G2 On Leadership
Did Obama ‘blink’ on tax cuts?
ALEX WONG/GETTY IMAGES
President Obama announced a deal with Republicans to extend Bush-era tax cuts.
In a high-stakes game of political chicken, President Obama appears to have bowed to Republican threats to block the extension of tax cuts to the middle class—and all other legislation— unless a similar tax
cut for high-income households was also included. Is this realistic bipartisan compromise after a sobering election, or is it a sign of weak leadership?
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Marshall Goldsmith is an executive educator, speaker, coach and best-selling author. If we ever plan to avoid
excessive debt, either Republicans will have to
demonstrate the courage to raise taxes or Democrats will have to demonstrate the courage to cut spending. This latest ‘realistic bipartisan compromise’ is another kick-the-can solution that will produce no increases in revenue or decreases in spending—just more debt!
Katherine Tyler Scott is managing partner of Ki ThoughtBridge, a leadership consultancy: When we train leaders to
negotiate, we always tell them
that they must know what they can do without ever coming to the bargaining table. They need this knowledge because it is their “walk away” if, after they have bargained in good faith, the deal being offered doesn’t meet their critical interests. Obama’s “walk away” was a form of Sophie’s choice to him: Should he allow the tax cuts to expire and leave millions of Americans in an even more precarious financial state or support legislation that includes what he firmly believes is unjust? Another lesson is to identify common interests
and then generate as many options as possible to meet them before deciding which ones best meet the interests. The partisan perceptions about the reasons for economic stability remained an obstacle to attaining common ground. The result is a legislation that will cost American taxpayers far more than what will be gained in the short term. Those with wealth will have more wealth; those surviving from paycheck to paycheck will hang on by a thread.
John Baldoni is a leadership consultant, coach, and regular contributor to the Harvard Business Review online: Good governance requires
an ability to see both sides of an issue and work toward an outcome that a majority will support. That requires compromise. One man who understood the nature of compromise was Dwight Eisenhower. Although Ike knewhow to give an order and expect it to be carried out, he was wise enough to realize that life did not operate according to an Army field manual.He learned this first-hand as supreme command of Allied forces in Europe, where he had to balance the wishes of his superiors, Roosevelt andMarshall, with the dictates of Churchill and De Gaulle—not to mention the egos ofMontgomery and
Patton.None (save for Patton) could be ordered; they needed to be placated. That required something that expert leaders do well: listen, learn and understand. Effective compromise is not capitulation; it is
a process of accordance with another point of view. There is an exception to compromise. As
preface to his above comment, Ike said, “All human problems, excepting morals, come into the gray areas.”Note the exclusion of morality. Trading in values for expediency—be it for profit or reelection—is what gives compromise a bad name. The rule that good leaders who know how to run an organization follow is simple: Compromise on issues, yes; compromise on values, never.
Excerpts from On Leadership, a Web feature exploring vision and motivation by Steven Pearlstein and Raju Narisetti. To see videos and read the entire panel’s comments, go to
www.washingtonpost.com/leadership.
SUNDAY, DECEMBER 12, 2010
A former U.S. senator and Washington state attorney general, Slade Gorton served on the 9/11 Commission: Standing alone, the president’s agreement is not a
compromise at all. But the tax-cut extension doesn’t stand alone. The president will get an unemployment benefit extension, and each side will get additional provisions for which it has advocated for some time. This is the essence of compromise, and gives us at least some hope of a constructive next year or so, perhaps even including progress on the overwhelming challenge presented by debt and the deficit.
Alaina Love is co-author,
with Marc Cugnon, of The Purpose Linked Organization: The current tap dance
around the extension of tax
cuts to high-income households is not an example of bipartisan compromise or mere leadership weakness. It is an act of blackmail rather than a game of “chicken.” What we are witnessing is the emasculation of the office of the president, with the intent to render Obama impotent in his efforts to course-correct this economy in ways that may be unpleasant, but necessary. Obama’s efforts do not serve the political ambitions of those already campaigning for the next election, nor do they serve Obama. But they may just serve the American people. During times of crisis, Americans have the
right to expect all of our elected officials to cooperate and intelligently address the issues that threaten to cripple the nation’s economy for decades to
come.Neither Democrats nor Republicans are exempt from this responsibility. This is no time for extortion, or adolescent
games of chicken. This is no time for self-serving decisions. America is in the fight of her life to regain our economic footing. Grow up, Washington leadership, and get on with it.
