Negotiating in a three-dimensional world
by: David A. Lax and James K. Sebenius
Most negotiators focus on one dimension, namely the tactics they bring to the bargaining table. But this approach is ill-suited to tough negotiations, especially when the other side holds all the cards. Three-dimensional negotiation, on the other hand, calls two additional dimensions into action: deal design and setup. It’s this combination of three dimensions that the world’s most experienced negotiators use for creating value, not just claiming it.
|Chances are that you have found yourself—or expect to find yourself—involved in some sort of bargaining process. Maybe you’ve just been through a tough negotiation, and you have a sense that you could have done better. Maybe you are looking down the road, in your professional or personal life, and you see important negotiations looming ahead. Most likely, you’re someone who’s involved in negotiations on a fairly regular basis, and you are simply on the lookout for new and better ideas.
We’ve got some ideas for you.
Where did these ideas come from? We’ve spent years doing deals. We advise companies and governments on their most challenging negotiations. We systematically analyze negotiations and teach what we’ve learned to senior executives, top government officials, and MBAs at Harvard and around the world. This long-term engagement with deals and dealmakers has left us increasingly dissatisfied with the model that dominates most of the negotiations—and thinking about negotiations—that go on today.
What’s the problem that we’ve perceived? Most negotiators focus on a single dimension of the bargaining process. They are “one-dimensional,” in our terminology, and the single dimension that they embrace is tactics. One-dimensional bargainers believe that negotiation is mainly what happens at the table. To them, preparation and execution is mainly about process and tactics.
But all too often, this one-dimensional approach leaves money on the table. It is inadequate to the tough negotiations in which the other side seems to hold all the cards. It isn’t well-suited to common dealmaking challenges such as many parties—not just two—tricky internal as well as external negotiations, and shifting agendas. It leads to suboptimal deals, creates needless impasses, and fosters conflicts that could have been avoided.
We have a better approach—one that encourages you to negotiate in three dimensions, not one. We’ve coined the phrase 3-D Negotiation™ to describe our approach, and to distinguish it from most of the negotiations that go on out there.
Our first dimension—tactics—is familiar territory. Tactics are the persuasive moves you make and the back-and-forth process you choose for dealing directly with the other side, at the table. Good tactics can make a deal; bad ones can break it.
Our second dimension, deal design, includes more than the obvious, face-to-face aspects of negotiation. Deal designers know how to probe below this surface to uncover the sources of economic and non-economic value. To unlock that value for the parties, they have a systematic approach to envision and structure creative agreements.
Where one-dimensional negotiators mainly focus on actions at the table, our third dimension, setup, extends to actions away from the table that shape and re-shape the situation to advantage. In deal after deal we’ve seen the same result: once the parties and issues are fixed, and once the negotiating table has otherwise been set, much of the game has already been played. Therefore, before even showing up at the conference room, 3-D Negotiators take the initiative. They act away from the table to set up the most promising possible situation, ready for tactical interplay. This means ensuring that the right parties have been approached, in the right sequence, to deal with the right issues, that engage the right set of interests, at the right table or tables, at the right time, under the right expectations, and facing the right consequences of walking away if there is no deal. If the setup at the table isn’t promising, this calls for moves to re-set it more favorably. We argue that a superior setup plus the right tactics can yield remarkable results that would be unattainable by purely tactical means, however skillful.
So the 3-D Negotiation approach is our effort to crystallize this very different set of insights and skills about setup and deal design, as well as tactics. These ideas come from the field—where you are—but they are scrutinized and tested by a wide range of people with either strong ideas about negotiation, lots of practical experience in the field, or both. Based on these two kinds of testing—“field-testing” and rigorous academic scrutiny—we are confident that the 3-D Negotiation™ approach can help you.
David A. Lax and James K. Sebenius are the authors of 3D Negotiation – Powerful Tools to Change the Game in Your Most Important Deals (Harvard Business School Press, September 2006). For more information see their book website www.3dnegotiation.com and their business website www.negotiate.com.
Adapted with permission from Harvard Business School Press from 3-D Negotiation: Powerful Tools to Change the Game in Your Most Important Deals by David A. Lax and James K. Sebenius. Copyright 2006 David A. Lax and James K. Sebenius. All Rights Reserved.