Thursday, October 7th, 2010 10:24 pm
Drove in, lost advantage of reading on train/bus but gained 30 mins sleep \o/ Read comfortably in foyer on those nice little couches they have scattered around until some guy came up and talked at me. I appreciate him being friendly but I also note that some guys seem to feel entitled to come and break into my perfectly happy, quiet space even if it's obvious I'm reading.

Negotiation kicked off with a reflective thing: what do you remember from last week?

I learned I have a very trust and disclosure based style and that I'm very attached to it. I learned that trust and truthfulness are very important in negotiations (thank goodness!)

Other people's reflections: Competitive - need to win

Case Study! Acquisition that went wrong

Negotiating a potential deal between a rapidly expanding health care organization looking to absorb new businesses and a new business run by an entrepreneur who is looking to build over 5 years then sell (currently in year 2). Discuss in small groups then debrief with entire class. What we're doing today is looking at strategy.

Who is involved?
  • Caulfield - Steven Phillips
  • Gold Coast - Michael Stennich
  • Brightwest - Peter Simmons
  • Venture capitalists (present 20mil future 50mil - not at the table but have a distinct influence on the outcome)
  • Medics and other clinics
What were the conflicts of interest?
  • Price (15m - 18m)
  • Control (script 10 - 30)
  • Risk (viable business model?)
  • Business Model (Caulfield or Brightwest)
  • Timeframe (5year plan versus immediate goals)
What were the opportunities for cooperation?
  • Package over time
  • Economies of scale (growing spreads costs - Gold coast)
  • Management model (integration / involvement) - doctors buy in to Gold Coast model - possibility to talk about Caulfield adopting Gold Coast approach (best impact for a relatively new model)
What information would each party really like to know?
  • Gold Coast needs to know Steven Phillips intentions for the future (commit, stay for a bit and move on)
  • Steven Phillips needs to know Gold Coast business model and where he fits in it - is it going to work and is he going to support it or does he not care because he will be moving on and wants to make his money right now.
Why does each party need each other?
  • Caulfield needs Gold Cost - to get in before Gold deals with a competitor
  • Gold needs Caulfield - to expand, and because Caulfield is new and a target for new business model, also Caulfield is a potential competitor
What alternatives do they have?
  • Caulfield can continue to do what it is doing and wear the risk of competition
  • Gold Coast needs to acquire and doesn't seem to have a lot of other options
Gold Coast needs Caulfield more!

Need to get to this point to understand this to understand this negotiation.

Exercise: Rewriting the Car Supply Contract

Consider what might be done in the context to make a preferred course of action more likely to succeed.

A supplier going out of business - bad for supplier, middling bad for buyer (new suppliers enter market)
Time pressure - short term contract, how to release time pressure? Stockpile?
  • Importance of issue to self: low but need to make high in order to resolve contendingly
  • Concern for other's outcome: low
  • Expectation of other's strategy: compromise / concede
  • Time pressure: low
  • Quality of alternative: can use other three suppliers
First approach: Contend! Want supplier to abide by contract - timely information and delivery.

Lunch: Kebabs again and some peaceful sitting in the sun.

Review own learning:

Things that I have learned today: have to understand what the other party wants/needs and how much they want/need it. Also have to be at the same place for negotiation to occur - at least, you can't use your approach and expect it to work if the other party is in a totally different place.

Have to BOTH be competitive (want something badly) or it becomes a demand/concede dynamic. For genuine creative cooperation you both have to demand something.

Some Theory

What do we know now?
  • Negotiation is complex and messy
  • We make a distinction between how we manage the issue, the process and our behaviour
  • We have to manage both competition and cooperation in the same negotiation.
Cooperation models: integrative (rational) model
  • Identify and define the problem – the ‘problem’ is that the other side won’t agree!
  • Understand the problem fully – identification of interests is an iterative process
  • Generate alternative solutions – adding value or just creative trading?
  • Evaluate and select alternatives – giving ‘objectivity’ to the end game?
Cooperation through problem solving: optimistic model
  • Create common goals or objectives
  • Have faith in own ability to solve problems
  • A belief in the validity of the other party’s opinion
  • Share the motivation and commitment to working together
  • Trust
  • Clear and accurate communication
  • An understanding of the process
R. says achievable? Unlikely.

