` Negotiations Presented by: Michael Erdle, Managing Partner, Deeth Williams Wall LLP December 6, 2007

It’s Negotiable: A Guide for Entrepreneurs Michael Erdle, Managing Partner

Introduction Negotiation Problems Negotiation Skills Dispute Resolution In theory there is no difference between theory and practice. In practice, there is. -- Jan van de Snepscheut

Negotiation Problems

Negotiation Skills

Dispute Resolution

In theory there is no difference between theory and practice. In practice, there is. -- Jan van de Snepscheut

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.”

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 Goals Distributing Value vs. Creating Value Opportunistic Problem-solving Identify Issues Consider Interests Mutual Complementary Conflicting

Distributing Value vs. Creating Value

Opportunistic

Problem-solving

Identify Issues

Consider Interests

Mutual

Complementary

Conflicting

Negotiation Goals Successful relationships are built on communication and trust. Negotiation is one way of creating trust – or deciding whether trust is justified. Example: “The Prisoner’s Dilemma” a classic negotiation game One-time deal vs. continuing relationship

Successful relationships are built on communication and trust.

Negotiation is one way of creating trust – or deciding whether trust is justified.

Example: “The Prisoner’s Dilemma” a classic negotiation game

One-time deal vs. continuing relationship

Negotiation Styles Assertiveness vs. Empathy Three common negotiation styles: Competitive Accommodating Avoidance Effective negotiator is both assertive and empathetic.

Assertiveness vs. Empathy

Three common negotiation styles:

Competitive

Accommodating

Avoidance

Effective negotiator is both assertive and empathetic.

Negotiation Skills Communication is the key to effective negotiation. Understanding and recognition do not mean compromise and concession. What you say is often less important than how you say it. Tone Body language

Communication is the key to effective negotiation.

Understanding and recognition do not mean compromise and concession.

What you say is often less important than how you say it.

Tone

Body language

Negotiation Skills Listening Develop “active listening”. Understanding Acknowledge the other person’s perspective. Flexibility Be open to other options. Pragmatism Be ready to accept the best available option.

Listening

Develop “active listening”.

Understanding

Acknowledge the other person’s perspective.

Flexibility

Be open to other options.

Pragmatism

Be ready to accept the best available option.

Effective Negotiation Interests vs. Positions “ Needs” vs. “wants” “ Separate the Person from the Problem.” Soft on the person Hard on the problem Consider other Options

Interests vs. Positions

“ Needs” vs. “wants”

“ Separate the Person from the Problem.”

Soft on the person

Hard on the problem

Consider other Options

Negotiation Use Objective Alternatives Look for a “win-win” solution Determine BATNA Best Alternative to Negotiated Agreement

Use Objective Alternatives

Look for a “win-win” solution

Determine BATNA

Best Alternative to Negotiated Agreement

Negotiation 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

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 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.

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 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 .

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 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.

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 Studies Research Projects Business Partnerships Technology Licensing

Research Projects

Business Partnerships

Technology Licensing

Research Projects Academic Interests Publication Collaboration Increase knowledge Obtain funding Commercial Interests Confidentiality Exclusivity Develop product Generate revenue and profits

Academic Interests

Publication

Collaboration

Increase knowledge

Obtain funding

Commercial Interests

Confidentiality

Exclusivity

Develop product

Generate revenue and profits

Business Partnerships “ Senior” partner Expand the business Maintain reputation Short-term focus “ Junior” partner Expand the business Build reputation Long-term focus

“ Senior” partner

Expand the business

Maintain reputation

Short-term focus

“ Junior” partner

Expand the business

Build reputation

Long-term focus

Technology 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

Licensor

Access to markets

Guaranteed revenue

Minimum continuing obligations

Low risk

Licensee

Access to technology

Low up-front cost

Guaranteed continuing support

Low risk

Dispute Resolution Arbitration Litigation Mediation Negotiation

Mediation 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

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

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

Qualities of a successful mediator

Negotiation & mediation process skills

Subject area knowledge

Lets parties make key decisions

Creative approach to the problem

Patience

Resources Cohen: You Can Negotiate Anything , Bantam, 1980 Fischer, Ury and Patton: Getting to Yes , Penguin, 1991 Ury: Getting Past No , Bantam, 1993 Mnookin, Peppet and Tulumello: Beyond Winning , Harvard University Press, 2000

Cohen: You Can Negotiate Anything , Bantam, 1980

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

Ury: Getting Past No , Bantam, 1993

Mnookin, Peppet and Tulumello: Beyond Winning , Harvard University Press, 2000

Questions?