THE MYTH OF THE FIXED PIE

THE “MYTH OF THE FIXED PIE”

Ultimately, what we’re really talking about here is counteracting what my partner, Max Bazerman, refers to as the Myth of the Fixed Pie. Having spent a great deal of time studying how people negotiate, Max recognized that achieving a “win-win” situation essentially means both sides getting an acceptable share of a fixed “pie” of resources. Of course, a “win-win” solution isn’t in itself a bad thing. But if you stop there, even though both sides may have achieved something marginally better than their alternatives, you may still be leaving serious money on the table. Nevertheless, many people do stop there. What Max realized is that the pie isn’t necessarily fixed. In almost any negotiation on almost anything other than a true commodity, you can find a way to enlarge the pie—create true, measurable business value and then trade to determine who gets how much of that value.

In terms of the blueprint I showed you in the last chapter, enlarging the pie essentially means increasing the size of the Agreement Zone. Let’s say, for argument’s sake, that you’re involved in a negotiation in which there’s $50,000 worth of value in the Agreement Zone. The blueprint for that would look like this:

Let’s say further, though, that by aiming to “create joint value and divide it given concerns for fairness in the ongoing relationship,” that is, by trading a wide range of items in the negotiation rather than just one or two, you can increase the size of the pie, the Agreement Zone, by an additional $50,000 in value. In that case, the blueprint would look like this:

Finally, having enlarged the Agreement Zone, that is, having created more value, you can then divide it, in which case the blueprint might look like this:

I understand, of course, that making the pie bigger and then determining who gets what share is completely counterintuitive to most people. It’s not the way people have traditionally done negotiations. But, as I explained earlier, the traditional way of negotiating simply doesn’t work in today’s business environment, and a new way is needed. The Strategic Negotiation Process is just such a way.

Before we go on to the first step of the process, let’s go back for a moment and look at the goal you set in the beginning of this chapter for your sample negotiation. Is your goal the same as one of those that most people use? Does it really look like a goal to you now, or does it look more like a tactic—a means to an end rather than an end in itself? It’s certainly true that getting the deal done in a reasonable time, increasing revenue or market share, and gaining data on the other side are laudable ambitions and prerequisites to creating joint business value. They do not, however, create joint business value themselves.

Now think again about what you really want to achieve in your sample negotiation, and circle the goal below that now looks most appropriate:

1. Close the deal profitably.

2. Close the deal by the end of the quarter.

3. Create joint value and divide it given concerns for fairness in the ongoing relationship.

I hope you chose Number Three. Bear in mind, though, that choosing Number Three as a goal doesn’t mean that you can’t close the deal profitably or by the end of the quarter. One of the benefits of using the Strategic Negotiation Process is that if, for example, increasing your revenues is what you want out of a given negotiation, you’re much more likely to get it by trading it for something that your customer considers more important.

Dealing with Professional Buyers

I noted earlier that one of the major changes taking place in the negotiating environment is the increasing number of professional buyers in the marketplace. This new type of buyer not only sees negotiation, like sales, as a process but, perhaps even more important for our purposes, is capable of performing in-depth analyses of your solution versus your competitor’s to an extent that you probably haven’t even begun to imagine. What this means is that many buyers are using what is effectively a new purchasing model, one that enables them to quantify value to a much greater extent than the vast majority of salespeople. Learning how to blueprint negotiations using the Strategic Negotiation Process will go a long way toward helping you meet this challenge. But because this is such a relatively new phenomenon, I am also providing additional information on this specific aspect of negotiating in boxes like this throughout the book.

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It may seem unlikely that professional buyers would be interested in being able to “create joint value and divide it given concerns for fairness in the ongoing relationship.” The fact is, though, they are, and for one very good reason. They know that in the vast majority of business-to-business deals, the long-term health of both buyer and seller comes not from negotiating over shrinking margins but, rather, from building long-term, profitable business relationships. So even though professional buyers can certainly be very tough negotiators, they understand that both you and they will be better off if you can come to an agreement in which both sides are satisfied.