Monday, March 8, 2021

What Makes a Negotiation Win-Win? Exploring Perspectives, Mutability, and the Limits of Value Creation – Part 1

by Zekariah McNeal ’21

 

Consider this slightly altered version of a well-known example from Getting to Yes.1 Two children are fighting over an orange, when their mother discovers them and demands that they stop. “Why do you want the orange?” she asks them both. “To make orange juice!” answers the first child. “To make a cake with the orange peel,” says the second child. The mother sees the obvious answer and peels the orange, giving the first child the pulp and the second child the peel. It is a simple and apt example of an integrative solution 

But if these were instead unrelated adults who were negotiating over intellectual property with priceless sentimental value, then a sharing arrangement would be difficult to reach. Integrative negotiators in such a situation might indeed discover value-creating options. They might broaden the terms of the agreement to try to include other assets. Or they might lengthen the relationship so that the side that did not acquire the property would gain more value in some other manner at a later time. But if the property truly had priceless sentiment attached, then no other value could suffice for the loss. These are negotiations in which one or some non-fungible and indivisible issues cannot be compensated by any value creation. 

Negotiations like this happen every day in which one side will have felt that the entire negotiation is a loss if they do not reach negotiated wins on particular issues, regardless of their wins elsewhere in the negotiation. Some call these win-lose negotiations. In such situations, negotiators may be highly integrative in style and inclination. But if they do not reach desired results, they may still conclude that the negotiation was win-lose and that they were the loser. How can we determine whether a negotiation is win-lose if integration is not a proxy?  

Pre-Agreement Perspective:  A Partial Explanation

Two theoretical approaches to negotiation hold sway over much of negotiation scholarshipintegrative negotiation and distributive negotiation. While integrative negotiations involve making tradeoffs across issues and creating value,2 distributive negotiations often involve dividing up a single resource or debating a single price point.3 These two definitions provide a framework by which students of negotiation can understand how their potential strategies and the strategies of their negotiating counterparts can lead to either synergistic value creation or adversarial power-grabbing. For example, according to the common pie metaphor, an integrative negotiator considers how she might expand the size of the pie, increasing resources, assets, and benefits for all parties involved. A distributive negotiator considers how she might acquire as much of the pie as possible through the negotiated agreement. And she hopes to get more of the pie than her negotiating counterpart will 

Some might consider these two frames to be instrumental in making a negotiation either a win-win negotiation (capable of reaching a satisfactory result for both parties) or a win-lose negotiation (zero-sum such that one party cannot be satisfied). They might describe any integrative negotiation as win-win and any distributive negotiation as win-lose. But viewing win-win negotiations and win-lose negotiations only as extensions of the integrative-distributive dichotomy veils the perspective that underpins it 

Before parties have reached a negotiated agreement, perspective plays several roles in relationship to the integrative-distributive dichotomy.4 Negotiators’ pre-agreement perspective influences their strategies, inducing them to approach particular issues (or the negotiation as a whole) with either integrative or distributive tactics. Throughout the process of the negotiation, the same pre-agreement perspective also influences the negotiators’ interpretation of how integrative the negotiation appears in the momentFrom pre-agreement perspective, both the external-facing strategy and internal-facing experience are primed to be either integrative or distributive. 

But is pre-agreement perspective, and the strategy that results from that perspective, sufficient to determine whether a negotiation could accurately be considered as win-win or win-lose? Surely, a positive, integrative perspective and strategy cannot make every negotiation a win-win negotiation.  

Instead, whether a negotiation is win-win or win-lose depends on two things. First, rather than depending entirely on the pre-agreement perspective of the negotiators, their post-agreement perspectives impact the overall assessment. Second, it depends on the mutability of the circumstances defining the contours of the negotiation. These two features are not always distinct in a negotiation. They, in fact, can have quite a significant effect on each other. But they can be analyzed distinctly before determining their often unhappy intersection. The rest of this piece is devoted to how post-agreement perspective significantly affects the determination of whether a negotiation is win-win or win-lose. A second, upcoming post will discuss both how the mutability of circumstances in a negotiation also affects this determination and how this mutability can influence post-agreement perspective and vice-versa.  

