By: Dra.Eva Lira
Universidad de Valencia

Today, no one doubts the fundamental role played by Information and Communication Technology (ICT) and the term “globalization” in the global economy. The “information society” defines the entry into the 21st century and it is the safe bet for socioeconomic development, according to the Global Information Technology Report (GITR, 2013).

The full development of the information society has as its central axis the use of ICTs in organizations that operate in any part of the world and at different time zones in a “global” manner. This picture is not the same in all countries, and with regard to the business use of ICT in Mexico, it is not a very promising place. (World Economic Forum, WEF, 2013-2014). As a result, the competitiveness of organizations is reduced. As evidenced in the new WEF report (2013-2014), Mexico went from No. 53rd in the previous ranking to No. 55th today. That is, this year it dropped two places from last year. Although a priori the situation is not very encouraging, this data shows some economic stability. The report notes that the momentum of ICT is crucial for competitiveness in Mexico, which continues to occupy very low levels in the rankings (83). In contrast, the GITR presents a more hopeful picture. Mexico is ranked 63 of the 144 economies analyzed. This represents an increase of 13 positions over the previous year, indicating an improvement in the inclination of the Mexican economy to take full advantage of ICT. The vice president of Global Technology Policy for Cisco Systems, a sponsor of the GITR, said that economies that do not apply comprehensive national broadband strategies run the risk of losing ground in terms of global competitiveness and will perhaps lag behind in achieving the social benefits provided by ICT. (Pepper, 2013)

Therefore, organizations with higher levels of competitiveness in the market are able to react and respond effectively to the changing environment, which is increasingly rapid and complex. The growing trend of organizations to work in teams, along with the progressive introduction of ICT, has enabled the emergence of Global Virtual Teams (GVT) or transnational distribution work teams. The most competitive organizations in the world use GVT to raise the quality of their products (for example, by maximizing the use of talent from around the world) at low cost (Furst, Reeves, Rosen and Blackburn, 2004). For a team to be considered a global virtual team, it must be located in at least two countries (Anawati and Craig, 2006; Horwitz, Bravington and Silvis, 2006; Staples and Zhao, 2006). These teams, which traditionally are formed in multinationals, increasingly operate in less complex organizations due to the lowering of price of ICT and improved Internet connectivity (one of three people have access to Internet [World Bank, 2011]. This work or telecommuting (Chronos Consulting, 2008; CISCO, 2008) requires personnel with knowledge and skills such as languages and flexible hours (for example, on weekends or nights). Non-working days differ with each country and must be taken into consideration (for example in Israel people work on Sundays and in Australia people do not work on Mondays; Glazer, Kozusznik and Shargo, 2012). However, research has shown that nontraditional hours, such as night shifts (Barton, 1994), work in isolation (Maruping and Agarwal, 2004) and intercultural communication (Brislin and Yoshida, 1994; Storti, 1994) are possible causes of stress in individuals. So, although GVT clearly have their benefits, we must ask whether they are a sustainable solution for organizations (Glazer et al., 2012). Knowing the characteristics of these teams is essential so that they are both environmentally friendly and sustainable. Thus, for example, work between people of different cultures requires verbal and nonverbal communication, and even the same language has different nuances and meanings between countries (Molinksy, Krabbenhöft, Ambady and Choi, 2005). Even a person who is competent in a language other than their native language needs background cultural information to establish effective communication (Gudykunst, 1998). Therefore, members of a GVT must know the verbal culture, norms and values (Bhawuk, 1998), gestures and behaviors (Molinksy et al., 2005) and nonverbal aspects of the culture. The communication required to do a good job includes, in addition to adequate verbal expression, emotions, gestures and body language as a means of relating to people (Matsumoto and Juang, 2008), which differ from one culture to another and are restricted to synchronous computer systems (such as instant messaging) and asynchronous (such as email). Therefore, the worker must be both skilled and competent to understand verbal and nonverbal aspects of a culture in the transmitted messages (Li, 1999; Molinsky et al., 2005). Thus, when a person is competent in the language and cultural norms of communicative discourse, communication is more effective (Glazer et al., 2012). This aspect is a crucial element in intercultural communication and critical when communication is done through ICT.

Another aspect of the study is the intercultural context (Glazer et al., 2012). Traditionally, individualistic cultures are considered “low context” (Hall, 1976) and collectivists “high context” (Gudykunst and Ting Toomey, 1988; Hofstede, 1991). Low-context cultures are characterized by an increased focus on substance rather than form when speaking or writing, and communication is direct, open, assertive, clear and explicit, with little room for interpretation (Brew and Cairns, 2004; Cinnirella and Green, 2007; Hall 1976; Yum, 1988). These cultures are characterized by being focused or task-oriented (in response to the content). Communication mediated by ICT enables teams to be more task-oriented rather than focused on the relational aspects, at least in part because the medium has a more limited bandwidth than traditional communication or in person (Culnan and Markus, 1987). In this sense, it can be said that “low context” cultures have more effective communication or take better advantage of the use of ICT.

In contrast, collectivist cultures communicate using a high-context style in their interactions, characterized by being less direct and expressive. The gesture is more subtle (for example, less use of body language, touch and eye contact (Brew and Cairns, 2004; Burleson and Mortenson, 2003). The speaker is more focused on form than on substance (Triandis, 1994), and the expected feedback is not so obvious (Korac-Kakabadse, 2004). Thus, collectivist cultures are characterized by issuing more implicit than explicit messages. This may require more information about the cultural background of these countries for effective communication. Also, given the objective characteristics of a means of communication mediated by ICT, which restricts nonverbal signals to a greater extent than traditional communication, this could also harm efficiency. However, the subtlety (for example, to think in the way in which a message is conveyed and expressed and to try and maintain some harmony) is an important feature in successful conflict resolution and negotiations (therefore, the effectiveness may depend on the task, which is a contingent variable to take into account). Moreover, in conflict situations, team members in high-context cultures (as in Mexico) will avoid or withdraw (Chua and Gudykunst, 1987). Negotiations of high-context cultures are characterized by being more covert and indirect than in low-context cultures, more organized, open and that share priorities and profits (for example, Adair, Okumura and Brett, 2001; Gelfand and Christakopoulou, 1999).

