Category Archives: Book Reviews

Four Pitfalls to Avoid in Decision Making

I first encountered Chip and Dan Heath’s writings when I listened to the audio book of Made to Stick several years ago. I was fascinated by their insights regarding influence and persuasiveness summarized by the SUCCES acronym: Simplicity, Unexpectedness, Concreteness, Credibility, Emotions, and Stories.

The Heath brothers also authored Decisive: How to Make Better Choices in Life and Work in which they lay out four principles with the WRAP acronym for avoiding pitfalls in decision making:

  1. Widen your options. This helps avoid the pitfall of “narrow framing.” It is all too easy to engage in the fallacy of “either/or” rather than recognizing a variety of potential approaches. Usually there are more than one or two choices. Rather than framing a decision as yes or no, either/or, consider small experiments and in-between steps to open a range of options. This reminds us of the insight from Getting to Yes regarding creatively inventing options that can satisfy all parties in a negotiation. Also, creativity and options can give you walkaway power to help you avoid bad situations and ripoffs.
  2. Reality test your assumptions. This helps to avoid the pitfall of “confirmation bias.” Rather than only seeking information that serves your preconceived notions, step back for a dose of reality. Make sure that you consider various scenarios, pros and cons, and sources of evidence. Even (and especially) if the evidence points away from your initial assumptions and inclinations, carefully evaluate and revisit your decision process.
  3. Attain some distance. Don’t let irrational feelings and short-term thinking lead you toward a wrong decision. You have to know yourself and understand your tendencies and weaknesses. Perhaps you are impulsive. On the opposite end of the spectrum, perhaps you suffer from fear or analysis paralysis. The Heath brothers recommend stepping back and asking yourself, “What would I tell my best friend to do in this situation?” I like to seek out counsel from others who are more experienced, or if I don’t have that luxury for some reason, I try to analyze what advice a “wise” person might give me.
  4. Prepare to be wrong. This helps to avoid the mental and emotional pitfall of overconfidence. Sure, we all want to be right. We want to “believe in ourselves.” However, if we’re honest, we have to admit that our decisions don’t always turn out like we were expecting. The authors suggest developing a “tripwire” that would trigger the decision-maker to reassess the decision and make appropriate adjustments. Actively evaluate decisions, make changes, and learn from mistakes.

Decision making can stretch us to our mental and emotional limits at times, but understanding the pitfalls and applying the Heath’s sound advice can make the process more smooth and enjoyable.

The Importance of Emotional Intelligence

How can you relate to people whose backgrounds and motivations are different from your own? How can you creatively tap into and channel others’ motivations for recognition and accomplishments beyond paying them more money? As a finance professional, should you primarily focus on numbers or people? How can you develop a reputation for being approachable and collaborative?

Developing emotional intelligence can help us become mentally active to recognize, analyze, understand, and manage intense feelings — whether our own (intrapersonal) feelings or the feelings of those around us (interpersonal).

Social and leadership skills can be developed over time, and they tend to become more important as a finance professional moves to higher levels within an organization. Technical skills and cognitive ability are vital, but don’t neglect emotional intelligence. Customers, employees, coworkers, and investors are among the groups with whom aspiring CFOs must learn to build relationships, channel motivation, manage conflicts, and develop win-win solutions.

I recently completed a Continuing Professional Education (CPE) self-study course on the difference between IQ and EQ (Emotional Quotient). The course helped me understand basic concepts and models of emotional intelligence.

Here is an outline of fifteen components of EQ organized under five major categories:

Intrapersonal Skills:

1) Self regard
2) Emotional self awareness
3) Assertiveness
4) Independence
5) Self actualization

Interpersonal Skills:

6) Empathy
7) Social responsibility
8) Interpersonal relationships

Stress Management:

9) Stress tolerance
10) Impulse control


11) Reality testing
12) Flexibility
13) Problem solving

General Mood:

14) Optimism
15) Happiness

Daniel Goleman, author of Working with Emotional Intelligence, divides EQ between personal and social competencies:


  • Self awareness – emotional awareness, accurate self-assessment, and self-confidence
  • Self regulation – self control, trustworthiness, conscientiousness, adaptability, and innovation
  • Self motivation – achievement drive, commitment, initiative, and optimism


