Negotiation Definition:1. Create value to the greatest extent possible2. Capture an appropriate share of the value that gets created3. Build and sustain critical relationships4. Enhance your personal credibility
Anatomy Physiology Structure Process• Parties and issues • Frameworks and details• Alternatives, options and • Small steps and big bangs action-forcing events • Learning and influencing• Interests and trade-offs • Adding and eliminating• Legitimacy • Bundling and unbundling• Information and • Sequencing and uncertainty synchronizing• Positions and packages• Value creation and capture
Analyzing Negotiation StructureAnatomyStructure Negotiator’s Checklist #1 • What is the full set of parties that are influencing, or could influence, the negotiations? What is the full set of issues that are, or could become, the focus of negotiations? • How do the parties perceive their choices or alternatives? Are there action-forcing events that could drive the process? • How do the parties perceive their interests? What trade-offs among the issues might they be willing to make? • Who has what information? How might you gain an information advantage? • What positions are the parties taking and why? Are the negotiations being conducted on an issue-by-issue basis or through packages? • How much potential is there to create value through trades? How will you be sure to capture a reasonable share of the value that is created?
Analyzing Negotiation ProcessPhysiology Process Negotiator’s Checklist #2 • Are you better off trying to define a broad framework for agreement or focusing on the details? • Should you seek incremental gains or be more ambitious? • What can you do to best learn about your counterparts’ interests? To shape their perceptions of their interests? To shape their perceptions of their choices? • Could you increase the potential to create value and reach agreement by adding parties or issues to the mix? Would reducing the number of parties or issues better focus the process or remove key blocks? • Would bundling or unbundling the issues help you increase the potential to make trades and create value? • Are you better off dealing with parties or issues sequentially or simultaneously? If sequentially, in what order should you proceed to build momentum?
Quick Summary of the Imperatives• Match strategy to situation – Diagnose the structure of negotiations, identify key constraints and opportunities, and craft your strategies• Plan to learn and influence – Figure out what you need to learn and where best to learn it; use information to create and capture value.• Shape the game – Focus on influencing who participates, the issue agenda, and the rules; don’t play some else’s game• Organize to learn – Take the time to reflect on your experiences.
The Four Questions to Organize to Improve• Did I create value? – Did I do all that I reasonably could to identify and realize opportunities to create value, or did I unnecessarily leave value off the table?• Did I capture value? – Did I capture a reasonable share of the value on the table, or did I give up or take too much?• Did I build relationships? – Did I preserve or enhance key relationships, or did I unnecessarily undermine them?• Did I enhance my reputation? – Did my conduct enhance or diminish my reputation as a negotiator?
The Four Opportunities• What information gathering and planning should I undertake before at-the-table discussions begin and between rounds of talks?• What should I try to learn at the table and how can I best do that? How should I approach shaping my counterparts’ perceptions of their interests and alternatives?• Are there opportunities to make unilateral game- changing moves, either before the negotiations formally begin or while they are in progress?• Can I negotiate with counterparts to favorably reshape the structure and process?
Negotiator’s Checklist #3• What are the key elements of the structure of the negotiation?• What are the associated challenges and opportunities?• How will you approach learning about your counterparts?• What can best be learned through prenegotiation preparation, and what should you seek to learn at the table?• How will you ensure that learning at the and away from the table is coordinated and integrated?• How will you approach creating value and capturing value?• What mix of tactics will you employ to shape your counterparts’ perceptions of their interests and alternatives?• How will you avoid becoming overcommitted to your plan and retain the ability to adapt to unexpected developments?• What is the right balance between planning and improvisation?• What personal disciplines and systems will you put in place to ensure that you reflect on experience and learn?
Dimensions of Consideration• Relationships – Are you negotiating a one-time deal or a relationship?• Conflict – Are you making a deal or resolving a conflict?• Gains – Are you dividing a fixed pie or enlarging the pie?• Authority – Who has the authority to make agreements?• Coalitions – Do the negotiations involve just two parties or more than two?• Linkages – Are the negotiations linked to other negotiations?
Checklist #4• Relationships – Is it a one-time interaction or longer-term relationship? – How does the relationship impact reputation? Create value?• Conflict – Do you and your counter parts have neutral or positive attitudes toward each other? – How can you stabilize the situation to avoid escalation? – Will you repair the relationship or “divorce?”• Gains – What is the full set of issues to be negotiated? – What are your trade-offs? The other side’s? – What are the implications for how you will approach creating and capturing value?• Authority – How will “internal” negotiations interact with “external” negotiations? – If you are a representative, how should you approach clarifying roles and securing your mandate?• Parties – Who will participate in the negotiation and what are their sources of power? – What are potential good and bad coalitions? – What are the implications for sequencing? Shuttles and summit meetings?• Linkages – How are your current negotiations linked to other negotiations? – What are the implications for the sequence of “moves” you should make in the linked system? – What are the implications for how and when you should share information?
Systematic Errors (Chapter 4)• Fixed Pie Bias – Reactive devaluation (don’t like the deal just because an adversary proposed it) – Whatever is good for them is bad for us• Vividness Bias – Create a scoring system – Separate information from influence• Non-rational Escalation of Commitment – Rationalizing prior decisions and behaviors – Win at any cost mentality – Gone too far to quit now mentality – Strategies: • Start your negotiation with a preplanned exit strategy • Assign and reward a “devil’s advocate” • Anticipate and prepare for the escalation forces you will encounter (de-escalate, know when to hold’em and when to fold’em)• Susceptibility to Framing – We are more risk averse when thinking about gains – We are more risk seeking when thinking about losses
When Rationality Fails (Chapter 5)• Watch for conflict and changing motivations• Egocentricism (see everything in your favor)• Overconfidence, irrational optimism, and the illusion of superiority
Be Rational in an Irrational World (Chapter 6)• Use “System 2” Thinking (reasoning – not emotions) – Make a system 2 list – Avoid negotiating under time pressure – Partition the negotiation across multiple sessions• Learn through the use of analogies – Debrief multiple negotiations simultaneously (compare and contrast) – Focus on the principles, not the particulars• Adopt the outsider lens – Bring in an outsider – Take the outsiders perspective
Confronting Others’ Biases• Incorporate the consequences of their biases in your strategy – Use system 2 thinking but adapt to their system 1 mistakes• Help others be less biased – Remove time pressure – Encourage them to “comparison shop” – Encourage them to prepare better• Calibrate information provided by others – Get multiple “estimates”• Use contingency contracts to resolve conflicts stemming from biases – Let them “bet” against you