When parties to a negotiation can’t seem to find common ground, it sometimes seems as if the only solution is “winner take all.”
Consider the decade-long campaign by the backers of the Cape Wind project to build the first offshore wind farm in the United States off the coast of Massachusetts in Nantucket Sound. Led by Jim Gordon of Energy Management Inc., Cape Wind Associates sought approval for the wind farm from dozens of local, state, and federal agencies and organizations.
On its long road to approval, the wind farm became a polarizing source of controversy, though one poll found that only 14% of Massachusetts residents opposed it. Project supporters argue that Cape Wind’s 130 turbines will provide a local source of clean energy for the region. Opponents, mostly a vocal group of wealthy area residents, have complained that the wind farm would ruin scenic views and create environmental problems. Cape Wind finally received all its needed permits in April 2011, but the project still faces legal challenges.
Is there a better way to get what you want out of a negotiation? Of course, writes Massachusetts Institute of Technology professor Lawrence Susskind in his new book, Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014). Contrary to what negotiators often assume, you don’t have to lean toward either creating value or claiming value. Rather, by using a number of well-tested negotiation moves, five of which we discuss here, Susskind explains how you can help the other side benefit from a deal while also claiming substantially more value for yourself.
1. Lead them into the trading zone.
Susskind describes the “trading zone” as that point in a negotiation when parties let down their guard and begin to search for a mutually advantageous deal. Unfortunately, it can be hard to get there, especially when you or your organization is pursuing a goal that threatens the status quo. In such cases, opposition is typically fierce.
At such times, organizations often believe that the key to winning is to try to enlighten their counterparts about how the proposed goal will further the common good, writes Susskind. For example, both proponents and opponents of Cape Wind came up with their own evidence to rebut the other side’s claims. One spokesperson for the project told National Public Radio that the key to winning approval was to “get in there earlier and educate people” about the value of the project.
This view is flat-out wrong, writes Susskind. When you communicate one- sided information about a project’s merits, you’ll come across as arrogant and oblivious to the other party’s concerns. “By the time the formal regulatory reviews took place, it was impossible to get all the parties in the same room for a civil conversation,” Susskind says of the Cape Wind project.
A joint fact-finding process, described in the sidebar on page 3, provides a better route to value creation and claiming. It begins by engaging negotiators in a collaborative exploration of a project’s feasibility and merits during its earliest stages, with the help of outside experts, before everyone begins taking sides. “By agreeing on the information that needs to be gathered, analyzed, and interpreted, the parties can lay the foundation for mutually beneficial negotiation,” writes Susskind.
Most two-party negotiations are actually multiparty negotiations in disguise because of the “back tables” involved— that is, both your constituents and theirs.
Corporations often use joint fact-finding in negotiations with the public, but the process can be just as useful in private negotiations between companies or even within them. Whenever parties are likely to disagree about the fundamental issues at stake, enlisting outside help for an unbiased view of the facts can be a crucial first step.
2. Create more value through trades.
In contrast to how the debate over offshore wind played out in Massachusetts, notes Susskind, the state of Maine took a different tack. It reviewed all potential offshore wind sites before any projects had been proposed and publicly noted which sites seemed most promising based on technical, economic, and aesthetic criteria. Perhaps as a result, wind farm proposals in Maine have faced far less public opposition than Cape Wind.
As this example suggests, a process that encourages collaboration, such as joint fact-finding, also lays the foundation you need to help you claim more value. Negotiators can draw on several strategies to both create and claim more value, writes Susskind in Good for You, Great for Me. First, prepare to present multiple proposals—all of which you value highly—at the same time. Your counterpart’s reactions to these proposals will help you better gauge his preferences across issues. Second, ask lots of questions to directly assess his interests and reveal your own. Third, make hypothetical “What if…” proposals to determine if a trade genuinely creates value for both sides, such as “If I offered you a 5% discount on our new product, would that be enough of an incentive for you to switch from our existing product?”
3. Try contingent agreements.
In negotiation, it’s common for parties to reach impasse because they have different beliefs about the likelihood of future events. You might be convinced that your firm will deliver a project on time and under budget, for example, but the client may view your proposal as unrealistic.
