No matter how many right moves you make at the table, however skillfully you read body language, frame arguments, make offers and counteroffers, doing so at the wrong table can undercut your results and undermine your negotiating skills and negotiation tactics. Not only should you negotiate right, you should do the right negotiation. Sometimes this means looking with new eyes for a more promising table. 3-D negotiation confronts an often overlooked aspect – and moves away from the table to ensure the most promising setup.
3-D Negotiation Examples
For example, the owners of a niche packaging company that boasted an innovative technology and a novel product were deep in price negotiation to sell the company to one of three potential industry buyers, all larger packaging operations. The owners’ first instinct had been to persuade their bankers of the need for a higher valuation, refine their at-the-table negotiating tactics for dealing with each major player, and try to spark a bidding war.
But my colleague David Lax and I urged the company’s owners to rethink this approach.
“Why not look for a new, potentially more profitable negotiating table?”
Our analysis suggested that one of their major customers, a large consumer goods firm, might value exclusive access to the company’s technologies and innovative packaging products vis-a-vis other consumer products companies.
The company’s managers opened negotiations with the consumer goods firm. In doing so, they uncovered a completely new source of potential value (value creation) – and a much higher potential selling price. They also increased pressure on the larger packaging companies to up their offers, because they would lose all competitive position if the deal went through. By moving to a new table, the company’s owners greatly improved their options.
At the outset of the sale process, the niche player negotiated, however skillfully, at the wrong table.
David Lax and James Sebenius developed the “3-D negotiation approach” to address this challenge and a broad range of related issues.
You’ve undoubtedly encountered the first two dimensions of negotiation, staples of managerial training. The third, however, may be less familiar.
Negotiating Skills and Negotiation Tactics from 3-D Negotiation:
1-D Negotiation: Focuses on interpersonal skills and tactics at the negotiation table. 1-D negotiation advice typically teaches you to foster a more effective process, enhance relationships, develop cultural sensitivity, and make better moves and countermoves.
2-D Negotiation: Stresses deal design and value creation. 2-D advice adds the art and science of diagnosing value, both economic and noneconomic, and crafting agreements that unlock that value on a lasting basis.
3-D Negotiation: Confronts an often overlooked aspect – moves away from the table to ensure the most promising setup. In a 3-D negotiation, you learn to ensure that the right parties are dealing with the right issues, in the right sequence, facing the right walkaway options – and at the right table, which you have set.
The 3-D approach recognizes that great negotiators need to be armed with more than just negotiation tactics and negotiation skills. They also need to know how to set up the right negotiation.
This means considering whether to find a new set of negotiating partners, bring new partners to the table, or reduce the number of players in the game.
Have you found the 3-D negotiation approach helpful? Share your experience in the comments.
Originally published in 2013.