Archive for November, 2010

Alberto Vollmer woke up to an unpleasant surprise one morning in February 2000. Land invaders had overrun the family estate in Venezuela, where Rum Santa Teresa has operated for more than 200 years. Almost overnight, a slum settlement appeared on the property. As the new Chairman and CEO of the family enterprise, which exports premium rum to more than 30 countries, Vollmer needed to do something. But he  had few options. “Venezuela is not an easy place to do business,” he said Nov. 16, 2010, during a guest lecture at Thunderbird School of Global Management.

Vollmer could not appeal to the police for protection because many squatters were relatives of local officials, who condoned the invasion. Vollmer could mount a counterstrike with his own security team, but he knew violence would lead to more violence. That left negotiation. Vollmer decided to meet with the leader of the invasion and explore peaceful solutions.

The strategy: Vollmer knew he could not evict the squatters, so he offered to donate 75 acres on the condition that the squatters develop an organized housing project instead of a haphazard shanty town. He also started working to improve social conditions in the neighboring communities — to prevent future invasions onto his estate. “It was clear,” he said. “If we did not invest heavily in the social area, we were not going to survive.”

The philosophy: Discover legitimate interests. “When you are being held hostage at the negotiation table, one of the things you have to do is develop bonding with your counterpart,” Vollmer said. “It is the only way to begin to influence this person and to access the true interests this person has behind the position he is stating. As soon as you begin to touch on those interests, a different dynamic occurs.” Vollmer said most hardball negotiators have legitimate interests hidden behind their actions. “The best thing is to drill into the problem, like disarming a bomb,” he said. “Try to put yourself in the other guy’s shoes, even if the other guy is a criminal — not to justify what he is doing but to really find out what he needs.” Vollmer said many criminals and other hardball negotiators do not recognize their own legitimate interests and need help identifying what these things are. Most people, he said, will do the right thing when shown the way. “The key is to ask the right questions,” he said. “Then help your counterpart achieve his legitimate interests.”

The result: An organized housing settlement with about 100 plots has emerged on the land donated by Rum Santa Teresa, and no additional land grabs have occurred. Vollmer has become friends with the invasion leader, who even asked Vollmer to be the godfather of his child. Venezuelan leader Hugo Chávez, generally an enemy to private enterprise, has held up Rum Santa Teresa as a model corporation.

Alberto Vollmer took over Rum Santa Teresa in Venezuela under difficult circumstances. Land invasions, drug wars, government corruption and violence plagued the region, creating an unstable business environment. The family enterprise, which exports rum to more than 30 countries, faced ruin after more than 200 years of prosperity. Conditions took a turn for the worse in 2003, when local gang members attacked one of Vollmer’s security officers and stole his gun.

Vollmer’s security team tracked down the gang leader responsible for the attack and brought him to the family plantation for interrogation. Vollmer had gained the upper hand. Corrupt local police viewed the gang leader as a nuisance and wanted him dead. Execution would come quickly if Vollmer handed the man over to authorities. Vollmer literally held the man’s life in his hands. He could have crushed his opponent at the negotiation table. No compromise was necessary, but Vollmer considered the long-term effects of ruthless negotiation tactics and decided to take a different approach. “Violence begets violence,” he said Nov. 16, 2010, at Thunderbird School of Global Management. “If I responded with violence, the result would be war.”

The strategy: Instead of violence, Vollmer decided to offer the gang leader a chance at redemption. Under the terms negotiated, the man would work on Vollmer’s plantation for three months without pay. The program would include hard work, job training, group therapy and zero tolerance for crime. The routine also would include a healthy dose of rugby, Vollmer’s favorite sport. In exchange for full compliance, the reformed gang leader would earn a chance at legitimate, gainful employment after graduation. For the first time in years, he would be able to make his mother proud.

The philosophy: Turn enemies into allies. “If you don’t have to crush your opponent, don’t crush your opponent,” Vollmer said. “Opponents never really die that easily. If you do kill him, he has family. He has relatives, and they are not going to forget you. When you look long-term, they are going to come back and bite you. You can’t be weak, but you don’t have to crush people either. You have to be strong but just, and people will respect you for that. You will find allies down the road instead of enemies who will come out of the dark.”

The result: The gang leader liked the new routine so much that he recruited the rest of the gang to join voluntarily. Eventually, Vollmer recruited a rival gang to join the program, which he called Project Alcatraz. The two gangs made peace, and soon Vollmer had other gangs lining up for admission.  The homicide rate in the region has dropped by 90 percent since 2003, and Rum Santa Teresa has prospered in the safer business environment. What was good for the gangs was also good for Vollmer’s bottom line.

By Karen S. Walch, Thunderbird Professor

Billions of dollars have been spent on negotiation education since the publication of Getting to Yes in 1981. Schools and other organizations have developed courses, self-assessments and Web-based software to help negotiators get to yes. But few programs have attempted to measure the impact of these efforts. Thunderbird addressed the gap with a new study that quantifies the benefits of negotiation education coupled with planning and management software. The study analyzed results from eight MBA classes and two professors spanning three years, comparing the results from negotiators using ExpertNegotiator software to the results from those who did not. | PDF: Read the study. | Summary: Read a study summary on the Thunderbird Knowledge Network.