Louis Guelette, cited in:

We decided to make him responsible for the revenue target of the SMB sector in South Africa, an area with limited resources that needed cooperation with business partners - a complex world that he didn’t know very well. Complex because such relationships can be with both partners and competitors and very much depend on the right deal being struck. Such management requires maturity and diplomacy and I was surprised to find these qualities and characteristics in a young man with little practical experience of the business.

KEY QUESTION: Are the stakeholders (employees, customers, shareholders) happy and engaged in the business; and would you “rehire” all of them?

[Carly] Fiorina, who in fact had done such an in-depth study of the company and the situation that she had many of the answers, probably meant to reassure people by her knowledge. But by not asking questions and by not failing to have some answers, she scared many of the employees. Fortunately, when this feedback was delivered and received, Fiorina adapted her active listening and allowed her natural gift for communication to flourish. This increased her credibility and at the same time deepened her insights into the company, its challenges, and its opportunities.

You are the customer of the supplier,” I said. “Why doesn’t the same principle apply?”

“Well, we recently renegotiated our lease agreements with the mall operators and owners,” he said. “We went in with a Win/Win attitude. We were open, reasonable, conciliatory. But they saw that position as being soft and weak, and they took us to the cleaners.”

“Well, why did you go for Lose/Win?” I asked.

“We didn’t. We went for Win/Win.”

“I thought you said they took you to the cleaners.”

“They did.”

“In other words, you lost.”

“That’s right.”

“And they won.”

“That’s right.”

“So what’s that called?”

When he realized that what he had called Win/Win was really Lose/Win, he was shocked. And as we examined the long-term impact of that Lose/Win, the suppressed feelings, the trampled values, the resentment that seethed under the surface of the relationship, we agreed that it was really a loss for both parties in the end. If this man had had a real Win/Win attitude, he would have stayed longer in the communication process, listened to the mall owner more, then expressed his point of view with more courage. He would have continued in the Win/Win spirit until a solution was reached they both felt good about. And that solution, that Third Alternative, would have been synergistic—probably something neither of them had thought of on his own.

For Penrose, the firm was defined not by the assets it owned or the contracts it made but by its capabilities and its ability to deploy those capabilities in productive services: ‘All the evidence we have indicates that the growth of firms is connected with the attempts of a particular group of people to do something.’ Perhaps that seems obvious. But her emphasis

on ‘the group’ recognises the centrally cooperative nature of business activity, and her identification of purpose – ‘to do something’ – establishes its problem-related focus.