Creative Conflict

A Practical Guide for Business Negotiators

Bill Sanders, Frank Mobus

• Publisher: Harvard Business Review Press
• Year: 2021
• ISBN:
  9781633699502
• Topic: Personal Development
• Subtopic: Negotiation

Negotiation is stuck—it's time for something new.

Almost everything is negotiable, almost every interaction a negotiation. And in no field is this clearer than in business, where every day we need to work with others to get things done. But when we have real differences, is a win-win always possible? Or must every negotiation be a zero-sum game, with a winner and a loser?

Over the last half century, these two opposing philosophies have ruled the field: the win-lose, tooth-and-nail battle plan identified with training guru Chester Karrass, and the win-win, "principled" creed of Getting to Yes, by Harvard's Roger Fisher and William Ury. Both were game changers in their day, but neither approach fully meets the challenges of today's volatile, disruptive, ultracompetitive business environment, where strategic problem-solving is a crucial skill, and time is of the essence.

In Creative Conflict, negotiation experts Bill Sanders and Frank Mobus provide something new. They use a dynamic, dialectical approach to show that negotiations are driven by competition and cooperation at the same time, counterintuitively revealing that conflict is at the core of every negotiation. When we tiptoe around conflict, we negotiate in a half-hearted way that limits our results. Creative negotiators probe and push until they hit a wall of disagreement, then figure out how to get past it. The authors construct a simple framework based on three basic but distinct contexts: bargaining, dealmaking, and relationship building. They then instruct readers on how to skillfully pursue their own interests while simultaneously seeking ways to expand a deal's scope and value for both sides.

Based on the popular Mobus Creative Negotiating seminars and the authors' experience working with Fortune 500 companies, Creative Conflict is a business book written for businesspeople, by businesspeople. It's your go-to guide for boosting your skills and confidence as a negotiator—and learning to strike a better deal.

Part One

THE THIRD WAY

1

Negotiating a New Era

There was a time, not so long ago, when business negotiators followed a simple, linear roadmap. Their job wasn’t always easy, but it was reasonably straightforward. Contracts were more or less uniform. Criteria were pretty much standard, with pricing first, second, and third. But that was then. In this more complex dealmaking era, we’re no longer comparing apples to apples. Modern buyers are eyeing Honeycrisps and Braeburns versus the latest Fuji–Golden Delicious hybrid, and asking themselves: Exactly what kind of apple do we need? And a seller might inquire: Is it for eating or baking or juice? Do you want acidity or sweetness? How many days of shelf life? And what about bruising? A thousand things need to be hashed out, and most of them aren’t tied to dollar signs.

The art of negotiating is at a watershed. Over the last half-century, two polar philosophies have ruled the field: the win-lose combat taught by training wizard Chester Karrass, and the win-win creed of the mega-bestselling Getting to Yes. Both were leaps in their day. But neither fully meets the test of our volatile, disruptive, ultracompetitive world. In a time where problem-solving and problem-finding are of the essence, the old rules go out the window.

In short, it’s time for something new. We wrote this book to show how negotiating is driven by competition and cooperation, often at the same time. It’s a two-sided dance, and the choreography evolves as you move along. Creative business negotiating feeds on agility and invention. It flourishes with an openness to new ideas, no matter their source. Creative negotiators strive to expand a deal’s scope while also pursuing a bigger portion of the pie. They push until they hit a wall of disagreement, and then they figure out how to get over it or through it or around it. They accept conflict as inevitable, and so it doesn’t faze them. The less comfortable the dynamic, the greater the potential rewards.

When we tiptoe around our differences, we negotiate in a half-hearted way and get limited results. We won’t find new opportunities by meekly deferring to the other side—or, on the other extreme, by steamrolling them into submission. Nor will we get there by sprinting to split the difference and be done with it. As the tale of Starbucks and United Airlines will illustrate in chapter 8, the best negotiators bring an appetite for contention, an eagerness to solve problems, and a willingness to persist and work the process as far as it can go.

Creative negotiators aren’t easy marks—far from it. They exercise due diligence. If they run into deception or confrontational caveman tactics, they’ll pull back to shield their organization’s interests. But they also stand ready—when warranted—to shed their skepticism and meet the other party halfway, or maybe a little further. Step by calibrated step, taking smart and measured risks, they endeavor to build a more lasting, rewarding, comprehensive deal. Even at that point, however, they take nothing and no one for granted. They’ll continue to monitor the other side’s performance and weigh the deal’s ever-shifting benefits against its costs. They know that negotiations continue long after a contract’s ink has dried.

Creative Conflict is a practical user’s guide that rests on two tentpole propositions. First, we’ll show how the spectrum of business relationships demands a range of negotiating approaches. A one-and-done haggle relies upon a very different skill set than a long-term strategic alliance—the organizing principle of the Mobus Negotiating Continuum, to be addressed in our next chapter. Second, we’ll explain why basic bargaining techniques, by themselves, won’t guarantee success. Tactical proficiency is still necessary, but it’s no longer sufficient; rules and tools are useless if we can’t deploy them when it counts. Creative negotiators are attuned to their mental model, the lens through which they interpret events and relate to others. They guard against their weaknesses while capitalizing on their strengths. They control their emotions and keep their eyes on the prize: a bigger and better all-around deal for both sides.

