Start-ups and individual entrepreneurs often encounter challenging conversations when negotiating with potential partners and investors. When you are trying to sell others on your big idea or venture, you face the daunting challenge of convincing them that it’s worth their time, money, and effort. And even as you’re drawing on all your powers of persuasion to close the deal, you still need to remain open to their feedback and concerns.

Entrepreneurs face unique challenges when vying for funding and negotiating with new partners. Massachusetts Institute of Technology professor Lawrence Susskind describes four of these challenges and ways that entrepreneurs can address them. We review these challenges and some of his proposed solutions here.

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4 Aspects of challenging conversations – and how to overcome them

1. Ego and emotion.

“Anyone who invents or creates something tends to become attached to it—and maybe even a little protective or defensive about it,” according to Susskind. After nurturing an exciting new idea, entrepreneurs are likely to have strong opinions about how their concepts should be brought to market. And they are likely to react strongly when someone seems to criticize or downplay what they have invented, as any viewer of the television show Shark Tank has observed.

Meanwhile, by necessity, investors and others in the business of vetting the next great idea build up a healthy skepticism about the pitches they hear. Fully aware that the majority of new business concepts fail, they scrutinize entrepreneurs’ claims closely for flaws. They may also try to conceal their excitement about a new business to try to get a better deal for themselves.

Not surprisingly, in challenging conversations when a potential partner’s skeptical remarks come up against an entrepreneur’s defensiveness, bruised egos and strong negative emotions often result. Reactive devaluation, a common cognitive bias identified by Stanford University professor Lee Ross, lies at the root of this challenge, according to Susskind. Reactive devaluation leads negotiators to automatically question the legitimacy of whatever a counterpart whom they perceive as an adversary proposes.

Negotiators need to overcome the reactive devaluation inspired by runaway egos and emotions. But how? There are numerous solutions to this problem, according to Susskind; one of the most promising is to rely on an intermediary, acceptable to both sides, to initiate or facilitate preliminary negotiation.

Entrepreneurs may initially balk at the idea of allowing someone else to lead their negotiation, even if only at the outset. But an intermediary whom both sides agree on can be invaluable in helping parties sidestep the problem of reactive devaluation. When an intermediary floats proposals and offers, both parties are less likely to immediately discredit or discount them, says Susskind. Involving a mutually acceptable intermediary can reduce the chances that emotions and ego will sidetrack the negotiations.

The idea of enlisting an intermediary or a facilitator to help you explore a potential deal has a long history in Asian business negotiations. An independent financial expert, trusted by both sides, often makes discreet inquiries (with the agreement of both buyer and seller) to determine quickly whether a zone of possible agreement (ZOPA) exists, given the interests and expectations of the parties. If a deal is unlikely, both sides can look elsewhere, and no one loses face. Negotiators who have experience crafting long-term business relationships are likely to find this strategy intuitively appealing.

2. Technical complexity.

Whether the innovation at stake is a smartphone app or a service requiring a network of complex software, start-ups often are based on a technical insight or design. Unfortunately for the entrepreneur, potential investors and business partners often lack the specialized technical expertise needed to fully grasp the entrepreneur’s concept.

This imbalance in technical knowledge can become the source of more challenging conversations in entrepreneurial negotiations. Because potential investors and partners often hire experts to test entrepreneurs’ products and services, an entrepreneur may be faced with the task of trying to win over the other party’s expert or team of experts. Rather than viewing your ideas objectively, such experts may try to punch holes in them simply to prove their worth and authority to their client. Moreover, even a well-established expert may lack the specialized knowledge needed to assess a new technology’s merits. Consequently, entrepreneurs can find themselves in the frustrating position of not being able to talk directly about the technical merit of their innovation with the person they really want to be educating.

How can you avoid such problems in entrepreneurial negotiations? Susskind recommends a process known as joint fact-finding, in which negotiators jointly select and hire a team of experts to produce a shared assessment. The experts may interpret the data differently, but at least they are working from the same analysis. By developing assessments or technical analyses jointly, negotiators avoid talking past each other.

Joint fact-finding can be used whenever parties are likely to disagree over technical matters at the heart of a negotiation. Susskind maps out a typical joint fact-finding process in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014).

3. Uncertainty.

Entrepreneurial negotiations are rife with challenging conversations about how an innovation will perform in the future. “The usual argument in favor of something innovative is that no one has ever tried it before,” says Susskind. “The argument against it is also that no one has ever tried it before.”

This uncertainty can cause entrepreneurs and their potential partners to reach very different predictions regarding how quickly an innovation will generate a user base, turn a profit (if at all), secure a subsequent round of funding, and so on. Disagreements over whose vision of the future is correct can lead parties in an entrepreneurial negotiation to unsatisfying compromise deals or impasse.

A better way? Sidestep such issues through the use of a contingent contract, recommends Susskind. When forming a contingent contract or agreement, negotiators agree on one or more “If this happens, then we do this or that” promises aimed at reducing the risk caused by uncertainty.

Suppose that an entrepreneur is highly optimistic that his new product will gross $500,000 in the next year, while the investor believes it will gross a much more modest $200,000 during the same time period. The entrepreneur might agree to accept a small percentage of any profits below the $200,000 mark in return for a bigger cut of profits above $200,000. In this type of contingent contract, each side bets on its predictions, which are enshrined in the final agreement and thus enforceable.

A contingent contract adds a bit more complexity to a deal but can vastly increase the odds of agreement, in addition to managing uncertainty and increasing long-term satisfaction for both sides.

4. Ongoing relationships.

As compared with one-off sales negotiations, entrepreneurial negotiations typically bind parties to an ongoing relationship, at least for a while. The need to prepare for an ongoing partnership can leave negotiators feeling torn between engaging in the types of hard-bargaining tactics that are common in the sales world, such as exaggerating claims and making take-it-or-leave-it offers, versus behaving in a more forthright manner that will help to build trust and cement a good working relationship.

