Negotiating The Impossible (Deepak Malhotra, 2016)

Ch 1 - THE POWER OF FRAMING

CONTROL THE FRAME

Control the frame of the negotiation. The frame that takes hold will shape how negotiators make decisions, evaluate options, and decide what is acceptable.

What is Framing: Way to put forward objectively identical proposals and options to make one of them look more attractive to the other side.

THE IMPORTANCE OF HELPING THE OTHER SIDE BACK DOWN

Convincing the other party that they will have to concede or withdraw from initial positions is not enough. You have to make it easier for them to back down.

Why so? It is because appearing as an achiever in the eyes of their audience is very important to them.

NEGOTIATE STYLE AND STRUCTURE, NOT JUST THE SUBSTANCE

Wise concessions on style and structure can help solve a problem more cheaply than costly concessions on substance.

Ch 2 - Leveraging The Power of Framing
Stalemate over Royalty Rates

WE WERE NEGOTIATING A large commercial agreement. The company I was advising was an earlystage venture that had developed a potentially game-changing product in a multibillion-dollar industry.
The folks on the other side of the table were hoping to license our product and help bring it to market. As a result, we had to negotiate a wide range of issues: licensing fee, royalty rate, exclusivity provisions, milestones, development commitments, and so on. We got stuck on royalty rate—that is, the percentage of sale price they would pay us for each product they sold.
There had been some early discussions in which the two sides had very informally agreed that a 5% royalty rate was reasonable. As time went on, it seemed that we had slightly different interpretations regarding how this percentage would be applied. Our view was that 5% was low, but would be acceptable as the rate they paid to us initially. As the product gained traction and was validated by the market, we felt the royalty rate should increase to a more appropriate, higher level.
We understood that our technology was still in a development phase, that early sales momentum might be slow, and that their heavy investments in manufacturing warranted a concession from our side.
Their perspective was quite different. They argued that because of their investments, the royalty rate should initially be close to zero; after two to three years, the 5% rate would kick in; and after that, royalty rates should go down, not up. Why should they go down, we asked? "Because in our industry, we always see royalty rates go down over time, not up. That's just how it is," they replied.
After some further probing they provided additional rationale: "If we are selling more of your product over time, you should be willing to accept a lower percentage."

Our initial hope was that we would be able to avoid confronting this issue head-on because the value of the overall deal was quite high, and with so much money to be made, this should not be a deal breaker for them. As the days passed with little progress, we realized that they really were stuck on the idea that “royalty rates are supposed to go down.” Were they worried about the precedent this might set in their other deals? Was it something they had promised their board, and now they did not want to lose face? Were they simply trying to get better financial terms? Try as we might, we could not get the numbers to work with rates going down over time. And if we tried to accommodate their desire for lower rates in the first year or two, it further increased our need for higher rates later. What to do?

WITHOUT MONEY OR MUSCLE

There are times when two sides have incompatible positions and one has to yield. There are other times when each side compromises, meeting in the middle (for example, we could have agreed to a flat royalty rate over time). And then there are times when the laws of physics do not necessarily apply to negotiations: things can go up and down at the same time.
The breakthrough came when we noticed a flaw in how we were going about the discussion: we were stuck negotiating royalty rates in one dimension (over time), when our differing perspectives made clear that two dimensions were in play: the passage of time and the quantity of sales. Maybe we could leverage this to create a royalty schedule that went both up and down. If the other side needed to show rates going down over time, perhaps we could accommodate this and still safeguard our financial interests when the product sold more. With this in mind, we sent them a royalty table that no longer listed rates over time. Instead, we created a two-dimensional chart that listed rates as a function of time and quantity sold. It looked something like Table 1.



For each year, instead of one royalty rate we would have a range (with a minimum and maximum) based on quantity sold. Notably, the maximum royalty rate for each year would decrease over time (top row), which we hoped would meet their demand for diminishing royalty rates. At the same time, the actual royalty rate for each year could increase year after year if we sold more. Our expectations for how the royalty rates would actually materialize is shown in Table 2, with highlighted cells showing our internal projections.



It worked. The other side argued over some of the numbers in the table, but this new proposal helped reframe our dialogue and avoid impasse. The two sides were no longer arguing over royalty trajectory or the rationale for whether it should go up or down, and in the weeks ahead, the issue went away completely. The final agreement contained a simplified version of the royalty table (with fewer columns and rows) that accounted for time and quantity. While perhaps not substantively different from what could have been accomplished by agreeing to royalty rates on one dimension, this stylistic approach helped our negotiating partner feel more comfortable with how the deal looked, and let us feel comfortable with the financial outcome.

PAY ATTENTION TO THE OPTICS OF THE DEAL

Pay attention to the optics of the deal. It's not just the substance of what you offer that matters, but how it looks to your negotiating partners and to their audience.

HELP THE OTHER SIDE SELL IT

Think about how the other side will sell the deal, and frame the proposal with their audience in mind.

MAKE IT SAFE FOR THE OTHER SIDE TO ASK FOR HELP

Make it safe for the other side to ask for help on optics. Build a reputation for rewarding transparency and not exploiting their moments of weakness.

AVOID ONE-ISSUE NEGOTIATIONS

Avoid negotiating over a single divisive issue. Add issues or link separate one-issue negotiations.

NEGOTIATE MULTIPLE ISSUES SIMULTANEOUSLY

Negotiate multiple issues simultaneously to help identify wise trades and to reduce the risk that concessions will not be reciprocated.

DIFFUSE THE SPOTLIGHT

Don't let any single issue become too prominent. Educate your audiences about how to measure success, and limit the amount of attention given to any one issue.

SPLIT ONE ISSUE INTO TWO

If there is only one issue, try to split it into two or more separate issues.

UNMASK THE UNDERLYING INTERESTS

Incompatible positions might be hiding reconcilable underlying interests.
Understanding why the other side wants something can lead to better outcomes than continuing to argue over competing demands or trying to meet in the middle.

FIRM ON SUBSTANCE, FLEXIBLE ON STRUCTURE

Be as firm as needed on substance; be as flexible as possible on style and structure.

GETTING UNSTUCK IS A WORTHY ENOUGH SHORT-TERM GOAL
 

A wisely framed proposal need not resolve the entire dispute. Sometimes just getting unstuck is the key to paving the path towards eventual agreement.

CH 3 - THE LOGIC OF APPROPRIATENESS

The logic of appropriateness tells us that many of the choices people make are based on how they answer one simple question: What does a person like me do in a situation like this?

1: LEVERAGE SOCIAL PROOF

The principle of “social proof,” as articulated by social psychologist Robert Cialdini, says that when people are unsure about which way to go, or what to choose, they look to the behavior of others, actual or implied. According to the logic of appropriateness, if we think most others are actually doing something, it must be appropriate. This is because when people look at the world, they think the world is supposed to make sense. And so when they see other people choosing a certain course of action, they say to themselves, “There must be a reason,” and take it as a signal that it is the correct or normal or acceptable behavior. Not surprisingly, then, the most direct way to boost the appropriateness of an option is to demonstrate or signal that others are also choosing it.

Leverage social proof to boost the appropriateness of your proposal.

The promise and peril of uniqueness

Most people know that “being innovative” can be a source of attraction and leverage. But in our rush to portray our solution as unique, path-breaking, and better than the competition, we sometimes inadvertently shoot ourselves in the foot. A salesperson, for example, who is trying to convince the customer that she will have the advantage of being among the first adopters of a new technology or solution may find that the strength of this pitch is eroded (or wiped out completely) by the fact that the other side is implicitly hearing “Other people like me don’t do this,” and thinking “What do they know that I don’t?” or “There must be no urgency to do this.” A salesperson in this situation may need to counterbalance the “uniqueness” argument with other information that can allay such concerns.

Framing an option as unique might make it more intriguing but less attractive.

2: SET THE DEFAULT OPTION

Present your proposal as the default option to boost its appropriateness.

Start with your draft of the agreement or process
The party that drafts the initial version of the agreement or process gains leverage.

3: SHIFT THE REFERENCE POINT

Establish a proper reference point. Even generous proposals can be evaluated negatively if the other side's reference point is not set appropriately.

4: DON'T APOLOGIZE FOR YOUR OFFER

Always justify your offer, but don’t apologize for it.

CH 4: STRATEGIC AMBIGUITY

US–India Civil Nuclear Agreement

IN 1968, THE “TREATY on the Non-Proliferation of Nuclear Weapons,” more commonly known as the Non-Proliferation Treaty (NPT), was negotiated into existence. The NPT was designed to restrict the number of countries that would have access to nuclear weapons to the five countries that had them at the time: the United States, the United Kingdom, the Soviet Union, France, and China. Not coincidentally, these were also the five permanent members of the United Nations Security Council. The long-term vision of the NPT was that signatories would commit (a) not to engage in proliferation activities, (b) to eventual disarmament among those who currently had nuclear weapons, (c) to supporting the peaceful use of nuclear technology for all signatories, and (d) to submit to inspections and safeguards by the International Atomic Energy Agency (IAEA) to ensure safety and compliance.

By the turn of the century, 190 countries had signed the NPT, with the only holdouts at the time being North Korea, Israel, Pakistan, and India.1 Those who refused to sign argued, as did many signatories, that given insufficient commitment to disarmament by the nuclear haves, the treaty was simply suppressing the sovereign and strategic rights of nuclear have-nots. In the years since the NPT went into effect, each of these four nonsignatories had, with varying degrees of success,
developed its own nuclear weapons.

In July 2005, the United States and India set in motion what would become a three-year marathon of interrelated negotiations aimed at completing a “civilian nuclear agreement” between the two countries. The premise was relatively straightforward: India would agree to separate its military and civilian nuclear facilities and place the latter under IAEA safeguards in exchange for full civil (i.e., nonmilitary) nuclear cooperation (e.g., commerce) by the United States and the then-45-nation Nuclear Suppliers Group (NSG). India’s status as a nonsignatory to the NPT, however, made the negotiations difficult—some would have said inconceivable. To allow India to engage in civil nuclear commerce would, in the view of many, undermine American commitment to the NPT. If nonsignatories would be treated as well as signatories, what incentive would there be for anyone to sign? In contrast, the Bush administration and others among the NSG believed that despite being a nonsignatory of the NPT, and despite having developed its own weapons, India had not engaged in proliferation activities. Allowing it to participate in civilian nuclear commerce in exchange for some degree of IAEA inspections and safeguards would only promote continued responsible behavior and greater safety.

Reaching such an agreement was meant to be difficult. Negotiations would need to be coordinated and sequenced at many levels, across the globe. First, the United States would have to pass domestic legislation allowing it to engage with a nonsignatory of the NPT (accomplished via the Hyde Act in 2006). Then, the United States and India would have to negotiate a bilateral agreement (referred to as a 123 Agreement). Meanwhile, the IAEA would have to approve an agreement with India to place Indian civil nuclear facilities under IAEA safeguards, and the NSG would have to grant India an unprecedented waiver to allow it to have access to nuclear technology and fuel. Finally, the agreement between US and Indian diplomats would have to be approved by the US Congress and supported by India’s Parliament.

One of the more vexing problems that arose during these negotiations pertained to the consequences that would follow if India tested another nuclear weapon. In 1998, India had, to broad international condemnation, conducted five nuclear tests, resulting not only in sanctions by the United States and others, but also in retaliatory nuclear tests (for the first time) by Pakistan, a mere two weeks later. A year later, in 1999, due to Pakistani military incursions through the “Line of Control” separating India and Pakistan in Kashmir, the two had waged history’s first and only conventional war between known nuclear powers. With this terrifying backdrop in place, it is no surprise that support for the civil nuclear agreement among US lawmakers and many NSG nations was contingent upon guarantees that India would not test another nuclear weapon.

Meanwhile, support in India was contingent upon exactly the opposite. There seemed no possibility that India’s Parliament would approve a deal if the agreement limited their perceived sovereign right to test nuclear weapons if and when they felt it was necessary. Indeed, this was the very reason India had not signed the NPT in the first place: a civil nuclear agreement that imposed NPT-type restrictions was entirely unacceptable. India had announced a voluntary moratorium on testing but was unwilling to make the moratorium binding.