Another cultural aspect characteristic of the GVT is the distance from power (Glazer et al., 2012), which differs from one culture to another, depending on the degree to which employees perceive that there is a greater or lesser distance with their superior. There are cultures where hierarchy is much more marked and inequalities are greater. In this sense, participants of a GVT with a high status are treated with respect and rarely criticized in public, unlike those in a culture where the distance from power is not so marked and the treatment is more egalitarian (Offermann and Hellmann, 1997). Therefore, if in a GVT participants differ in their idea of the distance from power, tensions may develop, anger characteristic of conflicts in relationships that are more difficult to overcome in electronic means of communication (Lira, Ripoll, Peiró and Orengo, 2008).

In conclusion, the coordinators of the GVT have to meet the new challenges arising from these teams by providing employees the necessary tools to communicate effectively with people from different parts of the world, given the particular difficulties of virtual communication (Lira, Ortega and Latorre, 2014) and the cultural differences (Glazer et al., 2012). The training must take into account, in addition to conflict resolution, the management and coping with stress, because cultural differences and constraints imposed by the use of ICT can provoke physical and health problems, for example, adapting to time zone differences. These interventions to promote the physical and psychological well being of the worker necessarily have to have an affect on several levels (individual, team and organization). Therefore, a crucial aspect for the success and sustainability of the GVT is to educate people about ICT and the cultural differences they may encounter while working with colleagues from other countries.?

References

• Glazer, G., Kozusznik, M., y Shargo, I. (2012). “Global virtual teams: A cure for or a cause of stress”, en Pamela L. Perrewé, Jonathon R.B. Halbesleben, Christopher C. Rosen (comps.), The role of the economic crisis on occupational stress and well-being. Research in Occupational Stress and Well-being, 10, 213 -266.
• Lira, E. M., Ortega, A., y Latorre, M. F. (2014). “Los equipos de trabajo virtuales en las organizaciones”, en R. Acuña (comp.), Multiculturalidad, Imagen y Nuevas Tecnologías. Madrid: Fragua.
• Schwab, K. (2014). World Economic Forum. 2014. The Global Competitiveness Report 2013-2014. Ginebra: World Economic Forum.

by: Yanira Petrides, Instituto Tecnológico Autónomo de México
Esperanza Huerta, Universidad de Texas en El Paso
TerryAnn Glandon, Universidad de Texas en El Paso

Systems that analyze the content of emails are used as a tool for detecting potential frauds.

These systems conduct a linguistic analysis of emails, searching for subtle clues that may suggest the intent to commit fraud. For example, the systems search for phrases that express rationalization, incentives or collusion. However, linguistic interpretation is highly subjective; therefore the reports generated by these systems cannot indicate the existence of fraud with complete certainty.

In our previous article “Potential Fraudsters,” we discussed five decisions that managers must make before using these systems: establish policies for email privacy, disclose the use of the system, select in-house or outsourced analysis, determine continuous or one-time assessment, and establish follow-up procedures for reports. In this article we will develop the latter issue. That is, we will discuss two challenges managers face when the system generates a report that has identified a potential fraudster and managers must follow up on the report.

The first challenge is to understand that the linguistic analysis of emails involves subjectivity and uncertainty and to acknowledge that the system can make mistakes. A fraudster is not likely to explicitly state in an email: “I’m going to commit fraud.” Therefore, these systems look for subtle expressions known as “precursors of fraud.” For example, one of the most common precursors of fraud is the desire to take revenge on the company or on an employee. This desire for revenge is an element of rationalization used by the fraudster to justify fraud.

The subjectivity involved in linguistic analysis can lead systems to produce two types of erroneous results when identifying potential fraudsters. The system can identify a person as a potential fraudster when the person is not, or the system can fail to identify a fraudster. These two types of errors have different implications. “Silent” fraudsters can commit fraud without leaving tracks in their emails. These systems cannot identify silent fraudsters.

The other type of error is more common–when an employee is identified as a potential fraudster, although he or she has not committed no wrongdoing. Employees may express in an email their dissatisfaction with the administration of the company only to vent, without any intention of committing fraud. Finally, precursors of fraud identified by the systems are, as the name implies, only potential antecedents of fraud. However, precursors may or may not be present when fraud is committed. Detection of a precursor of fraud does not imply with absolute certainty the existence of fraud.

The systems that conduct linguistic analysis have the capability to highlight the uncertainty in the results obtained to assist users to make decisions. The reports can include the likelihood that the person identified is in fact a fraudster. For example, the system can indicate that there is an 80% probability that the person has been correctly identified as a potential fraudster. Expressing the results with an estimated probability reminds users that there is a margin of error–that it is not 100% certain that the person identified is indeed a fraudster.

In summary, the first challenge for managers is to take into account that these systems do not ensure that they can identify all fraudsters (they do not detect silent fraudsters) or that all employees identified are indeed fraudsters (incorrect identification). Therefore, mangers must evaluate the report generated by the system to determine whether or not to initiate a fraud investigation.

This decision is crucial because it results in the allocation of resources for fraud investigation. If management believes the report has merit, the manager will initiate an investigation. If the manager believes the report has no merit, the report will be discarded as irrelevant and no investigation will be initiated. Due to the limited resources that companies have for fraud investigation, it is important to allocate resources to investigate cases in which it is more likely that fraud has occurred.

