Day 60 in MIT Sloan Fellows Class 2023, Entrepreneurial Negotiation3, Scenario role playing

In this class, we have some role-playings in a startup negotiation situation

Scenario 1: Emotional conflict

- Understanding the connection between emotion and preparation in negotiation
- Understanding how emotion makes it hard to hear what the other person is really saying (i.e. reactive devaluation)
- Understanding and probing interests as an important step in dealing with emotion and ego
- Focusing on building trust and maintaining relationships even as emotion and ego interfere
- Being aware of cognitive biases like reactive devaluation and its impact on negotiation

Scenario 2: Trust between different cultures

- Take account of cultural differences in exploring interests and understanding organizational dynamics
- Work to build trust as the core of long-term relationships
- Show respect for concerns about being treated fairly and equally (in the allocation of power and responsibility)
- Build ongoing communication into whatever partnership structure is under discussion
- Design dispute resolution mechanisms that put rules in place for resolving disagreements

Scenario 3: Overcome Uncertainty

- Understanding the ways that BATNAs or walk-aways can be used as a source of power
- Understanding how agents can use back tables or their absence as a source of power
- Understanding how contingent agreements can be used to deal with economic or financial uncertainty
- Knowing that differences in the time-value of money (ie. discount rates) can be a basis for creating value
- It is important to negotiate as if long-term relationships (and relationships) are at stake. When it is clear that they are not, it is still important to operate in a trust-worthy fashion.

Scenario 4: Technical Challenge

- Understanding the need to balance risk and reward and the likelihood that the two sides will see various ways of balancing them differently
- Uncertainty in a business context must be addressed directly. Contingent agreements of various kinds can be used to deal with different views of uncertainty
- The link between risk and control is important. Investors have a very hard time relinquishing control over a company in which they have a great deal of emotion/ego invested
- When faced with complexity, uncertainty and emotion, it is important to “negotiate how you are going to negotiate"
- It is important to build trust if an ongoing relationship is important, but trust must be earned not bought