How do you negotiate an agreement when the exact same issue is a deal breaker for both sides? 
How can you reconcile the interests of both parties when the minimum requirements of one (based on the logic of international security) are entirely unacceptable to the other (based on the logic of national sovereignty)?

WITHOUT MONEY OR MUSCLE

In 2007, the United States and India negotiated their bilateral agreement; in 2008, the government of Prime Minister Singh survived a no-confidence vote in the Indian Parliament, the IAEA approved the safeguard agreement, and the 45-nation NSG granted its waiver. Later that same year, the US Congress approved the deal, and the two countries officially signed it on October 10, 2008. 

How did this happen? Which side subordinated its demands and accepted the other side’s logic? Who made the courageous concession? It turns out no one did. So did the 123 Agreement signed by the United States and India restrict nuclear tests? Did it stipulate the termination of nuclear commerce if India detonated a nuclear device? No one could say for sure.

On October 1, 2008, US Secretary of State Condoleezza Rice gave testimony to the Senate in which she declared, “Let me reassure you that an Indian test, as I have testified publicly, would result in most serious consequences. Existing US law would require automatic cutoff of cooperation, as well as a number of other sanctions, if India were to test.”

On the other side, on October 3, 2008, Indian External Affairs Minister Pranab Mukherjee, when asked whether India had sacrificed the right to test, clarified that “we would not like to convert this voluntary moratorium into a treaty-bound obligation. That position has been maintained.”

What is going on? What does the agreement actually say? If anyone ought to know, it would be Secretary Rice and Minister Mukherjee, the two people who signed the final agreement on October 10, 2008. The fact is that the 123 Agreement, and the network of agreements on which the US–India deal is structured, are deliberately vague. But the lack of precision is by design: this is the art of strategic ambiguity.

STRATEGIC AMBIGUITY

When neither side is willing to openly subordinate its demands on key issues or principles, strategic ambiguity—language that is deliberately open to multiple interpretations—can help the parties reach an agreement.

AMBIGUITY IS DANGEROUS IF THERE ARE NO INCENTIVES FOR APPROPRIATE BEHAVIOR

Strategic ambiguity should be used only when other mechanisms are in place to ensure compliance with appropriate behavior.

THE ROLE OF STRATEGIC AMBIGUITY IN EARLY RELATIONSHIPS

Strategic ambiguity can help parties initiate relationships when there is insufficient trust for full commitment, but where being explicitly noncommittal is unacceptable.

Note:
It is worth highlighting that strategic ambiguity is not meant to substitute for a genuine and durable understanding between the two sides. If there are deep divisions on key issues of substance, strategic ambiguity not only will fail to help but may make matters worse.

CH 5: THE LIMITS OF FRAMING

Charting a Path to War in Iraq

IN 2002, THE US government, under President George W. Bush, was pushing for a United Nations Security Council Resolution that would put the Iraqi government, under Saddam Hussein, in material breach of previous resolutions pertaining to, among other issues, Iraq’s weapons of mass destruction (WMD) program. All parties agreed that weapons inspectors would go to Iraq to assess whether Iraq was now complying with UN demands. A strong disagreement surfaced when it came to next steps. The United States, along with the United Kingdom and others, demanded that a United Nations “authorization of force” against Iraq be automatically triggered in the event that Iraq failed to quickly satisfy inspectors.

France, along with Germany, Russia, and others (including the inspectors themselves), wanted to give the inspectors more time and—crucially—did not want an automatic trigger for the use of force.1 Instead, they demanded that the parties agree to meet again if the authorization of force seemed necessary. From the French coalition perspective, an automatic trigger almost guaranteed war even if there were no WMD program in place. The thinking was: How was Iraq to “immediately, unconditionally, and actively” prove the nonexistence of something that others believed the Iraqis were good at hiding and likely to lie about?

At the heart of the negotiation, then, was disagreement over a substantive issue (the trigger) that necessitated some type of compromise. More importantly, there was a deeper underlying dispute regarding the conditions under which the use of force would be appropriate.

A CAUTIONARY TALE

Rather than resolving this core dispute, the parties opted for a strategically ambiguous solution: UN Security Council Resolution 1441 did not contain any automatic triggers per se, but its language would allow the United States and its coalition partners to later interpret it as being sufficient to authorize the use of force. For example, while making it clear that further deliberation would precede military action, it also stated that Iraq was being given “a final opportunity to comply with its disarmament obligations.”

Moreover, as the US Ambassador to the UN, John Negroponte, pointed out soon after Resolution 1441 was adopted, the trigger was not the only thing the resolution did not contain:

If the Security Council fails to act decisively in the event of further Iraqi violations, this resolution does not constrain any Member State from acting to defend itself against the threat posed by Iraq or to enforce relevant United Nations resolutions and protect world peace and security.

As long as both coalitions were on the same page regarding their assessments of Iraq’s compliance with this resolution, there would be no problem: both sides could look forward to a second vote to authorize force if and when needed. Unfortunately, it was not long before the two coalitions disagreed about the extent of Iraq’s compliance, and whether and how soon the use-offorce vote should be taken. Given the unresolved underlying dispute on this core issue, it became clear that the French and the Russians were not in favor of quickly resorting to force and would veto any such authorization. Meanwhile, for the Bush administration in the United States, which continued to favor the use of force, a failed authorization vote would be worse than no vote at all. 

And so it transpired that, without a second vote on the use of force, against the strenuous objections of the French-led coalition, and even in the absence of any trigger for the use of force in the resolution, the US-led coalition went to war against Iraq on March 20, 2003. And both sides— the French and the United States—argued that they were acting in accordance with Resolution 1441. The failure of this approach to deal making can be seen not only in terms of the failure to prevent war, but because it led to even greater divisions and mistrust in the UN Security Council and beyond. Even if war was inevitable (for example, if the United States was committed to this course of action), the use of strategic ambiguity to gloss over deep divisions did not help and actually made matters worse.

AMBIGUITY IS NOT A REMEDY FOR SUBSTANTIVE CONFLICT

Ambiguity should not be used as a substitute for genuine agreement on substance.

A TRADE-OFF BETWEEN CURRENT AND FUTURE CONFLICTS

Strategic ambiguity involves a trade-off between minimizing current conflict and minimizing future conflict. If you are trying to reduce the likelihood of a dispute arising in the future, strategic ambiguity is not a good idea. The agreement should be as explicit and unambiguous as possible to avoid multiple interpretations of the deal as you go forward. If, however, you are more concerned about how to resolve current deadlock so that it does not obstruct deal making at the outset of the relationship, then one solution is to use strategic ambiguity. From this perspective, strategic ambiguity entails a bet—we accept a greater risk of future problems in exchange for making things easier for ourselves now. As we have seen, deciding whether to take the bet requires careful consideration of the costs and benefits, but a good rule is to lean away from strategic ambiguity when there are deep divisions on substantive issues that are unlikely to go away (or are likely to get worse) with the passage of time.

Ambiguity involves a trade-off between solving current conflicts and minimizing future conflicts.

BEWARE THE TEMPTATION TO SHAKE HANDS WHEN THERE IS NO AGREEMENT

If closing deals is rewarded, negotiators might conceal substantive disagreements to push through flawed deals.

AMBIGUOUS AGREEMENTS MAY BE PARASITIC

Parasitic value creation: an action designed to benefit everyone in the room at the expense of parties who are not at the table.

Ambiguous or incomplete agreements might be parasitic, meeting at-the-table interests at the expense of other stakeholders.

CH 6: FIRST-MOVER ADVANTAGE

The Unbroken Peace Treaty

CAN YOU NAME THIS country? The longest standing treaty in United States history is with this country.

The first building on foreign soil ever acquired by the United States is located there—and that building is also the only place outside of the United States to have ever been designated a National Historic Landmark.1 This country has been a prominent supporter of the United States in its “war” against terrorism, but military cooperation between the two is not a recent development—soldiers from this country fought alongside American forces in World War I, and it emphatically sided with the United States in its fight against the Confederate states during the American Civil War. Likewise, the United States has long championed this country’s aspirations for noninterference by foreign powers. It is also one of the 20 countries around the world with which the United States of America has a Free Trade Agreement. Which country is it?

Some more hints: It is in Africa. Approximately 99% of the population is Arab or Berber, and 99% is Muslim. It is one of only two countries on the continent that has been designated a “major non-NATO ally” of the United States, affording it special military and financial cooperation. Any other guesses?

Final hint: One of the greatest American films—with perhaps the most highly acclaimed screenplay—is set in the largest city of this country. Who is this special friend to America? Historians and movie buffs who have seen Casablanca might have an advantage in identifying the African nation as being the Kingdom of Morocco. The real question, however, is what accounts for this long-lasting relationship?

FIRST-MOVER ADVANTAGE

There is a powerful first-mover advantage in framing. Whenever possible, seek to control the frame of the negotiation at the start.

REFRAME AS EARLY AS POSSIBLE

If the existing frame is disadvantageous, seek to reframe as soon as possible.

DISPUTES ARE EASIER TO PREEMPT THAN TO RESOLVE

Disputes are easier to preempt than to resolve. Decisions can sometimes be framed in ways that help people avoid confrontation in the first place.

HIGH-LEVERAGE MOMENTS FOR FRAMING

Early actions can take on heightened significance. Look for low-cost opportunities to powerfully influence the frame and to establish the appropriate expectations and precedents for the relationship.

SUMMARY OF LESSONS FROM PART I: THE POWER OF FRAMING

• Control the frame of the negotiation.

• Make it easier for the other side to back down from strong positions.

• Wise concessions on style and structure can help avoid costly concessions on substance.

• Pay attention to the optics: how will the deal look to the other side’s audience?

• Help the other side sell the deal to their audience.

• Make it safe for the other side to ask for help on optics.

• Avoid one-issue negotiations: add issues or link separate one-issue negotiations.

• Negotiate multiple issues simultaneously, not sequentially.

• Diffuse the spotlight so one issue does not become too prominent.

• If there is only one issue, try splitting it into two.

• Unmask the underlying interests: incompatible demands can hide reconcilable interests.

• Be firm on substance, flexible on structure: I know where I need to get, I’m flexible on how I get there.

• Getting unstuck is a worthy enough short-term goal.

• Address the logic of appropriateness: what does a person like me do in a situation like this?

• Leverage social proof to boost appropriateness.

• Framing an option as unique is a double-edged sword.

• Frame your proposal as the default option.

• The party that drafts the initial version of the agreement or process gains leverage.

• Establish a proper reference point for their evaluations.

• Always justify your offer, but don’t apologize for it.

• Strategic ambiguity can help resolve deadlock when no one can back down.

• Strategic ambiguity should be used only if other mechanisms are in place to ensure compliance.

• Strategic ambiguity can help overcome initial hesitations to starting relationships.

• Ambiguity is not a remedy for substantive conflict.

• Ambiguity involves a trade-off between current conflicts and future conflicts.

• If closing deals is rewarded, negotiators might conceal substantive disagreements to push through flawed deals.

• Ambiguous deals may be parasitic, hurting those who are not at the table.

• Be the first mover: control the frame early.

• If the existing frame is disadvantageous, reframe as early as possible.

• Better to preempt conflict than to resolve it: frame decisions in ways that help people avoid confrontation.

• Early in the relationship, find low-cost opportunities to create the right frame for the relationship.

Part II: THE POWER OF PROCESS

The good news is, there is light at the end of the tunnel. The bad news is, there is no tunnel. (SHIMON PERES)

CH 7: THE POWER OF PROCESS

Negotiating the US Constitution

THE WAR FOR AMERICAN independence between the United States and Great Britain lasted eight years, formally ending in the Treaty of Paris, which was signed in 1783. By that time, the Articles of Confederation had served as the governing document of the United States for six years. By design, the Articles gave little power to the central government, and the sovereignty of the 13 states was paramount.

