Monday, December 28, 2015

Successful Entrepreneurs Must Learn to Negotiate

Successful Entrepreneurs Must Learn To Negotiate

If you can’t negotiate, you can’t be a successful entrepreneur. My new online class at MIT is designed to help both new and experienced entrepreneurs improve their negotiation skills. This includes learning how to handle the four unique features of entrepreneurial negotiation.

Harvard Business School Professor Howard Stevenson had it right when he said that entrepreneurship is “the pursuit of opportunity beyond resources controlled.” That means that no matter what the sector, entrepreneurship requires convincing others—start-up co-founders, angel investors, venture capitalists, employees, and potential business partners —to commit their knowledge, time, reputation, expertise, and money to your idea.  You’ve got to convince them it’s in their interest to do what you want, when you want, the way you want. And, you also have to be able to listen and improvise so you can refine, or even overhaul, your ideas in light of others’ needs and contributions.

These are learnable skills. Studies and experience show that people can get better at negotiation, no matter what their underlying style or background. Self-confidence has nothing to do with it, either. Empirically, confidence is a terrible predictor of one’s negotiation ability. So, if you think you can’t negotiate, don’t be discouraged. And if you think you’re a negotiation genius, don’t be so sure.

My new online MIT Professional Education course, Entrepreneurial Negotiation: The MIT Way, is designed to teach dealmaking skills to people working in start-ups or other entrepreneurial settings. It focuses on the unique features of entrepreneurial deal-making: the importance of ego and emotion; technical complexity; uncertainty; and the need to build and maintain relationships. Most simple buy/sell negotiations don’t always these factors; most entrepreneurial endeavors do.

My online negotiation course is like no other. It teaches negotiation through the use of role-play simulations developed by the Program on Negotiation at Harvard Law School (which I co-founded, and where I have taught executives and students for many years). These sims allow participants to practice the skills they’re learning, and discuss what worked and what they could have done differently. The course also includes video of real people negotiating, and shows me giving them coaching advice using video-recorded highlights of their efforts. The course provides opportunities for students to put their learning into action by writing short (two-page) response papers that other students in the class read and grade using an assigned template.

It is not possible to learn negotiation skills without practicing. And, it is best to practice with someone you can talk to afterwards. So, everyone who registers is urged to have a buddy register with them, so that they can complete four face-to-face practice negotiations.  For those who can’t co-register with a buddy, we have other ways to help you practice.

The course focuses on the four unique features of entrepreneurial negotiations:

(1) Ego and Emotion

Anyone who invents or creates something tends to become attached to it—maybe even a little protective or defensive about it. After all, they’re proud of what they produced—which they understand better than anyone—and have their own ideas about the best way to proceed. They are likely to get upset if someone else even appears to downplay its value. Entrepreneurial negotiations, therefore, almost always involve some degree of defensiveness on the part of the proposer or creator. On the other side, negotiation counterparts, such an investors, tend to have a healthy skepticism about the claims any inventor is making. After all, a large percentage of all new businesses and new ideas fail. Put these two together, and talks are likely to be delicate, perhaps even escalating into increasingly bold claims and deeper skepticism. Such interactions can lead to bruised egos.

Why does this happen? Psychologist Lee Ross at UCLA has identified an important cognitive bias that applies in these situations—reactive devaluation. It causes all of us to automatically question the legitimacy of anything proposed by a negotiating partner. An inventor is inclined to mistrust the statements made by the other side about his or her invention. While investors or business partners almost always start out skeptical about the claims made by an inventor.

There are a number of strategies and techniques that can be used to counteract important emotional and cognitive dynamics like reactive devaluation. Entrepreneurial Negotiation: The MIT Way gives budding entrepreneurs a chance to learn and practice these deal-saving techniques.

(2) Technical Complexity

Many start-ups are built around a technical insight or design. These may involve innovative hardware or software, or a complicated new application of old tools to solve a tricky problem, or capture an untapped market segment. Despite plenty of exceptions, potential investors or business partners rarely have the same specialized expertise as the inventors with whom they are negotiating. That’s why investors often rely on experts of their own to test and vet whatever is being proposed. Asymmetries in technical understanding and the involvement of skeptical experts working for the other side can create difficulties.

For example, experts selected by an investor or potential business partner may represent a particular school of thought on a technical matter that causes them to be skeptical of what is being proposed. When this happens, the inventor has to work especially hard to win over the other side’s expert. Moreover, even in the face of a great idea, an investor’s technical expert might remain skeptical, just to prove his or her worth, reflecting more of a bias than an objective evaluation of whatever is being proposed. In such situations, the entrepreneur will end up negotiating not only with the investor but also, indirectly, with what we call the investor’s or partner’s “back table.”

To negotiate with a back table (even indirectly), entrepreneurs have to find a way to make sure claims about their product or service, based on technical or scientific tests they have done themselves, are convincing. They know the strengths and weaknesses of the tests inside and out. Unfortunately, given typical negotiation dynamics, their results may fail to persuade a back table for the reasons mentioned above. Entrepreneurial Negotiation: The MIT Way teaches “joint fact-finding” – a technique for overcoming this problem.

