, financial, technical or organizational support available to accomplish the results.
4. Accountability - the standards of performance and time(s) of evaluation.
5. Consequences - what will happen as a result of the evaluation.

The agreement may be written by the employee to the manager to confirm the understanding.
Developing Win/Win performance agreements is the central activity of management, enabling employers to manage themselves within the framework of the agreement. Then the manager can initiate action and resolve obstacles so employees can do their jobs.

There are four kinds of consequences that management or parents can control - Financial, Psychic, Opportunity and Responsibility. In addition to personal consequences, the organizational consequences of behaviors should be identified.

4. The Reward System is a key element in the Win/Win model. Talking Win/Win but rewarding Win/Lose results in negating the Win/Win paradigm. If the outstanding performance of a few is rewarded, the other team members will be losers. Instead, develop individual achievable goals and team objectives to be rewarded.

Competition has its place against market competitors, last year's performance, or another location or individual where cooperation and interdependence aren't required, but cooperation in the workplace is as important to free enterprise as competition in the marketplace. The spirit of Win/Win cannot survive in an environment of competition or contests. All of the company's systems should be based on the principle of Win/Win. The Compensation system of the managers should be based on the productivity and development of their people. Reward both P (production) and PC (building production capacity).

5. The Win/Win process has four steps.

1. See the problem from the other point of view, in terms of the needs and concerns of the other party.

2. Identify the key issues and concerns (not positions) involved.

3. Determine what results would make a fully acceptable solution.

4. Identify new options to achieve those results.

You can only achieve Win/Win solutions with Win/Win procedures. Win/Win is not a personality technique. It's a total paradigm of human interaction.

Warren Edward Buffett's Time Line - World's Richest Man

1943: (13 years old)

* Buffett filed his first income tax return, deducting his bicycle as a work expense for $35.

1945: (15 years old)

* In his senior year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in a barber shop. Within months, they owned three machines in different locations.

1949: (19 years old)

* In 1949, he was initiated into Alpha Sigma Phi Fraternity while an undergraduate at the Wharton Business School at the University of Pennsylvania. His father and uncles were also Alpha Sigma Phi brothers from the chapter at Nebraska, where Warren eventually transferred.

1950: (20 years old)

* Buffett enrolled at Columbia Business School after learning that Benjamin Graham and David Dodd, two well-known securities analysts, taught there.

1951: (21 years old)

* Buffett discovered Graham was on the Board of GEICO insurance at the time. After taking a train to Washington, D.C. on a Saturday, Buffett knocked on the door of GEICO's headquarters until a janitor allowed him in. There, he met Lorimer Davidson, the Vice President, who was to become a lasting influence on him and life-long friend.
* Buffett graduated from Columbia and wanted to work on Wall Street. Buffett offered to work for Graham for free but Graham refused. He purchased a Sinclair gas station as a side investment, but that venture did not work out as well as he had hoped. Meanwhile, he worked as a stockbroker. During that time, Buffett also took a Dale Carnegie public speaking course. Using what he learned, he felt confident enough to teach a night class at the University of Nebraska, "Investment Principles." The average age of the students he taught was more than twice his own.

1952: (22 years old)

* Buffett married Susan Thompson.

1954: (24 years old)

* Benjamin Graham offered Buffett a job at his partnership with a starting salary of $12,000 a year. Here, he worked closely with Walter Schloss.
* Susan had her first child, Howard Graham Buffett.

1956: (25 years old)

* Benjamin Graham retired and folded up his partnership.
* Buffett's personal savings are now over $140,000.
* Buffett returned home to Omaha and created Buffett Associates, Ltd., an investment partnership.

1957: (27 years old)

* Buffett had three partnerships operating the entire year.
* Buffett purchased a five-bedroom, stucco house on Farnam Street for $31,500.
* Susan was about to have her third child.

1958: (28 years old)

* Buffett had five partnerships operating the entire year.

1959: (29 years old)

* Buffett had six partnerships operating the entire year.
* Buffett was introduced to Charlie Munger.

1960: (30 years old)

* Buffett had seven partnerships operating the entire year.
* The partnerships were: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff, and Underwood.
* Buffett asks one of his partners, a doctor, to find ten other doctors who will be willing to invest $10,000 each into his partnership. Eventually, eleven doctors agreed to invest.

1961: (31 years old)

* Buffett revealed that Sanborn Map Company accounted for 35% of the partnerships' assets.
* Buffett explained that in 1958, Sanborn sold at $45 per share when the value of the Sanborn investment portfolio was $65 per share. This meant buyers valued Sanborn at "minus $20" per share, and buyers were unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map business thrown in for nothing.
* Buffett reveals that he earned a spot on the board of Sanborn.

1962: (32 years old)

* Buffett's partnerships, in January 1962, had in excess of $7,178,500 of which over $1,025,000 belonged to Buffett.
* Buffett merges all partnerships into one partnership.
* Buffett discovered a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share.

1965: (35 years old)

* When Buffett's partnerships began aggressively purchasing Berkshire they paid $14.86 per share while the company had working capital (current assets minus liabilities) of $19 per share, this did not include the value of fixed assets (factory and equipment).
* Buffett took control of Berkshire Hathaway at the board meeting and named a new President, Ken Chace, to run the company.

1966: (36 years old)

* Buffett closes the partnership to new money.
* Buffett wrote in his letter “unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL.”
* In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn, and Co, a privately owned Baltimore department store.

1967: (37 years old)

* Berkshire paid out its first and only dividend of 10 cents.

1969: (39 years old)

* Following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway.

1970: (40 years old)

* As chairman of Berkshire Hathaway, began writing his now-famous annual letters to shareholders.

1973: (43 years old)

* Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors.

1979: (49 years old)

* Berkshire began to acquire stock in ABC. With the stock trading at $290 per share, Buffett's net worth neared $140 million. However, he lived solely on his salary of $50,000 per year.
* Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.

1988: (58 years old)

* Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7 percent of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which he still holds.

1999: (69 years old)

* Buffett is named the top money manager of the 20th century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton.

2002: (72 years old)

* Buffett entered in $11 billion worth of forward contracts to deliver US dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion.

2004: (73 years old)

* His wife, Susan, dies.

2006: (75 years old)

* Buffett announced in June that he would give away more than 80%, or about $99 billion, of his $491 billion fortune to five foundations in annual gifts of stock, starting in July 2006. The largest contribution will go to the Bill and Melinda Gates Foundation.

2007: (76 Years old)

* In a letter to shareholders, Buffett announced that he was looking for a younger successor or perhaps successors to run his investment business. Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.

2008: (77 Years old)

* Buffett becomes the richest man in the world according to Forbes.