Six Habits of Merely Effective Negotiators
gains unrealized. That’s because, while price is an important factor in most deals, it’s rarely the only one. As Felix Rohatyn, former man- aging partner of the investment bank, Lazard Frères, observed, “Most deals are 50% emo- tion and 50% economics.” There’s a large body of research to support Rohatyn’s view. Consider, for example, a sim- plified negotiation, extensively studied in aca- demic labs, involving real money. One party is given, say, $100 to divide with another party as she likes; the second party can agree or dis- agree to the arrangement. If he agrees, the $100 is divided in line with the first side’s pro- posal; if not, neither party gets anything. A pure price logic would suggest proposing something like $99 for me, $1 for you. Al- though this is an extreme allocation, it still rep- resents a position in which your counterpart gets something rather than nothing. Pure price negotiators confidently predict the other side will agree to the split; after all, they’ve been of- fered free money—it’s like finding a dollar on the street and putting it in your pocket. Who wouldn’t pick it up? In reality, however, most players turn down proposals that don’t let them share in at least 35% to 40% of the bounty—even when much larger stakes are involved and the amount they forfeit is significant. While these rejections are “irrational” on a pure price basis and virtually incomprehensible to reverse Midas types, stud- ies show that when a split feels too unequal to possible advice without assuming strictly ra- tional behavior—is producing rich insights in negotiations ranging from simple two- party, one-shot, single-issue situations through complex coalitional dealings over multiple issues over time, where internal negotiations must be synchronized with ex- ternal ones. Negotiation courses that ex- plore these ideas have always been popular options at business schools, but reflecting the growing recognition of their impor- tance, these courses are beginning to be re- quired as part of MBA core programs at schools such as Harvard. Rather than a spe- cial skill for making major deals or resolving disputes, negotiation has become a way of life for effective executives.
doesn’t come from telling people you are pow- erful. He went from being a guy driving the deal from his side of the table to the guy who understood the deal from the other side.” An associate of Rupert Murdoch remarked that, as a buyer, Murdoch “understands the seller—and, whatever the guy’s trying to do, he crafts his offer that way.” If you want to change someone’s mind, you should first learn where that person’s mind is. Then, together, you can try to build what my colleague Bill Ury calls a “golden bridge,” spanning the gulf between where your counterpart is now and your desired end point. This is much more ef- fective than trying to shove the other side from its position to yours. As an eighteenth- century pope once noted about Cardinal de Polignac’s remarkable diplomatic skills, “This young man always seems to be of my opinion [at the start of a negotiation], and at the end of the conversation I find that I am of his.” In short, the first mistake is to focus on your own problem, exclusively. Solve the other side’s as the means to solving your own.
Mistake 2 Letting Price Bulldoze Other Interests
Negotiators who pay attention exclusively to price turn potentially cooperative deals into adversarial ones. These “reverse Midas” nego- tiators, as I like to call them, use hard-bargain- ing tactics that often leave potential joint
Academics Take a Seat at the Negotiating Table Paralleling the growth in real-world negotia-
and Science of Negotiation soon transcended this simplistic “win-win versus win-lose” de- bate; the pie obviously had to be both ex- panded and divided. In The Manager as Ne- gotiator (by David Lax and James Sebenius), new guidance emerged on productively managing the tension between the coopera- tive moves necessary to create value and the competitive moves involved in claiming it. As the 1990s progressed with work such as Negotiating Rationally (by Max Bazerman and Margaret Neale), the behavioral study of negotiation—describing how people ac- tually negotiate—began to merge with the game theoretic approach, which prescribed how fully rational people should negotiate. This new synthesis—developing the best
tion, several generations of researchers have deepened our understanding of the process. In the 1950s and 1960s, elements of hard (win-lose) bargaining were isolated and refined: how to set aggressive targets, start high, concede slowly, and employ threats, bluffs, and commitments to posi- tions without triggering an impasse or esca- lation. By the early 1980s, with the win-win revolution popularized by the book Getting to Yes (by Roger Fisher, William Ury, and Bruce Patton), the focus shifted from bat- tling over the division of the pie to the means of expanding it by uncovering and reconciling underlying interests. More so- phisticated analysis in Howard Raiffa’s Art
harvard business review • april 2001
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