The Articles went so far as to clarify that the relationship between the states was merely a “league of friendship with each other.” This was to be expected given the confederation was formed by people who had just freed themselves from the grip of power vested in a distant monarch. Soon enough, however, problems with this arrangement emerged. George Washington, commander in chief of the Continental Army, had seen the failings firsthand during the war itself. Congress had no power to tax, and the states were often unwilling to contribute the funds necessary to pay military wages or the war debt owed to foreign countries. After the war ended, matters worsened. Congress was considered so powerless that its delegates often failed to even show up; on occasions when a quorum was reached, little was accomplished. Even bills aimed at raising tax dollars to pay the war debt were defeated, not because a majority of the states dissented, but because the Articles gave every state a veto. In 1786, Rhode Island defeated such a bill despite support in 12 other states; in 1787, New York cast the deciding vote to do the same.

Evidence that the Articles had serious shortcomings mounted. In 1787, the highly publicized but short-lived Shays’ Rebellion, an uprising among Massachusetts farmers who had economic grievances, made the economic and political problems plaguing the young nation especially vivid. Soon after, the various states agreed to send delegates to the Constitutional Convention in Philadelphia. The goal of the convention was explicitly modest: to consider modifications to the Articles of Confederation. Had the convention been seen as an event at which reformers would try to completely overhaul the government and wrest power away from the states, it is unlikely that any state would have even sent delegates. Yet, that is precisely what occurred.

Although it is certainly possible to overstate the role any one person plays at historic events, James Madison is quite rightly considered to have been one of the few indispensable characters in Philadelphia that summer. Yet, by almost any measure, the deck was stacked against him. At 5 feet 4 inches, and weighing close to 100 pounds, Madison did not project strength or stature. Far from being a captivating orator, he was shy and sometimes spoke too quietly in the debates to be properly heard. At 36 years of age, he was neither a war hero, nor a prominent national figure, nor even a senior member of the delegation from his home state of Virginia. Most problematic, there was very little support for a significant overhaul among the American population at large, and the notion that state legislatures would accept any sizable reduction in their powers was almost unthinkable.

Nonetheless, in large part due to Madison’s efforts, when the convention ended, the delegates had drafted an entirely new constitution that shifted considerable power towards a new central government. By late 1788, the required supermajority of states (nine of 13) had ratified it, and by early 1789, the US Constitution became the law of the land. How did this happen?

NEGOTIATING THE IMPOSSIBLE

For his contributions, Madison would come to be known as the “Father of the Constitution.” And while he spoke over 200 times during the debates that took place in the summer of 1787, much of what he managed to accomplish might be attributed to what took place before most other delegates even arrived in Philadelphia. By the time the convention started, Madison had already shaped the deliberations that would take place.

Madison arrived in Philadelphia on May 3, 1787, 11 days before the Constitutional Convention was scheduled to start. True to character, he was the first delegate to show up. George Washington, a fellow Virginian—and the most popular man on the continent—would be the second to arrive ten days later. When Madison and Washington visited the convention hall on May 14 for the scheduled commencement of the now-historic deliberations, they discovered that apart from some local Pennsylvanians, they were the only two people from among the other 12 states to have made it to Philadelphia. While justifiably concerned by what the delay portended, Madison got straight to work. The task ahead, as Madison saw it, was to convince the other delegates that the Articles of Confederation needed to be thrown out completely. To be more precise, given the potentially fatal shortcomings of a system in which any one state could overrule all others on matters of national importance, the new system needed to vest significantly greater power in a national government. Madison understood that the greatest barrier to the drastic change he wanted was the default process that was in place: the Articles of Confederation were going to be the starting point of any conversation. As long as the Articles served as the template to be revised, they would be too powerful an anchor in every discussion of how to structure government appropriately. A process based on, “How should we revise the Articles?” could never lead to as much change as a process based on, “What is the best system of government?” The process would need to be changed. 

Madison, working with George Washington and other like-minded delegates from Pennsylvania and Virginia, started to draft an alternative document that could serve as the starting point for discussion. What came to be known as the “Virginia Plan” consisted of 15 resolutions that, although presented as revisions to the Articles, in fact upended the existing compact between the states.

Among its proposals were the idea of proportional representation in Congress, giving power to citizens rather than state legislatures; the veto power of the executive branch; elements of checks and balances; and the ability of the legislative branch to negate state laws that were incompatible with the national interest. Perhaps most astutely, anticipating the resistance of state legislatures to the changes, it also proposed a revised process for ratifying the new Constitution: it called for ratification not by state legislatures, but by assemblies specifically selected for this purpose by the people of the various states.

Not even the considerable talent gathered in Philadelphia in May 1787 could have created such a document without the exhaustive preparation Madison had undertaken before setting foot in Philadelphia. One month earlier, in April 1787, after countless weeks of careful and extensive research on the history of different forms of government dating at least as far back as ancient Greece, Madison had drafted a document titled “Vices of the Political System of the United States.” In it, he laid out a careful critique of the existing system, as well as ideas on how the problems could be addressed. Shared with the Virginia and Philadelphia delegates in May, this treatise served not only as the backbone of the Virginia Plan but also as the basis for reformation presented at the Constitutional Convention.

The convention finally started on May 25. Only four days later, Virginia Governor Edmund Randolph presented the Virginia Plan. Reactions ranged from enthusiastic support to shock and anger. But the die was cast, and all of the debates to follow would take place in the shadow of the Virginia Plan. There was now an entirely new process in place; instead of debating the legitimacy of revisions to the Articles, arguments were focused on supporting or opposing elements of the Virginia Plan. Many compromises were made by all sides in the months ahead, but as each day progressed, the Articles of Confederation were left further behind.

HAVE A PROCESS STRATEGY

What truly exemplifies Madison’s genius is not merely the extent of his preparedness, but the focus of it. Whereas most people know to prepare for the substantive discussions that will eventually occur, Madison understood the power of shaping the process that will ultimately determine whether, when, and how the substantive discussions will take place. The most obvious examples were Madison’s extensive efforts in resetting the starting point of discussions and the coalition-building he did before the convention even started. If he had not executed these process interventions, the negotiations might well have gone a different way. Another crucial process element that favored Madison was the gag rule that delegates instituted to shield their debates from public interference; if too much information on the ongoing negotiations had leaked early on, it would have been difficult for some delegates to continue the controversial work of the convention. If these process elements had not been carefully considered and shaped, the debates would have started—and likely ended—quite differently.

The substance of a negotiation is about what the parties are trying to achieve. Process is about how they will get from where they are today to where they want to be. In the previous section, I discussed the peril of focusing exclusively on substance and ignoring the frame. In this section, I will make the same argument regarding process: even the most brilliant strategy for the substance of negotiations can be undermined if there is insufficient attention to process. Here are just a few elements of process to consider and try to shape:

• How long will negotiations last?

• Who will be involved and in what capacity?

• What will be on the agenda, and in what order will issues be discussed?

• Who will draft the initial proposal?

• Will negotiations be public or private?

• When and how will progress be reported outside of negotiations?

• Given multiple parties or issues, will there be one negotiation track or many?

• Will all the parties be in the same room at the same time?

• Will negotiations take place face-to-face or via technology?

• How many meetings will be scheduled?

• How will major deadlocks or other problems be managed?

• Will there be outside observers or mediators?

• Will deadlines, if any, be binding or not?

• What milestones might help build momentum and keep the process on track?

• If the negotiations end in no deal, when and how might parties reengage?

• Who are the parties that need to ratify the deal, and how much support is sufficient for passage?

In most negotiations, some or many of these factors will be predetermined, or there may be a default process in place due to precedent or the actions of other parties. But as we have seen, defaults need not be blindly accepted—they can be reset to great advantage. This happens only when negotiators have evaluated all of the important elements of process in advance and have assessed how alternative processes might facilitate or hinder progress.

Have a process strategy: 
How will you get from where you are today to where you want to be? 
Consider the factors that influence whether, when, and how substantive negotiations will occur.

DON’T IGNORE THE IMPLEMENTATION PROCESS

In the case of the United States Constitution, the crucial role of process can be seen even after the close of the convention. Much of the success in achieving ratification by the states can be attributed to the type of process that was implemented. Recall that many state governments would not have been in favor of the kinds of changes the new Constitution proposed. Moreover, many detractors of the Constitution were going to argue that delegates at the Constitutional Convention had exceeded their authority, that there was going to be too much power vested in the national government, and that individual rights were not sufficiently protected (a concern that was later remedied by the Bill of Rights).

How do you get sufficient support for a deal that is certain to shock many of those who have been outside of the negotiation? Fortunately for Madison and other supporters of the Constitution (dubbed the Federalists), the process for ratification was tailor-made to help them overcome opposition by the Anti-Federalists. 

First, and most crucially, according to Article VII of the Constitution, only nine of the 13 states needed to ratify the Constitution for it to go into effect for those states. This was despite the fact that any previous revision to the Articles of Confederation, which is what the new Constitution was supposed to be, had required a unanimous vote by all 13 states. 

Second, ratification took place through specially called state ratification conventions, rather than by the sitting state legislatures. 

Third, delegates were empowered to make only one choice—vote yes or no—and couldnot propose amendments or negotiate for revisions. And fourth, the Federalists moved quickly and strategically to schedule early votes designed to win passage in five of the pro-Constitution states.
This made it easier for delegates in other states who might have been on the fence to feel more comfortable voting in favor. Certainly, substantive concessions were also made to shore up support in some states—most notably, reaching an understanding that the Bill of Rights would be taken up by the first Congress under the new Constitution. But it is hard to imagine how the Federalists could have achieved success without the right process elements in place. If ratification had required consensus, states like Rhode Island, which had not even sent delegates to the Convention, would have surely vetoed all efforts from the start. Had states been allowed to vote on different versions of the Constitution, or to reopen debates in the hopes of scoring concessions, deadlock would have almost certainly resulted. Likewise, had the Anti-Federalists been given more time to mount an organized challenge to the Constitution, things might have ended differently.

A process strategy for deal making is not enough — You also have to strategize the implementation process. 
What will be required for successful implementation? 
How will you garner sufficient support for the deal? How will you ensure ratification?

THE POWER OF PREPARATION

As evident throughout, Madison understood the power that comes from being the most prepared person in the room. It was this quality that inspired him to conduct his scholarly research before the convention and to reach out to other Virginia delegates asking them to arrive early to draft “some materials for the work of the Convention.” He brought the same quality into the Convention itself. William Pierce, the delegate from Georgia who became famous for penning character sketches of other delegates, referred to Madison as someone who “always comes forward as the best informed Man of any point in the debate.”

The benefits of thorough preparation are as evident in complex deal making as they are in board meetings, sales calls, legal proceedings, and promotion discussions in faculty meetings. In every one of these environments, some show up woefully unprepared, some have done enough preparation to get by, and others are ready to respond to almost anything. In a truly important situation, you don’t want to be any of these people. You want to be a Madison: someone who has all of the facts at your fingertips, who can anticipate the arguments and reservations of the other parties, and who has carefully examined not just the strengths but also the weaknesses of your own argument. This is the person who is hardest to ignore or push around, to whom others are most likely to give deference, and who will most easily shape or reshape the process and the substantive negotiations effectively.

Be the most prepared person in the room. Know the facts, anticipate the arguments, and understand your weaknesses.

CH 8: LEVERAGING THE POWER OF PROCESS

NEGOTIATE PROCESS BEFORE SUBSTANCE

Negotiate process before substance. Understand and influence the process before diving too deeply into substantive discussions or concession making.

SYNCHRONIZE WITH THE OTHER PARTY ON PROCESS

Misalignment on process can derail deals. Ensure—early and often—that there is agreement about what has been accomplished and what the path ahead looks like.

SEEK CLARITY AND COMMITMENT

Even if you cannot influence the process, seek to get as much clarity and commitment on it as possible.

NORMALIZE THE PROCESS

Normalize the process. If other parties know what to expect, they are less likely to overreact to or overweight the significance of doubts, delays, and disruptions.

ENCOURAGE OTHERS TO NORMALIZE THE PROCESS FOR YOU

As important as it is to normalize the process for others, it is also important to have others normalize the process for you. It does neither side any good for predictable problems to go undiscussed. You are less likely to judge them harshly in the aftermath of adverse events if the other side has prepared you for the types of disruptions that are common when negotiating with people, organizations, cultures, or countries such as theirs. Moreover, in anticipation of some potential problems, you may be able to offer solutions that mitigate the likelihood of (or damage from) such events.

