So was it irrational for IBM to persist in these demands? I don’t think so. In fact, I think IBM would have responded to Spock, “As long as Fujitsu insists that it has the right to engage in what we see as illegal copying, why should we give up the leverage of a demand for draconian sanctions?” And I think Spock would have seen this as rational.
On the Fujitsu side, Spock would surely have focused on its strategic decision to persist with a business model based on maintaining an IBM-compatible operating system. Spock would have asked Fujitsu: “There is a long-term risk that you won’t be able to sustain an IBM-compatible strategy. Even if you get the ‘external information’ you need, what are the odds that you can keep producing compatible operating software, given copyright constraints?” I’m sure Fujitsu asked itself the same question. Spock would have pushed Fujitsu to consider abandoning that model altogether, saying: “If you agree to leave the compatibility business after a reasonable transition period, or agree to sell IBM’s software to your customers, IBM might be willing to negotiate a reasonable deal with respect to the other terms.” I’m sure Fujitsu considered this possibility. But in 1985, my guess is that Fujitsu was not prepared to abandon its compatibility strategy. It had no ready alternative. Whatever the long-term risks of that strategy, I strongly suspect that Fujitsu perceived that abandoning it was even riskier. And I don’t think Spock could have characterized this conclusion as irrational.
That leaves us with an interesting question. With the benefit of hindsight, we know there was a solution to this conflict: the Secured Facility Regime, which the panel and the parties devised jointly. Could the parties have figured this out on their own—two years earlier—and avoided warfare altogether?
To put it another way, suppose either side had offered the other a deal identical to the one we later imposed: the same lump-sum amount for the paid-up license; the same Instructions; the same annual access fee; the same Secured Facility safeguards. In 1985, would either have accepted such a deal from their adversary?
I think the answer is no—it’s inconceivable. And more important, I don’t think Spock would have considered either party’s refusal to be irrational or unwise, even though, with the benefit of hindsight, both would have been better off with the Secured Facility Regime.
Why is this so? Why couldn’t they have saved themselves all that pain?
The answer, I think, lies in the nature of uncertainty and its role in decision-making. This conflict was full of uncertainty on both sides. The legal issues were so unclear that the parties’ lawyers could reasonably make very different predictions of what an arbitration panel would decide. The parties were fierce competitors and didn’t trust each other, with good reason. Moreover, I suspect that within each company there were powerful constituencies that would have opposed the radical concessions necessary to create the Secured Facility.
Therefore, I am sure that IBM would never have agreed to give Fujitsu access to its source code, no matter what the safeguards. IBM would have said, “Are you crazy? Fujitsu is a major competitor. The 1983 Agreements don’t give them the right to inspect our source code, and they’ll never get it in arbitration. So why should we give it to them now? No way!”47
Similarly, I can’t imagine Fujitsu accepting a deal as restrictive as the one we eventually imposed. The elaborate safeguards contained in the Security Facility Regime were highly intrusive of Fujitsu’s programming practices. And we gave Fujitsu far less access to “external information” than its lawyers might reasonably have expected.
In short, both sides would probably have said, “No thanks. We’ll do better in arbitration.” And they wouldn’t have been crazy to think so. Nor do I think they realized in 1985 how poorly suited arbitration was for their type of dispute. Even if they had been capable of such foresight and had seen that the Secured Facility Regime served their interests better than warfare, I don’t think they could have made the mental leaps necessary to erect such a structure, absent the panel’s coercive power.
This conclusion has implications that extend well beyond this unique case. In some conflicts, the intervention of third parties with coercive power may be necessary to overcome a host of barriers: not only distorted thinking created by psychological or ideological traps, but uncertainty and internal organizational constraints.
Moreover, the type of coercive process used, and when, can make a real difference.
A conventional lawsuit, for example, would have been a disaster in this case. The parties were right to avoid it. Can you imagine a jury trying to deal with the technological and copyright issues involved? Or even a judge, for that matter? Moreover, I doubt the parties could have agreed on venue. Fujitsu would have refused to try this case in an American court and IBM would have refused to try it in Japan. So arbitration had its advantages, including the fact that the parties could choose the decision-makers.
Once the parties were in conventional arbitration, the panel’s rulings in response to the motions for summary judgment could not appropriately resolve the core copyright issue, but they did remove one of IBM’s favorite cudgels, the threat of draconian penalties—nudging the parties closer to settlement.
Although many disputants do settle after summary judgment, these parties didn’t. As you recall, they tried and failed. They needed a third way.
What ultimately worked was a hybrid process that started out as a conventional arbitration and evolved into something more complex—a kind of “grab bag” in which Jack and I were free to play many different roles, depending on the conflicts that arose over time. Our mind-set was facilitative: We were always eager to help the parties reach agreement, directly or indirectly, through their own negotiations. We always had in mind that the parties knew far more than we ever could about the technology and their own priorities and constraints. We always wanted to build on what they and their lawyers knew about the problem. But we had muscle in reserve. Without the flexibility of this hybrid system, we never would have resolved this case.
