My second favorite question has a familiar ring: What is an even better outcome? Once you have identified a series of potentially good results, the next step is to start thinking of ways to improve on them. There is always something just a little bit better than what you have already identified, even if it means simply adding the words “even better” to the current thinking. For example, a medical school dean I worked with defined a good outcome of his negotiation with the university president as increasing funding for research and maintaining a solid working relationship. We worked toward envisioning a better outcome by leaving the funding aim unchanged but expanding the affiliation goal to “building a stronger relationship with the president.”
Professor Howard Raiffa1 used to challenge businessmen with this claim: “Bring me any commercial agreement and I will improve it by more than my fee.” He always followed by teasingly noting that his fee was quite substantial. Raiffa was reminding us that skillful examination can almost always reveal better ways to structure a deal and create more value for the dealmakers. Economists talk about getting closer to Pareto optimality, and ordinary folks mean the same thing when they say, “Don’t leave money on the table.”
In thinking about getting to good or even better outcomes, it is useful to identify what we do not want. In other words, what is a bad outcome? Obviously, failing to get the terms you desire, being taken advantage of, feeling you lost, or ending up with less than you started with are all examples of bad outcomes. What I call a bad outcome can also occur, though, when a negotiator wins the battle in a way that takes him away from the direction he really wants to go.
Imagine a university president who has a deep need to always be seen as the smartest guy in the room. He has won world renown for his brilliance and served at the highest levels of government. Nevertheless, he must continually demonstrate that he is the brightest man alive, and he has a habit of showing contempt for those just a little bit less sharp. In faculty meetings, he spends too much time getting into little one-on-one intellectual contests. In small negotiations over minor matters, he often uses his power and intellect to wrestle his opponent to the ground. Over time, his desire to one-up his colleagues gets a whole lot of professors pissed off. They begin to conspire against him. They start a whisper campaign to discredit him with the board of trustees, and attempt to vote no confidence in him at the university senate. After a while, he is unable to govern the university, and eventually he is forced to resign. This brilliant man brought himself down by insisting on winning tiny battles. He consistently entered into small contests in which he would triumph, but the ultimate result was a bad outcome for him.
One of the most important things a negotiator can do is figure out what she is trying to gain or achieve. As simple as it sounds, the key is to then take actions that will move things in the prescribed direction and be scrupulous about avoiding measures that point things the other way.
The road to a fuller exploration of this idea always leads back to Pyrrhus.
The Greek King Pyrrhus of Epirus led an army that suffered irreplaceable casualties in defeating the Romans at Heraclea in 280 B.C. and Asculum in 279 B.C. during the Pyrrhic War. In both of Pyrrhus’s victories, the Romans suffered greater casualties than Pyrrhus did. However, the Romans had a much larger supply of men from which to draw soldiers, so their casualties did less damage to their war effort than Pyrrhus’s casualties did to his. He is often quoted as having said, “Another such victory and we shall be utterly ruined.”2
As a young lawyer, I saw case after case that could be described as Pyrrhic victories. People in difficult disputes would turn to their attorneys for advice about how to proceed. Being lawyers, they would recommend litigation: We’ll sue the bastards. By the end of that process, often years later, the loser of the lawsuit was bitter and impoverished. In many cases, so was the so-called winner. One can almost imagine the lawyer calling the client to read the verdict and congratulate him. “One more such victory,” the client might mumble, “and we shall be utterly ruined.”
If you look carefully, you will see examples of Pyrrhic victories all around, situations where someone can accurately say, “I won” yet must acknowledge that winning actually took him in the opposite direction from what he was trying to achieve.
In June 2013, the U.S. National Highway Traffic Safety Administration (NHTSA) recommended that a major automobile manufacturer recall one of its models because of an alleged defect that made the cars prone to fires in rear impact collisions.3 The manufacturer decided to dig in its heels and declined to issue the recall. In light of the NHTSA’s lack of power to force the issue, the manufacturer may believe that it won the battle. A negotiation professor would point out some other ways to look at the situation. What is the manufacturer really trying to do? (Sell cars.) What do they need to do it? (Customers who have confidence in their products.) How much do they spend on advertising to gain those confident customers? (Hundreds of millions.) How badly does this horrible publicity drive them in the opposite direction? (Very badly, indeed.) The ancient King Pyrrhus would surely recognize the point and label this a bad outcome for the car company.
Many aspects of the U.S. war in Vietnam might fit under this rubric. There was so much death, destruction, and loss, so much human suffering. And, of course, that faraway war caused a grave breakdown in social and governmental institutions in the United States. The situation in Asia got so bad, and the American war effort so estranged from its own goals, that eventually an unidentified military official was quoted as saying of the village of Bên Tre: “It became necessary to destroy the town to save it.”4
Sometimes there is a world of difference between winning and getting a good outcome. Opt for the good outcome.