Encourage others to normalize the process for you—and make it safe for them to do so.

EVEN THE OTHER SIDE’S REFUSAL TO CLARIFY OR COMMIT IS INFORMATIVE

Asking for clarity and commitment is valuable even if the other party is unwilling to provide them. It is better to know there is a lack of commitment and to adapt accordingly than to incorrectly assume that the process will unfold as you hope.

MINIMIZING THE LIKELIHOOD THAT THE OTHER SIDE RENEGES

The risk of reneging is lower when commitments are personal, explicit, unambiguous, and public.

THEY RENEGED: WHEN AND HOW TO WALK AWAY

These are five very important elements to consider before disengaging on the basis of process conflict:

• Can we be sure it was a breach, or does the other side have reasons to see things differently?
• Do we bring sufficient value to the table, and does the other party understand this?
• Can we justify our actions on the basis of acceptable principles?
• Have we clarified what would be required to fix the breach?
• Have we given the other party a face-saving way to return to the table?

The more of these questions that you can answer in the affirmative, the easier it will be for you to successfully challenge a perceived process breach.

Before walking away due to a process breach, consider: 
(a) whether the other side considers it a breach, 
(b) how much each side loses, 
(c) how you will justify walking away,
(d) whether they know how to remedy it, and 
(e) how they can do so without losing face.

FULL AGREEMENT ON PROCESS IS NOT ALWAYS POSSIBLE OR DESIRABLE

Commitment to a rigid process is not always possible or advisable. If the process is flexible, make sure all parties understand the degree to which there is commitment.

CH 9: PRESERVE FORWARD MOMENTUM

PRESERVE FORWARD MOMENTUM

Preserve forward momentum. Before using tactics to gain advantage, consider: 
How will this affect our ability to negotiate productively in the future? 

THE DARK SIDE OF CONSENSUS

Consensus deals can be shortsighted. As the number of parties with veto power increases, the degrees of freedom for deal structuring decreases.

THE PRINCIPLE OF SUFFICIENT CONSENSUS

In complex deals and protracted conflicts, especially if hostage taking is a concern, a sufficient consensus approach can be more appropriate than seeking unanimity.

LOWER THE BAR FOR PROGRESS, RAISE THE BAR FOR AGREEMENT

Keep a low bar for progress on individual elements of the deal, but a high bar for approving or ratifying the comprehensive final agreement.

NOTHING IS AGREED UNTIL EVERYTHING IS AGREED

The principle of “nothing is agreed until everything is agreed” can help overcome paralysis by allowing people to make concessions safely.

THE COST OF TRANSPARENCY DURING THE BARGAINING PROCESS

Transparency during the bargaining process can stifle progress. Give negotiators the privacy they need to structure the deal; give constituents the right to decide whether the deal is acceptable.

CH 10: STAY AT THE TABLE

Peacemaking from Vienna to Paris

THE FIRST WORLD WAR (1914–1919) has been labeled “the war to end all wars.” In fact, it may have been better described as “the war that forgot all wars.” Whether we look at the catastrophic decisions that led to the outbreak of war or at the structure of the flawed peace agreements that followed, we discover the tragic consequences of faded memories and of lessons too easily forgotten. Much has been said about the mistakes made in the Paris negotiations at the end of WWI, especially regarding how the treatment of defeated Germany likely played an important role in Germany’s march towards instigating World War II.

Of course, we sit in the privileged position of the future, making such judgments with the clarity of hindsight. Surely, if the victors had the ability to know better, they would have negotiated a different agreement. Alas, they did know better—and it did not help.

The hundred years of history prior to WWI were particularly notable for the relative absence of continental conflict in Europe. There were conflicts, to be sure, but none had escalated to the point of sustained multilateral wars with massive casualties. At least some of the credit for this goes to the negotiations that ended the previous great military conflict. The Napoleonic Wars had ended in 1814, and the victorious nations of Great Britain, Russia, Prussia, and Austria had come together in Vienna to decide the fate of defeated France. In much the same way, 105 years later, Great Britain, France, Italy, and the United States came together in Paris to decide the fate of Germany. In each case, the defeated nation was seen as having been responsible for the destruction that had been caused by the war. In each case, most of the negotiations took place on one side of the table: the peace terms were largely decided by the victors and imposed on the defeated nation with little room for further bargaining. Yet, on at least one crucial dimension, the outcomes of these two negotiations could not have been more different.

How were the combatants in 1814 able to avoid the kinds of postwar turmoil that the peacemakers in 1919 seem to have encouraged? How do you stop a resurgence of the misdeeds and mistrust that have just led to a devastating war?

WITHOUT MONEY OR MUSCLE

The Congress of Vienna (and a treaty signed earlier that year in Paris) had forced France to give up the land it had conquered in recent years, but it was allowed to return to its expansive borders of 1789. While appropriately considered the aggressor, France was not initially asked to pay war reparations, lest this burden lead the country to become so weak that it would tempt belligerence in the form of either future French aggression or the conquest of a weakened France by other nations. This policy changed when Napoleon restarted the war, after escaping from exile in 1815. After the second defeat, France was forced to pay reparations, which it did in full. Most importantly, in 1818, after France had made amends, it was invited to join the international community in what became known as the Concert of Europe. The multilateral conferences of the Concert of Europe were the closest thing to a United Nations or European Union that Europe would see until the next century. Despite having been the perpetrators of war, the French were given a seat at the table.

In contrast, a century later at the end of World War I, the Allies did not treat Germany so astutely. Ironically, but not surprisingly, given the mistrust and animosity that had been growing since at least the Franco-German War of 1870, it was the French who spearheaded the attack on Germany during the peace negotiations.4 When the smoke cleared, in addition to accepting severe restrictions on its military, Germany had to relinquish approximately 13% of its territory, 10% of its population, and all of its colonies outside of Europe.

The spirit of the deal can be best understood in two other key provisions. The first, Article 231 (AKA the “War Guilt Clause”), required the Germans to “accept the responsibility of Germany and her allies for causing all the loss and damage.” As such, Germany was expected to pay reparations to the tune of almost half a trillion dollars (in current dollars), a much higher amount than France had been required to pay in 1815, when measured as a percentage of GDP. But it was the second decision that was likely more consequential symbolically and substantively: disallowing Germany from joining the League of Nations, the precursor to the United Nations. The German perspective on the take-it-or-be-invaded offer was perhaps best captured by Foreign Minister Brockdorff-Rantzau, who summarized the treaty as follows: “Germany surrenders all claims to its existence.”

CREATE A PROCESS FOR RESOLVING RESIDUAL CONFLICT

While there has been much debate over whether the Germans could have afforded to pay the reparations demanded of them—they quite possibly could have done so—the fact remains that these demands sowed the seeds for future conflict. However, as we can see in the case of France after the Napoleonic Wars, the imposition of even substantial reparations is not a sufficient condition for the outbreak of future conflict. Reparations and other punitive measures may increase the likelihood of conflict, but if there are structures and channels in place for peaceably managing residual or latent conflict, future wars may be avoidable. A potentially bigger mistake in dealing with Germany was not the reparations, but the isolation: the outcome fueled conflict while simultaneously limiting the possibility of managing conflict. Indeed, it is the isolation of the enemy, far more than a demand for reparations, that distinguishes the peace negotiations in Vienna from those in Paris.

Most influential delegates at the Congress of Vienna in 1814 shared a belief that it was imperative to be forward-looking. The statesmen in Vienna seemed to care more about preventing future wars than about punishing the perceived perpetrators of past wars. They acted to secure peace on behalf of future generations, not merely to exact vengeance on behalf of current victims. Most notably, by including France among the community of nations, and by creating a system in which the balance of power would not tip too strongly against the victors or against the defeated, the Europeans assured themselves a relatively long-lasting peace. It was not so in 1919.

Most negotiations, even successful ones, leave residual conflict in their wake. Create channels and processes to manage subsequent flare-ups and latent conflict.

STAY AT THE TABLE

The problem of underinvesting in continued engagement exists in all kinds of conflicts. When peace talks disintegrate, and especially if armed conflict flares up as a result, there is a tendency to break off all communication or negotiation rather than keep channels open to facilitate a future attempt at peacemaking. Then, even when future opportunities for deal making arise, there is a debilitating lack of information and understanding; the lack of investment in maintaining relationships makes subsequent agreements that much more difficult to achieve. In sports, at least historically, there has been a tendency among some negotiators to engage with each other only when a new collective bargaining agreement is on the horizon, rather than to build trust in the interim years. Similarly, the recent nuclear negotiations between the United States and Iran were hampered in no small part by the lack of relations over the previous decades. Some salespeople, too, will disengage with customers after a deal is signed (or when it fails), and reengage only when it is time to pitch the next deal.

A wiser strategy, in each instance, is to stay at the table, at least figuratively, if not physically, even when there is no visible prospect for a deal, or money to be made. Especially in the aftermath of “failed” negotiations, the natural tendency is for the relationship to further deteriorate, for trust to diminish, and for perspectives to diverge further. Continued engagement is crucial to keep relationships intact, audit the potentially changing interests and constraints of all parties, and explore the possibility of renewed negotiations. Also, it is often easier to obtain information and build trust when substantive negotiations are not under way, because there is less anxiety that sharing information will give the other side an advantage in a deal. My advice to deal makers is to stay engaged regardless of the outcome; there may come a time when the deal you reached can be improved, or the no deal you reached can be reversed.

Stay at the table, especially after failed negotiations, to sustain relationships, understand the other side’s perspective, and look for opportunities to reengage.

IF YOU’RE NOT AT THE TABLE, YOU’RE ON THE MENU

In the case of WWI, it is not as if the potential problems with the peace deal were entirely unforeseen. Delegates from many countries openly worried that they had sown the seeds of future war. The notable exception was France, where some felt the terms were too lenient. A British officer at the time, Earl Wavell, described what occurred in 1919 with a touch of dark poetics: “After the ‘war to end war’ they seem to have been pretty successful in Paris at making the ‘peace to end peace.’”6 Why, despite such misgivings, did the treaty take the shape that it did?

One important reason was that the Germans were almost entirely excluded from the negotiations. In contrast, in 1814, the French had been given a seat at the table almost from the beginning, in no small part due to some brilliant maneuvering by the French diplomat (Talleyrand), although they had less of a voice than the other nations. In the absence of the German perspective in the room in 1919 (while the deal was being drafted), there was far too much momentum going against the Germans for far too long. There was simply no opposing force to balance the French demands. Not surprisingly, those with a seat at the negotiation table will sometimes ignore or even exploit the interests of those who are not represented. Indeed, a saying that has made the rounds in diplomatic and political circles gets right to the point: If you’re not at the table, you’re on the menu. In this case, the Germans were the appetizer, main course, and dessert.

The same holds true in all kinds of negotiations. Consider for example what typically happens in CBA negotiations in American sports. After months spent stubbornly resisting any calls for substantive concessions, the two sides eventually begin to move away from their opening positions. Which concessions do you think they make first? You do not need to know anything about sports, or even know which sport is being discussed, to be able to predict with great accuracy that one of the first big concessions that players will make is going to be related to rookie salaries and contracts. Why are the interests of rookies—the new players who are just entering the league—usually the first sacrifice made on the altar of collective bargaining? Because they are not at the table.

If you are not at the table, you are on the menu.

NEGOTIATING WITHOUT A SEAT AT THE TABLE

Wise negotiators do what they can to get a seat at the table. If that is not possible, there are other ways to influence what happens in a negotiation. In the 2011 NFL negotiations, for example, retired players did not have voting power in the negotiation, but they were able to influence the NFL Players Association and the league by using a sustained media campaign on retiree health concerns. More generally, if you have no formal role or leverage in the substantive negotiations, you may be able to influence those who do have control. Your leverage in these situations stems from your ability to help them from the outside. For example, they may have interests outside of the current deal that you can support in exchange for their support in the current negotiation. Or, they may need your help selling the current deal, as was the case with the retired players. If those at the table value your support or fear your opposition during the negotiation (or when it is time to ratify or sell the deal), you have leverage.

