Howard’s Inner Circle, No. 31: Bothered by Footnote Two of Chapter Seven

“Take a look as some of these seemingly petty disagreements that grew into full-blown war:
• A dispute between the cities of Modena and Bologna over a well bucket about nine hundred years ago began a war that devastated Europe.
• A Chinese emperor once went to war over the breaking of a teapot.
• Sweden and Poland flew at each other’s throats in 1654 because the king of Sweden discovered that his name in an official dispatch was followed by only two et ceteras, while the king of Poland had three.
• The spilling of a glass of wine on the Marquis de Torey led to war between France and England.
• By throwing a pebble at the Duc de Guise, a small boy caused the massacre of Yassy and the Thirty Years’ War”2

The above footnoted passage in the book I just finished reading fascinated me. Unfortunately, footnote two read “Source unknown.” I had expected to find specific support for these five emphatic statements. I wish the author would have instead said in the text that they reportedly grew to a full-blown war with his accompanying footnote “Source unknown.”
© 2011
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Howard’s Inner Circle, No. 30: “Yes! No. Yes! Has Nothing to Do With Uncertainty

When someone asks for you to agree to do something you can say Yes, No, or avoid responding. Since giving an accommodating yes bothers me and not responding usually upsets me, I have always wished I could say no better.

A “Yes! No. Yes!” may be the solution. In his book, The Power of a Positive No—How to Say No and Still Get to Yes, William Ury explains the first Yes expresses your interests and value. The No asserts your power. The second Yes furthers your relationship often by having a plan B that is at the ready to suggest.

A natural No is seen not as a rigid and inflexible position, but rather a firm stance that flows organically from your interests.
Based on his years acting as a negotiator in economic and political disputes, Ury believes that the key to facilitating a satisfactory agreement is to arrive at one that reflects not just your interests but the other party’s interest as well.
© 2011
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Howard’s Inner Circle, No. 29: “Simple” Rules to Live By?

There are three basic rules that I try to live by. They don’t provide a moral compass or perpetuate any religious belief. But rather allow me to be very comfortable with my decisions and actions.

Rule No. 1: Stay in the Present—The past is to be learned from, not relived. The future can be planned for, but not fanaticized about. Being right here in the present helps me maintain the proper perspective and focus. This concentration prevents my mind from wandering and allows me to perform at my optimum level.

Rule No. 2: Watch for Emotions—Reacting emotionally doesn’t mean that you are right or wrong. But it does reflect a fight-or-flight mentality allowing others to comment on and criticize the emotional outburst, instead of addressing the issue at hand. Putting the emotional component in context and under control brings clarity.

Rule No. 3: Go With Your Gut—We listen to our heart, to our mind, and sometimes to both. Neither one nor the two together are as reliable as the gut. Your heart can prevent you from seeing what you need to see. While you mind might make an out-of-context intellectual decision. Listening to your gut ensures that all conscious and unconscious considerations are factored in.

© 2011
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Howard’s Inner Circle, No. 28: A Token of These Times

To enter the New York City subway system you must use an electronic MTA MetroCard. It is generally purchased and refilled outside the subway stop entrance. That differs from when I was a wee lad. Then a small token was purchased from a station agent for 15 cents. If you had a problem when you inserted the token at the turnstile, the station agent would help you gain admission.

Unfortunately now at many station entrances there are no longer any attendants. And that’s a problem when the MetroCard machine at the station reads “No Cash Accepted.” The first time this happened to me I called the customer service telephone number on the back of my MetroCard that needed replenishing. To my surprise a recording stated the number was no longer in use and gave me a new number. I called and after following eight or nine prompts I gave up on informing the MTA about that MetroCard machine that wasn’t taking cash.

As I began walking to find a subway entrance machine that would take my cash, I pondered whether my experience was today’s token of the times.

© 2011
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Howard’s Inner Circle. No. 27: A Variation of Pass It On /Pay It Forward

To many “pass it on” and “pay it forward” means when someone does something nice for you; you should in turn do something at least as nice for someone else.

A good samaritan might pay the subway fare for someone who doesn’t have it. Rather than paying it back the traveler agrees if he or she comes in contact in the future with someone similarly situated to pay their fare.