  • Social awareness – empathy, service orientation, developing others, leveraging diversity, and political awareness
  • Social skills – influence, communication, leadership, change, conflict management, building bonds, collaboration and cooperation, and team capabilities

What are signs of a high EQ for a financial professional to recognize and develop? The course suggests several:

  • Express feelings with three-word sentences beginning with “I feel …”
  • Do not disguise thoughts as feeling by using “I feel …”
  • Do not be afraid to express feelings
  • Do not be dominated by negative emotions
  • Effectively read non-verbal communications
  • Let feelings lead to healthy choices and happiness
  • Balance feelings with reason, logic, and reality
  • Act out of desire, not duty, guilt, force, or obligation
  • Be independent, self-reliant, and morally autonomous

Among negative behaviors to avoid, the course lists blaming others rather than taking responsibility for one’s feelings, analyzing others when they express their feelings, trying to make others feel guilty, lying about feelings (or exaggerating/minimizing them), letting things build up, reacting strongly to minor issues, being unforgiving, acting on feelings rather than talking about them, and playing games and being evasive rather than direct.

Assess yourself based on the following questions that apply Goleman’s model from Working with Emotional Intelligence:

  • Do you understand both your strengths and your weaknesses?
  • Can you be depended on to take care of every detail?
  • Are you comfortable with change and open to novel ideas?
  • Are you motivated by the satisfaction of meeting your own standards of excellence?
  • Do you stay optimistic when things go wrong?
  • Can you see things from another person’s point of view and sense what matters most to him or her?
  • Do you let clients’ needs determine how you serve them?
  • Do you enjoy helping colleagues develop their skills?
  • Can you read office politics accurately?
  • Are you able to find “win-win” solutions in negotiations and conflicts?
  • Are you the kind of person other people want on a team?
  • Are you usually persuasive?

In summary, to develop EQ, the course suggests knowing your own emotions, motivating yourself, recognizing emotions in others, managing your emotions, and effectively handling relationships.

Four Ways to be a Principled Negotiator (Part 2 of 3)

We previously saw that principled negotiation differs from positional bargaining by separating people from issues and by focusing on interests rather than positions.

The third step in principled negotiation is to be creative and invent various options that could satisfy the interests of both sides. As a very simple example, recently I had two projects to complete — painting the walls of a room and thoroughly cleaning a floor that would later be painted. My wife asked which one I planned to complete first, and I told her the cleaning. She knew I would likely use a vacuum, which could potentially wake up the baby. When she calmly mentioned this, I knew we both had an interest in letting our baby take her nap, and I quickly invented the solution of painting while the baby slept — leaving the floor cleaning for later.

Negotiators lack creativity when they exercise premature judgment, try to find a single answer, assume that the pie is fixed (so the bigger one person’s piece is, the smaller the other’s piece), and “thinking that ‘solving their problem is their problem'” (p. 57). Instead, step back and use your imagination, try to broaden options, make the pie bigger rather than focusing on a “fixed-sum” game, and appeal to both sides’ interests.

To generate options, brainstorming is often quite effective and the authors describe potential rules and methods to use in the process, such as the no-criticism rule that encourages building upon participants’ openness and creativity.

A Key Gem to tuck away regarding creatively inventing options: “In almost every case, your satisfaction depends to a degree on making the other side sufficiently content with an agreement to want to live up to it” (p. 72).

The fourth and final step is to emphasize objective criteria in the negotiation. Basing the outcome of a negotiation on who has the stronger will is often costly in terms of time and relationship strain, and it cannot be expected to lead to a wise agreement. In contrast, objective criteria which is independent from the will of the parties involved can enhance the efficiency of the negotiation, lead to a wise agreement, and preserve the ongoing relationship between the counterparts.

Rather than yielding to pressure and threats, a principled negotiator bargains based on principle and reason. The objective standard should be legitimate and practical. One might think of the example of a dispute between young children over how to split a piece of pie. The time-tested solution is simple: One cuts, the other chooses.

In advocating objective criteria, one must avoid the subtle pitfall of using criteria solely to bolster one’s own position. Be truly flexible and open to reason and principle, even if the objective criteria differs from the standard you had initially proposed or works against the position you had originally sought to advocate. Negotiating on objective criteria provides a position of power because right makes might.

