Conscious Business [Kofman] — Part 1: Operational Conflict Resolution

Conscious Business: How to Build Value Through Values by Fred Kofman

I have about half a chapter left in Fred’s Kofman’s and can already definitively say that it’s one of those rare books that I will read more than once.

In this book Fred paints a very compelling picture on how values-driven mindsets and behaviors can transform workplace culture.

The book starts off covering three key mindsets. Starting with the “responsible” mindset, (which he calls the “player” mindset) this book provides the best description I’ve seen to the “victim” vs. “responsible” distinction which I covered here. Next, the “integrity” mindset is discussed, and the benefit of favoring “process integrity” (acting in a way that’s aligned with your values) over accomplishing a specific outcome. Last, is the “humble” mindset — viewing interactions as opportunities for mutual learning rather than a competition over “who is right?”.

The bulk of the book then focuses on the application of these mindsets common day-to-day business interactions: authentic communication, constructive negotiation (conflict resolution) and coordination (managing interpersonal commitments).

Finally, Fred touches on the topic of managing your own emotions.

I’ll be the first to admit that it’s not the easiest of books to read. I found the writing style to be a bit verbose/long-winded at times, but in other times this level of detail is essential. In particular, there are parts of the book in which Fred uses detailed dialogues between two people to demonstrate how the interaction plays out when both sides are acting impulsively/unconsciously, when both sides are acting consciously and when only one side does so. These dialogues not only do a great job driving the key point home, they also demonstrate that even if only one side chooses to take the higher road and act consciously, the outcome is still much better compared to when both sides act impulsively.

I will be sharing the two most useful tools I got out of the book in a two part series. Part 1 below, will cover a powerful protocol for effective conflict resolution, which Fred labels as “constructive negotiations”. Part 2 will cover interpersonal commitments, which Fred labels as “impeccable coordination”.


A conflict is created as a result of three enabling conditions:

  1. Disagreement — difference of opinion
  2. Scarcity — some limitation prevents each party from obtaining what each wants independently of the other’s actions.
  3. Disputed property rights — disagreement about who has the power to allocate resources / what decision-making mechanism will be used in case of irresolvable differences

These conditions can create three types of conflicts:

  • Personal conflict — when opinions don’t affect anything beyond personal preferences, the reasonable way to proceed is to acknowledge and respect each person’s right to think what she thinks. The only way to solve a personal conflict is to “dissolve” it, demonstrating that there is no scarcity of “rightness” and “self-worth”.
  • Interpersonal conflict — we need to adopt a common set of values. Emotional domain only. Cannot just agree to disagree and go our separate ways. Need to find some common ground.
  • Operational conflict — the ultimate issue under discussion is who gets what. There is a concrete decision to be made that will have objective consequences.

Operational conflicts tend to pose challenges on thee fronts:

  • Task — disagreements about what is going on, what has led things to be the way they are, why it happened, what should happen next, and who should do what to make it happen.
  • Relationship — doubts about the way we relate to each other: are we close? Are we aligned? Can we trust each other? Can we respect each other? How do you feel about me? What should I do about you and your feeling?
  • Self- sense of identity and esteem is at risk. How am I feeling? What does this situation mean to me? What does it say about me? What will others think of me? How will that affect my well-being?

Since it is impossible to have an operational conflict without also having personal and interpersonal conflicts, it is the hardest type to resolve.

The following protocol offers an effective structure/container for successfully working to resolve such conflicts:

1. Prior to the conversation: establish your Best Alternative To a Negotiated Agreement (BATNA) — worst-case scenario. The independent outcome you can guarantee for yourself if no interdependent solution works for all parties. The walk-away point.

2. Immediately prior to the conversation, get into the right mindset by adopting the following assumptions:

  • Task effectiveness — Each of us can provide significant information to the other. Our goal is to explore each other’s reasoning. I have contributed to the current situation and should explore my role it int.
  • Healthy relationship — cooperation stems from solidarity, not self-righteousness. The feelings we have for each other are fundamental to a successful conversation. We need to address everybody’s feelings with equanimity and compassion before getting to problem solving.
  • Self-integrity — the psychological stakes are high, and there is a serious identity issue at play. No simple all-or-nothing label can describe who I am. My goal is to act in alignment with my values. I need to stop all attempts to achieve self-worth through proving that I am right and the other is wrong.

3. Make sure the setting (physical environment, timing, etc) is appropriate

4. Process clarification:

  • Present the situation from a “third story” perspective that honors both positions.
  • Explain my intention to resolve the conflict constructively
  • Ask for permission to follow this structured process. Outline the steps.

5. Other person expresses, I listen:

  • Provide facts. Use specific examples.
  • Own opinions and feelings: Use self-statements. Fully own the responsibility for your emotional experience. “I” statements.
  • Recommend action
  • Ensure comprehension — “does this make sense?” “have I addressed your concerns?”
  • Accept challenges

6. You ask clarifying questions

7. You summarize the other person’s position and feelings “let me summarize to make sure that I understand”

8. Other person approves your summary (“does that sound about right?”)

9. Reverse Roles: You express, other person listens (see #5 for guidance)

10. Other person asks clarifying questions

11. Other person summarizes

12. You approve their summary

13. Dialogue — the objective is to compare opinions and find the root of differences. This is not the time to resolve anything. The focus is on reaching a deeper mutual understanding.

14. Do we need to agree? (are there practical consequences? if no — stop here)

15. Find the underlying interests — What do you really want? A position is an explicit demand that each speaker brings to the negotiation. An interest is the desire or need lying at the root of the position. We need to go beyond our incompatible positions to discover our more compatible deeper interests. “What would you get through X that is even more important to you than X itself?” / “Why is X important to you?”. Keep answering the question until the answer shifts from being about external needs to being about internal needs.

16. Brainstorm solutions

17. Negotiate and select

18. Reach outcome consensus (agreeing about what to do) OR

19. Reach processes consensus — if we cannot agree on what to do, default to an agreed upon decision-making process (typically: authority)

20. “We have explained to each other how we see the situation and what we think would be the best way to address it, and we have checked that we all understand each other. We have explored our needs and concerns and tried to reach a solution that we can all agree on. Unfortunately, this issue is difficult and ambiguous enough that intelligent, well-intended people like us cannot resolve it unanimously”

21. ”I’d like to ask for your support in allowing me to make a decision. I’m ultimately accountable for this decisions, and although I cannot be sure that I’m right, I believe that this is the best course of action under the circumstances”.

22. Avoid the End Run — no one-sided escalations

23. Commit to implement / pursue BATNA

24. Evaluate and learn

25. Celebrate constructively negotiating the conflict