Ask A Negotiation Expert: Creating More Value—For All

By PON Staffon / Leadership Skills

In these difficult times, many of us are thinking about how to help make the world better, including in our negotiations. The good news is that we can do so without huge sacrifices, writes Max H. Bazerman, the Jesse Isidor Straus Professor of Business Administration at Harvard Business School, in his new book, Better, Not Perfect: A Realist’s Guide to Maximum Sustainable Goodness (Harper Business, 2020). Bazerman talked to us about how negotiators can create more value for all by broadening their perspective.

Negotiation Briefings: What does making “better, not perfect” decisions mean to you?

Max H. Bazerman: The book builds on a philosophical perspective that has a terrible name, utilitarianism, which asserts that an ethical decision is one that creates the greatest amount of pleasure and minimizes the greatest amount of pain. From a negotiation standpoint, this means creating as much value as possible, either across all people or all sentient beings. That’s a lovely goal, yet maximizing value without giving special consideration to yourself and those most important to you isn’t reasonable for most of us. To become a more ethical person, my goal isn’t to maximize value perfectly, but to do better than I have in the past and to do better next year than I’m doing now. In my book, I aim to provide a realistic view of how we can be better rather than perfect.

NB: How does business negotiation apply to the idea of better, not perfect?

MB: In the negotiation literature, there’s a familiar graph that plots your outcomes on the x-axis and those of your negotiating counterpart on the y-axis. A core theme is that we can create a bigger pie by moving to the northeast of this space of outcomes for both parties. We’re critical of those who view negotiation as a fixed pie and miss opportunities to expand the pie of value through tradeoffs across issues.

As I moved to the world of ethics, I began to picture outcomes for oneself on one axis and outcomes for all others—not just one’s negotiating partner—on the other axis. It’s great if you want to trade some of your welfare for the welfare of others who need it more, but you can often create value for others without such sacrifices, simply by making wiser decisions about how you spend your time and what you do at work.

NB: People who work for not-for-profit organizations have special moral obligations. Any advice for them?

MB: Too many not-for-profits forget that their main objective is to create value for those in need. Not-for-profits sometimes spend too much effort competing against other not-for-profits for the same charitable dollars. Those in need often would be far better off if some of those not-for-profits combined to reduce their overhead and generate more donations. Not-for-profits also destroy value when they hire for-profit fundraising companies that take a chunk of the money they raise. The charity often argues that they wouldn’t have gained such money otherwise. But donors could have given it to another organization that would have used it more effectively. By comparison, the charity Share Our Strength raises money in clever and creative ways. A chef might contribute their labor to a food event where donors happily pay to eat the food, and those who are hungry are the beneficiaries. Such an approach creates value rather than moving value from one not-for-profit to another.

NB: Can you give an example of a negotiation from the news that went awry, from an ethical standpoint, and how it might have gone better?

MB: Donald Trump presents himself as a master negotiator. But as a businessperson, Trump took advantage of U.S. bankruptcy laws to go out of business many times, leaving the debt he accumulated to others. That negotiation framework doesn’t work for a government.

Trump’s claim that his great negotiation skills were going to bring us enormous success have not come to fruition. Consider his trade negotiations, the most visible being with China. Under President [Barack] Obama, a variety of trade agreements were serving America very well. China, however, was not the most reliable trading partner. What was the best way to put pressure on China? Consider that many of China’s other trading partners were also unhappy with its behavior. If the United States formed an alliance with our allies and confronted China, we likely would have made significant progress toward a better trade agreement.

Instead, Trump started trade wars with most of our allies, so they were no longer even on our side regarding trade. Then he took a variety of unilateral actions against China, which predictably retaliated. We ended up with a trade war that harmed American manufacturers. Overall, Trump’s trade strategy made China a bit worse off, the United States much worse off, and the world worse off. Trump destroys value by mistakenly thinking he can simply issue a tough demand and the other side will cave and grant a concession. That makes him a bad negotiator. From an ethical perspective, the amount of value he’s destroyed and harm he’s caused makes him a bad human being as well.