(3) Uncertainty

Entrepreneurship turns on innovation, and innovation is ripe with uncertainty. The usual argument in favor of something innovative is that no one has ever tried it before. The argument against it is also that no one has ever tried it before. All this uncertainty creates both risk and opportunity. Both are magnified by technical complexity in fast-changing markets and shifting business environments.

Especially at a start-up, reasonable minds can disagree about how to manage uncertainty. Experimentation and creativity help, of course. But in negotiations, investors and entrepreneurs sometimes turn to another tool to resolve their different estimates of what is likely to happen.  Instead of trying to negotiate agreements based on whose forecast is more likely to be correct—e.g., how fast the user base will grow, how soon the company will become profitable, when the next round of funding might arrive, how fast the company can scale up its presence or production—the parties can use “contingent agreements.” These bridge competing forecasts by spelling out what both sides agree should happen regardless of which scenario is correct. In Entrepreneurial Negotiation: The MIT Way, I examine the best ways of using contingent agreements as a hedge against uncertainty.

(4) Relationships

At the conclusion of many buy-sell negotiations, the parties are glad they never have to see each other again. Entrepreneurial negotiations, on the other hand, often require ongoing relationships. Managers need to keep talking to their board of directors; founders need to talk to venture capitalists more than just once. Once they have worked together for a while, they may part company; until then, though, they are best off behaving as if they will have to continue to work together.

There are several ways negotiators should and should not behave when they anticipate the possibility of long-term interactions with their negotiating partners. First, long-term working relationships hinge on trust, and trust depends on truthfulness. My course explores the differences between the kind of bluffing that’s seen as appropriate in many negotiating contexts, and the kind of deceit that sours relationships. Second, when relationships matter, negotiators should avoid win-lose deals that eventually leave one side realizing they didn’t get a fair shake. The alternative is a win-win outcome that benefits everyone, at least one that leaves all parties better off than they would be with any other available deal. This is more if both sides commit to creating enough value to go around. Entrepreneurial Negotiation: The MIT Way explains how to create value through win-win trades that build trust and sustain relationships.

The MIT Way

To be a good negotiator, you need more than mere tactics and technique. You need a theory, one that explains why you should do some things and not others. MIT’s motto (“Mens et manus”) is Latin for mind and hand—theory and practice, why and how. Any good entrepreneurial negotiator must know what to do and how to do it. Without adequate theory, you won’t know how to improvise or apply what you know in new situations.  Without adequate technique, you won’t be able to pull it off. The MIT way is to learn the theory of negotiation (that has developed in academic and business settings over the past several decades) try it out, and then formulate a personal approach to entrepreneurial negotiation that integrates both the why and the how.

The text for the MIT course is Good For You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation. Those who enroll get a free electronic copy.

Thursday, August 13, 2015

The Effects of Climate Change Are All Local: Here's What You Can Do to Help Manage the Risks

We've spent far too much time thinking about the global causes of climate change, and not nearly enough worrying about the local impacts that climate change is already having on coastal communities. The distinction is important. Most of the people pushing for reductions in greenhouse gas emissions are environmentalists or experts worried about future generations. But there is a very immediate constituency – the people being hit with higher costs for insurance, water and electricity, and those facing substantial property losses or a drop in business income today because of increased flooding and water shortages. People who live in a coastal community or on a river nearly anywhere in the world are a lot more worried about what's happening right now, than what might happen to future generations if we don't limit greenhouse gas emissions in the U.S., China, India and elsewhere.  Climate change means too much water or not enough water in the wrong place at the wrong time! It means deadly heat waves. It means radical changes in natural places, animal and plant life and the onset of new diseases. 

Our new book, Managing Climate Risks in Coastal Communities: Readiness, Engagement and Adaptation (by Lawrence Susskind, Danya Rumore, Carri Hulet and Patrick Field) is about to be published by Anthem Press. It tells the story of four coastal communities trying to take climate change-related risks seriously. What they are doing -- and what we have helped them learn from their efforts -- can help other cities and towns fast-forward the adoption of climate risk management measures that everyone agrees on.  Here's what these four communities in New England have done:

1. WHAT WE DID:  The “we” in this story is the New England Climate Adaptation Project (NECAP), a partnership based at the MIT Science Impact Collaborative and the not-for-profit Consensus Building Institute. Our close partners included the National Estuarian Research Reserve System, the University of New Hampshire, and four New England coastal communities. We prepared four Stakeholder Assessments—one for each partner town in Massachusetts, Rhode Island, New Hampshire and Maine. These involved interviews with several dozen officials, activists, business leaders and scientists.  The scientists on our team prepared a local climate change forecast (estimating likely temperature, precipitation and sea level changes in the near term, mid-term and long-term) using downscaled regional climate models and long-term data from local meteorological measuring stations. With all this information in hand, we developed tailored role-play simulation (RPSs). These are "serious games" that ask participants to imagine that they are working in a community a lot like their own, trying to figure out what to do about possible climate risks. We organized several workshops in each of our four partner communities at which more than 100 - 150 people played the games in each place. Workshops were co-sponsored by a wide range of local environmental, business and public service organizations.  The press attended.  We used social media to generate as much interest as we could.