For example, in setting the price for the paid-up license, we used a process similar to traditional arbitration. (Indeed, it was not that different from what a court might have done, although I think it was quicker.) In creating the Instructions, we employed something akin to an administrative rule-making process. Once the regime was up and running, we acted like a regulatory commission charged with ensuring compliance. Imagine trying to mediate those issues! It would have been a nightmare. But because the parties had given us the power to use clout when necessary, they were able to capture the efficiencies of a coercive process without losing the tailor-made nature of the system itself.
Another lesson of this case is that a third party, acting as mediator, can facilitate voluntary settlements when it is impossible for bitter enemies even to sit down at the negotiation table together. You will recall that during the initial mediation phase of our process, Fujitsu refused to negotiate directly with IBM. But as go-betweens, Jack and I helped the parties make a deal in which Fujitsu added hundreds of programs to the DP list.
Why should it matter whether negotiations are direct or indirect? Because for a party locked in a heated conflict, direct negotiations may be perceived as imposing greater risks and offering fewer benefits. Any proposal coming directly from the enemy may be devalued,48 and the mere act of sitting down at the negotiating table with a distrusted adversary may subject the leader to intense criticism from hard-liners. Indirect negotiations may feel much safer, both psychologically and politically. International relations provides many examples of intermediaries permitting indirect negotiations where adversaries are not willing to meet together. Switzerland acted as a go-between for the United States and Iran in 2003, and Turkey played a similar role for Syria and Israel in 2008.
Our mediation process provided Fujitsu’s leaders with analogous protective cover. Fujitsu decision-makers could tell themselves—and their constituents—that they weren’t bargaining with the Devil. Instead, they were working with Jones and Mnookin
to explore any options we might suggest.
When mediation didn’t work, Jack and I found that our ability to impose an outcome also lifted strategic and emotional burdens. It relieved one side or the other from agreeing to a compromise that might have been politically unacceptable behind the table. “I was made to do it by the panel” was a refrain that provided some psychological comfort and organizational protection.
This combination of roles—sometimes called “med-arb” because it combines the functions of both mediation and arbitration—is not only unusual but typically frowned upon.49 There are two concerns. One is that a mediator who also has coercive powers won’t really mediate at all—instead he or she will simply twist arms under the guise of being facilitative. The parties won’t get the full benefit of a facilitative approach. The second concern is that the neutral will learn things during a private mediation session that may later corrupt his judgment as an arbitrator.
Both of these concerns are legitimate, but I think that sophisticated and informed disputants should have the option of choosing a mixed process in which the same person plays multiple roles. This can have obvious efficiencies. The information that Jack and I gained at each stage of the process was never wasted. Moreover, parties may grow to trust particular neutrals and want them to play a mixed role.
This hybrid process turned out to be congruent with the Japanese cultural tradition captured by the word gaiatsu, or “outside pressure or guidance.” As neutrals, Jack and I adopted what we hoped would be a flexible, problem-solving mantra backed up by arbitral authority. In some ways such a mantra is consistent with the Japanese historical preference for informal dispute resolution mechanisms, based on well-developed relationships.
This case teaches a lesson about the role of lawyers as well. Lawyers can do more than conduct litigation as usual. The lawyers in this case played very constructive roles in designing a dispute system and getting this conflict resolved. Without the leadership and support of Raven and Barr, the clients would never have agreed to this process.
In 1997, five years before our regime was scheduled to end, the parties jointly decided that it was no longer necessary. Jack and I weren’t surprised. Fujitsu had not requested access to new IBM source code for about three years. We sensed that Fujitsu had been winding down its IBM-compatible line of business and was focusing its energies elsewhere. Indeed, our regime had given Fujitsu time to make an orderly transition to a new business model that was not based on IBM compatibility. As always, the computer world was changing. Mainframes, while still important, were no longer the center of the computer universe.
The parties made their final public announcement: Their conflict was officially over, and the special regime had ended. The two com-panies jointly declared their return to “an ordinary business relationship” governed by ordinary law. But sometimes an ordinary thing can knock your socks off, or at least give you pause. Imagine Palestinians and Israelis announcing that they had established ordinary relations in Jerusalem.
EIGHT
Disharmony in the Symphony
The phone call came out of the blue. Steve Toben, a program officer at the Hewlett Foundation, had tracked me down during my summer holiday on Martha’s Vineyard. I had known Steve for several years and I liked him very much. He headed the foundation’s program relating to conflict resolution, which had helped launch both an interdisciplinary research center I founded at Stanford in the 1980s and the Harvard Program on Negotiation, which I now directed.
“Sorry to bother you during your vacation,” he began. “I’m calling because the San Francisco Symphony is in deep trouble. I think you can help. Have you read about the strike?”
Steve knew I had successfully mediated a number of complex disputes. I thought I knew where he was going and I didn’t want to go there.
“Steve, I have no interest in mediating a labor dispute,” I interrupted. “This isn’t my kind of gig. I have no experience in the labor management area—that’s a specialty of its own.”
Steve politely told me that I had misunderstood the purpose of his call. He didn’t want me to act as a mediator. The strike was over. A new contract had been signed.
