Unusual Subroutines

The blog and musings of Christopher Allen-Poole

Negotiating Fairly

The Nash Game

Let's play a game, well, more of a thought experiment. Let's say that we are both hunters, and that we are both interested in getting the most meat possible. That makes sense, right? OK, so now let's imagine that we can either carry a spear, which is good for wounding a deer, or a net, which is good only for catching rabbits. You and I both know that we'll need to cooperate in order to catch that deer, and that if one of us brings rabbit net, then that person will get all of the rabbits. What do we choose?

If you haven't heard this before, it's something called the stag hunt game. I haven't done Nash or Rousseau justice, but even so it is a good lesson in the value of thinking cooperatively over thinking competitively. And that is exactly what I'm going to highlight today.

Negotiation is not easy. If it were, then there would be a lot fewer lawyers and a lot fewer contracts. There are too many ways that we can managed to short sell our interests and lose our shirts. And many people feel that they aren't talented enough to come out successful, however they define it.

What's a Zero Sum Game?

Part of the problem we have with negotiations is that we (as a culture) view negotiations as a zero-sum game. To get an idea what that means, imagine that you are playing a game where whoever gets the most cards wins. If you need an example, imagine you are playing War, no matter how many turns go by, there are no extra points to be had in the game. Unless someone cheats, there will always be 52 cards.

Negotiation, despite its portrayal in the popular mindset, is not a zero-sum game. The best results of negotiations are more often found through cooperation instead of people trying to beat each other or "win." In fact the best negotiators actually keep fairness as a mindset, Fast Company has actually suggested ways to use fairness as a tool to improve negotiations.

How Can Fairness Help

Fairness, in this case, means that you do your best to keep the other negotiators interests in mind and try to find a mutually beneficial resolution. This is so important that Harvard Business Review has said that failure to do this is one of the largest marks of the mediocre, and for good reason: knowledge of your partner's position is the fastest way to move a "no" to a "yes".

Without devolving into an NBC meme or a G. I. Joe PSA, negotiation, done well is about knowledge. Specifically, the best outcomes in negotiations rely on people being able to see enough of each other's positions to find ways to be mutually beneficial beyond the original terms. Often a successful negotiator will find a third option where everyone ends up with a win. This is called "growing the pie."

What's Growing the Pie

"Growing the pie" is an analogy. Imagine you ask for some pie, but the pie is very small. Even if you're successfully you'll only end up with an extremely small slice. No one will be terribly happy. Now imagine, instead, you had a way to double the size or triple the size of the pie. The person you're negotiating with will end up with a much larger slice, and they'll also be far more willing to hand you a larger slice as well. If this were a deck of cards, you might imagine that you're trying to negotiate for ten cards with someone who is only holding "clubs". "Growing the pie" would be the equivalent of saying, "If you give me four spades, two hearts, and six diamonds, you don't need to take anything out of your hand."

This thought is extremely practical. Imagine that you are negotiating a salary. The company can't afford the salary the candidate requires. If you take negotiation as a competition, then this contract is dead. On the other hand, if the company can get the candidate some alternative — better hours, remote work opportunity, extra vacation, season tickets to a Giants game (just kidding, no company can afford that), etc. — the candidate might be willing to work for a lower rate.

So that's the first major principle of negotiation. If you can find that one alternative, you'll give more value to your partner, and you'll increase the likelihood that your partner will return to you in the future. Fair-mindedness increases the likelihood of business, and a it gives a better promise of future business.

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