What They Didn’t Teach You at Business School about Negotiation

post from John Graham:

Your daughters are fighting – over an orange. No hitting
or hair pulling, just screaming and crying. What do you do? You might get a
knife and cut the thing in half. A zero-sum solution, but fair. If you’re smart
you ask each of them why they want the orange. If you’re lucky one wants it for
the juice, the other the peel for marmalade. They can share it with each
getting 100% of their desires. Smart parent!

In business school we call the latter approach
integrative or interests-based bargaining. Indeed, we often tell the parable of
the orange to demonstrate the thinking behind the process. Rather than a
competitive haggling over greedy positions, we’ve been teaching making
interests-based tradeoffs that should yield win-win solutions. But in the 21st
century, just getting to yes isn’t good enough.

There is a third way. The best negotiators in the world
think business-school-taught integrative bargaining is primitive. Jobs and Iger
used what we call Inventive Negotiation
in devising the Disney purchase of Pixar. They developed a trusting
relationship, laid their cards on the table, face up, and walked around Palo
Alto trading crazy ideas. Rather than bargaining over film distribution
agreements and intellectual property, they combined their imaginations to
design an ecosystem of creativity. Using this approach with your daughters, you
suggest planting an orange tree.

borrows the best ideas from the Japanese,
the Dutch, Silicon Valley, Hollywood, brain science, anthropology, and
experimental economics. Rather than focusing on disputes or problems, the
process begins with a search for opportunities. 
Next comes finding the best partners and developing trusting
relationships. Those relationships allow for application of tools of invention –
using a facilitator, leveraging diversity, getting the team, place, space and
pace just right, changing roles, and improvisation.  

examples of Inventive Negotiation
come from industry – Boeing/Mitsubishi, GM/Toyota, Apple/Hon Hai, Philips, and
Ford. All have imitated General Electric’s founder. Thomas Edison wasn’t just
an inventor. He was an inventive negotiator. Contemplate the array of companies
he created – 171 in all. Fifty were in countries ranging from Argentina to
Canada, from Japan, China, and India to Italy, Germany, and France. He dabbled
with partners in electric cars, batteries, cement, chemicals, and office
machines. The creative teams he developed laid the foundations for today’s
music, movie, and telecommunications industries.

list 22 inventors of incandescent lamps prior to Edison, but his team’s design
improved on the others in three ways: better incandescent material, a higher
vacuum, and higher electrical resistance allowing power to be distributed from
a centralized source. But the better bulb by itself wasn’t the reason for
Edison’s success. He and his partners also developed the basic grid to bring
the electricity from a distant generator across the wires to the bulbs. Now GE
makes everything from toasters to turbo-machinery.

the time Thomas Edison applied for patent #223,898 for his version of the light
bulb, he had already formed the Edison Electric Light Company in New York City.
He’d sold his vision: “We will make electricity so cheap that only the rich
will burn candles,” which helped him line up investors like the Vanderbilts and
J. P. Morgan. And within a decade, he’d recruited dozens of the smartest
engineers in the world and built the world’s first industrial laboratory in
Menlo Park, NJ.

He owned the American market (some 60 million at the
time), but his dreams were bigger: the entire British Empire (about 400
million). And one man stood in his way.

Joseph Swan held the British patent for pretty much the
same technology, and he was suing Edison there. Where others would have seen
this as an obstacle, Edison saw it as an opportunity. Soon he had persuaded
Swan that partnership was a better idea than litigation—a move that would make
both of them enormously wealthy.

So in 1883 the two partners created the Edison and Swan
Electric Light Company (Ediswan) to manufacture and distribute the invention in
Britain and its vast empire. Though famously “the sun never set on the British
Empire,” it apparently set every day on some portion of it. In those places
they needed lighting. Thus, Edison’s gamble paid off handsomely.

We have found others that use Inventive Negotiation – George Mitchell brokering a peace in
Northern Ireland, Marines drilling water wells in Afghanistan, Father Gregory
Boyle creating Homeboy Enterprises, extended families building
multigenerational housing. The list goes on and on. There is no limit to human
imagination when it’s purposefully applied to finding opportunities, TOGETHER.
Try Inventive Negotiation. Go beyond
just yes. Plant orange trees!

John L. Graham, co-author with Lynda Lawrence and William
Hernández Requejo, of Inventive Negotiation:
Getting Beyond Yes
(Palgrave Macmillan, May 2014), Professor Emeritus of
International Business, University of California, Irvine,