Suddenly the copilot, sitting shoulder to shoulder and elbow to elbow with the pilot, began to laugh. What began as a snicker grew louder and turned into a bellow. Angrily and in disbelief, the pilot turned to him. “What are you laughing about?” he asked. The copilot replied, “Boy, oh boy, have you got a big problem!”
Fisher’s point was that when partners are involved, the trouble of one is actually the problem of all. To the extent that we are all in it together, one person’s failure has bad consequences for others. To get good outcomes for yourself, help your partners solve their problems.
A critically important part of addressing everyone’s interests and concerns is through a process of creating more value. Negotiators who tend to see the process as dividing a fixed pie have a very hard time with this. Rather, it is essential to stop thinking of negotiating as a zero-sum game and become highly proficient at making the pie bigger before we start to split it up.
Work with Them to Create More Value
Which options offer the most opportunity for creating mutual gain? In essence, what can I trade to you that you value more dearly, and what can I receive from you that holds greater worth to me? Inventing options is the process of discovering where these trades exist. Remember back to the grade school lunchroom; your grilled cheese for my turkey sandwich, your cookie for my chips, and both of us happier.
The art of creating such value is truly a skill that can be developed and strengthened with practice. Begin to look around, seek out everyday examples, and you’ll find it becomes more intuitive over time. The opportunities really are all around us. Just ask the two women in the kitchen who were squabbling over the last egg in the refrigerator. Each was working on a recipe, and each declared the absolute necessity of using that sole egg. Old friends that they were, a bargaining session broker out. Annie offered Betty homemade cookies, hand delivered, for a week. Betty shot back with four days of complete dinners. Only as they approached exchanging a firstborn child for that coveted egg did Annie think to ask why Betty needed it. “For the yolk,” Betty replied. Annie began to laugh. “I need only the egg white,” she giggled.
Practice makes perfect in many things, including finding ways to create more value. You should be continuously on the lookout for situations that allow for the dovetailing of interests. As a practice tip, it is worth noting that win-win is very often win-win-lose. A great many of the wonderful ways to create mutual gain involve cutting somebody else out of the deal and then dividing the spoils that they would have claimed. We do not feel bad about this because the person or entity left out is usually nameless, faceless, and of no concern to us. Furthermore, they may never even know about the deal or the role they might have played in it. For example, when I persuaded the house seller to write my mortgage in exchange for a higher sales price, some undetermined bank was cut out of the deal. A dairy cooperative that allows farmers to sell their milk for higher prices eliminates some unnamed middleman. A family utilizing grandparents to babysit their beloved grandchildren is inadvertently taking employment from some enterprising teenager who will not get a child care job.
Creating more value can sometimes seem a little abstract. How a person measures worth is as unique as the individual herself. It can involve not just economic value but sentiment, ideals, ethics, hopes, and dreams. On the other hand, sometimes the process can be measured in dollars and cents. Consider the example of a local theater and the rising star lured to perform on its stage. Each had a tremendous interest in the success of the one-time-only performance. Each would be willing to pay dearly to ensure a packed house. When the time came to negotiate over the star’s fee, the theater owner gently inquired as to whether perhaps a lower fee paid to the star could be supplemented by more money spent on advertising. Suddenly, from stage right emerged an itinerant professor. “Watch this,” he said. “For every dollar effectively spent on advertising, you get two dollars of value.” He took a dollar out of his pocket and held it out. “If we spend this on your marketing campaign, how much value do you get?” He turned to the theater owner. “One dollar’s worth,” said the owner. Then he turned to the young star, who also replied, “One dollar’s worth of value.” The professor smiled and explained, “You have spent this single dollar, and yet you have derived two dollars of value from it. Magic!”
Exploring, talking, and finding out are critical to this process. Good negotiators ask why a hundred different times in as many ways. Listening, gathering information, and learning are prized skills. Research has shown that most skilled negotiators ask questions and test for understanding more frequently than do merely adequate bargainers. Learning the nuances of the other side’s goals, desires, needs, and impediments is the way to begin creating greater value. “Tell me what you want—what you really, really want.”
The more inquiring and perceptive you are, the more possibilities you have to offer your negotiating partner. A factory, for instance, needs to get rid of excess steam; located next door is an office building using a coal furnace to warm the building. A health food company is looking for a steady supply of wheat germ to sell; a maker of breakfast cereal removes wheat germ before processing wheat into cereal flakes. A state transportation department is getting rid of old, useless railroad cars; that same state’s fish and game department is planning to buy trash that can be sunk offshore to create artificial reefs.
As you learn more about the other side and their interests, you can explore possible trades with them. A good way to work through this process is by the using if-then statements. For example, if your factory provided steam to the neighboring office building for heat, would the landlord be willing to pay a small fee for it, based on the savings from not having to purchase more coal? Or, as the health food CEO, could you offer to cart away the wheat germ at no cost to the cereal manufacturer?
