Negotiating in a Three-Dimensional World

By David A. Lax and James K. Sebenius

Chances are you have found yourself—or expect to find yourself—involved in some sort of bargaining process. Maybe you’ve just been through a tough negotiation, and you have a sense that you could have done better. Maybe you are looking down the road, in your professional or personal life, and see important negotiations looming ahead. Most likely, you’re someone who’s involved in negotiations on a fairly regular basis, and you're simply on the lookout for new and better ideas. Consider the following thoughts.

Most negotiators focus on a single dimension of the bargaining process. They are “one-dimensional,” in our terminology, and the single dimension that they embrace is tactics. One-dimensional bargainers believe that negotiation is mainly what happens at the table. To them, preparation and execution is mainly about process and tactics.

All too often, this one-dimensional approach leaves money on the table. It is inadequate in the tough negotiations in which the other side seems to hold all the cards. It isn’t well-suited to common deal-making challenges such as multiple parties, tricky internal and external negotiations, and shifting agendas. It leads to suboptimal deals, creates needless impasses, and fosters conflicts that could have been avoided.

We have a better approach—one that encourages you to negotiate in three dimensions, not one. We’ve coined the phrase 3-D Negotiation™ to describe our approach, and to distinguish it from most of the negotiations that happen out there.

Tactics, our first dimension, are the persuasive moves you make and the back-and-forth process you choose for dealing directly with the other side at the table. Good tactics can make a deal; bad ones can break it.

Deal Design, our second dimension, includes more than the obvious face-to-face aspects of negotiation. Deal designers know how to probe below this surface to uncover the sources of economic and non-economic value. To unlock that value for the parties, they have a systematic approach to envision and structure creative agreements.

Setup, our third dimension, extends to actions away from the table that shape and re-shape the situation for advantage. In deal after deal, we’ve seen the same result: once the parties and issues are fixed, and once the negotiating table has otherwise been set, much of the game has already been played. Therefore, before showing up at the conference room, 3-D Negotiators take the initiative. They act away from the table to set up the most promising possible situation, ready for tactical interplay.

This means ensuring that:

• the right parties have been approached
  
• in the right sequence to deal
  
• with the right issues
  
• that engage the right set of interests
  
• at the right table or tables
  
• at the right time
  
• under the right expectations
  
• and facing the right consequences of walking away if there is no deal
  

If the setup at the table isn’t promising, this calls for moves to re-set it more favorably. A superior setup plus the right tactics can yield remarkable results that would be unattainable by purely tactical means, however skillful.

The 3-D Negotiation approach requires a different set of insights and skills about setup and deal design, as well as tactics. This new approach can help you in your next set of negotiations.

David A. Lax and James K. Sebenius are the authors of 3D Negotiation – Powerful Tools to Change the Game in Your Most Important Deals (Harvard Business School Press, September 2006). For more information see their book website www.3dnegotiation.com and their business website www.negotiate.com.

Published in Networking Today, February, 2007