The second challenge for managers is to understand how the uncertainty and the estimated probabilities disclosed in the reports influence the decisions we make. People react differently depending on how percentages are framed. For example, an 80% probability of a correct result is mathematically equivalent to a 20% probability of an incorrect result. However, we react differently when the percentage is framed as correct as opposed to an incorrect percentage. That is, we do not make an objective mathematical evaluation; rather we make a biased evaluation depending on the frame used. This phenomenon was originally studied by Kahneman and Tversky, who developed prospect theory and demonstrated the existence of these biases in decision-making in different contexts [1].

We conducted an experiment to understand the framing effect in the reports generated by linguistic analysis systems [2]. Participants in the experiment read a report stating that a person had been identified as a potential fraudster. Some participants read that there was an 80% probability that the person had been identified correctly, while others read that there was a 20% probability that the person had been incorrectly identified. As suggested by prospect theory, the framing used (correct or incorrect) influenced the decisions people made.

Our results indicate that when the percentage is framed as a correct probability, people are more willing to initiate a fraud investigation. However, when the percentage is framed as an incorrect probability, people are less willing to initiate an investigation. That is, when the report highlights the possibility of the system making an error in the identification of a fraudster–the probability that the subject has been incorrectly identified is stated–people take a more cautious approach to initiate an investigation.

Therefore, the second challenge for managers is to consider that the decisions they make are influenced by the framing effect. If managers want the reports to be evaluated more critically, they should use systems that highlight the probability of incorrect identification. In this way, the user will be reminded that there is a margin of error in the identifications and will act more cautiously.

In conclusion, the framing of the report can assist the decision maker to be more aware of the fallibility of the systems and the possibility of spending resources on unnecessary fraud investigations. From a practical perspective, contrasting a report that indicates the possibility of correct results to a report that indicates the probability of incorrect results can lead people to take a more cautious approach when making decisions. The presence of cognitive bias, such as framing, and the influence of culture emphasize the complexity of implementing this type of system in multinational companies.?

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1. The original studies are in: Tversky, A., and Kahneman, D. (1981). The framing of decisions and the psychology of choice. Science, 211(4481), 453-458. An updated and entertaining review of these and other biases in decision-making is in Kahneman (2013), Thinking Fast and Slow, Farrar, Straus and Giroux, ISBN-13: 978-0374275631.
2. The original report of the experiment is published in Huerta, Glandon and Petrides, 2012, “Framing, decision-aid systems, and culture: Exploring influences on fraud investigations”. International Journal of Accounting Information Systems, 13(4), p. 316-333.

Por: Guillermo Serrano
Sarum Capital

This paper will aim to shed some light on how finance plays a role in the fight against cancer and whether by shifting economic incentives, investors and industry can play a more effective role in expanding the resources available in the fight against cancer.

Cancer is the leading cause of death worldwide according to the Worth Health Organization with reported 8 million deaths per year (10% of the total) and according to the American Cancer Society it costs the world economy some $900 billion a year measured in lost years of life and productivity. This paper will aim to shed some light on how finance plays a role in the fight against cancer and whether by shifting economic incentives, investors and industry can play a more effective role in expanding the resources available in the fight against cancer.

The developed world currently channels some 10% of its annual spend into healthcare in general; representing in most cases a significant proportion of national government budgets. An army of some 4 million doctors in the OECD helps us in our daily quest for longer, fuller and healthier living. Much of the weaponry afforded to the medical profession stems from companies that deliver a set of technologies for diagnosing and curing disease. All companies’ products and services have gone first through a rigorous and often long processes of research, discovery, development, testing, approval and commercialization. This is often at an uncertain financial cost.

Finance plays an essential role in enabling companies to develop new products and we shall describe some of the investment dynamics related to companies in therapeutics and diagnostics with the differences between the two.

Companies in the therapeutic space deal with finding new products for cancer namely through the discovery of chemical or biological drugs; often used in combination with companies that manufacture the equipment used in radio, proton and heat therapies. The first subset is, perhaps, the most complex from a financing standpoint; namely for the time, cost and lack of certainty of success. Based on the scientific realities of drug discovery and their implicit high failure rate, they are without doubt one of the biggest challenges for they way biotechnology companies are financed. They stand out for the elevated level of investment associated with research and development, combined with expensive and lengthy trial periods before regulators approve them. Taking all these factors together, a new drug approval, today, costs the pharmaceutical industry around $1 billion.

Addressing those challenges we will comment on the article written by Fagnan, Ferna’ndez,
Lo and Stein of MIT¹ that proposes an ingenious proposal to address the risks associated with biotechnology investing.

The main advantage for biotechnology companies of therapeutic drugs used in cancer, is that they benefit from unique economics compared to other industrial products. Price sensitivity is low and uptake is almost instantaneous, once regulatory approval has been granted. The public and private healthcare systems of most OECD countries are prepared to spend generously on cancer patients (see the chart below). Avastin alone, the best selling cancer drug, generates annual sales for Roche in excess of $6 billion.

By contrast, the financing of developing effective diagnostics technologies is comparatively simpler than novel drugs, but their economics are quantifiably more difficult. The key element in the diagnostics equation is related to the timing of the decision to spend on the diagnostic test.

The best line of defense against cancer, assuming prevention has failed, is early diagnosis leading to early medical intervention. In some cases, mass screening programs can make a difference. Despite that note of caution, the American Cancer Society predicts that in 2014, an estimated 1,7 million people in the US will be diagnosed with cancer and the number of premature deaths that could be avoided through screening vary from 3% to 35%. Although there is consensus about the positive impact there is still a wide divergence about its benefits, including the economic ones.

From an industry perspective, the race to detect and diagnose cancer as early as possible has moved into the field of molecular biology. The objective is to detect the presence of cancer cells in the body long before it manifest itself as overt lumps, lesions, spots, bleeding, etc. When cancer cells arise, they begin to leave a trace of their own DNA or by spreading unique “debris” around the body and hence provide an opportunity in the quest to find them using inexpensive and simple-as-possible, non-invasive tests.

