“So you want to be a Chair?” June 24, 2011 American Orthopedic Association Copyright © President & Fellows of Harvard College. ©Copyright 2011 Andy Wasynczuk

Agenda 1.Key Principles in Negotiation  Prof. Andy Wasynczuk Harvard Business School Faculty; Former Chief Operating Officer, New England Patriots 2.The New Chair’s Challenges  Dr. Vincent Pellegrini James Lawrence Kernan Professor and Chair Department of Orthopaedics University of Maryland Medical Center 3.The Veteran Chair’s Perspective  Dr. Terry Light Dr. William M. Scholl Professor and Chair Hand Surgery Loyola University Health Systems 4.Q & A ©Copyright 2011 Andy Wasynczuk

Negotiator’s Goal: Create Value? Claim Value? BOTH! But the tactics for each can conflict with one another… leading to The Negotiator’s Dilemma ©Copyright 2011 Andy Wasynczuk

Claiming Value:  Key Preparation: Assess the Value Opportunity Identify your alternatives. How do you value them? What are the other side’s alternatives? Is there Zone of Possible Agreement? Learn! Test assumptions!  Key Activity: Shape Perceptions Influence by making your proposal superior to their alternative Set the Frame for your advantage Use anchors with justification  Key Risk: Emotional Traps People are not simply “economically rational” Questionable tactics can poison the deal/relationship Power plays often lead to escalation ©Copyright 2011 Andy Wasynczuk

Claiming Value:  Key Preparation: Assess the Value Opportunity  Identify your alternatives. How do you value them?  What are the other side’s alternatives?  Is there Zone of Possible Agreement?  Learn! Test assumptions!  Key Activity: Shape Perceptions Influence by making your proposal superior to their alternative Set the Frame for your advantage Use anchors with justification  Key Risk: Emotional Traps People are not simply “economically rational” Questionable tactics can poison the deal/relationship Power plays often lead to escalation ©Copyright 2011 Andy Wasynczuk

The Roosevelt Campaign – U.S. Presidential election 2. 3 million copies of a photograph have been printed for circulation with Roosevelt’s campaign speech. 3. Campaign manager (for Teddy Roosevelt) discovers that permission to use the photograph had not been granted. No time to reshoot/reprint. 4. Copyright law: owner can demand $1 per copy to use photos. 5. How would you (as campaign manager) handle this? ©Copyright 2011 Andy Wasynczuk

The Roosevelt Campaign Campaign manager sends telegram to copyright owner: “We are planning to distribute millions of pamphlets with Roosevelt’s picture on the cover. It will be great publicity for the studio whose photograph we use. How much will you pay us to use yours? Respond immediately.” Photographer’s reply: “We’ve never done this before, but under the circumstances we’d be pleased to offer you $250.” ©Copyright 2011 Andy Wasynczuk

The negotiation frame establishes the reference point for various elements of the broader negotiation Sophisticated negotiators often focus on defining this frame before exploring any issue or position of the negotiation Negotiation Frame ©Copyright 2011 Andy Wasynczuk

Claiming Value:  Key Preparation: Assess the Value Opportunity  Identify your alternatives. How do you value them?  What are the other side’s alternatives?  Is there Zone of Possible Agreement?  Learn! Test assumptions!  Key Activity: Shape Perceptions  Influence by making your proposal superior to their alternative  Set the Frame for your advantage  Use anchors with justification  Key Risk: ©Copyright 2011 Andy Wasynczuk

The Exchange Game 1.Player A makes an offer 2.Player B accepts or rejects offer and game ends 3.No other communication 4.Accept=split the $20 according to A’s offer; reject=both get $0 5.One time play; Real money at stake! ©Copyright 2011 Andy Wasynczuk

“I did not earn any money because all the other players are stupid! How can you reject a positive amount of money and prefer to get zero? They just did not understand the game. You should have stopped the experiment and explained it to them…” Actual subject comment ©Copyright 2011 Andy Wasynczuk

32 Studies Worldwide 1. Results:  Modal offers are fifty percent of the pie: mean is around 40%  Offers less than 25% are commonly rejected 2. The results do not change  When the pie is very large (>$100 in US with college student subjects, three months salary in other countries)  When subjects are told other party lives in an entirely different city  When subjects have extensive experience with the game. ©Copyright 2011 Andy Wasynczuk

Our Brains on Unfairness Brain Scan after “unfair” offer ($1-$4) Brain Scan after “fair” offer ($8-$10) Sanfey, Rilling et al, Science (March 2003) conflict disgust planning ©Copyright 2011 Andy Wasynczuk

Claiming Value:  Key Preparation: Assess the Value Opportunity  Identify your alternatives. How do you value them?  What are the other side’s alternatives?  Is there Zone of Possible Agreement?  Learn! Test assumptions!  Key Activity: Shape Perceptions  Influence by making your proposal superior to their alternative  Set the Frame for your advantage  Use anchors with justification  Key Risk: Emotional Traps  People are not simply “economically rational”  Questionable tactics can poison the deal/relationship  Power plays often lead to escalation ©Copyright 2011 Andy Wasynczuk

Creating Value  Key Preparation: Focus on interests… not just positions Ask, probe, learn, clarify Make clear your objectives Identify common ground AND differences  Key Activity: Solve their problem as well as yours (Don’t just compromise… Trade on differences) in priorities in capabilities In assessments about the future  Key Risk: Cooperating while they’re competing building trust developing relationships relying on reputation ©Copyright 2011 Andy Wasynczuk

Creating Value  Key Preparation: Focus on interests… not just positions  Ask, probe, learn, clarify  Make clear your objectives  Identify common ground AND differences  Key Activity: Solve their problem as well as yours (Don’t just compromise… Trade on differences) in priorities in capabilities In assessments about the future  Key Risk: Cooperating while they’re competing building trust developing relationships relying on reputation ©Copyright 2011 Andy Wasynczuk

Creating Value  Key Preparation: Focus on interests… not just positions  Ask, probe, learn, clarify  Make clear your objectives  Identify common ground AND differences  Key Activity: Solve their problem as well as yours (Don’t just compromise… Trade on differences)  in priorities  in capabilities  In assessments about the future  Key Risk: Cooperating while they’re competing building trust developing relationships relying on reputation ©Copyright 2011 Andy Wasynczuk

Creating Value  Key Preparation: Focus on interests… not just positions  Ask, probe, learn, clarify  Make clear your objectives  Identify common ground AND differences  Key Activity: Solve their problem as well as yours (Don’t just compromise… Trade on differences)  in priorities  in capabilities  In assessments about the future  Key Risk: Cooperating while they’re competing… manage by  building trust  developing relationships  relying on reputation ©Copyright 2011 Andy Wasynczuk

Agenda 1.Key Principles in Negotiation  Prof. Andy Wasynczuk Harvard Business School Faculty; Former Chief Operating Officer, New England Patriots 2.The New Chair’s Challenges  Dr. Vincent Pellegrini James Lawrence Kernan Professor and Chair Department of Orthopaedics University of Maryland Medical Center 3.The Veteran Chair’s Perspective  Dr. Terry Light Dr. William M. Scholl Professor and Chair Hand Surgery Loyola University Health Systems 4.Q & A ©Copyright 2011 Andy Wasynczuk