If you’ve ever had a landlord dispute or a failed real estate deal, you know that negotiating can be difficult, frustrating and even downright dirty. According to expert strategist Barry Nalebuff, it doesn’t have to be that way. We make discourse more challenging by failing to recognize that mutually beneficial outcomes are possible.
Nalebuff has served as Milton Steinbach Professor of Management at Yale SOM for the past 30 years, teaching negotiation, innovation, strategy and game theory to some of the brightest young minds in business. A successful entrepreneur, he is the co-founder of big name ventures Honest Tea and Kombrewcha and has co-authored several books, including Thinking Strategically and The Art of Strategy.
In his latest book Split the Pie: A Radical New Way to Negotiate, Nalebuff argues that considering the collective’s needs is the most productive way to problem solve. Unfortunately, few people and practically no businesses approach discussions with this mindset, a problem he’s intent on changing.
Forget what you think you know about power.
“One of the reasons that people dislike negotiation is that they feel taken advantage of,” explains Nalebuff in his interview with Brilliant Thoughts host Tristan Ahumada. The feeling of disenfranchisement is even greater when people assume they don’t have power in a dispute. He says that many people underestimate the value they’re bringing to the table.
“The whole goal of negotiation is to beat what you can get with no deal,” Nalebuff says. “And each party is equally needed to make that happen.”
He believes that the smaller party in a dispute has just as much power as the larger party if they really understand what the negotiation is about. Consider Nalebuff’s example in which two people, Alice and Bob, must decide how many slices of pizza they each get out of a 12-slice pie. If they fail to come to an arrangement, Alice will walk away with four slices and Bob with two. It might seem like Alice has the upper hand in this situation, but only if you discount the remaining six slices.
What Alice and Bob should be doing is agreeing to find a way to split the remaining six slices equally. In order to maximize the amount of pizza they each get, Alice and Bob have to work together, embrace openness and imagine the possibilities.
Start your negotiation with openness.
Most people have been taught that it’s smart to withhold information in a negotiation—that secrecy gives them power. Nalebuff says that’s not exactly true. In many situations, revealing information, especially as it relates to interests and intentions, can be a helpful tool to increase understanding between parties.
However, before two people can be open with each other, they have to identify a common goal. Nalebuff demonstrates how Bob or Alice could initiate this conversation in the pizza scenario. “Our goal in this negotiation is to make a really big pie and split it,” he says. “I know you want the whole pie, but if you’re prepared to agree now to split the pie with me, then we can spend all of our effort on making a big pie and not have to watch our back.”
No matter how the other party responds, this direct strategy is useful for moving the conversation along. If both Alice and Bob agree that this goal is mutually beneficial, they can devote their energy to pursuing it together. If one party declines because they want more than their fair share, the propositioner can walk away knowing they attempted a fair solution.
Ask the right questions.
“Our ability to understand the other person’s perspective—that’s actually really what negotiation is about,” explains Nalebuff. In order to get on the same page, people need to ask questions to gain perspective, as well as answer questions to communicate what’s important to them.
“People’s first reaction when somebody asks for something is to say no,” says Nalebuff. “My first reaction is to say yes, how can I give you what it is that you want, because if you get what you want, I can get what I want.”
When Ahumada points out that sometimes people are cryptic about what they actually want, Nalebuff suggests two strategies to combat this reluctance: share more before asking for answers or ask what the other person doesn’t want, where they’re the least flexible. In many cases, it’s easier for people to speak openly about undesirable outcomes than desirable ones.
Don’t leave creativity as a last resort.
In complex negotiations, the answers aren’t always straightforward or transactional; reaching an understanding may require an imaginative process. The problem that many business people encounter when they finally do resort to a creative strategy is that they waited too long—trust is already diluted. Frustrations are high, and time is running out. The other party may be skeptical of the offering and view it as a trick or an act of desperation.
Approaching a negotiation with empathy, curiosity and fairness can help both parties explore innovative solutions. A great way to demonstrate that you’re really hearing and grasping the nuances of another person’s perspective is making their argument for them and asking if you got it right. Once both people believe that the other one actually understands where they’re coming from, it gets much easier to move forward together.
“The goal is not to destroy the pie in the process of trying to capture it,” reminds Nalebuff. Even in situations where the goal is to extract as much value as possible, the people who choose to cooperate and negotiate for their collective good seem to benefit the most.
Before you can split the pie, you have to agree on terms, which requires seeing the situation through the other person’s eyes. Understanding what they want and how to give it to them ultimately benefits the giver as much as the recipient—yet another fantastic example of how giving value comes back around.