April 23, 2014

Classified: Holly Schroth Teaches Students About Behind-the-Scenes Negotiations


Senior Lecturer Holly Schroth has developed cutting-edge exercises in her Negotiations course.

This article is part of a series called "Classified," in which we spotlight some of the more powerful lessons that faculty are teaching in Haas classrooms. If you have a suggestion for a class to feature, please email Haas Newsroom editor rkelly@haas.berkeley.edu.

Alienation or camaraderie. Betrayal or consensus. These were just some of different feelings students experienced last week—depending on their teams—during a multi-person, multi-issue exercise in Senior Lecturer Holly Schroth’s Negotiations class.

The negotiations exercise, focused on a swimwear company competing against market leader Speedo, became so contentious for one team that students threatened to quit their fictional jobs. And that was after a mock “cocktail party.”

“We needed to have a certain minimum amount of funding and the CEO didn’t honor that, so we decided to walk away,” says Adrian Kok, who became a disgruntled director of development during the exercise.

Other teams, meanwhile, reached consensus on 90 percent of their issues before their formal "crisis meeting" and felt much more congenial toward their colleagues.

"This exercise shows students how it's so important to negotiate behind the scenes before the actual meeting to understand everybody's interests, to influence others in a positive way, and to build consensus," says Schroth. "It does take a lot of effort and a lot of time."

Schroth created the case after observing difficult relationships between the marketing and engineering groups at a semiconductor company. “I developed this based on my real-life experience that most deals are done in the shadows, behind the scenes,” she says.

The exercise began a week earlier when students learned their roles and then spent the next several days making phone calls and jockeying behind the scenes to create alliances and reach consensus on three decisions for a company called Swimwear Everywhere.

When students returned to class Monday night, they mingled in their assigned roles during a 30-minute “cocktail party” with juice, soda, cookies, and chocolate-covered pretzels. Then they broke into their teams for a 30-minute “crisis meeting” to reach an agreement on these decisions:

  • Should Swimwear Everywhere invest in new technology for recently acquired subsidiary TTR to produce the next generation of high-tech suit?
  • Should TTR and Swimwear Everywhere drop lawsuits filed against Speedo, USA Swimming and its head coach, and a swim star who made disparaging remarks against TTR and said he intended to wear Speedo despite being under a contract with TTR?
  • What should TTR do about its sponsored swimmers who insist on wearing Speedo instead of TTR?

“That was painful,” Kurt Zhao, MBA 14, said with a sigh of relief at the close of a difficult negotiation Monday night, which in his group ended up pitting students representing marketing and product development against each other in a debate on how to spend $20 million.

“It doesn’t have to be black and white,” noted Stephanie Lai, MBA 14, who represented legal counsel. Her suggestion that marketing and product development split the $20 million 50-50 was rejected by the “CEO.”

Ultimately, the CEO called a vote and the majority agreed to give the entire $20 million to the marketing department. Two students representing product development were the only ones to vote against the deal.

CEOs on a few teams made the mistake of proposing a vote on issues, which can alienate others, Schroth says. Proceeding with lawsuits against swimmers and coaches was another common mistake—a company should never alienate its customers, she explains.

Lily Wang, MBA 14, another “CEO,” succeeded in leading her team  to consensus on most of the issues before coming to the crisis meeting. Consequently, it proved less contentious.

Wang says she talked to classmates more during the one-week exercise than any other week during her time at Haas. A strategy manager at Google whose role includes negotiating contracts with vendors, Wang says the exercise taught her the importance of re-confirming assumptions and talking not only with the people she is negotiating but also the people for whom her negotiating partners are responsible.

“I realized in the early stage that I needed to get consensus and move the company forward,” she says. “It goes against my personality, but I think that’s important.”

Similarly, Kok, who became the disgruntled product manager, says the exercise is proving very valuable in his workplace as his boss recently put him in charge of creating a structure to help executives make product feature decisions.

Explains Kok, who works at a firm that builds analytics for mobile networks: "What I'm doing differently right now is creating a mental note that I really need to reach out to some of the folks on the opposite side and pay special attention to them and apply sources of influence if not to have them be enthusiastic about my point of view but at least make sure they’re not going to stand up and walk out the door.”

 

Lily Wang leads her team through a crisis meeting.
Lily Wang, MBA 14, leads her team through a "crisis meeting" during Holly Schroth's Negotiations class. The meeting followed a "cocktail party" with less formal talks.

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