Negotiation for China Week 2: Getting to Yes, the Method II and New Tools for Negotiators

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Negotiation for ChinaWeek 2 Getting to Yes, the
Method (II) and New Tools for Negotiators

• Webster/ SUFE MBA
• 2008
• Jack Marr

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Week 2 Getting to Yes, the Method (II) and New
Tools for Negotiators

• Review/ Presentation
• Focusing on Interests, Not Positions
• Inventing Options for Mutual Gain
• New Tools for Negotiators

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Week 2 Getting to Yes, the Method (II) and New
Tools for Negotiators

• Review
• Focusing on Interests, Not Positions
• Inventing Options for Mutual Gain
• New Tools for Negotiators

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Review from Week 1

• Jagger/Richards. You Cant Always Get What You
  Want, ?
• Traditional negotiating styles soft and hard.
  Both flawed
• Game theory. What is the point of tic tac toe?
• Perception (1)gtgt Emotion (1)gtgt COMMUNICATION ltlt
  Emotion (2)ltltPerception (2)
• Find your and your constituents/counterparties
  perceptions and emotions

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Week 2 Getting to Yes, the Method (II) and New
Tools for Negotiators

• Focusing on Interests, Not Positions
• Inventing Options for Mutual Gain
• New Tools for Negotiators

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Focusing on Interests Not Positions (1/5)

• Two men in a library bickering over how far to
  open window. Librarian asks why? To get some
  fresh air To avoid the draft Librarian opens
  wide a window in the next room, problem solved
• Position clear statement of specific desirable
  result in negotiation
• Interest motivation driving the negotiation
• Interests motivate, silent movers behind
  positions. You decide positions. Interests cause
  you to decide

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Focusing on Interests Not Positions (2/5)

• For every interest, probably several positions to
  satisfy it
• Examples Position selling used Nokia for 1500
  RMB. Interest use money to upgrade laptop. Maybe
  you have a discount on laptops???
• Examples Position want to takeover Chinese
  company. Interest want access to channels. Maybe
  you can form a revenue sharing alliance???
• Behind opposed positions lie both compatible and
  conflicting interests
• Tenant vs. landlord shared interests stability.
  Well-maintained apartment. Good relationship.
  Conflicting interests cost of rent, cost of
  deposit, cost of repairs, etc.
• Or you and juzi seller both interested in money
  and juzi, but you both want to feed your
  families!

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Focusing on Interests Not Positions (3/5)

• How to identify interests put yourself in their
  shoes. Why does a supplier ask for certain terms?
  Why does your boss demand you come in at 830 AM
  every morning? Whats your basic concern?
• Ask why not? figure out what they think YOU
  will ask for, and then ask what stands in their
  way. Iran hostages once taken, made sense to
  keep longer
• As who am I trying to ultimately influence? If
  they you dont understand their position, maybe
  they dont either. Why suits?
• Analyze impact of interest on constituencies
• How will this decision affect me, my peers, my
  family, the short term, long term, economic
  consequences, outsiders, is it a good precedent,
  is it right, will making this decision prevent a
  better one later? Etc.
• Analyze it from BOTH sides how will it affect
  them, etc..
• Bush and the Axis of Evil

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Focusing on Interests Not Positions (4/5)

• Most powerful interests human interests
• Maslows Pyramid
• My Khazak horse negotiation
• Make a list as you go, and prioritize it
  according to need
• Talk about interests without moving into
  positions
• Use their interests when negotiating

Self Actualization Self Esteem Sense of
Belonging Secutiry Survival
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Focusing on Interests Not Positions (5/5)

• By understanding people, they will think you are
  intelligent and sympathetic, and therefore
  respect you. Language?
• Tell the reasons FIRST, then the answer
• But dont go on too long. Get to the point
  quickly and clearly. Remember, LISTEN
• Look forward, not back. Dont dwell on what
  happened.
• Talk about where you would like to go, not where
  you have come from. Think about the US and China,
  or Sony and Samsung
• Be concrete but flexible and never put them in a
  corner.
• Be hard on the solution, but soft on the problem.
  Find your need, state it as an interest, and hold
  your ground
• Do not let your desire to be conciliatory stop
  you from doing justice to your problem.
• Use cognitive dissonance hit hard on your needs
  while supporting them on theirs

