Negotiating Genuinely: Being Yourself in Business 9780804792110

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N e g o t i a t i n g

G e n u i n e l y

N e g o t i a t i n g G e n u i n e l y Being Yourself in Business

S h i r l i

K o p e l m a n

I l l u s t r a t i o ns b y R u t h G w i l y

stanford briefs An Imprint of Stanford University Press Stanford, California

Stanford University Press Stanford, California ©2014 by the Board of Trustees of the Leland Stanford Junior University. Illustrations ©2014 by Shirli Kopelman. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press. Special discounts for bulk quantities of Stanford Briefs are available to corporations, professional associations, and other organizations. For details and discount information, contact the special sales department of Stanford University Press. Tel: (650) 736-1782, Fax: (650) 736-1784. Printed in the United States of America on acid-free, archival-quality paper Cataloging-in-Publication Data is available at the Library of Congress. ISBN 978-0-8047-9069-7 (pbk.: alk. paper) ISBN 978-0-8047-9211-0 (electronic) Typeset by Classic Typography in 10/13 Adobe Garamond

Contents

Preface    vii Acknowledgments    ix 1   A

Positive Negotiation Framework   1

2   Being 3   Why

Genuine in Business: Wearing One Hat   13

One Integral Hat in Negotiations?   23

4   Building

Hat-to-Hat (H 2H) Business Relationships   48

5   Navigating

H 2H Communication and Strategic Emotions   57

6   Pursuing

Extraordinary Success   77

Key References and Selected Readings   83

p r e fa c e

We often assume that being a strategic negotiator implies calculated self-interest with a dose of inauthenticity, or walling off vulnerable parts of ourselves. In business, you might not consider the values and norms you espouse when interacting with family, enjoying leisure activities, or participating in community. To many, business interactions imply a game with its own rules, one grounded in economic frameworks of social exchange and widely variable in terms of how heavily it emphasizes strategic competition and cooperation. Rather than changing hats when you navigate different roles (businessperson, spouse, runner, volunteer), and wearing a distinct business hat, could you integrate hats? Grounded in a positive framework, this book distills years of research, teaching, and coaching into an integrated genuine approach. Negotiation is perhaps the most challenging setting for a genuine approach. Inherently, negotiations are mixed-motive social interactions with cooperative and competitive implications for both task and relationship outcomes. On one hand, there are resources in the mix that can grow, not only be allocated. On the other, as people discuss value creation and value distribution, their behavior is part of the equation and there are reputational and long-term business consequences. Although there are many vii

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preface

negotiation challenges, my experience with the business world suggests that the most fundamental is to be at once real and strategic. This duality is both possible and powerful. Negotiating Genuinely promotes an integrated approach of “one person, one integral hat.” Readers will learn how integrating their broad and deep psychological resources under one genuine hat will enable them to straddle the most complex dimensions of negotiations more naturally, positively, and successfully.

Ac k n o w l e d g m e n t s

This book builds on the ideas of many people. I hope the combination of these ideas in this context provides a unique contribution. Purposely, this writing is unencumbered by academic citations. There are a handful of excellent negotiation books summarizing and translating the research that has accumulated in the negotiation discipline. Negotiating Genuinely is intended to complement these books and offer insights into how people engage in negotiations. I intentionally provide only broad and comprehensive research-based principles; well-established knowledge and strategies in the discipline that are not the intellectual property of any one researcher. This wisdom can be traced back to the Greek philosophers, the brilliant minds who lived before the Greeks, those since the Greeks, and those publishing today. I draw from what I have learned not only in my academic discipline of negotiations but also in my personal experience and work with businesspeople. My work in the business world has spurred new research; perhaps so will this book. Primarily, this book is written to spur positive business, Negotiating Genuinely to co-create sustainable outcomes and promote well-being. Thank you to my family, friends, colleagues, and students, who have contributed to my thinking on negotiations. You will undoubtedly smile when you recognize your imprint in the pages ahead. ix

N e g o t i a t i n g

G e n u i n e l y

1  A P o s i t i v e N e g o t i a t i o n F r a m e w o r k

Ask any executives attending a negotiation workshop what they seek, and they will say they came to learn the most potent evidence-based tactics to persuade others and increase profits. More sophisticated negotiators, often more experienced, explain that they are looking to persuade others to cooperate and embrace a win-win approach. Nobody attends to better understand themselves. But those who do learn about themselves reap tremendous returns and subsequently send their teams, even their competitors, to become more effective negotiators from the inside out. Over the past two decades, I have worked with for-profit and nonprofit executives and their clients to better understand their negotiation challenges. To help them succeed, I have pushed the boundaries of negotiation research and developed a theory of positive negotiation. Whether you are negotiating for positive results or simply would like to feel positive about the negotiation process, a positive lens illuminates elements of negotiation that frequently go unnoticed. My positive framework broadens and deepens our understanding of the social interactions that constitute the negotiation encounters we experience on a daily basis. If you work with people, negotiating is one of your most prevalent daily activities—whether you consider it that way or not. 1

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Negotiations definitely include formal mergers and acquisitions, procurement, and sales. More frequently, we negotiate when we brainstorm about ideas, tasks, roles, innovation opportunities, and strategy. A common definition of negotiation describes it as a situation in which at least two people interact and decide how to allocate a resource. Sometimes the resource is money, for example price or salary. Other options include time (how much time to spend on a project), roles and responsibilities (who does what), and psychological resources (energy, responsibility, or blame when things get derailed). The way I view the world, it may be more challenging to find an interaction at work that is not a negotiation. For many people, a snapshot of a negotiation includes people wearing business suits, sitting at opposite ends of the executive suite. In the United States, another image is sitting at a car dealership, waiting for the salesperson to return to the desk with a response from the sales manager. But most negotiations are neither so structured nor rigid. Many negotiations do not take place around a table. A broader interpretation suggests that negotiations can happen in any place, at any time. They are fluid and often casual. Executives often learn about the resources on the metaphoric table and the communication across it. The key to negotiating genuinely is examining who you are at the table. W h o A m I W h e n I N e g ot i at e ?

The process of negotiating genuinely begins with the internal question, “Who am I when I negotiate?” Are you only a businessperson representing yourself, or your company, with the sole purpose of maximizing shareholder value? Or perhaps you focus more on stakeholder value? Does being a businessperson lead you to ponder, “To win, do I need to take on an inauthentic negotiation identity?” Many people feel pressured to adopt a style they believe is expected in business.