2. WHAT WE WANTED TO LEARN:  We wanted to know if this approach to enhancing community readiness to address climate-related risks works. Does it give people a better understanding of the problems they face, the options open to them, the reasons that experts and locals think differently about what is happening and what ought to be done, and the costs of taking different actions?  Does this approach to public engagement build capacity and political momentum? Does it change anyone's mind?  Does it legitimize the search for immediate "no regrets" actions as far as public spending is concerned?  Does it help the community see why adaptation is a local (not a state or a federal) problem?  To answer these questions, we used independent town-wide polling to establish a base line of public attitudes about climate change before and after the workshops, surveying more than 500 people. We held intensive debriefings with all participants at the end of each workshop. We interviewed almost 25% of the participants 4 - 6 weeks later to see what they remembered.  We did statistical analyses of the results across demographic groups within each community, between those who participated in workshops and those who didn't, and then compared the four communities in the four states. We prepared detailed Case Studies summarizing what we learned in each town. In the book, we summarize all of our findings.

3. RESULTS: A simple, but tailored one-hour game with a 30-minute debriefing can change minds with regard to the importance of climate change, the nature of climate risks, and the need for local action. People from almost all groups (except those so convinced that climate change is not a problem that they refused to participate) learned about the science involved, increased their sense that local governments need to act and became more optimistic that people in their community could and should act together to manage climate risks. Public officials and staff felt more empowered to take action in their respective spheres (public works, emergency response, health services, etc.) after seeing people’s hearts and minds change at the workshops.

4.  WHAT COMMUNITIES CAN DO.  Communities facing climate change-related risks have a few different options: they can do nothing and hope for the best. They can invest in emergency preparedness so they are better able to respond and recover from crises. They can "retreat" from the most vulnerable areas. They can try to defend themselves by building protective infrastructure and adopting new policies, such as land use regulations and building codes. They can mix and match elements of each of these strategies. Whatever they decide, they will need widespread support because it will take public and private cooperation and a continuous, not a one shot, effort to bring all but one of these options to fruition. Individual landowners, businesses, environmental activists, public agencies and taxpayer groups will have to work together. 

5.  WHAT WE LEARNED: Above all, communities must enhance their level of readiness if they expect to address climate risks. They will have to provide opportunities for widespread public involvement in something other than a few "town hall" meetings at which pre-packaged information is handed out and people are lectured at. They will have toh help taxpayers understand that there are "no regrets” moves they can make to reduce climate risks while simultaneously accomplishing other important objectives at the same time. For example, using this year's open space preservation money to create natural barriers along the shore can provide storm protection for private property owners, reduce saltwater intrusion into freshwater wetlands (protecting underground water supplies), armor waste disposal and electricity infrastructure, and minimize flood risks. 

6.  OUR TAKEAWAY: The sooner the U.S. shifts its focus to reducing local vulnerability to climate risks (so that everyone can see what the costs are going to be year after year as climate change accelerates), the sooner there will be more of a political constituency that wants to get at the source of the problem. So, unlike many who worry that any talk of adaptation detracts from global efforts to push for mitigation (i.e. reduction in greenhouse gases), we take just the opposite view.  We think the political pressure for mitigation is not strong enough to push for a global action plan or new US laws because people don’t recognize the costs to them today.  Now is the time to highlight what it’s going to take to help vast numbers of coastal and riverine communities all over the world avoid paying immense costs just to survive in the years ahead. When they see what it really costs to manage climate risks, we believe they will care much more about the underlying cause, and quickly become the missing constituency needed to push for global emissions reducing policies.

6. WHAT CAN YOU DO?  Get your community to play the serious games we have developed (or look for a range of local partners that will help adapt the games to your local conditions). Do a simple, anonymous assessment to understand what everyone's real views are at present on issues of climate change (you might be surprised!).  Use our before-and-after surveys to document the shifts that occur once people start attending workshops and playing the right games.  Get local officials and community activists to be the first to play the games and talk about what the results suggest for your community. Involve the local media in reporting the story.  Adopt a consensus building approach to formulating a collective risk management plan for the community. Don't wait for extensive state or federal direction -- it's probably not coming anytime soon. Emphasize the search for no-regret options -- things you can do right away that are good for multiple reasons AND will reduce your community's vulnerability to sudden climate change. 

You can order our book from Amazon.  You can learn more at

Sunday, June 7, 2015

It's the Process, Stupid!

For part of every year, I live in the most libertarian state in America. My family and I have spent our summers and winter vacations in the same small cabin on a lake for more than 25 years. The town we live in has about 1350 residents (about 900 of whom are 18 or older). It spreads out over about 30 square miles. There is a state road running through the town that is zoned for commercial use; otherwise, the town, in its master plan has chosen to ban heavy industry (particularly oil and gas distribution centers and junk yards). So, the town doesn't offer many jobs and most people commute to work. The several lakes in the town and beautiful New England setting attract a lot of out-of-towners and vacationers. Right now, the residents are up-in-arms because the town has approved construction of an oil and gas distribution center in the commercial zone.  The site in question is in a 100 year flood zone, in a wetland and over an aquifer recharge area.

