Wednesday, January 31, 2007

Is your negotiating style leaving value on the table?

Leaving value on the negotiation tableThere's an exercise I use to get people to think about negotiating styles.

You mark a line down the middle of the floor with masking tape. Then you tell participants to find a partner and to stand facing each other on opposite sides of the line. You instruct them that they are about to play a game and that the object of the game is to get your partner to come over to your side of the line. You tell them that if they can do that, they'll win. And not only will they win, but you will pay the winner $1000. You then give them 60 seconds to play.

What happens next is predictable.

First of all, across all groups, people typically rely upon three approaches:

  1. Persuasion.

  2. Trickery.

  3. Force.
Persuasion: Most people will attempt to persuade their partner to come over to their side of the line. They try to offer compelling arguments why they deserve the money. Sometimes, too, one partner will persuade the other to postpone gratification and come over to the other side on the promise that if the game is played again it will be their turn to collect the $1000.

Trickery: In some cases, people will promise to split the money while secretly intending to renege. An unscrupulous few will trick their partners, reaching out to shake their hand as a sign of good faith and then suddenly pull their unsuspecting partner across the line.

Force: Some players will try to use intimidation or brute force to drag their partner across the masking tape line.

This isn't surprising. In real-world negotiations, people rely on these same approaches. Persuasion is very common--efforts to convince the other person that you’re right and they’re wrong, or to hand over something that we want. Trickery and force or intimidation remain perennial favorites--for some people, negotiation is a form of warfare. Unless there's blood on the sand, the negotiation's a failure.

These approaches often come up short. With persuasion, you often get nowhere--it becomes an endless round of "Yes, but". With trickery, you might get the monetary results you wanted, but you've also destroyed trust. Not only will that person never do business with you again, they'll tell others to stay away from you, too. And the problem with treating negotiations like a battle is, after all the time and energy you invest in the negotiation, you've made an enemy instead of someone who might be willing to do business with you again.

Back to the game I was telling you about.

When you stop the game and ask who won, the results are interesting. Typically, there are three outcomes:

In order of most frequently occurring to least frequent:

1) Neither partner wins anything, since both failed to get the other to step across the line (approach used: persuasion, trickery).

2) The partners split the $1000 if one agrees to cross the line to the other side (persuasion, trickery).

3) One partner wins, the other partner receives nothing (trickery, force).

There is, however, a rarely used fourth approach which yields an equally rare outcome. This approach enables both partners in a pair to each get $1000. A win-win, in fact.

Can you figure out how to do that? I'll give you a moment to ponder it. (You mediators sitting there in the back of the room, no fair giving away the answer.)

Okay, time's up.

Here’s the answer:

All the parties have to do is switch sides.

That's it.

The problem though is that people don’t usually think of doing that. When you tell them that the winner gets $1000, people figure in each pair only one can emerge a winner. It doesn’t occur to them that both could win. There’s nothing in the directions that forbids it. The directions are clear: If you get your partner to come to your side of the line, you win $1000. That’s it. But people hear the word "win" and they're already thinking about the other side of that coin: lose. It's what puts the "zero" in zero sum game.

What happens is, people compete. That competitiveness forecloses any other results but lose/lose, win/lose or a 50/50 split. People waste time figuring out how to divide the pie instead of inventing ways to expand it.

In your negotiations, how much value are you leaving on the table? Is your desire to keep that competitive edge blinding you to more profitable outcomes?

Think about it.