Notes to accompany Ch. 3 Integrative Negotiation Lecture. East-West Negotiation, Culture and Challenges.

1. 3-1 Strategy and Tactics of Integrative Negotiation

2. Last Session(s): Win-Loose, Zero-Sum, Distributive. For some, they were “Loose-Loose”. What were your take-away’s: A-Team Items? Personal Journal? This Session: Win-Win, Mutual Gains & Their Differences. Recall…

3. Experiential Learning from the three recent Simulations Win: Trust, throw X’s & Y’s Reputation, Greed vs. Cooperation Negotiate with your Professor: Perspective (other sides shoes), hierarchy & power Baker-Andersen: First Offer, Information, BATNA Winner’s curse: “leave money on the table.”

4. Interdependence (Ch. 1) In negotiation, parties need (depend) each other to achieve their preferred outcomes or objectives… This mutual dependency is called interdependence Interdependent goals are an important aspect of negotiation Win-lose: I win, you lose – Baker-Andersen. Win-win: Opportunities for both parties to gain

5. Interdependence Interdependent parties are characterized by interlocking goals Having interdependent goals does not mean that everyone wants or needs exactly the same thing A mix of convergent and conflicting goals characterizes many interdependent relationships 1-5

6. 1-6 Types of InterdependenceAffect Outcomes Interdependence and the situation shape processes and outcomes Zero-sum or distributive – one winner Non-zero-sum or integrative – mutual gains situation

7. The Dual Concerns Model 1-7

8. Value Claiming and Value Creation Opportunities to “win” or share resources” Claiming value: result of zero-sum or distributive situations where the object is to gain largest piece of resource Creating value: result of non-zero-sum or integrative situation where object is to have both parties do well Most actual negotiations are a combination of claiming and creating value processes More of one approach than the other Negotiator perceptions of situations tend to be biased toward seeing problems as more distributive/ competitive than they really are

9. 1-9 Value Claiming and Value Creation Negotiator’s value differences include: Differences in interests Differences in judgments about the future (perceptions) Differences in risk tolerance Differences in time preferences Shows that if one side achieves his goal, it does not preclude the other from achieving their goals.

10. 3-10 Strategy and Tactics of Integrative Negotiation

11. Most people think win-win negotiation means one or more of the following: Compromise -Even split Building a relationship -Satisfaction Win-win really means that all creative opportunities are exploited and no resources are left on the table (“integrative negotiation”, aka hard work.) what is win-win negotiation?

12. What Makes IntegrativeNegotiation Different? 3-12 Focus on commonalties rather than differences Address needs and interests, not positions Commit to meeting the needs of all involved parties Exchange information and ideas Invent options for mutual gain Use objective criteria to set standards

13. Win-Win Negotiation What it is typically not… Compromise Even Split Satisfaction Building a relationship What it typically is… Does it involve more than one issue? Can other Issues be brought in? Can side deals be made? Do parties have different preferences across specific issues? These lower the total value for both sides…

14. Pyramid Model of Integrative Agreements Level 3: Pareto-optimal Level 2: Settlement demonstrably superior to other feasible settlements Level 1: Mutual settlement (positive bargaining zone) < 25%

15. Claiming and Creating Value

16. “Expanding the Pie” Strategies Strategies That Do Not Work… Commitment to reaching a win-win deal Compromise Focusing on a long-term relationship Adopting a “cooperative orientation” Taking extra time to negotiate Why? often parties have an incorrect idea about what win-win is pertains to slicing the pie, not expanding the pie establishing a long-term relationship does not translate directly into win-win keeps parties from focusing on the right information at the right time

17. “Expanding the Pie” Strategies Strategies That Do Not Work… Commitment to reaching a win-win deal Compromise Focusing on a long-term relationship Adopting a “cooperative orientation” Taking extra time to negotiate Strategies That Work… Perspective-taking (other shoes) Ask questions about interests and priorities Provide information about your interests and priorities Unbundle the issues Make package deals, not single-issue offers

19. Trust

20. Abundance Mentality

21. Give to get

22. Maturity

23. Stand up for your Issues

24. Systems Orientation

25. We are just a part of a larger goal

27. …

28. 3-21 Key Steps in the Integrative Negotiation Process Identify and define the problem Understand the problem fully Generate alternative solutions Evaluate and select among alternatives

29. 1. Identify and Define the Problem Define the problem in a way that is mutually acceptable to both sides State the problem with an eye toward practicalityand comprehensiveness State the problem as a goal and identify the obstacles in attaining this goal Depersonalize the problem Separate the problem definition from the search for solutions – avoid a rush towards a solution.