Howonline retailers stay a step ahead of comparison shoppers
Web sites glean data from people
for ‘dynamic pricing’ BY ANNIE LOWREY
T
he American consumer is back for the first holiday season since 2007. But
while shoppers are hitting the malls, they’re also being choosy— and comparison shopping is more easily done online. Web sales will rise 11 percent in No- vember and December, according to ComScore, compared with about 3 percent for sales in bricks-and-mortar stores. Online shoppers can get better prices and perks like free shipping. On- line merchants, however, are not exactly defenseless. One way they fight back against picky custom- ers is through “dynamic pricing,” also called “discriminatory,” “per- sonalized,” or “variable” pricing. And, for the most part, customers have no idea it is happening. In its most brazen form, it
works like this: Retailers read the cookies kept on your browser or glean information from your past purchase history when you are logged into a
site.That givesthem a sense ofwhat you search for and buy, how much you paid for it, andwhether you might be willing and able to spend more. They alter their prices or offers accordingly. Consumers — in the few cases they recognize it is going on, by shopping in two browsers simultaneously, for in- stance — tend to go apoplectic. But the practice is perfectly legal, and increasingly common—per- vasive, even, for some products. Sellers of time-sensitive, highly
price-variable goods (think air- line tickets, hotel rooms, or car rentals) do it all the time, some- what openly. If you have ever had the annoying experience of buy-
ing a plane ticket through a portal such as Kayak, then seeing the final price jump $10 or $40 at check out, you have probably found yourself on the receiving end of dynamic pricing. Banks do the same for prod-
ucts such asmortgages and credit cards, where prices change de- pending on everything from the customer’s credit rating to the manager’s whims to what brows- er the searcher uses. This August, the Wall Street Journal reported on a company that helps Capital One determine what credit-card deals to offer customers when they land at the site. The deals change depending
not on any credit-rating or salary information given to the firm by the customer — just on informa- tionskimmedoff of their comput- er before the page loads. More recently, bloggers caught the bank offering different deals to users using different browsers. (Chrome users demand better deals than Firefox users, FYI.) Online retailers also alter pric-
es, deals, and offers on regular goods that do not traditionally have much price volatility. Groups such as Consumers Union periodically track shop- ping sites to see how and how often they change prices, and find fairly frequent instances of dy- namic pricing. “While surfing Barnes and No-
ble’s site, we selected a newhard- cover book,” the watchdog noted in a 2007 investigation. “[We] placed it in our online ‘cart’ at a cost of $20.80. We added several other books as well but didn’t finalize the sale. Two days later, using thesamebrowser,wefound the cart had been emptied. We selected the same titles . . . [it] now cost $26.00.” Ditto for shoes on Zappos and a number of other products. It is impossible toknowexactly what stores change prices for
SPENCER PLATT/GETTY IMAGES It’s also legal for bricks-and-mortar stores to change prices whenever they wish, but itmay be less apparent to shoppers when they do so.
customers after they have clicked to put a product in their shopping cart — or which stores change a price on a customer depending on their browser or cookies. Shoppers despise the practice, understandably, so stores rarely cop to it unless caught red-hand- ed. But many offer disclaimers implying they are aware of price discrepancies. Pottery Barn, for example,answers the question, “Why is the price of an item inmy saved shopping cart different from when I selected it?” on its
site. The answer? “Prices are sub- ject to change — including tem- porary reductions as well as per- manent increases. The prices of items in your cart represent the current price for which you will be charged.” In short: dynamic pricing. The practice, if mysterious, is
not new. Mega-retailer Amazon offered the same DVD for differ- ent prices to different customers in 2000, creating a public-rela- tions disaster. The company claimed it was performing A/B
price testing — seeing how many more folks would buy the DVD at a higher price—and said it would always give all customers the lower price at sale. But the inci- dent fostered widespread con- cern about dynamic pricing and spurred the first thorough study of the practice. Concern about dynamic pric-
ing resurged in 2005, when the University of Pennsylvania’s An- nenberg Public Policy Center published a much-ballyhooed pa- per, entitled, somewhat provoca- tively, “Open to Exploitation.” Re- searchers conducted a 1,500-per- son survey and found about two in three respondents did not know that it is legal “for an online store to charge different people different prices at the same time of day.” About 70 percent did not real-
ize it is legal for bricks-and-mor- tar stores. But yes, as long as stores do not discriminate based on age, sex, location or other characteristics, they can price as capriciously as they want. Fears aside, how pervasive is
the phenomenon? How does it happen?Andwhat can customers do about it? The truth is, even retail ana-
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lysts, academics, and industry groups do not have a good sense of the scope of dynamic pricing— not so much because of a lack of interest, but because companies aren’t forthcoming about how they price online. A 2000 Forrest- er Research report found “most merchants feel pressure to com- pete on price online and are testing a mix of strategies to appeal to price-conscious con- sumers,” but has not followed up in recent years — despite the explosive growth of online shop- ping and the growing sophistica- tion of theWeb marketplace. But if analysts aren’t sure about the scope of the phenome-
non, the tech guys building the pricing systems certainly are. One computer scientist who builds smart sites for online re- tailers — with a nondisclosure agreement, hence the anonymity —says that concerns about differ- ent customers getting different price quotes for the same good are probably overblown. Some retailers do it, particu-
larly when gauging the market for certain items. But companies know that consumers watch for it, and that they will take their business elsewhere if they think they’re getting a raw deal. That said, major retailers are
getting much more sophisticated and subtle about ways to game shoppers. It’s common for big retailWeb sites to direct users to different deals, offers or items based on their purchase histories or cookies. They also alter their Web pages with internal ads, letting a shopper’s cookies or browser data influence which sale products pop up. And com- panies frequently offer special deals for customers with a few items in their shopping bags — from discounts on additional items, to free shipping, to cou- pons for future purchases. Inge- nuity, rather than price-tamper- ing, is now the name of the game. And as much as retailers try to
foil bargain shoppers, consumers do hold the upper hand online. Dynamic pricing is easy to coun- teract. Search multiple sites — including ones that collect prices from across the Internet as well as the sites themselves. Run searches on more than one browser, including one which you have erased cookies. Leave items in a shopping cart for a few days to gin up discount offers. And be prepared.
Lowrey reports on economics and business for Slate.
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