When relationship building is a goal, win-win outcomes are important. If both sides need each other until they can find their place in the market, hard-bargaining tactics at the outset of an entrepreneurial negotiation likely will be counterproductive. The key is to remember that investment or partnership negotiations almost always involve multiple issues and that not every issue will be equally important to both sides. Even challenging conversations about how much funding an investor will offer hinges on related issues, such as how much equity or what kinds of rights she will gain in return. Other issues ripe for trading in entrepreneurial negotiations include the investor’s degree of involvement in the project, her risk tolerance, stock purchase agreements, selection of key personnel, and the role of other investors.

The presence of multiple issues allows negotiators to make creative, trust-building trades in which one partner gains more of what he wants on one issue in exchange for giving more of what the other partner wants on another issue. Whether an investor hopes to work closely with a start-up or remain more hands-off, the two sides can improve their deal and launch a strong relationship through such trades.

What is your experience with having challenging conversations with negotiation counterparts?

A common question around negotiation dialogue is how to elicit information from a counterpart. Here’s one such question from a reader:

I’ve been told that learning information about my counterparts—their preferences, fears, goals, strengths, and weaknesses—is critical for success in negotiation. I need to understand what others care about to be able to trade for issues I care about more. But during my negotiations, I tend to feel unsure about the best way to learn about others, especially information that seems sensitive or private. How can I learn more about the people I’m negotiating with?

Here’s what Alison Wood Brooks,  O’Brien Associate Professor of Business Administration and Hellman Faculty Fellow in the Negotiation, Organizations & Markets Unit at Harvard Business School, had to say.

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One answer to your question lies in a simple behavior that people do all the time. In fact, you’ve done it just now: asking questions. Though this seems like an intuitive answer, asking questions is an art, one that many people struggle to master.

3 Common guidelines for asking questions that can help you in your  negotiation dialogue

1. Ask, ask, ask. Most people—in life and in their negotiation dialogue—do not ask nearly enough questions, for several reasons. First, we are self-focused and often don’t think to ask questions about others. Second, we may not ask questions because we’re uninterested in the answers. Third, we realize we could ask questions but, as you expressed, are worried our questions will be perceived as intrusive or offensive.

In negotiation, we want to optimize two goals: learning information and impression management. We need to learn things about our counterpart, but we also want them to like and respect us. Luckily, asking questions satisfies both goals. Based on research I have conducted with my Harvard Business School colleague Karen Huang, not only is asking questions useful for information exchange in a negotiation, but people actually like conversational partners who frequently ask them questions more than those who ask them questions infrequently. Asking questions triggers self-disclosures by the question answerer, which feels good—people typically love talking about themselves. You can expect the question answerer to attribute those good feelings to you (the curious, caring person who asked).

2. Content matters, but less than you think. In our research, we find that people are worried about asking questions that could seem too personal, specific, broad, or nosy. But the content of questions matters less than most people think. Generally speaking, people are happy to be asked almost anything; and, in the rare cases when they aren’t, they can choose not to answer.

Master question-askers often start with “small talk” questions on topics unrelated to the negotiation: “What are some of your interests outside work?” or “How was the hotel?” or “I see you went to the University of Wisconsin. Did you like it?” Questions seemingly unrelated to the negotiation dialogue help to build rapport by signaling that you care about your counterpart, and the answers may reveal information that is helpful in the negotiation.

When negotiations begin, the way you ask questions can make a difference. Asking pointed questions (e.g., “Has your used iPhone ever been dropped or damaged? Has it ever been repaired?”) inspires more honest answers than open-ended questions that allow the answerer to leave gaps and omissions (e.g., “Can you tell me about the history of this used iPhone?”), research by Maurice Schweitzer and Julia Minson at the Wharton School suggests.

3. Listen carefully to answers. Many people don’t listen carefully to people’s answers to their questions. If you don’t listen carefully, you won’t learn the information you seek, and you won’t know what types of follow-up questions to ask. Follow-up questions signal empathy and active listening, which build trust and increase your counterpart’s disclosures. Even saying, “I’m not sure I understand what you mean. Can you tell me more about that?” invites your counterpart to continue the negotiation dialogue.

Research by Michael Norton and Todd Rogers of Harvard suggests that people sometimes answer a slightly different question than the one that was asked (“artful dodging”) or say something that is true but deliberately misleading (“paltering”). Careful listening and specific follow-up questions will help you detect dodges and palters from your counterpart.

What are your thoughts? How do you use negotiation dialogue to learn more about your counterpart?

“Confessionals.” “Informal informals.” “Indabas.” Delegates from the 196 nations participating in the U.N. Climate Change Conference, held in Paris at the end of 2015, cycled through an eclectic variety of negotiating formats in their race to make binding commitments to lower greenhouse-gas emissions. According to media reports, the participants’ willingness to shake up the complex multiparty negotiations with new negotiation tactics was crucial to their ability to forge an agreement that was not only unanimous but also more ambitious than originally envisioned.

Conference organizers and leaders had already met to lay the groundwork for a successful negotiation, such as steering the process of creating a draft agreement and designing a comfortable and welcoming negotiating environment. Here we describe the specific strategies the negotiators followed to ensure that all voices were heard—strategies that may prove useful the next time you are involved in a difficult multiparty negotiation.

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3 Negotiation tactics that could help you achieve success in complex multiparty deals

1. The confessional.

Aware that the delegates would be working around the clock and facing enormous stress, the French government hosts went to great lengths to attend to their needs, from serving haute cuisine to setting up meditation and relaxation rooms. Along these lines, the hosts also introduced a series of “confessionals”—confidential talks where delegates could “speak from the heart” to listening French diplomats, as one delegate told the Guardian. The delegates were promised that whatever they said in a confessional would remain private, a rule that allowed them to open up about and begin to work through their frustrations and concerns.

In business disputes, professional mediators often end up serving as confidants to one or both sides. In a large multiparty negotiation that is expected to be tense, organizers might try to help participants manage their stress levels and reflect more deeply on their positions by having a mediator or even a psychologist available for them to meet with in confidence.

