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Related Experiment Videos

3-D negotiation. Playing the whole game.

David A Lax1, James K Sebenius

  • 1Harvard Business School, Boston, USA. lax@negotiate.com

Harvard Business Review
|November 19, 2003
PubMed
Summary

Negotiation success hinges on three dimensions: tactics, deal design, and setup. Executives often overlook the crucial "setup" dimension, which involves reshaping the negotiation

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Area of Science:

  • Business Strategy
  • Negotiation Theory

Background:

  • Executives often focus on negotiation tactics and deal design, neglecting the structural setup.
  • Traditional negotiation approaches concentrate on interactions and value creation within the deal itself.

Purpose of the Study:

  • To explore the underutilized third dimension of negotiation: setup.
  • To demonstrate how reshaping the negotiation's structure can lead to better outcomes.

Main Methods:

  • Analysis of negotiation dynamics across three dimensions: tactics, deal design, and setup.
  • Examination of how '3-D negotiators' strategically alter the negotiation's scope, sequence, and participants.
  • Case studies from business and foreign affairs illustrating 3-D negotiation tactics.

Main Results:

  • Effective negotiation requires mastering all three dimensions: tactics, deal design, and setup.
  • 3-D negotiators proactively reshape the negotiation environment, identify external value-creating elements, and manage information flow.
  • Strategic inclusion of new players and backward mapping from ideal resolutions are key 3-D tactics.

Conclusions:

  • Moving beyond the bargaining table to strategically design the negotiation setup is critical for long-term value creation and claiming.
  • Executives must adopt a holistic, three-dimensional approach to negotiation for optimal results.

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