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I will definitely recommend this book to business, non fiction lovers. Your Rating:. Your Comment:. Preparing for Negotiation Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. This discussion was held at the 3 day executive education workshop for senior executives at the Program on Negotiation at Harvard Law School.
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And sixth, the collection rights to these contracts were sold to a consortium of European, U. These actions fundamentally changed the negotiations. Instead of facing the original negotiation with Kennecott alone, Chile now effectively faced a multiparty negotiation with players who would have future dealings with that country—not only in the mining sector but also in the financial, industrial, legal, and public sectors. If an agreement were not reached and Chile acted to expropriate the operation, Kennecott would have a host of parties on its side.
It is unlikely that 1-D tactical or interpersonal brilliance at the table—whether in the form of steely gazes, culturally sensitive remarks, or careful and considered listening to all parties—could have saved Kennecott from its fundamentally adverse bargaining position.
Successful 3-D negotiators induce target players to say yes by improving the proposed deal, enhancing their own BATNAs, and worsening those of the other parties. It drives you nuts, trying to juggle them all. But number one, it will change the perception on the other side of the table. And number two, it will change your self-perception. It will come across with a whole other level of conviction. While negotiators should generally try to improve their BATNAs, they should also be aware that some of the moves they make might inadvertently worsen their walkaway options.
For instance, several years ago, we worked with a U. The company had already researched possible cultural barriers and ranked its three potential partners according to the competencies it found most desirable in those companies. After approaching the negotiations in a culturally sensitive spirit, and in what had seemed a very logical sequence, the U. The team abandoned those talks and was now deep into the process with the second most desirable candidate—and again, things were going badly.
Imagine subsequent negotiations with the third, barely acceptable, partner if the second set of talks had also foundered—in an industry where all would quickly know the results of earlier negotiations.
As each set of negotiations failed, the U. Fortunately, the U. This helped the U. The U. In short, doing so would have created the equivalent of a simultaneous four-party negotiation structured as one U. This more promising 3-D setup would have greatly enhanced whatever 1-D cultural insight and tactical ingenuity the U. Swiss banking executives saw no reason to be forthcoming with Bronfman; they believed they were on strong legal ground because the restitution issue had been settled years ago.
But after eight months of lobbying by Bronfman, the World Jewish Congress, and others, the negotiations were dramatically expanded—to the detriment of the Swiss. The bankers faced a de facto coalition of interests that credibly threatened the lucrative Swiss share of the public finance business in states such as California and New York.
They faced the divestiture by huge U. It was, however, an almost unimaginable outcome at the beginning of the small, initially private game in which the Swiss seemed to hold all the cards. Another way for negotiators to claim value is to shift the issues under discussion and the interests at stake. Consider how Microsoft won the browser war negotiations. In , AOL was in dire need of a cutting-edge Internet browser, and both Netscape and Microsoft were competing for the deal.
The technically superior, market-dominant Netscape Navigator vied with the buggier Internet Explorer, which was then struggling for a market foothold but was considered by Bill Gates to be a strategic priority. In the book aol. They were dominant. We needed to get what the market wanted. Most important, we saw ourselves as smaller companies fighting the same foe—Microsoft. But when all was said and done, it was Microsoft that had etched a deal with AOL.
The software giant would provide Explorer to AOL for free and had promised a series of technical adaptations in the future. Microsoft had also agreed that AOL client software would be bundled with the new Windows operating system. In effect, Bill Gates sacrificed the medium-term position of MSN to his larger goal of winning the browser war. These examples of 3-D value-claiming moves conflict with the standard 1-D interpersonal approach to negotiation. Actions taken away from the table—sharply altering parties and issues, restructuring and resequencing the process, changing BATNAs—are not primarily about 1-D interpersonal skills but rather about enhancing the underlying setup of the negotiation itself.
By adding complementary parties or issues to the negotiating process, 3-D negotiators can not only claim value for themselves but also create more value for all parties involved. In Co-opetition, their influential book on business strategy, Adam Brandenburger and Barry Nalebuff explored the concept of the value net, or the collection of players whose potential combination and agreement can create value. They scan beyond their specific transactions for compatible players with complementary capabilities or valuations, and they craft agreements that profitably incorporate these players.
The world of foreign affairs offers many examples in which potentially valuable bilateral deals can be impossible unless a third party with complementary interests is included. In a issue of Negotiation Journal, University of Toronto professor and international negotiation specialist Janice G.
Egypt improved the image of the United States in the Arab world, especially among the oil-producing states; the United States gave Israel large amounts of military and financial aid; and Israel supplied Egypt with territory. Indeed, a bilateral exchange between Egypt and Israel would not have succeeded since each did not want what the other could supply. In an example from the business world, the owners of a niche packaging company with an innovative technology and a novel product were deep in price negotiations to sell the company to one of three potential buyers, all of them larger packaging operations.
