The following series of 4 articles leads with an introduction to negotiation and goes on to explore other principles of negotiation. An Introduction to Negotiation By Tim Cullen The word "negotiate" has acquired a mystique, implying that it is a discrete activity relating to business deals, the freeing of hostages, or settlements of disputes between nations. At the other extreme, the word conjures up images of haggling over a rug or a brass pot in a bazaar or flea market. But the reality is that we all, typically, negotiate in some shape or form every day of our lives. A brother and sister may negotiate for the front seat in the car on the way to school; colleagues at work negotiate over everything from how best to market a product to the timing of meetings. Whenever you want something that requires the cooperation or agreement of another person, you are engaged in a negotiation. Too often, we are guided by our gut instincts and our experience of negotiation as children in the playground or as tourists in a street market. Too often, we look on negotiation as a competitive sport where the sole objective is to win ‐ an attitude that is reinforced by advertisements we read for negotiation training that promise victory in gladiatorial contests with our opponents. Such an approach may produce satisfying results some of the time, but defeated opponents may not want to deal with you in the future and you may have missed opportunities that a more cooperative approach could present. There are a few home truths that too many people ignore when they embark on a negotiation. First, we should always put ourselves in the other person's shoes and try to think about what he or she is looking to get out of the negotiation. This requires us to ask questions and find out as much as possible about our negotiation partner's interests. Secondly, we should examine more closely precisely what our own interests are and not limit ourselves to the most obvious headline objective. The more issues that can be brought into play that are potential areas for negotiation for both parties, the more opportunity there is for mutually beneficial trading. A third point to remember is that obtaining our share of a "fixed‐pie" is not always the limit of what we can achieve. It won't always be possible but we should always look for opportunities to expand the pie and create value in a negotiation so that both parties have the opportunity to walk away from the table with a sense of satisfaction that they have achieved more from the negotiation than they would have by following a different course of action. Above all, good negotiators have a heightened sense of self‐awareness. They recognize the biases that we all possess and that too often trap us into making bad decisions as the negotiation progresses. Greater self‐awareness can make us better persuaders and more sensitive to manipulative efforts to influence us employed by those with whom we are negotiating. Over the next few weeks, we will be looking more closely how these principles come together and how a better understanding of them can make us more effective negotiators with family, friends, work colleagues and everyone with whom we need to reach agreements. This series of articles will also give a flavour of what participants learn in the week‐long Oxford Programme on Negotiation at The Saïd Business School at the University of Oxford. Tim Cullen is Associate Fellow at Saïd Business School, University of Oxford. Negotiation, Expertise and the Five‐Process Model of Leadership By Sherman Roberts Humans are "natural negotiators." But natural is not always good. Research shows that the vast majority of people negotiate intuitively, based on innate predispositions programmed into us by natural selection, plus a bit of informal learning. Therefore, most people negotiate rather poorly and tend to leave a great deal of value on the table. CEOs, statesmen, heads of major nonprofits, and the like, seem about as subject to negotiation errors as the rest, but their errors cost more. But a small percentage of individuals engage in many very complex negotiations and are exceptionally successful. These people are not just lucky and innate talent explains only about 4% of the variance in skill. These are real experts who have mastered the fundamental behavioural processes of negotiation and, through training and practice, they have built a systematic but flexible skill set that allows them generate remarkably good results. The gap between experts and the majority raises questions: What is the negotiation skill set? How does one achieve competence or expertise as a negotiator? To what extent can executive education courses, such as the Oxford Programme on Negotiation (OPN) help people improve? A negotiation is a process in which two or more parties attempt to overcome an initial difference in preferences by engaging in a series of interactive cycles of choice‐making (about desired results and how to get them) and communication (to convince others to comply with one's preferences). These cycles continue until an agreement or an impasse is reached. One cannot become an expert at "negotiation as a whole" except by becoming an expert at these two basic component parts. The good negotiator also considers his performance a set of leadership processes ‐ an effort to lead constituencies and negotiating partners alike to agreements that produce mutually beneficial results. Choice‐making This involves learning to: a) avoid intuitive choice‐making biases such as over‐optimism, overconfidence, sacrificing bigger long‐term outcomes for smaller short‐term ones, and many other innate biases that worked for our ancestors better than for us; b) use rational, computational methods to collect and organize information on objectives and alternatives and then to determine which alternative works best; and c) protect decision making from persuasive advocates who present biased information to serve their own interests. Communication Communication in negotiation is done in many ways including informing, promising incentives, and even commanding obedience. Persuasion leverages these pragmatically, but it focuses on appealing to innate