entrepreneurshipresource center

The Resource Center has all the info you'll need From content to user feedback, the resource center has the information you need for every level of the entrepreneurial process.

Negotiating for Mutual Gain

William Ury, Director of the Global Negotiations Project, Harvard Law School

Each profession sees the world through its own prism. Wherever they look, business executives see financial opportunities. Politicians see unconverted voters. Carpenters see houses in need of repair. As a negotiation specialist, I may be guilty of the same distortion, but wherever I look, I see an unheralded revolution happening in business, indeed in every domain of human life. Call it the Negotiation Revolution.

During the talks I give on negotiation, I usually ask members of the audience how much time they spend negotiating – broadly defined as engaging in back-and-forth communication trying to reach agreement. Whether the audience is managers or schoolteachers, governmental officials or engineers, Brazilians or Americans, the response is invariably the same: the majority of people say they spend over half their waking hours negotiating. Asked if the amount is increasing or decreasing, almost everyone agrees it is going up.

Nowadays, people seem to be negotiating everywhere. It starts first thing in the morning in the family. Who will do the household chores? Who is in charge of the family finances? “We’ve gone from marriages where very little needed to be negotiated,” reports family psychologist Howard Markham, “to ones where nearly everything needs to be negotiated.” The process continues at work with co-workers, bosses, and employees. People negotiate with customers and suppliers with banks, accountants, and lawyers not to speak of government authorities. We find ourselves negotiating from the moment we get up until the moment we go to bed.

In the corporate world, work is increasingly accomplished in teams and task forces, business is carried out through joint ventures and strategic alliances, and growth is achieved through mergers and acquisitions. Each of these organizational forms requires continuous negotiation and renegotiation as the business environment changes. Negotiation has become a growth industry.

In the 1970s, the subject of negotiation was hardly a defined field of study and training. Almost no courses were offered in universities. Two decades later, negotiation courses are ubiquitous. They are taught in many schools of business, government, and law, in most large corporations and many government agencies and even in elementary schools. The hunger for knowledge about this subject has been overwhelming.

But why? The answer appears to lie in the Knowledge Revolution and its effects on our forms of organization and on the very logic of conflict.

To survive and thrive in the knowledge economy, organizations of all kinds from companies to countries have come to recognize the urgency of breaking down walls of all kinds, such as communication barriers, tariff barriers and barriers of rank and status, which refers to anything that interferes with the information-sharing process through which new knowledge and wealth are generated. Whereas pyramidal organizations create and reinforce boundaries, network organizations erase boundaries by making connections across them. The tearing down of the Berlin Wall has become a metaphor for what is happening around the globe. As pyramidal organizations everywhere flatten themselves into networks, the primary form of decision-making changes from vertical, the people on top giving orders, to horizontal, everyone negotiating.

In order to get their jobs done nowadays, people depend on dozens of individuals and organizations over whom they exercise no direct control. They cannot impose a decision; they are compelled to negotiate. Even in the military, the epitome of a pyramidal organization, where people are accustomed to give orders and receive instant obedience, the new reality applies. On a lecture tour in Colombia, I was puzzled to receive a request from General Zuniga, the chief of the armed forces, to give a talk to his generals and admirals. They required negotiating skills, he explained, in order to obtain the budget they sought from politicians, the cease-fires they wanted from guerrilla leaders, and the cooperation they needed from their peers. Even with direct subordinates, he added, they could not get the kind of performance they wanted by simple orders; they needed to negotiate for it.

With the Knowledge Revolution, moreover, a shift is taking place in the very logic of conflict. Whereas the traditional basic resource of human society – land – is a fixed pie lending itself to destructive fights over its division, the new basic resource – knowledge – is an expandable pie. More knowledge for you need not mean less knowledge for me; we can all partake of it. If I give you land, I have less land, but if I give you knowledge, as in this article, I do not thereby have less knowledge. Indeed, we can both benefit from the same knowledge. There are limits to land and material resources, but there are no known limits to learning.

In contrast to land, which is typically improved through the act of possession, knowledge is improved through the act of sharing. The core enterprise of the Knowledge Revolution – science – relies on the exchange of theories and information. Scientists compete with one another, as when different teams race to be the first to invent a vaccine, but the competition is mostly in the timing. The fundamental mode is cooperation; no scientist can work effectively without cooperating with colleagues past and present. Through such cooperation and sharing, knowledge as a resource grows more and more abundant for everyone.

Even in the profit-making world, where the competition is fierce and companies often guard their knowledge jealously, the best strategy is often to share one’s knowledge – sometimes even for free. Consider the first major software program used for navigating the Internet, Netscape. It consisted almost entirely of knowledge, ones and zeros of computer code. It cost the company next to nothing in the form of labor, machinery or transport to create an almost infinite number of copies. Indeed, the company succeeded by giving away most of its product for nothing on the Internet, thereby allowing it to command eighty-five percent of the market for a period. By positioning itself to sell a host of other products and services to its customers, the company generated enormous value for its investors and was eventually purchased for more than four billion dollars.

The Knowledge Revolution thus makes it easier for both sides of a negotiation to “gain.” “Both-gain” does not mean that both parties get everything they want, but rather that they each benefit more than they otherwise would. Companies are finding it to their advantage to pool their resources for research and development, to share production facilities, and to learn from each other. They are forging strategic alliances and joint ventures, sometimes with their most ardent competitors. The largest company in the world, General Motors, created an alliance with its competitor Toyota; IBM did the same with Fujitsu. Benetton’s success comes from its cooperative relationships with its more than seven hundred small entrepreneurial subcontractors. Benetton concentrates on what it does best, buying raw materials, creating colors and marketing the clothes, while the suppliers do what they do best, making clothes; as Benetton grows, everyone benefits. Increasingly in today’s marketplace, a business’s ability to compete depends on its ability to cooperate.

Traditionally, negotiation had a “win-lose” quality to it; it was seen as just another form of warfare. Increasingly, however, people and organizations are searching for methods to arrive at solutions for mutual gain. In my work as a third party consultant, I have had many opportunities to witness hard-bitten union leaders and skeptical managers, for instance, gradually come to see that “mutual gains bargaining” can lead to tangibly better results than shouting at each other and seeking to defeat the other. “I remember the heartburn, the headaches, the sleepless nights,” says teachers’ union negotiator Arnie Klayman. “This way [mutual gains bargaining] is much less threatening.” Instead of trying to divide up an economic pie that is often shrinking with intensified global competition, management and labor seek to expand the pie through innovative ways to increase productivity and share the profits. “Getting along – that’s our competitive advantage,” one formerly skeptical union leader, Denny Morris of the Paperworkers Union, told me.

With the Knowledge Revolution, then, comes a revolution in decision making and dispute resolution. The pyramids of power are collapsing and taking their place are networks – networks of negotiation.

(Editor’s Note: This article is adapted from The Third Side by William Ury.)

© 2006 William Ury. All rights reserved.

comments powered by Disqus

Search the Resource Center

Stay Connected

Email Newsletter Signup

Want to get connected? Sign up to receive regular news, polls and updates from The Kauffman Foundation.

Email Newsletters

Want to be up-to-date with the latest news and updates from Entrepreneurship.org? To subscribe, just give us your email address below; you'll choose which e-newsletters you'd like to receive on the next screen.