Posts

Why I Love Accountants: the Subprime Mortgage Debacle

/3 Comments/in /by

If you were the head of some large organization and faced some really serious crisis with which you had little experience—who would you want at your side?

1. your lawyer
2. your CFO
3. your management consultant
4. your PR and marketing guru
5. your COO

Me, I’d pick the CFO. Why? Because (s)he’s most likely trained in accounting. And I have come to believe that accountants have—overall—the clearest and most practical view of the world of all the professions.

I suppose it has something to do with a closed system view of the world. Everything’s either a debit or a credit; it must have an account, and an offsetting account. And everything must cross-foot; it must all add up.

But unlike other closed systems (scientology? creationism?) there are very few gaping holes of the “here a miracle happens” sort.
When I was a management consultant, I built a case study out of a client experience, and frequently used it as an interview case.  I also tested it on many of my own colleagues.  Most cracked the code after about three minutes; some in two minutes; a very few in one minute.

Our CFO —Ross Currie—got it in 15 seconds, and he wasn’t a consultant.  He was a trained accountant.

For a example of what I’m talking about, try a delightful column by Jim Peterson, who writes for the Business Section in the International Herald Tribune. In Accounting for Subprime—Scoring the Scorekeepers, he writes:
 

As soon as commerce moved beyond one-to-one barter, conventions were required to quantify such inherently judgmental issues as the hazard of re-payment in future periods, the time value of money to change hands at a later time, or the transfer of performance to a third-party.

So viewed, subprime and the credit market turmoil are all about the accounting, and nothing else. Fundamentally flawed assessments were made – whether out of venality or ignorance – about the quantification, of timing and transferability of the risks associated with uniquely complex financial derivatives, and the collapse in their values as knowledge and experience eventually caught up.

So the accounting for mortgage-based assets and their off-spring should be seen as a proxy for the reckoning of financial reality in all aspects:

He then goes on to describe the accounting view of each player in the debacle—people who overpaid on houses with over-leveraged credit; the investment banks who dreamed up the toxic waste; and the merry-go-round investors who bought it.
Read the rest his article to find out its implications for Sarbanes Oxley.

Like I said—in a crisis, I’d pick the CFO.

Who would you go for?

Hip to Be Square at Roundball

/2 Comments/in /by

Last post I talked about a possible trend against cynicism. Well, when it rains, it pours.

Mark Slatin tells us what happened at halftime at a recent Maryland Terrapins vs. Wake Forest basketball game.

I’ll just let Mark tell this story in his words:

The PA announcer introduced student contestants for the Pep Boys Fan Challenge. These two young men were competing for a year of free windshield washer fluid. I couldn’t make this stuff up! Regardless of where you sat that night, any fan could tell that both competitors had enjoyed their share of super sized Pepsi’s and grande nacho cheese tortillas.

The winning contestant would need to complete a “speed drill”. The goal? Dribble the ball from under one basket to the foul-line and back, then to the half-court line and back, then to the other foul-line and back, and finally to the far base-line before finishing with a successful basket.

The labored breathing started for both men as soon as they hit the first foul-line. As they reached the half-court line, one appeared to glance upward to see if an oxygen mask would mercifully drop from the Jumbotron. As they headed for the final turn, one warrior had gained, what they call in football, separation, from the other – nearly the full length of the court.

At this point, fans started to cheer. Not for the apparent victor, but to support the guy who was grasping onto hope…just to finish.

Then it happened.

The contestant who was gliding to an easy victory slowed down about eight feet in front of the basket, got down on all fours, and waited for his competitor, a complete stranger, to approach. As the athletically-challenged straggler huffed and puffed his way toward his competitor, he saw the offering of a human trampoline in front of the basket. Hands and knees now firmly planted on the hardwood floor, the first contestant pointed up to his own back.

The anticipation and noise level escalated as he neared with slow motion speed. Without breaking stride, the newly anointed crowd-darling picked up steam, took a final dribble, jumped on the back of the first contestant and slam dunked the ball to an erupting Comcast Center crowd.

Unexpected.
Unnecessary.
Unselfish.

Both men hugged and held each other’s hand in the air in victory as the video camera sent their image to the arena mega-screens. The Terps went on to win the basketball game; but, these men were the real victors that night.

By humbling ourselves and not seeking the spotlight, we build trust.

By giving credit instead of taking it ourselves (especially when we can), we build trust.

By doing what is unexpected, unnecessary and unselfish, we build trust; capturing the hearts of everyone in our arena. The one-year supply of windshield washer fluid is just a bonus.

What Mark said.

Call for Submissions for the March Carnival of Trust

/0 Comments/in /by

This Thursday (that’s two days from now) is the deadline for the March edition of the Carnival of Trust.

Carnival of Trust

If you haven’t seen the carnival yet, have a look at some great reading here.

If you haven’t contributed yet from your own blog, do so here.

This month’s carnival will be hosted by Duncan Bucknell, from Down Under, at his IP ThinkTank Blog.

Love to hear from you!

Fighting Cynicism

/3 Comments/in /by

I often want to be hip and in the know.  I don’t think I’m the only one.  And frequently this urge manifests itself in sarcasm, cynicism or being snide.

Are we living in a time where this urge is perhaps more prevalent than others? So much so that we’re beginning to see a backlash?

Some see the Obama phenoma as evidence of such a backlash.  I’ll abstain from that debate.  Besides, I’ve got a better piece of evidence.

In Advertising Age —‘of all places,’ I’m tempted to say—we find Snide Advertising is Bad for Business and Society,  by Richard Rapaport. He dissects some of the snarkier, hipper ads on TV today—ads by FedEx, Budweiser, Priceline.com.

I don’t think of advertising as a bastion of expansive social thinking; much less of a philosophy linking social well-being and business profits. I think of it as a center of cynicism, actually. And yet, read these few snippets (and remember, this writing appears in Advertising Age):
 

There are few barometers so reflective of modern life as TV advertising. It makes sense. Take the culture’s most facile minds, challenge them to pry cash from an increasingly tapped-out audience, and what do you get? Commercials built on sadism, on derision, on one-upsmanship — in a word, "snide."

If you look up "snide," you find synonyms such as "sarcastic" and "malicious." Snide advertising possesses a governing syntax that demands, to begin with, sacrificial victims…

Another building block of snide advertising is physical aggression…

Snideness is the leitmotif of sexy slapstick that predominates in ads for domestic beer bottlers, the bottom feeders of American advertising…

The bottom line of snide advertising is a kind of Darwinian "survival of the snappiest," requiring that you get the last word in any exchange and that it be a "gotcha."

… the crux of snide advertising [is] the ability to communicate that you and your product are too hip to so much as work up a spit to actually sell the merch; that the very process of making the ad, like most other human endeavors these days, is barely worth the effort.

…It behooves marketing professionals to understand the difference between subtle irony and idiot snideness and aim for an advertising denominator cognizant of the maxim that expansive, confident consumers part with their cash far more readily than do angry, fearful ones.

When the purveyors of pitch are telling us not to foul the nest—maybe there’s something going on?

Trust Is the New Leadership In A Flat World

/5 Comments/in /by

Thomas Friedman’s book The World is Flat is an absurdly great best-seller.

It was a best-seller when printed in 2005, and as of today it’s still ranked #112 on Amazon. That’s a lotta bananas.

I don’t recall if Friedman ever defines “flat”—but it is an apt adjective.

“Flat” conveys the sense of “level playing field,” as in markets opening up to competitors from everywhere. It suggests a levelling of wages and prices, for the same reason. And it certainly conveys the feeling of lots and lots of interaction between buyers and sellers.

But enough about Friedman. Here’s what “flat” says to me.

Business used to be about stable, vertically organized, fire-walled, corporate entities—which competed against each other. That was business.

Not any more.

