11 Mar 2002  Research & Ideas

Breakthrough Negotiation:
Don’t Leave It On the Table

Ponder this. Businesses are constantly involved in negotiations but rarely develop these skills in their leaders. Harvard Business School professor Michael Watkins explains the secrets of powerful negotiators. PLUS: Book excerpt.

 

Editor's Note— In a new book, Breakthrough International Negotiation: How Great Negotiators Transformed the World's Toughest Post-Cold War Conflicts, Harvard Business School professor Michael Watkins dissects the art of give-and-take. This excerpt details principles followed by master negotiators.

We begin with a handful of overarching ideas about breakthrough negotiation. The seven principles that follow represent an overview of how breakthrough negotiators operate.

Principle 1: Breakthrough negotiators shape the structure of their situations

Breakthrough negotiators never view their negotiating situations as preordained or fixed. They understand that they cannot afford to get mired down in reacting to counterparts' moves; they must shape their situations. So they work to mold the basic structure of the negotiation by involving the right people, controlling the issue agenda, creating linkages that bolster their bargaining power, and channeling the flow of the process through time. They understand that actions taken away from the negotiating table can be as important as what goes on at the table, if not more so.1

Specifically, skilled negotiators recognize that much of what influences outcomes takes place before the parties sit down across the table from each other. Even after negotiations begin, they continue to shape the structure by molding the agenda, introducing action-forcing events, and linking or delinking negotiations. When based on clear-eyed analysis, adept efforts to shape the structure of the game can have a powerful impact on outcomes.

Principle 2: Breakthrough negotiators organize to learn

Skilled negotiators learn by doing the necessary preparation to negotiate: They diagnose the essential features of the situation, familiarize themselves with its history and context and with the record of prior negotiations, and probe the backgrounds and reputations of their counterparts. At the same time, they recognize that conventional preparation has limitations. Even the best-equipped negotiating team must cope with constraints on time, expertise, money, data, and access to documents. Skilled negotiators therefore focus on continuing to learn at the negotiation table as they carefully gauge reactions and responses while testing hypotheses by asking questions and putting offers on the table.

The great negotiatorsof the business world are largely invisible.
— Michael Watkins

The best negotiators also work to foster organizational learning, both during and after a negotiation. They pay careful attention to managing the team learning process, establishing clear roles and responsibilities for observation and analysis, and devoting substantial time between at-the-table sessions to integration and distillation of insights.

Principle 3: Breakthrough negotiators are masters of process design

Control of the process yields control over outcomes. Skilled negotiators think hard about the impact of process on perceptions of interests and alternatives, on the part of their counterparts and those they represent, and on their own side. Then they work to fashion—often to negotiate—processes likely to lead in favorable directions.

Skilled negotiators know, for example, that one-on-one negotiations are suited to some issues and group negotiations to others. They are cognizant of the potential benefits and costs of setting up a secret channel. They understand that details as small as the timing of a meeting or the size and shape of the negotiating table can make a difference. Above all, they are reflective about the process design choices they make; they know that a bad process—one perceived as unfair, illegitimate, or simply confusing—can create unnecessary barriers to agreement and that good process design can promote breakthroughs.

Principle 4: Breakthrough negotiators foster agreement when possible but employ force when necessary

Breakthrough negotiators understand the delicate interplay between negotiation and coercive power. Speaking of the U.S. failure in Vietnam, Henry Kissinger said, "Treating force and diplomacy as discrete phenomena caused our power to lack purpose and our negotiations to lack force."2 This observation was echoed by Kofi Annan in his description of dealing with Iraq: "You can do a lot with diplomacy, but with diplomacy backed up by force you can get a lot more done."3

Great negotiators make skilled use of explicit and implicit threats. They also recognize the need for threats to be credible, because the cost of using force can be very high. The Gulf War, for example, cost the U.S.-led coalition $61 billion; allied casualties were low, but tens of thousands of Iraqis lost their lives. Experienced negotiators recognize too that their counterparts will probably view any agreement achieved by means of coercive power as illegitimate and will feel free to violate its terms unless power is applied on an ongoing basis to enforce it. They also understand that backing weak players into a corner triggers resistance and escalation.

Principle 5: Breakthrough negotiators anticipate and manage conflict

Negotiators' efforts to advance their sides' interests almost always go hand in hand with management of conflict, both between the sides and within them. Often, negotiators or those they represent are already locked in adversarial relationships when negotiations begin, and the experience of past conflict is likely to have distorted their perceptions. Even if the parties are not already "at war," every effort at deal making is a dispute waiting to happen.

To paraphrase Roger Fisher, breakthrough negotiators mediate their own disputes.4 They are skilled at diagnosing potential sources of conflict. They recognize the potential for escalation in zero-sum thinking, mutual perceptions of vulnerability, a history of distrust or injury that has transformed perceptions, and cultural misunderstandings. They are also equipped to craft strategies to overcome these barriers, such as by reframing issues or setting up confidence-building mechanisms.