When it comes to making convincing commercial logic for any type of cancer screening, the test must be capable of detecting cancer earlier than overt symptoms appear and, also, evidence must be available that an earlier initiation of treatment results in an improved patient outcome. Before health authorities approve any test, its performance is measured in terms of sensitivity, specificity, and positive-predictive values and negative-predictive values.

From a financial perspective, the challenges faced by technology companies are associated with the difficulties of discovery and, all too often, the difficulties in managing scientific teams along commercially viable paths. The commercial attraction of a successful screening test cannot be underestimated, because the statistics point towards 1 in 200 in the population will be diagnosed with cancer in any given year. In simplistic terms, a screening test has potentially 200 more customers than a therapeutic drug.

Sarum is currently invested in a company called Rhedyn that is developing a non-invasive test for primary and recurrent bladder cancer that hopes to replace the discomforts of cytoscopy. Within Europe, we have also come across success stories such as MDx Health that is now marketing a molecular diagnostic product for prostate cancer and Epigenomics, which intends to bring to market a non-invasive screening test for colon cancer.

For individuals with a personal history of cancer, or a strong family history of cancer, genetic testing could be a plausible way to deal with the probabilities of developing cancer. The costs of the test are dropping every year as new and more efficient gene amplification and sequencing equipment is delivered to the world’s laboratories. This is an area of medical technology that is truly disrupting the way cancer is diagnosed and it’s enabling the creation of personalized medicine.

The next stage in the diagnostic phase is generally represented by the use of biopsies, a procedure by which surgeons take a tissue sample to help grade the cancer and determine, in some cases, its extent and the use of imaging techniques (MRI, PET, ultrasound or CT) to determine the exact location and size of the tumour within the body and its association with other structures.

From a financial standpoint the risks and returns associated with investing in the medical imaging industry are probably very similar to other kinds of equipment manufacturers. The biggest challenge from a commercial standpoint, relative to drugs and diagnostic products, is their product differentiation and distribution. The Sarum SICAV has recently invested in a company called Endomagnetics that offers patients a non-invasive and far less toxic way to detect the presence of metastasis in the lymph nodes following conventional breast cancer interventions. It is just an example of medical imagery being an essential part of cancer treatment.

The timeline and cost profile vary from company to company, but in general technological development in medical equipment is an evolutionary process. Each year, equipment manufacturers identify new opportunities from in-house or external research sources, which may ultimately lead to new products in the marketplace. Every now and then there are disruptive new technologies that take aim to enter the market by displacing the established ones.

The scale of the investment required to introduce a product to market, making a very broad generalization for the purposes of this paper, it would not be unusual if it is at least 10x cheaper than a therapeutic. So, if a typical medical technology start-up works with 20 full time scientists to develop a particular piece of equipment, the “burn rate” of such a venture is likely to exceed $3 or $4 million per year. If we assume a 5-year timeline to market, we would then find ourselves with a $15 to $20 million-investment proposition.

Alternatively, the scientific work for a therapeutic may well face the same kind of costs, but once we add a $15,000 to $25,000 bill for each patient in a clinical trial, costs quickly escalate over the $100 million mark. If, on top of that, we add the risk of failure, the costs for Pharma escalate to the estimated $1 billion we mentioned earlier.

The financial system struggles to deal with the high level of uncertainty and risk inherent in the biotechnology area. A recent article titled “Can financial engineering cure cancer?” makes a brilliant and well-documented series of proposals for removing, or at least reducing uncertainty or failure in biotech, which probably represents the highest form of financial risk taking. The paper provides a portfolio approach by way of crating a multi-billion dollar mega-fund which is used to support a sufficiently large number of drug candidates to minimize the consequences of failure and spread the benefits of success, through adequate returns to all investors.

The creation of this proposed $135 billion cancer fund would undoubtedly unleash a flood of funding with the probable result of escalating, by hundreds, the number of new drug candidates; with the theoretical “comfort blanket” of it being a “safe” way of deploying capital.

A basic concern of ours would be that by lowering the cost of capital the chances of creating some kind of a financial bubble in biotech would be quite high. We would suspect this bubble would manifest itself in a drop in success rates, as significantly more drug candidates are brought forward and/or asset (IP) price inflation as the supply of capital could outstrip the supply of scientists and biotechnology companies. Examples in other markets such as property, the Internet and emerging markets have taught the financial markets a few hard lessons recently.

Risks in the biotech industry are born out of the very complexities involved in finding molecules or biologics that perform a therapeutic effect in the human body. The sheer uncertainty of introducing a novel therapeutic compound into the complex milieu that is the human body is so unpredictable that neither the best computer models, nor the finest research minds, can reliably predict whether a drug candidate will not be unduly toxic without testing it first on healthy individuals. The industry calls this first stage of the regulatory process Pahase I trials, and this is just the first stage of the regulatory process, there are two more, Phase II and Phase III, each with a higher cost to the preceding Phase and each with a significant probability of failure. In the case of new cancer drug candidates, less than 5% of them will eventually turn out to be approved drugs and reach the patient.

If failure is the norm, what can we do about it, finacially? In our view there is room for improvement, at least in Europe where we are writing this article, to treat innovation in a different light; from a purely fiscal standpoint. There are a number of initiatives that could have instantaneous positive effects, from making tax losses count double or triple if they stem from cancer related companies, to making capital gains free of tax, or, even allowing the tax- free credits from capital gains count more than their nominal amount.

Investing in biotech is risky business and, in our view, the scientific realities will make sure that it stays that way. Only by recognizing those risks and making governments more sensitive to that fact, will more resources be made available by the capital markets.

At the beginning of the paper we quantified the costs of cancer to the world economy at $900 billion per year and if we were to apply a standard VC return to eradicating cancer, the world should be prepared to invest at least $4 trillion to fix the problem profitably. If we take profits out of the equation it would mean the world should be prepared to invest at least $18 trillion. Will we??