In the “flat” world, we don’t have corporations—we have supply chains. The vast majority of the auto industry’s costs are purchased costs. I’m told that when Tata set out to design a sub-$2500 car, they didn’t call a company meeting—they called a supply chain meeting.

The old job of leaders and managers—to organize (largely hierarchical) efforts within the walls of the Good Ole Corporation—is disappearing.

The new job is being done by supply chain managers, customer relationship managers, key account sales managers, and field engineers.

And that new job is not about directing people over whom you have control—it is about influencing those over whom you have absolutely no control whatsoever.

Trust is the new leadership.

It’s no longer about how you measure, motivate and inspire those beneath you or with the same W-2 form as you. It’s about how you connect with, help, and serve those with whom you interact in the Great Outside World.

Trust is the new leadership.

It’s no longer about how you help those who depend on you. It’s about how you help those on whom you depend.

And there’s the rub. Our old leadership models were internal; it was OK to help your people—after all, you all worked for Good Ole Corp.

But in old-think strategy, the customer and the supplier are your competitors too (think Five Forces model). Don’t share your cost information; contract for everything; you get what you bargain for; check with the lawyers.

In a flat world, old-think strategy runs smack up against new-think leadership.

In a flat world, you actually have to trust your supply chain. Your supply chain is your friend, not your enemy.

It’s no mistake Davos this year was all about collaboration. Collaboration is the new competition.

And trust is the new leadership.

Like old “internal” leadership, it comes with a paradox. If you focus on serving others, you will be served yourself. But if you set out to serve yourself by the “means” of serving others, you will be found out.

Now Pitching For Watergate: Roger Clemens

/0 Comments/in /by

It didn’t start with Watergate—and it sure didn’t end with it.

Still, the1972 failed Republican burglary of the Democratic National Committee at the Watergate Hotel in Washington still best embodies an eternal truth:

The cover-up is worse than the crime.

How many reiterations of that tragi-comedy have we seen recently?

-President Clinton and the Lewinsky scandal;
-Dan Rather and the forged memos regarding George W. Bush’s Air National Guard service;
-Martha Stewart and the sell order with her broker;
-Senator Craig and the Minneapolis airport;
-Senator Allen and the macaca brouhaha;
-Congressman Mark Foley
-Pastor Ted Haggard

Now it’s Roger Clemens.

Bill Dwyre, columnist for the LA Times , gets it just right in his Roger Clemens Gets Some Unsolicited Tough Advice.

Dwyre is one good writer. In a fine imitation of another Clemens (Samuel) channeling Huck Finn, he offers Roger Clemens his best advice on how to get out of this fix, based on all the slick huckstering he’s seen as a reporter. Some excerpts:

Let’s pretend we have gone to the dark side and our job is to tell our client, Clemens, how to get himself out of the fine fix he’s in…
You get a big room in a big hotel near a big airport and call a news conference.

You walk in with George Mitchell, sit down and start by saying how honored you are that a man of his stature is there; that you are flattered to be sitting next to somebody who has done things such as negotiating successful treaties in Northern Ireland.

Then you say you are sorry, that you won’t be able to say that enough to properly express your depth of feeling. You explain that you are a proud man who is also almost psychotically competitive. You say that you really have no idea if the steroids and HGH helped all that much, that it could be that what you accomplished in baseball might have been accomplished anyway.

But the thought of other players having an edge overwhelmed your better judgment and sent you on your way. Then, one denial led to another and before you knew it, you didn’t know how to turn back.

You don’t expect fans’ forgiveness, you just hope for a glimmer of understanding. You expect some of your personal pitching records to carry an asterisk wherever they appear, and you ask that your name not even be listed on any Hall of Fame ballot, because that might take votes away from a player more deserving.

[Your remaining years’] salary will go to two causes. The first will be used by Major League Baseball for costly blood tests of all players for HGH, done randomly, and for continued research into affordable HGH tests. The second will be a foundation that spends all its efforts getting high school athletes to understand the evils of performance-enhancing drugs.