Identify Truly Good Outcomes and Don’t Get Distracted
Of course, most negotiators believe they are working toward the best possible outcome in every case. Where do they go wrong? There are two major stumbling blocks to achieving best outcomes. The first is that a negotiator fails to identify what really good outcomes are. The second is that she gets distracted by other things—side issues that are irrelevant, or worse, to the good outcome being pursued.
Failing to think through what a really good outcome looks like may be a function of inadequate training, time pressure, or poor preparation. Taking the time to think through where this negotiation is headed and where I really want it to go is effort well spent. The law of unintended consequences usually works against us, but with forethought and careful attention, we can often avoid its ill effects. Indeed, if we pay close attention to all the likely results of our efforts, we may be able to create a cascade of happy side effects. Chapter 2 of this book focuses on interests that can guide you in thinking hard about your true desires and the negotiated outcomes that can actually move you toward them.
Getting distracted by small battles and side issues is a mistake that can be remedied through practice and careful planning. We live in a competitive society, and it is easy for us to get carried away by the idea of winning. Many people pride themselves on a competitive tenacity that leaves nothing on the table. If possible, they take the table as well. But research has consistently shown that many of these winners end up regretting their victories. Indeed, it happens so often that economists have termed the phenomenon “winner’s curse.” Competition is a natural and necessary motivator, yet it does not always bring a happy ending. What goes awry here? “People . . . pay far too much money, spend too much time, or sacrifice too many other interests for the privilege of saying they have won,” Professor Shell explains.5 The desire to win represents a dangerous shift in focus: Besting the competition becomes the primary goal, and the outcome itself becomes secondary. Paradoxically, the strategies and behaviors that follow are usually self-damaging. Avoid hurting your own efforts by keeping your eyes firmly fixed on where you really are trying to go.
What Makes for a Good Outcome?
So, what does a really good outcome look like? It tends to le
ave you with most of the things you want, both substantively and with regard to the people you are negotiating with.
For many years, I taught in a business school in Athens. There is a quarrel so common among Greek families that students came to me with what seemed to be different versions of the same story. It has to do with ownership of an olive tree. Imagine that two families live side by side in that fertile Mediterranean land. A small grove of olive trees grows along the border between them. Or, to make the story even more dramatic, a single olive tree sits astride the property line. Both families claim the tree, and its fruit, as their own. A dispute breaks out that grows angrier with the passing years and, eventually, across generations. Nobody wants to yield on the olive tree. Nobody wants to compromise. It is a matter of high principle. But what does each member of each family really want? Everyone seeks to live a good and peaceful life in the shade of the olive trees. The resentment, fighting, and bad feelings are all directed toward their closest neighbors. I would argue that to win the battle of the olive tree is to reap a bad outcome. A good outcome is defined in part, I believe, by friendly relations and peace among our neighbors. After all, when you grow more olives than you can use, there is great joy to be had in sharing them with those we live among.
An angry customer (one of my best students) approaches the airline, demanding compensation for delays that caused her to miss her connection. She will have to spend many hours in this hub airport waiting for the next flight. When she demands compensation, the airline’s first instinct is to deny, stonewall, and stubbornly refuse. In declining to budge, the representative cites internal policy. That policy is designed to save the airline a few bucks, which, multiplied by the millions of delayed passengers, adds up to millions. As the student points out, though, a lifelong customer is worth many thousands of dollars. A great deal more is spent each year on advertising to offset terrible word of mouth. What might a good outcome look like? Suppose the airline gives the stranded student a free membership in the First Class Club Lounge? It actually costs them nothing (the lounge is already there), and it meets the traveler’s need for a little comfort and soothing in the middle of the long trip. Note, too, that it may actually instill a kind of brand loyalty in her, since to conveniently use their lounges may necessitate flying their airline.
As I frequently urge when teaching business executives, companies work hard and spend millions to build their reputations. Negotiated outcomes that leave that reputation intact are valuable for them. Those deals that actually improve the company’s reputation are truly golden. Their adversary in the consumer complaint or lawsuit is actually their once and future customer.
Consider this wonderful, if apocryphal, tale of an encounter between an American businessman and a Mexican fisherman.
