Blessed with mineral resources, but cursed with human resources impaired by cognitive biases

Jun 16, 2018 Letters

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DEAR EDITOR,
I refer to your column captioned “Looking at the impact of ExxonMobil” that relates to the Guyana Oil Exploration Contract with ExxonMobil that appeared in the Sunday June 10th, 2018 edition, and one with Chris Ram “ExxonMobil List of 227 companies, an embarrassment to government… insult to Guyana.”
Like many other Guyanese I am dismayed, nay, discombobulated by the daily revelations of the glaring miscalculations, misjudgments and poor negotiations of the Granger-led administration of the APNU+AFC coalition government as they relate to the Oil Contract.
I have read with increasing concern how Guyana has been shortchanged in what the IMF has reportedly characterized as “a generous” contract, a Politically Correct way of characterizing what in other words would have been otherwise described objectively as a horrible contract.
What Business Schools of the Leading Universities in the world tell us is that no person or country gets what they deserve; they get what they negotiate! Persons therefore should not blame ExxonMobil. ExxonMobil is a decades-old, world-class, successful international enterprise. It is NOT a CHARITY ORGANIZATION! It is a BUSINESS ENTERPRISE! It operates in the world of business. And University Professors the world over, in Harvard, Yale, Oxford and Cambridge teach graduate MBA students that business is like war: it is based on deception!
The Top Business Schools of the world all use the famous Chinese military strategist Sun Tzu’s “The Art of War” – the world’s foremost doctrine on military strategic thinking – to teach business strategies. They all implicitly acknowledge that international business is like war. Sun Tzu writes: “Know your enemy and know yourself and in 100 battles you will never be in peril.”
In its Program Guide, the Harvard Negotiation Institute identifies one of its Learning Objectives for its 1-week course in negotiations as: Heighten your awareness of your strengths and weaknesses. And in Business Schools the world over, administrators, businessmen, and leaders are taught how to conduct a SWOT Analysis of your business and of yourself.
Did the Guyanese negotiators do a SWOT analysis of themselves? And, equally if not more importantly, did they do a SWOT analysis of ExxonMobil?
Based on the outcome of the negotiations I don’t think so. If they had done such an analysis they would not have even showed up at the negotiating table! Because they would have realized that there was a glaring mismatch of resources, knowledge skills and competencies.
The question is: Does a law degree from a local, regional or British university plus a 1-week attendance at a Harvard Negotiation Institute Summer Program qualify a Guyanese politician to negotiate with the 100-year old multinational ExxonMobil Power House? Would you as a parent send your 10-year old kid to fight in the ring with a Mike Tyson? Would you go into a dogfight with a penknife against a person wielding an AK-47? You wouldn’t even think about it!
As a colleague suggested the Guyanese negotiating team might have benefitted somewhat from reading “Negotiating for Dummies” by Wiley Publishers plus several rereads of “The Art of The Deal” by, you guessed it, Donald Trump. Perhaps they would have fared better had they gone to Trump University and gotten a degree in ‘Closing the Deal!’
The fact of the matter is the ExxonMobil negotiators are not only very qualified lawyers with decades of oil industry-specific negotiating experience but they also have a successful track record competing against other giants in the industry and have an in-depth understanding of the industry the world over.
If you are a locally or regionally trained lawyer with 25 years experience negotiating used-car sales agreements, rental contracts, office space or Herdmanston Accord Political Agreements, that does not qualify a person to negotiate an Oil Exploration Contract with a multinational such as ExxonMobil. Which Guyanese negotiator can come close to an ExxonMobil negotiator? Let’s be honest with ourselves. None.
If the Granger-led administration was smart they would have used a similar approach the Burnham-led administration used with respect to the Territorial Dispute with Venezuela, namely, retain high level international negotiators with oil industry specific expertise and a proven track record. That strategy was so effective it is still in use today.
Sun Tzu, in his military classic “The Art of War” exhorts leaders to: “Know the terrain.” In terms of business negotiations, that translates to “Know the subject area.” In this case, have an in-depth Knowledge of the oil industry. Sun Tzu writes: “To secure ourselves against defeat lies in our own hands, but the opportunity of defeating the enemy is provided by the enemy himself.”
Did the Guyanese negotiating team have an in-depth knowledge of the Oil Industry. No they didn’t…and still don’t. Just look at the asymmetries of information, knowledge, skills, track record and resources, both human and technological, between the two negotiating sides. It’s like comparing North Korea with the United States of America. What we Guyanese have witnessed is the total demolition of the Guyanese team!
It has been said, reportedly, by one oil tycoon quoting the Holy Bible that “The meek shall inherit the earth … but not its mineral resources!” The smart ones will. And, that is quite evident in the Guyana case and in other small countries. Plain and simple. They have all been outsmarted.
Quite frankly, the Guyanese negotiators of the Oil Contract, past and present, don’t know what they don’t know!
That stems partly from the fact that they think that because they have the “institutional authority” to make decisions they are smarter than the rest of us Guyanese. They suffer from the Small-pond, Big-fish Effect. Think about it. Guyana with a population of say 700,000 vs. USA, the richest country in the history of the world with a population of 326 million and GDP = 57,467USD. One small department of ExxonMobil alone generates more revenue than the whole of Guyana in a Year.
The dangerous consequences of The Dunning-Kruger Effect (a cognitive bias in which people of low ability have illusory superiority and mistakenly assess their cognitive ability as greater than it is) are compounded by cognitive biases in the Granger-led administration, one in particular is “The Man With A Hammer Effect”, otherwise known as ‘deformation professionnelle” This Effect is the tendency in persons to see things only from the point of view of their profession. As a famous economist puts it, “If the only tool you have is a hammer, all the problems you see, look like a nail.”
This effect manifests itself in the present administration in many ways. The military person sees things only from his profession’s point of view: command and control. The lawyer, from his legal point of view. If there is a problem of corruption, set up a Commission of Inquiry; if there is a problem of a vacancy, appoint an army officer; if there is a problem of implementing a policy, rename a ministry; if there is a problem with racism, rename it social cohesion!
The combination of “The Dunning-Kruger Effect” and “The Man With A Hammer Effect” is further reinforced by “The Peter Principle”, named after the famous Canadian Dr. Lawrence J. Peter, who in his book, writes: in any hierarchical organization, such as the army, the government, persons tend to be promoted to their “level of incompetence”.
Here in Guyana, from sheer observation, you see this effect throughout the administration. A loyal, long standing party-card holder with a first degree in history, sociology or one of the soft sciences is promoted to be Permanent Secretary of a Ministry or chairman or CEO of a government-owned corporation or Commissioner of a Commission of Inquiry. The consequence of that is a double whammy: we’ve lost the potential competence of a budding historian or sociologist and gained the incompetence of a public administrator.
A person with degrees in history has, over the years, acquired certain analytical skills that are particular to that area of study. Those skills, research has shown, are not transferable to another area of study, say science, or public administration, for example. The skills and knowledge of an army officer, acquired over years of training in boot camps in the grasslands and jungles of Guyana are not skills that are transferable to the executive office or boardroom unless they are supplemented by extensive formal training in management or public administration.
Here again the consequences of the non-transfer of relevant skills creates another whammy: Guyana loses the potential of a possible great general and gains a mediocre administrator.
Is it therefore any surprise that persons without the requisite experience and knowledge, pitchforked into positions of power, think they are a match for corporate lawyers from ExxonMobil?
Guyana is indeed blessed with natural mineral resources but cursed with Human Resources dangerously impaired by cognitive biases.
Concerned citizen

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