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!

MBA Rankings

The Financial Times, which traditionally gives IMD’s MBA the lowest ranking (#14 in the world and #4 in Europe this year) of any publication, just ranked IMD as the #1 school in the world for executive education, tying it with Harvard Business School. The FT also ranked IMD #1 in the world last year in its “ranking of rankings,” which considers the MBA, executive MBA, and other executive education programs. Although I would love to see the MBA ranked higher, my kudos still go out to all of my professors who contributed to the high executive ranking.

Rankings should obviously be taken with a heaping spoonful of salt. However, as a quantitative person, I like knowing how my organization is measuring up against others in specific evaluation criteria. The key is to understand those criteria instead of just taking the ranking at face value. The FT ranking, for example, surveys MBA alumni and asks them questions such as from which schools they are most likely to recruit new MBA graduates, possibly biasing the ranking toward larger schools.

As the rest of the major publications announce their rankings this year, I will keep everyone updated.

Alternative Energy

An anonymous reader posted a comment on one of my previous blog entries asking, “Are there opportunities for MBAs in alternative energy?” My analysis indicates that there are. There is a tremendous amount of investment in alternative energy right now, and investment implies the need for finance, entrepreneurship, and management skills. Alternative energy is also dependent on major deals and partnerships so deal brokering skills are important. R&D and innovation management are also key for many alternative energy companies.

Vestas Wind Energy recruits at IMD and I had the opportunity to bump into their CTO on-campus. We discussed how large alternative energy companies look for leaders to help them solve their major technological challenges, an issue near and dear to my heart, as well. So yes, anonymous reader, I believe that there are many many opportunities for MBAs in the world of alternative energy.

Final MBAT Thoughts

Although I complained a great deal about HEC’s disorganization, the weekend was still a blast. Not to be a total geek, but it felt a lot to me like Harry Potter’s Triwizard tournament. There were schools from all over Europe and participants from all over the world. Each school had its own colors and culture, and everywhere you went many languages were being spoken.

I am proud to have coached/captained both of IMD’s medal-winning teams. I wish I could take credit for the success but the real credit is due to my teammates, who overcame long odds, no time for practice, and the temptation to blow off the tournament to frolic in Paris. Many of them stepped up on a moment’s notice, without any preparation at all, and helped us win through sheer determination. Those who weren’t playing helped through their cheering and support.

Now we are back in Lausanne and the work has piled up. We have a big Strategy project due this week and many more deliverables next week, but the memory of the MBAT is still fresh in our minds. Although my voice is hoarse, my arm and side rope-burned, and my middle finger numb (not sure what I did to it during the tug of war), I am honored to have represented IMD alongside such capable classmates. Now, back to the “real” world!