If you don’t have a seat at the table, you might influence deal makers by creating value outside of the deal, or by offering to help sell or implement the current deal.

UNDERINVESTING IN PROCESS DURING TIMES OF PEACE

In his book Diplomacy, Henry Kissinger suggests a second reason why the peace negotiations in 1919 and 1814 took different shapes.7 In 1814, the memory of past wars was vivid. For the previous few centuries, Europeans had not gone more than a few years without seeing war break out among great European powers. The prospect of continued and escalating conflicts was considered real, even assured, unless great effort was made to prevent it. In 1919, in contrast, the Great War (WWI) was seen as more of an accident or an anomaly, rather than the rule. It seemed to demand explanation (How did it happen?), rather than effort (How to prevent it in the future?). What the negotiators did not fully appreciate was that the long era of peace that ended with WWI had been the product of careful “system building,” not an inevitable consequence of history’s quest towards enlightenment.

This is an all too common problem in negotiated agreements in long-term relationships. When the context of a deal is forgotten and memories have faded, it becomes difficult for future generations of negotiators to understand the logic behind the original deal and why it might make sense to retain it. Instead, the deal begins to look flawed or inappropriate and no longer relevant. According to Dr. Kissinger, this explains why the British, after a few decades of peace following the Congress of Vienna, started to step away from their role as guarantors of the balance of power in Europe; it explains why the Austrians, within two generations of the Congress of Vienna, began to risk the system of alliances on which their survival depended to pursue short-term gains and temptations; it explains why the Germans, who had now consolidated power, traded away their treaty with the Russians to woo the British. In each case, statesmen failed to see that they had purchased peace by paying what, in the absence of war, seemed like unnecessary costs. For example, the British saw peace and felt their investment in Europe was unnecessary, rather than viewing the peace as a consequence of their investment. Likewise, the Austrians and Germans failed to appreciate that the freedoms they enjoyed were rooted in the alliances that they were now ready to squander. Let’s take this to a corporate context. Imagine a new CEO who walks into the office and finds that there have been no legal disputes in the last ten years and therefore decides that there is no longer any reason to invest in a legal team or in drafting contracts carefully with vendors and customers. Or, in sports, imagine a soccer team that discovers that the other team has not scored a single goal in the first half of the game and decides to pull the goalie for the second half. These decisions would be unthinkable. Unfortunately, in conflict environments, people will often make very similar decisions. When “success” is not assessed in terms of a measurable “gain” but by the maintenance of a positive status quo (e.g., peace, continued cooperation, etc.), the causal link between effort and success may be unobservable. Without careful examination, it is not obvious what is keeping things on track. And if the policies designed to promote cooperation are costly—financially, politically, bureaucratically—there is a temptation to stop investing in them. Entropy ensues: in the absence of deliberate investment, relationships, institutions, and collaborative enterprises can all too easily deteriorate.

Companies seem to underinvest in strengthening stakeholder relationships when times are good, only to find they are short on goodwill when conflict arises. In the domain of armed conflict, the onset of insurgency is often preceded by political marginalization and procedural injustices perpetrated by a dominant group that seems to take the peaceful status quo for granted. In an entirely different context, the same principle might be useful in explaining why some in the United States have been caught up in the so-called anti-vaccination fad in recent years. Once a disease such as measles is largely eradicated and people do not have experience with the devastation it brings, it is easy to disparage the very vaccines that suppressed the disease and provided the comfort from which vaccine deniers wage their attacks. In each of these cases, the problem is not an unwillingness to invest in factors that sustain peace, nor is it the undervaluing of peace itself, but a failure to see how one leads to the other.

There is a tendency, especially in times of peace, to underinvest in processes that can help maintain relationships and in institutions that can help sustain the peace.

As with preparation, there is a wide disparity in how much negotiators focus on process. Some ignore it entirely; others strategize and negotiate process with incredible forethought. While we have seen the importance of negotiating process, this is not to say that you cannot overemphasize it. As the next chapter illustrates, there can be too much focus on process. When process takes on too much importance and becomes overladen with significance or symbolism, it can seriously damage prospects for substantive progress.

CH 11: THE LIMITS OF PROCESS

GETTING STUCK ON PROCESS: COMMON REASONS

Parties can get bogged down with process concerns when: 
- there is inadequate preparation, 
- an unrealistic goal of crafting the perfect process, or 
- an excessive desire for strategic flexibility.

WHEN TO LEAVE PROCESS BEHIND

If substantive discussions are being thwarted by an excessive focus on process:
(a) consider reaching an agreement on an imperfect but revisable process, or 
(b) begin substantive discussions in parallel with process discussions.

PROCESS CONFLICT AS A PROXY WAR FOR LEGITIMACY AND LEVERAGE

When power relations are unclear or unstable, process negotiations can become proxy wars for leverage and legitimacy, endangering substantive negotiations.

THE CASE FOR TAKING A STAND ON PROCEDURAL ISSUES

Resisting unfair demands on matters of substance is easier if you have earlier challenged unfair demands on process.

HOW TO STAND FIRM ON PROCESS

If you want to stand firm on process, it is best to: 
(a) demonstrate that you seek equality, not advantage, 
(b) acknowledge and address substantive concerns that are linked to process choices, and 
(c) negotiate substance in parallel with process.

CH 12: CHANGING THE RULES OF ENGAGEMENT

Negotiating with Your Friends

IN FEBRUARY 2002, NBC and Warner Brothers made headlines when they signed the most expensive deal in television history for the rights to a 30-minute sitcom. The show was Friends, a situation comedy about six friends living in New York City. This would be the tenth and final season, ending a decade-long run in which the show was nominated for over 60 Primetime Emmy Awards (winning six) and was ranked in the top five shows on TV in all but its first season. It was undoubtedly a great show, but that is not enough to explain how much the actors playing the six main characters were paid for the final season. 

Many comedies have one clear star surrounded by an ensemble of other characters. Consider, for example, some of the most popular shows on NBC in the two decades leading up to this negotiation:

The Cosby Show, Family Ties, Frasier, Everybody Loves Raymond, and Seinfeld. What made Friends unique was that there were six characters, all of whom were given close to the same amount of screen time. This made them all equally important. It could also make them, from a negotiation perspective, equally expendable. From the point of view of the production company or a TV network, if one cast member were to get too aggressive in bargaining, the show would likely be able to continue without him or her. It would not be an ideal situation, but having the ability to move forward with five of six original cast members should have provided some degree of leverage against the actors. (This kind of leverage is hard to muster when the show is called Seinfeld or Everybody Loves Raymond, and the actor’s name happens to be Jerry Seinfeld or Raymond Romano.)

Yet, when all was said and done, the deal reached between NBC and Warner Brothers gave each of the six actors $1 million per episode. With 22 shows scheduled for the season, the actors would each stand to make $22 million.2 To put this in perspective, consider the following: Only a few years earlier, in the final season for Seinfeld, a show that won more Emmys and did better in the ratings than Friends, Jerry Seinfeld was paid $1 million per episode; the next-highest-paid three actors were given $600,000 per episode.3 How then were all six “friends” able to hold out for so much more?

WITHOUT MONEY OR MUSCLE

The seeds for success in 2002 were sown years earlier, during the negotiations for the third season of Friends. Prior to the third season, the six actors had always negotiated in the standard way, which is to say they negotiated separately with the help of their agents. After the first year, for which each actor was given a standard $22,500 per episode, their future salaries would be a function of the success of the show, the perceived importance of the character, and the outside options the actor had. In the second season, these factors resulted in a range of salaries for the six, between approximately $20,000 and $40,000 per episode.

Before negotiations for the third season began, however, actor David Schwimmer (“Ross”), who was likely to make one of the highest salaries that season, came up with a different approach. He went to his fellow cast members and made the argument that the production company and TV network had tremendous leverage over them because, individually, each of them was replaceable. They would not be in a position to really share in the show’s success unless they agreed to stick together in future negotiations and to ask for the same salary for each actor. This was unorthodox;

Schwimmer was asking them to pay no attention to their individual value-add to the show and to instead negotiate based on their collective contribution. If they could somehow stick together regardless of who “objectively” deserved more or less in any given season, they would have increased leverage. Then he played his trump card. To underscore his own commitment to the idea, he offered to make the first sacrifice; he would ask the production company to pay him less money in the third season so that all of them would make the same amount. Jennifer Aniston (“Rachel”) would have to agree to do the same—and she did. As a result, in that contract, each of them was paid the salary of the lowest-paid actor: starting at $75,000 per episode for Season 3, and increasing to $125,000 for Season 6. They would never negotiate separately again. David Schwimmer recalled, during an interview with Vanity Fair:

I said to the group, “Here’s the deal. I’m being advised to ask for more money, but I think, instead of that, we should all go in together. There’s this expectation that I’m going in to ask for a pay raise. I think we should use this opportunity to talk openly about the six of us being paid the same. I don’t want to come to work feeling that there’s going to be any kind of resentment from anyone else in the cast down the line. I don’t want to be in their position”—I said the name of the lowest-paid actor on the show—“coming to work, doing the same amount of work, and feeling like someone else is getting paid twice as much. That’s ridiculous. Let’s just make the decision now. We’re all going to be paid the same, for the same amount of work.” I thought it was significant for us to become a miniunion. Because there began to be a lot of decisions that had to be made by the group in terms of publicity. That was actually a byproduct of how the impulse originated, which was from my ensemble theater [experience]. We all paid dues. We were all waiting tables and doing other jobs, but we all paid the same amount of dues, and we were all paid out equally. That idea was really important to me.

In addition to higher salaries, the cast members were able to negotiate a share of syndication royalties—uncommon for an ensemble at the time—giving them a percentage of revenues once the show was in reruns. After the sixth season, the cast negotiated a salary of $750,000 per episode for each actor. By the time the famed $1-million-per-episode negotiation took place, there was no doubt in anyone’s mind that the six actors were going to either all sign or all walk away. Schwimmer’s gambit—the sacrifice he made when tens of thousands of dollars were on the table—paid off in the millions.

SHAPE THE TERMS OF FUTURE ENGAGEMENT WHEN IT’S STILL CHEAP TO DO SO

Early-stage interactions can provide a relatively low-cost opportunity to shape the terms of future engagement.

COSTLY INVESTMENTS SIGNAL COMMITMENT TO PROCESS

It is one thing to come up with a good idea for how to reshape the process. It is another thing entirely to do so in a way that underscores your own commitment to the proposal. Notably, Schwimmer’s proposal was not going to be costless; occasionally, one or more of the actors might be worse off with this arrangement. To articulate with credibility that he believed such costs were worth incurring, he took the first hit. The willingness to incur a cost early on when there is no guarantee that the investment will pay off is a powerful means of signaling commitment to a new way forward.

Governments or armed groups that incur political costs or accept preconditions for initiating a peace process send such a signal. Potential deal makers who agree to a hefty “break-up fee” if the deal does not happen, or to an exclusive negotiating period that may delay or eliminate other options, are also signaling commitment early on. Employees who agree to accept a job offer before negotiating the precise terms are doing the same. I know a CEO of an early-stage company that was struggling and in dire need of additional capital. There was tremendous anxiety among employees regarding what would happen if the company failed to ink another round of investment in the next few months. This created an incentive for them to start looking for other jobs right away, as a job search can take months as well. The CEO went to his key employees and asked them to delay any such plans. He told them that he was committed to the company and to them and that he needed them to also stay committed for a few more months before deciding to look elsewhere. And then he underscored his commitment by promising to pay their salaries from his own pocket if necessary (i.e., if the investors did not sign) to ensure that they would not start jumping ship at this moment of crisis.

Each of these types of decisions may be a bad one in some circumstances, and I do not recommend any of them with regularity. That is precisely the point: because these are risky, they can send a strong signal of commitment.

Your willingness to incur up-front costs in support of the process sends a credible signal of your commitment to it.