The story of how the project was approved is worth telling because it underscores, even in a state that is strongly anti-government, that people don't like it when someone, however well established in town, plays fast and loose with the rules of the game.  The landowner of the site got himself appointed head of the local Zoning Board. The Board heard the applicant's request for a zoning variance (making an exception and allowing heavy industry in a commercial zone) at a meeting when the public was not present. (The public wasn't present because notice of the meeting was placed in a newspaper in the state capital 30 miles away. Less than 1% of the town subscribes to that paper.)  At the meeting, the chair of the Board stepped down for a few minutes, recused himself, walked around to the other side of the microphone and presented his request for a variance.  During the discussion (with no legal counsel present), he advised his fellow Board members that they were empowered to grant the variance, and that's what they did. Almost all were newly appointed. (One member, in private conversation, indicated that he felt pressured to go along.)  The minutes of the meeting (again, which almost nobody knew about) were not posted in the town hall until AFTER the 30 day period for a legal appeal of the variance had passed.

Next, the site plan for the new oil and gas distribution center went to the Planning Board. The Planning Board held an extended public hearing that stretched over several evenings and several weeks. The professionals hired by the applicant offered a detailed site plan.  Strong concern was registered by nearby residents (who had not received any notice of the request for the zoning variance because the land owner kept a small strip of land between the proposed project (which was now in the the hands of the oil and gas company) and the neighbors. Thus, technically, they were not abutters. The way the Planning Board operates in this state, since it made up of citizen volunteers and has no professional staff of its own, is to rely on what the applicant submits.  When concerned citizens pointed out that even a small leak could spill across the road into the nearby brook and contaminate two of the lakes in the town, the applicant's engineer assured the Planning Board that the containment plan they had in mind wouldn't allow this to happen. When residents complained that
the whole facility was in violation of the town master plan (which clearly excludes heavy industry), the applicant's lawyer pointed out that the Zoning Board had granted them a variance. When residents raised concerns that the volunteer fire department did not have the necessary equipment or training to deal with a propane or fuel oil fire, the specialist hired by the applicant explained that their leak detection and containment system would head off any such problems.  The Planning Board didn't buy this, so the applicant offered to pay for new equipment and training for the local fire department. When other critics of the project pointed to sink holes that had already formed on the site (because so much of the soil was disturbed when the site was excavated and regraded), the applicant's engineers said they would put the tanks on concrete pads.  When still others pointed out that the site is in a seismically-active area and the pads (and tanks) might crack, the engineer said that they weren't required to make the facility earthquake-proof.

The town by-law only requires a drainage plan sufficient to deal with a 10 year flood. An engineer hired by concerned "abutters" said that a 100 year flood analysis would make more sense.  When citizens at the hearing pointed out that very large tanker trucks would be heading to the site at least three times a day and turning off a highway (with a 55 mile an hour speed limit and a passing lane coming from the other direction), the applicant said that they had already received approval from the state highway department. When neighbors asked for trees to hide the tanks from the highway, the project developer indicated, at first, that wouldn't be possible because the police and fire chiefs needed to be able to see the tanks from the road to ensure security. (They later backed off this claim and agreed to add a visual barrier.) When residents asked that the Planning Board require the site owner to carry insurance sufficient to cover any and all costs of accidents and leaks, the Planning Board claimed that it was not empowered to do this. The back-and-forth continued for many hours. Some residents had done their homework and discovered that the applicant had similar facilities at several other sites that had been the target of state and federal enforcement actions. The Planning Board ruled such comments out of order, claiming they were only entitled to look at the details of the site plan.  Eventually, the Planning Board was caught in the middle between friends of the applicant and angry opponents. The town Board of Selectmen indicated that there was nothing they could do because the project was in the hands of the Zoning Board and the Planning Board.

It took only a few weeks for a petition to the state Attorney General asking for an investigation to gain almost 300 signatures (about 1/3 of the adults in town). The Attorney General, though, will probably find that the Zoning Board followed the letter of law.  It seems the rules regarding public notice and recusal of officials are pretty vague. The Planning Board's final approval is likely to be tied up in court for the next several years. How is it possible for a Planning Board to protect the public health, safety and welfare (to say nothing of the ecosystems involved) if it has no independent environmental impact assessment or risk assessment to work from, even for one of the riskiest projects in the town's recent history? How can it be OK for a landowner to take his request for a project that is clearly barred by the town master plan (as well as by a plebiscite when the master plan was updated) to a Board that he heads? How is it possible for public notice requirements to permit no notice to nearby landowners and no posting of the minutes of a Board meeting within the period in which residents are allowed to appeal such a decision?

What's interesting is that signs have started to sprout all over town saying "No Tanks."  Residents in this libertarian state are looking to their local officials to "do something" about the threat posed by the project. Other commercial interests along the state road are worried that heavy industry in the commercial zone may pose risks to them and adversely affects the business climate. The state-wide daily newspaper has begun to cover the story, indicating that such manipulation of local boards is not in the best interests of the state. Even if the courts uphold both the Zoning and Planning Board decisions, residents won't forget what happened. I doubt the oil and gas distribution company will have very many local customers. In the end, even if the letter of the law is followed, but the spirt of the law and basic fairness to neighbors are violated, everybody loses.  Opponents will face ongoing and unnecessary risks (and loss of property values), while proponents will besmirch their good name, lose market share, set a troublesome precedent and face extended legal fees.

Better for local governments, even in a libertarian state, to set and follow clearer and more sensible ground rules. And then, everyone needs to abide by the process.   

