Posts Tagged ‘Start Up’

Equally applicable to Business, Brexit or POTUS.

orange

Roger Fisher and William Ury (Harvard 1981) tell the story of two sisters arguing over an orange. After some discussion they agree to divide the orange in half, an apparently wise and fair solution. One sister then peels her half and eats the fruit, while the other peels her half, throws away the fruit and uses the peel to make a cake. What appeared to be a wise solution – namely a 50-50 division of the orange was certainly fair, but not very wise. If only the sisters had paid less attention to their positions (how much of the orange each was asking for) and more to their interests (why each wanted the orange) they could have reached an agreement which allowed both to obtain everything they wanted.

Instead of analysing negotiation as a confrontation between two adversaries (each of whom is determined to get as much as possible, while surrendering little or nothing on the way), the ‘Principles of Problem solving’ approach calls for greater collaboration. Each side seeks to do as well as possible for itself, but views the other party not as an adversary but as a potential collaborator. The objective is to find ways to advance one’s self-interest while also leaving room for the other side to do the same. This calls for negotiators to move from statements of position to an analysis of underlying interests.

Exponents of this approach to negotiations argue that opportunities for joint gain result when negotiators are able to metaphorically swing their chairs round so that, instead of facing each other, they are side by side, instead of confronting each other, they jointly confront the problem that challenges both. People negotiate with each other all the time – wives with husbands, managers with workers, nations with other nations. Yet despite the fact that it is a path of everyday life, it is only in recent decades that we have begun to study negotiation systematically. To be sure, not all conflicts are amenable to this joint problem solving approach, many are, however.

Others remain better suited to the more traditional concession-making process, alluded to earlier, in which negotiations begin at extreme opening demands, then slowly shift from these in order to reach some sort of mutually acceptable agreement. Although these two methods of thinking about negotiations would appear to rest on different assumptions about the nature of the process, they are actually very much alike in one key aspect. Both points of view are best suited to the kind of negotiation that takes place between parties of equal power. Whether it is two sisters, or two super-powers, as long as neither party has the power to impose agreement on the other, and parties acknowledge their interdependence, there is room and opportunity for negotiation.

But what happens when power is not equally divided between the parties, when one side has far more power than the other, when one side is far less dependent on reaching a negotiated settlement than the other? As Jeff Rubin and Jeswald Salacuse (Harvard 1990) point out, if two nations are engaged in a water rights dispute concerning a river, and one nation sits upstream of the other, why should the upstream party agree to negotiate, rather than simply decide unilaterally to do exactly as it pleases? In turn, what does the party with low relative power do to persuade its upstream counterpart to come to the negotiating table?

vietnam

It is usually assumed that success in negotiations is merely a matter of power and that the company with less power is always at the mercy of the company with more power. Yet the history of international relations is filled with examples of large states which failed to force small states to do their bidding (eg the US and Vietnam, the USSR and Afghanistan). These examples raise the question of whether results in such negotiations are not just a matter of power, but also of strategies and tactics.

It is said that everyone loves an underdog, that the skilled negotiator should be able to turn this phenomenon to his or her advantage, that often the seemingly weak are far more powerful than they realise, and that the powerful may be far weaker than is commonly supposed. Well no method can guarantee success if all the leverage lies on the other side. The most any method of negotiation can do is to meet the two objectives: to protect you against making an agreement you should reject and to help you to make the most of the assets you do have so that any agreement satisfies your interests as well as possible.

So is there a measure for agreements that will help you to achieve these aims? Yes there is – develop your BATNA (best alternative to a negotiated agreement). The relative negotiating power of parties depends primarily upon how attractive to each is the option of not reaching agreement. Generating BATNAs requires three distinct operations.

  • Inventing a list of actions you might conceivably take if no agreement is reached;
  • Improving some of the more promising ideas and constructing them into practical alternatives;
  • Selecting tentatively the one option that seems best;

Having gone through this effort, you now have a BATNA. Judge every offer against it, having a good BATNA can help you negotiate on the merits. Apply knowledge, time, money, people, connections and wits into devising the best solution for you, independent of the other sides assent.

sumo-light

 

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So many articles in the broadsheets about people leaving London and their reasons why, some real and some spoofed for comic effect. It stirs up many emotions in people, given the pressures of modern life and the increasing ratcheting up of costs of sustaining a family and a young business in London. I moved here in 1976 from NI and lived first in Guildford a commuter town in Surrey, then Belsize Park in North London, mixed with time in Silicon Valley off and on since 1987. Now I am back in the countryside of Wiltshire, I have built start-ups in both London, Silicon Valley and in the rural areas of the UK, so I think have an interesting perspective.

So let’s get real the better opportunities for creating a team, cutting deals and getting funded are in London, simply by the volume of people, networks and funds to plug into. In my last start-up we were based in Clerkenwell and by that stage of my start-up experience knew how to slipstream all the players that created opportunities to make a name for yourself. But of course if you are less experienced and maybe never going to be the number one or two in your global market space, it can be the opposite, a more daunting, alienating place where you feel you are not at the party.

There is definitely an inner game feel to London and some just do not ever get the invites to the inner sanctum of top-level VC funding and all those cool Pitching events at Downing Street and the Palace. That, if it is happening to you, even though it is all around you in London can make you feel like a failure. Very few actually make it as a tech start-up in London, although from all the column inches, blogs and networking events devoted to the space it is difficult to see through that veneer. My calculated guess is that 98% never get funded beyond family and friend’s rounds, of which only 30% of the 2% that do will survive and maybe you will remember 3 brand names that did win in 10 years time.

It’s a tough game and takes real stamina, resilience and experience around you to make it, and that is without taking into account the negative macro events that can wipe you out like Lehmans and the periodic UK/Global market crashes every 5/7 years. But of course if you were looking at the start-up world in a logical and reasoned basis you probably are not suited to the crazy world that we entrepreneurs inhabit. Yes you must really believe as a founder beyond all the negative pushbacks that you are right about your product/service and must keep the idealist attitude alive.

So you can fail in London too, and it is why most British start-ups fail in Silicon Valley as well because the competition there is even more fierce and the money game even more aggressive than in the UK and most are not tough or experienced enough to compete on equal terms. But you are in Cardiff, Bath, Bristol, Birmingham, Manchester, Newcastle, Edinburgh, Glasgow, Belfast and Dublin, what chance do you stand cut off from Boris’s gleaming Tech City? Well it depends a lot on what level you are playing at, what your goals are and how you set about creating your own networks.

There are great start-ups out across the UK and Ireland, bright people with bright ideas, but the thing that defines a winning company is the drive to reach the goals that are set day one in the business plan. If you are out to build a global company at some point you are going to have to go where the big deals are being done, be it London, New York, Frankfurt and San Francisco. This does not mean that you have to move the whole company from the low-cost base you might have established but it does mean a lot of travel and nights away connecting to the networks that open the door to enterprise clients and the funding that follows those early big name wins.

It requires a concerted effort as well not just dipping in and out every 90 days as I see so many companies doing, the people in the big city networks won’t take time with you and create that continuity of connection if they do not sense your committment to the cause. There is no easy or quick way of doing this, the hours day and night have to be put into this programme. If you are lucky you may find key experienced champions in those networks that like you and your company and will get alongside in accelerating your access and growth. It is certainly a lonely thing to do on your own and it never does any harm to have someone watching your back on the circuit when travelling and running hard.