2. The informal informal.

In Paris, as in many United Nations negotiations, the delegates’ main task was to resolve contested passages in the so-called negotiating text—a working document that had been created and edited with input from virtually all the participants in the nine months leading up to the conference. At the start of the Paris talks, the negotiating text was littered with bracketed sections that needed to be discussed and resolved. For example, “should,” “must,” or “may” wealthy nations commit to delivering financial assistance to nations affected by natural disasters caused by climate change?

Small groups of delegates from various countries were charged with resolving chunks of disputed text, often just a single paragraph, according to the Guardian. Their meetings were known in the United Nations’ quirky lingo as “informal informals.” Befitting their name, informal informals were often impromptu huddles in the hallways of the conference center. After agreeing on a piece of bracketed text, the group would pass it along for approval in a meeting of delegates from each nation.

In multiparty negotiations, a unanimous or near-unanimous agreement is often more stable and lasting than an agreement achieved through majority rule. Yet the process needed to secure a consensus can seem daunting. Business negotiators might consider the U.N.’s process of tasking small groups representing various factions with resolving detailed matters. The consensus achieved in small groups can build goodwill that may spill over when their work is brought to the broader group.

3. The indaba.

Likely the most unique of the negotiation tactics employed at the Paris conference was the indaba, a meeting style of the Xhosa and Zulu people of South Africa. In a traditional indaba (the word means “business” or “matter” in Zulu), male elders and other leaders gather to try to negotiate common ground on a problem that affects the community. Although only the leaders have decision-making power, all in the community are invited to attend the indaba and share their views, according to the Sydney Morning Herald. By giving everyone a voice, indabas are said to break through impasse and promote consensus building.

South African negotiators first introduced indabas at a 2011 climate-change summit their nation hosted. In Paris, indabas gained a higher profile. During the conference’s final week, as negotiators worked furiously to resolve their differences, the organizers held indabas in large rooms, setting up 80 seats reserved for government ministers, according to the Herald. In some cases, the indabas ran all night, from midnight until 8:00 a.m., with fresher negotiators taking over for exhausted ones, until a final agreement was reached on December 12.

At the indabas, each country was invited to air its “redline positions,” or must-haves, whether that meant simply restating entrenched positions (as most did) or unveiling a new or compromise position. At one point, the energy minister of the Caribbean island of Saint Lucia, James Fletcher, said his nation would only accept an agreement that stipulated global warming be kept below 1.5 degrees Celsius rather than the more conservative 2-degree target that delegates had centered on throughout the talks, the Herald reports. Over the course of the conference, poorer nations believed to be most threatened by future environmental disasters had pushed for the tougher target. The below 1.5 degrees goal ultimately made it into the final resolution, suggesting that smaller nations gained a stronger voice in the indabas.

In your own multiparty negotiations, you may find great value in pausing back-and-forth negotiations to hold an indaba-style meeting. The process may allow new perspectives to enter the conversation and inspire the type of breakthrough you’ve been seeking.

What unusual negotiation tactics have you employed to achieve success in difficult talks?

QUESTION

I’ve been told that learning information about my counterparts—their preferences, fears, goals, strengths, and weaknesses—is critical for success in negotiation. I need to understand what others care about to be able to trade for issues I care about more. But during my negotiations, I tend to feel unsure about the best way to learn about others, especially information that seems sensitive or private. What is the best way to elicit information from my counterparts?

ANSWER

A: One answer to your question lies in a simple behavior that people do all the time. In fact, you’ve done it just now: asking questions. Though this seems like an intuitive answer, asking questions is an art, one that many people struggle to master. Let’s examine three common guidelines for asking questions that can help you in negotiation:

1. Ask, ask, ask. Most people—in life and in negotiations—do not ask nearly enough questions, for several reasons. First, we are self-focused and often don’t think to ask questions about others. Second, we may not ask questions because we’re uninterested in the answers. Third, we realize we could ask questions but, as you expressed, are worried our questions will be perceived as intrusive or offensive.

In negotiation, we want to optimize two goals: learning information and impression management. We need to learn things about our counterpart, but we also want them to like and respect us. Luckily, asking questions satisfies both goals. Based on research I have conducted with my Harvard Business School colleague Karen Huang, not only is asking questions useful for information exchange in a negotiation, but people actually like conversational partners who frequently ask them questions more than those who ask them questions infrequently. Asking questions triggers self-disclosures by the question answerer, which feels good—people typically love talking about themselves. You can expect the question answerer to attribute those good feelings to you (the curious, caring person who asked).

2. Content matters, but less than you think. In our research, we find that people are worried about asking questions that could seem too personal, specific, broad, or nosy. But the content of questions matters less than most people think. Generally speaking, people are happy to be asked almost anything; and, in the rare cases when they aren’t, they can choose not to answer.

Master question-askers often start with “small talk” questions on topics unrelated to the negotiation: “What are some of your interests outside work?” or “How was the hotel?” or “I see you went to the University of Wisconsin. Did you like it?” Questions seemingly unrelated to the negotiation help to build rapport by signaling that you care about your counterpart, and the answers may reveal information that is helpful in the negotiation.

When negotiations begin, the way you ask questions can make a difference. Asking pointed questions (e.g., “Has your used iPhone ever been dropped or damaged? Has it ever been repaired?”) inspires more honest answers than open-ended questions that allow the answerer to leave gaps and omissions (e.g., “Can you tell me about the history of this used iPhone?”), research by Maurice Schweitzer and Julia Minson at the Wharton School suggests.

3. Listen carefully to answers. Many people don’t listen carefully to people’s answers to their questions. If you don’t listen carefully, you won’t learn the information you seek, and you won’t know what types of follow-up questions to ask. Follow-up questions signal empathy and active listening, which build trust and increase your counterpart’s disclosures. Even saying, “I’m not sure I understand what you mean. Can you tell me more about that?” invites your counterpart to keep talking.

Research by Michael Norton and Todd Rogers of Harvard suggests that people sometimes answer a slightly different question than the one that was asked (“artful dodging”) or say something that is true but deliberately misleading (“paltering”). Careful listening and specific follow-up questions will help you detect dodges and palters from your counterpart.

