Once a negotiation is under way, you should step back peri- odically to evaluate how you are doing. It comes most naturally to step back between negotiating sessions, but it can (and should) also be done in the heat of battle. The ability to "go to the bal- cony," as William Ury put it, to look at your situation from a distance, can be cultivated. 1 Difficult at first, it gets easier with practice. Keep asking yourself, "What would outside observers say about what is going on here? What would they suggest I do to get things back on track?" Appraising an ongoing negotiation is partly about whether you are meeting the specific goals you set for yourself. Clearly identi- fying your goals while preparing to negotiate is only half the bat- tle; you have to keep those benchmarks firmly in mind as you go forward. Research shows that negotiators perform best when they set ambitious stretch goals and then strive to meet them, as long as they don’t get overcommitted and fail to accept agreements that are better than their BATNAs. 2 Negotiations are so fluid that it’s dangerous to adopt a rigid once-and-for-all approach, and stepping back can also help you stay as flexible about means as you are firm about goals. Describ- ing his successful negotiations to end the war in Bosnia, Richard Holbrooke defined his approach as "very flexible on tactics, but firm on goals." 3 General Dwight D. Eisenhower elaborated the 102 point: "A sound battle plan provides flexibility in both time and space to meet the constantly changing factors. . . . Rigidity in- evitably defeats itself, and the analysts who point to a changed de- tail as evidence of a plan’s weakness are completely unaware of the characteristics of the battlefield." 4 Plans are not an end, but they are an essential means. The insights that result from stepping back will sharpen your diagnosis of the situation and reveal new opportunities to shape the structure and manage the process. After all, how can Daniel Riley, or Claire Prescott, or Van Bolton hope to negotiate effective- ly if they don’t evaluate how they are doing and take corrective action? Ultimately, judging success is about more than whether you do well in your current negotiation. It’s also about its impact on your reputation and relationships, as well as your success at learning and your adherence to ethical principles that are important to you. This means you have to keep a broader set of criteria in mind as you evaluate your performance. This chapter provides a suggested set of questions for assessing your progress at diagnosing the situation, shaping the structure, and managing the process. You should review these questions at the end of each negotiating session. Over time, as you internal- ize them, asking them during the negotiation as well will become second nature. QUESTIONS ABOUT DIAGNOSING THE SITUATION When you step back to assess the adequacy of your efforts to di- agnose the situation, you will in effect be diagnosing your diag- nosis. Ask yourself the following questions. Question 1: Do You Have a Clear View of the Situation? A clear view of your situation is the bedrock on which you build your strategies and tactics. If your take on the situation is flawed ASSESSING THE RESULTS 103 or incomplete, you are likely to be blindsided or to underperform. This is what happened to Daniel Riley in his negotiations with Ken Gourlay, described in Chapter One. Because he wasn’t suffi- ciently self-conscious about probing his situation, he missed op- portunities to create and claim value. Diagnosing your diagnosis calls for periodically returning to the basic diagnostic elements we discussed in Chapter One: Parties: Who will participate, or could participate, in the negotiation? Rules: What are the rules of the game? Issues: What agenda of issues will be, or could be, negotiated? Interests: What goals are you and others pursuing? Alternatives: What will you do if you don’t reach agreement? Agreements: Are there possible agreements that would be acceptable to all sides? Linkages: Are your current negotiations linked to other negotiations? Ask yourself whether anything has happened to make you question your original assessment of each element. Have new par- ties gotten involved, or could that happen? If so, what are the im- plications? Are the rules of the game what you thought they were? Are the agenda of issues and other players’ interests and BATNAs what you predicted they would be? Do you see any new implica- tions for the types of agreements that are possible? Do you under- stand the full set of existing and potential linkages? Question 2: Have You Been Efficient and Effective in Your Learning? More preparation is not always better. Diagnosis involves making a sound investment of your scarce resources to gather and analyze 104 BREAKTHROUGH BUSINESS NEGOTIATION information. Daniel Riley failed at this: he squandered numerous opportunities to learn more at very low cost by talking to other en- trepreneurs and venture capitalists and simply by asking more questions. The more thoroughly you