When the factors get complex, we might explore a program that does the math on the factors of uncertainty and choices taken along the way – TreeAge. This software, available online at treeage.com, helps develop and test outcome through complex decision tree analysis.
Across the board, information is the medium of negotiation. Information helps us identify our own and the other’s interests. It is the basis of our understanding of the business, legal, or other risk context for assessing a deal. It is the prima materia with which we make any assessment of risk or value. Only with information can we discover and assess our leverage.
Assess Leverage; Engage in Logrolling.
Much has been written on leverage. When one controls the counterparty’s access to a means of satisfying that counterparty’s need, or if one can impede the satisfaction of that need, one has bargaining power. It is important to be clear on what those levers are on both sides of the table. It is further helpful to see if there are alternative means of satisfying, or jeopardizing, the need or interest in question; this liberates one from being hung up on a particular risk or issue.
There are a good number of times when it can cost one party little to satisfy a significant need of the other party. If each party can offer something of low value to the offeror and high value to the other party, this presents a wonderful opportunity for trading that will generate higher overall value in the deal. This type of trading, known as logrolling, can be a source of great satisfaction.
The risk analysis discussion above should already suggest that a good negotiator should not shy away from numbers. In deals there are often many moving parts, each with its potential economic value. It pays to try to price values, to calculate risks, to test principles and assumptions by working out their math.
Develop Principles and Standards.
At the heart of the Fisher-Ury model of negotiation – in addition to putting the parties into a cooperative frame of mind, focusing on the problem, identifying the issues, discovering underlying interests, and developing options to meet those interests, producing a deal that is superior to the BATNA – is the recognition that developing workable options and deals often depends upon arriving at principles which all parties can adopt. This fits into our “mundus” section, because they are an effort at transforming the subjective into the realm of objectivity. Whether it is fair, doable, wise, legal, efficient, considerate, reciprocal, due – whatever the standard, it pays consciously to work to develop standards that can be discussed with and adopted by one’s counterparty in order to address distributive issues or generally to work out a deal.
This can include finding an objective basis for assessments by turning to authorities in recognized texts – like the Kelley Blue Book for used car values – to experts, like appraisers or accountants, or to broader custom and usage in a particular industry or trade. The net result is bringing the discussion into an objective realm susceptible to shared, open analysis, and away from the subjective realm governed by the assertion of wills.