The ability to foster productive working relationships is another key to managing conflict. Such relationships act as a kind of psychological buffer during difficult times. As one negotiator put it:

You have to have the ability to interact on human terms with the other party. Don't get me wrong. It's not that you have to play the nice guy. Not at all. It's the ability to sense the other party, to understand him. You don't have to fall in love with the other party in order to understand. You don't even have to sympathize with the other party in order to understand what's going on with him. But you have to be able to understand and you have to be able to develop trust. But also to project a kind of seriousness and, if necessary, also toughness with regard to principles and positions that you believe you have to protect.

At the same time, skilled negotiators are careful not to let agreement or avoidance of conflict become ends in themselves. No agreement is preferable to a bad agreement. The best negotiators never get so caught up in the process that they lose sight of the end they are trying to achieve. Said one negotiator, "Getting to yes is easy: all you have to do is roll over. It's getting what you want that's hard."

Principle 6: Breakthrough negotiators build momentum toward agreement

Negotiations do not proceed smoothly from initiation to agreement. They ebb and flow, with periods of deadlock or inaction punctuated by bursts of progress until an agreement is reached or breakdown occurs. Decision makers make hard choices (such as to make an unfavorable concession) only when they lack more attractive alternatives and doing nothing is not an option. As long as counterparts believe that the costs of action outweigh the potential benefits of inaction, they cannot be expected to act.

Breakthrough negotiators thus work to channel the flow and pace of the process. Sometimes developing an attractive vision of a desirable future pulls the other side forward toward agreement. Sometimes a logjam can be broken by proposing a formula or framework or face-saving compromise. Movement can also be created by erecting barriers to backsliding that impel the process forward—taking advantage of the irreversibilities characteristic of complex negotiation systems. By securing early agreement on basic principles or a framework for detailed bargaining, a negotiator can make reversal more costly.

Principle 7: Breakthrough negotiators lead from the middle

Great leaders are often great negotiators, but the reverse is also true. The actions of skilled negotiators have a big impact on the outcomes of complex negotiations. In negotiations between groups, external negotiations and internal decision making within the groups invariably interact. How they do so can enhance or undermine the potential for agreement. Representatives must work internally to shape their mandates and negotiating instructions, and to sell the resulting agreements to constituents. At the same time, they must build credibility and productive working relationships externally while advancing the interests of their sides. But good external moves may have adverse consequences for selling agreements inside, and vice versa. A negotiator explained:

You can do things that help you to progress in relationship to your external partner. . .but they would have created problems for you on the home front. The gap between those who are leading the negotiations and all those people who have to come afterward would grow, beyond the point where it could be bridged. But if you walked too slowly, you might stay close to your constituents, but you would have been very far away from the other side.

Managing internal decision making, which often consists of shaping internal negotiating processes, is frequently more challenging than negotiating with the other side. Breakthrough negotiators also pay close attention to how the other side makes decisions, and they use their insights to tailor their own moves and sometimes even to help their counterparts sell agreements.

Because skilled negotiators have substantial control over the flow of information between inside and outside, they are seldom mere passive messengers carrying out the instructions of their principals. According to this negotiator:

The traditional model [of the process] is that the leadership sets the goals, and then from those goals [the lead negotiator] can make decisions regarding strategy, tactics, and then produce instructions for the team. But that scenario doesn't represent real life, as far as I understand it or experience it, because the goal and the strategy is changing constantly. There is a dynamic throughout the process. And the leadership is not fully in control of it because that dynamic is the product of the interaction between you and the other party, and sometimes more than one party…And since things are changing, then you can have an impact whatever your position in the loop. You can have a big impact if you handle it cleverly and effectively.

Acting as a bridge between internal decision making and external negotiating and reconciling the divergent interests of fractious constituencies demands leadership grounded in credibility and skill rather than authority. Negotiators who participate in shaping their mandates have a clear and unwavering vision of what they want to achieve, and work to shape internal and external perceptions to maximize their ability to advance their sides' interests—and their own.

Developing Negotiators

Breakthrough International Negotiation: How Great Negotiators Transformed the World's Toughest Post-Cold War Conflicts

Are great negotiators just born that way, or can they be developed? What are the characteristics of a powerful negotiator? How can businesses train their front-line negotiators to be more effective? In an e-mail interview, Working Knowledge editor Sean Silverthorne discusses these issues and the concept of "breakthrough negotiation" with Harvard Business School professor Michael Watkins, author of the recent book, Breakthrough International Negotiation: How Great Negotiators Transformed the World's Toughest Post-Cold War Conflicts.

Silverthorne: You contend that while some great negotiators are born, many of the skills can also be taught. What are the attributes of a breakthrough negotiator that can be learned?