A Posi ti ve Negoti ati o n Framework

3

What if you could just be you? The best you? The way that we think about ourselves as negotiators relies, at least in part, on the way that negotiation is ritually conceived. This can be traced back to clear intellectual roots. In line with its origins in mathematical modeling and economics, the focus of much early negotiation research was on resources, not people. In the past three decades, negotiation research has been influenced by psychology and sociology, and yet much of this research focused on people’s deviations from rationally maximizing resources. Research has been theoretically grounded in a social exchange approach, which views relationships as socioeconomic transactions of material and nonmaterial goods. It has produced important insights about how resources are, or are not, maximized and how they are allocated. It has also produced insights about the context of negotiations, and how communication, personality traits, and culture influence negotiations. Established negotiation theory assumes that people engage within the capacity of their role to trade ideas, emotions, or goods. These encounters lead to two sets of outcomes that concern negotiators: task outcomes such as financials, and relationship outcomes such as reputation or long-term productive business relationships (see Figure 1.1). This approach is quite broad to describe the goods that might be exchanged. Some academics even describe marriage and love as social exchange processes with transaction costs and opportunities. Likewise, the established approach is broad in that it includes both task and relationship processes and outcomes and considers objective and subjective utility models. However, it is constrained in how it conceptualizes the identity of the players (role players) in the exchange. Although most negotiation research does not explicitly refer to economic frameworks or social exchange theory, these assumptions drive the way negotiations are framed.

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figure 1.1.  Negotiation through the lens of economic social exchange

Despite great advances in theory and practice, I believe that the established approach constrains how we view the people who negotiate. First, this approach assumes that people in business are solely role-senders, people who hold a defined role or set of roles, representing a business entity. Roles and position are important, as they define the scope of responsibilities and empower people. But they may also have negative, unintended consequences such as narrowing the identity that surfaces in a given situation or negotiation. For example, a CFO might be more likely to take a leadership perspective and focus on broader and longer-term horizons of your firm’s financial strategy. However, how likely would she be to consider the basic human values that are salient to her as a mother or daughter? If you are an American negotiator, given that U.S. corporate culture separates work and family, you are probably less likely at work to draw on knowledge and wisdom that informs decisions you make outside of work. This can be a real drawback. Consider your cultural background and the business culture in which you are immersed. When you negotiate, to what degree does your business identity empower you and in what ways does it constrain you? Second, given the established approach to negotiations, many people assume that being a strategic negotiator requires them to strive to be solely economically rational. It is important to note that economically rational self-interest can be aligned with maximizing joint gains; the more resources available, the larger an individual’s potential portion. Thus a competitive businessperson would also cooperate to further maximize individual profits. To

A Posi ti ve Negoti ati o n Framework

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whatever degree you emphasize competition or cooperation, do you, personally, conceptualize yourself as an economically selfinterested and rational businessperson? Are you solely inclined to maximize your own subjective utility? Theory assumes this. However, many people do not necessarily feel this way. Business culture often reinforces and emphasizes economic rationality. Consider your stereotypical negotiation persona. Is it grounded in an economic-rational perspective, along the lines of the research framework that I’ve just described? N e g ot i at i n g B e yo n d Ro l e

The positive theoretical approach at the base of negotiating genuinely incorporates and augments the economic social exchange model (see Figure 1.2). The role-based economic transaction depicted in Figure 1.1 does not disappear. We do function as a member of the marketing department, a procurement officer, a hair stylist, a waiter, or a bank teller. This reality does not go away. In parallel, beyond any combination of roles, we also engage as full, integral, and genuine persons. Engaging beyond roles and adopting a positive genuine approach enables additional generative processes to transpire when people interact (the negotiation process in the middle of Figure 1.2). The interaction is both strategic

figure 1.2.  A positive approach to negotiations: Being strategic and genuine

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and genuine. A strategic and genuine process enhances instrumental negotiation outcomes, such that traditional outcomes, for example, profits and reputation, become more sustainable. Furthermore, genuine and strategic interactions spark well-being benefits that would not be captured by a traditional economic model. When you negotiate genuinely, the process is no longer solely strategic. To be genuine suggests that you need to engage in a way that also resonates with you, as if you have no goals. Or more precisely, in a way that resonates with the you beyond the business roles and positions you hold (such as corporate lawyer, nurse, fundraiser, chef, or interior designer) and their associated goals. To excel at economic social exchange, you also need to adopt a positive approach and negotiate genuinely. Being genuine is not the same as being authentic. Authenticity can be fabricated. A restaurant touting authentic French cuisine does not necessarily provide a genuine French experience. Authenticity suggests the attributes of the original thing are reconstructed, but does not necessarily refer to the genuine construct. For example, a tourist attraction may mimic the archaic Roman Cardo (a north-south-oriented street in Roman cities) and construct an authentic experience for people visiting and shopping in a particular city. However, if you are lucky, there are places in the world where you can see genuine archeological remnants from the Roman Empire, and also genuinely experience them as the Romans may have thousands of years ago. I was fortunate to attend concerts in an original Roman amphitheater. During the day, it is a tourist destination, but at night it is a local theater. Sitting in the same exact seats and imagining who sat there two thousand years ago was a wonderful experience that provided a deep connection to people and to humanity. Genuine experiences fuel deep connections. Architects and leaders may construct or fabricate authenticity, and negotiators can too. The pretense of authenticity quickly can lead to reputational damage. Being genuine can provoke anxiety

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about revealing oneself, but it has a tremendous upside. Being genuine does not mean telling everyone everything all the time, as of course that would not be wise. It does not even suggest putting your cards on the table or being overly cooperative. It suggests mindfully, and appropriately, revealing yourself in negotiation. To do so, you need to be your full self in the moment—not a partitioned identity, wearing a discrete hat. Being genuine is an ongoing pursuit. Becoming a genuine negotiator is about integrating yourself. It requires intentional and iterative internal negotiations that acknowledge and resolve what at first glance may appear to be paradoxically contradictory, or overly harmonious clusters of yourself. It’s about simultaneously being you, for example, the CFO, a mother, an employee, an American, or so on, without being stuck or limited by your roles, positions, or a particular identity. This book is about the continuous process of becoming a genuine negotiator who crafts positive processes and outcomes. A genuine approach does not preclude use of power, such as setting boundaries, or expressing negative emotions, such as sadness, anxiety, or anger. Sometimes power and negative emotions lend a capability to illuminate and lead people to address important and difficult topics. For example, expressing anger about a potential ethical breach may clarify a loophole or sharpen a boundary. And if it comes from someone who rarely expresses anger, it would also communicate the importance and urgency of the matter. Thus anger could enhance positive negotiation processes and outcomes. On the other hand, being happy and friendly sometimes leads people to avoid addressing key concerns. Issues may remain unresolved, preventing positive negotiation outcomes. Being genuine, in this sense, is not the same as being solely nice. Nor is it about communicating the first thing that comes to mind. Negotiating genuinely requires mindful integration and alignment of positive and negative emotions toward constructive resource-generating conversations. Conversations that address the core interests and priorities of all

