entrepreneurship 101: negotiations

It’s Negotiable:It’s Negotiable:A Guide for EntrepreneursA Guide for Entrepreneurs

Michael Erdle,Managing Partner

IntroductionIntroduction

Negotiation Problems and OpportunitiesNegotiation Case Studies

Research Collaborations Business Partnerships Technology Licensing

Dispute Resolution

What is Negotiation?What is Negotiation?Everything is negotiated.

Family and personal • “Where should we go for lunch?”• “Can I borrow the car?”

Academic research• “Fund my project.” • “Publish my paper.”

Business ventures• “I want a raise.”• “Invest in my company.”• “Pay me a license fee or I’ll sue you.”

Negotiation GoalsNegotiation Goals

Distributing Value vs. Creating Value Opportunistic Problem-solving

Identify Issues Consider Interests

Mutual Complementary Conflicting

Negotiation StylesNegotiation Styles

Assertiveness vs. EmpathyThree common negotiation styles:

Competitive Accommodating Avoidance

Effective negotiator is both assertive and empathetic.

Effective NegotiationEffective Negotiation

Interests vs. Positions “Needs” vs. “wants”

“Separate the Person from the Problem.” Soft on the person Hard on the problem

Consider other Options

NegotiationNegotiation

Use Objective AlternativesLook for a “win-win” solutionDetermine BATNA

Best Alternative to Negotiated Agreement

Negotiation TrapsNegotiation Traps

Classic “Hard Bargaining” Ploys Extreme claims, small concessions “Take or leave it.” Unreciprocated offers Threats and warnings Attacking the alternatives Good cop, bad cop

Ways to Respond Ways to Respond

Extreme claims, small concessions Tit for Tat – make equally small concessions

“Take or leave it.” Make a counter offer Offer an alternative Don’t be afraid to walk away.

Ways to Respond Ways to Respond

Unreciprocated offers Don’t negotiate against yourself. Wait for a counter offer.

Threats and warnings Don’t make a counter-treat. Challenge the underlying assumptions .

Ways to Respond Ways to Respond

Attacking the alternatives Ask for an explanation. “Why do you have a problem with…?”

Good cop, bad cop Negotiate with the boss. Use the “good cop” to your advantage.

Case StudiesCase Studies

Research Projects

Business Partnerships

Technology Licensing

Research ProjectsResearch Projects

Academic Interests Publication

Collaboration

Increase knowledge

Obtain funding

Commercial Interests Confidentiality

Exclusivity

Develop product

Generate revenue and

profits

Business PartnershipsBusiness Partnerships

“Senior” partner Expand the business

Maintain reputation

Short-term focus

“Junior” partner Expand the business

Build reputation

Long-term focus

Technology LicensingTechnology Licensing

Licensor Access to markets

Guaranteed revenue

Minimum continuing

obligations

Low risk

Licensee Access to technology

Low up-front cost

Guaranteed continuing

support

Low risk

Negotiation SkillsNegotiation Skills

Listening Develop “active listening”.

Understanding Understand the other person’s perspective.

Flexibility Be open to other options.

Pragmatism Be ready to accept the best available option.

Dispute ResolutionDispute Resolution

Mediation

Negotiation

Arbitration or Litigation

MediationMediation

Interest-based Mediation Mediator is a facilitator Focus on interests, not legal rights or

obligations Options for creative solutions

Evaluative Mediation Neutral evaluation Based on legal rights & obligations

MediationMediation

Qualities of a successful mediator Negotiation & mediation process skills Subject area knowledge Lets parties make key decisions Creative approach to the problem Patience

ResourcesResources

Cohen: You Can Negotiate Anything, Bantam, 1980

Fischer, Ury and Patton: Getting to Yes, Penguin, 1991

Ury: Getting Past No, Bantam, 1993Mnookin, Peppet and Tulumello: Beyond

Winning, Harvard University Press, 2000

Questions?Questions?