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Focusing on Interests Not Positions

• Split up into 4 teams of 5, two team As and 2
  team Bs.
• An American agricultural company (A) wants to buy
  a Chinese agricultural company (B), but
  negotiations have gotten stalled on positions.
  Publically, As positions are
• Want 65 control with 6 of 7 board seats
• Want to pay 150 m cash and 5 m shares of As
  stock
• Want B to fire 35 of workforce
• Publically, Bs positions are as follows
• Wants to retain 49 control with 3 of 6 board
  seats
• Wants 300 m in cash and 1 m shares of As stock
• Dont want to fire people
• Wants access to US distribution channels
• Negotiate with the team, trying to move away from
  positions to discover their Interests. Do not
  worry about closing the deal yet.
• Note on Chinese CEO role

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Week 2 Getting to Yes, the Method (II) and New
Tools for Negotiators

• Focusing on Interests, Not Positions
• Inventing Options for Mutual Gain
• New Tools for Negotiators

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Inventing Options for Mutual Gain (1/6)

• In a divorce settlement, who gets the house? Who
  gets custody of the children? You may see the
  choice as one between winning and losing and
  neither side will agree to lose. Even if you do
  win you have a sinking feeling that they will
  not let you forget it.
• Losers use all kinds of disfunctional behavior
  trying to correct unfair settlements examples?
• Expand the pie before dividing it are there a
  set number of As in this course? Riccardo
• Judgment hinders imagination
• People feel that disclosing information can
  hinder your bargaining position. But it can also
  help to reach mutual gain. Prisoners dillemna
• No single answer dont narrow the gap, but
  broaden options.

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Inventing Options for Mutual Gain (2/6)

• For a negotiator to reach an agreement that
  meets his own self interest he needs to develop a
  solution which also appeals to the self-interest
  of the other. or.
• As it is by treaty, by barter, and by purchase,
  that we obtain from one another the greater part
  of those mutual good offices which we stand in
  need of, so it is this same trucking disposition
  which originally gives occasion to the division
  of labour. In a tribe of hunters or shepherds a
  particular person makes bows and arrows, for
  example, with more readiness and dexterity than
  any other. He frequently exchanges them for
  cattle or for venison with his companions and he
  finds at last that he can in this manner get more
  cattle and venison, than if he himself went to
  the field to catch them. From a regard to his own
  interest, therefore, the making of bows and
  arrows grows to be his chief business, and he
  becomes a sort of armourer. Another excels in
  making the frames and covers of their little huts
  or moveable houses. He is accustomed to be of use
  in this way to his neighbours, who reward him in
  the same manner with cattle and with venison,
  till at last he finds it his interest to dedicate
  himself entirely to this employment, and to
  become a sort of house-carpenter. In the same
  manner a third becomes a smith or a brazier a
  fourth a tanner or dresser of hides or skins, the
  principal part of the clothing of savages. And
  thus the certainty of being able to exchange all
  that surplus part of the produce of his own
  labour, which is over and above his own
  consumption, for such parts of the produce of
  other men's labour as he may have occasion for,
  encourages every man to apply himself to a
  particular occupation, and to cultivate and bring
  to perfection whatever talent or genius he may
  possess for that particular species of
  business.45 Adam Smith, On the Wealth of
  Nations Book I Chapter II (Read on your own)

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Inventing Options for Mutual Gain (3/6)

• Leave the money economy and go back to truck and
  barter in your negotiations
• Separate inventing from deciding. BRAINSTORM!!!
• How many have done it ?
• Define your purpose
• Chose a few participants
• Change the environment
• Design an informal atmosphere
• Chose a facilitator
• Ground rules
• Seat participants side by side
• Clarify the ground rules, especially no criticism
• Brainstorm long
• Record the ideas in full view

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Inventing Options for Mutual Gain (4/6)

• After brainstorming
• Star the most promising ideas (make sure to get
  input from participants)
• Invent improvements for promising ideas
• Set a time to reevaluate and decide
• Consider brainstorming with the other side
• Make it clear it is NOT a negotiation/decision
  session
• Next, multiply options. Not one answer, not
  looking for needle in a haystack

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Inventing Options for Mutual Gain (6/6)