Tuesday, May 12, 2015

Evaluating a Consensus Building Effort

I worry a lot about how to evaluate the success or failure of consensus building efforts in which I get involved.  When I try to convince someone in a position of responsibility to commit to consensus building, I need to tell them how they'll be able to gauge the results.  Assume, for example, that I a am able to persuade a public official to (1) spend $50,000, and (2) require agency staff (as well as more than a dozen non-governmental participants) to commit the equivalent of one day a week for several months trying to reach agreement about when, whether and how to proceed with a controversial project.  If the project is going to cost several million dollars -- and generate tax revenues for the city for many decades to come -- it is easy to point out that $50,000 is a small price to pay for ensuring broad-gauged public support, especially if the group is able to reach an agreement among all (or nearly all) the participants. But that's not a sufficient measure of success, is it?

And, what if the agreement is not unanimous?  Someone opposed to a project now supported by a larger group may have a harder time blocking implementation (and pursuing their own interests). From that person's standpoint, a nearly-unanimous agreement is not a good thing. And, what if the agreed upon version of the project is going to cost the city a lot more than the original proposal?  Without a consensus building effort, the project might still have gone ahead, albeit with only lukewarm support from some of the stakeholders. To get agreement (which is still worth it to the city), local government might be required to pony up additional resources. Someone whose best interests are served by blocking any and every version of the project and for whom no amount of  compensation of any kind would justify their support will feel that nearly unanimous agreement is a bad outcome. .

More specifically, here are the three questions I ask myself when I try to evaluate the success or failure of a consensus building effort:  Was agreement reached (and did the agreement meet the interests of all or almost all the stakeholders)?  How does the agreement compare -- in terms of the fairness, efficiency, stability and wisdom of the choices that were made -- to what the parties would probably have been forced to accept?  And, are there spillover effects of the agreement and the consensus building process that should be taken into account in my overall assessment of the results?

Agreement Reached?

If all the parties support the agreement; that is, if they believe there interests are well met; I would probably say the process is a success. Of course, the agreement must be reached without spending an exorbitant amount of time or money. And, the parties had to have a pretty good idea when they came to the table of what their interests and walk-away options looked like.  If the process brings some people to their senses or helps them clarify their priorities and their walk-away alternatives, that, too is a measure of success -- even if no agreement is reached.

Sometimes one or more parties will oppose an agreement even though everyone else is happy with it. Since most consensus building efforts do not commitment to unanimity, I might still judge the outcome a success.  It may be,  the rest of the group ganged up one party -- an outlier whose interests are diametrically opposed to everyone else's. On the other hand, assuming the rest of the group has made a good faith effort to meet the interests of the one left out, I would probably say the process was a success. the exception, though, is when the one left out holds the key to moving forward (i.e. the developer who is financing the project).  Then, if an agreement can not be implemented, the process is clearly not a success.

So, the extent to which the parties feel that the consensus building process helped them reach an agreement that meets their interests is a key to the success of the effort. If the agreement is not unanimous, it might still be successful as long as the group makes a good faith effort to meet the interests of the one left out.  And, if the outlier was seeking primarily to play a spoiler role, everyone else may judge their agreement a huge success.  If the process helped the parties recalculate their priorities and check the reasonableness of their expectations, even if no agreement is reached, I might still say the process was a success.  No agreement is sometimes the right outcome, especially if there is no "solution space" in light of party's next best option.

As Compared to What?

Even if the group reaches agreement, we still need to consider the fairness, efficiency, stability and wisdom of what they have worked out. In my book Breaking the Impasse (Basic Books, 1985) I explore each of these criteria in more detail.  If an agreement is reached by papering over fundamental differences, the desired results may not be achieved, even if the strict terms of the agreement are implemented.  My Dutch friends call this "a thin ice agreement." If the participants were tired, and agreed to something contrary to their interests, they'll reneg and implementation will fail.  Sometimes the parties agree to endorse to something without checking back with their constituents (i.e. their back tables).  The agreement may well fall apart in such cases.  Furthermore, circumstances may change during implementation. If the parties fail to consider important contingencies (and structure their agreement accordingly), whatever they are hoping to achieve won't happen. So, we can say, in retrospect, that an agreement wasn't wise (even if we can't say that at the point at which it is signed).  Judging whether an agreement (and the process leading up to it) is fair, efficient, stable and wise requires the passage of time. Looking back, it might be obvious that the parties ignored or misread information readily available to them.  These are all situations in which agreement, in and of itself, is not a sufficient measure of success.

Spillover Effects?

The assessment of any consensus building process hinges, in part,  on the goals the parties set for themselves at the outset.  In the midst of a hopeless deadlock, stakeholders might set as their goals rebuilding trust and generating a few good ideas (that might give root to longer term solutions).  So, a process could be successful even if an agreement is not reached.  It all depends on the goals of the participants.  If an agreement is reached,  but in the process relationships are undermined; for example, it turns out someone didn't negotiate in good faith and that become clear only after an agreement was reached, I might judge the process a failure.  I also want a consensus building effort to make it easier for the parties to deal with each other in the future. I want to help build trust, increase empathy and enhance appreciation for the views of others.  I want to help the parties internalize the ground rules essential to joint problem-solving.  If all of these things don't happen, even if agreement is reached, I might decide that the process failed.

