Rehearsing for Success

Want to win your next negotiation? Role-playing, that much-maligned management technique, could actually do the trick.
From the July, 2002 issue of Business 2.0, page 94

Try this experiment: Mention the term “role-playing” to your colleagues and note whether they a) roll their eyes, b) groan bitterly, c) guffaw, or d) all of the above. (Probably d.) For most businesspeople, role-playing conjures up memories of either some excruciatingly dumb team-building exercise or, worse, group therapy. And that’s a shame, says J. Scott Armstrong, a marketing professor at the University of Pennsylvania’s Wharton Business School. “It’s kind of baffling to me,” he says. “It’s a technique that really seems to work, yet it’s so difficult to get anyone to use it.”

Outside the business world, role-playing doesn’t have the same image problem. Presidential candidates use it to prepare for debates. Legal hotshots like F. Lee Bailey, Alan Dershowitz, and Barry Scheck practice in front of faux juries. Military commanders, too, frequently act out roles to help them anticipate opponents’ moves.

After three decades of research into business decision-making, Armstrong believes that role-playing could work just as well for executives. In recent studies, for example, he and Kesten Green, a researcher at Victoria University of Wellington, New Zealand, asked college students to act out six historical business conflicts and then predict how the problems were actually resolved (see “Role-Playing vs. Game Theory“). The students answered correctly 64 percent of the time on average. Other students, presented with a written description of the disagreement and asked to guess the outcome, were right just 28 percent of the time. Game theorists — who employ a rival model for predicting the outcome of conflict — were right 37 percent of the time.

Conducting a role-playing exercise is about as complicated as setting up a kids’ game of make-believe. If you’re facing a labor negotiation, for instance, divide participants into two groups, one representing management, the other representing the union. Give each group a one-page summary of the situation and its role, and give them time to prepare. Then bring the groups together and have them interact as if they were the real participants.

You don’t need Laurence Olivier, Armstrong says, but for the exercise to be successful, participants must play their parts earnestly. That means stifling the initial urge to guffaw. The payoff is that you could get the last laugh at the end of your next big negotiation.

Role-Playing vs. Game Theory Using historical business scenarios, business professors Armstrong and Green showed role-playing to be much more accurate than game theory at predicting the outcome of real-life business conflicts.
In 1961, Philco Corp. tried to persuade regional supermarket chains to sell its home appliances, promising to offer discounts to consumers. The chains feared losing floor space. The discount strategy persuaded stores to let Philco in.
In 1982, having seen the NFL‘s TV revenues leap during the previous decade, players demanded a 55% cut. After owners rejected their demand, they debated whether to strike. The players went on strike for eight weeks and won concessions from the owners.
In 1969 the Food and Drug Administration ordered Upjohn to stop selling Panalba, an antibiotic that accounted for 12% of its U.S. revenues. Upjohn’s board debated two major choices: give in to the FDA or resist the ban. Upjohn’s board removed the drug from the U.S. market but resisted a complete ban by continuing to sell it overseas.

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R&D spending

How much money is really spent on R&D in the U.S., and where’s it all going? Hard to say exactly, but a wonky study just churned out by the California government does shed some light. Their estimate: $220 billion a year, 20 percent of it in California.

California also happens to be the biggest single recipient of federal research grants: $50 billion between 1993 and 1999. Of that total, 58% went to businesses, 41% to universities.

They break it down by counties, and show that — now this is really interesting — Los Angeles is the biggest recipient of federal research money, San Diego is #2, and Santa Clara is #3.

R&D spending

Loudcloud Discovers Market Darwinism

Loudcloud announced this week that it would exit the Web outsourcing business. Does that mean you should think about running your website in-house? Not necessarily.

As recently as a year ago, managed service providers (MSPs) seemed to be a pretty good bet. The idea behind them made sense: Instead of fronting a lot of money for servers, software, and data centers, you could just hand over those responsibilities to a company that specialized in such technology. The MSP would not only host your site but also maintain it, update it, and fix any glitches — all for a reasonable monthly fee.

Now, though, the biggest MSPs have been swallowed up and are divisions of larger companies, like EDS and IBM. The few remaining stand-alones are dying off or moving into other ventures. This week, MSP pioneer LoudCloud announced that it’s quitting the services market altogether. EDS will buy Loudcloud’s MSP business (comprising about 50 corporate clients) for $63.5 million.