Alison Wood Brooks

Assistant Professor of Business Administration

Harvard Business School

Numerous research studies have found that women who assertively emphasize their skills, accomplishments, or desire to lead tend to be viewed as less likable and less hirable than men who are equally assertive. Women appear to suffer from this phenomenon, known as the backlash effect, when they act contrary to gender-stereotypical expectations that they will be accommodating and passive.

Yet not all research studies have found evidence of a backlash effect against women. To understand why, Melissa J. Williams of Emory University and Larissa Z. Tiedens of Stanford University closely analyzed 63 past studies that focused on evaluations of individuals behaving dominantly.

Williams and Tiedens found that study participants reacted more negatively to women whose dominance behaviors were explicit—for example, when they were making a demand or advocating for a particular position. By contrast, women did not incur a backlash when their dominant behavior was implicit—for example, when they used expansive body language or a direct speaking style associated with stereotypical male behavior.

The results suggest that women need not shy away from adopting a commanding nonverbal presence in negotiations. It also suggests that organizations need to work harder to ensure that women are not penalized based on their gender for making direct requests and demands.

Resource: “The Subtle Suspension of Backlash: A Meta-Analysis of Penalties for Women’s Implicit and Explicit Dominance Behavior,” by Melissa J. Williams and Larissa Z. Tiedens, Psychological Bulletin, 2015.

 In negotiation, a “blowback effect” from feigned anger

Pretending to be angry can intimidate counterparts into making greater concessions than they had planned, some negotiation research has found. But a new study by Rachel L. Campagna of the University of New Hampshire and her colleagues finds evidence of an undesirable blowback effect, in which one’s false display of anger leads one to experience genuine anger and also inspires retaliatory behavior from one’s counterpart.

In one experiment, participants playing the role of a job candidate believed they were negotiating online with another participant playing the role of an employer over payment for completing a task. The experimenters sent the participants preprogrammed messages that seemed to convey either the employer’s anger, happiness, or neutrality in reaction to the exchange of offers. Participants could then decide whether to accept or reject the employer’s final (preprogrammed) offer of $25. After the negotiation, the participants had the chance to renege on the agreement they’d just reached and accept an offer to work on the same task, also for $25, from a different employer.

Most participants chose to accept the employer’s offer, regardless of the employer’s apparent emotional state—angry, happy, or neutral. However, a full 55% of participants who faced a seemingly angry counterpart chose to renege on the deal, due to a lack of trust in their counterpart, whereas only 18% of those facing a neutral counterpart and 17% of those facing a happy counterpart chose to renege. The employer’s angry responses triggered anger and distrust in negotiators, who then seized an opportunity to sabotage the deal.

In another experiment, pairs of students engaged in a simulated two-stage job negotiation online over work conditions and benefits (first stage) and compensation (second stage). During the first stage, those playing the employer were given financial incentives to seem either angry, happy, or neutral. Those assigned to appear angry actually felt angrier after the negotiation than those assigned to appear happy or neutral. The emotion expressed by the “employer” didn’t affect the deal negotiators reached in the first stage. However, during the second stage, relative to those in the happy or neutral conditions, “employers” in the angry condition offered their partners a higher salary and also behaved more politely, suggesting that they were trying to make up for their feigned anger. “Employers” in the angry condition also felt a greater need than those in the happy or neutral conditions to pay a bonus to ensure that their new “employee” cooperated on the job.

Overall, the findings suggest that feigning anger may not only bring no short-term benefits but also create both the fear and the reality that those confronted with false anger will sabotage any deal that is reached.

Resource: “Strategic Consequences of Emotional Misrepresentation in Negotiation: The Blowback Effect,” by Rachel L. Campagna, Alexandra A. Mislin, Dejun Tony Kong, and William P. Bottom, Journal of Applied Psychology, 2015.

Numerous research studies have found that women who assertively emphasize their skills, accomplishments, or desire to lead tend to be viewed as less likable and less hirable than men who are equally assertive. Women appear to suffer from this phenomenon, known as the backlash effect, when they act contrary to gender-stereotypical expectations that they will be accommodating and passive.

Yet not all research studies have found evidence of a backlash effect against women. To understand why, Melissa J. Williams of Emory University and Larissa Z. Tiedens of Stanford University closely analyzed 63 past studies that focused on evaluations of individuals behaving dominantly.

Williams and Tiedens found that study participants reacted more negatively to women whose dominance behaviors were explicit—for example, when they were making a demand or advocating for a particular position. By contrast, women did not incur a backlash when their dominant behavior was implicit—for example, when they used expansive body language or a direct speaking style associated with stereotypical male behavior.

The results suggest that women need not shy away from adopting a commanding nonverbal presence in negotiations. It also suggests that organizations need to work harder to ensure that women are not penalized based on their gender for making direct requests and demands.

Resource: “The Subtle Suspension of Backlash: A Meta-Analysis of Penalties for Women’s Implicit and Explicit Dominance Behavior,” by Melissa J. Williams and Larissa Z. Tiedens, Psychological Bulletin, 2015.

 In negotiation, a “blowback effect” from feigned anger

Pretending to be angry can intimidate counterparts into making greater concessions than they had planned, some negotiation research has found. But a new study by Rachel L. Campagna of the University of New Hampshire and her colleagues finds evidence of an undesirable blowback effect, in which one’s false display of anger leads one to experience genuine anger and also inspires retaliatory behavior from one’s counterpart.

In one experiment, participants playing the role of a job candidate believed they were negotiating online with another participant playing the role of an employer over payment for completing a task. The experimenters sent the participants preprogrammed messages that seemed to convey either the employer’s anger, happiness, or neutrality in reaction to the exchange of offers. Participants could then decide whether to accept or reject the employer’s final (preprogrammed) offer of $25. After the negotiation, the participants had the chance to renege on the agreement they’d just reached and accept an offer to work on the same task, also for $25, from a different employer.

Most participants chose to accept the employer’s offer, regardless of the employer’s apparent emotional state—angry, happy, or neutral. However, a full 55% of participants who faced a seemingly angry counterpart chose to renege on the deal, due to a lack of trust in their counterpart, whereas only 18% of those facing a neutral counterpart and 17% of those facing a happy counterpart chose to renege. The employer’s angry responses triggered anger and distrust in negotiators, who then seized an opportunity to sabotage the deal.