In Sum

Its hard to answer the three questions with which I began.  Moreover, the answers may vary depending on who you ask. Averaging the  results (across all stakeholders) just muddies the result. Aggregating across the participants hides what could be serious adverse effects on the least powerful or the least articulate stakeholder.  On the other hand, netting out the results in a way that assumes that each participant must achieve a result that at least equals what they would have gotten if there had been no consensus building effort, is probably a reasonable way to gauge the outcome.  I also try to incorporate an assessment of what the participants learned  (about each other and how to participate in such a consensus building process).  If I can say that everyone got at least what they would have achieved without the consensus building effort -- and some got more -- while some (or most) of the participants felt they learned how to advance their interests more effectively in the future, then I would say a consensus building effort was successful.

Sunday, April 19, 2015

The Academic Life: Not much of a Community

I've been part of the same academic department for more than 40 years. For 12 of those years, I had management responsibility. All told, there have been 12 different heads of the Urban Studies and Planning Department since I arrived in 1969. I've seen six university presidents come and go.  I've also seen how six Deans of the School of Architecture have approached the increasingly difficult task of trying to make sense of our school with its Department of Architecture, Department of Urban Studies and Planning (DUSP), The Media Lab, and Center for Real Estate that offer 20 different degrees.  Because I am on sabbatical, I have had a chance to reflect on the most significant changes in the way my Department was run in the past and the way it currently operates.  Don't get me wrong.  I'm quite happy where I am, or I would have left. And, the MIT administration (at a very centralized institution) has been quite generous with the Department.  But, the differences in what academic life used to be and what it is like now -- in the same department in the same university -- are worth noting.

The size of the tenured faculty has remained relatively stable for more than a decade (although we probably have the largest tenured faculty of any of the 70+ planning schools in North America).  We haven't switched to part-time, adjunct faculty the way many schools have.  We do have several Professors of Practice and full-time non-tenured faculty because we need advanced practitioners to help teach practice-skills, but mostly we have full time tenured or tenure-track faculty. We just hired four new faculty members this past year.  Our two-year professional master's of city planning degree has about 120 students. That's been stable for a long time.  There are still three or four applicants for each slot ever year.  There may be a slight uptick in the number of international students in our MCP and PHD programs over the past 20 years, but not much. The PHD Program mostly takes students with a prior master's degree who stick around for four to five additional years. There are 50 - 55 full time enrollees and 12 - 15 applicants for each of the 10 - 12 slots we fill each year.  They are an extremely eclectic group  with impressive scholarly credentials and a lot of practical experience in the public sector or in civil society.  It's a big department with lots of resources.  It's not so large by MIT standards, at least insofar as the engineering and science departments are concerned, but 30 tenured or tenure-track faculty is large by comparison with all other department of the same kind.  So, we have a lot of graduate students and a large faculty. (N.B. In the 1970's, when "urban problems" in America were on the front page every day, we had to cap the number of undergraduate majors in the department at 50.  Now there are fewer than 20 undergraduate majors, and they are more environmentally focused.)

Students and faculty in the Department of Urban Studies and Planning continued to be divided into program areas -- city design and development, environmental policy and planning, international development, and housing and community economic development along with cross-cutting areas like transportation planning and urban information systems. These divisions, however,  are a lot less useful than they used to be because students and faculty are engaged in research on issues like renewable energy, climate adaptation, housing development in China, and the impact of social media on public participation that don't fit neatly into the four long-standing categories. The list of more than 100 classes offered every year by our faculty would startle you.  And, a great many DUSP faculty teach and do research with faculty in other MIT departments or other universities, extending the geographic and topical scope of the research in the Department even further. It's hard to know which research funds are unique to our department, but I would estimate that our faculty are part of more than $5 million in sponsored research every year.  We just received one of the largest gifts ever made to MIT -- $118 million -- to support a new Real Estate Laboratory with a sustainable development orientation and an emphasis on China.  The scope and content of what we teach and the research we do changes to reflect what is happening the world at large.  That's not surprising.

What is surprising, though, is that the way we used to make decisions -- as a faculty -- and the full partnership role that students had,  are both gone. The faculty has occasional meetings to hear what has already been decided (by a small sub-committee or the Department Head),  but rarely invests in anything like the extensive debates we used to have about what our objectives or policies ought to be.  Students are asked their opinions, but they no longer serve as voting members on committees and, because of federal laws (and fear of lawsuits), they can no longer read letters of recommendation for student applicants or potential faculty hires.  Indeed, the entire relationship between graduate students and faculty has changed. Students do not feel free to speak their minds with their faculty advisors. They are too worried about how they will be judged (or who they might offend). Junior faculty do everything they can to avoid making statements that might be divisive.  They can't afford to alienate senior faculty who hold their futures in their hands. Most of the faculty and most of the graduate students have very little curiosity about what their peers (in the Department!) are doing.  They are too busy doing their own work. I doubt that very many faculty would say that their colleagues are among their closest friends (although that definitely used to be the case). While I'm sure that graduate students have close friends among other students in the Department, my sense is that the scope of those connections in the Department are quite limited.  Everyone is very busy, very scheduled.

