Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Lumo Bodytech: A Bumpy Journey case study is a Harvard Business School (HBR) case study written by George Foster, Amadeus Orleans. The Lumo Bodytech: A Bumpy Journey (referred as “Perkash Bodytech” from here on) case study provides evaluation & decision scenario in field of Innovation & Entrepreneurship. It also touches upon business topics such as - negotiation strategy , negotiation framework, Firing, Hiring, Innovation, Leading teams.
Negotiation strategy solution for case study Lumo Bodytech: A Bumpy Journey ” provides a comprehensive framework to analyse all issues at hand and reach a unambiguous negotiated agreement. At Oak Spring University, we provide comprehensive negotiation strategies that have proven their worth both in the academic sphere and corporate world.
What’s my BATNA (Best Alternative To a Negotiated Agreement) – my walkaway option if the deal fails?
What are my most important interests, in ranked order?
What is the other side’s BATNA, and what are his interests?
Monisha Perkash cofounded Lumo Bodytech during an incubation program organized by Innovation Endeavors - the venture capital firm started by Eric Schmidt - in 2011. At the time, she had barely met her cofounders and the team was expected to launch a business after six months of design thinking and prototyping efforts. The result was a start-up focused on improving posture and helping solve the common problem of back pain. As of 2018, Lumo Bodytech was still alive and thriving, but the journey had not been free of obstacles and difficult decisions for the CEO. Even before the conclusion of the incubation phase, one of the cofounders had expressed his dissatisfaction with the direction of the ideation process and threatened to quit if nothing changed. He was an accomplished software engineer who had become a friend in just a few months of work. Additionally, the equity for the new business had already been split among the four cofounders, which could further complicate any exit negotiations. Around a year later, Lumo Bodytech had successfully launched but the wearables fever was dying down and the financial needs of the young start-up became more pressing by the day. That was when Perkash was approached by a large Asian manufacturer who would be willing to invest if the company implemented a significant change in its strategy, from focusing on a single product to adopting a platform approach to its product line. It was a hard decision to face so early in their trajectory, but Perkash knew she had to make a choice. The challenges related to financing the company would knock on Perkash's door once again in mid-2014, when the company had to decide between raising venture debt or settling for a smaller round of equity financing. To make matters worse, there seemed to be a central misalignment between the cofounders and one of the board members about how to approach the issue. Finally, Perkash had also experienced a fair amount of human resources problems over the years. Some of those were a superstar engineer who had a huge ego, a former classmate who wanted new responsibilities but was underperforming and a new hire who had come from a much larger company and was not prepared for the challenges of a startup environment. Perkash saw it all.
By interests, we do not mean the preconceived demands or positions that you or the other party may have, but rather the underlying needs, aims, fears, and concerns that shape what you want. Negotiation is more than getting what you want. It is not winning at all cost. Number of times Win-Win is better option that outright winning or getting what you want.
Options are the solutions you generate that could meet your and your counterpart’s interests . Often people come to negotiations with very fixed ideas and things they want to achieve. This strategy leaves unexplored options which might be even better than the one that one party wanted to achieve. So always try to provide as many options as possible during the negotiation process . The best outcome should be out of many options rather than few options.
When soft bargainers meet hard bargainers there is always the danger of soft bargainers ceding more than what is necessary. To avoid this scenario you should always focus on legitimate standards or expectations, clearly understanding the arbitrage . Standards are often external and objective measures to assess the fairness such as rules and regulations, financial values & resources , market prices etc. If the negotiated agreement is going beyond the industry norms or established standards of fairness then it is prudent to get out of the negotiation.
Every negotiators going into the negotiations should always work out the “what if” scenario. The negotiating parties in the “Lumo Bodytech: A Bumpy Journey” has three to four plausible scenarios. The negotiating protagonist needs to have clear idea of – what will happen if the negotiations fail. To put it in the negotiating literature – BATNA - Best Alternative to a Negotiated Agreement. If the negotiated agreement is not better than BATNA (Negotiations options), then there is no point in accepting the negotiated solution.
One of the biggest problems in implementing the negotiated agreements in corporate world is – the ambiguity in the negotiated agreement. Sometimes the negotiated agreements are not realistic or various parties interpret the outcomes based on their understanding of the situation. It is critical to do negotiations as water tight as possible so that there is less scope for ambiguity.
Many negotiators make the mistake of focusing only on the substance of the negotiation (interests, options, standards, and so on). How you communicate about that substance, however, can make all the difference. The language you use and the way that you build understanding, jointly solve problems, and together determine the process of the negotiation with your counterpart make your negotiation more efficient, yield clear agreements that each party understands, and help you build better relationships.
Another critical factor in the success of your negotiation is how you manage your relationship with your counterpart and other people doing the mediation. According to “George Foster, Amadeus Orleans”, the protagonist may want to establish a new connection or repair a damaged one; in any case, you want to build a strong working relationship built on mutual respect, well-established trust, and a side-by-side problem- solving approach.
According to
Harvard Business Review
, there are three types of negotiators – Hard Bargainers, Soft Bargainers, and Principled Bargainers.
Hard Bargainers – These people see negotiations as an activity that they need to win. They are less focused less on the real objectives of the negotiations but more on winning. In the “Lumo Bodytech: A Bumpy Journey ”, do you think a hard bargaining strategy will deliver desired results? Hard bargainers are easy to negotiate with as they often have a very
predictable strategy
Soft Bargainers – These people are focused on relationship rather than hard outcomes of the negotiations. It doesn’t mean they are pushovers. These negotiators often scribe to long term relationship rather than immediate bargain.
Principled Bargainers – As explained in the seven elemental tools of negotiations above, these negotiators are more concern about the standards and norms of fairness. They often have inclusive approach to negotiations and like to work on numerous solutions that can improve the BATNA of both parties.
Open lines of communication between parties in the case study “Lumo Bodytech: A Bumpy Journey” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
George Foster, Amadeus Orleans (2018), "Lumo Bodytech: A Bumpy Journey Harvard Business Review Case Study. Published by HBR Publications.
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