diagnose a negotiating situation, the more prepared you are likely to be. But trade-offs are inescapable, and you will have to contend with some limits: 5 Resource limits. Unless you have no constraints on your time, expertise, money, and access to documents and other data, you will have to make cost-benefit calculations: Is the information that could be unearthed with more research worth its cost? Informational limits. Even with unlimited resources, you could not collect all the information you want. Negotiations are always games of incomplete information, because of uncertainty and deliberate efforts to conceal or mislead. Remember that there’s no point in beating your head against a brick wall. Cognitive limits. Intense preparation could rigidify your definition of an acceptable agreement. 6 You could also guess wrong about the other side’s interests, distorting the way you gather and interpret information, and reinforcing your misconceptions. 7 For all these reasons, you need to plan your investments in di- agnosis. Take the time to step back and ask: Can I see any inex- pensive opportunities to acquire more insight? Have I reached the point of diminishing returns, and would my resources be better spent on learning from my counterparts at the negotiating table? QUESTIONS ABOUT SHAPING THE STRUCTURE Breakthrough negotiators refuse to take the situation they con- front as a given. Instead, they work to transform the situation’s ASSESSING THE RESULTS 105 components in ways that make good agreements possible. Here, too, discipline yourself to step back and assess your success at shap- ing the structure by asking the following questions. Question 3: Are You Involved with the Right People? A highly favorable agreement with the wrong people can be of less long-term value than a good agreement with the right people. Are you dealing with the people whose participation offers you the best opportunities to create and claim value? Could you negotiate a better deal with a different mix of people? Can your counterparts be trusted to implement the terms of the agreement? Think about Claire Prescott’s negotiations with Eric Mersch, described in Chapter Two. She probably could have done better by seeking out other sources of funding for the project and by ne- gotiating with competitors of BargainMart. Doing so would have strengthened Claire’s ability to create and claim value. Question 4: Are You Building Your BATNA? A strong BATNA builds bargaining power. Have you done all you can to build your BATNA? Do alternatives exist that you haven’t yet explored? Can you build coalitions or harness the power of competition? Are there linkages whose creation (or elimination) would strengthen your alternatives to agreement? What about your counterparts’ BATNAs? Could you make their alternatives to ne- gotiated agreement less attractive without triggering irrational re- sistance on their part? In her negotiations with BargainMart, Claire neglected sev- eral opportunities to strengthen her BATNA. She could have ne- gotiated to extend the option on the land, built a coalition of satellite tenants, and promoted competition between BargainMart and its competitor ValueShops. These and other initiatives would have substantially bolstered her bargaining position. 106 BREAKTHROUGH BUSINESS NEGOTIATION
Question 5: Are You Shaping the Issue Agenda? Focusing on the right set of issues enhances your ability both to create value and to claim it. Ask yourself periodically whether there are issues you could add to the agenda that would expand oppor- tunities to create value. If so, how could you accomplish this? Are toxic issues impeding progress or poisoning the potential for value creation? If so, how can you defer them or remove them perma- nently from the agenda? In the negotiation between Global Airways and the pilots’ union described in Chapter Three, Van Bolton’s agenda-shaping strategy was central to his success in managing the dispute. Bolton was able to defer the issue of payment of the damage award, and by broadening the agenda to include issues like pension credit for the pilots’ furlough period, he both created and claimed value. Question 6: Are You Winning the Frame Game? Your goal in framing is to persuade your counterparts (and other influential parties) to accept your definition of "the problem" and "the options." In other words, you must find a way of framing the situation that has face validity and resonance with the target au- dience. Have you managed to accomplish this? If not, what are the competing frames, and what makes them more compelling? How might you hone or alter your framing to make it resonate with your audience? Both Daniel Riley and Claire Prescott could have done a bet- ter job of framing. Daniel was in a position to bring a fully func- tioning design team to a new company, and he should have framed his negotiations in those terms. Instead, he let Ken Gourlay frame the situation as an ordinary job negotiation and thus claim value. Claire would have done better if she had framed her negotiation with Eric in terms of her external constraints: "If I can’t find fi- nancing and attract good satellite tenants, we will both lose a very attractive opportunity." ASSESSING THE RESULTS 107