You apologize to your wife for involving her in this and you describe how you sat your kids down and looked them in the eye.

Next, you do the hardest thing. You apologize to Brian McNamee.

Finally, you let Mitchell have the last word. Expect appropriate, articulate and scholarly.

Then go home, turn on the TV and watch how fast the worm will turn. Americans want to forgive you, to love you again, and the media that battles now for every stray eye and ear will quickly tune in to that and lead your reversal of fortune.

You will always be damaged goods, but a scar is infinitely better than the current stake you have protruding from your heart.

Your window of time is closing fast. Get rid of those two legal lumps you hired, Frick and Frack. Sit down, take a long look in the mirror. Then do it.

Clemens could probably pass a lie detector test; no one is more convinced by his bluster than he himself is.

Dwyer is giving him fabulous advice. And I’ll wager 10:1 Clemens won’t take it.

Is this an athletic tragedy? Or another pathetic, almost-comedy?

A Valentines Day Sampler and Home Companion

/2 Comments/in /by

Happy Valentine’s Day!

But do you know what’s behind that?

Herewith, a sampling of history, customs, and trivia surrounding what we now call “Valentine’s Day” and celebrate on February 14.

From Wikipedia: [given] no [prior] connections whatsoever with sentimental love, appropriate lore has been embroidered in modern times to portray Valentine as a priest who refused an unattested law attributed to Roman Emperor Claudius II, allegedly ordering that young men remain single. The Emperor supposedly did this to grow his army, believing that married men did not make for good soldiers.
The priest Valentine, however, secretly performed marriage ceremonies for young men. When Claudius found out about this, he had Valentine arrested and thrown in jail. In an embellishment to The Golden Legend, on the evening before Valentine was to be executed, he wrote the first "valentine" himself, addressed to a young girl variously identified as his beloved,[22] as the jailer’s daughter whom he had befriended and healed,[23] or both.[24] It was a note that read "From your Valentine."[22]

Finally, the origins of “make love, not war.”

The U.S. Greeting Card Association estimates that women purchase approximately 85 percent of all valentines.[3]

The triumph of hope over experience.

The St. Valentine’s Day Massacre. Buy the DVD here.

Well, that would be a distinctive choice…

The first true Valentine card was sent in 1415 by Charles, duke of Orleans, to his wife. He was imprisoned in the Tower of London at the time.

Roses are red, violets are blue, I’m stuck in the Tower—hmmm….

Valentine’s Day Love Quotes

If music be the food of love, play on.
– Shakespeare

Charm is a way of getting the answer yes without having asked any clear question.
– Albert Camus (1913-1960)

It’s not the men in my life that count — it’s the life in my men.
– Mae West (1892-1980)

Love is much nicer to be in than an automobile accident, a tight girdle, a higher tax bracket, or a holding pattern over Philadelphia.
– Judith Viorst

At the touch of Love every one becomes a poet.
– Plato

Maybe not everyone; Plato obviously couldn’t even rhyme.

Valentine’s Day Humor
My boyfriend and I met online and we’d been dating for over a year. I introduced Hans to my uncle, who was fascinated by the fact that we met over the Internet. He asked Hans what kind of line he had used to pick me up. Ever the geek, Hans replied, "Just a regular 56K modem."

Hey, sounds better than "come up and see my etchings." Whatever works.

From The Restored Church of God at

Valentine’s Day’s traditions and customs originate from two of the most sexually perverted pagan festivals of ancient history: Lupercalia and the feast day of Juno Februata.

Luperci (male priests) conducted purification rites by sacrificing goats and a dog. Clothed in loincloths made from sacrificed goats and smeared in their blood, the Luperci would run about Rome, striking women with februa, thongs made from skins of the sacrificed goats. The Luperci believed that the floggings purified women and guaranteed their fertility and ease of childbirth.

