1. The problem: Positions often mask interests
There may be a better/more efficient way to satisfy their interest, or yours, than their demand

2. Malhotra/Bazerman’s Principles
Don’t just ask what – ask why: Holbrooke/wife’s taxi
Seek to reconcile interests, not demands: Gore/Nader
Create common ground with uncommon allies: Nader/Bush
Interpret demands as opportunities: Builder penalty/bonus
Don’t dismiss anything as “their problem”: Cost of shipping
Don’t let negotiations end with rejection of your offer: Linda’s Q: was it price? Or features
Understand the difference between selling and negotiation: It’s about listening, not persuasion

3. How to do this? Build trust
Speak their language – learn it, or get an expert
Build a relationship, including when not negotiating
Ask questions, esp. if you’re surprised/skeptical
Give away some information – relative priorities, not absolute value
Negotiate multiple issues – offer packages
Make multiple offers – uncover their priorities
Remember: Negotiation is an information game

4. Malhotra/Bazerman Suggestions
Preparation
Identify your own multiple interests
Create a scoring system
Calculate a reservation value for the package
Identify the other side’s multiple interests
Execution
Negotiate multiple issues simultaneously
Make package offers:
Test preferences: “ABC or BCD?”
Leverage differences of all types to create value

5. Independent Immunities Issues
Royalty percentage paid by Pure Health for license
Whether/to what extent Pure Health can keep/benefit from product improvements
Waiver of non-compete for marketing VP
Length of interim production by Prometheus

6. Multi-Issue Bargaining
What order of discussion:
One issue at a time?
Review all?
Trade information re preferences first?
Jointly explore?
What structure for trades:
One or more at a time?
One and “You owe me?” Packages?
Recommendation: Discuss multiple issues, signal your preferences, then propose packages, seeking best fit of interests

7. Now negotiate Independent Immunities

8. Sources of Joint Gains Differences in relative importance of issues:
Valuation: car, house sale
Prediction of future: stock, business, land
Attitude toward risk: Insurance, warranties, contingent fees
Capability: Financing, PR, sales
Value of time: Current vs. deferred money

9. How To Prepare? ID your own interests clearly; rank your preferences
Ask
Why do they want that?
What are their interests? Use role reversal
Whose interests? Bargainer and client may differ
What possible contrary interests: Why might they say no?
How to satisfy their goals at low cost? 6

10. How To ID interests in discussions?
Stress relationships, repeat dealings
Provide information:
Why you are interested in a deal
Your constraints and preferences
Maybe resources/capabilities that add value
Ask questions that mirror the data you give:
Interests, preferences, constraints, resources
Faced with a position, ask why do you need that? 6

11. How to develop options? Begin with an easier issue: show cooperation
Explore their preferences on multiple issues
Look for what you value differently
Propose packages; offer adjustments and trades
Avoid escalating and self-fulfilling behavior
Keep working to be creative; don’t rush just to be friendly, or take positions to protect yourself

12. Importance of listening
Talk before making offer
Listen for information
Negotiate on three levels:
over process
over information
over the outcome

13. Empirical Findings About Skilled Negotiators
Huthwaite Study of British negotiators
Compared 49 successful bargainers to average group
Most in labor/management, some dealmakers
Based on actual negotiations
Scored key differences in behavior

14. Planning: Skilled bargainers vs. less-skilled bargainers
Consider a broader range of options
Tend not to put issues in a set sequence, but do consider linkages between them
Set outside limits on the outcome on each issue
Consider possible areas of agreement 40% of time vs. 10% for less skilled
Develop twice as many settlement options
Comment on long term issues twice as often
Try harder to identify the other side’s interests

15. Skilled bargainers ask more questions
21% of the actions of skilled, versus 10% of the actions of average bargainers
Value of questions:
Provide information about other side’s thinking
Control agenda
Avoid expressing direct disagreement
Keep them from thinking, give you more time

16. Why Is It Hard? We see a fixed, win-lose pie
We instinctively view the world from our own lens: They must care about the same things we care about
Bargaining fosters competitiveness: We want to “win” and bluff/mislead about our interests
A basic tension: If you are open, the other side may bluff/mislead you about their interests and real goals

17. Other obstacles
In an actual negotiation, you have to create your own score sheet
You don’t know the other party’s true score sheet, and they may conceal/misrepresent it

18. How to claim value
Misrepresent your minimum (“I’ve got to get to 350…”)
Misstate values of options
Manipulate reciprocity: “You owe me (but a bigger one)…”
Manipulate principles to propose “mutual” trades that favor you: “If you concede entirely on waiver, I’ll concede entirely on interim production”

19. How to avoid this in dealmaking?
Begin with a “Y” strategy
Look for evidence that they’re using Y’s
Develop relationships and agreements
Ask / negotiate / warn over apparent “X”s
Retaliate if necessary—but delay and limit your response
Then renegotiate process / allow them to reform