Instead of mainly working with its bankers to make the case for a higher valuation and to refine its at-the-table tactics with each packaging industry player, the niche player took a 3-D approach. The move uncovered a completely new source of potential value—and a much higher potential selling price. It also increased the pressure on the larger packaging companies: They would face more competition and might not be able offer the same kind of exclusive, customized packaging service to their customers.
The potential elements of a value net are not always obvious at the start of a negotiation. Local and committing, wanted assurances that agreed to lend, conditional on the suc- regional contractors were in no posi- the project would actually work.
Involve Derano. In great need without guaranteed takeout financing of some plausible guarantee of project 2. Involve the EDA. Derano expressed serious doubts opment Administration EDA could matching funds from the LDA and a about managing an already-designed make junior subordinated loans to guarantee of a successful, certified, project with BFE and local contractors firms for certified job-creating job-creating project. And there was no in place. But by offering to pay above projects; the overall loan limit was LDA to certify the jobs or provide the normal fee, Iverson got Derano to equal to the number of jobs times matching funds.
Involve the Town of Concord. Go back to Concord with Der- and its formal job certification along modification. Returning to the bank, ano deal.
Go back to UIC to modify its nent financing. And the project was launched. For example, a U. From membership contri- questions that focus on relative valuation. What out- converting the dollars to local currency at the side issues might be highly valued if they were official exchange rate to buy development incorporated into the process? Are there any rights. The owner of the land and the conser- parties outside the immediate negotiations vation group negotiated hard and tentatively that can bear part of the risk of the deal more agreed on an amount of rain forest to be pro- cheaply than the current players?
But 3-D thinking ultimately im- sary to shrink—or at least stage—the set of in- proved the deal for all sides. The country had to use certain set of standards may benefit from first scarce dollar-export earnings, needed for many seeking agreement between a few dominant pressing domestic purposes, to keep its debt- players, which would then serve as the basis service obligations current; of course, interest for a later deal among the wider group.
Or, ne- payments were determined by the face value gotiations to forge a multi-issue strategic alli- of the debt, not the bond discount. These facts ance between two firms may be dramatically suggested that more value could have been simplified by one side which instead proposes created by adding two other sets of players to an outright acquisition.
The conservation structure in which Bell Atlantic was the nomi- group then used this greater quantity of local nal acquirer. For example, two partners seeking to This expanded four-party negotiation—se- terminate their relationship may have diffi- quentially involving the conservation group, culty determining exactly who gets what.
The bank was able to re- or a seller of its own shares and the other side tire debt and cancel dollar-interest obligations, must respond. Often, changing the form of a which were very costly to the country, using negotiation by bringing in a skilled third-party cheaper to it local currency without export- mediator creates value.
For example, two in- ing more or diverting scarce export earnings. He had Sophisticated negotiators act in all three di- obtained seed funding, developed the technol- mensions to create and claim value.
While 3-D ogy to bring the Web to ordinary television negotiators should play the existing game sets, created a prototype, and hired his core well, as tacticians and deal designers, they team. Running desperately low on cash, Per- should also act as entrepreneurs, seeking to lman scanned widely and discovered an array create a more favorable target game.
He ing and framing the flow of information to im- needed to engage in 3-D analysis to determine prove their odds of getting to yes. To act outside the box, one the most promising deals to build his com- must first look outside the box. By searching pany. It is helpful While 3-D negotiators ements of a potential value net, 3-D negotia- to think of the logic of backward mapping as tors can retrain their focus on complementary being similar to the logic of project manage- should play the existing capabilities and valuations that other players ment.
In deciding how to undertake a com- might add. Useful game-changing questions plex project, you start with the end point and game well, as tacticians include: Who outside the existing deal might work back to the present to develop a time and deal designers, they most value an aspect of it? Who might mini- line and critical path.
Who might supply a piece of value-creating, sustainable agreements entrepreneurs. Which is- among a supportive coalition of parties.
And at vious that he should approach venture capital what point does complexity or conflict of in- firms first. However, because VCs were deeply terest between parties call for shrinking the skeptical of consumer-electronics deals at that scope of the negotiation? Scanning beyond time, Perlman mapped backward from his VC the current game to claim value normally fo- target. He reasoned that a VC would find cuses on a parallel set of questions: Are there WebTV more appealing if a prominent con- additional bidders or parties who could favor- sumer-electronics company were already on ably alter BATNAs in other ways?
Can certain board, so Perlman embarked on a sequential issues be linked for leverage?
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