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Examples... Several years ago, I had a business deal that was going sour. My colleague and I started negotiating and things weren’t going very well. About a year earlier, I had taken some negotiation courses from Mount Royal College. With these courses behind me, I realized that we had drifted into position bargaining. I tried my best to bring negotiations back into a win-win mode, but
we had gone down the positional road too far. I didn’t have enough
win-win style skills, and my friend remained firmly entrenched in
positional techniques. We eventually did settle the dispute by butting heads for long enough. I ended up paying my colleague a bit more than what I thought he was worth, but I really resented the effort I had to expend to get him back into the project. He most likely thought that I had put the screws to him and only finished the project because he was getting something for a few more hours instead of walking out and getting nothing. Needless to say, we have not done any business since—which is unfortunate because we were a good team. The ironic thing about this negotiation is that my colleague was a classical positional bargainer (according Mount Royal’s course), which should not be too surprising because that is how our culture teaches us to resolve disputes. Yet he would most likely say he employed a win-win approach to business. I’m going to present two possible dialogues as how they can work in OilFinancier. Tom and Dick are working up a deal.
POSITIONAL BARGAINING Tom: I have the oil rights to H11, and I want to drill a shallow well there. I am offering you a 30% stake in revenues for putting up 50% of the cost. Dick: For 50% of the cost, I’ll take 45% of the revenues. Tom: I can only give that cut if you promise me a similar deal in the future on one of your oil rights.
Dick: That’s not good enough. I also need you to promise me not to bid in any oil rights auction for the next five days.
WIN-WIN NEGOTIATION Tom: I would like to drill a well on H11. I have the rights to this location. Are you interested? Dick: Sounds like a good idea. But I want to risk only $50,000 on such a venture. Tom: I can put up the other $50,000, so we have the capital to drill the well. We need to determine how much my rights are worth. Any ideas? Dick: I haven’t done any evaluations yet, but Dave the admininstrator says a fair value for the rights is 10% of the revenue at this stage of the seminar. Is this OK by you? Tom: Let’s use that figure for this deal. So the other 90% goes to the investors. This means for each $1000 of investment, we get 0.9% of the revenues. That’s 45% for your investment. And that’s 45% for my investment and 10% for my oil rights for total of 55%. COMPARISON So let’s ask some questions about these two styles. What style is more likely to:
Despite 30 years of negotiation trainers trying to convince business people to learn the skills for win-win negotiation, positional bargaining is still very much entrenched in our culture. I would not be surprised if any of you prefers positional bargaining (and you may even call it win-win) as your style of making deals. And I really don’t want to argue with you. But in OilFinancier, we don’t have real money on the table. So we can experiment with different styles with no real risk on your part. If you think the first dialogue is a better way to make a deal, stay with it for all I care. But if you find you can’t put a deal together after several attempts, you could blame me for not enrolling the right kind of students into the seminar—or you might want to change your negotiation approach. It’s up to you. Your share price at the end of the seminar will be a pretty good indicator of your negotiation skills. And who knows, maybe you are the type of person who can be successful with positional bargaining. You would not be the first. In the positional bargaining dialogue, note how the dialogue starts with a position (a number), followed by a counter position, followed by several other counter positions. The win-win style, on the other hand, moves smoothly from "interest" (are you interested in such a deal?) to identifying "issues" (where the capital is coming from and determining the value of the oil rights) to positions that have been based on a previously agreed measure of fairness (55% for Tom, and 45% for Dick with each contributing $50,000). If you want to move from positional bargaining to win-win, the best way is not mention any numbers for the first email or two. Find the interest and issues first, then work on the positions (the numbers). You should analyze each email you send and receive for its positional bargaining and win-win components. Is not OilFinancier an excellent forum with which to experiment , learn, and entrench good negotiation skills? |
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