Toyota Production Process (3 Steps)

Consider what the Toyota people are attempting to accomplish. They are saying before you (or you all) do work, make clear what you expect to happen (by specifying the design), each time you do work, see that what you expected has actually occurred (by testing with each use), and when there is a difference between what had actually happened and what was predicted, solve problems while the information is still fresh.

Source: http://hbswk.hbs.edu/item/3512.html

Installments in negotiations (Source HBR)

There are other reasons to make concessions in installments. First, most negotiators expect that they will trade offers back and forth several times, with each side making multiple concessions before the deal is done. If you give away everything in your first offer, the other party may think that you're holding back even though you've been as generous as you can be. The manufacturer who offered a 3 percent wage increase to the employees' union up front faced exactly this problem.

Installments may also lead you to discover that you don't have to make as large a concession as you thought. When you give away a little at a time, you might get everything you want in return before using up your entire concession-making capacity. Whatever is left over is yours to keep—or to use to induce further reciprocity. In the real estate example, you might discover that the initial $30,000 increase in your offer was all that you needed to sign the deal!

Finally, making multiple, small concessions tells the other party that you are flexible and willing to listen to his needs. Each time you make a concession, you have the opportunity to label it and extract goodwill in return.

All of the above strategies are aimed at guaranteeing that the concessions you make are not ignored or exploited. It is important to note, however, that when someone refuses to reciprocate, the refusal often hurts her as much as the party who made the concession. Nonreciprocity sours the relationship, making it difficult for negotiators to trust each other or risk further concessions. Thus, effective negotiators ensure not only that their own concessions are reciprocated but also that they acknowledge and reciprocate the concessions of others.

Negotiation tip

Which of these scenarios would make you happier?

Scenario A:

While walking down the street, you find a $20 bill.

Scenario B:

While walking down the street, you find a $10 bill. The next day, on a different street, you find another $10 bill.

The total amount of money found is the same in each scenario—yet the vast majority of people report that Scenario B would make them happier. More generally, extensive research (beginning with the work of the late Stanford University professor Amos Tversky and the Princeton University professor and Nobel laureate Daniel Kahneman in the 1970s) demonstrates that while most of us prefer to get bad news all at once, we prefer to get good news in installments.

Rofr sometimes not good for holder

The issue in both contracts, says Roth, who specializes in game theory, experimental economics, and market design, was that the right was structured as what he terms a Before and After Right of First Refusal (BA-ROFR). The right holder is offered an initial deal by the asset owner—the landlord offers to sell the flat to the renter for $100,000, probably a relatively high price. If the tenant rejects the deal, the landlord is free to offer the property to a third party. But the tenant is still in the game. If the owner and a third party agree on a price below the $100,000 originally offered to the tenant, the tenant has the option to acquire the property for that lower price.

Seems like a sweet opportunity for the tenant. But the timing of the deal works in favor of the landlord, who can now present an ultimatum to the third party saying that if the third party offers a price below $100,000 the renter has a right to match the offer. The BA-ROFR not only strengthens the bargaining position of the owner with the third party, but it also allows the initial offer to the tenant to be set high.

Source: HBR

Convertible Bond

The advantage of issuing convertible bonds in a start-up is that the company receives cash and doesn't need to fix the conversion price at issuance.

Usual features:
1) Coupons (might increase over time)
2) % Discount, e.g. note-holder can exchange note at 75% of the next round, into equity
3) Conversion into common or preferred stock
4) Warrant coverage in % of note amount.
5) Conversion of Warrants can also be discounted so that one effectively receives more warrants