First Dip in the Lake

Strategy went well today and, to celebrate, Mario (Brazilian), Martin (Czech), Tomas (Slovakian), and I forewent studying for tomorrow’s IPE exam to play some beach volleyball. The weather, ~55 degrees F and drizzling rain, was hardly ideal, but we didn’t let that stop us. We played for about two hours straight and all of the games were really close. It wasn’t the best volleyball any of us had played but, by the end, it felt great.

Instead of using the showers by the courts, Martin insisted on taking a dip in the lake. In that I’m pretty sure the shower water is just lake water anyway, why not? I followed him in and Tomas and Mario weren’t far behind. The water wasn’t too cold . . . for a lake fed by glacial runoff! So it was pretty bracing to say the least. It was very clear and we could see the bottom as far out as we went (not very far). We only stayed in for maybe five minutes but, for those five minutes, there was no exam to study for, no job search, no pressure at all. We were just four boys splashing around in the water; it’s a memory of my IMD experience I will definitely take with me.

Now it’s back to the “real” world, however. Most of the other students don’t seem to be studying for the IPE exam claiming that there is nothing to study. I think there is plenty to study and will be spending tomorrow morning pouring over our semester’s worth of presentations on the issues faced by every region of the world. Tomorrow’s exam should be less about regurgitating facts and more about analyzing global issues to make sound policy recommendations. Still, it can’t hurt to have the facts fresh in my mind!

Strategery

Finance went well today. I and Gong Ping, my Chinese classmate, finished first so we spent some time playing ping pong before studying for tomorrow’s Strategy exam. He is much more accomplished than I at ping pong (He’s been playing since he was 3!) so he coached me on my forehand smashes. It was very helpful and I appreciate his willingness to work with me instead of just beating me mercilessly. The spirit of collaboration at IMD extends all way to recreational sports!

Now I am wading through 100+ pages of a Strategy case (plus supporting materials) in preparation for tomorrow’s Strategy exam. The case, unfortunately, was written at Harvard Business School. We have noticed all year that HBS cases tend to be much, much longer than IMD cases, requiring much more time to read and much more focus to distill out the relevant details. No wonder it takes American programs two years to finish an MBA!

Stewart Hamilton is a Bad, Bad Man

Our Accounting professor led us to believe for the past several weeks that today’s Accounting exam would not require us to put together balance sheets or profit & loss statements for corporations with numerous, complex transactions, which we had to do in the Mod I Accounting exam. Consequently, no one studied balance sheets or profit & loss statements for this exam.

You can imagine our shock and dismay when we opened up today’s Accounting exam booklet to find a problem that A. required us to produce a balance sheet and profit & loss statement B. featured some of the most complex transactions we have seen all year, and C. was worth 25% of the total exam grade! Oh Stewart, you codger; just as we thought you were softening up, it turns out that you were just lulling us into a false sense of security. Even his assistant was in on the gag; a few weeks ago she held a review session, dressed in provocative attire (trying to distract us from the danger that lay ahead!), and told us that the only document we would need to assemble on the exam was a cashflow statement. No wonder so many students failed the exam last year!

When I first saw the problem, I was mortified. I hadn’t studied that material and the problem setup was daunting. My MP3 player had just switched to Mozart’s Requiem in D–how fitting. I decided to skip it and come back to it at the end, lest it bog me down and affect the rest of my exam. The other problems were challenging but I felt confident in my answers. As the clock continued to tick, all I had left standing in the way of being done with Accounting forever was this one Devil problem.

I couldn’t remember exactly the methodology I was supposed to use to work through it so I just reasoned my way along. And, after some time . . . it was my most successful solution for such a problem all year. My balance sheet balanced on the first go-round and the P&L fit right in. That helped quell the anger I was initially feeling toward Stewart. Plus, I suppose you can’t blame an Accounting professor for putting something so fundamental to Accounting on his final exam. Perhaps it was an intentional lesson on planning for the unexpected.

The victory over the unexpected challenge was a good note on which to end my Accounting “career.” Next up: Finance. Arturo claims that the exam is exclusively about options but, now that we’ve been stung by Stewart, we’re all refreshing ourselves on capital structure, discounted cashflow forecasts, and CAPM. We’ll just see if our other professors are in on it too!

Bring on the Exams!

This weekend was pleasant and relaxing. I took care of many chores, wrote some papers, and, most importantly, played some beach volleyball. On Saturday our play was cut short by a scary storm that rolled in out of nowhere: very low, very dark clouds, high winds, and lots of lightning. No problem, though; we ran and took refuge in a nearby sailing club, where we had drinks and waited out the storm. The sunset after the storm was brilliant. Sunday there weren’t many people at the courts, which was no problem for me and Tomas. We were able to play for about two hours straight before returning to our studies.

On another, extremely positive note, the mighty Rice Owls baseball team defeated Sam Houston State, St. John’s, and UT (the most gratifying) to advance to the Super Regional tournament of the College World Series. We had a blast at last year’s Super Regional and I miss being able to attend in person. Looking at those pictures again brings a smile to my face.

We have today off to prepare for our four days of exams: Accounting, Finance, Strategy, and IPE. Today will mostly focus on Accounting preparation with some Finance mixed in as well. Strategy will be a case-based exam so not much preparation is possible until Wednesday evening, when we receive the case. The IPE exam will involve taking and defending a stance on a major world issue, citing evidence from disparate regions. It is open book/notes/Internet so, again, there isn’t much preparation I can do in advance.

The weather looks great today–not bad for beach volleyball! No, bad Bryan! Focus, focus . . .

Carmen

Yesterday we made our final presentation for our startup project. After four months of working to add value to our client company, we are enthusiastic about its prospects so had no trouble presenting it positively to our jury of VCs and entrepreneurs. They asked tough questions which made for a challenging, valuable experience.

To celebrate, one of my startup group members, Mathias (French), and I attended a performance of Bizet’s Carmen last night. Perhaps we should have been working on our papers or studying for exams, but relaxing with a wonderful performance and some wine (My first in three weeks!!!) was just what the doctor ordered.

We have this morning free too, as the final startup groups make their presentations. Martin (Czech), Martin’s wife (Czech), and Tomas (Slovakian), and I are seizing the opportunity to play some beach volleyball. Again, maybe we should be working but the weather is beautiful and I can’t pass up the opportunity to get in touch with my Eastern European side.

May 28th

As many of my readers know, May 28th has been a poignant day for me for 18 years now. It was on this day in 1990 that my father lost his 11-year fight against cancer. Not a day goes by that I don’t miss him, but not a day goes by either that I’m not thankful for the time we had together.

He was a remarkable man, born in Lucera, Italy during WWII to my Arabic grandfather and Nonna italiana. He then grew up with four wonderful sisters in a modest little house in Hot Springs, Arkansas–just a few doors down from Bill Clinton, incidentally. I don’t think his parents ever really understood his ambition as he established a promising career in optical physics and moved around the country, but they loved him and supported him all the way until the end.

In the wake of Dad’s death, I discovered exactly how blessed I was. I have a strong, wonderful mother who was more than up to the challenge of playing the roles of both of my parents. I have an extended family who has always been and will always be there for me. And I have devoted friends who accept me unconditionally. Through no fault of my own, I have more than anyone could ask for and for that I am extremely grateful.

So on a day that I always devote to pensiveness and reflection, here’s to you, Dr. Guido Hassin. I miss you. We all miss you. But we’re all better off for having known you.

The Irrationalities of Negotiation

Today we conducted another acquisition simulation, for Finance this time. Our last simulation, for Strategy, was computerized and was built around realizing synergies between the two organizations and generating buy-in from stakeholders on both sides (and external). Today’s simulation was a negotiation between Nestle and Rowntree, a UK-based chocolatier. Our 12 study groups were divided up evenly, half representing the acquiror and half the acquiree.

Last night we submitted our position to a neutral party: which operational/organizational issues were important for us, who we thought had the most bargaining leverage, what our target price was, and what our walk-away price was. The objective was to propose a win-win deal in which both sides ceded some points and came out better in the long run. My group represented Rowntree.

This morning we met with our paired Nestle group and got down to business. We both agreed that we were working toward the same goal and the meeting began very congenially. We compromised and came to agreements on layoffs, organizational structure, branding, and distribution with no problem. However, once the discussion turned to price, the attitudes of both sides soured.