• Other methods
• Look for weaker options
• Substantive Procedural
• Permanent Provisional
• Comprehensive Partial
• Final In principle
• Unconditional Contingent
• Binding Nonbinding
• Who are you negotiating with, and what are their
  best options? Not Webster or Lenono, but Jack or
  your client
• Offer multiple options to your conuterpart
• Also, dont offer options that you cannot acheive

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Inventing Options for Mutual Gain (6/6)

• Circle chart for evaluating options pp. 70

Approaches strategies, theoretical solutions
Analyze into causes/barriers
Theory
Action what specifically to do?
Whats the problem ?
Real World
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Inventing Options for Mutual Gain

• Now, split back up into your teams. First,
  brainstorm out your own options for 5 minutes.
  Then, if you like, spend another 5 minutes
  brainstorming with the other side
• After brainstorming
• Star the most promising ideas (make sure to get
  input from participants)
• Invent improvements for promising ideas
• Set a time to reevaluate and decide
• Consider brainstorming with the other side
• Make it clear it is NOT a negotiation/decision
  session
• Next, multiply options. Not one answer, not
  looking for needle in a haystack

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Week 2 Getting to Yes, the Method (II) and New
Tools for Negotiators

• Focusing on Interests, Not Positions
• Inventing Options for Mutual Gain
• New Tools for Negotiators

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New Tools for Negotiators (1/3)

• Negotiations now typically involve many parties
  that have an interest in the outcome the
  stakeholders and require decisions on many
  complex issues. Immense sums of money may ride on
  the outcome. McKinsey
• Sophisticated method of constituent mapping as
  discussed last week
• lation but fear of the black box
• Process
• Identify key issues Power case, tariffs and
  subsidies/ green issuje, Coolstuff case
  management brand control/ valuation
• Identify all the stakeholders (constituents)

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New Tools for Negotiators (2/3)

• (Cont.) For each stakeholder, based on each
  issue, decide on the following and rate 1 to 10
• Position/ Interest what is each parties idea on
  the issue?
• Salience How important is this vs. all other
  issues? IE would they drop everything to attend a
  meeting on this (class examples)
• Clout How much influence do they have?
• Constituent Position Interest Clout Salience Ally/
  Enemy/Neutral Strategy
• CEO 300 Cash 5 9 Enemy
• Director Shares Save 6 8 Ally
• Government Cash F/X 9 1 Neutral
• Etc.
• 3. Outcome continuum weighted average of
  salience and clout. Should do for each issue.
• 4. Stability analysis how far is the outcome
  from each parties preference? If not (ie a
  win/lose or lose/win) unlikely to be stable.

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New Tools for Negotiators (3/3)

• 5. For each issue, then, decide whether the
  stakeholder is an ally, in-between, or enemy.
  Then chart vis a vis salience and clout (chart pp
  8)
• Think of this as a tool to be added to Getting to
  Yes toolkit, especially as regards constituent
  mapping

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Case

• Think back to todays case
• List out the various constituencies. List each of
  the issues (there are 4 or 5) for each and then
  rate their salience and clout on each issue (1
  (strong) 10 (weak)). Do a weighted average if
  you have time
• Position/ Interest what is each parties idea on
  the issue?
• Salience How important is this vs. all other
  issues? IE would they drop everything to attend a
  meeting on this (class examples)
• Clout How much influence do they have?
• Next, brainstorm out your own options for 5
  minutes. Then, if you like, spend another 5
  minutes brainstorming with the other side
• After brainstorming
• Star the most promising ideas (make sure to get
  input from participants)
• Invent improvements for promising ideas
• Set a time to reevaluate and decide
• Feel free to work in groups, and use in class
  next week

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• Next Week
• GTY pp. 84-134
• NR What Makes Global Negotiations Different?
• Please bring case notes from last time to
  class!!!!

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Group Negotiation

• 35 of grade
• Groups of 4 max ideal
• Chose negotiation topic that is interesting to
  you
• Suggested format (20 minutes max with 5 minutes
  QA)
• Describe case and background
• Hold role-play negotiation or describe
  negotiation
• Summarize and analyze result of negotiation
• Have fun and make it challenging
• Please form groups and complete outlines with
  roles by July 15th BEFORE CLASS by email.
• Topic, group members, and individual roles
• Questions?