February was also sacred to Juno Februata, the goddess of febris (“fever”) of love, and of women and marriage. Billets (small pieces of paper, each of which had the name of a teen-aged girl written on it) were put into a container. Teen-aged boys would then choose one billet at random. The boy and the girl whose name was drawn would become a “couple,” joining in erotic games at feasts and parties celebrated throughout Rome. After the festival, they would remain sexual partners for the rest of the year. This custom was observed in the Roman Empire for centuries.

In A.D. 494, Pope Gelasius renamed the festival of Juno Februata as the “Feast of the Purification of the Virgin Mary.” In A.D. 496, powerless to get rid of [Lupercalia], Pope Gelasius changed it from February 15 to the 14th and called it St. Valentine’s Day, named after one of that church’s saints.

The church whitewashed Lupercalia even further. Instead of putting the names of girls into a box, the names of “saints” were drawn by both boys and girls. It was then each person’s duty to emulate the life of the saint whose name he or she had drawn. Though the church at Rome had banned the sexual lottery, young men still practiced a much toned-down version, sending women whom they desired handwritten romantic messages containing St. Valentine’s name.

Hmmm…I wonder what the Secret Santa program looked like before the Pope toned it down…

Decaying Social Trust and Moral Indignation

/8 Comments/in /by

Pop quiz!

Who wrote: “This is how the world will end—not with a bang, but a whimper.”

a. T.S. Eliot
b. W. H. Auden
c. Robert Frost
d. e.e. cummings
e. Alfred E. Neumann

Answer at the end; no fair peeking.

I don’t know about the world, but the subprime/mortgage/credit crisis shows how social trust ends. Not with a whimper, but with righteous moral indignation—on all sides.

We are in the midst of the deflation of a debt or credit bubble, itself based on an asset bubble—overpriced houses. As of today, according to the Mortgage Bankers Association, 24% of subprime mortgages are delinquent or in foreclosure; ditto for 4% for prime mortgages; and for all mortgages it’s a record 7.9%, the highest since records began in 1979.

Everyone played musical chairs. And the more frantic the music, the more rightous the talk.

Here’s the Heritage Foundation—mind you, just last November, 2007—demonstrating its utter subordination of logic to ideology, arguing against H.R. 3915, a House bill to reign in predatory lending:

[the bill] would establish an explicit series of credit standards for lenders, which could have the effect of excluding many moderate income borrowers from the ownership market. In sum, the enactment of H.R.3915 would delay the housing market recovery that is now struggling to get underway.

Yup, Congress killed the real estate bubble appreciating market.

A year earlier, in September 2006, the Mortgage Bankers Association stated that

“the subprime market has evolved dramatically in recent years, providing significant benefits to consumers…increasing regulation could decrease competition and increase rates that the subprime market offers consumers.”

But this is not a populist rant.  Consumers were far from just hapless victims.

An FBI Mortgage Fraud report 3 months ago stated that up to 70% of early payment defaults may have been linked to buyer misrepresentation on loan applications.

What about FICO credit scores?  Courtesy of BusinessWeek, meet “credit doctors,” companies who will manipulate credit ratings by blitzing credit agencies with disputes about old reports (which have likely been lost), setting you up as an “authorized user” of an account owned by someone with good credit, or just creating paper accounts.

“All legal,” they protest. Of course. No miscreants here.

So—end game—bang or whimper?

Dateline, CBS Evening News February 12, 2008.  Meet Karen T., a married San Francisco suburbanite who bought a condo as a second home for $505K, financing it 100% with mortgage debt. Now it’s worth $340K, and her adjustable mortgage goes up $900 this June.

They own another home. They can afford the rate increase. So—what to do?

Karen’s answer?  Walk away. Default.  Give it back to the bank.

Is Karen distraught? Not really. “I’m not doing anything illegal.  Everything’s negotiable in business—this is just another business decision. I don’t see why this is any different. I’m within my right to walk away from a bad deal.”

And 60% in an LA Times Real Estate blog poll agreed with her.