I had violated one of my own teachings: listen first, talk second. Somewhat sheepishly, I asked Steve why he had called.
The strike had been “a real catastrophe,” Steve went on. No winners, only losers. The musicians had lost two months’ wages and were bitterly divided. By a narrow majority, the orchestra had ended up accepting a contract that was little better than what management had offered before the strike began. Management had suffered a public relations disaster. Ten weeks is an eternity for a business that depends on live performances. The strike had forced the cancellation of forty-three concerts, offended major donors, prompted erstwhile loyal fans to cancel their subscriptions, and elicited ridicule from the public. Inside the organization, relationships were horribly strained. People were barely speaking to each other.
Steve finally got to the point. “We need you to teach these people to negotiate. All they know how to do is fight. If they don’t change their ways, they may destroy the institution the next time around.”
I thanked him but declined. My fall schedule was already crammed.
Steve persisted. “We have some time. The new contract still has twenty-seven months to run. And there’s no need for you to do this alone. Put a team together and the foundation will fund the work.”
I said, “Look, Steve, just because the Hewlett Foundation wants these people to ‘change their ways’ doesn’t mean they’re motivated to do it—much less get instruction from some Harvard professor.”
“That’s a fair point,” Steve conceded. But he was a good negotiator—persistent as hell. “Come see for yourself. After your vacation, give me two days of your time. Talk to some key people at the symphony. I’ll arrange it all. No commitment on your part beyond this little visit. I’d like your assessment.”
At this point I felt like a bachelor whose rich uncle was trying to set him up on a blind date. No commitment, the uncle says. Just meet her—I’ll pay for dinner! I certainly wasn’t looking for a new project, especially not one with a long-term commitment.
But I found it hard to keep saying no to Steve. He wasn’t asking for much. And in a sense, I owed Hewlett. No foundation had done more to support the field of dispute resolution. I began to waver. I love classical music, and I attend symphony concerts regularly. Like most music lovers, I had no idea how the business side of a major symphony orchestra worked. All I knew was what I saw and heard from my comfortable seat in the concert hall: disciplined teamwork, beautiful music, everything just as it should be. Now Steve was telling me that behind the façade, people were practically breaking chairs over each other’s heads. I was intrigued. I agreed to visit about a month later. In the meantime, Steve sent me some background materials and we talked further.
I began to realize that this would be no conventional blind date. I wasn’t just being fixed up with a person, but with the whole crazy family! By the time I got to San Francisco I realized that the dating metaphor was all wrong. I was more like a therapist being asked to treat a horribly dysfunctional family.
On September 18, 1997, I flew from Boston to San Francisco for a two-day visit with the symphony. Steve had set up a series of appointments so I could meet separately with the parties. I would meet first with labor: several key members of the orchestra. Then I would meet with management—or more precisely, the three captains who shared responsibility for running the symphony: executive director Peter Past-reich, who ran the business side; Nancy Bechtle, head of the board of governors; and maestro Michael Tilson Thomas, the music director, whom everyone referred to as “MTT.”
As my taxi headed for Davies Symphony Hall, I went over what I hoped to accomplish. One of my goals was to listen. I expected that each of my interviews would reveal a radically different perspective on the symphony’s problems.
I also hoped to give everyone a sen
se of my own approach to nego-tiation and training. Slogans like “win-win,” often associated with my Harvard program, are incomplete and misleading. They make it all sound too easy. I believe that effective conflict resolution requires one to manage certain tensions that cannot fully be resolved. People can learn to manage these tensions, but it is hard work. It takes motivation, especially in the context of a large institution.
So my most important goal was to assess for Steve whether the parties were motivated. The symphony people wouldn’t be paying for this program, I reflected; the foundation would. It would be a little too easy for the symphony people to say yes to “negotiation therapy” and then just go through the motions. If they really wanted to learn a new approach to conflict, great! They didn’t have to accept me as their negotiation guru; in fact, I was kind of hoping they wouldn’t. I would help Steve find someone else. But if they weren’t prepared to do some serious work—if they didn’t genuinely want to change—I would tell Steve that there was no point in going forward.
My first meeting was with five musicians who had been elected by their peers to serve on the “Players’ Committee.” I didn’t know what the Players’ Committee was, but I’d soon find out. The musicians introduced themselves in terms of their instrument. Tom Hemphill, the gregarious committee chairman, was a percussionist. Wayne Roden played the viola. Robin McKee and Linda Lukas were flutists. I was surprised to learn that Chris Gilbert, who looked no more than five feet six, played the double bass.1
It was almost noon, so I suggested we have lunch together at a small café just up the street. I don’t know if my excitement showed, but I was thrilled to be meeting with five members of the San Francisco Symphony (SFS)—more thrilled than if I had been meeting with, say, five players from the San Francisco Giants. I had never been on my school’s baseball team, but I had played the trumpet in my school orchestra. I knew the SFS was the big leagues and that you had to be an extraordinary musician to get this far. To me, all 105 musicians of the SFS were members of an artistic elite. And now I was having lunch with what I took to be the innermost circle: the “Players’ Committee.”
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