Loudcloud is changing its name to Opsware and morphing into an enterprise software company, selling the systems-management and server code used in its own data centers. (EDS will be Opsware’s first customer, with a three-year, $50 million licensing contract.) And another MSP, the awkwardly named NOCpulse, has announced similar plans to begin selling the software it uses to run its business.

One reason these independents are disappearing is that they lack the credibility of a big technology company like EDS, a fact that even Loudcloud founder Marc Andreessen acknowledges. If a Fortune 500 company is going to trust someone with its website, it’s going to pick a big, reliable service provider that — barring accounting scandals or acts of terrorism — is likely to be in business for the next few years. After getting turned down again and again by large corporations that refused to hand over their Web operations to a small startup, Loudcloud decided to throw in the towel.

“We concluded that it would be far easier for someone who already has a track record to take that business and run with it,” Andreessen says.

But part of the demise of the independent MSPs also stems from the tough business climate right now. Everyone is looking to trim IT expenditures, and getting rid of recurring monthly fees (such as those paid to an MSP) is a fast way to make your budget look svelte. “Companies are looking at who they’re writing checks to,” says Corey Ferengul, vice president at the Meta Group. “Whether it’s cheaper or not, the perception is there that [hosting your own website] is cheaper, because you don’t have to write that check anymore.” Other companies already have hardware and data-center space to spare, thanks to the tech buildup of recent years, and they also have more confidence about managing their own Web infrastructures. Ergo, less outsourcing.

But does this mean you should bring your Web infrastructure in-house? Not necessarily. In fact, such a move may simply be signing on for costs — and headaches — that were once included in those monthly checks. “We believe it probably is still cheaper to go with an MSP in the long run, but some organizations are not doing complete cost capture,” Ferengul explains. In other words, they see one big item in the budget and don’t realize that cutting it only adds dozens of smaller ones elsewhere.

You can tell whether outsourcing makes sense only by looking at the total cost of owning and operating your website — including the cost of such variables as staffing, routine maintenance, data-center floor space, and even electrical power. It’s harder to make this calculation than it is to simply look at the size of a monthly check. But if you’re serious about cutting costs, it’s the only way to go.

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Q&A: Evan I. Schwartz / Author of "The Last Lone Inventor"

San Francisco, California, USA –One clear day in September 1927, in a small San Francisco laboratory, abrainy 21-year-old Utah farm boy demonstrated the first electronictelevision broadcast. But the name Philo T. Farnsworth never became ahousehold word. His efforts to bring television to market were thwarted byDavid Sarnoff, the hard-charging president of RCA, who managed throughdeceit, trickery and drawn-out litigation to delay television’s commercialdebut until 1939 — largely to protect RCA’s then-booming radio business. Bythe time TV really took off in the 1950s, Farnsworth was all but forgotten,and RCA had become a TV powerhouse.

This intriguing tale is revealed in “The Last Lone Inventor,” a newly published book byEvan I. Schwartz (HarperCollins, 322pp., $24.95). Schwartz, who also wrotethe early dot-com classic “Webonomics,” visited San Francisco recently totalk about Farnsworth, Sarnoff and the birth of television.

SF Gate: How did you come on the idea for this book?

Evan I. Schwartz: I was covering the Internet and how it was changing ourlives. I thought the only way to get perspective on all this new technologywas to go back in time and research other communications technologies whenthey were new, and how the public reacted to them. That’s when I startedreading about the story of Philo T. Farnsworth, the farm boy who inventedtelevision.

In the summer of 1998, I went on a little pilgrimage to Farnsworth’slaboratory on Green Street, where he invented television. I couldn’t believethat the building was still there. There’s a [video-production] company,Philo Television, there, and I went up and found all these Philo fans. He’dbecome this inspirational character to some people.

The story had great characters, there are lessons about technology we canlearn and there’s a great setting. I really just became captivated by it,and it wouldn’t let me go.

Your excitement about the topic and your engagement with thecharacters really shows through in the book.

