From sales, to date night, to politics--we are always negotiating. In this inaugural episode, UO professor of management David Wagner explains how this actually can be a great thing. Negotiations, he explains, are often about problem solving and discovery. We then dive into his negotiations class, which visits Starbucks and Chipotle as well as explores business hypotheticals and hardball tactics. Podcast editor Alec Cowan comes to the rescue to perform some vocabulary duty, explaining "3D negotiation." And host Troy Campbell brings in some psychology.
Prepare for an episode full of charm, hope, and education as we kick off Business 1O1. We promise you'll leave the podcast rushing to "source interests" in all your relationships, and you'll see immediately how when we understand the 1O1 of anything, we can better at everything!
What We Learned
Integrative Negotiations
In Negotiations 1O1, management professor David Wagner took us into his class and gave us the core idea of integrative negotiations, a manner of negotiating that focuses on building something together. This method of negotiation looks for cooperative opportunities, rather than distributive value claiming. Integrative negotiations also look at multiple issues, not just a single value, like price.
Two examples of integrative negotiations:
EXAMPLE 1: New Independent Coffee Roaster and Established Grocery Store
An independent coffee roaster wants to sell its beans for the highest price they can, and the grocery store wants to buy the beans for the lowest price. Therefore, if the two just talked about price they would be engaged in distributive negotiations and miss out on opportunities. However, if they opened up the conversation, like Wagner advised, they would enter into integrative negotiations and could both benefit.
A possibility beyond price: The coffee roaster could explain that they are interested in exposure, and the grocery store could explain that they want to build their brand through associations with hip brands. The grocery store could offer to put the coffee roaster in the front of the store, if the coffee roaster creates a really hip display.
A possibility mixing with price: The grocery store could offer use of their large distribution networks. This would make it easier for the coffee roaster to ship to local coffee shops. The coffee roaster would gladly drop their asking price for the grocery store in exchange.
EXAMPLE 2: Iron Man and Phil Knight Negotiating before and after Listening to this Podcast
1O1 Everywhere: Surfacing Interests
Maybe the best “you can use this everywhere” piece of advice Wagner offered was “surfacing interests.” This idea is essential for integrative negotiations, and when done right, it is a beautiful thing that makes us smarter everywhere.
In Romance … For most couples, the goal of date night is quality time in love. This often gets overlooked because each partner focuses on the other’s interests in what movie or food is consumed. If, instead, they just brought up their focus on spending unstressed time together in love, things could get better.
At Work … Podcast host Troy Campbell constantly has lunch with people just to talk about what their interests are and share his own. This leads to collaborations, such as the science department needing better communication and Campbell's marketing students using their talents to communicate about important things.
At School … A student might indicate interest for more time on a final project and ask the professor how this interest could be met while maintaining the professor’s interest in the student learning. Together, they might find a way for the student to combine final projects across courses to save time and increase learning.
With Friends … The surface desire is to save money, so friends go to a cheaper dinner and get to an event space before the cover charge is demanded.
Personal Life ... A tenant might ask their landlord if they need anything. The tenant might discover the landlord needs gardening, electrical work, or security. The tenant might be able to provide these things for a reduction in rent.
The Misconceptions
As always, our guest demystified the topic and corrected a lot of misconceptions. Here are four:
- We think that negotiations are just for business deals, but actually, we are always negotiating, multiple times a day.
- We think that negotiations are a place in which we should never tell people what we actually want, but actually, in most negotiations, playing all our cards and surfacing our interests is beneficial.
- We think that negotiations are all about money, but actually, money is only one of many things that can be negotiated.
- We think that negotiations should be kept to a minimum, but actually, we should be constantly negotiating, asking, and surfacing interests, or else we will leave so much value on the table.
Quotes from the Episode
Along the same lines of definitions, Wagner gave us a lot of memorable quotes:
“We need to understand people's interests."
"You’re negotiating every day, multiple times a day.”
“The world is full of opportunities to negotiate and full of opportunities to create value.”
“We are doing things that people like, but they don’t really care that much about those things, and it comes at a huge cost to us.”
“If we let people’s mild preferences rule the day, there is value that is lost, there is value left on the table, there is well-being that is destroyed.”
“These high stakes situations, if these are the only time we are negotiating or view ourselves as negotiating, then, sure, it makes sense that we feel a little anxiety about negotiating.”
Activity Parable: Collect No’s
Wagner tells students to go out into the world and “collect no’s.” This is done by asking for what one wants in a situation until hearing a “no.” The point of this activity is to show that there is value left on the table and opportunities everywhere. It also is just to get people more comfortable with negotiating. People have to ask for more things like . . .
“Can I have a bigger scoop of beans?”
“Can you give my niece a tour of the fire station?”
“Can we stay and study until the baristas leave?”
Life Advice: Turning a “No” into a “Yes” with Surfacing Interests
Wagner says we should collect "no’s," but he also thinks that quite often we can turn a "no" into a "yes," or something of similar value. This is because when people say “no,” there is usually a good reason. Surfacing the interest behind that "no" can help one find an integrative solution.
For instance, David talks about a student who asks their parents to come see them at school to see a presentation or come to parents’ weekend. If the parent says “no,” the student might ask why. If the reason is “money,” maybe there is a way to do it cheaper. If the reason is “time,” maybe there is a way the student can help open that time or set up a Skype-in option.
Plus, remember what host Campbell said about the psychology of perspective taking and how negotiating has its own value. When a person has taken our perspective and understands our needs, we tend to like that person more. Understanding another’s needs and interests is important and can produce intangible relationship benefits from the negotiation. So, take the time to understand people’s interests. Even if it doesn’t lead to a better outcome, it will lead to a better relationship.
Life Example: Job Offer Negotiation
A job offer should be seen as the start of conversation about many things, including salary, benefits, and opportunities. Many companies do not extend their best offer to an applicant outright because they do not know what the best offer would be to a specific hire. For instance, people value different things, such as vacation days, salary, childcare, transportation, start times, and more. A company is not going to offer top of the line on all those to every person.
Furthermore, a company may not know what makes you the best employee for them, such that they are looking for an integrative solution that maximizes not only your likelihood to accept the offer, but also your performance on the job. For instance, you might be good at collaborating or have a desire to acquire new skills, such as cooking or coding, depending on the job. You could negotiate for paid trainings or the ability spend to 10 percent of the time on independent creative endeavors. Some of these might be very desirable to certain companies.
One last consideration: If a company is not willing to get integrative and negotiate with you, then you might want to consider whether a company that does not understand the benefits of basic 1O1 negotiations is the right place for you to be. Negotiations can often be a good way to test the character of a potential employer or client.
Key Idea: 3D Negotiations
We can’t leave without one more piece of helpful terminology from Wagner. David explains that many people tend to focus just on how to negotiate at the table—refered to as “table tactics.” This is the dramatic and showy stuff we see in movies and on TV. On the screen and in real life, less attention is often paid to the set up and the deal design. People need to think of negotiations in 3D:
- Set Up – researching, building good will, getting alternative offers
- Table Tactics – from integrative negotiations to hardball tactics, what is done at the main time of negotiating.
- Deal Design – what the actual deal says in explicit writing.
David Wagner's Negotiations Basics
Professor: David Wagner
Location: Lundquist College of Business, Department of Management
Class Size: Approximately 40 students
Key Class Activity: Negotiating practice, where students sit in pairs all across the business school, assuming many different roles throughout the term
Important Homework: Collect no’s
Major Project: Evaluating a modern negotiated deal like “Did George Lucas effectively sell Star Wars?” or “Did Whole Foods get its worth from sale to Amazon?”