09 Moms Video Analysis

MOMS.
COM
Prof. Stephen W. Nason

Prof. Larry Franklin
Negotiation Outline: Where are We Going?
Negotiation
Fundamentals Processes Contexts Remedies
Nature of Perception Salary Negotiation

Negotiation & Biases Negotiations Envelope
Distributive VC vs.
Negotiating Style Video Analysis
Negotiations Entrepreneur
Integrative Hard Ball Tactics Disputes Persuasion

Negotiations
Strategy Individual, B2B, M&A Best Practices
& Tactics B2Gov
International Conclusion
Teams
Difficult
Coalitions &
Negotiations
Multiple Parties
© Prof Stephen W. Nason – All Rights Reserved 2
Succeeding in Negotiations
You will never lose if you understand your:
 Bottom Line (Reservation Point )
 BATNA (Best Alternative to a Negotiated Agreement)
You maximize your chances of succeeding gloriously if you:

 Trade
Negotiation Fundamentals
Bargaining Zone: Moms.com
WCHI
Initial offer Buyer Maximum price
$ ?? $...... / episode
$...... / episode $ ??
Minimum Hollyville Initial offer
Seller

Your Target (Goal)
Is having a target important?
 Your target keeps you motivated towards continuing negotiating, trying to
improve your outcomes, Even after you have an offer that is better then
your Reservation price
 Your target helps you get more than the mere minimum
Challenging Targets
What if you do not reach your target?
 Who cares? You are most concerned with getting the best deal for
yourself as possible
 Having an hard to reach target helps motivate people towards striving for
the best deal
How Can You Maximize Your Results?
Trade!
 Each party gives up their low priority interests in exchange for getting their
high priority interests.
– Ask:
1. Does each have different interests?
2. Do they put different weights on the same interests?
– If the answer to either question is yes then can trade issues.
Trade away less important issues

in exchange for more important issues.
In Order to Trade You Must Understand the
Difference between Interests vs. Positions
 Stated Positions - what one party in a negotiation says they want
 Underlying Interests - what that party really wants
– Need to be aware of own interests
– Need to be aware of other parties interests
• Even if other party does not fully understand own interests
• If you understand other party’s interests better than they do it gives you a big
advantage
Preferences WCHI (Buyer) Hollyville (Seller)
Price/Episode
Limit
Aspiration
Runs/Episode Adjustment
4
5
6
7
8
Financing Savings/Cost
Year 1
Year 2
Year 3
Year 4
Year 5
Junior’s Reservation Price
Ratings (Estimated likelihood)
2-3
3-4
4-5
5-6
6-7
Alternative Deal Value
9
Outcome A: Price/Episode WCHI Hollyville
$...../ episode
Outcome B: Compromise WCHI Hollyville
$...../ episode
Runs/ Episode ….
Financing …..
Outcome C: Trade WCHI Hollyville

$...../ episode
Runs/ Episode …..
Financing …..
© Prof Stephen W. Nason – All Rights Reserved

Negotiation Outline
Negotiations Identify & Add
Issues
Add Resources
Claiming Value: Creating Value:
Distributive Neg. Negotiation Tactics Find non-specific
Compensation
Reservation Prioritize interests
Price Cut Costs
Trade
BATNAs Bridge Gaps
Use Bets
PREPARATION Search for

Information
PSS
Build trust
Ask questions Trade info. Mult.sim.offers
Trade Issues: Techniques
 Unbundle issues
 Add new issues
 Discover preferences
– (Probing for real interests on each issue)
 Start trading
 Make package deals, not single issue offers
Identify and add additional issues to create
value.
Identify and Add additional issues:
 Develop as many of your own issues as you can
 Find as many of your opponent’s issues as you can
 Prioritize the issues
 Trade
Example in Moms.com?
 Juniors
Any Additional Issues?
Juniors
 Adds profit to both sides
WCHI
(Buyer) $...../ep
$...../ep Hollyville
(Seller)
Cascade Manor
$...../ episode

$...../ episode
Runs/ Episode …..
Financing …..

