Business Negotiations: Wrestling with a Win-Win Negotiation Solution

The Mutual-Gains Approach to Negotiation and Claiming Value

By on / Business Negotiations

Adapted from “Divide the Pie—Without Antagonizing the Other Side,” by Robert C. Bordone, first published in the November 2006 Negotiation newsletter.

Even those who effectively engage in a mutual-gains approach to negotiation, in which parties work together to meet interests and maximize value, can be stymied by the task of dividing up seemingly fixed resources, such as budgets, revenue, and time. The tough distributive, or value-claiming, aspects of a deal can poison the negotiation and destroy business partnerships.

In negotiation, figuring out who should get what is rarely easy, but creative solutions do exist. Consider the legendary “Malice in Dallas.” In 1990, Stevens Aviation, a South Carolina–based aviation sales and maintenance company, began using the advertising slogan “Plane Smart.” In 1991, Southwest Airlines coined the phrase “Just Plane Smart,” and Stevens notified Southwest of the apparent trademark infringement.

The dispute easily could have cost both sides hundreds of thousands of dollars in legal fees. Instead of bringing in the lawyers, however, Stevens chairman Kurt Herwald came up with a novel approach to resolving the conflict: he challenged Southwest CEO Herb Kelleher to an arm-wrestling match. Whoever won the best of three would earn rights to the slogan, and the loser of each match would make a donation to a charity of the winner’s choice. Kelleher accepted.

On March 20, 1992, several thousand people attended the “Malice in Dallas” at Dallas’s Sportatorium. The event was widely covered by the national media. Stevens’s Herwald won two of the three matches and the right to the slogan.

Shortly after winning, Herwald agreed to let Southwest continue to use its slogan. The companies presented $10,000 to the Muscular Dystrophy Association and $5,000 to the Cleveland Ronald McDonald House. Then-president George H.W. Bush commended them on their “win-win” solution.

Ed Stewart, Southwest’s manager of public relations, estimates that the match saved his company $500,000 in legal fees and generated $6 million in publicity. As for Stevens Aviation, Herwald partially credits the event for his company’s three-year increase in business, from $28 million to more than $100 million.

The upshot: Approaching distributive issues with a creative mindset can not only preserve a relationship but also add significant value for both sides.

Related Article: How to Avoid a Bidding War

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a FREE copy of our Business Negotiation Strategies: How to Negotiate Better Business Deals special report from Harvard Law School.

Originally posted August 2011.

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