3-D Negotiation

3-D Negotiation is our effort to crystallize this very different set of insights and skills about setup and deal design, as well as tactics.

3-D Negotiation is our effort to crystallize this very different set of insights and skills about setup and deal design, as well as tactics. Setup dimension. The first dimension, setup, involves actions away from the table to create the most favorable situation for negotiation. This includes ensuring the right parties are involved, in the right sequence, dealing with the right issues, at the right time, and with the right consequences for walking away. Deal design dimension. The second dimension focuses on creating value through creative agreement structures. Deal designers probe beneath surface-level positions to uncover sources of economic and noneconomic value, then structure agreements to unlock that value for all parties. Tactical dimension. The third dimension encompasses the more familiar interpersonal skills and moves made at the negotiating table. While important, tactics alone are often insufficient for achieving optimal outcomes in complex negotiations.

To negotiate truly compatible views, consider an explicit and periodic "audit" of all sides' perceptions. Identify key players. Map out all actual and potential parties involved in or affected by the negotiation. This includes obvious counterparts, but also internal stakeholders, decision-makers, influencers, and those who must implement any agreement. Uncover true interests. Look beyond stated positions to understand the underlying interests, motivations, and priorities of all parties. Probe for both economic and non-economic interests that may drive decision-making. Assess alternatives. Evaluate each party's best alternative to a negotiated agreement (BATNA) or "no-deal option." Understanding these alternatives provides insight into each side's leverage and willingness to make concessions.

Differences of interest or priority can open the door to unbundling different elements and giving each party what it values the most at the least cost to the other (as the Egyptians and Israelis did): a core principle of deal design. Identify complementary differences. Look for areas where parties have different priorities, valuations, forecasts, risk tolerances, or time preferences. These differences create opportunities for mutually beneficial trades. Unbundle issues. Break down complex negotiations into component parts to identify more opportunities for value creation. This allows for creative problem-solving and customized solutions. Structure win-win agreements. Design deals that capitalize on differences to create more value overall. For example: Trade low-cost concessions for high-value gains Use contingent agreements to bridge different risk tolerances Structure payments to match time preferences

Many otherwise experienced deal makers forget that they can advance their interests in three ways: to claim a bigger share of a small pie, a somewhat smaller share of a much bigger pie, or, best of all, a full share of a very large pie. Shift from zero-sum thinking.…