Maybe that's the way it needs to be. But, I miss the freewheeling debate among the factions in the Department that could always be counted on to have strong feelings about current public policy questions. I miss the student-faculty interaction in which the students were as passionate, outspoken and uninhibited about their views as the faculty Everything seems more businesslike now.  Each person sticks to their own knitting. Even though I send copies of my new books to almost all of my colleagues, I doubt any of them has read them. Not one person in five years (and I published a new book almost every year or two) has come back to me and asked to talk about what I've written. Almost no one sends copies of the articles they publish to anyone other than the one or two faculty in exactly the same area of specialization.  When I travel out of the country with some of my colleagues and listen to them present to foreign audiences, I'm more likely to learn about what they are doing.

I don't know if my academic department is typical of others. But the loss of comradeship, the absence of spirited debate, curiosity about what colleagues are thinking and doing, and the lack of interest in collective governance (indeed, many faculty want to be left off committees and actively find ways of avoiding "administrative assignments") make day-to-day life in the university a lot less interesting than it used to be. The sense that graduate students "need to know their place," represents a loss for both the students (who are likely to treat their own students the same way in the future) and for the faculty who would otherwise be pushed harder to think about what they believe and why.

All told, even though my department is much richer in many respects, and the individuals involved are as smart and well-educated as they ever were, it doesn't feel like much of an intellectual community.  We had a series of large departmental meetings last year at which faculty were given 5 minutes to present a "lightening round" talk about their work. There were one or two questions asked by people who, in fact, were not familiar with the years of research summarized in each five minute talk (with jazzy power point slides, of course). I found it profoundly disappointing, but so typical of what passes for our "intellectual community" these days.

Wednesday, April 1, 2015

Reaching Agreement on the Nile

Egypt, Ethiopia and Sudan recently signed a Declaration of Principles aimed at resolving an increasingly contentious dispute over Ethiopia’s ongoing effort to build the $4.6 billion-dollar hydroelectric power plant project called the Grand Ethiopian Renaissance Dam, Africa’s largest. The Declaration does not seek to resolve the larger question of how the overall waters of the Nile will be shared.  The fact that the Declaration was signed is an important accomplishment. I want to look closely, though, at the ten principles spelled out in the Declaration because I’m worried that some may be difficult to implement. [For a full translation of the agreement see]  I am also concerned about how the Declaration relates to the ongoing effort to reach agreement on the more comprehensive Cooperative Framework Agreement (CFA) that six of the Nile Basin countries have signed, but that Egypt and Sudan still oppose.

The Principle of cooperation 

This principle speaks of “cooperation based on mutual understanding, common interest, good intentions, benefits for all, and the principles of international law.”  The reference to international law is important.  Subsequent interpretations of whether the signatories are indeed living up to their responsibilities can, at least, be interpreted in the context of the 1997 United Nations Convention on the Law of the Non-Navigational Uses of International Watercourses. 

The Principle of development, regional integration and sustainability

The Declaration indicates that the “purpose of the Renaissance Dam is to generate power, contribute to economic development, promote cooperation beyond borders, and regional integration through generating clean sustainable energy that can be relied on.”  It does not acknowledge that the three signatory countries are likely to have different objectives, at different times, with regard to energy production, agricultural needs and the allocation of water to support urban development.  The idea of “regional integration” is hard to fathom.  Each country will undoubtedly prepare its own development plans and pursue its own idea of what sustainable development requires.  I’m afraid that the practical implications of this Principle are entirely unclear.

The Principle of not causing significant damage

The Declaration calls for “the three countries [to] take all the necessary procedures to avoid causing significant damage while using the Blue Nile.”  International law already makes clear that all riparian countries are obliged to avoid causing significant harm as they seek to use transboundary waters. The Declaration goes on to say, “In case significant damage is caused to one of these countries, the country causing the damage [...], in the absence of an agreement over that [damaging] action, [is to take] all the necessary procedures to alleviate this damage, and discuss compensation whenever convenient.”   Here, again, it is hard to know what this will require in practice.  Alleviation of damage could mean removing the dam.  Is that what Ethiopia is committing to?  Compensating the costs of damages is a complicated proposition, not just determining the amount of compensation this is appropriate, but deciding to whom and how it should be paid.  No new instrumentality for determining whether significant damage has been caused or alleviating damage (or requiring compensation) is described in the Declaration.

The Principle of fair and appropriate use 

The Declaration says that the countries involved “will use their common water sources in their provinces in a fair and appropriate manner,” taking account of
“natural” and “climatic” elements, “social and economic needs,” “the needs of residents who depend on the water sources,” and “current and possible uses of the water sources.”  What does this mean?  Fair and appropriate use is very much in the eye of the beholder, although I am presuming they meant to reference the language of the UN Watercourse Convention that talks about “equitable and reasonable utilization.”  The Declaration goes on to speak about proportionality (again, presumably with reference to the UN Convention): with regard to “the extent of the contribution of each of the Nile Basin countries in the Nile River system” and the “extent of the percentage of the Nile Basin’s space within the territories of each Nile Basin Country.”  This is confusing.  The reference to the Nile Basin (the full Basin presumably) goes well beyond the sub-basin. Yet, only three of the 12 countries in the full Basin are involved as signatories to the Declaration.  And, even if the Declaration is referring only to the sub-basin, the percentages implied are likely to be contested.  Under similar circumstances, in other parts of the world, disputes have arisen because transboundary water users tend to calculate their proportionate shares differently.  The Declaration says that “Elements of preserving, protecting, [and] developing [water sources] and the economics of water sources” should be taken into account in determining fair and appropriate use.  Again, determining what these costs are, is likely to be contentious.