Farnsworth was this ball of nervous energy, and he looked like aninventor, and of course the name Philo T. Farnsworth — I mean, I didn’tmake the name up. He had this gigantic forehead that looked like it had anoversized brain inside — and it probably did, considering the stuff he wasdoing. And then [RCA President] David Sarnoff, who was the world’s firstelectronic-media mogul, he is the villain in this story, but also verycomplex, because he invented this heroic path for himself, and he really lethis ego get the better of him. He got carried away sometimes.

Farnsworth was only 14 when he first conceived the idea fortelevision. How did he get from that moment of insight to his first workingprototype?

He was inspired by the great lone inventors like Edison, Bell,Morse and the Wright brothers. He was reading every science book he couldfind, and memorized Einstein’s photoelectric theory, which won the NobelPrize for physics in 1921. That was the same exact year that Farnsworth wasout plowing the potato fields, looking at the parallel lines in the field.That was his “Eureka!” moment, that the only way to transmit these imageswas to scan electrons [in parallel lines], use them to represent thechanging light patterns then transmit that signal through the air likeradio.

The first successful demonstration of television was in San Francisco onSept. 7, 1927, when he was 21 years old. He unveiled it to the press a yearlater, and the Chronicle broke the story. He had the press conference on aSaturday, and I guess no one else showed up. Public relations was not hisforte.

Sarnoff, sitting in his office in the Woolworth Building [in New York City]– which was the tallest building in the world at that time — when he readthe story, he started devising his plan to steal the idea, or at least delaytelevision, because otherwise it would topple his radio empire.

How did RCA respond once it heard Farnsworth had demonstratedtelevision in his San Francisco lab?

Sarnoff started secretly funding Vladimir Zworykin’s research atWestinghouse. Zworykin had a Ph.D. in physics from the St. PetersburgInstitute of Technology in Russia, and he also believed in the electronicapproach to television. But Zworykin was making very slow progress, so inApril 1930, Sarnoff sent Zworykin to the Green Street laboratory.

Well, Zworykin arrived in April 1930 for three days. Farnsworth and hisbackers showed him everything. They treated him very cordially, because theyhoped to license their patents to Westinghouse — they didn’t know that hewas working with Sarnoff. Zworykin held up Farnsworth’s image-dissectortube, which was the first electronic television camera, and said, “This is abeautiful instrument. I wish I had invented it myself.”

Then he went back to Pittsburgh, at Westinghouse, where he attempted tobuild a crude replica of Farnsworth’s image-dissector tube. He then took itdirectly to David Sarnoff, who put Zworykin to work at RCA Laboratories inNew Jersey — and the race was on to develop a commercially viabletelevision.

Farnsworth was really kind of an anachronism, wasn’t he? His modelsare these solitary inventors — but by the time he started, as your bookdocuments, the process of invention had already become very corporate.

He believed he was going to bring new inventions into the worldjust like his heroes. Of course, by then, companies had sprung up around thenew inventions, all these inventions led to great new industries and themanagers who ran these companies were afraid of the next invention thatwould disrupt or topple their empires. So they began launching these thingsthat were called corporate R&D labs, which didn’t exist in this countryuntil the year 1900, when GE launched GE Labs. By the late 1920s, all thetop 500 companies had their own R&D labs. So Farnsworth didn’t fully realizehe was fighting this new system of corporate-controlled innovation.

If you look at patent ownership from 1931 on, it’s dominated bycorporations, whereas before that point, it was dominated by individuals.

What was the effect on innovation and invention, of that shift fromthe independent inventor to the corporate R&D department?

Well, in terms of being an inventor, you had no other choice. Ifyou were working in a corporate R&D department, with your invention, youwould assign it to the company. In those days you got a check for onedollar. Once you signed the check, the contract was enforced, and thecompany owned the patent. And that’s where the best and the brightest peoplewent to go to work.

In a way, you can’t argue with the success. The corporate R&D labs led tothe whole electronics industry and to the computer industry. But meanwhile,lone inventors were marginalized. They were considered outcasts and nuts. Itjust became unheard-of that an individual was associated with a greatinvention after that, like Edison was with the phonograph or Bell with thetelephone.