In most cases, those options that create the most value will be the very best ones for meeting the underlying interests of the parties. Once the maximum amount of value has been created, when no piece of the pie remains unclaimed on the table, then and only then should negotiators begin to worry about forging the final terms of an agreement. The task that Lax and Sebenius call “the negotiators dilemma: creating and claiming value”7 is made dramatically easier when the parties have worked together to bake a big, full, and rich pie before they begin to worry about dividing up the slices.
Chapter Summary
Work to create deals that meet your own interests very well and the other side’s at least sufficiently.
Do not ignore third parties to the negotiation; take their interests into account as well.
The interests that lie below each party’s stated positions can be the key to creating deals that meet everyone’s real needs.
Most negotiation situations include some interests in common, some that are different but compatible, and others that are in conflict. Explore shared interests and work to dovetail compatible interests.
Options are the many ways that a deal could be structured.
Think of a negotiation not as a fixed amount of value to be divided, but as a pie that can be enlarged before it is cut. The creation of more value usually makes agreement easier.
Notes
1. Roger Fisher, William Ury, and Bruce Patton, Getting to Yes: Negotiating Agreement Without Giving In, 3rd ed. (New York: Penguin Group, 2011), 43.
2. Ibid., 44.
3. Bharat Mediratta and Julie Bick, “The Google Way: Give Engineers Room,” New York Times, October 21, 2007.
4. G. Richard Shell, Bargaining for Advantage: Negotiation Strategies for Reasonable People (New York: Penguin Books, 2006), 34.
5. Ibid., 29.
6. Fisher, Ury, and Patton, Getting to Yes, 62.
7. David Lax and James Sebenius, The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain (New York: Free Press, 1986), 29.
Chapter 3
Fairness
Nobody likes to be treated unfairly. Not you and not those you negotia
te with. Nobody enjoys realizing that they got a less than fair deal, either. Both being treated in a legitimate manner and getting a deal that is basically just are important to everyone.
Good negotiators refuse to be part of a process, or outcome, that is anything less than fair. You should do the same. Just as a skilled negotiator will never agree to a deal that does not do a good job of meeting her interests or that is not better than her best alternative, so, too, she should decline one that is perceptibly unfair.
What Is “Fair”?
Clearly, we are headed straight toward the problem of defining “fairness.” What does it mean, and how are we going to measure it? Leading negotiation professors urge us to look to authoritative standards and norms to help delineate fairness. What Fisher, Ury, and Patton call “objective criteria”1 can be thought of as outside measures of fairness that can be used to anchor a negotiation in principles rather than as a test of will.
These outside yardsticks for measuring fairness will help us in two ways. First, they guide us in forming the upper and lower boundaries of a fair solution or deal. That leaves us with a range of potentially fair outcomes. Once these are established, we can safely bargain, knowing that any agreement inside that range can be justified as fair. By the same token, we will commit ourselves to refusing a deal that falls outside that range. The authoritative standards have created a kind of safety net for us to avoid ending up with a deal that does not measure up as legitimate.
Second, we also use such standards and norms as a means of persuading our partners as to the general equity of the proposals we are making. Can we overcome their doubts by pointing to the norms of their profession, the standards of their beliefs, or the principles of their faith? Can we show them that what we are proposing is something they would readily agree to if not involved in a negotiation? Objective criteria can help demonstrate that a proposal meets their need as well as ours to be treated fairly.
A recent graduate of the University of Pennsylvania Law School was offered a position with the largest law firm in Philadelphia. When he learned of the starting salary they were offering, though, he became discouraged. He knew for a fact that many of his Wharton MBA friends would be starting at higher amounts. His professor encouraged him to talk with the hiring partner at the law firm. The partner was surprised that he was unhappy. “We pay every starting associate that same salary,” he said. “You are getting what everybody gets.” “Furthermore,” he went on, “we raised the starting salary last year. It is fair to say that nobody has ever started at this firm at an amount higher than what you will be receiving.” The new graduate had to agree that was a pretty convincing standard. And the implied standard, that a new lawyer should get as much as an MBA, was probably less appropriate than he had originally thought.
In addition to using norms and standards to persuade the other side about fairness, a good negotiator should remain open to be persuaded in like manner. Is it possible that they are being much fairer than I understood them to be? What criteria are they basing their proposals on? How does the situation look from their point of view? Professor Fisher always used to ask his negotiating partners, “Where did that figure come from?” He was challenging them to justify their offers and show how they were grounded in fairness.
The admonition to never accept a deal that is not fair, no matter how attractive, can occasionally be gut-wrenching. What if a proposal is clearly not legitimate yet extremely attractive? Still, the wisest negotiator I know likes to set the boundaries early in the process. “I will accept any offer that you can show me is fair,” he says, “but I will not accept any offer—regardless of value—until you show me why it is fair.” He is insisting from the outset that fairness will be a requirement that must be met.
