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3D Negotiation: Powerful Tools to Change the Game in YourMost Important Deals By David A. Lax and James K. Sebenius Harvard Business School Press 2006
When Staples, the office supply store, needed expansion capital in its early days, it went back to the venture capitalists who helped get the company off the ground initially. But, much to the disappointment of its founder, Thomas Stemberg, the VCs uniformly refused to value Staples as highly as he had hoped.
So, ask David Lax and James Sebenius in their new book 3D Negotiation, what was Stemberg's best negotiating stance at this juncture? Did a good result for him depend on his use of hard bargaining win/lose tactics at the table? Alternatively, should he have become a win/win player-brainstorming options with the venture capitalists, focusing on what would be fair?
No on both counts, say the authors. What Stemberg needed was a more promising setup, involving the right new parties and interests, more receptive to the deal he was seeking. The specific advice he received was to go directly to the financial institutions, some of whom were limited partners of the venture capital firms (and who resented handing off to them a big share of the profits and hefty management fees). He also approached high net-worth individuals who could recognize the potential of Staples and support a higher valuation. In short, by applying the principles of 3D Negotiation, Stemberg zeroed in on potential high-value players and thereby achieved a better setup and a better outcome.
The lesson is clear, in the view of Messrs Lax and Sebenius. Don't treat the parties and subjects of negotiation as fixed (as, they say, the great bulk of academic writers and how-to-guides on negotiation do). Don't just focus on tactics at the table. If you don't like the way the table is set, act away from the table to reset it, by attacking the scope and sequence of the negotiations. In that way, you'll create and claim value for the long term.
Of course, the authors don't completely ignore tactics at the table, which comprise the first of their three dimensions. They recognize that any good bargainer must master such tactics, and include chapters on shaping perceptions and solving joint problems to...