Question 7: Are You Channeling the Flow? Channeling the flow of a negotiation is like directing the course of a river: you can dam it or you can reroute it. Have you engi- neered action-forcing events that compel your counterparts to make tough choices? Can you use linkages to force action? Have you raised the cost of delay for the other side and lowered it for yourself? Would it be productive to engineer an impasse or defer commitment? By letting Ken Gourlay determine the pace of the negotiations, Daniel Riley put himself in a weak position. Ken used the need to approach venture capitalists as an action-forcing event. Rather than defer commitment, which would have increased the pressure on Ken, Daniel allowed himself to be swept along. QUESTIONS ABOUT MANAGING THE PROCESS The goals of managing the process are to channel the macro-flow, shape key micro-interactions, and influence the mental processes of your counterparts. To assess your success in managing the pro- cess, ask the following questions. Question 8: Are You Moving the Process Through the Right Phases? There are better and worse ways to structure the flow of the ne- gotiating process. It’s usually a mistake, for example, to jump to negotiating details of the substance without first building rapport with your counterparts and negotiating the process itself. This is easy to say, but hard to do when you are in the grip of a time crunch or enmeshed in an emotion-laden conflict. You have to discipline yourself to step back and ask: Have I been successful in reaching agreement with the other side about how the process should be structured? Are the phases through which I envision proceeding likely to build momentum? If not, how can I reshape the macro-flow of the process to remove un- necessary barriers to agreement? 108 BREAKTHROUGH BUSINESS NEGOTIATION Daniel Riley didn’t think about the phases through which his negotiations with Ken should proceed, so he was unable to adjust his posture accordingly. Van Bolton, on the other hand, did an outstanding job of thinking through the progression of the pro- cess. By focusing first on the relationship, then on immediate is- sues raised by the merger, and finally on the damage award, he created and sustained momentum. Question 9: Are You Creating Value as Well as Claiming It? Nearly all negotiations have some potential for value creation. Even in the highly contentious negotiations between Global Air- ways and the pilots’ union, opportunities arose to make mutually beneficial trades. To be realized, this potential must be identified. Naturally, you can’t do this single-handedly. But you can period- ically step back and ask yourself whether there are potential joint gains that are going unrealized and, if so, what you might try to do. Of course, it’s not enough to create value; you must claim an appropriate share of it. But be sure not to sacrifice your own in- terests in pursuit of joint value creation. Negotiators can err by placing too much emphasis on either value claiming (thus driving out the potential for value creation) or value creation (creating lots of value for their counterparts). The key is to maintain both a judicious openness to value cre- ation and caution about having value claimed from you. As we have seen, it’s often difficult to tell how successful you have been at creating and claiming value: potential joint gains can easily get left on the table. But it’s still worth periodically asking whether you are doing all you can to create value and whether you are giv- ing up value too easily. Question 10: Are You Accumulating Negotiating Capital? Goodwill matters in any ongoing relationship. Claire Prescott can expect to negotiate with BargainMart on a multitude of issues for many years to come, as can Daniel Riley and Ken Gourlay, and ASSESSING THE RESULTS 109 Van Bolton and Stuart Adams. A good relationship will minimize the need for monitoring compliance and facilitate future agree- ments. The negotiation process can create or deplete a reservoir of goodwill; it is possible to create and claim a lot of value but still squander resources or sully your reputation. You will feel pressure to do well in the current negotiation, but you should also consider the impact of your behavior on future ne- gotiations. So ask yourself: So far, have you accumulated or spent negotiating capital in this negotiation? Have you begun to build the foundation for a productive working relationship or poisoned the well? Question 11: Are You Crafting Sustainable Agreements? You can negotiate with the right people and do a good job of cre- ating and claiming value and still fail. One way to fail is to drive such a hard bargain that the resulting agreement sets the stage for your counterparts to renege or renegotiate or cheat in implemen- tation. The other side has to claim an acceptable share of value too. In part, crafting