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1. Fagnan, D. E., Fernandez, J. M. ; Lo, A. W. and Stein, R. M., 2013. Can Financial Engineering Cure Cancer? The American Economic Review, Volume 103, Number 3, May, pp. 406-411(6)

By: Antonio Lloret
ITAM

At first glance, it appears that a successful negotiator is one who manages to achieve their objective in any way possible and at whatever cost. But the negotiator may not achieve their goal if they are single minded and self-serving. The ability of a good negotiator must go beyond a single goal, a linear goal, as if the negotiation with an individual were independent of all future negotiations.

The effective negotiator must be able to think that in the future, most likely, and sooner rather than later, she will return to the negotiating table with the same person or another one she has met with before.

In this way, the negotiator is dynamic, flexible, adaptable, and in these circumstances, the picture must be broader in both time and space. Negotiation depends on future negotiations, just as future negotiations are related to past ones. Therefore, a successful negotiation cannot be all or nothing. In fact, it can be a bit of everything or a bit of nothing. No finite set of negotiations can be a single great negotiation. What, then, does it mean to be a good negotiator? 1) Do not drain yourself, 2) have temporal vision, 3) have a spatial, not linear vision, 4) consider a bit of everything and a bit of nothing, 5) have a shortcut, and 6) be adaptable. Let’s compare these ideas with the six mistakes that effective negotiators make, according to Sebenius.

Error 1. Neglecting the other side’s problem

To know what you want, you have to understand what the problem is and what their highs and lows are, but you also need to know the other side’s problem, as well as their limitations. The idea is that the negotiator must understand the other party’s interests, so that the options that you offer seem attractive to them because they satisfy their own interests. To remedy this error, it is necessary to discard a self-interest position and consider that your interests are linked to the interests of the other.

Error 2 Letting price be the only variable in the decision

To assume that the result of a negotiation can be put into monetary terms is like assuming that only money has value and the other elements in a successful negotiation actually have no value and cannot be incorporated into the process. The relations, interests, future possibilities – uncertain and even ambiguous ones – should be considered, including emotions. This doesn’t mean you stand still in search of the value, but rather consider the intangible, ethereal and abstract in the price of the negotiation as future possibilities of a good agreement. A bad agreement is no better than no agreement. A bad agreement limits the possibilities of re-negotiating in the near or distant future. A good agreement extends the time horizon and is inclusive in its object and subject. This is our premise.

Error 3. Letting positions drive out interests

The three elements that we must take care of are i) issues, ii) positions and iii) interests. These concepts are synonymous with “the what, the prospects and the collateral”. To cast them aside is to reduce the spatial vision and resort to linear negotiation. If an item can be seen in broad terms, increase control variables; then there will be priorities that should be considered in both cases, along with actions to avoid previous mistakes. One possible solution is to keep your eye on the mark and organize hierarchically without allowing the skein around it to influence the conclusion.

Error 4. Searching too hard for common ground

Balance does not exist; it is an illusion. It does not exist in the cards or in tarot. There is, however, a place that resembles a zig-zag, a seesaw, a weighing scale that can be fair and that’s fine. In the large and small numbers, the common ground is necessary foolishness to justify and to do justice to the negotiation. The differences stand out, they add, they congregate and even match. The value is in the difference between a bit of everything and a bit of nothing.

Error 5. Neglecting the best alternative to a negotiated agreement

The ace in the hole, the indifference, the enthusiasm, the path, the unknown shortcut, define a way, a tactic, a strategy for getting there. But this requires an extensive knowledge of one or both, an accordion, a going back and forth, and a link as a stepping stone to reach and overcome at least the lack of comprehensiveness of the most relevant.

Error 6. Failing to correct for skewed vision

To schedule an experiment between equals, one needs to know their strategies, their actions, their payments, their pains and their daily routine. Their fixation and stability force them to be limited to a constant tug of war. Adaptability and flexibility are really the great alternatives, the value of going and returning. Look beyond what you believe and admit a mistake, your mistake, and return to the path that leads to many paths heading south, north, center or inside.

In conclusion

Negotiators have to make mistakes to be aware of errors and to assume that to get to where they want to go, they must not be drained or limited or become self serving, but allow a bit of a lot and a lot of a bit, build roads, and be able to adapt. In a nutshell, the good negotiator must be able to be negotiated.?

References:

• Sebenious, JK. (2001) “Six habits of merely effective negotiators”, Harvard Business Review.

By: Daniela Ruiz, Caroline Auvinet and Claudia González

Micro, small and medium-sized enterprises (SMEs) are a key element in the economic development of any country. In Mexico, the importance of SMEs lies in the large number of jobs they create and their level of participation in the Gross Domestic Product (GDP).

According to data from the National Institute of Statistics and Geography (INEGI), there are approximately 4,015,000 business units in Mexico, of which 99.8% are SMEs, that generate 52% of the GDP and 72% of the jobs.

Other advantages of SMEs are their flexibility and dynamism, as many assimilate and adapt new technologies with relative ease and have flexible manufacturing processes that enable them to increase or decrease the size of their production in accordance with demand. In addition, the multiplier effects generated at the local and regional level are very significant.

However, there are restrictions that limit the growth of SMEs. Among the most important are the lack of access to financing, weak administrative capacity, poorly trained staff, inability to exploit economies of scale, and imperfect information of market opportunities. Therefore, without government intervention, SMEs have a large number of failures or remain small, and have high transaction costs. This amply justifies government intervention to improve the economic environment and to create conditions that contribute to the establishment, growth and consolidation of SMEs.

