Week 3 - Underlying interests in a negotiation
This course section is focused on “Interests and Positions” in negotiations. Here is the summary:
Rational Frontier of Negotiation:
- After discussing emotions, the course shifts to the rational aspects of negotiation, focusing on positions and interests.
Positions and Interests:
- A ‘position’ in negotiation terms refers to a specific demand, often tied to price. ‘Interests’ are the underlying motivations or causes behind the offers made in a negotiation. Interests serve as a powerful foundation to enrich agreements.
Three Reasons to Negotiate (According to Lewicki, Barry, and Saunders):
- 1) To share or divide a limited resource.
- 2) To create something that neither party can achieve alone.
- 3) To solve a problem or dispute to avoid the escalation of a conflict.
- This refers to the decision between negotiating based on positions (distributive) or based on interests. The context of the negotiation often dictates which approach is most appropriate.
Limitations of Position-Based Negotiations:
- Distributive (position-based) negotiations, especially when centered around one variable (like price), often lead to tension and can miss opportunities to create additional value. This approach may also hinder the establishment of long-term relationships.
Promoting Interest-Based Negotiations (IBN):
- While positions remain relevant, promoting negotiations based on interests (IBN) is often more desirable due to its multi-dimensional nature. This approach allows for more flexible and creative agreements, which can accommodate seemingly opposite stances.
Preparation and Understanding Interests:
- A key part of preparing for negotiations is to have a clear understanding of one’s own interests and to seek insight into the counterpart’s interests. Without this understanding, positive outcomes are hard to achieve.
Cost and Results of Different Negotiation Approaches:
- Interest-based negotiation is generally less costly than trying to exert power and often results in mutually beneficial solutions. Position-based negotiation can result in a “win-lose” outcome, where one party is left dissatisfied and potentially resentful, possibly seeking revenge in future interactions.
Continuous Learning for Negotiators:
- The course emphasizes the need for negotiators to maintain an attitude of continuous learning. The field of negotiation is evolving, with new theories and practices emerging in response to complex and changing environments.
- The course reiterates the importance of adopting an open posture to assimilate new negotiation approaches and to develop the necessary skills for putting these approaches into practice.
In summary, the section emphasizes the shift from the emotional to the rational aspects of negotiation, introducing the concepts of positions and interests. It explores the benefits and limitations of these approaches and encourages negotiators to focus on interests to foster more collaborative and mutually beneficial outcomes. The section also highlights the importance of continuous learning and adaptability in the practice of negotiation.
Negotiation based on interests or IBN (Interest Based Negotiation) was historically introduced in the publication of the book Getting to Yes by Roger Fisher and William Ury of Harvard’s negotiation program
Interest based negotiation seeks to combine (integrate) the negotiators’ interests (usually there are multiple interests behind any position) in such a way that there is a correspondence that satisfies both parties.
From What (positions) to Why (Interests).
in a negotiation, there are visible and tangible elements that we can identify with our senses, and they appear immediately as topics to discuss. They are known as positions, which because of their one dimensional nature can provoke unnecessary conflicts and rigid postures in negotiators.
These are the focal points of the negotiation: economic and financial issues, such as price or rate, or substantial aspects such as resource allotment. Substantive interests are similar to positions and by they are by nature the tangible elements that are valued by the negotiating parties from their own perspectives.
These are related to the way an agreement is arrived at: One party may focus exclusively on the outcome, using competitive tactics, while the other party may be interested in collaborative tactics to reach an agreement.
Here the emphasis is on preserving the relationship and supporting each other with mutual respect and interdependence. These are the essential ingredients to promoting synergy in an effective negotiation.
These are intangibles that are identified with what is fair and correct, acceptable, and ethical. At the same time, they are good practices that have prevailed throughout time. Principle interests can be transversal (inherent) to the other types of interests.
The parties realize differentiated tasks to achieve the same purpose. For example a musical consortium provides ambiance for commercial centers.