Watkins: The most important skills for negotiators are pattern recognition, mental simulation, and reflection-in-action. Every negotiator can develop these skills to some degree through training and experience. Pattern recognition is the ability to see and exploit emerging patterns in the complexity and clutter of an on-going flow of events to separate the wheat from the chaff, as it were. Mental simulation is the ability to foresee how the other side is likely to react to one's moves and countermoves, to look forward and reason backward. Reflection-in-action is the ability to maintain self-awareness even as you are engaged in (often-stressful) interactions with the other side. While great negotiators seem to have innate potential in these areas, even they have to work hard to hone their awareness. But everyone, regardless of their inherent abilities, can improve their negotiating skills dramatically.

Q: Businesses are constantly involved in one kind of negotiation or another, yet it seems companies generally pay little attention to developing excellent negotiators. What are the potential drawbacks to a company that leaves negotiating skills to chance?

A: Surprisingly few businesses focus on developing good negotiating organizations. If a company is depending on acquisitions or strategic alliances to drive its growth, it had better be good at negotiating these deals or work to get better fast. More generally, organizations often employ many negotiators who pursue similar negotiations with different counterparts: for example, a manufacturing company with many purchasing managers and salespeople. What happens if these negotiators don't learn from their past negotiations, capture the resulting insights, and, crucially, share these insights among themselves? The answer is that precious opportunities to improve organizational performance are lost. Knowledge about how to negotiate effectively is a precious resource. It is therefore important to focus on management of organizational learning, not just development of individual competence.

Q: What can current business leaders learn from the post-Cold War conflict negotiations detailed in your book?

A: The book is useful for anyone seeking to advance the interests of their organization (corporation or non-profit) through interactions with powerful internal and external constituencies. What do diplomats do? They find ways to structure processes and creative deals that bridge differences between the parties in conflict and advance the interests of their nations. Managers face similar challenges every day. To be effective, they have to be skilled at negotiating with powerful external players including the leaders of other corporations as well as customers, suppliers, sources of financing, allies, shareholders, government officials, analysts, and the media. You can't pick up a newspaper without seeing an example of corporate diplomacy good or bad. The Microsoft antitrust saga, GE's failure to win approval for the Honeywell merger, and the Ford/Firestone debacle are high-level examples. But lower-level diplomacy is a daily challenge for every company.

Q: One key to successful negotiations is all the work that goes on beyond the bargaining table—what you call shaping the game. What is an example of how shaping the game led to negotiating success?

A: Richard Holbrooke was particularly skilled in shaping the game in his negotiations with the warring parties in Bosnia. He built a powerful external coalition in favor of forceful intervention, and helped initiate the NATO bombing that weakened the Bosnian Serbs. He then skillfully maneuvered the parties to the table at Dayton through the use of shuttles and summits, as well as by focusing first on broad principles and then working incrementally toward more detailed agreements. In this way he shaped both who was involved in the negotiation and what the issues were.

Q: Shimon Peres wrote a foreword for your book, but the Israeli-Palestinian conflict is one of the great, unresolved disputes of our time. What can we learn from the widespread acceptance of the Mitchell Accord for the Middle East, and the inability of the parties to make it work?

A: Like many bitter conflicts, the dispute in the Middle East is as much between hard-liners and moderates as it is between Israelis and Palestinians. The hard-liners on both sides don't want a negotiated settlement, they want to fight and win. They often effectively collude to undermine efforts to move toward negotiated agreement. The Mitchell Plan is a threat to hard-liners on both sides. On the Israeli side, there are powerful constituencies that don't want to give up the settlements in the West Bank and Gaza. On the Palestinian side, there are many who still dream of driving the Israelis into the sea. The current phase of escalation represents a victory of the hard-liners over the moderates. It will last until a critical mass in both sides becomes convinced that outright victory isn't possible.

Q: Who do you think are some of the great negotiators from the business world?

A: The great negotiators of the business world are largely invisible. They are the skilled professionals in the investment banks, venture capital firms, corporate business development groups, and sales forces that negotiate for a living. The business world tends to make celebrities of great managers, but the great negotiators are unsung heroes.

Q: What is your latest pursuit?

A: I have a new book on "breakthrough business negotiation" coming out later this spring. It develops and extends the ideas in Breakthrough International Negotiation and applies them to business negotiation. I'm also working on a major project on international trade negotiation and the role of business in shaping the rules of international trade.

Footnotes:

1. This distinction is developed in J. Sebenius, "Introduction to Negotiation Analysis: Structure, People, and Context," Harvard Business School Note 896-034 (1996).

2. H. Kissinger, White House Years (New York: Little, Brown, 1979), p. 62.

3. "U.N. Chief Tries Again to Get Iraq to Allow Arms Searches," New York Times, Aug. 10, 1998.

4. Roger Fisher argued that every negotiator has a dual role as partisan advocate and as comediator. See R. Fisher, "Negotiating Inside Out: What Are the Best Ways to Relate Internal Negotiations with External Ones?" in Negotiation Theory and Practice, ed. J. W. Breslin and J. Z. Rubin (Cambridge, Mass.: PON Books, 1991).

Excerpted with permission from Breakthrough International Negotiation: How Great Negotiators Transformed the World's Toughest Post-Cold War Conflicts, Jossey-Bass, 2001.

[ Order this book ]