In Mexico, there are many government programs that support SMEs. However, there is no evidence of a collaborative effort between various government agencies focused on informing them about the full range and objectives of the programs. Consequently, the majority of SMEs do not know about the right program for the specific needs of their companies or projects, do not know when or how to participate in the calls, and thus miss the opportunity to apply for the appropriate program that could have a significant impact on the productivity and rate of growth of their businesses. Furthermore, government agencies forgo the opportunity to place their resources efficiently in those SMEs or entrepreneurs who could better use them to create value and generate jobs. It is also possible that the lack of coordination between the different agencies results in an unnecessary duplication of efforts and that they overlook the opportunity to link SMEs with support programs elsewhere.

This article presents a brief summary of the governmental programs offered. In June 2013, the date in which the mapping of the government support programs was completed, there were 91 programs focusing solely on SMEs. Excluded from this figure are government programs whose beneficiaries are not SMEs. In this study, the products offered by the Development Bank, specifically NAFINSA, BANCOMEXT and Financiera Rural, were also included.

The main results of the mapping indicate that of the 18 Federal Agencies, only seven offer this type of program. The ministries of Agriculture (SAGARPA) and of Economy (SE) account for 74% of the programs, followed by the National Council for Science and Technology (CONACYT) and, to a lesser degree, the Ministry for Social Development (SEDESOL). The transparency indicators for each agency show that the approved budgets do not depend on the number of programs offered. For example, even though SAGARPA and SE administer the same number of programs, SAGARPA has a budget nearly four times greater.

An important conclusion is that the programs do not have a defined policy with regards to the stage of the companies that they want to support. Thirty percent of the programs are not specialized in any stage of the business, but equally support the seed, development and expansion stages. This is not necessarily a good thing, as companies have different needs at each stage of development, and require different kinds of support and expertise. In addition, despite the importance of support for SMEs in the initial stages of creating new businesses, it is surprising that there are only three programs focused on the seed stage, and no more than five in the seed and development stage, while the greatest efforts are focused on supporting the expansion stage.

With regards to the types of support for SMEs, virtually all programs provide non-refundable grants, requesting an average of 30% of matching funds from the beneficiary. Even when the development bank offers various financing schemes and capital, creating other programs that provide support in the form of financing or capital is considered to be an area of opportunity that could be exploited by the federal government.

Another of the obstacles faced by SMEs in searching for and finding the right support program, as some programs do not have updated information, or the available information presents major inconsistencies, especially on the Internet. Furthermore, virtually no program, with the exception of those of SAGARPA, publishes in advance call dates or rules of operation.

To know and better understand the government programs in support of SMEs in Mexico, initiatives that strengthen the impact of the programs, such as the following, should be promoted:

• Include a catalogue and technical specifications of each program on the websites of the various agencies, so that beneficiaries can learn about their characteristics, requirements and objectives.
• Make a concerted effort between government agencies not only to concentrate the information in one site, but also to link the offers of different programs.
• Strengthen support programs at the seed and development stage.
• Strengthen support programs in the form of capital and credit.
• Develop a methodology to rate the performance and impact of the programs.
• Create a shortcut to the existing support programs on the homepage of each federal agency.
• Create an individual page for each program, explaining in an abbreviated manner, its objective, beneficiaries, eligibility criteria and how one can access the program. In addition, this page should disseminate the rules of operation, dates of the calls, transparency reports, list of beneficiaries and full contact information (name of responsible person, address, telephone, email and mailbox for questions).
• Review the online information of budget transparency indicators and the reporting of accounts of each of the programs of the various agencies. Include report figures of rejection of the submitted projects that competed for the programs.
• Update the information of results at the end of each fiscal year.
• Put the results in an easy-to-use format (either Excel or Word) to facilitate the analysis of data.
• Post the rules of operation and the calendar of dates of the calls for all programs that will be offered during the year.

We hope this information will serve our readers to find and become familiar with the ideal government support program for each stage of development of their company.?

By: Google Mexico

Women are currently the engine for development in Latin America, and the number of female workers, especially entrepreneurs, is growing.In Mexico, one of every three SMEs is led by a woman, and a new initiative will enable them to expand their businesses on the Internet.

Google is launching the initiative, called “Connected,” along with strategic allies such as Banorte, the Economy Secretariat, the National Entrepreneur Institute, the Mexican Association of Women Entrepreneurs, Crea Communities of Social Entrepreneurs, the National Institute for Women, Jimdo and ITAM. Its goal is to support women entrepreneurs by providing the necessary tools to use the Internet as an effective and free channel to expand their SMEs, to grow and pursue new business opportunities. This initiative seeks to reduce the digital divide, contribute to gender equality and promote socio-economic development and competitiveness.

“Connected” promotes a unique space where women can find information to understand the tools available and the steps to take to put their businesses online and to attract new customers.

In addition, they share stories with other women who have reached out to the Internet as a means to grow their businesses and integrate a community of entrepreneurs to generate a true environment of entrepreneurialism.

“We believe that women are an engine for development in Latin America and the Caribbean. In Mexico, one of every three SMEs is led by a woman and we would like to introduce them to the Internet tools to contribute to the development of their projects of entrepreneurship,” said Miguel Alva, director of marketing for Google México.

“Connected” began as a parallel project to “Connect Your Business”, in which entrepreneurs can get a domain, an administrator for their web page and free hosting for 12 months. “The value-added for women entrepreneurs is to generate publicity on the Internet for their business, send traffic to their page and obtain educational tools and financing to grow their business,” Alva pointed out. With these two initiatives, entrepreneurs may detect and initiate discussions with potential customers who navigate looking for products and services that they offer. In addition, the entrepreneurs who join “Connected” or “Connect Your Business” will have access to solutions and content that will provide useful tools to enhance and develop business skills.

Alva said that when an entrepreneur wants to start or expand their business to the Internet, they encounter too much information and it is overwhelming. “Through our initiative we guide the entrepreneurs to identify what they need in each of the stages of maturity of their business,” he said. “At the same time, they will be generating a community of women who share their experiences with one another and help each other resolve doubts.”