In another experiment, pairs of students engaged in a simulated two-stage job negotiation online over work conditions and benefits (first stage) and compensation (second stage). During the first stage, those playing the employer were given financial incentives to seem either angry, happy, or neutral. Those assigned to appear angry actually felt angrier after the negotiation than those assigned to appear happy or neutral. The emotion expressed by the “employer” didn’t affect the deal negotiators reached in the first stage. However, during the second stage, relative to those in the happy or neutral conditions, “employers” in the angry condition offered their partners a higher salary and also behaved more politely, suggesting that they were trying to make up for their feigned anger. “Employers” in the angry condition also felt a greater need than those in the happy or neutral conditions to pay a bonus to ensure that their new “employee” cooperated on the job.

Overall, the findings suggest that feigning anger may not only bring no short-term benefits but also create both the fear and the reality that those confronted with false anger will sabotage any deal that is reached.

Resource: “Strategic Consequences of Emotional Misrepresentation in Negotiation: The Blowback Effect,” by Rachel L. Campagna, Alexandra A. Mislin, Dejun Tony Kong, and William P. Bottom, Journal of Applied Psychology, 2015.

For 70 years, the governments of Japan and South Korea disagreed over what Japan might owe the Korean women its soldiers abused during World War II. The story of how they finally came to agreement reminds us of the importance of including all interested parties in conflict-resolution efforts.

An unresolved issue

During the war, tens of thousands of women, many of them from Korea, were forced to serve as sex slaves for Japan’s Imperial Army. Since the war, relations between Korea and Japan have remained frosty over the issue of these “comfort women,” as they were euphemistically called. Japan insisted it had resolved the issue in a 1965 treaty regarding its colonial rule of Korea and through a 1993 statement that acknowledged its responsibility for the Korean women’s treatment during the war. But for many in South Korea, these moves did not go far enough in making amends to the victims. While only 238 former South Korean comfort women came forward to tell their stories, many others, who feared being stigmatized, are believed to have endured their pain in silence.

Tension grew between the two nations over the issue in recent years. In 2011, South Korean activists erected a statue directly across from the Japanese embassy in Seoul of a resolute young comfort woman seated next to an empty chair that symbolizes her dead comrades. The Japanese government considered the statue an embarrassing affront. Pressed by conservative hard-liners, Japanese prime minister Shinzō Abe ordered a review of Japan’s 1993 apology to the comfort women, suggesting he felt the apology had gone too far. After taking office in 2012, South Korean president Park Geun-hye refused to meet with Abe in protest over the issue.

Arm’s-length peacemaking

Meanwhile, U.S. president Barack Obama was eager for a thaw between South Korea and Japan. A closer alliance between the two nations, he believed, could help counterbalance China’s strength in the region, to America’s advantage, and also help to police North Korea, Juliet Eilperin reports in the Washington Post.

The White House opted not to try to mediate a resolution of the comfort women dispute for fear of being blamed if such an effort failed. But Obama reportedly raised the issue almost every time he met with Abe or Park. And in March 2014, he succeeded in getting the two leaders in the same room together for the first time, welcoming them to a nuclear security summit in the home of the U.S. ambassador to The Hague. Abe struck the right tone by addressing Park in Korean; she smiled in response, according to the Post.

That meeting created enough positive momentum that Abe and Park authorized bilateral negotiations on the question of the South Korean comfort women. The fact that only 46 of the victims who have come forward are still alive—most of them are about 90 years old—created a new sense of urgency. And the two sides became further motivated to reach a deal in 2015, a year that marked the 70th anniversary of the end of World War II and the 50th anniversary of diplomatic normalization between South Korea and Japan.

Throughout the course of the talks, the Obama administration strived to remain a neutral listener that reportedly encouraged both sides to focus on “the 21st century rather than the 20th century,” one senior White House official told the Post. “That style of finding the middle was important,” said U.S. Secretary of State John Kerry.

An irreversible resolution

Just days before 2015 drew to a close, South Korea and Japan announced that they had reached a “final and irreversible resolution” of their dispute. The Japanese government issued a formal apology to the South Korean comfort women for their “incurable physical and psychological wounds” and accepted its responsibility for the actions of its military authorities. It also promised to pay $8.3 million to provide health and other services to these survivors, while carefully stating it would not provide reparations to any of the survivors.

In return, the South Korean government promised never to criticize Japan over the issue again, according to the New York Times. Japan failed to negotiate the removal of the comfort woman statue facing its embassy; South Korea promised only that it would discuss the matter with the victims and their representatives.

Turning their backs on the deal

From a diplomatic standpoint, the agreement quickly reaped gains: When North Korea claimed to have conducted a nuclear test in January, Abe and Park were able to discuss the matter by phone. In Japan, Abe was largely praised for resolving the comfort women issue, though he did face some criticism from his political right for making concessions.

But in South Korea, the surviving comfort women largely rejected the agreement. Noting that they had not been invited to the negotiating table, they said that the matter should not have been treated as a political dispute but as an opportunity to listen to them and address their needs. Survivor Lee Yong-soo said at a press conference that she would ignore the deal because it did not clearly hold the Japanese government legally responsible for its behavior during the war and did not provide formal reparations to her and the other victims.

Meanwhile, the statue of the young woman whose eyes are trained on the Japanese embassy remains firmly in place.

Learning from a sensitive negotiation

The following four lessons emerge from South Korea and Japan’s dispute-resolution process:

1. Consider what you’re missing. When a dispute festers over time, parties can become so focused on the past that they lose sight of what would benefit them in the present. Conduct a rational analysis aimed at identifying what you could gain from moving forward.
2. Seek input from stakeholders. When trying to resolve a sensitive dispute, seek the input or involvement of all relevant stakeholders. By inviting those affected by your negotiation to contribute to a solution, you can increase the odds that any deal reached will be comprehensive and successfully implemented. Our article “New Strategies for Your Multiparty Negotiation Tool Kit” on page 4 of this issue offers specific techniques to help you meet this goal.
3. Seek forgiveness with sensitivity. An apology can lead to breakthroughs in dispute resolution, but only when it meets the needs of those who have been wronged. Listen closely to them to identify whether and how you can provide the type of closure they seek.