What’s great is the giver and the receiver of the generosity are both at ease, and someone else will probably benefit in the future. Otherwise, one of the parties feels uncomfortable as the giver usually doesn’t want to be paid back, and the receiver feels obligated to do so.

There are many other instances when a kindness makes the recipient feel like they have an obligation. Perhaps a solution might be if the recipient of a kindness would make a donation to a charity in honor of the giver and in appreciation of the good deed. It could be one favored by the good samaritan. If desired, he or she could be informed that a donation has been made and the reason for it without revealing who made it.

© 2011
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Howard’s Inner Circle, No. 26: Eight Random Observations

1. There should be greater study as to why there is a jobless recovery.

2. Companies are extensively utilizing independent contractors and falsely representing them as employees to customers.

3. Standards of journalism are disappearing.

4. Consultants abound.

5. Blogs and social media both have a distinct stream of consciousness flavor whose impact isn’t fully understood yet.

6. More CEOs have not previously worked in the type of business that they manage.

7. Globalization, commodization, and marketing spin is changing the customer relationship into a defacto adversarial one.

8. Embracing diversity and looking for common ground
© 2011
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Howard’s Inner Circle, No. 25: 1+ 1 = …

I noticed a significant, surprising, and welcome change at the recent New York State Society of CPAs’ 2010 Practice Managing Conference. All four accounting firm managing partners freely shared on a panel and in roundtables at lunch their views on firm mergers and acquisitions. It wasn’t a discussion in the clouds as they didn’t play it close to the vest as many managing partners normally do. They openly shared providing extensive details on all aspects of the merger process including their individual firm’s merger philosophy, retirement funding, capital requirements, payouts, and method of integration.

Here is my take on their cumulative M&A wisdom:
1. A Real Due Diligence--Determining compatibility of cultures requires “dating.” It goes beyond financials, getting firm information, and meetings with the managing and other partners. It can involve walking around a firm unaccompanied and going with a prospecting partner to present a proposal to a possible client.
2. Use of Guarantees--To get needed buy-in and alleviate anxiety, incoming partners can be guaranteed in the first two years that they will earn at least what they previously earned. Some firms have a no-harm, no-foul one-year period that allows for a quiet unraveling of the merger or the departing of an unhappy incoming partner. This option is rarely exercised and included to provide comfort that the merger isn’t cast in stone.
3. Maintain a “No-Jerk” Zone--Closely evaluate incoming partners so a problem partner isn’t brought aboard. Interestingly, the other incoming partners are usually happy that individual is gone.
4. Pay Attention to Integration--Transition should begin quickly and be comprehensive. Benefits, culture, career development, and opportunities should be detailed. Training is instituted right away as well as meetings are conducted to provide quick and effective integration of practice areas and niches.
5. Belief in Increased Value--There is a significant distinction between an actual merger and an acquisition. Just calling something a merger doesn’t make it so. A real merger is based upon a substantial potential for increased value. 1 plus 1 equals at least 3. For example, it might be that growth is identified by the offering of more services to key clients of the firms. This is in contrast to an acquisition which is simply a retirement payout to retiring partners. The ultimate actual payouts with regard to mergers and acquisitions significantly reflect the differences.
6. Individualized Guidance--Professional coaching should be given to each partner so they fully understand and acclimate to the new firm.
7. Understanding Why--The reason for a firm merging in often involves succession issues such as retirement funding or an inability to grow. In contrast, the more dominant firm might need a niche, more staff, or expansion into a new geographic market. Both should understand why the merger is being sought by the other. A merger should always be part of a comprehensive strategic plan.
8. Better Usage of Staff--A merger allows a firm to reassign staff and place them in more suitable positions. Larger firms permit greater specialization whether it is a particular practice area like taxes or a niche like litigation support.
9. Greatest Difficulty--There are always problems incurred with a merger or acquisition. Even if everything is done right expect some. The most common one involves software, such as when the two firms were using different tax software. It can take a full one-year cycle to rectify.
10. Be Realistic--In a merger there is usually one dominant firm and that firm’s culture and processes and procedure will, with minor exceptions, normally control. It is rare to see a real merger of equals. The reason is for that to be successful there needs to be the creation of an entirely new culture with attendant new processes and procedures.

I walked away from the conference with the distinct impression that each of these managing partners represents a new type of firm leader. One who really understands that win-win is an integral part of their successful firm business model.
© 2010
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