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negotiators enable negotiators to co-create value and reach extraordinary instrumental and non-instrumental outcomes. In this book, I will lead you on a path that explores how to internally negotiate your multiple identities and become the integral, and therefore genuine, you in business. I will demonstrate why negotiating genuinely is important in negotiations, a challenging task in which to succeed you need to simultaneously cooperate and compete. We will then assess what happens when you genuinely engage in business relationships. Finally, we will examine how negotiating genuinely enables emotion management in challenging conversations and discover how, reciprocally, emotion management helps maintain a genuine approach. Before moving ahead to further explore what it means and how to adopt a positive approach, to negotiate genuinely, let’s take a moment to explore the strategic task in which negotiators are situated—a negotiation. R e c o g n i z i n g N e g o t i a t i o ns

Many books have been written about the successful economics and psychology of negotiations. Some are based on personal experiences; others are evidence-based and build on systematic empirical research (see the recommended readings at the end of this book). Despite the plethora of research, there is no formula of tactics a negotiator can learn and always apply. There are discrete evidence-based tactics that will likely lead a negotiator toward predefined goals, such as anchoring by making the first offer on price to maximize individual gains. But any tactic depends on the uniqueness of the individuals involved, the business context, situational factors, cultural nuances, and the manner in which the tactic is deployed. A wise and knowledgeable negotiator must assess the situation and decide if a tactic is appropriate, or choose which tactic would be best. Although there is no magic formula for tactics, there are strategies that consistently guide a negotiator toward

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successful outcomes. To successfully negotiate and implement these strategies, you need to recognize when you are negotiating. Take a moment to think about your day. Have you engaged in any negotiations today? At work? Or outside of work? What did you negotiate over? Money? Task responsibilities? Distance between cars on the highway? In some countries, when you keep what you would consider a safe distance from the car in front of you, immediately someone will pull in and halve that distance—so you might make a concession and keep 75 percent of what you consider safe to block out those drivers. We negotiate throughout the day, often without noticing, and over many different types of resources. Sometimes these negotiations are so easy and quick, we miss noticing we are negotiating. For example, I ask my colleague if he would like to join me for lunch at our usual place and he says yes. I made an offer about how to spend a defined amount of time, where to do so, with whom, and what selection of food might be available. He accepted. Done. Because he and I have negotiated this frequently in the past, the two of us do not need to engage in a discovery period or a lengthy communication process to reach a perfect outcome. Thus we sometimes miss recognizing a negotiation because of its simplicity. At other times, we engage in very complex decisionmaking processes with multiple parties and don’t recognize we are negotiating because such processes also have another name or category in our minds. An example would be project management. Much of what a project manager does is a negotiation. In fact, many conversations people have at work constitute negotiations. Let’s assume for the moment you are aligned with my perspective on negotiations, and are adept at recognizing countless negotiations you encounter throughout the day. Next, it is important to identify the type of negotiation encounter: is it decision making or conflict management? In decision-making negotiations, people might be completely aligned and spontaneously, or very quickly, make a joint decision

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on how to exchange resources (such as in the lunch example above). Even if people have different opinions (for example, for lunch, I prefer a salad bar, whereas you prefer a noodle shop), that doesn’t mean they are experiencing interpersonal conflict. At the other end of the spectrum, some negotiations revolve around inherent interpersonal conflict, but these also include an interdependent resource-allocation decision-making process. Conflict incorporates the elements of a decision-making negotiation, but is often more complex. I define these two negotiation contexts as follows: A decision-making negotiation is a genuine and strategic process of people working toward sustainable resource generation and allocation. A conflict-management negotiation is a process in which at least one person, who perceives an embedded conflict, mindfully approaches the other person to redefine a genuine and strategic relationship going forward, while sustainably generating and allocating resources.

An important dimension differentiating a decision-making negotiation from one of conflict-management is the degree of interdependence between negotiators before, during, and after a negotiation. The key dimension differentiating them is that in decision making, negotiators can walk away respecting one another and agreeing to disagree today, and not close a deal. They may or may not entertain future business opportunities. In contrast, conflict-management negotiations involve personal interdependence before and after the meeting. It can be a slippery slope when we enter a business conversation to address a problem. Frequently things get worse, rather than better. These negotiations necessitate not only good decision making, but also conflict-­ management skills. From a strategic perspective, I suggest that as soon as you recognize you are negotiating, you also define what type of negotiation it is. This categorization will help you anticipate the tone of the conversation. It also informs two key strategic elements of the negotia-

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tion: your alternatives to negotiating with this particular person, such as what happens if you do not reach an agreement, and how you view the negotiated resources. In decision-making negotiations, such as deal-making transactions, you can develop a strong alternative opportunity, providing power to create and claim even more resources with your current negotiation partner. You have the opportunity to walk away if this is not the case. These negotiations are about exploring synergies. For example, a negotiation expert who secures a profitable alternative, such as generating a $3 million profit, can view the current negotiation as an opportunity to “add whipped cream and a cherry to top it off” (in other words, reach $3.8 million). You don’t have to compromise. You can explore trading to get everything you want. In conflict-management negotiations, not reaching an agreement has negative consequences. Future interdependencies cast a shadow on all negotiators. These negotiations frequently mitigate losses and necessitate compromising. In conflict management, negotiators should not expect to get everything they want. Value creation might reflect going from negative $10 million to only negative $3 million, thanks to masterful negotiation skills. And it is never pleasant to be in the negative quadrant of profits. Value creation and value claiming are universal to decisionmaking and conflict-management negotiations. As we explore what it means to negotiate genuinely, we will also consider how negotiating genuinely enables negotiation strategies for maximizing profits. Sometimes the resources are easily quantifiable in financial currency, other times they are not. For simplicity, my examples will be financial and in U.S. dollars. Those of you who do business in another currency can simply change the $ symbol to one you prefer. Those of you who frequently or primarily negotiate over nonmonetary terms will need to translate these financial benchmarks to a unit that enables you to interpret the concepts I discuss so that you learn and are able to apply these ideas of value creation in your business setting.

