Thursday, May 31, 2007

Position based Vs Interest based Negotiation

It is interesting to note that negotiation is a life skill which all of us practice which we do not attach much science to. Since the day we were born we've been negotiating and mind you we've been good at that. We learned craft when we want mother's milk and subsequently we mastered it where we use accomplish many things by simply crying for things.

A typical negotiation ends up on most occasions with a win loose situation. Each party "come to the table" with their own position. That sets the tone for the rest of the activity where in dog eat dog world each party tries to overwhelm the other. Rationale is simple. If I walk away with anything less from my original position I have lost something. I have compromised. So let me do what ever within my power to either defend my position at a minimum or may be get more than I want. Obviously this leads to win loose situation. Those who give in most will loose while those who gain will win. Position based negotiations on most occasions become personal matters. Let me share with you the story of the genie,

Once upon a time there was this man who was walking in the beach where he came across a different bottle. For curiosity the man opened up the lid and out came the 'genie'. After thanking the man genie volunteered provide the man with anything he wants as a gesture of goodwill. However it said that what ever the wish the man is granted with the neighbour will get double of that. First the man wanted a mountain of gold and then he realised his neighbour will get double of that amount. So he gave up the idea. Then he was thinking of a place for him to live but the idea of his neighbour having two he could not live with. He racked his brain profusely and finally said to the genie, "OK , take one eye of mine".

Sometimes the competition we have is against someone else for no reason. Who cares what your neighbour gets if you are way better off than you are. Whilst it is obvious when confronted with the situation our competitive nature tends to take over common sense.

Compromise is another popular misconception. There is a school of thought that both parties needs to compromise to arrive at a workable solution or a win win situation. But in actual terms a compromise leads to a loss of something either one party or both parties have originally wanted. Thus it is not a win win situation.

Better way of negotiating is the interest based. Rather than holding on to positions if you ask the question "why" you are at that position parties have the opportunity to transcend in to another level from where they are. The best way to mov from position based negotiation in to interest based negotiation is by asking the question why?
For example let us consider a scenario of two children a mother and an orange. The two girls were arguing that want the same orange. The positions are fairly clear. Each party wants the organge and they would go all out trying to get that. However as story goes mother decided to cut orange in half give both children. Ince she did this both girls went to the kitchen and one girl made juice out of the pulp and drank and threw away the peel while the other girl took the peel from her half and used it for marmaleade while trwoing away the pulp. At that point the mother realised had she asked why she could have made two oranges out of one and allowed each daughter to have a "complete" orange!


Ami Sampath said...

I found this post, while I was Googling for "position based and interest based negotiations", which is a topic covered in my MBA studies at PIM. And, this was a brilliant source of information for me to understand the two concepts. More than everything else, I'm happy to see that you too are a Sri Lankan :-)

Thanks for this masterpiece, and hope you'll continue blogging

Nirdesha said...

Okey, here is another student from MBA studies at PIM :)

I found this article really helpful. Thanks

Dassa Lessons said...

Good to hear it was useful for you both. Good luck with your MBAs

Shiham nawaz said...

And I shall third the PIM representation......

Good example though....

But i did find another similar example of 2 men fighting over an Orange. And both ended up making marmalade and orange juice with the halves they got.

check this link

Anonymous said...

Actually,good post. thx

Charith Jayasinghe said...

This helped a lot me and my group mates. I am also a PIM MBA student from 2011 batch.Thanks!