The story, I think, is this transition from where society was at thebeginning of the century, which was an independent frontier culture largelydominated by American individualists, to the end of the century, which is atechnology-obsessed, media-controlled culture. Not that there’s anythingwrong with it; it’s a great place to live. I love it. But it wasn’t alwaysthis way, and it wasn’t all that long ago — it was only in the span of alifetime that this massive change happened.

So what does the invention of television tell us about what’shappening right now?

Well, people learned incredible lessons when the market crashed[in 1929]. RCA lost 90 percent of its value, and most stocks were just wipedout. It was worse than the crash we experienced, but the lessons weresimilar. People were more skeptical of corporations — especially involvingtechnology — were very cautious about investments. Yet subsequently,technology became more popular and more powerful than ever. The marketcrashed in 1929, but radio was more popular and more powerful than ever. Themarket crashed in 2000, but the Internet isn’t going to go away. It’s justgoing to become more powerful and change the world in ways that we don’teven know yet.

So, how did things end up in the battle between Farnsworth and Sarnoff?

Well, you’ll see what happens if you read the book. The story takes theseunexpected twists and turns.

Fair enough. At any rate, it sounds like Farnsworth never got therecognition he deserved.

That’s right. Interestingly, the only time Farnsworth was ontelevision, nationally, was on the program “I’ve Got a Secret,” in 1957. Hestumped the panel — they couldn’t guess who he was, and he won $80 in cashand a carton of Winstons. [A video of this episode is available onSchwartz’s Web site.]

By then, of course, television was taking over the country. TV went from 0percent market share in 1948 to 90 percent in 1960. It’s very similar towhat the Web was going through in the ’90s. But Farnsworth was alienatedfrom his invention. At one point, you couldn’t mention the wordtelevision around him.

What was the most exciting point, for you, during the research andwriting of your book?

Interviewing people who were there. I first visited PemFarnsworth, the widow, in December 1999. She was 91 years old. It was reallyexciting meeting her. She’s a remarkable person, and she tells these vividstories. I couldn’t have written the book without her.

And also, just going on these trips, researching and going to these places,like the potato farm where he grew up. There are so many resources in theNational Archives and the Library of Congress, and just finding these olddocuments and memos — it was almost like a detective story.

The Farnsworth family is working for some kind of recognition ofFarnsworth’s role in inventing television, right?

They’re trying to get the television academy to give PemFarnsworth an Emmy — “an Emmy for Pemmy” — during the Emmy broadcast thisSeptember. That’s the 75th anniversary of the invention on Green Street. Andthat’s going to be the last major anniversary, because she’s 94. Farnsworthhas never gotten that kind of national recognition, so it would be awonderful moment in television if they could give her the award. [For moreon this campaign, visit]

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Information You Need, Almost Anywhere

Truant officers in Boston are testing a new system that shows how mobile applications are supposed to work.

Elliot Feldman, director of alternative education for Boston Public Schools, has no illusions about his job. Among other duties, he oversees the school system’s truant officers and meets with every unofficially absent student they pull off the streets. “I deal with the underbelly,” Feldman says. “I’ve seen kids involved in every crime — murder, rape, assault, you name it.” In other words, his job is right out of the TV show Boston Public (only without the melodramatic musical score).

The problem is, each of Feldman’s truant officers has to carry around a 5-inch-thick printout that lists every one of Boston’s 63,000 public school students, along with their class schedules, parents’ phone numbers, and absenteeism records. “If you’ve got a document that’s about the thickness of three phone books, on a windy, rainy day, it’s unwieldy,” Feldman says. That’s one reason his truant officers are so excited about a new mobile application that will let them look up student records using cell phones.

The application, currently in field trials, lets truant officers enter a student’s ID number to get up-to-date information directly from the school system’s database. (Officers get the ID numbers by asking students or by looking at student ID cards; they can also enter just the student’s name if necessary.) Phones are password-protected, and they automatically shut off access to the system after a few minutes of inactivity — so if one falls into the wrong hands, it can’t be used to get information from the database.

This is a classic application of mobile technology: replacing dated, unwieldy printed information with up-to-the-second wireless data. When the system is fully deployed this fall, the program will make truant officers’ lives considerably easier — while also making school-skipping students’ lives that much harder.

