Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. Impact America Fund: Challenges of New Fund Formation case study is a Harvard Business School (HBR) case study written by Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi. The Impact America Fund: Challenges of New Fund Formation (referred as “Fund Jalia” from here on) case study provides evaluation & decision scenario in field of Leadership & Managing People. It also touches upon business topics such as - negotiation strategy , negotiation framework, Venture capital.
Negotiation strategy solution for case study Impact America Fund: Challenges of New Fund Formation ” 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?
In July 2013, Kesha Cash transitioned out of her stable role as co-founder of and fund manager for Jalia Ventures ("Jalia"), an initiative investing in early-stage mission driven "businesses operated by entrepreneurs of color," to launch her own impact venture fund focused on underserved communities. Because Jalia had been funded and supported by Serious Change, L.P., a global impact investment fund, Cash was new to the process of fund formation. She had heard that she needed at least $250,000 over a period of two years to get through the fundraising process but managed to launch the fund with a budget of just over a third of that amount in under two years while taking barely any salary. By December 2014, Impact America Fund (IAF) had its first official close at less than 50 percent of the target fund size-a strategic decision made by Cash to begin investing in order to prove that she could source and close deals on her own. With her initial close, Cash's vision of creating a fund focused on generating real financial returns while improving the wellbeing of underserved communities was realized. Despite her success in bootstrapping the initial fund, Cash had much more work ahead of her. In addition to managing investors and sourcing new deal opportunities, Cash now had to consider how to scale for later funds, and whether to continue to follow the fund's original vision on her own, as she had already proven that she could do, or take on a partner in order to pursue strategic opportunities. Indeed, the real work was just beginning. This case describes the challenges faced in the formation of a sustainable for-profit impact venture capital fund. It covers the origin of the fund; an overview of the fund's structure and terms, investment strategy, early fundraising, and strategic opportunities; as well as a discussion of impact measurement.
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 “Impact America Fund: Challenges of New Fund Formation” 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 “Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi”, 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 “Impact America Fund: Challenges of New Fund Formation ”, 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 “Impact America Fund: Challenges of New Fund Formation” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Heidi Krauel Patel, Charles Ewald, Jaclyn C. Foroughi (2018), "Impact America Fund: Challenges of New Fund Formation Harvard Business Review Case Study. Published by HBR Publications.
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