LABEL YOUR CONCESSIONS

In the case of Friends, the right attributions seem to have been made of Schwimmer’s behavior.
His co-star and friend, Matt LeBlanc (“Joey”), would later reflect:

Schwimmer was in the position to make the most money. He was the A-story—Ross and Rachel. He could have commanded alone more than anyone else.... Did he know ultimately there would be more value in that for all of us as a whole? I don’t know. I think it was a genuine gesture from him, and I always say that. It was him.

Label your concessions. Even genuine acts of kindness and wisdom can be interpreted as weakness or incompetence. Shape the attributions others will make of your behavior to ensure that you encourage reciprocity rather than exploitation.

IF A DESTRUCTIVE PATTERN IS ENTRENCHED, LABEL YOUR FUTURE CONCESSIONS

Earlier in the book, we discussed the importance of reframing quickly if a disadvantageous frame is in place. Of course, the sooner you challenge a disadvantageous frame, the sooner you are able to achieve your preferred outcome. But there is another reason to act quickly. The longer a frame persists and goes unchallenged, the harder it will be to change it later. For example, in labor–management relationships, if a contentious frame has been in place for decades and the owners call for a lockout each time they negotiate (e.g., in the NHL), it will be hard to change the pattern. Even if all sides want to improve the relationship, it will not be easy for owners to decide against issuing a lockout. If you’ve negotiated aggressively the last five times you came to the table, your well-intentioned decision to negotiate more amicably this time might actually be perceived as a sign of desperation. The longer you’ve been fighting, the harder it is to stop fighting without looking weak. Similar patterns often take hold in politics, and, sadly, too often in personal relationships as well; each time one side softens its stance, the other side is conditioned to take advantage of the opportunity.

One solution is to label your concessions; let the other side know that you are acting out of concern for the long-term relationship, not out of weakness. But if a pattern of fighting is entrenched, or if the frame of “eat-or-be-eaten” has persisted for too long, your labels may not be immediately credible. You may not be able to convince your negotiating partners in the heat of battle that you are actually “strong and nice” because they have never before seen you exhibit both of these traits at the same time. From their point of view, you’ve only ever acted “nice” when you were in a position of weakness.

In such situations, it is sometimes more effective to label your future concessions. For example, you fight more aggressively than you had wanted to today because the alternative is to be seen as weak, but you propose a path that can lead to future cooperation by letting the other side know you are willing to behave differently next time if they will work with you to create the right conditions. These conditions could be an agreement that both sides will start out with less aggressive positions, that the media will not be used to attack each other, that concessions will be reciprocated in a timely manner, or that each side will just do its best not to respond to kindness with mistrust or aggression. Simply put, a concession today might not be possible to label, but a concession you have not yet made can be easier to label.

If a destructive pattern is entrenched, label your future concessions.

SAFEGUARD YOUR CREDIBILITY—AT TIMES IT WILL BE YOUR ONLY SOURCE OF LEVERAGE

As we’ve just discussed, not all negotiations provide an easy way to label your concessions and show your commitment to a process that would work better for everyone. You may not have the option, like David Schwimmer did, of incurring the first cost, and the people whom you have to convince of your motives may not trust you as much as the “friends” trusted him. But in my experience, there is one way to signal your commitment to process that all negotiations provide: Always keep your word, even when it is costly. The best deal makers and diplomats take very seriously the promises and commitments they have made to the other side on small things and big. This is not only the right thing to do; it is a tremendously powerful instrument in deal making. Especially in difficult, protracted conflicts where negotiating itself might be seen as risky or useless, often the only source of leverage you have for bringing the other side to the table is your credibility. And once you’re at the table, mistrust is often the biggest barrier to the give-and-take necessary for progress, because many of the concessions either side commits to are not deliverable right away—promises of equitable treatment, power sharing, future benefits, etc. are necessarily premised on trust. If you have not built up a reputation for credibility, you are ill-suited to negotiate such deals.

Interestingly, in both big deals and small, people don’t usually lose their credibility because of one sudden act of extreme treachery. Rather, credibility erodes slowly over time, as the other party starts to learn that we do not always follow through on our commitments; that we sometimes make strong assertions based on incomplete information; and that we seem to forget some of the assurances we gave, perhaps too hastily, in earlier discussions. As a consequence, the reason someone doesn’t believe you when you honestly tell them “I cannot do that” is because some weeks or months ago you used the same language, only to do that very thing once it suddenly became worthwhile. I remind my students and clients often: There will come a time when your only source of leverage in the negotiation will be your credibility. It is unfortunate that this invaluable asset is so often traded away for so little, so casually.

Credibility is usually lost a little at a time. Safeguard your credibility by following through on your commitments, even the small ones.

Part III: THE POWER OF EMPATHY
Understanding, I think, is the most important thing when you are dealing with people—any people. You have got to make the effort to understand even the ununderstandable.
- LAKHDAR BRAHIMI
    
CH 13: THE POWER OF EMPATHY

Negotiating the Cuban Missile Crisis

ON OCTOBER 16, 1962, American U-2 spy planes conducting reconnaissance over Cuba discovered what was later confirmed to be the construction, with help from the Soviet Union, of missile sites capable of launching nuclear weapons. The mere existence of missile sites in nearby Cuba was neither unexpected nor problematic, but two specific features of these sites were of particular concern to the United States. First, they would be capable of launching offensive missiles that could target the US mainland. Second, the missiles were capable of carrying nuclear warheads. As it happens, the Soviet Union had promised publicly and privately that offensive missiles capable of carrying nuclear weapons would not be stationed in Cuba. It was now clear that these assurances had served only to deceive and to delay discovery of the missile sites. This set off what in the United States would come to be known as the Cuban Missile Crisis. As the conflict escalated, the world started to inch closer to a nuclear war than it has at any other time in history. On October 18, US President John F. Kennedy (JFK) organized a group of advisers, later dubbed the ExComm (Executive Committee of the President of the United States), that would convene secretly to assess options for how to respond to the threat. This group of more than a dozen people included the Joint Chiefs of Staff, the secretaries of defense and state, the national security advisor, the CIA director, and Robert Kennedy, who was both attorney general and JFK’s younger brother.

Early on it became clear that there were two primary options for a US response. The first, which we might call the aggressive option, would entail immediate air strikes to take out the nascent missile sites, possibly followed by a land invasion of Cuba. The second option, which we might refer to as the gradual option, called for the imposition of a blockade to keep additional military equipment from reaching Cuba, followed by diplomacy and coalition building in South America and the United Nations; in this option, military strikes would be the measure of last resort. There were reasonable arguments on both sides, and both options were risky. The discussion among ExComm members revealed that there was not even agreement about which option would be more likely to lead to further escalation by the Soviet Union.

At the start of ExComm deliberations, almost everyone supported the aggressive option. Robert Kennedy was in the small minority who considered this to be too risky a strategy because it immediately limited options for both sides. He also felt that there was a strong moral argument to be made against a superpower unilaterally and preemptively attacking a small country. In the days that followed, the tide shifted, and the majority of the ExComm came to the conclusion that the gradual option was superior. From a historical perspective, almost everyone agrees that the shift from aggressive to gradual was wise. The reason is that we have learned a lot since 1962 about what was happening at the time in the Soviet Union and Cuba, and almost every piece of new information suggests that an aggressive (air-strikes/invasion) strategy would have been even more disastrous than the ExComm had imagined. In other words, every incorrect assumption the ExComm made was wrong in the same direction: it underestimated the risk of escalation in the event of a military strike. For example, the ExComm assumed there were roughly 10,000 Soviet troops in Cuba at the time; in fact, there were over 40,000. Consider how this increases the likelihood that the United States ends up killing so many Soviet troops that the Soviet Union feels it must retaliate. Also, the ExComm believed that although there were missiles in Cuba, the nuclear warheads were yet to be delivered. In fact, the nukes were already in Cuba, and the arsenal even included “tactical” nuclear weapons, the kind one might use on an invasion force. Finally, the ExComm took it as an article of faith that no Soviet nuclear weapon could be launched without explicit authorization from Soviet Premier Nikita Khrushchev. In fact, Soviet commanders in Cuba had the authority to use nuclear weapons at their discretion, and Cuban leader Fidel Castro had decided that nuclear weapons should be used if there were an invasion. US Secretary of Defense Robert McNamara, who had been part of the ExComm, would later explain the implications of this: “No one should believe that had United States troops been attacked with tactical nuclear warheads, the United States would have refrained from responding with nuclear warheads. And where would it have ended? In utter disaster.” Disaster may have been avoided, at the outset, by moving to the gradual option, but choosing diplomacy is never a panacea. Just because the military option is terrible and you have opted to negotiate does not mean you will be able to reach an agreement—especially when you are negotiating in the shadow of time pressure, uncertainty, mutual mistrust, and deep-seated antagonism.

How do you approach a negotiation in which no one is willing or able to back down, and when each delay and every misstep takes you closer to the brink of nuclear war?

NEGOTIATING THE IMPOSSIBLE

Instead of a preemptive military attack, the United States set up a naval blockade of Cuba, which they termed “quarantine” for political and strategic reasons. Then, in concert with a growing group of allies, and the threat of military escalation, the United States began to pressure the Soviet Union to negotiate an end to the crisis. An outcome acceptable to the Americans would require the Soviet Union to dismantle the missile sites and remove the missiles from Cuba. How could the United States convince the Soviets to do so, especially when they had shown a willingness to take grave risks for military advantage, while the United States had so far shown an unwillingness to escalate matters or flex too much muscle?

The key to resolving the crisis was not just a different approach from what had initially been favored, but an entirely different perspective on how the conflict should be viewed. What made the difference was JFK’s willingness to consider Khrushchev’s point of view, and to investigate precisely why the Soviet Union felt compelled to transfer nuclear weapons to Cuba even when it risked starting a war. There were, it turns out, a number of such reasons—and understanding them was pivotal.

Consider the Soviet perspective. First, the United States already had nuclear-capable missiles stationed close to the Soviet Union, in Turkey and Italy, which were as threatening to the Soviets as the missiles in Cuba would be to the United States. Second, there was a significant “missile gap” at the time, with US nuclear capabilities (i.e., the number of missiles, bombers, and warheads) being an order of magnitude greater than those of the Soviet Union. The US arsenal was also more technologically advanced. Third, the biggest problem with the Soviet arsenal was a scarcity of intercontinental ballistic missiles capable of reaching the United States in the event of war. The Soviets knew this problem could be overcome in a few years, but in the meantime, they believed a nuclear deterrent in the form of shorter range missiles stationed closer to the United States was badly needed. Finally, there was the issue of how the CIA kept hatching plans to assassinate or overthrow Fidel Castro, something the Soviet Union and Cuba found more than a little irksome.

Understanding this perspective went a long way in helping to end the crisis, but even then the path ahead was not easy. In the days that followed, as public and private diplomacy took shape, there were multiple crises and numerous decisions made under tremendous uncertainty. On one occasion, the US military deployed depth charges to force a Soviet submarine to surface, unaware that it was a nuclear submarine and that they had almost triggered a protocol that would cause it to launch its weapons. At another point during the crisis, Fidel Castro reached a moment of such despair that he sent Khrushchev a letter proposing a preemptive nuclear strike against the United States. Khrushchev, wisely, ignored the advice.

Ultimately, despite the important (but limited) use of military assets, and even after the missile sites became operational, it was not a military response but a negotiated agreement that resolved the conflict. The key elements of the deal were as follows. The Soviet Union would remove the missile sites under UN monitoring—which they did the following month. In exchange, the United States would end the quarantine and make two promises. First, the United States would deliver a “noinvasion” pledge regarding Cuba. Second, and crucially, the United States would dismantle the missiles based in Turkey and Italy that the Soviets considered threatening. But there was a twist. Fearing that this last concession would make the United States look weak, the Americans demanded that the removal of US missiles be a secret element of the deal; Khrushchev was told that if he publicized the American concession on missiles, the United States would no longer be able to follow through on it. In other words, Khrushchev could get a good deal, but he would not be able to declare victory. The possibility of a nuclear confrontation in the event of impasse may have tipped the scale in favor of doing the deal; Khrushchev agreed.