It has been impressive to me how consistently, in every negotiation we have done, no matter how genuine the desire for collaboration is, irrationality and defensiveness play strong roles. Someone will invariably say something inflammatory. This causes the other group to put up its defenses and soon the two groups are “at war” with each other. In this case it came down to the last minute for us. We were bickering over a gap of 25 pence per share. The price was well above my group’s walk-away price and below the other group’s walk-away price. We had agreed on every other aspect of the deal. In short, rationally everyone in the room was prepared to accept the terms on the table but no one’s ego wanted to give up that final 25 pence–or even meet in the middle.

At the last second, as we were being called into class and it looked like no deal would happen. I offered my hand to the other group’s chief negotiator and accepted their terms. I had no authority to do so, but my group went along with it because rationally they knew it was the smart choice. I couldn’t believe how emotions had almost killed a good deal over 25 pence!

The real learning came in class during the debrief. Only half of our groups had reached agreements despite every single one of them having entered negotiations with enough common ground (as illustrated by the positions they submitted last night) to do a deal. One group failed to close based on a difference of 10 pence even though all their other terms were in place–and I thought our 25-pence difference seemed trivial!

The exercise and the debrief were valuable. If there is one thing we have learned at IMD it is that human beings behave irrationally, especially when under stress. Human beings lead and represent organizations (companies, departments, even countries), giving these organizations a sort of collective irrationality. Slowly but surely we are learning to anticipate and identify irrational behavior in ourselves and in others, enabling us to detach from strong situations and make rational decisions. Here at IMD we have the opportunity to test out such skills in a consequence-free environment such that we are more prepared to do the right thing when billions of dollars, the future of an organization, or even human lives are on the line. Real world, real learning.

Beach Volleyball in the Rain

After an incredibly productive several days of work for deskNET, my group’s startup client, I was chomping at the bit to get outside and enjoy the beautiful weather. Most of the class gathered in the auditorium to watch The Constant Gardener, one of 10 movies we must see in preparation for our Discovery Trip to Kenya. Having already seen it, I snuck off with Tomas, the Super Slovakian, to get some volleyball in while it was still light out.

At almost exactly the moment that we played our first point, it began to rain, just a sprinkle at first. Then it came down a little harder. And then harder. By the time we finished our second game, it was pouring. But hey, we were already there so we might as well play. Our opponents had the same attitude so, while the rest of the courts cleared, we managed to squeeze in four games before Tomas had to leave. Sure the conditions were suboptimal, but it was still a blast.

On an unrelated note, I’ve finally returned to my journey through American pop music and have now made it to 1993. It takes me back to my 8th grade graduation dance at Lake Braddock and the beginning of my freshman year at TJ–great memories!

US Immigration

Today’s IPE class featured discussion of Europe’s immigration policies and challenges. In much of the discussion, the US (along with Australia and Canada) was held up as an example of “good” immigration culture. Perhaps I’ve become so bogged down by the US media, where immigration is always a hot topic and our policies are always portrayed as needing to be “fixed,” but it was interesting to hear the perspective of 80+ students from other countries. Apparently the US isn’t doing such a bad job.

One thing this course has driven home to me is that I took so many things for granted growing up in the US. Many, many other places in the world enjoy so much less wealth, freedom, and . . . hope than we do; I feel very fortunate to have, through no fault of my own, had the opportunities I have had. As my Romanian-American classmate points out, perhaps I’m still riding high on the excellent representation of the US brought to us by yesterday’s visit from Warren Buffett. Either way, I’m proud to be an American and God bless America!

The Oracle of Omaha

When I first heard that Buffett would be coming to IMD, I was ecstatic. When I learned that it was Warren Buffett, not Jimmy, I was disappointed but still pretty excited. We prepared and analyzed a case involving Berkshire Hathaway’s first international acquisition, Iscar, and were joined by Buffett and Icsar’s CEO, Eitan Wertheimer. Although we only had an hour with them, they covered a lot of ground ranging from investment strategy to operations policies. However, as is usually the case when we have the case protagonists in class, most of our questions were about softer issues: leadership, culture, and values.

Buffett impressed me as being very . . . real. His personal presentation was exactly in line with the writing style of his letters to shareholders and books: simple, modest, and sprinkled with stories from his entire career. His ability to remember elaborate details from decades ago is amazing. It was also great to have a prominent American here representing good values and responsibility. Moreover, I felt very much at home as he described his love of American football and steak.

Perhaps most important, however, is that I let the Oracle know that I had a prediction of my own: the Rice Owls will win the College World Series of Baseball in his hometown of Omaha this year. I will send him a Rice baseball cap so that he can show his support in June!