Dave & All *** Negotiation Primer ***
Why should the Q reduce the X% royalty rate? As a show of good faith in negotiations.
I merely suggested a give and take. The Q license its IPR to the Europeans in exchange for a converged standard, said license being reduced. In most to nearly all negotiations, there is great difference between the first offer and the accepted offer.
You do not make arbitrary "good faith" concessions, especially when negotiations should not be based on a positional bargaining approach.
Check out Roger Fisher's Getting to Yes (1981), which is based on findings from the Harvard Negotiation Project, Harvard University.
Some excerpts:
Any method of negotiation may be fairly judged by three criteria: It should produce a wise agreement if agreement is possible. It should be efficient. And it should improve or at least not damage the relationship between the parties - amicable. A wise agreement can be defined as one which meets the legitimate interests of each side to the extent possible, resolves conflicting interests fairly, is durable, and takes community interests into account.
The most common form of negotiation, depends upon successively taking - and then giving up - a sequence of positions.
Arguing over positions produces unwise agreements
When negotiators bargain over positions, they tend to lock themselves into those positions. The more you clarify your position and defend it against attack, the more committed you become to it. The more you try to convince the other side of the impossibility of changing you opening position, the more difficult it becomes to do so. Your ego becomes identified with your position. You now have a new interest in "saving face" - in reconciling future action with past positions- making it less and less likely that any agreement will wisely reconcile the parties' original interests.
Arguing over positions is inefficient
Bargaining over positions creates incentives that stall settlement. In positional bargaining you try to improve the chance that any settlement reached is favorable to you by starting with the extreme position, by stubbornly holding to it, by deceiving the other party as to your true views, and by making small concessions only as necessary to keep the negotiation going. The same is true of the other side. Each of those factors tends to interfere with reaching a settlement promptly. The more extreme the opening positions and the smaller the concessions, the more time and effort it will take to discover whether or not agreement is possible.
Arguing over positions endangers an ongoing relationship
Positional bargaining becomes a contest of will. Each negotiator asserts what he will and won't do. The task of jointly devising an acceptable solution tends to become a battle. Each side tries through sheer will power to force the other to change its position. Anger and resentment often result as one side sees itself bending to the rigid will of the other while its own legitimate concerns go unaddressed. Positional bargaining thus strains and sometimes shatters the relationship between parties.
When there are many parties, positional bargaining is even worse
Although it is convenient to discuss negotiation in terms of two persons, you and "the other side," in fact, almost every negotiation involves more than two persons...The more people involved in a negotiation, the more serious the drawbacks to positional bargaining.
Being nice is no answer
Many people recognize the high costs of hard positional bargaining, particularly on the parties and their relationship. They hope to avoid them by following a more gentle style of negotiation. Instead of seeing the other side as adversaries, they prefer to see them as friends. Rather than emphasizing a goal of victory, they emphasize the necessity of reaching agreement. In a soft negotiating game, the standard moves are to make offers and concessions, to trust the other side, to be friendly, and to yield as necessary to avoid confrontation.
The soft negotiating game emphasizes the importance of building and maintaining relationship. Within families and among friends, much negotiation takes place in this way. The process tends to be efficient, at least to the extent of producing results quickly. As each party competes with the other in being more generous and more forthcoming, an agreement becomes highly likely. But it may not be a wise one. The results may not be as tragic as in the O. Henry story about an impoverished couple in which the loving wife sells her hair in order to buy a handsome chain for her husband's watch, and the unknowing husband sells his watch in order to buy a beautiful comb for her hair. However, any negotiation primarily concerned with the relationship runs the risk of producing a sloppy agreement.
More seriously, pursuing a soft and friendly form of positional bargaining makes you vulnerable to someone who plays a hard game of positional bargaining. In positional bargaining, a hard game dominates a soft one. If the hard bargainer insists on concessions and makes threats while the soft bargainer yields in order to avoid confrontation and insists on agreement, the negotiating game is biased in favor of the hard player. The process will produce an agreement, although it may not be a wise one. It will certainly be more favorable to the hard positional bargainer than to the soft one. If your response to sustained, hard positional bargaining is soft positional bargaining, you will probably lose your shirt.
There is an alternative
If you do not like the choice between hard and soft positional bargaining, you can change the game.
The game of negotiation takes place at two levels. At one level, negotiation addresses the substance; at another, it focuses - usually implicitly - on the procedure for dealing with the substance. ... The answer to the question of whether to use soft positional bargaining or hard is "neither". Change the game. At the Harvard Negotiation Project, we have been developing an alternative to positional bargaining: a method of negotiation explicitly designed to produce wise outcomes efficiently and amicably. This method, called principled negotiation or negotiation on the merits, can be boiled down to four basic points:
People: Separate the people from the problem.
Interests: Focus on interests, not positions.
Options: Generate a variety of possibilities before deciding what to do.
Criteria: Insist that the result be based on some objective standard.
The first point responds to the fact that human beings are not computers. We are creatures of strong emotions who often have radically different perceptions and have difficulty communicating clearly. Emotions typically become entangled with the objective merits of the problem. Taking positions just makes this worse because people's egos become identified with their positions. Hence, before working on the substantive problem, the "people problem" should be disentangled from it and dealt with separately. Figuratively if not literally, the participants should come to see themselves as working side by side, attacking the problem, not each other. Hence the first proposition: Separate the people from the problem.
The second point is designed to overcome the drawback of focusing on people's stated positions when the object of a negotiation is to satisfy their underlying interests. A negotiating position often obscures what you really want. Compromising between positions is not likely to produce an agreement which will effectively take care of the human needs that led people to adopt those positions. The second basic element of the method is: Focus on interests, not positions.
The third point responds to the difficulty of designing optimal solutions while under pressure. Trying to decide in the presence of an adversary narrows your vision. Having a lot at stake inhibits creativity. So does searching for the one right solution. You can offset these constraints by setting aside a designated time within which to think up a wide range of possible solutions that advance shared interests and creatively reconcile differing interests. Hence the third basic point: Before trying to reach agreement, invent options for mutual gain.
Where interest are directly opposed, a negotiator may be able to obtain a favorable result by simply being stubborn. That method tends to reward intransigence and produce arbitrary results. However, you can counter such a negotiator by insisting that his single-say-so is not enough and that the agreement must reflect some fair standard independent of the naked will of either side. This does not mean insisting that the terms be based on the standard you select, but only that some fair standard such as market value, expert opinion, custom, or law determine the outcome. By discussing such criteria rather than what the parties are willing or unwilling to do, neither party need give in to the other; both can defer to a fair solution. Hence the fourth basic point: Insist on using objective criteria.
Hope this was interesting reading.
Cheers,
Greg B. |