With these two building blocks in place, you’ll have the foundation you need to make the most out of any negotiation, whether it’s a buy-sell transaction or an agreement to be navigated within your own organization.

Customized Competition

Through much of the twentieth century, the US economy was organized around standardized products for a generalized marketplace. Henry Ford liked to boast that you could buy a Model T in any color you wanted—as long as it was black. When Ford or General Motors needed paint or sparkplugs or tires, they issued a set of uniform specs for any suppliers who could meet them. Other industry leaders—DuPont, U.S. Steel, IBM—followed suit. Bidders were pitted one against the other, dragged down to their bottom line. In a page out of Thomas Hobbes, business-to-business negotiating was nasty, brutish, and short. The game was mechanical and impersonal, and rigged in the largest buyers’ favor.

But no longer. In the information economy, commodities are mostly the province of low-wage countries. To survive the global meatgrinder, sellers have customized to the nth degree. Distinctive products and services build greater loyalty among end users—begetting tighter requirements on the buyer’s side, and a narrower supply base. Deals are more complex and executed over longer periods. They’re more likely to include issues that can’t be fully factored into the initial terms. A negotiation over a design-build construction project or a byzantine outsourcing arrangement has more moving parts than an order for x grosses of felt tip pens.

Standardization is passé. Where young people once chose between Keds and PF Flyers, Nike now sells literally thousands of models of sneakers. Supply chains rely on customized inputs for parts, machinery, even outsourced production. The lowly sparkplug has evolved into a marvel of customization, geared to a gamut of compression ratios, chamber temperatures, timing specifications, firing gaps, and so on. The imperative to be unique inspires far-flung, exclusive associations. A Chevy Le Mans might be designed by one team in Italy, engineered by another in Germany, and manufactured by a third in Sweden or Japan.

Our point is that customized production has changed how we negotiate. Yesterday’s purchasing heads are now “sourcing directors” or retail “category managers.” It’s no longer enough to solicit three bids and pick the lowest price. Now they’re on the hook to develop strategic sourcing initiatives to boost quality and simultaneously drive down costs. New-era buyers begin by hunting for reliable suppliers with a track record of continuous improvement. When they find one, the ensuing parley goes lightyears beyond the price haggles of old. It’s a mercurial climate, and companies often enter negotiations flying blind. The software that seemed ideal may in fact be suboptimal. An alternate version with extra features just might catapult your business to a whole new level—but only if you ask the right question. Dealmaking is no long linear. It’s less about setting rigid criteria and more about exploring the realm of unknown possibilities.

Creative negotiators come armed with a diverse skill set, an agile mindset, a creative and collaborative outlook. They need to be detectives, debaters, strategic thinkers—even students of behavioral economics. They’re expected to perform at a higher level than ever before.

The stakes are higher, too. Fierce offshore competition has narrowed everyone’s margin of error. It’s no longer enough to do everything right in product development, marketing, and production. If a company fails to harvest its good work at the bargaining table, those hard-won advantages drain away. Getting a better price is not just about beating the seller out of a few extra bucks to look good to your boss—it’s a matter of survival. If the seller has flexibility, and your cost of acquisition is inflated, your company could find itself at a critical disadvantage to a competitor with a more aggressive purchasing team.

In business, as in life, much of your success depends on the agreements you make. Creative negotiating can have an outsize impact on individual careers, team performance, bottom-line results, and an organization’s future:

• Salespeople close more profitable deals and build customer loyalty.
• Supply chain managers make better buys, generate savings, and strengthen vendor relations.
• Project managers run smoother, more profitable projects, delivering on time and under budget.
• Senior leaders enlist stronger commitment to milestones and objectives, promoting enhanced team member performance.
• Success breeds success—as performance improves, confidence and satisfaction soar.

Threats and Transformation

How else has negotiating changed? Let us count the ways:

1. Price is no longer king. At a recent seminar with a top metrology company (the people who measure auto parts with super-fine engineering tolerances), a salesperson told us, “We’re the highest-priced firm out there. If we go out and just sell our product, we’re dead—we won’t make any sales. We’ve got to be selling solutions.” Then there was the client we’d assumed was a coal company, until they corrected us: “We’re an energy solutions provider.” The best price is no longer a deal’s sine qua non. It makes little sense to get a rock-bottom number for software if you end up paying through the nose for training and customizing, plus next year’s indispensable upgrade.
2. Nearly everything’s on the table. There’s vastly more headroom for both sides—more flexible pricing, and far more opportunities to expand a deal. In the digital age, the cost curve of specialized products has plummeted. Which capabilities does the customer want optimized? How much technical support will be included? When every contract is a la carte, there’s far more potential for creative problem-solving.
3. Collaborative dealmaking is in vogue. Newtonian physics seemed to work just fine until Rutherford and Einstein discovered subatomic particles: enter quantum mechanics. In contemporary business dealings, as negotiators delve more deeply into the finer details, the limitations of haggling have grown more apparent. It might se...