and learned predispositions toward compliance or persuasion principles. Persuasion can be used deceptively but to great cost as it undercuts trust and threatens reputations. Choice making and commutation/persuasion skills are necessary, but not sufficient to assure success in negotiation. Best results generally require the skilled use of one or more three fundamental performance processes ‐ operating, information gathering, and innovating ‐‐ that are contemplated in my "Five‐Process Model of Leadership" and summarized below. Operating to produce results Many mistakenly believe that the end result of a negotiation is an agreement. At best agreement is an intermediate step in negotiations; and some agreements are worse than no agreement. Success is not in the agreement, but in the exchange of concrete results that operational implementation of the agreement produces and parties should consider how to plan for, carry out and trouble‐shoot the implementation of agreements. Information‐gathering and "expanding value" Many negotiators do little or no active information gathering. They simply react to the offers with counteroffers or arguments because they assume that the gain of one party is the loss of the other. In this purely "value claiming" approach, making one's point rather than learning from the other party is the rule. But in most negotiations there is more to be gained by both or all parties by also expanding value ‐ by finding trade‐offs among the multiple possible results that may have different values for each party. Value expansion is made possible by finding creative trade‐offs, and by developing of alliances, often among unlikely partners. These are seldom possible unless parties take the time to gather information about the how and why results are valued, what relationships exist among parties and constituencies, and what procedures each party prefers and why. Innovation in negotiations Research shows that people really are "spontaneously creative." New combinations of behavioural elements are occurring to some extent at all times because behaviour is the product of a complex nervous system and environment. Creativity methods attempt to convert this potential for novelty into useful, replicable innovations. In negotiations we often need innovation to break out of conceptual boxes that lead to impasses, to acquire scarce information from the other party or some other resistant source, and to develop a new offer, tactic or strategy that changes the entire landscape of negotiation in one's favour. Research by Anders Ericsson and other "experts on how to develop expertise" have shown that to become an expert at anything, it is necessary to break complex activities into their component parts, to pinpoint the key elements the promote success, to systematically practice each, to get objective feedback on the degree of skill attained, to receive positive reinforcement for improvement, and to continuously trouble‐shoot the training process to improve it as well. To become an expert negotiator therefore, following these procedures for each of the five fundamental performance/leadership processes outlined above, you can make the transition between these processes and integrate them into a system that will prove crucial to success in negotiations. Sherman D. Roberts is Academic Director of the Oxford Programme on Negotiation and an Associate Fellow of Saïd Business School. Benefitting from Reciprocity in Negotiation By Iris Bohnet Here is how the norm of reciprocity works: If you are kind to me, I will be kind to you in return—and vice versa. According to this norm, people have a fundamental need to reward kindness and punish unkindness. Negotiators benefit from including this behavioural regularity into their toolbox. In many situations, we can trust each other because we know that the norm of reciprocity obligates trustworthiness in return. Reciprocity does not come cheap. Invitations to reciprocate work best if they are based on an intentional act of true generosity. What is considered to be kind or fair and thus worthy of reciprocation depends on the specific context in which a negotiation takes place. One of the most important features of the context determining fairness reference points is whether or not social comparisons are possible. What may seem to be a stingy offer in isolation, can be perceived as fair when compared to comparable offers. Experienced negotiations know this well. Retailers lure buyers by offering a discount off what they hope to establish as the norm, the manufacturer’s list price; salespeople seek to convey the impression that their buyer of the moment is getting a special low price; and proposers of marriage try to convey the impression that the responder is regarded more highly and loved more dearly than anyone the proposer has ever met. Both parties know that if the proposal is viewed as being favourable relative to the norm, the prospects for acceptance are considerably enhanced. Here are some strategies that help you employ the norm of reciprocity effectively: 1. Clearly establish who the parties to the reciprocal exchange are. If the parties at the table are negotiating on behalf of someone else, you need to know whether or not they are empowered to engage in the game of reciprocity. 2. Make sure your behaviour cannot be attributed to ignorance or chance. Study comparable offers (demands) before you meet at the negotiating table and let your counterpart know that you are informed and intentionally make the offer (demand) you put on the table. 3. Make your counterpart feel indebted. Only a meaningful favour induces kindness in return. For example, patterns of concessions may signal your expectations of reciprocity. To signal your willingness to cooperate, make a relatively large concession initially but do not move if your counterpart does return the concession. 4. Send a credible signal. Credible signals cannot easily be faked. For example, blushing is a credible signal of embarrassment. If it is known that someone tends to blush when lying, it becomes a credible signal of truth‐telling. 