A Key Gem to tuck away regarding the difference between standards in positional and principled negotiation: “In positional bargaining, negotiators spend much of the time defending their positions and attacking the other side’s. People using objective criteria tend to use time more efficiently talking about possible standards and solutions” (p. 83).

We have seen that principled negotiation rests on four key ideas:

  • Separate people from problems
  • Focus on interests rather than positions
  • Invent options for mutual gain
  • Insist on using objective criteria

In the final installment of this review we will look at ways to deal with challenging negotiation situations.

Four Ways to be a Principled Negotiator (Part 1 of 3)

Negotiation tactics are often thought of like secret weapons. You want to keep your counterpart guessing, never divulge your bottom line, possibly find ways to intimidate your counterpart, and use the element of surprise. Under this paradigm, the less your counterpart knows about the books you’ve read and the conditioning you’ve undergone to enter the negotiation, the better.

There is an alternative approach: “Principled negotiation is an all-purpose strategy. Unlike almost all other strategies, if the other side learns this one, it does not become more difficult to use; it becomes easier. If they read this book, all the better” (p. xix).

Does this sound intriguing?

The quote comes from Roger Fisher, William Ury, and Bruce Patton, authors of Getting to Yes: Negotiating Agreement Without Giving In (Penguin Books, 1991, 2nd ed.). They describe their approach as principled negotiation, distinguishing it from positional bargaining in which the negotiator uses either a hard or soft stance.

To understand the approach and distinctions better, consider two elements of a negotiation: the substantive issue and the process. Each assertion you bring to the table and your demeanor throughout the process reinforces rules (often unspoken) about the process you are undertaking. You can take a hard or soft stance in advocating for your position, or you can step back and propose — explicitly or even implicitly — a principled approach.

Rather than deciding beforehand what position to take in order to best serve your interests — and then advocating for this position more or less robustly or timidly — you can negotiate on the merits of the situation. The authors boil down this principled approach to four points (pp. 10-11):

  1. People: “Separate the people from the problem.”
  2. Interests: “Focus on interests, not positions.”
  3. Options: “Generate a variety of possibilities before deciding what to do.”
  4. Criteria: “Insist that the result be based on some objective standard.”

The authors describe this approach as hard on the merits and issues but soft on the people and relationships.

The first step is to be sensitive and recognize the humanity of your counterpart. We don’t negotiate with machines or animals but with other humans who have real emotions, fears, values, beliefs, and elements of unpredictable behavior. We want to come through the negotiation having reached a wise agreement, as efficiently as possible, and with an ongoing relationship still intact. Rather than throwing around your weight by making personal attacks or appeasing your counterpart with substantive concessions, fundamentally deal with each issue on its merits. There will be no need for shouting, name-calling, or any other personal attacks; the hardness will be reserved for keeping the negotiation on a principled course.

A Key Gem to tuck away regarding the people aspect of negotiations: “The ability to see the situation as the other side sees it, as difficult as it may be, is one of the most important skills a negotiator can possess” (p. 23).

The second step is to be clear on the difference between interests and positions. The analogy that came to mind is a familiar marketing distinction between benefits and features. An average salesperson can talk all day about a product’s features. The remarkable salesperson can discern what benefits I’m looking for and show me exactly how the product will give me everything I need (and more). Rather than saying, “This has a nice touch screen,” the salesperson could say, “You can utilize the touchscreen to save time and spare yourself the frustration of pressing buttons and scrolling through menus.”

A negotiator who focuses on positions is like the salesperson who focuses on features. Instead, a negotiator does well to focus on underlying interests — i.e., the objectives to be achieved, which could be accomplished through a variety of means. A principled negotiator recognizes that features (positions) can vary as long as they provide ultimate benefits (i.e., preserve legitimate interests).

A Key Gem to tuck away regarding advocating for your interests in a negotiation: “It is your job to have the other side understand exactly how important and legitimate your interests are” (p. 50).

To Be Continued . . .

Eight Steps for Leading Change

John P. Kotter of Harvard Business School has written extensively on change in articles and books, including Leading Change (Harvard Business School Press, 1996) and The Heart of Change (Harvard Business School Press, 2002).