The parties collaborate with the same end in mind, but benefit differently. For example, a computer manufacturer incorporates a system to automatically attend clients for a service company.
The parties develop the same tasks to achieve greater benefit. For example, the fusion of businesses with complementary messaging applications directed to the X Factor in televised contests.
Interest based negotiation
Interest based negotiation is a negotiation paradigm that seeks collaborative agreements among the parties involved, integrating their interests around common objectives, shared objectives, and joint objectives.
In this section, critical thinking is highlighted as a fundamental skill for exploring the underlying interests in a negotiation process that motivate the positions taken by the negotiators. Here is a summarized version of the content:
- Critical thinking is a key skill in negotiations. It helps negotiators to understand the “why” (the interests) behind the “what” (the positions), allowing for a deeper exploration of the reasons motivating each party.
- Critical thinking enables negotiators to become “deep negotiators” rather than “superficial negotiators”. It encourages them to question, test, explore, and analyze the intentions of all parties involved.
- Business schools are increasingly focusing on developing critical thinking skills in students to help them navigate the complexities of the modern world.
- Two main skills necessary for successful negotiations are identified: effective communication and critical thinking. Utilizing these skills in negotiations forms a virtuous circle, where the skills are strengthened through use.
- A key aspect of critical thinking is the ability to see a problem from different perspectives, considering alternative viewpoints, and thereby enabling the breaking of impasses or paralysis that can occur during negotiations.
- Critical thinking also involves the development of a BATNA (Best Alternative To a Negotiated Agreement), which is dynamic and changes as the negotiation progresses. The counterpart in the negotiation also has a BATNA.
- The concept of “reframing” or changing the frame of reference in a negotiation is illustrated through an anecdote from Theodore Roosevelt’s presidential campaign.
- Critical thinking, driven by reason and not emotion, complements emotional intelligence skills, highlighting that negotiation is both a science (reasoned and logical) and an art (influenced by emotions and feelings).
- The goal is to shift from a “win-lose” (distributive) posture to a “win-win” (integrative) posture, adopting the principles of interest-based negotiation to complement position-based negotiation.
Skill to develop critical thinking
[[j9CPBCR0RHmQjwQkdFR5ZQ_0adacc66bd3743a885bb3f98aaf66e7e_Skill-to-develop-Critical-thinking.pdf|Skill to develop critical thinking]]
using rational and emotional elements, focusing on the relationships, verbal language (above all body language), and elements of problem solving
Critical thinking is a skill that is rooted in the Socratic method of questioning, showing the validity of ideas by using exploratory questions, thinking systematically, and seeking evidence that supports our ideas.
see also Socratic Leadership
three functions of critical thinking are derived: description, analysis, and evaluation
To conduct an interest based negotiation, it’s important to use the principle of reciprocity so that the other party also reveals his or her interests.
Description and Pre-Negotiation
With the structure of the negotiation pyramid, we can explore our own underlying interests in positions, going from “what” to “why” and supporting ourself on “how,” “where,” “when,” and “who.” This process is also known as self-negotiation (the conversation between the rational and emotional parts of our brain). When it’s carried out in a team, it’s called pre-negotiation.
Negotiation experts coincide that one part of the preparation process of negotiation is to have our interests clear and try to find out our counterpart’s interests.
… using logical arguments to prioritize and analyze the strengths and weakness of our arguments related to the interests proposed, seeking correspondences, complements, and differences
Arte by Alfred Font Barrot and Negotiation Genius A producer has a total inventory of 100,000 eggs. Two pharmaceutical companies compete for the same inventory. One requires a minimum of 80,000 eggs, while the other needs at least 70,000 eggs. The producer’s dilemma is who he should sell to and in what terms should he negotiate with these potential buyers? What’s interesting about this example is that during many explanations about this problem, both students and executives in training have failed to find a solution to the dilemma and only a small percentage of them have asked Why (do they want the eggs). One company answered that they only wanted the yolks while the other was only interested in the whites as a base for nutrients.