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I invite you to create a negotiating-genuinely template. It will provide guidelines for preparing, navigating, and evaluating negotiations strategically and genuinely. Take a few minutes to note what we have covered thus far. In your preparation, identify the people around the metaphoric table and some basic information about the context. Discern if you are in the realm of decisionmaking or conflict-management negotiations. You will want to evaluate and possibly actively negotiate a best alternative to serve as your benchmark for positive relative profits. Whether in decision making or conflict management, your alternative serves as a benchmark for gauging success. Define the net present value of your next best alternative deal as the point of origin (zero relative profits). Value you are able to gain in the context of this negotiation, therefore, will be a positive number indicating how much better you can do, through genuine and strategic exploration. Incorporate into your negotiating-genuinely template key questions and suggested practices that will prompt you to implement ideas in this book, translating them into action. Mine is a living document that I constantly revise, as my thinking on the topic becomes more sophisticated and more concrete. I complete it mentally, or literally, every single time I anticipate or recognize a negotiation. Following each negotiation, I also reflect on how well designed my template was and consider how to adapt it for my future negotiations. Interestingly, every semester that I teach negotiations, I discover ways to improve my template based on insights co-created with students. I see it through their eyes and innovate, sometimes simplifying it and other times adding a dimension. Your negotiating-genuinely template will reflect the unique contribution of my positive approach to negotiations. It will hinge around your identity as a negotiator and will enable you to achieve extraordinary outcomes. Next, we explore how you might think about yourself when you negotiate. How you can go beyond being the most appropriate self to being a positive integrated you.

2  Being Genuine in Business: W e a r i n g o n e H at

Negotiation is perhaps the most fundamental and challenging battleground for a genuine approach. People often assume being a strategic negotiator implies calculated self-interest with a dose of inauthenticity, or walling off vulnerable parts of ourselves. Our fear of being taken advantage of and our desire to excel drive inauthentic behavior. Rather than reflecting on who we are when we negotiate, we frequently focus on our negotiation goals and what we wish to achieve. But what if we want to negotiate differently? What does it mean to be genuine, and how does one become genuine and maintain a genuine approach in the most strategic business encounters? Most people have not spent much time conceptualizing their business identity but are very much aware of the different roles they play. How many different roles do you play at work? Outside of work? How often do you transition roles and metaphorically wear different hats as you traverse between work and other domains of your life? I invite you to ask yourself: How can I be me in business? What hat would I wear? 13

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This is a deep philosophical question. Obviously, I cannot tell you who you are. But I can guide you in evaluating the many hats you wear and what that means in negotiations. There are many ways to think about identity. Some management scholars suggest that people have an individual identity (simply me), a relational identity (me when I relate to others), and a collective identity (me as a group member). Others would suggest that at each of these levels of analysis—individual, relational, and collective—you might have multiple identities. The way you think about identity might be informed by your culture. People from individualist cultures, such as the United States, are more likely to define themselves as autonomous and describe themselves with the use of adjectives (for example, I am tall, athletic, and extroverted). People from collectivist cultures, such as Japan, are more likely to define themselves in relation to others (for example, I am a son, a father, and a Ross School of Business alumnus). Some would argue that identity is relatively fixed, whereas others conceptualize it as negotiable and fluid. Any way you think about it, identity is complex. I invite you to take a moment to think about the different hats you wear in your life, both in and out of work. Your list may quickly transcend the ten hats outlined in Negotiating-Genuinely Worksheet 1 (Table 2.1). If you would like to have some fun, sketch out what each hat might look like. Or, for those who like me are graphically challenged, go online and find an image of a hat that represents each role. As you complete Negotiating-Genuinely Worksheet 1, in each row sketch or name the hat and define the role (such as salesperson), the domain in which you assume this role (for example, work at an encyclopedia sales company), the people with whom you negotiate in this role (for example, adults over eighteen who are at home between 9 a.m. and 5 p.m.), and the resource that is being negotiated (cost, terms of payment, whether the customer prefers the electronic or the printed version of the encyclopedia, and so on). You obviously negotiate in all domains

Table 2.1. Negotiating-genuinely worksheet 1: Your negotiation hats

Role in Which You Negotiate Hat 1

Hat 2

Hat 3

Hat 4

Hat 5

Hat 6

Hat 7

Hat 8

Hat 9

Hat 10

Domain of Life ( for example, work, family, sports, religious group, hobby, alumni associations, professional associations, clubs)

Who You Interact with When ­Wearing This Hat

What ­Resources Are ­Negotiated

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of life and might be able to learn to negotiate better in business by thinking about all the negotiations you encounter. Therefore, this worksheet includes both business and other domains. Let me provide you with some examples. In my life, one hat I wear in business is that of a teacher. As a professor, I teach people how to negotiate. This takes place as a part of my work at the university or in business consulting in the United States and around the world. The people I teach are predominantly university students in different degree programs, ranging in age from undergraduate students to M.B.A. students in their mid-to-late twenties all the way to senior executives who might be forty to sixty and business leaders who seek to advance their organizations, as well as their personal careers. They are diverse in age and cultural background, industry experience, and career goals. As I think of myself in this hat, the image of my black six-pointed velvet Ph.D. graduation cap comes to mind. Thus, one row in my table might look like this: My professor-teacher hat Role ProfessorTeacher

Domain of Life

Negotiation Partners

Work at university and consulting

Students (degree program and executives) and business leaders

Resources Knowledge, class format, effort, expectations

Throughout my day at work, I wear many distinct hats. I interact with my research team and colleagues as a scientist, leading projects, serving on committees, coordinating conferences, and developing organizational infrastructure. Sometimes these correspond to a formal organizational role (such as executive director), whereas other times my hat reflects a social role. In all of these, a hat that comes to mind is one I could wear with a formal business suit or casual dress:

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My professor-researcher hat Domain of Life

Role

Negotiation Partners

Colleagues, Work at ­university doctoral students, journal editors and ­professional and blind-peer ­reviewers, associations journalists

Professorresearcher

Resources Creative ideas, workload, ­deadlines, word count, positioning

And, a completely different set of hats come on and off outside of work. Thus, another hat I literally wear often during the fall season in Ann Arbor but metaphorically year round is an M-Go-Blue hat: My Michigan football fan hat Role Michigan football fan