What specific authoritative standards or norms can we use to show fairness? Fisher, Ury, and Patton give us a wonderful list to start us thinking:2
Market value What a court would decide
Precedent Moral standards
Scientific judgment Equal treatment
Professional standards Tradition
Efficiency Reciprocity
Costs Etc.
Move beyond Market Value to Measure Fairness
Because I spend a lot of time at Wharton, it is typical to see market value used a great deal in discussions of standards. Certainly it is a strong and legitimate standard. It is valuable, though, to broaden our practice by becoming skilled at using other criteria.
To be playful, when we study this topic, I tell my students that I intend to shoot and kill anyone who does not turn in their homework on time. Why is that not a legitimate punishment? The list of reasons includes moral standards, precedent, court decisions, equal treatment, and professional standards. When I ask what might be an appropriate sanction for late homework, the replies include (1) how other professors handle it, (2) fairness to those students who did turn it in on time, (3) what I have done about this in past years, and (4) an attempt to correlate the infraction with the harm it does. Once that whole list is on the table, students begin to gravitate toward the standards that result in the lowest penalties to advance their interests.
Fisher, Ury, and Patton famously urge that negotiators should “separate the people from the problem.”3 What is the problem they are referring to? After years of study, I have concluded that in an ideal negotiation, all parties work together, as one team, toward resolution. The problem they are resolving, in the end, is the answer to this question: What is the fairest solution we can find to the issue we are negotiating about?
Chapter Summary
Good negotiators insist on both a fair process and a fair outcome.
In using objective criteria to determine what is fair, it helps to offer criteria that will be credible to the other side.
Justify your proposals by showing how they are grounded in legitimate standards. Ask your negotiating partners to do the same.
Work to make the negotiation process an exercise in joint problem solving. The problem to solve: What is the fairest solution?
Notes
1. Roger Fisher, William Ury, and Bruce Patton, Getting to Yes: Negotiating Agreement Without Giving In, 3rd ed. (New York: Penguin Group, 2011), 82.
2. Ibid., 86.
3. Ibid., 19.
Chapter 4
Communication to Build the Kind of Relationship You Want
Top negotiators almost always want to create a good relationship. That term is generic, though, and needs to be carefully fitted to the situation. You probably don’t want a loving relationship with your accountant or a businesslike relationship with your daughter. So defining the scope and type of relationship with each person in each negotiation is an important first step.
It helps quite a bit to know a great deal about the people you are negotiating with. You can start by trying to identify each one’s negotiating style, as explained in the first chapter of G. Richard Shell’s Bargaining for Advantage.1 From there, it is well worth discovering whether those you are working with are takers, givers, or matchers, as those three types are explained by Adam Grant in his book Give and Take.2 Beyond that, though, it is good to learn about their personal characteristics. Some people are kind, and others are abusive; some are talkative, and others are taciturn; some are adventurous, and others like to follow a well-worn path. Furthermore, most people are at least partly defined by their past and their experiences. Who is this person? Where has she been? What influences have deeply affected her? What is she proud of? What are her likes and dislikes? You get the idea. The more you can know about the other people, the better off you are likely to be. As will be discussed later in greater depth, attempting to learn all you can about the other people in a negotiation is an effort well worth making.
Set Relationship Goals
Among the reasons you are gathering all this information about the other people involved is to guide you in thinking about your relationship goals. Early on, you set a general idea for the kind of relationship you are
trying to fashion. As you work together, though, new data may allow you to refine or amend these targets. Think about what the relationship is like right now, what it might be like as the negotiation progresses, what you need this relationship to be once this negotiation is concluded, and what long-term potential this relationship might hold if you can move it in a desirable direction.
The first time Joe Biden worked with Barack Obama on a bill as colleagues in the Senate, it is surely true that he had no idea that this man would be president, would chose Biden as his vice president, and would embrace him as a key member of his presidential inner circle. Relationships are full of potential, and the best negotiators are always looking ahead at the same time they are working hard on the current deal. Keep an open mind about where the new relationship might go once the negotiation is concluded.
Furthermore, a positive relationship is likely to create a virtuous cycle of good feelings between and about the people involved. Research shows us consistently that goodwill fosters goodwill, even in the short term. You will get more of what you want by working alongside the other party to find a solution than by working against him to wrench one out. And, of course, the opposite is also true. A poor relationship, or one filled with bad feelings, is likely to hamper efforts or, at the very least, will not produce the good feelings that sometimes make the difference between agreement and failure. People are simply willing to go a little bit further for those they feel good about.
Communicating successfully is critically important for more than one reason. It is necessary to conduct the current negotiation on its merits. It is also the most important tool you have for maintaining and building the negotiating relationship you want. Furthermore, as we will see later, it is the cornerstone for defining the negotiation process you wish to establish.
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