The application was built by AirClic, based in Blue Bell, Pa., using its “SmartCode” technology. SmartCodes are based on a simple but elegant idea: With mobile devices, it’s easier to use numeric codes to trigger specific actions than it is to enter alphabetical data one letter at a time. When those numeric codes are coupled with specific information about the person entering them, you can develop some pretty sophisticated mobile applications.

For example, a pharmaceutical company might interpret a product ID code for a given drug three different ways, depending on who enters it. A drug company rep could type in the code, meaning she just left a sample with a doctor. If a pharmacist enters the same code, the application could recognize it as a reorder request and respond accordingly. If a consumer enters the number, the system could beam information about the drug to the customer’s cell phone.

AirClic’s approach is clever, because from the point of view of software designers, mobile phones suffer from a major interface impediment: their size. No matter how smart the phone, you can fit only so many buttons into a couple of square inches. That means it’s difficult to type data into cell phones — severely limiting the kinds of interactivity that mobile applications can offer. Companies that want to build mobile applications will be limited to the 12-key cell-phone interface for the foreseeable future. So why not get used to the idea and build applications that work better in that environment?

The beauty of the SmartCode scheme is that numeric codes are everywhere, from UPC codes on retail products to employee ID numbers to zip codes. According to Lewis Taffer, AirClic’s general manager for North America, SmartCodes will work not just on mobile phones but also on handheld devices like Palms and iPaqs; you can enter SmartCodes by typing, by pressing keys, or even by speaking the numbers into a phone. Add a clip-on bar-code scanner to a mobile phone (AirClic sells one for $150) and you can scan the codes without pressing any keys at all. Don’t expect consumers to start scanning bar codes anytime soon — the scanners are too expensive, and there’s no pressing need for them. But the combination of cell-phone and bar-code-scanning technologies is well-suited to a variety of industrial applications, such as manufacturing or shipping, where physical objects need to be tracked in real time.

The Boston schools’ use of the technology shows how mobile applications can work. The key is to focus on simplifying specific, repetitive tasks and provide an easy means of data entry. It also helps that the Boston application is aimed at a narrow audience with well-defined information needs. Browsing for random bits of information on the wireless Web is a nonstarter — it’s much better for mobile applications to focus on answering particular questions, like “Where is this student supposed to be right now?” and “How can I call his or her parents?”

Meanwhile, Boston’s Feldman says, his truant officers are delighted by their new mobile application. “They’re like kids in a candy store — this technology makes their life infinitely easier,” he says. Let’s hope future mobile applications do more of the same.

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Equally Shared Parenting

One year ago, my wife and I became parents, and decided to share the responsibility of raising our daughter equally. We each work half time, so one of us is always home with our girl.

We found out that it’s not so easy to make equally-shared parenting work, even in a progressive place like the Bay Area. It’s hard to find a part-time job that pays well. Part-time workers lose benefits like insurance and sick days, and they lose status. People think if you aren’t putting in sixty hours a week, you aren’t really working.

Then there’s the perception that dads are just amateur parents. Even though I’m with my daughter every afternoon, I still get patronizing comments like “I see Dad’s babysitting today.”

No wonder so many parents take a traditional path, with a fulltime mom and a wage-earning dad — or else just park their kids in day care. It’s just easier that way.

That’s too bad, because shared parenting has a lot of benefits for children and their parents. For instance, I’ve spent more time with my daughter in her first year than most dads do in five.

According to child psychiatrist Stanley Greenspan, babies need lots of one-on-one time with grownups in order to develop intellectually and emotionally. Kids get more of this attention from their parents than they do at day care centers.

To make equally-shared parenting work, you’ll probably have to accept a lower standard of living. On the plus side, that can lead to more quality family time. How about going for a hike, instead of a movie? The park instead of the mall? Yosemite instead of Disneyland?

Without the traditional roles, you have to make a lot more choices — like who’s going to take Junior to the doctor today? Everything is up for grabs, so you need to spend time talking with your partner — about schedules, responsibilities, and expectations.

It shouldn’t be so hard, of course. Employers can support shared parenting by making it easier to work flex time or part time, without losing benefits. We can encourage fathers to get more involved in the care of their children, by honoring child care as much as having a brilliant career. And everyone needs to get used to the idea of dads pushing strollers.

With a perspective, this is Dylan Tweney.

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