Be a neutral peacemaker. If you’re an outsider who would benefit from the resolution of a dispute, look for opportunities to play peacemaker, as the Obama administration did—and strive for neutrality throughout the process.

For 70 years, the governments of Japan and South Korea disagreed over what Japan might owe the Korean women its soldiers abused during World War II. The story of how they finally came to agreement reminds us of the importance of including all interested parties in conflict-resolution efforts.

An unresolved issue

During the war, tens of thousands of women, many of them from Korea, were forced to serve as sex slaves for Japan’s Imperial Army. Since the war, relations between Korea and Japan have remained frosty over the issue of these “comfort women,” as they were euphemistically called. Japan insisted it had resolved the issue in a 1965 treaty regarding its colonial rule of Korea and through a 1993 statement that acknowledged its responsibility for the Korean women’s treatment during the war. But for many in South Korea, these moves did not go far enough in making amends to the victims. While only 238 former South Korean comfort women came forward to tell their stories, many others, who feared being stigmatized, are believed to have endured their pain in silence.

Tension grew between the two nations over the issue in recent years. In 2011, South Korean activists erected a statue directly across from the Japanese embassy in Seoul of a resolute young comfort woman seated next to an empty chair that symbolizes her dead comrades. The Japanese government considered the statue an embarrassing affront. Pressed by conservative hard-liners, Japanese prime minister Shinzō Abe ordered a review of Japan’s 1993 apology to the comfort women, suggesting he felt the apology had gone too far. After taking office in 2012, South Korean president Park Geun-hye refused to meet with Abe in protest over the issue.

Arm’s-length peacemaking

Meanwhile, U.S. president Barack Obama was eager for a thaw between South Korea and Japan. A closer alliance between the two nations, he believed, could help counterbalance China’s strength in the region, to America’s advantage, and also help to police North Korea, Juliet Eilperin reports in the Washington Post.

The White House opted not to try to mediate a resolution of the comfort women dispute for fear of being blamed if such an effort failed. But Obama reportedly raised the issue almost every time he met with Abe or Park. And in March 2014, he succeeded in getting the two leaders in the same room together for the first time, welcoming them to a nuclear security summit in the home of the U.S. ambassador to The Hague. Abe struck the right tone by addressing Park in Korean; she smiled in response, according to the Post.

That meeting created enough positive momentum that Abe and Park authorized bilateral negotiations on the question of the South Korean comfort women. The fact that only 46 of the victims who have come forward are still alive—most of them are about 90 years old—created a new sense of urgency. And the two sides became further motivated to reach a deal in 2015, a year that marked the 70th anniversary of the end of World War II and the 50th anniversary of diplomatic normalization between South Korea and Japan.

Throughout the course of the talks, the Obama administration strived to remain a neutral listener that reportedly encouraged both sides to focus on “the 21st century rather than the 20th century,” one senior White House official told the Post. “That style of finding the middle was important,” said U.S. Secretary of State John Kerry.

An irreversible resolution

Just days before 2015 drew to a close, South Korea and Japan announced that they had reached a “final and irreversible resolution” of their dispute. The Japanese government issued a formal apology to the South Korean comfort women for their “incurable physical and psychological wounds” and accepted its responsibility for the actions of its military authorities. It also promised to pay $8.3 million to provide health and other services to these survivors, while carefully stating it would not provide reparations to any of the survivors.

In return, the South Korean government promised never to criticize Japan over the issue again, according to the New York Times. Japan failed to negotiate the removal of the comfort woman statue facing its embassy; South Korea promised only that it would discuss the matter with the victims and their representatives.

Turning their backs on the deal

From a diplomatic standpoint, the agreement quickly reaped gains: When North Korea claimed to have conducted a nuclear test in January, Abe and Park were able to discuss the matter by phone. In Japan, Abe was largely praised for resolving the comfort women issue, though he did face some criticism from his political right for making concessions.

But in South Korea, the surviving comfort women largely rejected the agreement. Noting that they had not been invited to the negotiating table, they said that the matter should not have been treated as a political dispute but as an opportunity to listen to them and address their needs. Survivor Lee Yong-soo said at a press conference that she would ignore the deal because it did not clearly hold the Japanese government legally responsible for its behavior during the war and did not provide formal reparations to her and the other victims.

Meanwhile, the statue of the young woman whose eyes are trained on the Japanese embassy remains firmly in place.

Learning from a sensitive negotiation

The following four lessons emerge from South Korea and Japan’s dispute-resolution process:

1. Consider what you’re missing. When a dispute festers over time, parties can become so focused on the past that they lose sight of what would benefit them in the present. Conduct a rational analysis aimed at identifying what you could gain from moving forward.
2. Seek input from stakeholders. When trying to resolve a sensitive dispute, seek the input or involvement of all relevant stakeholders. By inviting those affected by your negotiation to contribute to a solution, you can increase the odds that any deal reached will be comprehensive and successfully implemented. Our article “New Strategies for Your Multiparty Negotiation Tool Kit” on page 4 of this issue offers specific techniques to help you meet this goal.
3. Seek forgiveness with sensitivity. An apology can lead to breakthroughs in dispute resolution, but only when it meets the needs of those who have been wronged. Listen closely to them to identify whether and how you can provide the type of closure they seek.

Be a neutral peacemaker. If you’re an outsider who would benefit from the resolution of a dispute, look for opportunities to play peacemaker, as the Obama administration did—and strive for neutrality throughout the process.

“Confessionals.” “Informal informals.” “Indabas.” Delegates from the 196 nations participating in the U.N. Climate Change Conference, held in Paris at the end of 2015, cycled through an eclectic variety of negotiating formats in their race to make binding commitments to lower greenhouse-gas emissions. According to media reports, the participants’ willingness to shake up the complex multiparty negotiations with new tactics was crucial to their ability to forge an agreement that was not only unanimous but also more ambitious than originally envisioned.

In our March cover story, we reviewed the steps that conference organizers and leaders took to lay the groundwork for a successful negotiation, such as steering the process of creating a draft agreement and designing a comfortable and welcoming negotiating environment. Here we describe the specific strategies the negotiators followed to ensure that all voices were heard—strategies that may prove useful the next time you are involved in a difficult multiparty negotiation.

1. The confessional.

Aware that the delegates would be working around the clock and facing enormous stress, the French government hosts went to great lengths to attend to their needs, from serving haute cuisine to setting up meditation and relaxation rooms, as we noted in last month’s issue. Along these lines, the hosts also introduced a series of “confessionals”—confidential talks where delegates could “speak from the heart” to listening French diplomats, as one delegate told the Guardian. The delegates were promised that whatever they said in a confessional would remain private, a rule that allowed them to open up about and begin to work through their frustrations and concerns.

In business disputes, professional mediators often end up serving as confidants to one or both sides. In a large multiparty negotiation that is expected to be tense, organizers might try to help participants manage their stress levels and reflect more deeply on their positions by having a mediator or even a psychologist available for them to meet with in confidence.

2. The informal informal.

In Paris, as in many United Nations negotiations, the delegates’ main task was to resolve contested passages in the so-called negotiating text—a working document that had been created and edited with input from virtually all the participants in the nine months leading up to the conference. At the start of the Paris talks, the negotiating text was littered with bracketed sections that needed to be discussed and resolved. For example, “should,” “must,” or “may” wealthy nations commit to delivering financial assistance to nations affected by natural disasters caused by climate change?

Small groups of delegates from various countries were charged with resolving chunks of disputed text, often just a single paragraph, according to the Guardian. Their meetings were known in the United Nations’ quirky lingo as “informal informals.” Befitting their name, informal informals were often impromptu huddles in the hallways of the conference center. After agreeing on a piece of bracketed text, the group would pass it along for approval in a meeting of delegates from each nation.

In multiparty negotiations, a unanimous or near-unanimous agreement is often more stable and lasting than an agreement achieved through majority rule. Yet the process needed to secure a consensus can seem daunting. Business negotiators might consider the U.N.’s process of tasking small groups representing various factions with resolving detailed matters. The consensus achieved in small groups can build goodwill that may spill over when their work is brought to the broader group.

3. The indaba.

Likely the most unique negotiating technique employed at the Paris conference was the indaba, a meeting style of the Xhosa and Zulu people of South Africa. In a traditional indaba (the word means “business” or “matter” in Zulu), male elders and other leaders gather to try to negotiate common ground on a problem that affects the community. Although only the leaders have decision-making power, all in the community are invited to attend the indaba and share their views, according to the Sydney Morning Herald. By giving everyone a voice, indabas are said to break through impasse and promote consensus building.

South African negotiators first introduced indabas at a 2011 climate-change summit their nation hosted. In Paris, indabas gained a higher profile. During the conference’s final week, as negotiators worked furiously to resolve their differences, the organizers held indabas in large rooms, setting up 80 seats reserved for government ministers, according to the Herald. In some cases, the indabas ran all night, from midnight until 8:00 a.m., with fresher negotiators taking over for exhausted ones, until a final agreement was reached on December 12.

At the indabas, each country was invited to air its “redline positions,” or must-haves, whether that meant simply restating entrenched positions (as most did) or unveiling a new or compromise position. At one point, the energy minister of the Caribbean island of Saint Lucia, James Fletcher, said his nation would only accept an agreement that stipulated global warming be kept below 1.5 degrees Celsius rather than the more conservative 2-degree target that delegates had centered on throughout the talks, the Herald reports. Over the course of the conference, poorer nations believed to be most threatened by future environmental disasters had pushed for the tougher target. The below 1.5 degrees goal ultimately made it into the final resolution, suggesting that smaller nations gained a stronger voice in the indabas.

In your own multiparty negotiations, you may find great value in pausing back-and-forth negotiations to hold an indaba-style meeting. The process may allow new perspectives to enter the conversation and inspire the type of breakthrough you’ve been seeking.

Start-ups and individual entrepreneurs often encounter roadblocks when negotiating with potential partners and investors. When you are trying to sell others on your big idea or venture, you face the daunting challenge of convincing them that it’s worth their time, money, and effort. And even as you’re drawing on all your powers of persuasion to close the deal, you still need to remain open to their feedback and concerns.

Entrepreneurs face unique challenges when vying for funding and negotiating with new partners. In his new online course, “Entrepreneurial Negotiations: The MIT Way,” Massachusetts Institute of Technology professor Lawrence Susskind describes four of these challenges and ways that entrepreneurs can address them. We review these challenges and some of his proposed solutions here.

1. Ego and emotion.

“Anyone who invents or creates something tends to become attached to it—and maybe even a little protective or defensive about it,” according to Susskind. After nurturing an exciting new idea, entrepreneurs are likely to have strong opinions about how their concepts should be brought to market. And they are likely to react strongly when someone seems to criticize or downplay what they have invented, as any viewer of the television show Shark Tank has observed.

Meanwhile, by necessity, investors and others in the business of vetting the next great idea build up a healthy skepticism about the pitches they hear. Fully aware that the majority of new business concepts fail, they scrutinize entrepreneurs’ claims closely for flaws. They may also try to conceal their excitement about a new business to try to get a better deal for themselves.

Not surprisingly, when a potential partner’s skeptical remarks come up against an entrepreneur’s defensiveness, bruised egos and strong negative emotions often result. Reactive devaluation, a common cognitive bias identified by Stanford University professor Lee Ross, lies at the root of this challenge, according to Susskind. Reactive devaluation leads negotiators to automatically question the legitimacy of whatever a counterpart whom they perceive as an adversary proposes.

Negotiators need to overcome the reactive devaluation inspired by runaway egos and emotions. But how? There are numerous solutions to this problem, according to Susskind; one of the most promising is to rely on an intermediary, acceptable to both sides, to initiate or facilitate preliminary negotiation.

Entrepreneurs may initially balk at the idea of allowing someone else to lead their negotiation, even if only at the outset. But an intermediary whom both sides agree on can be invaluable in helping parties sidestep the problem of reactive devaluation. When an intermediary floats proposals and offers, both parties are less likely to immediately discredit or discount them, says Susskind. Involving a mutually acceptable intermediary can reduce the chances that emotions and ego will sidetrack the negotiations.

The idea of enlisting an intermediary or a facilitator to help you explore a potential deal has a long history in Asian business negotiations. An independent financial expert, trusted by both sides, often makes discreet inquiries (with the agreement of both buyer and seller) to determine quickly whether a zone of possible agreement (ZOPA) exists, given the interests and expectations of the parties. If a deal is unlikely, both sides can look elsewhere, and no one loses face. Negotiators who have experience crafting long-term business relationships are likely to find this strategy intuitively appealing.

2. Technical complexity.

Whether the innovation at stake is a smartphone app or a service requiring a network of complex software, start-ups often are based on a technical insight or design. Unfortunately for the entrepreneur, potential investors and business partners often lack the specialized technical expertise needed to fully grasp the entrepreneur’s concept.

This imbalance in technical knowledge can become another challenge in entrepreneurial negotiation. Because potential investors and partners often hire experts to test entrepreneurs’ products and services, an entrepreneur may be faced with the task of trying to win over the other party’s expert or team of experts. Rather than viewing your ideas objectively, such experts may try to punch holes in them simply to prove their worth and authority to their client. Moreover, even a well-established expert may lack the specialized knowledge needed to assess a new technology’s merits. Consequently, entrepreneurs can find themselves in the frustrating position of not being able to talk directly about the technical merit of their innovation with the person they really want to be educating.

How can you avoid such problems in entrepreneurial negotiations? Susskind recommends a process known as joint fact-finding, in which negotiators jointly select and hire a team of experts to produce a shared assessment. The experts may interpret the data differently, but at least they are working from the same analysis. By developing assessments or technical analyses jointly, negotiators avoid talking past each other.

Joint fact-finding can be used whenever parties are likely to disagree over technical matters at the heart of a negotiation. Susskind maps out a typical joint fact-finding process in his book Good for You, Great for Me: Finding the Trading Zone and Winning at Win-Win Negotiation (PublicAffairs, 2014).

3. Uncertainty.

Entrepreneurial negotiations are rife with uncertainty about how an innovation will perform in the future. “The usual argument in favor of something innovative is that no one has ever tried it before,” says Susskind. “The argument against it is also that no one has ever tried it before.”

This uncertainty can cause entrepreneurs and their potential partners to reach very different predictions regarding how quickly an innovation will generate a user base, turn a profit (if at all), secure a subsequent round of funding, and so on. Disagreements over whose vision of the future is correct can lead parties in an entrepreneurial negotiation to unsatisfying compromise deals or impasse.

A better way? Sidestep such issues through the use of a contingent contract, recommends Susskind. When forming a contingent contract or agreement, negotiators agree on one or more “If this happens, then we do this or that” promises aimed at reducing the risk caused by uncertainty.

Suppose that an entrepreneur is highly optimistic that his new product will gross $500,000 in the next year, while the investor believes it will gross a much more modest $200,000 during the same time period. The entrepreneur might agree to accept a small percentage of any profits below the $200,000 mark in return for a bigger cut of profits above $200,000. In this type of contingent contract, each side bets on its predictions, which are enshrined in the final agreement and thus enforceable.

A contingent contract adds a bit more complexity to a deal but can vastly increase the odds of agreement, in addition to managing uncertainty and increasing long-term satisfaction for both sides.

4. Ongoing relationships.

As compared with one-off sales negotiations, entrepreneurial negotiations typically bind parties to an ongoing relationship, at least for a while. The need to prepare for an ongoing partnership can leave negotiators feeling torn between engaging in the types of hard-bargaining tactics that are common in the sales world, such as exaggerating claims and making take-it-or-leave-it offers, versus behaving in a more forthright manner that will help to build trust and cement a good working relationship.

When relationship building is a goal, win-win outcomes are important. If both sides need each other until they can find their place in the market, hard-bargaining tactics at the outset of an entrepreneurial negotiation likely will be counterproductive. The key is to remember that investment or partnership negotiations almost always involve multiple issues and that not every issue will be equally important to both sides. Even a discussion of how much funding an investor will offer hinges on related issues, such as how much equity or what kinds of rights she will gain in return. Other issues ripe for trading in entrepreneurial negotiations include the investor’s degree of involvement in the project, her risk tolerance, stock purchase agreements, selection of key personnel, and the role of other investors.

The presence of multiple issues allows negotiators to make creative, trust-building trades in which one partner gains more of what he wants on one issue in exchange for giving more of what the other partner wants on another issue. In the Lyft-GM partnership described in the sidebar above, for example, GM negotiated for a seat on Lyft’s board, a benefit it was able to receive thanks to its hefty financial investment in the company. Whether an investor hopes to work closely with a start-up or remain more hands-off, the two sides can improve their deal and launch a strong relationship through such trades.

General Motors and Lyft look to the future

On January 4, the ride-hailing start-up Lyft announced that General Motors (GM) had agreed to invest $500 million in the company, supplying a full half of Lyft’s most recent $1 billion venture-financing round, according to the New York Times. In addition to providing financial support and gaining a seat on Lyft’s board, GM will work with Lyft to develop a network of self-driving cars and set up hubs across the United States where people without cars can earn income by renting GM cars at a discount and driving them for Lyft.

The deal has the potential to be a win-win over the long term. Lyft is getting the funding it needs to become competitive with its more popular rival, Uber, and GM is gaining a foothold in the rapidly growing ride-sharing economy and the chance to introduce young urban dwellers to GM cars.

“It felt very natural very quickly,” Lyft cofounder and president John Zimmer told the Associated Press, speaking of the deal, which took about three months to negotiate. The companies were able to find synergy in their complementary needs and shared desire to capitalize on anticipated shifts in car ownership.