In Leading Change, Kotter lists eight reasons why organizations can fail in their transformation efforts (pp. 4-14):

  1. “Allowing too much complacency.”
  2. “Failing to create a sufficiently powerful guiding coalition.”
  3. “Underestimating the power of vision.”
  4. “Undercommunicating the vision by a factor of 10 (or 100 or even 1,000).”
  5. “Permitting obstacles to block the vision.”
  6. “Failing to create short-term wins.”
  7. “Declaring victory too soon.”
  8. “Neglecting to anchor changes firmly in the corporate culture.”

According to The Heart of Change (pp. 2-3), making big leaps forward (rather than mere continual and gradual improvement) is essential. In addition, changes must focus primarily on behavior, with strategy, systems, and culture secondary. Change is about influencing feelings more than providing analysis to impact thoughts. Corresponding to the eight categories of failure, here are the eight key steps for creating effective change (pp. 3-6):

  1. Create a sense of urgency, which “gets people off the couch, out of a bunker, and ready to move” (p 3).
  2. Put together a qualified and effective guiding team.
  3. Create a vision and set of strategies.
  4. Communicate “simple, heartfelt messages sent through many unclogged channels” (p. 4).
  5. Provide empowerment, not by “handing out” power, but by removing obstacles.
  6. Create short-term wins to produce momentum. Otherwise, “the cynics and skeptics can sink any effort” (p. 5).
  7. Don’t try to do too much at once, but don’t lose momentum by letting up and quitting too soon.
  8. Behave consistently to create a culture that helps change stick.

As opposed to the pattern of “Analysis-Think-Change,” much more frequently the progression is “See-Feel-Change” (The Heart of Change, p. 11).

In conclusion, Jack Welch once reportedly said, “You’ve got to talk about change every second of the day” (p. 14). The world is constantly changing, and one can either choose to effectively lead the process of change or let change sneak up by surprise.

Vision Clarifies Dreams and Goals Make Your Mission a Reality

No matter your background in life, if you are reading this, it’s clear that you have a mind and capabilities to work toward success. You can make a choice to take ownership of your career and be proactive to build a track record of achievement. As you progress, you will find great benefit in strategic planning. Start with your dreams, clarify these with vision, craft your mission statement to define your calling, and set goals to stay on track. What is the best way to approach this process?

Radio host and personal finance guru Dave Ramsey wrote a book for small business owners called EntreLeadership. His third chapter, “Start with a Dream, End with a Goal,” contains some helpful insights on each step, which I summarize below:

Dreaming – This is great because it demonstrates you have hope and the energy to win, but you don’t want to stop with merely being a “dreamer” who can’t deliver.

Vision – Being able to see a path forward provides clarity to eventually translate your dreams into action for yourself and/or your team. Constantly communicate and reinforce your vision to yourself and the people with whom you work.

Mission statement – Further clarify and define your dreams and vision so that you know what you are about. This helps creates your organizational culture (or in the case of an individual, your “personal brand”) and defines the value for every role or task. This helps you prioritize, focus, and decide when to say “no” to opportunities that are outside the bounds of your calling. The mission statement includes the following:

  1. What – your skills and abilities
  2. How – your personality traits
  3. Why – values, dreams, and passions

Goals – This is where the dreams, vision, and mission become practical and down to earth. There is a “wheel of life,” which includes the following spokes or areas in which to set goals (be intentional and don’t neglect any one of these, even the areas in which you are weak):

  1. Career
  2. Financial
  3. Spiritual
  4. Physical
  5. Intellectual
  6. Family
  7. Social

Furthermore, there are five necessary attributes for goal-making success:

  1. Specific – not vague (e.g., “I want to lose ten pounds” rather than “I want to lose weight”)
  2. Measurable – this leads to measurable progress, or traction
  3. Time limit – this helps you stay focused and on track so that your goal is not merely something you want to “eventually” (i.e., never) accomplish
  4. Your goals – you must own the goal, and it must be derived from your dream in order for you to have the motivation to overcome many inevitable challenges
  5. In writing – many people fail at this point, but the successful ones almost invariably have written goals

Consider these helpful tips as you formulate a career development plan: Dream big dreams. Then clarify your dreams with vision. Define your vision in terms of a mission. Finally, make your mission a reality with goals.