According to the executive, “Connect Your Business” has registered more than 70,000 SMEs, of which 60% have an active web page. Today, there are 56.5 million Mexican Internet surfers, of whom at least 50% look for products, goods and services online and 35% make purchases using this virtual mechanism. Therefore, “we hope that ‘Connected’ has the same success,” Alva said.

Why have a business online?

To create a web page on “Connected” is very simple. You only have to go to conectadas.com.mx.mx and follow the steps. In a few minutes any company can be added to the Internet with administration, hosting and domain free for a year. It will also have an email account, technical support and a budget in the platform of online advertising with Google AdWords.

A success story is that of JuanaCata.com.mx, an SME that makes and sells handicrafts from Mexico. It was founded in Oaxaca, in February 2012, by Ileana, a young woman who wanted to help her family. When searching for a quick and easy solution to add her company to the Internet, she decided to create their website with “Connect Your Business”, and its growth has been rapid.

The company is made up of nine women who embroider shirts, purses and other items. Their raw material is the table covering, and workmanship of each piece can take up to two days. With “Connect Your Business”, they have managed to expand. In one year, their page has had more than 5,000 visits and sales increased more than 10%.

Tips to ensure the success of your web page:

1. Plan the structure and type of information that you want to display. Before designing your web page, carefully determine the objective (inform, sell). When you are clear about what you want, make a separate sketch of the structure of the page. What are the most important points for navigation? What images are the most representative and attractive? What texts? Note that it is essential that visitors quickly and easily find the information they are looking for.
2. Present all information in an attractive, clear and orderly fashion. Choose an appropriate design for the visitors and content of the page. A page for a law firm, where more formality and seriousness is expected, will not be the same as another dedicated to design, where creativity and originality is valued more. Make it easy for the user to navigate the page without ever feeling lost. To do this, you should create five to seven main points in the navigation, use attractive and meaningful images, and write short paragraphs.
3. Think about the audience you want to reach and adapt the content accordingly. Regardless of your audience, it is necessary that the ideas are well written and without spelling errors. Above all, you are a professional and you have to transmit it. Do not forget to adapt the content to its objectives. Think about how much information you’d like to present to your visitors and how to do it.
4. Keep your web page updated. Everyone likes new things, so you cannot let your page fall into oblivion or obsolescence. Enter new developments on the page and inform users about new products, for example, through articles in a blog on the page. In addition, search engines such as Google also like active pages and value new content.
5. Analyze the statistics of your website and take the necessary measures. After launching the site and receiving the first visits, analyze and evaluate the behavior of the visitors (how long they stay on the page, which sections they visit, which pages they come from, etc.) Then, depending on the results, adapt the content or change the type of information or the structure. It is important never to lose sight of the impact of the new changes. In this way, you will know what works best on the web page and how to act accordingly.

Simple, effective and free. “Connected” leads entrepreneurs to the Internet in order to develop them and to continue pushing Mexico forward. Learn more about this initiative at conectadas.com.mx. ?

By: Gabriela N. Góngora
Departamento Académico de Computación

Mexico’s economy is “efficiency based”¹ while countries such as U.S., U.K., Japan, Germany, Norway, amongst others, have economies “based on innovation”.

Mexico’s economy is “efficiency based”¹ while countries such as U.S., U.K., Japan, Germany, Norway, amongst others, have economies “based on innovation”. What does this mean? For example, entrepreneurs in the U.S. have larger and diversified markets, as well as income sources to start new businesses, thereby propitiating entrepreneurial activity and competition within their economy. This actually gives the impression that starting companies have a rough time, but in the long-run competition translates into a broader field of options for consumers, ranging from prices, quality and product diversity, all of which conform stronger economies and better environments for innovation to arise. Mexico is far behind in this process. Even though it has a more advanced economy, than countries with basic-needs economies, and is heading towards services and innovation based economies, we can say it is half-way along the correct path.

In GEM’s² 2013 report, 54.6% of the mexican population (aged 18-64) asserted to have opportunities for entrepreneurship, and 58.5% perceived they had the abilities to do so. Sadly, 31.6% had fear of failure, which impacts in a 16.9% that actually had entrepreneurial intentions. In real terms, Mexico has a 11.9 rate of nascent entrepreneurship, while a 3.3 new business ownership rate and a 4.2 established business ownership rate. So…what are we, in Mexico, doing wrong? Is it cultural? Is our economy that is not strong enough? Is our government not providing the right means for innovation? Is there a deficit in education? Well, it is actually a combination of these factors, but we can pin-point the extremes to get a better glance at the problem.

According to GEM’s³ key entrepreneurial framework conditions, Mexico is severely lacking entrepreneurship education, specially at a basic school level, and not so much in higher education. On the other hand, Mexico’s best indicator is in physical infrastructure, having access to resources, communication, transportation and land, i.e. we have the goods but need to know more about how to use them properly, to innovate with them and appease new businesses.

One renowned educational institution, ITAM, has decided to join this road towards improved entrepreneurial education in Mexico, and as of the 8th of october 2013 it inaugurated its Center for Innovation and Entrepreneurship, by hosting a prominent entrepreneur, Bill Aulet, Director at Martin Trust Center for MIT Entrepreneurship. Mr. Aulet is also professor at MIT Sloan School of Management, and has more than 25 years of experience as an entrepreneur, previously being president and CEO of Cambridge Decision Dynamics and SensAble Technologies, MIT spin-outs, where he raised more than 100 million dollars.

Fernando Lelo de Larrea, academic and entrepreneur, spoke prior to Bill Aulet, as an introduction to ITAM’s initiative. He began by stating that “It has never been easier to start a company, its never been harder to build a business” (quoting Don Lodge, from Google Ventures). It has become harder due to all the challenges posed by technology, finance and the market dynamics. Nevertheless, ITAM can raise the leaders necessary to face these challenges and create the businesses that can provide new conditions for consumers, instead of small, basic businesses. Resources are becoming easier to obtain each time, and ITAM comes into the game with a serious proposal, with strength, strategy and the superb formation that it gives to every single one of it’s students. For this to become entirely true, it is up to its alumni to seize this knowledge and resources that ITAM has provided for them.