Karen is morally indistinguishable from a landlord turning off the heat under rent control; insurance companies withdrawing sole-provider coverage from unprofitable markets; banks charging usurious credit rates; emergency rooms turning out the uninsured; de facto mortgage redlining; and a thousand forms of “fine print."  Or—come to think of it—from a banker foreclosing on a never-should’ve-approved-that-loan loan. 

The rallying cry is always, “I’m not doing anything illegal.”

But here’s the kicker.

Karen’s not morally indignant about walking away. To her, that’s “a business decision.”

No, her moral indignation is reserved for the consequences she might face.  She leans her face on her hand, her voice intensifying, as she says, “It is devastating to think that my credit scores are going to drop 200 points," she said.

OMG, it’s just so, like, unfair!

Huh? Devastated because you were educated, had the money, and placed a 100% bet on an overheated market—and lost? And you can afford to pay the piper—but don’t want to?

Take a trip to Vegas, Karen, and see if the blackjack dealers buy it.  Better yet, go tell it to someone with half your education and income who’s been foreclosed on after having spent their last money trying to pay the bank. 

It doesn’t matter who started the food fight.  It seems that the decay of social trust is accompanied by higher levels of self-righteousness and narcissism on both sides.

When business and consumer alike choose moral bankruptcy over financial bankruptcy—without even thinking about it—and then justify it indignantly through Darwinian arguments—well, Houston, we’ve got a problem in trust-land.  Not to mention ethics-land. 

Oh yeah—T.S. Eliot. 
 

Buy With the Heart, Justify With the Brain

/1 Comment/in /by

People buy with the heart, and justify their decision with the brain.

I’m not the only one to make that claim (for another, try Jeffrey Gitomer).

People in “sophisticated” businesses—information technology, Wall Street, law, accounting, consulting—tend not to believe it.  They think business people make business buying decisions in a rational, deductive, linear, data-based, cost-benefits kind of a process.

These people are sellers and buyers of sophisticated sales management and sales training systems.  Their models are variations on “consult with a customer to find a need, get the customer to articulate it, package a solution, and show the customer how the solution fills the need.”

Fine, except it assumes:

a. The buyer can articulate the need
b. The buyer is willing to articulate the need.

Frequently, neither is true.  I recall (can someone help me out on this?) a study of relocations of corporate headquarters, identifying how many moved the HQ closer to the chairman’s home, vs. how many moved it further away.  Care to guess the outcome?

Educated people in powerful businesses (oil, investment banking, capital equipment) will generally tell you they make decisions based on the rational model described above.

Here is a delightful counter-example from a few years ago about an oil industry executive, making an important personal purchase decision—how to select a high-end, bespoke English tailor, courtesy of Thomas Mahon’s blog English Cut:

It’s funny how things from the past can do two things- (A) come back and haunt you, or (B) come back and help you.

Last week I measured up a new customer, who has a senior position with one of the largest and most successful oil companies in the world. He was a very charming fellow who only knew about me through reading English Cut.

He chose me not just because he felt I could give him true bespoke (which I certainly hope I can), but the deciding factor was that he is originally a Cumberland native, like myself. So that put his mind at rest. People go with who they know.

As we were discussing the final cloth choices on his two suits, we stood by the window looking out onto sunlit Savile Row and Anderson & Sheppard’s old premises. When my customer told me which line of business he was in, I remarked that when I as working at A&S I used to cut for the chairman of his company, in other words, his boss.

He than stood back in astonishment. I didn’t know if this meant he thought his boss was the best dressed man on the planet, or the worst, so I was fairly nervous there for a moment.

But then he told me the story. When he first started working with the chairman several years ago, he was in a business meeting on a private jet somewhere over the Atlantic. When my customer had finished discussing some business details, the chairman leaned over the table, took off his glasses and said, referring to his accent, “You sound just like my tailor.”

So be nice to everybody. You never know who may be talking about you.

The customer’s original “deciding factor” was the geographic origin of the tailor—a connection with his own.

