The Parlor Room

In the first of two special episodes featuring Season 1 bonus content, host Chris Linnane shares exclusive, unaired clips from his conversations with Harvard Business School faculty members.

Tune in to hear from Mike Wheeler on negotiation, Jill Avery on branding, Jeff Bussgang on entrepreneurship, and Nien-hê Hsieh on ethics and artificial intelligence.

Catch up on Season 1 of The Parlor Room:

Mike Wheeler on the Jazz of Negotiation: https://hbs.me/2p8khc9j

Jill Avery on Building a Winning Brand Portfolio: https://hbs.me/yck3ytv6

Jeff Bussgang on the Rise of AI & Raising Venture Capital: https://hbs.me/y5t28vmw

Nien-hê Hsieh on Ethical AI, Decision-Making, and Investing: https://hbs.me/yckvtvxn

Transcript

Chris Linnane:

The Parlor Room is an official podcast of Harvard Business School Online.

Welcome to The Parlor Room, where business concepts come to life. My name is Chris Linnane, and I'm the creative director of Harvard Business School Online. Those of you watching the video version of this episode may notice that I'm not actually in the room right now. I'm in my home studio. That's because this is going to be a different type of episode, and I'll tell you why. Every time I sit down with a guest, we talk for over an hour. Then I have to cut it down to 15 to 20 minutes, and that's not easy because I often need to cut out great sections. Then I also cut around 15 minutes of me looking confused and telling stories from my childhood. Those cuts are a little easier. Anyway, I have four unheard gems for you in this episode. Quick hits of business knowledge that haven't appeared in any episodes yet. I hope you walk away from this episode. entertained and armed with new, actionable insights you can apply to your life and work. So thank you so much for tuning in. Let's get started.

Let's start with the one and only Mike Wheeler. Professor Wheeler teaches Negotiation Mastery at Harvard Business School Online, and he's one of the best storytellers I know. In this clip, Mike introduces the practitioners in this course, we call them protagonists, and explains what role they play. One of the critical pieces at Harvard Business School and Harvard Business School Online is that we learn from real-life cases, real-life stories. In this clip, Professor Wheeler tells a remarkable real-life negotiation story. It highlights how unpredictable and fluid negotiations can be. Let's have a listen.

Mike Wheeler:

Well, as you know, better than almost anybody else, Chris, we have a mix of my faculty colleagues, a half dozen who economists, lawyers, psychologists, organizational behavior, people who play an important role sharing their wisdom and experience with people who take the course. But we have at least six, maybe seven people who are great negotiators in a wide variety of fields. Chris Voss, former FBI hostage negotiator. Kim Driscoll, who is now the Lieutenant Governor of the state and a political life. She was a mayor at the time. Also, Mike McIlwrath, an American who's worked in Italy for years for an engineering company. He talks about why he thinks in certain situations you ought to make the first offer, and people will hear him explain that in a minute-and-a-half clip. We also have Jim Levine, and Jim did a terrific job being an agent for my Art of Negotiation book.

He told a story about how he made a lot of money by not making the first offer before he became an agent. He was developing educational software that was, in some ways ahead of the game, made a lot of sense, but the platforms weren't there to use it.

So he and his two partners were trying to see if they could get a few bucks for it, and they went to different companies. There was one that seemed to be interested and they had to talk about, "OK, we have nothing. Now what would we accept? Well, if we got $15,000, that's $5,000 each. It's better than nothing." So they went and they were meeting with the president, not some second or third in they, the president of this Massachusetts-based company, and the president asked, "So what are you looking for in price?" He said, "Well, we may just (this is Jim). We may just decide to hold onto it, but if we got a really attractive offer, we'd certainly give it consideration." And the president answered, "How does a million dollars sound?"

Chris Linnane:

What? Wow.

Mike Wheeler:

And Jim being Jim said, "It sounds a little low."

Chris Linnane:

That's keeping your cool.