sustainable agreements means anticipating and dealing with contingencies. Some contingencies are unfore- seeable (the market for software solutions for managed care com- panies collapses, a new communication technology dramatically reduces the need for air travel), but others can be anticipated and prepared for (BargainMart refocuses its business or declares bank- ruptcy, Omega Systems gets acquired by another company). Ask yourself: Does the agreement you’ve reached accommodate foresee- able contingencies? Does it establish mechanisms (such as dispute- resolution processes and mediation-and-arbitration provisions) for handling unforeseeable contingencies? Question 12: Are You Upholding Your Ethical Standards? "Negotiation ethics" may strike some people as a contradiction in terms. But negotiators have to live with the consequences of their actions, and failure to adhere to your core beliefs is corrosive. It’s 110 BREAKTHROUGH BUSINESS NEGOTIATION no defense to hide behind your role as representative of an orga- nization. In the end, you have to live with yourself. Step back oc- casionally to make sure that you aren’t sacrificing your standards in the heat of battle. Negotiation is shot through with tough choices. By and large, truth telling, fairness, and balanced representation of parties ab- sent from the table present the biggest challenges. Truth telling has to do with acts of commission and omission in the sharing of information. Where does shaping perceptions end and lying be- gin? Do you owe it to your counterparts to reveal information they haven’t asked for? Is it simply a matter of caveat emptor? Issues of fairness are inescapable in negotiations. Should you aim for the most favorable agreement your power enables you to achieve? To what extent should notions of fair division shape your thinking? Even if you want to be fair, there are no objective crite- ria for fairness. Where you stand depends on where you sit. Finally, negotiations often affect the interests of people who don’t have seats at the table. You may represent others’ interests and also your own. Whose interests come first? Sometimes even the interests of unborn generations must be balanced against those of today. To what extent can and should you consider the inter- ests of those absent from the table? Question 13: Are You Learning, Both Individually and Organizationally? Finally, every negotiation is an opportunity to learn and to become more adept. But learning happens only if you invest in capturing the lessons of experience. This means taking the time to reflect on the lessons you learned. What went well? What should you do differently next time? What did the other side do well, and what can you learn from them? It is a useful discipline to write an after- action report summarizing decisive events and lessons. Doing this will help you avoid the same sticking points in the future, perhaps by beginning to shape the structure earlier. We will discuss this step in more detail in the Conclusion. ASSESSING THE RESULTS 111
CLOSING THE LOOP These thirteen questions are a template for evaluating your own performance and progress in any negotiation. They are summarized in the table on pages 113–114. Use the Actions column to address any weaknesses that you identify in the Assessment column. Before proceeding to Part Two, flip back to the Introduction and briefly review the core elements of the framework: diagnos- ing the situation, shaping the structure, managing the process, and assessing the results. Then think about how to apply these ideas to a negotiation in which you are involved, focusing on what you will do both at the negotiating table and away from the negotiat- ing table. 112 BREAKTHROUGH BUSINESS NEGOTIATION T emplate for Judging Performance Question Assessment Actions Diagnosing the Situation 1. Do I have a clear view of ———————————— the situation? not at all adequate absolutely 2. Have I been efficient and ———————————— effective in my learning? not at all adequate absolutely Shaping the Structure 3. Am I involved with the ———————————— right people? not at all adequate absolutely 4. Have I built my BA TNA? ———————————— not at all adequate absolutely 5. Have I shaped the issue ———————————— agenda? not at all adequate absolutely 6. Am I winning the frame ———————————— game? not at all adequate absolutely T emplate for Judging Performance ( continued ) Question Assessment Actions 7. Am I controlling the flow? ———————————— not at all adequate absolutely Managing the Process 8. Am I moving the process ———————————— through the right phases? not at all adequate absolutely 9. Am I creating value, as ———————————— well as claiming it? not at all adequate absolutely 10. Am I accumulating ———————————— negotiating capital? not at all adequate absolutely 11. Am I crafting sustainable ———————————— agreements? not at all adequate absolutely 12. Am I upholding my ethical ———————————— standards? not at all adequate absolutely 13. Am I learning, both ———————————— individually and not at all adequate absolutely organizationally?