The punch line, from which we conclude the tailor had a customer for life, was that the customer’s boss had also hired the tailor.

You come from my part of the world, and my boss uses you.  Sold.

Lesson 1. You won’t find that one in a standard sales process model.

Lesson 2. You can’t build that one into a standard sales process model.

Lesson 3. What you can do is what Aristotle pointed out: character is a habit.  Be nice, competent and of service to everyone—as a habit.  Then when the uncontrollable comes around, you’ve got a reference.

Selling to the Primal Instinct in All of Us

/7 Comments/in /by

If you’re in sales, this blogpost is for you.

If you have a toddler at home, ditto.

And if you’re a toddler parent who sells for a living, you just hit the jackpot. Listen up.

I recently wrote an article on selling called The Point of Listening is Not What You Hear, But the Listening Itself.  (Or, read the shorter, blog version).

The title pretty much says it. A lot of sales programs focus on listening for content; but unless the customer feels heard, all you’ve done is a brain-suck, and that feels invasive to the customer.

That idea won’t be new to some salespeople, or to afficionados of communications theory.  But I had no idea how firmly based it is in develomental history.

From the NYTimes Feb. 7, we have “Coping with the Caveman in the Crib.” 
 

If there is such a person as a “baby whisperer,” it is the pediatrician Dr. Harvey Karp, whose uncanny ability to quiet crying babies became the best-selling book “The Happiest Baby on the Block.”

Dr. Karp’s method [works with] fussy babies who are quickly, almost eerily soothed by a combination of tight swaddling, loud shushing and swinging, which he says mimics the sensations of the womb.

Now Dr. Karp, assistant professor of pediatrics at the University of California, Los Angeles, has turned his attention to the toddler years…A wailing baby is nothing compared with the defiant behavior and tantrums common among toddlers.

But Dr. Karp’s method of toddler communication is not for the self-conscious. It involves bringing yourself, both mentally and physically, down to a child’s level when he or she is upset. The goal is not to give in to a child’s demands, but to communicate in a child’s own language of “toddler-ese.”

This means using short phrases with lots of repetition, and reflecting the child’s emotions in your tone and facial expressions. And, most awkward, it means repeating the very words the child is using, over and over again.

For instance, a toddler throwing a tantrum over a cookie might wail, “I want it. I want it. I want cookie now.”

Often, a parent will adopt a soothing tone saying, “No, honey, you have to wait until after dinner for a cookie.”

Such a response will, almost certainly, make matters worse. “It’s loving, logical and reasonable,” notes Dr. Karp. “And it’s infuriating to a toddler. Now they have to say it over harder and louder to get you to understand.”

Dr. Karp adopts a soothing, childlike voice to demonstrate how to respond to the toddler’s cookie demands.

“You want. You want. You want cookie. You say, ‘Cookie, now. Cookie now.’ ”

It’s hard to imagine an adult talking like this in a public place. But Dr. Karp notes that this same form of “active listening” is a method adults use all the time. The goal is not simply to repeat words but to make it clear that you hear someone’s complaint.  “If you were upset and fuming mad, I might say, ‘I know. I know. I know. I get it. I’m really really sorry. I’m sorry.’ That sounds like gibberish out of context,” he says.

On his DVD, Dr. Karp demonstrates the method. Within seconds, teary-eyed toddlers calm and look at him quizzically as he repeats their concerns back at them.

“The goal is not simply to repeat words, but to make it clear that you hear someone’s complaint.”

The point of listening is not what you hear, but the act of listening itself. Or, to be more correct, the result of that act, namely the customer’s experience of being heard.

Sometimes what works on kids also works on adults.  Sometimes not.  My tummy tells me this is the former.

And it’s basic. Primal.  It’s about empathy, not about exchange of cognitive information.

Don’t listen to do a brain-suck. Listen so the customer (or your toddler) feels heard.

And to all you salesperson/parents out there—you’re welcome.  Wish I’d’a knew it!