The US missiles were removed the following year, but Khrushchev lost his job soon after, at least in part because of the perception that the United States had “won” the standoff. Only decades later would the United States acknowledge publicly that JFK had, in fact, made a quid pro quo offer to remove US missiles in exchange for the removal of Soviet missiles.

EMPATHY CREATES MORE OPTIONS—FOR YOU

A successful end to this crisis would be unimaginable if not for President Kennedy’s ability and willingness to consider the conflict from Khrushchev’s point of view.5 From the US perspective at the time, it would have been easy to see the Soviet Union as nothing more than an immoral state that was acting in an irresponsible and provocative manner, under the cover of lies and misdirection, to gain military advantage.

But the more important consideration from a negotiation perspective is always this: How does the other side see their own behavior? In fact, there would have been little appetite to even attempt diplomacy if JFK had not made an effort to consider the reasons why the Soviet Union would find its own actions justified. And once negotiations were under way, a solution was possible only because the United States understood the real motivations and concerns of the Soviet Union. This is the power and promise of empathy.

The mistake people make is to think that empathy is what you use when you want to be nice, or that it is an instrument of the weak. This reflects a dangerous flaw in understanding. For negotiators, the reason to empathize with the enemy is not because it is somehow the “nice” or “liberal” or “enlightened” approach to dealing with nasty people. We need to empathize because it makes it more likely that we can achieve our own goals. In the case of the Cuban Missile Crisis, for example, the negotiated solution would not have been possible—or imaginable—if President Kennedy had not empathized with Premier Khrushchev. Unless Kennedy acknowledged that the Russians might legitimately feel threatened by the US missiles in Turkey and Italy, the removal of these missiles, which was pivotal in resolving the conflict, would not even have been a concession worth considering. Why bother making such a concession if the real reason the other side is behaving this way is that it is evil or irrational?

In negotiations of all kinds, the greater your capacity for empathy—the more carefully you try to understand all of the other party’s motivations, interests, and constraints—the more options you tend to have for potentially resolving the dispute or deadlock. In other words, when you empathize, you are not doing others a favor, you are doing yourself a favor. If the employer who refuses our request for a raise is immediately written off as callous, if the business partner who makes aggressive demands is too readily seen as greedy, if the political opposition is too quickly labeled evil or illintentioned, we limit our own options. Your boss may have real constraints. The business partner may genuinely believe her requests are reasonable. Your political opponents almost certainly believe that they are the ones doing what is best for the country. When we fail to explore their perspectives, we are unlikely to de-escalate conflict, find common ground, help each other address core concerns, or think creatively about how each side’s interests might be met. Empathy expands the set of options you have for resolving conflict and reaching agreement. Empathy does not guarantee success, but a lack of empathy usually guarantees failure.

Empathy expands the set of options you have for resolving the conflict. The better you understand the other side’s perspective, the more likely you are to find a solution.

EMPATHY IS NEEDED MOST WITH THOSE WHO SEEM TO DESERVE IT LEAST

Most of us see ourselves as being relatively understanding and empathetic, but we fail to act this way when we are dealing with people who have done things that we find abhorrent or inexplicable. Yet, these are precisely the situations where empathy is most needed. You already understand your friends; the key to resolving conflicts lies in understanding your enemies.

It is important not to confuse empathy with sympathy. The goal is to understand what is causing someone to behave a certain way; it does not mean you have to approve of their goals or actions. There is a difference between explaining the other side’s behavior and justifying it. If we are to engage with them in any manner other than all-out war, and perhaps even then, we must seek to understand why they believe their actions are appropriate, no matter how inappropriate we may believe them to be. When you are dealing with difficult negotiations and ugly conflicts, it is not necessary to agree with the other side, but it is crucial to understand them. As he reflected on what future generations might learn from this brush with disaster, Robert Kennedy described the crucial role of empathy, and the importance of taking the other side’s concerns into consideration:

The final lesson of the Cuban missile crisis is the importance of placing ourselves in the other country’s shoes. During the crisis, President Kennedy spent more time trying to determine the effect of a particular course of action on Khrushchev or the Russians than on any other phase of what he was doing. What guided his deliberations was an effort not to disgrace Khrushchev, not to humiliate the Soviet Union.

Empathy is needed most with people who seem to deserve it least. The more intolerable their behavior, the greater the potential benefit of understanding it.

CREATE SLACK

At the height of the crisis, soon after the quarantine was put in place, a Soviet ship came close to the line of interception. JFK decided against stopping the ship and having it boarded. Instead, he let it pass, taking the advice of an ExComm member who pointed out the possibility that the quarantine line had not yet been communicated to the ship’s crew. The thinking was that perhaps it would be better to give the other side some time to think through and understand the consequences of their actions. Similarly, during the crisis, before an American U-2 spy plane was shot down over Cuba by a Soviet missile, the ExComm had decided that any such action would be cause for an immediate US military attack. According to Secretary of Defense McNamara, an action such as firing on Americans “would represent a decision by the Soviets to escalate the conflict. And therefore, before we sent the U-2, we agreed that if it was shot down we wouldn’t meet—we’d simply attack.”7 However, when a spy plane did get shot down, the president ignored military leaders who advised immediate retaliation. It might have been an accident, JFK reasoned: Khrushchev was unlikely to have ordered such an attack when tensions were so high. Perhaps it would be better not to assume the worst of intentions too quickly. It turns out JFK’s assessment was correct, and the order had not come from Khrushchev.

One way to reduce the risk of dangerous escalation is to create greater slack in the trigger for retaliation. Instead of punching someone the moment he pushes you, it may be useful to first figure out whether it was really a push, whether it was intentional, and what the reason was. If your antagonist keeps shoving you, or if you are sure it was deliberate and ill-intentioned, then a physical response might be appropriate (although there are, of course, other options). More generally, while it may be useful to have thought about the precise conditions under which you will retaliate, it is also important to leave some room for discretion. During the crisis, JFK reduced the likelihood that a mistake or misunderstanding would lead to escalation by giving some benefit of the doubt to the other side and by making sure they understood what lines were not to be crossed. If, instead, JFK had insisted on retaliating after even a single perceived transgression, the conflict would likely have escalated to dangerous levels.

Create slack. If your calculus for retaliation ignores the possibility of mistakes or misunderstanding, the risk of unhealthy and inappropriate escalation increases.

STRATEGIC FLEXIBILITY VS. CREDIBILITY

Slack does not come without cost. The greater the slack in the system, the more likely it is that you are seen as weak or irresolute if you choose not to retaliate. This could provoke even greater aggression if the other side is ill-intentioned or opportunistic. At a fundamental level, there is always a trade-off between strategic flexibility and credibility. In pursuit of flexibility, President Kennedy risked losing credibility each time he gave the Soviet Union the benefit of the doubt.

Credibility—the degree to which others believe that we will follow through on our commitments — helps us convince others to behave appropriately. Strategic flexibility—the option of changing our minds if sticking to a previous commitment seems unwise—allows us to make the best choice at the moment of decision. We typically want as much credibility and flexibility as possible. However, the more we invest in strategic flexibility, the less credibility we will typically have, and vice versa. For example, committing publicly to a strategy increases your credibility but reduces your flexibility because it is harder to back down. Private commitments provide greater flexibility, but signal less credibility and commitment.

There is almost always a trade-off between maintaining strategic flexibility and safeguarding credibility.

AVOID CORNERING YOURSELF

There will be times when you feel that losing some credibility is acceptable because following through on an earlier commitment (e.g., a deadline or ultimatum) would be disastrous. In other instances, you might decide that you must stick to your commitments, even if doing so is costly. In my experience, while it is impossible to completely eliminate the trade-off between strategic flexibility and credibility, it can be managed more or less wisely. You can avoid many such conflicts if you follow a simple rule: do not make ultimatums that you do not intend to follow through on, and absolutely avoid making ultimatums if you can achieve your objectives without them. In other words, to the extent possible, ultimatums should not be used unless they are both necessary and real.

Do not make ultimatums unless you plan to follow through on them—and even then, look for other means of influence that won’t sacrifice strategic flexibility.

DON’T FORCE THE OTHER SIDE TO CHOOSE BETWEEN SMART DECISIONS AND SAVING FACE

The same problem exists on the other side of the table; they too must navigate the tension between maintaining their credibility and changing their minds when it is the smart thing to do. This is why, from JFK’s perspective, the risk was not that Khrushchev was evil or irrational. The risk was that even smart, reasonably well-intentioned people can fall into the trap of having to fight when the only other option is to back down and look weak. As a result, much of what guided JFK’s strategy was an effort not to put Khrushchev in a position where he had to choose between those two options. As Robert Kennedy wrote in his memoir of the crisis:

Neither side wanted war over Cuba, we agreed, but it was possible that either side could take a step that—for reasons of “security” or “pride” or “face”—would require a response by the other side, which, in turn, for the same reasons of security, pride, or face, would bring about a counter-response and eventually an escalation into armed conflict. That was what [the President] wanted to avoid....

We were not going to misjudge, or miscalculate, or challenge the other side needlessly, or precipitously push our adversaries into a course of action that was not intended or anticipated.

Do not force people to choose between doing what is smart and doing what helps them save face.

BEWARE THE CURSE OF KNOWLEDGE

A few days into the crisis, once the “gradual” strategy had been decided upon, President Kennedy had to address leaders of Congress to give an update on what had been discovered in Cuba and what the United States planned to do about it. The session did not go well, as members of Congress lambasted the president’s strategy as insufficient, too weak, and likely to embolden further Soviet aggression. The president and his team were understandably upset about this reaction. Robert Kennedy was among those who felt strongly that the ideas emanating from Congress were naïve, terribly short-sighted, and a danger to humanity. It was at this point that JFK said something to his brother that I find to be especially telling about the character of the president. As Robert Kennedy recalled:
He was upset by the time the meeting [with congressional leaders] ended. When we discussed it later he was more philosophical, pointing out that the Congressional leaders’ reaction to what we should do, although more militant than his, was much the same as our first reaction when we first heard about the missiles the previous Tuesday.

As JFK pointed out, members of the ExComm had been given many days—behind closed doors— to think about the problem, to debate it, to change their minds, to sleep on it, and to grapple with the complexities of seemingly straightforward choices. It was after all of this that they had come to the conclusion that the aggressive approach was unwise, and that the gradual approach, however imperfect, was a better idea. The question JFK was asking his brother to consider was this: How can we expect Congress to be, on day one, where it took us so many days to get? Despite his own misgivings about the congressional reaction, JFK reminded his brother that they ought not to hold Congress to a higher standard than they held themselves.

JFK was essentially pointing to what social scientists have referred to as the “curse of knowledge.” The “curse” describes the following phenomenon: Once we know something, it becomes very difficult for us to understand what it feels like not to know it. That is, once we have learned something, or reached a conclusion, we seem to lose the ability to put ourselves in the mindset of someone who has not yet had that realization—even though we were that person not so long ago. The curse can derail even the best efforts of those who are in the right and well-intentioned: parents who are trying to motivate, teachers who are trying to educate, leaders who are trying to inspire, and negotiators who are trying to persuade. In all of these domains, we do ourselves no favors when we forget that what is obvious to us will not be so obvious to the other side, and that it does not mean there is something wrong with them.

Beware the curse of knowledge. Once we know something, we lose the ability to understand what it feels like not to know it.

DON’T JUST PREPARE YOUR ARGUMENT, PREPARE YOUR AUDIENCE

The curse of knowledge reminds us that, as deal makers and diplomats, we ought not to simply walk into the negotiation with a set of prepared arguments that we hope will win the day. We also have to prepare our audience for our arguments. We need to think about what the other side needs to have seen, felt, experienced, or understood before they will even be receptive to the merits of our arguments and perspective. The greatest of arguments, the best of proposals, and the wisest of ideas will still fall short if we have not brought them to a point where they are capable of hearing, understanding, and evaluating what we say.

Don’t just prepare your arguments, prepare your audience for your arguments.

Each year, the Program on Negotiation at Harvard University presents a Great Negotiator Award.

