The ability to provide credit feedback
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The ability to provide feedback within the context of partnership is an important aspect of your Partnering Intelligence. If you can’t provide feedback, resentment begins to fester. As in conflict, a partner’s resentment develops into passive-aggressive behavior that can quickly turn destructive.
The best model I’ve seen for giving feedback has five basic steps:
1. You note a person’s behavior.
2. The behavior creates an impression on you—maybe good, maybe bad, but powerful enough for you to take notice.
3. Time passes. You evaluate what you want to do about the impact of the behavior. If it’s urgent, you may react immediately: “That was a great comment you made.” Or, “Please stop interrupting me.” Depending on the situation, you may want to give the feedback in a private setting. In general, though, I recommend giving it as soon as possible after the behavior.
4. Give your feedback to the other person. Describe the behavior and tell the person the impact it had.
5. Decide what to do with the person’s reaction. Remember, the feedback is yours. It’s your impression that you’re giving to the receiver. It’s up to the receiver to decide what he or she wants to do with the information.
One example from the automotive sector is the large spread differential between Ford and Renault bonds with similar coupon and maturity. Although the rating agencies assign approximately the same credit risk to both issuers, investors view the risk that is related to owning Ford bonds as significantly higher. Our study clearly outlines that Ford bonds have been much more volatile than Renault bonds between September 2003 and February 2004. When S&P put Ford on credit watch negative on October 21, 2003, spreads widened massively. Even if only very few investors feared a multiple notch downgrade of Ford from the then BBB rating, a 1 notch downgrade to BBB coupled with a negative outlook would have caused concerns about a later downgrade of Ford into high-yield. There were fears
Coca-Cola introduced new Coke after taste tests proved it more popular than Pepsi and the original Coke. However, the launch of new Coke contained an untested assumption: that flavour mattered more than image. The information gathered built upon this flawed notion, confirming the decision that classic Coke needed to be replaced. This view was contrary to what customers – past, present and future – actually wanted. Interestingly, this goodwill was so powerful that the cause of the company’s failure was also the source of its salvation, as consumers forgave Coca- Cola and realised that they appreciated classic Coke, or else tried it for the first time.