Post-Agreement Perspective

Post-agreement perspective might be understood more narrowly as the satisfaction level of the negotiators. As such one might conclude that the relationship between post-agreement perspective and the win-lose inquiry is simple: An unsatisfied post-agreement negotiator will have the perspective that the negotiation was win-lose, and a satisfied post-agreement negotiator will have the perspective that the negotiation was win-win. But this fails to capture the complexity of one’s perspective.  

There are two different ways that postagreement perspective helps to answer the question of whether a negotiation was win-lose. First, negotiators may discover objective information after the negotiation showing that there was little opportunity to create value.  Second, the negotiators may be inclined to interpret the results as if they are zero-sum. 

While negotiators’ pre-agreement perspectives can be dispositive for their strategy, those perspectives can change dramatically through the negotiation process as goals are attained or lost. Attempts at value creation may fall short of their intention. Either party may find that they are cornered into an agreement that is zero-sum. And after the agreement, some previously-unknown factors may come to light that help the negotiator to realize that they were in a zero-sum situation. It is only after the negotiation that a negotiator is able to have a full picture of what was possible, one that is less adulterated by the tactics or expectations of the moment 

Still, few negotiators are freed entirely from those expectations. Many negotiators enter negotiations with biases that shade their interpretation of what a win-win negotiation is. Although the post-agreement negotiator will have a much clearer picture of the full negotiation, the negotiator will still have an inclination either to focus on the value missed or to recognize the value gained. The exact same negotiation might appear to be a win-win negotiation to one negotiator and a win-lose negotiation to another negotiator. While such a negotiation may have the same Zone of Possible Agreement,5 each hypothetical negotiator will have a different “zone of satisfaction.” 

Consider again the negotiation regarding intellectual property with priceless sentimental value. One in such a negotiation might enter it hoping to use integrative strategies. Additionally, as he uses those strategies, his integrative inclination may help him to recognize and appreciate the pie expandingIssues may be divided, created, and traded as the negotiating counterparts endeavor to create value. But a difference arises between negotiated wins that meet some interests and wins that allow a negotiator to disregard a loss on the primary issue. A negotiation such as this intellectual property dispute may be a situation in which the latter type of win is far less likely. However integrative the negotiator, the primary issue may be too non-fungible and too indivisible.  

Through his post-agreement perspective, a negotiator is more likely to recognize such objective limitations and interpret the negotiated results according to some personal propensity toward satisfaction. It is these post-agreement observations that allow a negotiator to most accurately determine if a negotiation is win-lose. Negotiating practitioners would do well to not too quickly make a judgment that a negotiation is win-lose until after the agreement. But they would also do well to recognize that there are some negotiations that are bound to be win-lose regardless of their efforts. There are indeed objective and predictable factors that contribute to a negotiation being win-lose, but as an upcoming post will discuss, even these seemingly fixed circumstances may not be immutable and may make such a determination more complex.

1. Roger Fisher & William Ury, Getting to Yes 51 (1981).
2. What is Integrative NegotiationProgram on Negotiation | Harvard Law School Daily Blog https://www.pon.harvard.edu/tag/integrative-negotiation/. 
3. Katie ShonkDistributive Bargaining StrategiesProgram on Negotiation | Harvard Law School Daily Blog (Feb. 25, 2021) https://www.pon.harvard.edu/daily/negotiation-skills-daily/distributive-bargaining-strategies/. 
4. See Margaret A. Neale & Max H. BazermanPerspectives for Understanding Negotiation, 29 J. Conflict Resol. 33, 40 (1985).
5.  For further discussion about the “Zone of Possible Agreement,” see Robert H. Mnookin, Scott R. Peppet & Andrew S. Tulumello, Beyond Winning: Negotiating to Create Value in Deals and Disputes 19-21 (2000) .

 

Zekariah McNeal ’21 is a JD candidate at Harvard Law School. He focuses his studies on corporate law, criminal law, and dispute resolution. He has been a Teaching Fellow in a conflict resolution course at Harvard College and a student in the Harvard Negotiation and Mediation Clinical Program. He serves as a Notes Editor of the Harvard Law Review, represents low-income clients in Boston-area criminal hearings through the Harvard Defenders, and is an active member of the Harvard Black Law Students Association. Before law school, Zekariah called Oklahoma City, Oklahoma, home. He graduated summa cum laude from Oklahoma Christian University where he obtained degrees in Electrical Engineering and Biblical Studies. He worked for two years as an electrical engineer before transitioning to Harvard Law School.