The principle of how the dam's storage reservoir will be filled initially (and dam operation policies)

The three nations intend to create a Technical Committee with four experts from each country. This Tripartite Technical Committee will need to undertake a number of additional studies to determine the possible impacts of the dam. The Tripartite Committee is expected to take account of the recommendations made by a previous international panel of experts.

Joint fact-finding is a very good idea. It is probably the most important feature of the agreement.  The Declaration calls on the Tripartite Committee to analyze “different scenarios of the first filling of the Grand Ethiopian Renaissance Dam reservoir in parallel with the construction of the dam.”  It also calls for the development of “guidelines and annual operation policies” for the Renaissance Dam.  It doesn’t say, though,  that these policies should be developed in cooperation with the managers of the Aswan High Dam in Egypt.  There is no parallel situation in the world in which two large dams in such close proximity  are not managed in concert.  The Declaration does call on Ethiopia “to inform downstream countries, Egypt and Sudan, on any urgent circumstances that would call for a change in the operations of the dam, in order to ensure coordination with downstream countries' water reservoirs.”  That is a far cry from close cooperation in the management of the two dams.

The principle of trust building

The Declaration says that “downstream countries will be given priority to purchase energy generated by the Grand Ethiopian Renaissance Dam.”  Since Egypt is worried that the filling of the GERD will impair its ability to generate the electricity it needs, the idea that Ethiopia will sell Egypt electricity is very important.  In fact, the Declaration calls for a more concrete form of benefit-sharing than anything mentioned in the CFA. However, being “given priority” says nothing about price and availability.  It is highly unlikely that Egypt wants to become dependent on Ethiopia, at least at the present time, for the electricity it requires. So, it is not clear how the sale of electricity will build trust.  It could be, if Ethiopia promised to replace, free-of-charge, any electricity that the filling of the GERD causes Egypt to lose, this would constitute a “confidence building” or trust-building measure.

The principle of exchange of information and data

Egypt, Ethiopia and Sudan have promised to “provide the information and data required to conduct the studies of the national experts committees from the three countries in the proper time.”  The Declaration does not say what information this covers.  Nor does it say what the penalties or remedies are if accurate and timely information are not forthcoming.

The principle of dam security

The three countries “appreciate all efforts made by Ethiopia up until now to implement the recommendations of the international experts committee regarding the safety of the dam.”  I won’t review the content of these recommendations in this blog entry, but the international experts involved questioned the adequacy of the design of the GERD as well as the accuracy of certain forecasts regarding the likely impact of filling the GERD on downstream countries (i.e. Sudan and Egypt).  The Declaration says that “Ethiopia will continue in good will to implement all recommendations related to the dam's security in the reports of the international technical experts.”  It is not clear whether this refers to the recommendation of the earlier international experts’ report (which called for a temporary halt in construction until certain safety issues could be reviewed and resolved), or whether it refers to subsequent safety recommendations of the new Tripartite Technical Committee.

The principle of sovereignty, unity and territorial integrity

The Declaration promises that the “three countries [will] cooperate on the basis of equal sovereignty, unity and territorial integrity of the state, mutual benefit and good will, in order to reach the better use and protection of the River Nile.” This is somewhat confusing.  The emphasis on equal sovereignty and territorial integrity suggests that each of the three countries has a right to pursue its self-interest with regard to the waters of the Blue Nile.  Cooperation and unity, on the other hand, suggest a commitment to their shared interests. To some observers, these commitments might appear to pull in opposite direction. A different interpretation, though, is that the Declaration is intentionally acknowledging the 1959 Nile Basin Agreement that gave Egypt veto power over any development decisions regarding the Nile. The Declaration seems to embrace the new language of the CFA or, at least, the idea that there needs to be cooperation and shared decisions making about major development projects (and that Egypt will no longer have unilateral control). 

The principle of the peaceful settlement of disputes

Finally, the Declaration calls on the three countries to “commit to settle any dispute resulting from the interpretation or application of the declaration of principles through talks or negotiations based on the good will principle. If the parties involved do not succeed in solving the dispute through talks or negotiations, they can ask for mediation or refer the matter to their heads of states or prime ministers.”  I’m delighted to see an explicit reference to the need for dispute resolution.  Most dispute resolution clauses in other international agreements, though, are a lot more specific about the ways in which mediation is triggered (and supplied) and how a definitive resolution of differences will be achieved (i.e. through arbitration of some kind). 

The Declaration represents an important breakthrough.  From all reports, construction of the GERD is more than one-third complete and concerns raised by the International Panel of Experts have Egypt worried that the filling of the GERD could cause water shortages or adverse water quality effects in Egypt.  Sudan is finally a partner in these conversations. The GERD will make it easier for Sudan to store water and enhance its hydroelectricity production. All of these are positive features of the Declaration.  However, the other countries upstream are probably wondering what the Declaration means with regard to Egypt’s willingness to sign the CFA and allow a full basin partnership to come into effect.