In such situations, a contingent agreement—negotiated “if, then” promises aimed at reducing risk about future uncertainty—offers a way for parties to agree to disagree while still moving forward. Contingent commitments often create incentives for compliance or penalties for noncompliance, writes Susskind. You might propose paying specified penalties for turning your project in late or agree to significantly lower your rates if you go over budget, for example.
To add a contingent agreement to your contract, begin by having both sides write out their own scenarios of how they expect the future to unfold. Then negotiate expectations and requirements that seem appropriate to each scenario. Finally, include both the scenarios and the negotiated repercussions and rewards in your contract. Now breathe a sigh of relief that, no matter what happens, you should be satisfied with whatever remedies are in place.
Through joint fact-finding, parties can enter the trading zone—that space where it is possible to explore mutually advantageous trades. You will find that you can claim more value for yourself after you have done everything you can to help the other side “win” as much for themselves as possible.
Joint fact-finding should follow several key steps, Lawrence Susskind writes in Good for You, Great for Me, including:
- Negotiate an agenda.
- The interested parties should jointly choose a professional mediator to help them agree on an agenda and ground rules for their talks, such as the amount of time and money they’ll spend gathering data and analyzing it.
- Choose advisers together. Rather than each hiring their own experts to present opposing versions of the facts, negotiators should work together to select technical advisers and analytic methods that will help them arrive at a shared understanding of a project’s likely costs and benefits.
- Jointly assess data. After the advisers present their results, the parties themselves, and not their advisers, should negotiate how to proceed. It’s also important for the parties to share the findings with their constituents.
- Correct misperceptions. Having agreed-upon facts and forecasts makes it difficult for negotiators to brush aside one another’s concerns. Jointly generated forecasts also allow you to correct faulty perceptions within your organization, while encouraging your counterpart to reconsider unreasonable assumptions and demands.
4. Write their victory speech.
You may think you’re involved in a negotiation with one other party, but think again, advises Susskind. Most two-party negotiations are actually multiparty negotiations in disguise because of the “back tables” involved— that is, both your constituents and theirs. Though often unseen and unheard, these constituents can nonetheless be a powerful presence in a negotiation, as they must sign off on whatever deal shows up on their desks.
The knowledge that you are making your case not only to the person (or people) in front of you but also to their back table offers a clue to negotiating more effectively. Rather than viewing your negotiating partner as an adversary, start looking at her as an important emissary to her back table. That means supplying her with the arguments she will need to sell an agreement that is best for you to her back table. In other words, write your counterpart’s victory speech for her.
The backers of the Cape Wind project failed in this regard. They never wrote the victory speech that would have allowed their wealthy opponents to show the world how the original plan for the wind farm had been modified to ensure lower-priced energy for area residents, avoiding the need for further investments in fossil fuel–powered generating plants and increasing the profits of the local tourism industry.
5. To prevent disputes, prepare for them.
Just as joint fact-finding can lead to mutually beneficial outcomes, a negotiation tool known as dispute prevention could help business partners deal with their differences more productively.
Though dispute prevention is not commonly used in business contracts, the construction industry has relied on it for decades, writes Susskind. Companies entering into construction contracts are eager to avoid delays that could kill a complex multiyear building project. So before work gets under way, the project’s developer, financers, architects, and any other interested parties sign an agreement in which they vow to meet and communicate regularly, monitor progress jointly, and consult with mediators to quickly resolve minor disagreements. Such carefully designed dispute-prevention systems have proven highly effective at warding off serious conflicts and delays.
These days, business negotiators often include clauses mandating the use of dispute-resolution procedures such as mediation or arbitration in their contracts. Yet few put in place the types of detailed safeguards that have been so effective in the construction industry. Why? Perhaps because the lawyers who draft business contracts have little incentive to promote processes that would help parties avoid litigation.
Combining dispute prevention with a contingent agreement can be an effective remedy. For example, you might negotiate a provision to your contract that promises a financial bonus to the other side if they avoid litigation for the life of the contract. Such a clause could give both sides the incentives they need to stay in touch throughout the implementation stage and involve a mediator at the first sign of trouble.