________

1.  Previous and modified version of this article appeared on holaMundo magazine, ITAM, December 2013.
2. Computer Science Master student, ITAM.
3.  Amorós, J. E., Bosma, N. (2014).”Global Entrepreneurship Monitor, 2013 Global Report”. Global Entrepreneurship Research Association, pp 10.
4. Idem, pp 26-30.
5. Idem, pp 46-49.

But what exactly is “entrepreneurship”? Bill Aulet described it as being analogous to running experiments, a process of trail, error and adjustment in order to succeed in selling a product. So, entrepreneurship can be taught? Yes, indeed. Bill Aulet is certain that entrepreneurship can be taught, and that is what he does at MIT. Entrepreneurship cannot be taught by sitting down or looking at a keyboard all day long, entrepreneurship comes from research, training in the real world, getting experience and understanding the world that surrounds us. Therefore, one can only get better at being an entrepreneur by trying repeatedly. Some people might get it naturally, as it always happens there are people who are born naturals at dancing, or at handling a computer or constructing objects, but it is up to each person to excel their own potential through repetition and education.

Bill asked the audience “why do people want to be entrepreneurs?”. The first answer was “because i want to be my own boss”. Surely, independence is a very attractive aspect, but a misleading one. Being one’s own boss, as Bill pointed out, is not easy and is partly untrue, because one ends up working for the customers (who ultimately buy the product and sustain one’s business), for a board of directors and even sometimes for investors.

How about “I want to work my own hours”? That is also a typical response as to why someone would like to be an entrepreneur. Bill assured that any entrepreneur will work its own hours, “all of them”, truth be told. Being an entrepreneur is not the easy way out and it is certainly not the least time consuming. So, why would anyone really want to be an entrepreneur? Bill singled out that entrepreneurs do not have to go interview for a job, they create their own job and a much better one because they can change the world the way they want and how they want to. One gets the chance to impact on the world, to innovate, to seek opportunities where others have not dared to look or exploit. Quoting Bill, “Nothing will test your skills more than to be an entrepreneur”.

Bill defined two basic types of entrepreneurship: SME and IDE. SME stands for Small and Medium Enterprise Entrepreneurship, meaning, small companies that will stay small, addressing the local market and providing a service to them, as would a pizza shop, beauty salon, amongst others. On the other hand, IDE stands for Innovation Driven Enterprise Entrepreneurship, and this is the one we should all have in mind at ITAM. IDE attacks the global market with innovation and taking higher risks, but in the long run creating skyrocketing revenues. For this to happen entrepreneurship has to be taught at scale i.e. universities need to provide the skills, resources and education necessary for students, thereby encouraging them to go build their own companies.

An important aspect of this necessity is that universities need to provide this education based on facts and not on stories. It is not enough to come in and tell students all the great stories about being an entrepreneur if the proper tools are not at their disposal. How does Bill Aulet suggest we should scale entrepreneurial education? By a very simple principle. He says that people should have “the fearless spirit of a pirate with the execution skills of a Navy Seal”. Schools are the optimal environment to eradicate fears and enter the entrepreneurship world, as they provide students with a support structure, the opportunity of finding their teams, of choosing their tools and pulling everything together.

“Focus on paying customers”, Bill mentioned, where he defines 24 steps, based on 6 themes, towards becoming a successful entrepreneur. They are not be taken as an equation or algorithm but if followed will certainly improve the odds of success in the entrepreneurial world.

The first theme is “who is your customer?”. To begin with, one needs to think of a paying customer, analyze who cares about the project, otherwise the product is a science project and not a business. After that, “what can you do for your customer?”. A product needs to be specified, the value of its proposition, never forgetting the care for the customer at hand. Next is “how does your customer acquire your product?”. A lot of effort and time in decision making has to be put in to knowing how to sell a product and acquire a paying customer. The third theme is “how do you make money off you product?”. How to calculate the marginal cost of a customer? By researching the particular market and selecting the correct pricing framework for it. After that, “how do you design and build your product?”. At this stage of the process the building of a product begins, in a very efficient way. Finally, the sixth theme is “how do you scale your business?”, i.e. have a plan for the product, in the long and short term.

What we can conclude from Bill Aulet’s conference is, first and foremost, fear of failure has to be eradicated, quoting him, every entrepreneur should have “the fearless spirit of a pirate with the execution skills of a Navy Seal”. After having the spirit, the correct environment and circumstances have to be propitiated i.e. getting education, and with it fear is lost, creativity is excelled and entrepreneurship can be further achieved.

Heading towards the correct path, mexican government has also ensured new international agreements that encourage entrepreneurial activity, as well as the formation of the National Institute of Entrepreneurs (INADEM). Efforts are in place towards creating laws that facilitate resources and conditions for new entrepreneurs to emerge. New financing channels are being provided, but work is still to be done when it comes to universities that are able to provide adequate education (orientation and quality) for the creation of new businesses, and their growth. Everyone has to put their own grain of sand for Mexico’s entrepreneurial education to change, but opportunities like ITAM’s Center for Innovation and Entrepreneurship, are more like a a bucket of sand. We have the sufficient resources to start shaping a better economy for Mexico and a more exciting future for the people, if we all learn to use the resources handed, learn to be fearless and seize the educational opportunities that help us handle the tools already in place for us.?

References

• Disciplined Entrepreneurship, disciplinedentrepreneurship.com, consulted: 9th october 2013.
• Amorós, J. E., Bosma, N. (2014).”Global Entrepreneurship Monitor, 2013 Global Report”. Global Entrepreneurship Research Association.
• “Entrepreneurship at a Glance 2013″. (2013). OECD.