As the story goes, an American investment banker is on vacation in a small coastal village in Mexico and happens to notice a little boat just pulling into the dock. In it is a man and several large fish he had caught. Seeing the fresh fish, the American asked how long it had taken to catch them. “Only a little while” was the reply. “Why didn’t you stay out a little longer and try to catch more fish?” the banker asked. The fisherman replied that he didn’t need more fish, that his catch was plenty to feed his family. “But then what do you do with the rest of your day?” the banker asked. The fisherman replied, “I sleep late, swim, play with my children, take a siesta with my wife each afternoon, and spend evenings in the village drinking wine and playing my guitar with my friends.” The American grew excited. “I could help you with your fishing business,” he almost shouted. He began sketching out a plan to help the fisherman become successful and wealthy. First, the fisherman would need to fish for a few more hours each day to enable him to catch more fish and then use the extra money earned from selling the fish to buy a bigger boat. With a larger boat, he could then catch even more fish and buy more boats, ultimately amassing a fleet of fishing boats. Eventually, the investment banker told him, he could own his own fish-processing plant. Of course, he’d have to eventually move to Mexico City, then Los Angeles, and finally New York City to more effectively manage his growing fishing empire. “How long would all this take?” asked the fisherman. “Oh, 15 to 20 years” was the reply. “And then what would I do?” asked the fisherman. “Then you would announce an IPO, go public, and make millions. You’d be a very wealthy man!” said the banker excitedly. “And then what?” the fisherman asked. “Then you can retire, move to a small fishing village where you could sleep late, swim, play with your kids, take a siesta with your wife, and spend your evenings in the village drinking wine and playing your guitar.”
My favorite example of all would probably make a good script for a Hollywood movie. Two students of mine were negotiating against each other in the most important case of the semester. Both of them knew that a high score would earn an A but a lesser performance was going to doom the negotiator to a lower semester grade. It was a zero-sum case with no opportunity to create value, so they could not both get good scores—and they knew that, too. It was a kind of fight to the death (Wharton grading edition). There was one other factor in this negotiation that needs mentioning. After deciding that they hated each other in the first week of the course, they had been slowly going through a process of falling in love. They didn’t quite know it yet, but one of them felt overwhelming attraction, and the other’s heart started to race whenever they were together. As these two sat down across a big oak table, one of them suddenly heard the professor’s voice echoing across memory from the first days of the semester. “What is really a good outcome?” he bellowed. “And what might seem good on the surface but is actually a bad outcome?” Their eyes met, and their slightly trembling hands reached out to each other for the handshake that was to begin the case. What do you think would be a good outcome? How about a better outcome? What is the dangerous very bad outcome that looms in this situation?
There are many paths to the best possible outcome. Some involve getting more money or increasing wealth. Others have to do with strengthening relationships, increasing personal happiness, following ethical or religious codes or ideals, gaining renown or admiration, building or strengthening reputation, and generally becoming more of the kind of person we really want to be.
In the end, what is truly a good outcome of a negotiation for you? I suppose it is the result, in all its consequences, ripples, flapping butterfly wings, and unanticipated side effects that leads to a significant increase in your well-being. And I will define your well-being as including, but not limited to, your happiness, fulfillment, pleasure, achievement, delight, contentment, and peace.
Chapter Summary
Understanding what a good outcome looks like for you is critical to negotiating success.
Once you identify a good outcome, work to improve it.
Avoid Pyrrhic victories that take you farther away from your ultimate goals.
If your negotiating partner is left worse off or feels victimized, it may not be the best possible outcome for you.
Notes
1. Howard Raiffa, Negotiation Analysis: The Science and Art of Collaborative Decision-Making (Cambridge, MA: Belknap Press, 2007).
2. Adrienne Mayor, The Poison King: The Life and Legend of Mithradates, Rome’s Deadliest Enemy (Princeton, NJ: Princeton University Press, 2009).
3. Bill Vlasic, “Chrysler Rejects Regulator’s Request to Recall Jeeps,” New York Times, June 5, 2013, B1.
4. Guenter Lewy, America in Vietnam (New York: Oxford University Press, 1980).
5. Richard Shell, Bargaining for Advantage: Negotiation Strategies for Reasonable People (New York: Penguin, 2006), 38.
Chapter 2
Interests, Options, and Goals
Interests motivate people; they are the silent movers behind the hubbub of positions. Your position is something you have decided on. Your interests are what caused you so to decide.
—Fisher, Ury, and Patton, Getting to Yes1
Good negotiators pay
a great deal of attention to underlying interests. They seek a deal that meets their own interests very well, satisfies the interests of other parties sufficiently, and adequately addresses those of all important players who are not part of the actual negotiation. To do otherwise is a mistake. If the agreement does not meet the needs of the other negotiation parties, they will not agree to enter into the deal. If they are somehow tricked into signing a contract that does not really work for them, they will seek ways to sabotage, escape, or otherwise not comply. That is not good for anyone.
In any important deal, there are third parties who are not part of the negotiation at all, yet have the power to subvert it. Governmental regulators, interest groups, and courts come quickly to mind in a major industrial agreement. If we are talking about a deal between brother and sister, though, important parties not at the bargaining table include mom, dad, other siblings, and the babysitter. All of these nonparticipants have tremendous power to help make the negotiated deal succeed. They also have the power to sink it. As a result, any good negotiator will be sure their interests are met to at least an acceptable degree.
What Do You Really, Really Want?
What are we talking about? How can we usefully define “interests”?
Negotiating Your Investments Page 3