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This is a course on strategic collaboration for entrepreneurs and their stakeholders. It consists of an introduction to the basic principles of strategic negotiation, a guide to negotiating with agents of organizations, a discussion of negotiating about price, and four videos on how to use the preparation templates that are included with the course.
Course participants have access to occasional live webinars in which we demonstrate how to analyze and prepare for specific negotiation challenges such as resolving conflicts with co-founders, deal making with angel investors, get a line of credit at a bank, and more.
Every leader of a startup is continually working with other people to get something done or thinking about ways to get help from someone. That is the essence of negotiation.
What makes strategic negotiation strategic is the incorporation of the interests of other people into the plan for getting what we want. If other people are either necessary or a potential impediment to what we want to accomplish, we must take what they might do or be persuaded to do into account. That means we must consider what they want and need—their interests.
Strategic negotiation is a form of collaborative negotiation, a process of working together to create more value for all involved rather than pushing against each other in an effort to outwit, outfox, outmaneuver, coerce, or otherwise prevail in a game of winning and losing, where most often everyone loses.
This course introduces the basics of the strategic negotiation method to entrepreneurs and their stakeholders. It is only the beginning, but for entrepreneurs it is a valuable set of tools and techniques.
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|Section 1: The Basic Principles|
This short lesson sets the stage. We meet Holly Cartwright, who has just formed a business, Holly's Jolly Salsa.
Holly feels overwhelmed by negotiations with employees, lawyers, accountants, web developers, suppliers, investors, and other stakeholders.
To Holly, negotiation feels like a tug of war.
Is there a better way? Yes, it's called Strategic Negotiation.
|Lesson 2 introduces the principles of strategic negotiation:
|The strategic negotiation process revolves around three elements: Interests, Options, and Legitimacy.
This lesson covers the nature of both tangible and intangible interests and explains how they relate to Maslow's Hierarchy of Needs.
We also discuss the Importance of Meaning and respecting the Other Person's need to be involved in a grander purpose.
The better we understand the other side's interests, the more likely we will be able to devise options that satisfy their interests as well as ours.
By getting a deep understand of what they want and need, we will be able to help them help us get what we really want.
Developing options is about expanding the pie, that is, finding ways to create more value for both sides at minimal cost to each. The lesson discusses how to generate options for this purpose.
Standards of Legitimacy are the measures of acceptability of the options the parties develop. The help assure that each side will feel fairly treated and not taken advantage of.
The lesson illustrates how the legitimacy element is a powerful tool with which to escape the tug of war that haggling and other forms of positional bargaining involves.
|Everyone considering entering into a business relationship has five initial questions:
Trustworthiness has two axes: competence (ability to perform) and character (willingness to do it).
To assure trustworthiness, use the following checklist, which summarizes the 7 Habits of Trustworthy People:
The three magic words every entrepreneur needs to have readily available at all times:
|Know what you and other parties can do to satisfy your interests if you don't reach agreement. These are the parties' Walkaway Alternatives. This lesson explains how to use this information to use your and their best walkaway alternative to craft better deals.
Make sure the Commitments contained in agreements are realistic, sufficient, and operational.
An agent is anyone with authority to act on behalf of another person or entity (the principal).
When negotiating with agents, we must consider the agent’s personal interests as well as those of the principal because they inevitably become intertwined.
This lesson explains how to analyze both sets of interests and to use them in the negotiation process.
|The advent of price tags in 1938 was a welcome innovation, among other reasons, because many people are uncomfortable haggling about the price of something.
But you don't need to haggle. You need to think strategically.
And you need to use all 8 elements of strategic negotiation wisely when discussing the price of what you buy as well as what you sell.
We explain how to get the best price on a new car by creating an auction in which you switch roles with the dealer and become the seller--of your purchasing decision.
In fact, entrepreneurs have many advantages in price negotiations, especially when working with professional service advisers.
Price should not always be a function of cost of production or the calculation of a supposedly acceptable profit margin.
Instead, when in the role of seller, entrepreneurs can often get better deals if they analyze the value they are creating for the buyer and negotiate prices accordingly.
If you must offer discounts because you have not yet been able to demonstrate the value of your product or services, then take care to avoid setting bad precedents. You can do this by explicitly designating the lower price as an introductory offer or a special price for test purposes. Make clear that the price will be adjusted in later sales based on demonstrated value.
|Section 2: How to Use the Preparation Tools|
|The Franklin Decision-Making Tool divides major decisions into pro and con arguments that are collected over several days.
The user then eliminates arguments on each side of roughly equivalent weight until one or more arguments remain on one side with none left on the other.
Benjamin Franklin called this his prudential algebra.
Download the template of this tool for use when facing momentous decisions.
The video explains how to use the tool.
The Currently Perceived Choice Chart is similar in structure to the Franklin Decision-Making Tool. But its purpose is altogether different.
The Currently Perceived Choice Chart helps the strategic negotiator get inside the thinking of the other side, helping them to understand how they are likely to see the current proposal.
What are they consequences to them of saying Yes and of saying No.
By using this tool carefully, the strategic negotiator can anticipate objections, invent new options, and craft arguments that are more likely than otherwise to persuade the other side to help her get what she wants.
Download and print the template.
The video explains how to use it.
The Interest Analysis Worksheet
|Preparation is key to successful negotiations.
The Strategic Negotiation Preparation Tool helps the strategic negotiator
Download and print the template.
The video explains how to use it.
|Section 3: Complete the Survey|
|Section 4: Live Session Materials|
|Lecture 12||13 pages|
|This is a pdf version of the outline we will use for the live webinar session on July 27, 2013.
|This is a recording of our live demonstration on July 27, 2013, on negotiating with an angel investor who wants to be made chairman of the board in exchange for his $400,000 investment. We cover how to identify the investor's interests, how to discover the founders' interests, each side's walkaway alternatives, and various aspects of the legitimacy of the demands the investor is making. The session lasts about 1 hour.|
Michael Palmer is the founder and lead consultant of Grow a Great Company (formerly Ethics By Design). He received his M.A. and Dr. Phil. degrees from the Freie Universität Berlin and his J.D. from Georgetown University. He has been a lawyer since 1980.
Mike’s consulting practice has included work for Fortune 500 companies, Big 4 accounting and consulting firms, medical care facilities, and government agencies.
Mike has taught negotiation and conflict management skills to thousands of executives, lawyers, health care professionals, academic leaders, community members, and college students.
He works with Charles L. Howard, the recognized authority on ombuds offices, in helping organizations establish ombuds offices to help resolve work-related problems informally, confidentially, and impartially.
He has taught at colleges, universities, and law schools in Germany and the United States, including at Middlebury College (1996-2008) and Champlain College, where he teaches an online course on professional ethics.
Mike is the author of The Morally Responsible College, Professional Ethics for Business Managers, Complying with the Ethics Mandates of the Federal Acquisition Regulation, Winning Settlements: What Lawyers Must do to Get the Best Deals for Their Clients, and numerous articles on business ethics, negotiation, mediation, and litigation risk management.
Mike first practiced law with Jenner & Block in Chicago and then as head of his own firm in Vermont. He is a Senior Professional with CMI Concord Group and serves as a legal expert in USAID-funded Rule of Law projects in countries with developing economies such as Jordan, Macedonia, Bosnia and Herzegovina, Russia, Azerbaijan, and Mongolia. A frequent speaker and resource person, Mike has conducted workshops at regional, national, and international conferences and taught seminars for professionals and business leaders on a variety of topics.