3d Negotiation

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Savvy negotiators not only play their cards well, they design the game in their favor even before they get to the table.

Playing the Whole Game

3-D Negotiation

by David A. Lax and James K. Sebenius

Reprint R0311D

Savvy negotiators not only play their cards well, they design the game in their favor even before they get to the table.

3-D Negotiation
by David A. Lax and James K. Sebenius


What stands between you and the yes you want? In our analysis of hundreds of negotiations, we’ve uncovered barriers in three complementary dimensions: The first is tactics; the second is deal design; and the third is setup. Each dimension is crucial, but many negotiators and much of the negotiation literature fixate on only the first two. For instance, most negotiation books focus on how executives can master tactics—interactions at the bargaining table. The common barriers to yes in this dimension include a lack of trust between parties, poor communication, and negotiators’ “hardball” attitudes. So the books offer useful tips on reading body language, adapting your style to the bargaining situation, listening actively, framing your case persuasively, deciding on offers and counteroffers, managing deadlines, countering dirty tricks, avoiding cross-cultural gaffes, and so on. The second dimension, that of deal design—or negotiators’ ability to draw up a deal at the table that creates lasting value—also receives attention. When a deal does not offer

enough value to all sides, or when its structure won’t allow for success, effective 2-D negotiators work to diagnose underlying sources of economic and noneconomic value and then craft agreements that can unlock that value for the parties. Does some sort of trade between sides make sense and, if so, on what terms? Should it be a staged agreement, perhaps with contingencies and risk-sharing provisions? A deal with a more creative concept and structure? One that meets ego needs as well as economic ones? Beyond the interpersonal and deal design challenges executives face in 1-D and 2-D negotiations lie the 3-D obstacles—flaws in the negotiating setup itself. Common problems in this often-neglected third dimension include negotiating with the wrong parties or about the wrong set of issues, involving parties in the wrong sequence or at the wrong time, as well as incompatible or unattractive no-deal options. 3-D negotiators, however, reshape the scope and sequence of the game itself to achieve the desired outcome. Acting entrepre-

harvard business review • november 2003

page 1

3-D Negotiation

neurially, away from the table, they ensure that the right parties are approached in the right order to deal with the right issues, by the right means, at the right time, under the right set of expectations, and facing the right nodeal options. Former U.S. trade representative Charlene Barshefsky, who has negotiated with hundreds of companies, governments, and nongovernmental organizations to spearhead deals on goods, services, and intellectual property, characterizes successful 3-D negotiations this way: “Tactics at the table are only the cleanup work. Many people mistake tactics for the underlying substance and the relentless efforts away from the table that are needed to set up the most promising possible situation once you face your counterpart. When you know what you need and you have put a broader strategy in place, then negotiating tactics will flow.”1

3-D Negotiation in Practice
Even managers who possess superior interpersonal skills in negotiations can fail when the barriers to agreement fall in the 3-D realm. During the 1960s, Kennecott Copper’s longterm, low-royalty contract governing its huge El Teniente mine in Chile was at high risk of renegotiation; the political situation in Chile had changed drastically since the contract was originally drawn up, rendering...
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