5. Find out how your counterpart feels about reciprocity. Will she turn down a favour because she does not want to be obliged to return it? Will he be upset when invited to reciprocate or will he be distressed if prevented from returning a favour? What cultural or context‐specific norms of reciprocity apply? 6. And finally, and probably most importantly, make it attractive for your counterpart to reciprocate. Increase the benefits—material, psychological, social—of norm compliance. Build a relationship, make the kindness of your offer (demand) publicly known and engage in repeated interactions where reciprocating your kindness is also in your counterpart’s long‐term interest. Iris Bohnet is Professor of Public Policy at Harvard Kennedy School, director of the Women and Public Policy Program and a vice‐chair of the Program on Negotiation at Harvard Law School. She is an Associate Fellow at Saïd Business School, University of Oxford where she teaches in the Oxford Programme on Negotiation. Negotiating Successfully Across Cultures By Michael Gates ‘In all negotiations of difficulty, a man may not look to sow and reap at once; but must prepare business, and so ripen it by degrees’ – Francis Bacon (1561‐1626) ‘Of Negotiating’ Negotiation is probably as old as mankind itself and was born out of Homo Sapiens’ early struggles for survival and dominance. During the last century or so negotiation has become a science, dominated by the Americans. But anyone who has mediated at, for instance, a Japanese‐US joint venture knows that the moment intercultural factors enter the equation, the landscape can change utterly. It has always been logical to understand the cultural factors in international negotiations. The first principles and values of the different parties can diverge widely, colouring the entire process. But in the current climate appreciating cultural bias is essential. Three key reasons are: • In times of financial crisis, people are under psychological stress and there is a tendency to assert our cultural values more powerfully when under pressure. • Global markets and sources of labour are shifting to the East and South, forcing Westerners into understanding different negotiation mind‐sets. • Relationship skills ‐ including negotiation ‐ are overtaking linear task‐oriented skills (like production, logistics and IT) as the main driver of competitive edge. If entering into the other party’s world and adapting your behaviour and communication accordingly are key to negotiation, in international negotiation cultural preparation to understand different worlds is central to successful strategy and tactics. Is your counterpart persuaded by logic or force of personality? Is price the key issue, or is there a broader more long‐term view? Are they more likely to paint a rosy picture of the deal, and expect you to do so, or do they prefer to err on the side of caution, even pessimism? What is their reaction to concessions? How do they see you, and how do your assumptions colour your view of them? What is their notion of truth? Of ethics? And, most important of all, what builds trust in their eyes – the glue without which no negotiation is truly going to succeed? It is dangerous to rely on our intuitions. We feel that our unwritten behavioural codes for persuasion and negotiation are universal and innate. In fact, they are largely acquired and culturally‐bound. But where to begin? There are over 200 national cultures world‐wide, and many other ‘cultural layers’, such as region, generation, gender, class, education, profession – in fact all the norms that we have learned through being members of a particular group. One theoretical model which may be useful for analysing broad cultural differences in approach is set out by Richard D. Lewis in his book When Cultures Collide. He divides cultures in three main categories as follows. Many cultures are a mix, but tend to dominate in one or two categories: The relative positions of cultures can be roughly arranged in a triangle, as a guide to which negotiation approaches may work best: For successful cross‐cultural negotiation it helps to have a logical mental process encompassing: 1) A clear analytical model for interpreting cultural behaviour and applying that model to manage cross‐cultural interaction. 2) A sharpened understanding of your personal cultural profile, and how that fits into the global context of the triangle, in areas such as attitudes to truth, risk, time, power etc. 3) Adaptation of personal communication style to different cultures’ expectations in negotiation – e.g. in the use of logic, emotion, initiation versus reaction, simplicity versus complexity, optimism to create a positive climate or a frank investigation of problems at the outset, theory or pragmatism. 4) An understanding of how trust is seen in different cultures, and using this as a means of building trust more effectively in negotiation. 5) Building time in your preparation to synthesise these elements into your overall strategy and tactics. Over time, one can refine one’s approach to create check‐lists for distinctive national negotiating characteristics. A list for the French ‐ from an Anglo‐Saxon perspective ‐ might be: • Be prepared for more formality than you are used to, seen in hierarchical seating and the use of surnames and formal introductions. • Understand that logic and precision dominate and they will not accept arguments that are based on compromise rather than logic. At the recent G20 negotiations, President Sarkozy remarked ‘I prefer a clash to a flabby consensus.’ • Expect a longer, more roundabout and oratorical discourse than at your domestic negotiations. • Remember that the most important demands may only appear at a late stage in the negotiations. • Understand that they often need to receive direction from their superiors who are not present. • Personal views often influence dealings on behalf of their organisation. Building a relationship may be crucial. • They will not be flexible simply to get agreement. Francis Bacon’s words on negotiating apply more than ever today. But in a global world, we ignore cultural preparation at our peril. Michael Gates is Group Managing Director for Richard Lewis Communications and teaches on the Oxford Programme on Negotiation.