Capitalize on negotiator differences

By on / Negotiation Skills

Adapted from “What Divides You May Unite You,” by James K. Sebenius (professor, Harvard Business School), first published in the Negotiation newsletter, July 2005.

Some years ago, an English property development firm had assembled most of the land outside London that it needed to build a large regional hospital. Yet a key parcel remained, and its owner stubbornly resisted selling. The small property was appraised at a mere £80,000, but the developer had successively offered £90,000, £100,000, £120,000, and—ultimately—£200,000 to no avail. Clearly, the owner was aware of the parcel’s pivotal position and seemed determined to exploit it.

With the project hanging in the balance, the firm’s chief executive arranged a personal appointment with the owner. The executive arrived by chauffeur at the elderly woman’s somewhat shabby, but neat cottage, and she invited him in for tea.

Looking around the home, the executive noticed several pictures of a small dog adorning the walls. The owner sadly recounted how “dear Fluffy” had passed away three years ago. The executive asked to see the beloved pet’s gravesite. Following a moment of quiet contemplation in the cottage’s tiny garden, he delicately asked whether the woman had considered what would happen to the spot in coming years. “Would a proper memorial, well tended in perpetuity, be fitting?”

In the end, the development firm arranged for Fluffy to be handsomely interred in a prestigious pet cemetery, the cottage was sold for less than £100,000, and plans for the hospital were back on track. On closing, the owner remarked, “What use does an old woman like me have for money, as long as I can let a nice flat closer to Fluffy?”
However quirky, this story illustrates two important truths about effective negotiation. One, the most powerful ingredients of joint gain often turn out to be the differences among parties. Two, finding those differences requires probing beyond apparently incompatible bargaining positions to understand the other side’s true interests.

Focusing on differences to create value may seem counterintuitive. After all, don’t we negotiate to resolve differences? In fact, value-creating differences—those that one side can meet relatively cheaply but that offer significant value to the other side and vice versa—are the key to joint gains. It was easy for the development firm to solve the owner’s “Fluffy problem,” which meant a great deal to her. In turn, the owner enabled the hospital project to go through with a simple sale.

This basic deal design principle applies to simple differences of interest or priority. It also extends to differences in forecasts or beliefs about the future, differences in attitudes toward risk and time, and a host of other differences that can be profitably dovetailed for mutual benefit.

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