3-D Negotiation: Playing the Whole Game

Why didn’t those last deals work out the way you expected? You brilliantly followed all the rules in negotiation manuals: You built enormous goodwill. You demonstrated astute cultural sensitivity. And you unlocked hidden value for all parties. But you were still left empty-handed.

Like most of us, you may have waited too long to start negotiating. We’re trained to think that negotiation happens at the bargaining table—in the first dimension of interpersonal and process tactics—or at the drawing board—the second dimension, where the substance of the deal is hashed out. But by the time parties are sitting down to hammer out an agreement, most of the game has already been played.

That’s why savvy 3-D negotiators work behind the scenes, away from the table, both before and during negotiations to set (and reset) the bargaining table. They make sure that all the right parties are approached in the right order to deal with the right issues at the right time.

3-D moves help you engineer deals that would otherwise be out of tactical reach. Rather than playing the hand you’re dealt, you reshape the scope and sequence of the entire negotiation to your best advantage.

The Idea in Practice

In addition to skillfully handling tactical and substantive challenges, consider these guidelines to 3-D negotiation:

Scan Widely

Search beyond the existing deal on the table to find complementary capabilities and value that other players might add. Ask such questions as: Who, outside the existing deal, might most value aspects of it? Who might supply a piece missing from the current process? Who might minimize the costs of production or distribution?

This process will identify all the actual and potential parties and crucial relationships among them, such as who influences whom, who defers to whom, who owes what to whom. Example: 

When WebTV Networks was launching, founder Steve Perlman obtained seed funding, developed the technology, created a prototype, and hired his core team. But in order to turn the start-up into a self-sustaining company, he needed more capital and broader capabilities. So he identified potential partners in many fields: Internet service providers, content providers, consumer-electronics businesses, manufacturers, distributors.

Map Backward and Sequence

The logic of backward mapping is similar to project management: You begin with the end point and work back to the present to develop a critical path. In negotiation, the completed “project” is a set of agreements among a coalition of parties.

To start, identify what you’d ideally like to happen. Then, determine who must sign on to make your vision a reality. Often, approaching the most difficult—and most critical—partners first offers slim chances for a deal. Instead, figure out which partners you need to have on board before you initiate negotiations with your most crucial partners. Example: 

Even though WebTV badly needed capital, Perlman didn’t approach obvious investors immediately. He knew that VCs were skeptical of consumer electronics deals, so he mapped backward from his VC target. Since VCs would be more apt to fund his company if a prominent consumer electronics company were already on board, he first forged a deal with Phillips and then used that deal to sign up Sony, as well. When he finally approached VCs, he was able to negotiate new venture money at a higher valuation.

Manage Information Flow

How you tailor your message to each potential partner can dramatically alter the outcome of your negotiation. Timing is vital: Decide which stages of the negotiation process should be public, which private, and how much information from one stage you should convey at other stages.