Domain of Life

Negotiation Partners

Resources

Family and sports

My brothers and my daughters and about 114,000 fans at the Big House

Price of tickets, energy, noise levels, color (maize out or blue attire), and so on

In contrast, adventure travel or relaxation modes lead me to put on my straw hat: My adventurer hat Role Adventurer

Domain of Life Outdoors activities and travel

Negotiation Partners

Resources

Rigor of path, Local and international duration, location, amenities, and adventurers, so on vendors, airlines

My most recent list of hats I wear on a daily or weekly basis is now at fourteen. The negotiations I encounter wearing these

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­ istinct hats range widely with respect to the people and resources d engaged. You may use Negotiating-Genuinely Worksheet 1 or create a more graphically elaborate electronic version to map your negotiation hats. This will become part of your negotiating-genuinely template. Please think of at least four hats before continuing. If you quickly come up with ten hats or more, don’t let the worksheet constrain you. Also, you might remember another hat or two as you continue to read this book, or in the upcoming weeks as you encounter situations with your new negotiating lens. Add those hats to the list as you go. Is one of these hats the one you think of most frequently as your negotiation hat? Do you negotiate better when you wear that hat? Do you ever wear more than one hat at a time? The metaphor of the hat that is most appropriate for a particular role and situation is powerful. Roles are fundamental to organizational structures and coordination of work. On one hand, roles are a resource, but on the other hand, they can constrain us. But no matter how we think about roles, making the transition between roles as we negotiate across contexts and relationships suggests we sequentially and appropriately switch hats. Considering the four hats I described, this is what I might juggle on a particular day:

Appropriately switching hats

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Negotiating genuinely is not about appropriately switching or juggling hats. The fact that we play multiple roles in our lives suggests that any particular role, or hat, does not represent us fully as a person. I would like to suggest that an even more powerful notion is developing a single hat to reflect our genuine complexity. The first step in imagining this notion is metaphorically or visually aggregating your hats. This suggests you wear more than one hat at once. In fact, if you think about it, there are probably quite a few situations in which you wear two hats simultaneously. But if you were to represent your full self, you would be wearing all your hats at once. As I think of my negotiation self, or myself across domains and over time, it might appear as though I’m wearing a stack of hats:

My aggregated hats

On one hand, this requires less of a juggling act. On the other, it introduces a new complexity; it necessitates an examination of which hat is on top, which is on the bottom, and how they interrelate. No matter how they are stacked, the stack still represents discrete hats. We are not quite genuine when we aggregate. Let’s push this metaphor one step further. How might we construct a truly integrated hat? Rather than aggregate, let’s think of how to integrate key elements of each hat

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to one hat. Attaching a literal cue or symbol from each hat onto a mega-hat might visually inform a step toward integration. Here is what my four hats might look like:

Literal integration

But this is still a tapestry. How can we move away from thinking about our hats categorically? Can you imagine a unique hat that symbolically integrates all your hats and genuinely reflects you at this moment in your life? Fantastic. Here is an image of mine. Its shape, as you can see, is different from all the hats I described earlier. You might find a hat that symbolizes you in a deep and personal way. If you can’t think of a particular hat that reflects you, use mine or imagine an invisible metaphoric hat. I call this truly integrated hat, the integral hat:

My integral hat

How does my unique metaphoric hat become my integral hat? First, I flip it and drop the symbols of each hat inside:

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Symbolic integration inside my integral hat

The integral hat, however, represents more than the aggregate of my discrete hats. As I let go of my block M, tassel, bow-tie, and so on, I realize there are things already inside my hat. They relate to past personal experiences, genetic makeup, or culture, which I may never have identified, categorized, or allocated to a particular hat. For example, I might find myself negotiating and reflecting the grace with which my grandmother respected people, without ever having identified this quality with a particular negotiation hat. Furthermore, even what I believe to be relatively familiar components, which I just placed in this hat, such as the tassel or bowtie, might form new and possibly mysterious combinations. Each combination, as well as the process of full integration, might lead to a whole that is greater than, or simply different from, the sum of the parts. The integral hat is me. It is a deep interconnected and somewhat mysterious me. Mysterious, because I don’t always know what emerges from within me until I witness it in the context of a negotiation. The key is that the process of hat integration transforms your hats into a single integral hat. It is not about impression management, nor is it a facade nor a mask, but a genuine reflection of you

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as a person. The integral hat becomes a metaphoric container that symbolically carries your identity as it ephemerally (momentarily), yet repeatedly, comes into being, reflecting you as a negotiator who fully engages with other people. As soon as my integral hat comes into being it becomes invisible. It is reflected by my words and through my actions, as I engage and become a negotiator. Take some time to reflect about your hat worksheet and imagine your integral hat. As you imagine the process, experiment first with symbolically integrating three of your hats. Try integrally wearing all three in a particular conversation, even if it’s a casual conversation. One way to practice is, just before the conversation, take one minute to reflect about the three hats you are integrating and then let go of these thoughts. Acknowledge to yourself that it is too complex to simultaneously be three different things at once and instead think to yourself, “I’ll just be me.” See what happens. Then, in another casual conversation, try a combination of three different hats. Repeat this multiple times and notice what happens. Play with this process and take notes following each conversation. The next chapter will examine why the integral hat makes such a difference in negotiations.

3  Wh y On e In t e g r a l H a t i n N e g ot i at i o n s ?

Why would wearing your integral hat be advantageous in negotiations? For one, the integral hat may fuel creativity. When wearing your integral hat, you can draw resources from multiple sources. Wearing different hats creates partitions walling off parts of ourselves and restricting the resources we have available at any given moment. The integral hat is more likely to enable us to creatively pull from our broad experience and knowledge. For example, although I’m in work mode, perhaps my block M inside my integral hat is the element of my personality and personal history holding the key to a challenge I’m facing. Suddenly, although the problem I was trying to solve seemed linear, I see an image of football fans raising their hands by section around the stadium and creating a wave—and it always begins with the students. This sparks a moment of insight, as I realize that our customers have already signaled what they want and all we need to do is energize and ride this wave full circle. Thus, perhaps the creativity solution you are looking for in a merger and acquisition is hiding in the hat you normally wear in a completely different context. An important dimension of creativity is putting together things that normally don’t go together. Likewise, combining and integrating hats generates new combinations 23