30. 2. Understand the Problem Fully Identify Interests and Needs Interests: the underlying concerns, needs, desires, or fears that motivate a negotiator Substantive interests = key issues, financial Process interests = the way the dispute is settled Relationship interests = value of their relationship Interests in principle= doing what is fair, right, acceptable, ethical may be shared by the parties

32. Payment Terms

33. Specifications

34. Transportation

35. Delivery Date

36. Quantity

37. Process

39. Re-Forming Questions for Win-Win Options How can both parties get what they want? What issues are higher and lower priority for me? Them? What is inexpensive for me to give and valuable for them as non-specific compensation (benefits) What can I do to minimize the other’s risks/costs? What are the other negotiators real interests and needs? Mine? Match your Higher Priorities against their lower priorities: find win-win.

41. 3-28 4. Evaluation and Selection of Alternatives Narrow the range of solution options Focus on the positive options… Evaluate solutions on: Quality …how good they are. Objective standards… Acceptability…How acceptable. Agree to evaluation criteria in advance Be willing to justify personal preferences

42. 3-29 Evaluation and Selection of Alternatives Take time to “cool off” Use patience and focus on positive options Explore different ways to logroll Exploit differences in expectations and risk/ time preferences Keep decisions tentative and conditional until a final proposal is complete Minimize formality, record keeping until final agreements are closed

43. Summary: Successful Integrative Negotiation Factors Some common objective or goal Faith in one’s own problem-solving ability A belief in the validity of one’s own position and the other’s perspective The motivation and commitment to work together Trust Clear and accurate communication An understanding of the dynamics of integrative negotiation

44. Why Integrative Negotiation Is Difficult to Achieve The history of the relationship between the parties If contentious in past, it is difficult not to look at negotiations as win-lose The belief that an issue can only be resolved distributively Negotiators are biased to avoid behaviors necessary for integrative negotiation The mixed-motive nature of most negotiating situations Purely integrative or purely distributive situations are rare The conflict over the distributive issues tends to drive out cooperation, trust needed for finding integrative solutions

45. Comments/Feedback?

46. Adapted from “Negotiation” Text (Lewicki 5e) and, Heart and Mind of the Negotiator (Thompson 4e)

47. Negotiation Style Self-Assessment APPENDIX A

48. Competing Style: Q1, 7, 13, 17, 22: ____ Avoiding Style: Q2, 10, 5, 18, 25: ____ Collaborating Style: Q4, 8, 12, 19, 21: ____ Accommodating: Q3, 9, 15, 20, 24: ____ Compromising Style: Q6, 11, 14, 16, 23 :____ Assertiveness: (COMP+COLL)-(AVOD+ACCOM): ___ Cooperativeness: (COLL+ACCOM)-(COMP+AVOID): ____ Self-Assessment Calculations

49. The Dual Concerns Model 1-36

50. Key Terms APPENDIX B

51. contingency contracts Agreements wherein negotiators make bets based on their differences in beliefs, forecasts, risk profiles, and interests. empathy Ability to emotionally connect with another person. false conflict or illusory conflict A situation in which conflict does not exist between people, yet they erroneously perceive the presence of conflict. fixed-pie perception The belief that the counterparty’s interests are directly and completely opposed to one’s own. illusion of transparency The tendency of negotiators to believe that they are revealing more information than they actually are; i.e., they believe that others have access to information about them when they in fact do not. inductive reasoning The process by which a negotiator unilaterally deduces what the counterparty’s true interests are and where the joint gains are by listening to their responses in negotiation. integrative negotiation A process by which negotiators seek to expand the amount of available resources. issue mix The union of both parties’ issue sets. logrolling The strategy of trading off in a negotiation so as to capitalize on different strengths of preference. p1

52. lose-lose effect The tendency for negotiators to settle for outcomes that both prefer less than some other readily available outcome. multiple offers of equivalent value simultaneously A strategy that involves simultaneously presenting the counterparty with two or more proposals of equal value to oneself. pareto-optimal frontier A situation in which no other feasible agreement exists that would improve one party’s outcome while simultaneously not hurting the counterparty’s outcome. perspective taking A cognitive ability to consider the world from another’s viewpoint. postsettlement settlements Strategies in which negotiators reach a binding settlement, but agree to explore other options with the goal of finding another that both prefer more than the current one; if one is not found, the current settlement is imposed. premature concessions Making concessions on issues before they are even requested. presettlement settlements (PreSS) Formal, partial settlements that occur in advance of the parties’ undertaking full-scale negotiations, designed to be replaced by a long-term, formal agreement. p2