The recipients have ranged from diplomats, to corporate deal makers, to artists. At some point during the Q&A that takes place on the day of the event, the recipient is inevitably asked to address the following question: What are the characteristics of a great negotiator? Having heard a dozen award recipients answer this question—people who have negotiated across many different cultures and in very different contexts—something stands out. There is one trait that everyone has mentioned in some form or another: empathy. Whether you are negotiating a business deal, an ethnic conflict, a job offer, a spousal dispute, or an international trade deal, it is essential that you try to understand how others see the situation.

By exploring the other side’s perspective, we expand the set of options for de-escalating conflict and achieving mutually acceptable outcomes. It is not always easy. There will be times when the other party’s actions leave little doubt that they are up to no good—meanwhile, your situation is precarious and getting worse by the day. How is empathy supposed to help you then? In the next chapter, we consider precisely such a situation, and take a look at how negotiating with empathy can work wonders.

CH 14: LEVERAGING THE POWER OF EMPATHY

EXPLORE ALL POTENTIAL EXPLANATIONS FOR THE OTHER SIDE’S BEHAVIOR

Consider all potential explanations for the other side’s behavior. Do not start by assuming incompetence or ill intent.

IDENTIFY THE BARRIERS: PSYCHOLOGICAL, STRUCTURAL, AND TACTICAL

Not every negotiation should end with a deal. If the best you have to offer the other side is worse than their alternatives, not reaching a deal is the right outcome. Not reaching a deal is tragic only when you are the right partners for each other and value could be created for everyone, but something is standing in the way of getting it done. Just as it is important to consider all of the factors that might motivate the other side, before entering any important negotiation, it is important to anticipate as well as possible all of the factors that might derail the deal. What are the barriers to reaching agreement?

Broadly speaking, there are three classes of barriers that negotiators ought to consider:

Psychological Barriers: These are barriers that exist in the minds of people, such as mistrust, ego, disliking the other party, emotions, biased perceptions of fairness, and overconfidence.

Structural Barriers: These are barriers that are associated with the “rules of the game” as currently established—e.g., time pressure, having the wrong parties at the table, the use of agents whose incentives are misaligned with yours, too much media attention, insufficient availability of information, other deals or agreements that are constraining your options, etc.

Tactical Barriers: These barriers arise from behaviors and choices on either side, such as publicly committing to a position that is untenable, aggressive tactics that provoke retaliation, focusing too narrowly on one issue and failing to consider all of the interests of each party, choosing not to exchange information, and so on.

In complex negotiations and difficult disputes, you will never anticipate all of the barriers, nor are you likely to eliminate all that you see, but putting forth this effort may substantially increase your chances of success. Better to know, as soon as possible, whether you need to find ways to overcome mistrust, gather more information, bring other parties to the table, negotiate behind closed doors, or preempt the use of aggressive tactics, than to go in with the blind faith that deals that are good for all parties will always get done. The more carefully you evaluate all the challenges that you may face, and the more comprehensively you consider the various tools and tactics at your disposal for addressing them, the more likely that your deal-making efforts will succeed.

Early, and throughout the negotiation, audit the psychological, structural, and tactical barriers that may obstruct deal making.

WORK THE WHOLE BODY

Imagine that you are on the street and someone attacks you. If you feel that you must fight back to defend yourself, you might instinctively make a fist and punch at the attacker’s head. In the heat of the moment, you might try to do this over and over again, using one instrument against one target. While natural, this may not be the most effective approach, especially against a competent attacker. Rather, you want to “work the whole body.” Instead of focusing narrowly on one target, or using only one method of attack, more experienced fighters will consider all of their instruments (two hands, two feet, knees, elbows, nearby items that can be used for defense, and so on) and evaluate all potential areas that could be targeted.

The same is true in deal making and diplomacy. Effective negotiators work the whole body by considering all of the barriers they need to target and all of the instruments at their disposal for doing so. In our negotiations, we had to think through all of the potential barriers to getting sign-off, for example: their engineer’s deadline, their CEO’s perception that we did not deserve more money without a signed CA, and the devaluation provision in our term sheet. We also had to think carefully about all of the levers available to us for targeting these barriers, for example: renegotiating with our investor, bringing in others from our company to help evaluate the other side’s motivations, changing their payment terms, using our technical resources to solve their engineering concerns, and our ability to threaten disengagement if they did not sign off soon enough. I do not think we would have succeeded if we had used only “hard” tactics (threatening to walk away) or if we had only tried “soft” tactics (offering to meet their needs on payment and timetable). We needed a strategy that effectively combined various tactics.

Work the whole body. Consider all the barriers, approach the problem from all directions, and use all the levers at your disposal.

IGNORE ULTIMATUMS

Ignore ultimatums. The more attention you give to them, the harder it will be for the other side to back down if the situation changes.

REPHRASE ULTIMATUMS

Reframe ultimatums. By rephrasing ultimatums using less rigid language, you make it easier for the other side to back down later.

WHAT IS NOT NEGOTIABLE TODAY MAY BE NEGOTIABLE TOMORROW

What is not negotiable today may be negotiable tomorrow. Think about how to shape incentives and options for all sides to make future attempts at negotiation more successful.

CH 15: YIELDING

YIELDING

Sometimes the best response to a deep-rooted perspective is to yield to it: understand it, adopt it, and repurpose it to advance your position.

BRIDGING TO ACCOMMODATE COMPETING PERSPECTIVES

Competing perspectives can be bridged if: 
(a) one side can adopt the other’s frame without sacrificing their ability to articulate key demands, or 

(b) both sides can agree to a new frame that gives neither an advantage.

YIELDING TO THE OTHER SIDE’S PERSPECTIVE CAN ENHANCE YOUR LEVERAGE

Sometimes the best way to convince someone of your point of view is to talk to them in their own language. Not only is this more efficient, but it can make your arguments even more powerful. There is something quite compelling about being able to demonstrate to someone that your demands remain legitimate “even if we accept your preferred logic for how to approach the problem.” 

Teachers might have a greater impact on donors and other stakeholders if they can articulate their position in terms of the need to identify appropriate bases of measuring performance as opposed to the legitimacy of tenure, because the latter can be perceived as a merely self-serving or ideological stance.

Yielding to the other party’s frame or perspective might enhance your leverage.

GIVE THE OTHER SIDE CONTROL—WITH CONDITIONS

The basic principle to follow when there are legitimate concerns on both sides of the table and progress has been slow: 

Give the other side control, but clarify your conditions. This simple strategy:

• shows empathy for their concerns, allowing them to focus on finding solutions rather than continued advocacy;
• clarifies for the other side what is and isn’t important to you, making their life easier;
• keeps either side from “owning” and clinging to its preferred idea or approach;
• helps find a solution by encouraging multiple, and often creative, proposals.

If your proposals are being rejected but their concerns seem legitimate, try giving the other side the task of structuring the deal—but clarify the conditions they must meet.

CH 16: MAP OUT THE NEGOTIATION SPACE

THINK TRILATERALLY

Think trilaterally: evaluate how third parties influence or alter the interests, constraints, and alternatives of those at the table.

MAP OUT THE NEGOTIATION SPACE

Map out the negotiation space. Your strategy should take into account all parties who can influence the deal or who are influenced by the deal.

ICAP ANALYSIS: INTERESTS, CONSTRAINTS, ALTERNATIVES, AND PERSPECTIVE

When it comes to understanding the other parties in the deal, what precisely are we to understand about them? I have developed a framework (ICAP) to help organize your thinking around four critical factors: each party’s interests, constraints, alternatives, and perspective. Here are the kinds of questions that each of these raises:

• Interests: What do the other parties value? What do they want and why? What are their relative priorities? Why are they doing this deal? Why now rather than last month or next year? What do they worry about? What objectives are they trying to achieve with this negotiation? Are their interests likely to change over time? If so, how?

• Constraints: What are the things they can and cannot do? On which issues do they have more or less flexibility? On which issues are their hands completely tied? What is causing them to be constrained? How might their constraints change over time? Are there other parties with whom we might negotiate on their side who would be less constrained?

• Alternatives: What happens to them if there is no deal? Are their outside options strong or weak? Are their alternatives likely to improve or deteriorate over time? How might their alternatives be shaped?

• Perspective: How are they seeing this deal? What is their mind-set? Where does this negotiation fit into the portfolio of deals they are doing? Is this a high or low priority for them? Are they thinking strategically or tactically? Long-term or short-term? Is this negotiation occupying a large or small portion of their organization’s attention?

An ICAP analysis at the outset of negotiations—and updating the analysis as the deal progresses—can be crucial. The better you understand their interests, the more likely you will be able to structure deals that create value for all parties, and to overcome deadlock. Understanding constraints is important because there will be times when even the concessions you deserve will not be possible to obtain because the other side’s hands are truly tied in those areas. In such cases, you will be more likely to achieve your objectives if you know what is and is not achievable, and which type of deal structure is actually viable. The more carefully you have assessed their alternatives, the better you understand the value you are bringing to the table, and the leverage that you have. Finally, when you understand the perspective—psychological, cultural, or organizational—with which they are approaching this deal, you are better positioned to anticipate the types of barriers that might emerge. You are also more likely to take the steps that can help reshape their perspective to one that may be more amenable to effective and productive deal making.

ICAP Analysis: Assess the interests, constraints, alternatives, and perspective of all parties in the negotiation space.

THE ACTION AWAY FROM THE TABLE

When it comes to evaluating the action away from the table and how it can influence the negotiation, there are three assessments worth making:

Static Assessment: How does the existence of third parties influence the interests, constraints, alternatives, and perspectives of all parties in the negotiation?

Dynamic Assessment: How is third-party influence changing over time? That is, are the other side’s alternatives improving or worsening? Are constraints tightening or loosening? Are interests evolving?

Strategic Assessment: How might we engage with third parties to influence the negotiation? Might they be willing to put pressure on the other side? Might they agree to subsidize the deal? Would doing a deal with a third party change the power dynamics in our favor?

Sometimes, we can leverage the existence of third parties to achieve our objectives (static). Other times, our success hinges on anticipating a changing landscape (dynamic). And then there are situations where we must actively engage with third parties to create the conditions for success (strategic). 

Your analysis and approach should take into account the static, dynamic, and strategic possibilities of leveraging third parties.

BE PREPARED FOR GOOD FORTUNE

Prepare for good fortune. Be psychologically, organizationally, and politically prepared in case a window of opportunity opens for deal making or diplomacy.

IMPROVE POSITIONING AND CREATE OPTION VALUE

When there is no possibility of reaching a deal today, prepare for future opportunities with moves that improve positioning and create option value.

DON’T RUSH TO EMBRACE A WINNING STRATEGY

Avoid picking a winning strategy earlier than is necessary. Keep options open and be prepared—psychologically, organizationally, and politically—to change course.

CH 17: PARTNERS, NOT OPPONENTS

PARTNERS, NOT OPPONENTS

See the other side as your partner, not your opponent, regardless of the type or degree of conflict. It is hard to empathize or collaborate with “opponents.”

LOOK FOR WAYS TO CREATE VALUE

Start by asking: What would be the value-maximizing outcome? Are there ways to create value?

FIRST, IMAGINE THE IMPOSSIBLE

Ask people to imagine a world in which the seemingly impossible actually happens.
Then ask them to paint you a picture of what that world looks like.

CH 18: COMPARE THE MAPS

THE SOCIAL CONSTRUCTION OF CONFLICT

Protracted conflicts cannot be resolved without genuine efforts to understand the deepseated forces that legitimize each side’s perspective and behavior.

ASKING FOR THE SACRED

Understand what is sacred to the other side and avoid asking for it as a precondition to engagement. They might agree to negotiate what was once nonnegotiable, but only if they see a credible path to resolving the conflict or achieving vital objectives.

HISTORY BEGINS WHEN WE WERE WRONGED

History begins at different times for different people. The dates that register on our calendars are typically those that mark our victories and victimizations.

DON’T ASK PEOPLE TO FORGET THE PAST

Asking people to forget the past is futile, but it is sometimes possible to help them find more value-creating ways to apply the lessons of the past.

BUT LET US BEGIN

Never let fear dictate your response to the problems of human interaction.

What we usually consider as impossible are simply engineering problems — there’s no law of physics preventing them. 
-- MICHIO KAKU

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