Powerscreen Case

Exercise:

The PowerScreen Problem

This exercise was to develop recommendations for Star to handle the disputes with his business partner, Hacker. A crucial step was to understand the whole story, including the views of the other side, which could be facilitated by a discussion with Hacker’s attorney.

One dispute between Star and Hacker was the ownership of PowerScreen, which was the tip of an iceberg of more fundamental disputes - the future and structure of HackerStar, Inc. (hereafter referred to as “the company”). Without solving the latter (including business and personal relationship components) though, satisfactory resolve of the former would be unlikely.

Before moving on, interests of Star were first identified. His short-term interest was to clearly establish ownership of PowerScreen by the company. A broader one was to keep the company intact with Hacker, by re-structuring so that sales and marketing could be handled properly within appropriate budgets and; having Hacker’s commitments on appropriate business behaviors, including objective judgments as well as openness, trust and respect for their partnership. Star’s long-term interest was to get his investment in the company paid off, which could be best achieved by keeping and growing the company.

My negotiation with Hacker’s attorney started with the ownership of PowerScreen. To avoid positional bargaining over percentage of ownership, we focused on revealing each party’s interests underneath. Hacker’s interests could be summarized as his hunger for recognition of potential, marketing commitments and respect for his talents reflected from the development of PowerScreen.

To disentangle relationship from substance, I dealt with people problem first, by clarifying Star’s attitude was actually inconsistent with Hacker’s perception - he thought PowerScreen was brilliant and was willing to apologize if his reactions led to Hacker’s misperceptions.

Believing another main interest of Hacker was not to be sued for employment contract breach, my next step was to offer supports to Hacker’s attorney for advising Hacker along my direction, by raising our common interest of dispute resolve without litigation. Supports included the viewpoint that litigation, with grey areas on the contract (say, definition of Hacker’s “work time”), could be lengthy and resource-consuming, which put Hacker at an inferior position with the possibilities that his financial backup might not be as strong as Star’s and he simply might not feel comfortable in court.

With confidence in resolving people’s issue and likelihood of consensus to avoid litigation while pushing PowerScreen into market, I shifted to tackle the dispute regarding the company’s future, for which Hacker’s attorney and I had an open discussion about the underlying interests of both parties. We again unveiled a common interest of keeping and restructuring the company to let Hacker concentrate on R&D (product and innovation). To practically support the restructuring and save face for Hacker, I proposed offering commissions to Sparks for sales (Hacker expressed satisfaction with his work) and outsourcing marketing services to Gates (referred by Hacker) for PowerScreen and other products of the company. To further save face for Hacker and boost the attractiveness of the option of restructuring the company with his role in R&D, a royalty of 10% was offered for all products invented by the R&D department he was going to lead. To facilitate Hacker’s attorney’s discussion with Hacker to justify his acceptance of such option, I weighed the possible incomes of Hacker for his alternatives and presented the diminished attractiveness of his possible BATNAs - (i) and (ii) below: