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Negotiating in 3-D: An Overarching Way to Get to Yes?
From resolving a labor dispute, to orchestrating a merger, to getting a new company off the ground, negotiation plays a vital role in nearly every facet of business. In a course note titled "Negotiation Analysis: Summary Framework and Examples," HBS professor James K. Sebenius (with David A. Lax) has developed a "three-dimensional" model that, in addition to utilizing two familiar and traditional aspects of negotiation, offers a third, multifaceted approach that has enormous potential to increase effective negotiation.
According to Sebenius, the first dimension - by far the most studied and familiar - consists mainly of the process taking place at the bargaining table, elements such as setting a positive atmosphere, establishing trust, and being persuasive, creative, and sensitive. It also includes deciding who makes an opening offer and when, how high or low it should be, and the dynamics of successive counteroffers.
The second dimension moves beyond process to substance, with a focus on designing sustainable agreements that create value. While a one-dimensional negotiation, especially if inexperienced participants are involved, may get bogged down in a battle of bargaining positions, a two-dimensional negotiation is informed by the search for any deeper interests that may underlie the parties' positions. For example, during a seemingly intractable dispute over the Sinai, negotiators concluded that the Israelis cared more about security, while the Egyptians were more concerned about sovereignty. The solution was to establish a buffer zone under the Egyptian flag rather than continue a vain zero-sum search over where to draw a boundary line in the sand.
The third dimension challenges the basic architecture of negotiation and considers what each party might do if the two-dimensional approach cannot render an outcome acceptable to participants. Its most familiar element involves what each party will do if no deal can be reached - in other words, the "best alternative to negotiated agreement" or "BATNA." Rather than expending efforts at the bargaining table seeking to improve a potential deal that under the best of terms may still be unsatisfactory, more sophisticated negotiators carefully assess whether those efforts might be better spent away from the table, generating competing offers or involving other parties - activities, in other words, that tend to enhance one's BATNA.
Sebenius cites the example of Kennecott Copper Corporation, which a number of years ago was faced with what the company felt might be an eventual government takeover of its mines in Chile. Simply continuing a narrow, legalistic relationship-by-contract with the state would leave the company vulnerable to expropriation. So Kennecott undertook to strengthen its bargaining position and enlarge its negotiating parameters by repositioning itself vis-à-vis the larger Chilean society. The company gained leverage by transforming the situation into a multilateral business deal involving a number of players that had strong and stabilizing connections with various nonmining quarters of Chilean life, including the financial, industrial, and legal sectors. "Kennecott involved a variety of other parties that it could count on for support, and it changed the nature of Chile's BATNA in favor of the company," Sebenius observes.
The three dimensions of his model, Sebenius says, are related and cumulative rather than separate, with the most effective negotiators often crafting mutually reinforcing moves from each dimension. He emphasizes the importance of how each party's interest and BATNA interact to set up a joint problem. "A 3-D negotiator solves that problem elegantly by using both process insight and substantive understanding, by taking actions both at and away from the table, and by playing the given Œgame' well and changing it advantageously," Sebenius says. "Options can be framed in such a way that what you choose in your perceived interest is in fact what I want. Ideally, I can build an attractive bridge from where you are now to where I would like you to be."
(Adapted from articles that appeared in the Summer 1999 edition of Working Knowledge, a publication of the HBS Division of Research.)
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