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of thinking and feeling. The integral hat might provide multiple perspectives and therefore more adaptive and flexible repertoires of behavior that will help you achieve extraordinary outcomes in negotiations. The integral hat not only potentially provides greater resources and creativity but enables you to source your strengths. Think of two spectacular instances when you were able to negotiate like a star. What discrete negotiation hat were you wearing? On several occasions, I have had students who noted they were much more ambitious, persistent, and successful when they negotiated on behalf of others wearing the hat of an agent. Are you as good at negotiating your own salary as you are promoting someone else? For many people the answer to this question is unequivocally no. What enabled you to be successful in that role, and can you embrace that capacity in another role? Thus, hat integration can provide an internal path for learning how to be a better negotiator by importing and integrating strengths from a particular hat to your integral one. And possibly new strengths emerge when you merge hats. There may be qualities associated with two distinct roles you hold that when combined become core strengths, though each on its own was not. Thus there could be mutuality and synergy in hat clustering. The integral hat instigates developmental processes and leads to self-knowledge. Finally, the integral hat has positive ethical implications. It aligns your values and ensures that you always follow your moral compass. It ensures, for example, that a person’s decisions on Monday morning on Wall Street are aligned with espoused religious or secular values. Partitioning your hats can be ethically risky. Being the integrated holistic you in business thus also protects negotiators. If you negotiate wearing your integral hat you are more likely to succeed, and not just because you have more internal resources, such as creativity and strengths, and can maintain your ethics. The integral hat makes such a difference in negotiations because it

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enables you to be simultaneously cooperative and competitive. The simultaneity of cooperation and competition is one of the most challenging dimensions of negotiations. Being the integral you enables integral cooperation and competition. In t e g r a l C o o p e r a t i o n a n d C o m p e t i t i o n i n N e g o t i a t i o ns

Negotiations are not just about competition. Sophisticated negotiators understand that the resources on the metaphoric table are not necessarily fixed. In theory, some negotiations could merely be distributive, reflecting a zero-sum game, such that every unit one gains, the other loses (and the sum of plus one to you and minus one to me is zero, therefore the term zero sum). But in practice, unless you face an institutionally constrained negotiation, you can influence the resources on the table and transform negotiations into value creation opportunities. Another way to think about this is that a negotiation is not a debate, in which I arm my opinions and shoot holes in yours, resulting in a winner and a loser. Negotiations are complex opportunities to exchange information and search for positive and sustainable agreements. Recognizing that negotiations provide opportunities to create value is a key driver of positive outcomes. Although over-used, and sometimes abused, the term win-win reflects a cooperative discovery and co-creation of value. Either negotiator could potentially claim value created, so both are motivated to co-create value. At the same time, in business, each negotiator is motivated to maximize their own, or their company’s profits. This competitive dimension takes on a different character when it is viewed through the lens of a positive approach that embraces the reality of cooperating and competing simultaneously. Strategies that enhance your ability to achieve your personal agenda or maximize your firm’s profits do not necessarily reflect a cost to the

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other negotiator. Your profit aspirations are ambitious, and not necessarily aggressive. Setting ambitious competitive goals could be a cooperative move if they also motivate value creation. One mistake many people make when they try to balance competition with cooperation is coming into a negotiation making concessions and suggesting solutions that would be good enough, rather than clearly articulating what would be an ambitious outcome. In a zero-sum world, an ambitious goal by definition suggests a looming loss for the other person. But in a more sophisticated resource-generative world, an ambitious goal could actually lead to a better outcome for all negotiators. Flexible persistence to meet one’s ambitious goal motivates a search for value creation opportunities. And in contrast, satisficing (being satisfied with less) up front, before exploring such opportunities, can constrain negotiations and possibly turn value creation opportunities into zero-sum purely competitive engagements. A classic pitfall is falling for a 50-50 fair split of resources, or meeting in the middle, due to cooperative intent and concerns for fairness. But if you get nothing in return for this concession, you forgo not only claiming value but also creating value. While in the moment it feels good from a relationship perspective, it obfuscates differences that can be generative and potentially destroys value. What if you could set positively deviant or exceptional personal goals, and achieve them, yet I could also get everything I want? Why not explore this before starting to make concessions? Therefore, before entering a negotiation, explicitly set an ambitious goal, and before considering how to concede, explore whether value can be created so both people get what they want. One way to think of building profits is to imagine you are a profit architect (Figure 3.1). Given the infrastructure and foundations of your business venture, how high could you imagine this building soaring? Could it rise to the level of a skyscraper? Set an ideal goal, even higher than your ambitious profit goal. Negotiate with that height in mind. Who knows, maybe magically the other

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figure 3.1. Building profits

negotiator also wants a room with a similar view and there are two vacant offices on that floor. While you want to focus on an ambitious goal, you need to know your bottom line. The most powerful bottom line represents a viable alternative you have secured through an earlier negotiation process or inquiry. When you stand on solid ground and already have a viable deal, no matter what power tactics the other person deploys, you will not accept a profit lower than the one you already secured. If you think about profits as a tall building, you don’t necessarily enter the current negotiation at street level. For example, you may have already negotiated with another potential partner to reach profitability levels that are represented by the height of the fourth floor. This means that as powerful and potentially business combative your current negotiation partner might appear, that person can’t push you down to the third or second floor, and definitely not down to the basement. You have secured the view from the fourth floor.

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But what view would you like? Remember, you are not necessarily fighting over resources. You may just be riding up the elevator together in a completely synergistic fashion. If so, why aim for the tenth floor when there could be a thirty-third floor? Now let’s translate the metaphor back to financials: Why aim for a net relative profit of $6 million (the difference between 10 and your next best alternative of 4) when you could soar as high as $29 million (33−4)? Obviously, when you describe the thirty-third floor—the business arrangement that would produce such a profit—you need to do so in a respectable and credible manner. As a profit architect, you need to build foundations that sustain the vision, and while you might not have all the building materials in place, your dream of having a thirty-third floor needs to be convincing. You might need to flexibly explore the thirty-second or thirty-first floors, since the thirty-third was your opening strategy, but it serves as a positive anchor for the conversation, if you will. Positive because you realize that this anchor is not only a competitive but also a cooperative strategy if the other negotiator can also build toward the profits represented by the thirty-third floor. You need to be comfortable with this anchor, communicating it without initially signaling anything other than this representing an ideal outcome. Standing tall may lead you to feel vulnerable. But you know you selected a good starting point if you can imagine achieving it without being disappointed. You would not think to yourself that you should have aimed for the thirty-seventh floor. I define this positive anchor as an ideal goal. What would happen if it were a purely competitive negotiation is that we would need to change our metaphor from that of a highrise building to a tug-of-war. By definition, in a deal-making decision-making negotiation, for example, a seller would be pulling toward a high price, while the buyer would be pulling toward a low price. Or if the resource was time, the product developer might pull toward earlier delivery, while the production team would ask for more time, playing a tug-of-war on time. Depending on all the