Trust in the context of negotiation:
  • Are you telling me the truth? (it’s acceptable to lie about your bottom line)
  • If I provide information or make a concession will you reciprocate?
  • Can I believe that you will do what you are saying you will do?
NB: Trusting the person is not the same as trusting the process.

Evaluate: “If you are too honest and trustworthy, most people will take advantage of you.”

Eh, I think this is often conflated with ‘naive’ and ‘vulnerable’ but I don’t think it has to be. People who choose to be honest and trustworthy can still set good boundaries and demand what they want.

Evaluate: “Fear is a stronger persuader than trust”

Erm. If we first accept that people only negotiate because they fear the consequences of not negotiating then yes, fear is a stronger persuader than trust. Personally, I don’t think that’s why I negotiate, I like to think I’m moving towards something, not away from.

Trust

A willingness to take unilateral action which might lead to exploitation but which anticipates a non-exploitative response from the other person.
  • Building trust: Talk process – about the need for cooperation, trust etc. and get some reciprocation – before actually taking the risky move on information exchange or on the issue itself. i.e. build trust by talking about trust, not by offering concessions.
This is a very pragmatic view and while I don't like the way it's framed it's nice and practical.

Getting to YES
: Negotiating Agreement Without Giving In

A more robust form of cooperation (popular with law schools) that assumes competitive and uses cooperation as a fallback. “Hard” versus “soft” tactics.
  • Separate people from problem
  • Focus on interests not positions
  • Generate a variey of options (problem solving)
  • Use objective criteria (can be very hard to agree on what ‘objective’ is)
Not recommended, but good to know if you're dealing with lawyers.

Story!

Two students in a library, one closes the window, the other opens it. Rinse and repeat with increasing levels of irritation. Finally librarian asks why to which Closer says draft is disturbing their papers and Opener says room is stuffy. Librarian opens window in next room thus refreshing air without draft.

Moral of the story: Librarians are Gods!
Moral #2: Ask why, ask it a lot.

Cooperation in context

There are three tasks at the negotiation table
  1. Differentiation – find out the full extent of the difference
  2. Exploration – uncover and explore options
  3. Exchange – trade offers to reach an agreement
I can see how keeping this in mind is going to be useful

Exercise: Island Queen versus Tropical Island

Team of three, one team has the Island Queen (cruise liner) brief, the other team has the Tropical Island (local government) brief. Negotiate an agreement on how X annual visits for Y days with Z tourists disembarking.

One team did not reach agreement out of six teams playing,  we were the only team to get only 3 visits for the first year, the other 4 got 6 (we negotiated for 3 in the first year with an annual review).
  • Split visits - am and pm gets more people off the boat
  • Purchasing from locals - support local industry
  • Supporting local infrastructure - initial injection for critical infrastructure
  • Help fund local college
  • Internships on island
  • Lecturers from ship for local college
  • Build a bigger ferry and moore
  • Increased visits based on metrics - increased infrastructure / island review
Fun!

Then we broke early and my team used the time to work on our group assignment due in week 4. We've worked out what we're focusing on and we've agreed who is doing what.
Wednesday, October 13th, 2010 03:59 am (UTC)
Moral of the story: Librarians are Gods!
Moral #2: Ask why, ask it a lot.


I dunno if they're gods, but they are pretty cute. *GRIN*

And yeah, "Why?" is a real good question. I am asking a lot of whys lately. Also, "What?" and "Where?"

When I first started working for Old Boss (who is a really good manager) I spent a long time wondering why he, as a guy who was v. senior in our shared field but new at the company, didn't throw his weight around more. After all, he had the weight to throw! After working for him for a while, it became clear that he was deferential in the way that, in martial arts, one takes a half-step back to balance one's weight: because it didn't really cost him anything, and it positioned him better to move when moving was necessary. Management-jitsu. ;>
Wednesday, October 13th, 2010 02:33 pm (UTC)
My statistically significant other [personal profile] maharetr is a library tech so we know to respect their powers

I would make some remark here about standard deviations, if I were a little more awake, but as I am not I will have another cup of coffee and flap my hand vaguely toward the southern hemisphere. ;>

Three months is probably at least right -- I am having to wade into a couple of things sooner than that, at New Job, because we are having crises, but I am making a real effort to leave calm in my wake. We'll see how that works.