Mike Wheeler:

Yeah, and Jim said, "Lemme take a break with my two colleagues here." They were sitting right next to him and he had his hands on their knees. They were bouncing up down. Sure. They went to the men's room and they tried not to yell and scream and so forth. They were so thrilled with what had happened. They came back and sold for $1,000,005. Wow. And that if you do the math is a hundred times more than they were to accept. Yeah, they did. Well, now I'm not suggesting that I can come every time, but there are times where I think you want to do what Mike McIlwrath says and set the basis of what the negotiation is going to be by putting a plausible number out there. And there are other times where you might be surprised, even though you're not valuing what you have very high, somebody else might, and that was the case in this instance.

Chris Linnane:

I once sold a 1993 Toyota Corolla to a tiny kid with a high-pitched voice named Rocky. I think I sold it for $500, but if I had heard that story first, I could have made at least $600. Rocky, if you're listening, I talk about you all the time, you won.

Our next bonus clip comes from Jill Avery. Professor Avery is one of the most knowledgeable and down-to-earth people I've worked with. She's building two courses with HBS Online: Personal Branding, which is part of our CLIMB program, and Creating Brand Value, which we discussed in detail during her episode. In this clip, Professor Avery breaks down how companies need to think and what they need to do to build and maintain a healthy brand portfolio. And her example is the merger of Marriott and Starwood Hotels.

Jill Avery:

So a lot of the brands that they acquired were in the same categories as the brands that they had homegrown. So for instance, both companies operated in the luxury segment, both operated in the premium segment or the self-select segment. And so as the brand portfolio came together, there were opportunities for the brand managers to say, where is their overlap and where do we need to pull brands further apart to make sure that they are differentiated from each other to make sure that they each had a unique point of difference so that they weren't cannibalizing each other or creating customer confusion, if you will, about what does that brand stand for? What does that brand stand for? For example, in the luxury segment, the coming together of these two companies resulted in the brand portfolio having both the Ritz Carlton brand and the St. Regis brand.

Are they different enough in the minds of consumers, or should the brand managers strive to create a unique point of difference, a unique differentiation for each of those brands so that customers, when they're looking for a luxury hotel brand can say, ah, the St. Regis is for this, and the Ritz Carlton is for this same thing. In the premium segment, the new portfolio has brands like Marriott Hotels, Sheraton, and Weston. Are those brands too close together? Does each have its own scope or role? How should the brand managers think about creating a unique identity for each of those brands? You want every brand in your portfolio to have a distinct role and scope, right? Who are the consumers that this brand is designed for, and what is the value proposition of that brand? What is that unique point of difference that that brand is going to deliver to the customers? If two brands are targeting the same customer and offering the same value, then you should be saying, maybe I don't need two brands. Maybe one brand can carry that role and scope. So brand managers need to first assess what brands are in my portfolio, what brands are a little too close or a little overlapping, and can I take those two brands and draw them apart, or is the overlap real and inevitable? Maybe I should discontinue one of those brands and let the other one shine.

Chris Linnane:

Marriott and Sheraton are close to my heart. My oldest brother was a big-time college swimmer, Big East champion kind of guy. I was 10 when he was in college, and I had to go all over the East Coast to watch him swim with my parents. We drove everywhere from one hotel to the next. After four years of that, I felt like a worn-out, old businessman alone at the free hotel breakfast in strange town after strange town alone by the indoor pool, watching other kids having fun with their close in age siblings.

That's when I started talking to myself, and that's when I started coming up with really good ideas. I say that because our next bonus clip comes from HBS Professor Jeff Bussgang. Professor Bussgang's HBS Online course is called Launching Tech Ventures. On Jeff's episode, I pitch him two very good ideas: Encore Concert Diapers ("Never miss another encore.") and Holy Rollers sermon sharing app, an app for religious leaders who want their personal lives back. He had no interest in either idea. In this quick clip, Professor Bussgang is talking about a startup that makes synthetic palm oil and how startups can identify their customers.