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variables at stake, being on the thirty-third floor and anticipating $29 million net profits might translate to selling a product for the unit price of $1 million (anticipating a fixed quantity of twenty-nine units). But the buyer might be dreaming of a price of $500,000. Fortunately, we often have the power to transform negotiations from haggling over price to trading over multiple variables and adjusting price, as we gain profits elsewhere. Even if you are not anticipating a purely competitive negotiation, self-serving ambitious goals are key to successful negotiations. I suggest defining two goals: ideal and ambitious. Your opening offer reflects your ideal goal and serves as a positive anchor for the conversation. It needs to be supported by a business vision you can articulate that entices both negotiators to explore value-creation opportunities. Your ambitious goal might be more grounded in the current context, yet unapologetically still represents an outstanding outcome for you. Define your ideal and ambitious goals in advance and focus on both during the negotiation. The ideal goal and the ambitious goal are strategically important to competitively claim value and also to motivate search for value creation that might result in equivalent, or even more profits. While you negotiate focusing on your ideal and ambitious profit goals, don’t lose sight of your alternative and know your walk-away point. This is not a low target, which some people find helpful to set (in addition to ideal and ambitious goals), but an objective number that quantifies your alternative deal. It defines an outcome at which you are indifferent between this deal and the alternative deal, taking into account transaction costs. It indicates when you are making a profit in this deal, above and beyond your best alternative. I call this the relative profitability point. In your negotiating-genuinely template, you will want to note your best alternative and calculate your relative profitability point. Like­wise, set your ambitious and ideal goals on the basis of two factors: (1) the other negotiator’s willingness to pay, given their alternative; and (2) opportunities for synergies.

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To reach your ideal goal you will need to explore value-creation opportunities. If you anticipate or find yourself in a tug-of-war, for example on price, the first question you should internally ask is, “Where is my hammer?” Breaking price into its components generates multiple negotiable issues and flexibility for piecing things back together in a manner that may generate value to both sides. Let’s shift to explore how this might work. There are two well-established fundamental ways of creating value: aligning similar interests and trading differences. Expert negotiators link multiple negotiable issues to capitalize on similarities in interests and differences in the relative weight of a given negotiable issue. Negotiators who assume the negotiation is purely distributive and only competitive miss opportunities to create value, or even worse they transform rich opportunities for value creation into purely distributive ones. Even experienced negotiators don’t fully leverage opportunities to create value. They might recognize one way to create value and stop there, succumbing to resulting positive feelings about the process as a proxy for actual value creation. Or, they wrongly assume that given the apparent conflict, joint value creation is simply not possible in a particular situation. Counterintuitive to many negotiators, business discussions plagued with differences are also rich in opportunities. A key to joint value creation is reframing differences from a symbol of conflict to a symbol of diversity in needs. When needs are diverse, everyone might be more likely to get what they want. But how do you discover opportunities to jointly create value? As a profit architect, you need to fully understand the building blocks of value creation. T h e B u i l d i n g B l o cks o f J o i n t P r o f i t s

Experienced negotiators know that preparation is key—you can’t just wing it. Interestingly, even negotiators with vast experience

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figure 3.2. Generating joint profits: What are the building blocks?

don’t always know what exactly they are doing from a resource maximization perspective. Let’s think for a moment about this task. Reflect back to your childhood. Did you play with building blocks? Remember what these looked like? Possibly colored wooden shapes; some rectangular blocks, but also squares and triangles. Even the noncreative among us could pretend to be little architects and make a wall from squares and rectangles, and put little triangles on top to make a house. For simplicity, let’s stick with only squares, rectangles, and triangles (Figure 3.2). With these three types of blocks, we intuitively know how to build a house. But as negotiation architects, we are often stuck in the world of content and can’t discern the types of building blocks before us. If we would like to reach that thirty-third floor of profits, and are okay with the other negotiator joining us up there or elsewhere to see the view, we need to know how to build joint profits and reach the Pareto optimal frontier, thereby maximizing the gains from trade. Value is generated and at least one person gets it, but the other person does not have to lose for this to occur (we are not in a zero-sum situation). Negotiation architects need to recognize three metaphoric building blocks, through the analysis of the relationships between negotiators’ positions, interests, and priorities. Theoretically, there are three building blocks (types of negotiable issues): distributive, compatible, and trade-off. Once we learn to

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recognize them, we can disassemble and recombine resources on the table to generate a larger sum (a house, and possibly even a castle). To discern whether a resource functions as a distributive, compatible, or trade-off negotiable issue, you must understand not only your own perspective but also that of the other negotiator. It requires an analysis of both negotiators’ positions, interests, and priorities. This complex interdependence will enable you to recognize building blocks and combine them in a way that maximizes profits. It is key to strategically prepare for a negotiation by mapping out the interdependent structure of all potential negotiable issues. However, as much as you prepare, you will probably never have full information about the other person, and thus at the onset of the negotiation it is imperative to test the assumptions about the issue structure, jointly explore opportunities that keep improving the deal for both negotiators, and jointly build profits (Figure 3.3). Let’s take a moment to define what information we need to map out, to discern what negotiation building blocks are on our metaphoric table. A position is what you ask for on the surface. An interest is the underlying motivation driving your position. A priority reflects the importance of the issue to one negotiator relative to the other negotiator. Analysis of these generates the three building blocks; the types of issues that come into play: distributive, compatible, and trade-off.

figure 3.3. Negotiators as profit architects

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$4,000 Bargaining Zone $5,000

figure 3.4. Zero-sum allocation of $1,000

A distributive issue is one for which negotiators have opposite and similarly weighted positions. If it were the only issue negotiated, such as price, the negotiation would become a zero-sum game in which one person gains every dollar lost by the other person. If a deal is struck, a fixed amount of value is created above and beyond the alternatives. Let’s turn to a quantifiable example to make this more concrete. Imagine a person is interested in buying a gizmo. If that person could purchase the gizmo elsewhere for $5,000 and a seller already has an offer for $4,000, any deal in this range ($4,000 to $5,000) would be profitable for both negotiators. This range is referred to in the negotiation literature as the bargaining zone. In this example, it generates $1,000 more than each person’s alternative, and the negotiation revolves around how to divide this value (Figure 3.4). Assuming each person has the goal of maximizing financial value, each would seek a price closer to the other person’s profitability point (the buyer would strive for $4,000.01, the seller for $4,999.99). Rationally, at their profitability point each would be indifferent between accepting this deal or going with the alternative deal, and at a relative profit of $0.01 would prefer this deal. Realistically, people might be insulted by $0.01 and therefore prefer their alternative deal.