$...../ episode
Runs/ Episode …..
Financing …..
Outcome D: Additional Issue WCHI Hollyville

Juniors $..../ episode

Bridge negative ZOPAs by getting to the heart
of the underlying issues
Bridging:
 Find a new creative option that satisfies the main interests of both parties
– Reformulate the conflict to consider the wider variety of solutions that
address the underlying interests of both parties
How to deal with the different expectations in ratings
Preferences WCHI (Buyer) Hollyville (Seller)
Price/Episode
Limit
Aspiration
Runs/Episode Adjustment
4
5
6
7
8
Financing Savings/Cost
Year 1
Year 2
Year 3
Year 4
Year 5
Junior’s Reservation Price
Ratings (Estimated likelihood)
2-3
3-4
4-5
5-6
6-7
Alternative Deal Value
Contingent Contracts:
Bet on differences
 Two parties disagree about some future event
 He thinks “A” will happen
 She thinks “B” will happen
 Now bet,
 say if “A” then he gets ____
 If “B” then She gets _____
The Problem: Different Expectations on Future
Ratings
Likelihood estimated by
Ratings WCHI Hollyville
2-3
3-4
4-5
5-6
6-7
 The Solution: Betting on Different Expectations

– If ratings ….., WCHI …..
– If ratings ….., WCHI …..
 Expected Value:
– WCHI:
– Hollyville:
$...../ episode

$...../ episode
Runs/ Episode …..
Financing …..

$...../ episode
Runs/ Episode …..
Financing …..
Outcome D: Additional Issue WCHI Hollyville

Juniors $....../ episode
Outcome C: Contingent Contract WCHI Hollyville

If ratings …..
If ratings ……
Contingent Contracts:
 Build on differences rather then argue about them
 Use other’s biases to create an agreement
– Basically you are betting that your biases are fewer then theirs
 Solves problems of trust
 Exposes dishonesty
 Reduces risk
 Provide incentives
How to Get Info Necessary to Reach an
Integrative Agreement?
Prepare, prepare, prepare, and then …
 Prepare some more
Prepare What?
 Identify the true decision maker
 Look for common ground
 Surface potential problems (why might they say no)
 Search for solutions to the other sides problems
How Can You Trade for Issues You Do Not Know
Exist?
WCHI does not know about the costs to Hollyville payments over time
 So how can you trade what you do not know?
 Find out
– Prepare
– Gather Information
– Probe! Ask Questions
Integrative Negotiations
VIDEO ANALYSIS: MOMS.COM
Should you Make the First Offer?
 No!
– You give the other side info!?
 Yes!
– Anchoring effect!
 How to decide?
– If you have at least some reasonable information then make the first offer to
utilize Anchoring Effect
– If you have very bad info then it is better not to make the first offer in order to
gather information
Do you have enough info in this exercise to make an

opening offer?
How High Should the First Offer be?
 High but reasonable
 The final result is usually about half way between the two opening offers.
 The higher opening you can get away with the better
Does National Culture affect what is considered “reasonable”
How high is Reasonable in the …
 US
 Russia
 China (Mainland)
 Hong Kong
 Germany
Negotiation Envelope
How high should your opening offer be?
How high should your target be?
 Negotiation Envelope
 Bottom line ---- Target ---- Opening Offer
 Example: Salary
 Bottom line -------------- Target ---------------- Opening Offer
 US$ 120k. $140k $160k
 Target is half way between bottom line and opening offer
How Should you Respond to an Offer?
Krunch!
 Some indication that you have heard their offer and it is not good enough.
E.g.:
– “That is too much for me, can you give me a better number”
– “I like your ___ but it is out of my league, is there anything we can do about
it?”
– “I need your help with these numbers, isn’t there anything you can do?”
– “Ouch, that hurts. Ease my pain, just a little?”
– “Do you also want my wife? Work a little with me here?”
– “I can’t take that to my boss, I’ll lose my promotion.”
 Krunch early and often, but do not be annoying
Is There a Strategy to Making Concessions?
 Make fewer concessions than the other
 Make you concessions smaller than the other side
 Keep track of all your concessions and all your opponents concessions
Should There be a Pattern to Concessions?
Should the first concession be big or small?
 At the beginning of the negotiation make larger concessions and as you
reach your target make smaller ones
– This signals that you are close to your limit
 If you need to drop below your target make very small concessions
 Do NOT let the other side consciously recognize this pattern!
What Can Explain Nason’s Results?
 Innteliginse?
 Experience?
Not Likely!
What Really Explains these Results?
 Preparation
– Long flight back from LA
– Spreadsheet
 Negotiating Style
– What style did Larry use? (What is his true style?)
– What style did Nason use? (What is Nason’s true style?)
Negotiation Styles
Assertive
Competing Collaborating
Assertiveness
Compromising
Unassertive
Avoiding Accommodating
Uncooperative Cooperative
Cooperativeness
RED BLUE GREEN
Competing Compromising Accommodating
 Winner and losers  “Close the gap”  Nurtures relationships
 View Neg. as a game  Super-rational  Solves others problems
 Intense, bold,  Anchor positions  Avoids conflicts
 Passionate and heated  Determined  Listens
 Adept at leverage &  Apply fair standards  Cares
tactics
SILVER YELLOW
Collaborating Avoiding
 Digs into underlying  Tactful, diplomatic
issues  Dodges confrontation
 Propose alternatives  Cautiously tactical
 Creative  Uses information strategically
 Problem solvers  Reveals selectively
 Not focused on closure  Withholds,
The Situational Matrix: A Strategy Guide
Perceived Conflict over Stakes
High Low
I. Balanced Concerns II. Relationships
Marriage, Friendship, or
Perceived Importance of Future
Business Partnership,
Joint Venture, or Merger Work Team
High
Best Strategies: Best Strategies:

Relationship
1. Accommodation
1. Collaborative 2. Collaborative
2. Compromise 3. Compromise
III. Transactions IV: Tacit Coordination

Divorce, House Sale, or Highway Intersection or
Low Market Transaction Airplane Seating
Best Strategies: Best Strategies:

1. Competition 1. Avoidance
2. Collaborative 2. Accommodation
3. Compromise 3. Compromise
Which Style Works Best?
 Each style has it own unique advantages
 Each style has it own unique weaknesses
The key is to match the style to
 Your opponent
 The situation
- With lots of integrative potential be more collaborative
- With little integrative potential be more competing or compromising
No one style is overall most effective:

you should match your style to your opponent and the
situation
What Really Explains these Results?
 Preparation
– Spreadsheet
– What happens when a Competitive Red negotiator goes against a
Collaborative Silver
What Else Really Explains these Results?
 Preparation
– Spreadsheet
– What happens when a Competitive Red negotiator goes against a
Collaborative Silver
 Anchor:
 extreme vs. reasonable
 Questions
 Pattern of Concessions
 Krunch
 Sweatner
What were the Negatives for Nason
 Hurt Relationship
 WCHI never buy a show from Hollyville again
 What about real relationship?
 Missed out on integrative potential by being greedy
 Too much squeezing, not enough trading
 Preconceived notions blinded him from recognizing a collaborative

negotiator
 “quite honestly, that's not within my range”
Moms.com Takeaways
 Preparation, Preparation, Preparation (Excel vs. paper & pen)
 Adapt your negotiating style to the situation (competitive vs. collaborating)
 Anchor high
 Preconceived Ideas can powerfully influence one’s perception (time value
of money)
 Krunch!
 Trading issues adds value!
 Add additional issues
 Search for contingent contracts

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MOMS.

Prof. Stephen W. Nason

Fundamentals Processes Contexts Remedies

Nature of Perception Salary Negotiation

Integrative Hard Ball Tactics Disputes Persuasion

You maximize your chances of succeeding gloriously if you:

© Prof Stephen W. Nason – All Rights Reserved 4

Trade away less important issues

Outcome C: Trade WCHI Hollyville

© Prof Stephen W. Nason – All Rights Reserved

PREPARATION Search for

Outcome B: Compromise WCHI Hollyville

Outcome C: Trade WCHI Hollyville

Outcome D: Additional Issue WCHI Hollyville

© Prof Stephen W. Nason – All Rights Reserved 15

 The Solution: Betting on Different Expectations

Outcome B: Compromise WCHI Hollyville

Outcome C: Trade WCHI Hollyville

Outcome D: Additional Issue WCHI Hollyville

Outcome C: Contingent Contract WCHI Hollyville

Do you have enough info in this exercise to make an

Best Strategies: Best Strategies:

III. Transactions IV: Tacit Coordination

Best Strategies: Best Strategies:

No one style is overall most effective:

 Preconceived notions blinded him from recognizing a collaborative

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