Jeff Bussgang:

In the early days, your innovative customers are willing to deal with an imperfect product or maybe even a pricey product. So for example, in the case of synthetic palm oil, if they're fabricating that in a lab, they have to get down what she calls the techno-economic curve. It takes time to get to the volume to be able to have a cheaper palm oil that you can substitute for what you have in your peanut butter that's going to take a long time. So it's better to start with customers that are willing to pay a bit more and deal with a bit more of a less perfect supply chain than a large customer that has greater demands on you. It's the same thesis behind when you're selling to retailers. You don't want to go to Walmart first. You want to go to smaller retailers who have less stringent demands, work out the kinks, get your product process underway, figure out how to sell it, figure out the sell-through, figure out the marketing, figure out the distribution and the supply chain, and then go to the big retailer. And similarly, for her going to the smaller challenger brands and personal care, that allowed her to walk her way down that techno-economic curve.

Chris Linnane:

This last bonus clip comes from Professor Nien-hê Hsieh. Nien-hê's HBS Online course is called Leadership, Ethics, and Corporate Accountability. He's a very cool guy. His voice is so calming, and he really put me at ease. It felt like I finally found a therapist who gets me. He's not a therapist as far as I know, but that doesn't matter. While we were talking about ethics and AI, I started blurting out all my fears about generative AI and the devaluation of humans. Professor Hsieh pulled me back from the edge. His perspective is fantastic. I think you'll enjoy it, too.

Nien-hê Hsieh:

I think the other way it actually matters is the fact that the other person in most situations had a choice about whether or not to engage with me. This may not be so true in business transactions, but certainly if you're thinking about a client relationship or thinking about sort of other areas in which we engage with one another, the other person had a choice not to engage with me, and that the fact that they chose to engage with me I think is pretty powerful because that sort of demonstrates not just a concern, but actually an interest or want or desire to engage. And I think being desired or wanted in that way, I know we're talking about business, but that's actually a really important part of what it means to be human.

Not to digress too much, but if you think about that, that sort of gets at the idea that human beings in some sense can't really exist without being recognized by other human beings. So this is expressed in the idea of Ubuntu in Africa, which is the idea that "I am because you are and you are because I am, and we are." So this idea that we're individuals, but our full individuality is not possible, absent being recognized and engaging with other people. Another way to think about is Martin Buber, the Jewish theologian, where this idea that we relate to the world either in terms of an I thou relationship or an I-It relationship. So even think of a tree, I can have an I-It relationship with a tree where basically I use the tree for firewood. I cut it to make furniture. I used to build a house, or I can have an I-Thou relationship with the tree in the sense that I treat the other tree as something that when I actually engage with it, I open myself up to transformation.

Because I think of it not just simply as an object or an it, but as a subject in a certain kind of way. And the question I think that generative AI is raising for me at least, is that the more time we spend engaging with and taking the products from AI as a kind of substitute for what can be produced by a human being, the question is are we engaging with it in sort of an I-Thou kind of way, or are we simply consuming it in a certain kind of way? And the risk and the worry that I have, is that AI doesn't see us as a thou. It sees us as an it. And so in a bizarre way, I think actually the more convenient we make our lives, the better products we have all through this kind of way that's not done with other people, we actually risk in a way, almost dehumanizing ourselves. And that for me is sort of the concern. And so that I think makes our conversation even more depressing. But I do think it's important because it gets to the crux of the question of how do we actually differentiate what we do from what AI does? It's not that we can do it better or worse, it's that there's another human being involved. And I think that's the part that I hope we don't lose in all this discussion.

Chris Linnane:

See, everything's going to be okay. AI can help us, but it can't replace us. Humans need humans. I've been telling myself that every night before bed and every time my watch congratulates me for standing up.

So that wraps up part one of our bonus content from Season 1. Look for part two and the rest of The Parlor Room episodes wherever you get your podcast. And don't forget to visit the part of theparlorroompodcast.com and follow us on LinkedIn, Facebook, Instagram, TikTok, and X.

My name's Chris Linnane. Thank you so much for listening. If you're enjoying The Parlor Room, please share the show with your friends and subscribe, rate, and review it wherever you get your podcasts. Thank you.