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If price is the only issue negotiated, the outcome might be dictated by brute business prowess and influence skills. The conversation may feel cooperative and friendly, even though it is competitive. It may include persuasive arguments dressed up in language of “value creation.” In particular situations, the distribution might be influenced by relationship concerns. If each person’s relative profits were to become known to both, many negotiators would prefer to split profits equally, as an equal split represents a cooperative distribution. For example, if this negotiation was between two divisions of the same firm, they might settle on a “fair” price of $4,500, which would generate $500 for each division. But if alternatives aren’t known, a negotiator doesn’t need to concede on price as a relationship-building strategy—the other negotiator should be just as concerned about the relationship. Furthermore, even when anticipating a future relationship, a negotiator doesn’t necessarily want to set a precedent, prioritizing the relationship more than the other person does. For example, if the seller didn’t know the buyer’s alternative, the seller might be satisfied with a relative profit of $100 (if a friendly conversation led to an agreed-upon price of $4,100), especially if the scale in our example was different and 10 percent of the value created represented a profit of $1,000 or even $100,000. Particularly if the buyer’s opening offer anchored the conversation significantly lower than the seller’s alternative, a concession-making process that ends up at $4,100 might feel like a win to the seller. The psychology of negotiating price is sophisticated. But no matter how it is divided, if only price were negotiated then at every price point the sum of the net profit (relative to the best alternatives) would be fixed and the negotiation would resemble a tug-of-war. To create additional value would require discussion of additional negotiable issues beyond the main distributive issue. It’s wise to assume that there is always one distributive issue. Any other negotiable issue considered in addition to the main distributive issue may be a compatible issue or a trade-off issue. Both compatible issues and trade-offs have the potential to create value

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above and beyond the bargaining zone on the main distributive issue. They do so in different ways. Brainstorming multiple issues beyond the distributive issue is a critical element of strategic preparation and strategic engagement. This may involve breaking apart a component of price and treating it as a separate issue that can then be linked to price—for example, payment terms or warrantee. Table 3.1 provides a sample template for conducting this analysis. This is an important component of your negotiating-genuinely template. The left column captures the concrete negotiable issues (potential resources) that are anticipated to arise or to come up in discussion. To understand how each of these resources impacts value creation and value distribution it is necessary to analyze the relationship between positions, interests, and priorities for the negotiators on each particular issue. For each negotiable issue consider the five columns delineated in Table 3.1 (my position, my interest, your position, your interest, and the relative weight or priority of this issue to each negotiator). Table 3.1. Mapping Negotiable Issues

*Does this issue have an impact on my bottom line more or less than the other person? Is it more important to me, or to you?

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The analysis is conducted as if each issue is separable, but in the deal, and in order to create value, issues need to be linked and value is generated through strategically linking them. When completing this table for a particular negotiation, replace my and your with names of the people who are negotiating, and if it’s a multiparty negotiation you may need to add columns (the template assumes only two negotiators). Map all the issues you and other negotiators might discuss and discern what type of building block each represents: distributive, compatible, or trade-off. I recommend beginning the strategic preparation process by identifying the main distributive issue (for example, price or time). Therefore the first row in Table 3.1 is defined to be a distributive issue. The main distributive issue, by definition, is one for which negotiators hold opposite positions and equal weights (a dollar the buyer wins is a dollar the seller loses). In the case of price, interests would simply be profitability and therefore do not provide a significant insight. Compatible issues generate value by capitalizing on similarities in interests. The first additional issue in Table 3.1 cues a potential compatible issue, when an analysis of each person’s underlying interest indicates that adding this issue will benefit both because it meets their needs. Sometimes compatible issues seem so simple that they are overlooked and left off the table. For example, both negotiators are interested in adding an additional product to the current agreement. Once they add this additional product they may have opposite positions on its price, but initially each person has a position that adding this product can have a positive net value. Compatible issues can be introduced strategically during the negotiation process to enhance profit building. Exploring a compatible issue early in the negotiation might also facilitate trust. Sometimes a negotiator may introduce one compatible issue early on, and hold on to another to be strategically introduced if the discussion gets derailed or otherwise toward the end of the negotiation as a creative add-on that sweetens the deal. Furthermore, a

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compatible issue, such as an additional product, might be leveraged to build a long-term relationship and strategically be discussed at a separate, additional meeting. A key phrase you might hear yourself saying is, “What if in addition to x we also negotiated y?” In the gizmo example, perhaps there was a feature you could add to the gizmo that had a bargaining zone of $160 (for example, the buyer could purchase it elsewhere for $360, whereas the seller could sell it for $200). The sum of joint resources would grow from a net of $1,000 to a net $1,160 of value generated by this negotiation (relative to the alternatives). Sometimes compatible interests generate positions that are completely aligned (both negotiators have an underlying interest that the product be painted and both actually prefer the same exact color, for example, green). The main insight comes from adopting a principled approach (a la Getting to Yes by Fisher, Ury, and Patton) that goes beyond positions to underlying interests—the driving motivations, needs, or reasons why a negotiator takes a particular position on an issue. Trade-offs are negotiable issues that generate value by capitalizing on differences in value or priorities (see row 3 in Table 3.1). Many negotiable issues appear on the surface to be purely distributive, such as payment terms (for example, a buyer may prefer to pay later, whereas a seller prefers cash now) or delivery date (for example, the buyer prefers earlier, whereas the seller, later), because the positions of the negotiators are opposite. However, even when the positions of the negotiators are opposite, value can be created if one person prioritizes the issue more than the other person because of differences in, for example, valuation, capabilities, expectations, or risk assessments. For instance, an extra year of warrantee may be worth more to one negotiator than it costs the other, or one may prefer blue much more than the other prefers yellow, suggesting that color is more important to one person than the other. The key insight comes from discerning a difference in priority, or in practical terms the relative weight of that issue on one’s bottom line.

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Table 3.1 cues the mapping of trade-offs by assessing the middle column, which compares one’s perspective to the other person’s and discerns the direction that leads them to be unequal (≠). Once you discern the direction, you can insert a greater than (>) or less than (