Investigative Negotiation

The best way to get what you’re after in a negotiation—sometimes the only way—is to approach the situation the way a detective approaches a crime scene.

by

Deepak Malhotra

and

Max H. Bazerman

by

Deepak Malhotra

and

Max H. Bazerman

From the Magazine (September 2007)

Summary.

Reprint: R0709D

Negotiators often fail to achieve results because they channel too much effort into selling their own position and too little into understanding the other party’s perspective. To get the best deal—or, sometimes, any deal at all—negotiators need to think like detectives, digging for information about why the other side wants what it does. This investigative approach entails a mind-set and a methodology, say Harvard Business School professors Malhotra and Bazerman.

Inaccurate assumptions about the other side’s motivations can lead negotiators to propose solutions to the wrong problems, needlessly give away value, or derail deals altogether. Consider, for example, the pharmaceutical company that deadlocked with a supplier over the issue of exclusivity in an ingredient purchase. Believing it was a ploy to raise the price, the drugmaker upped its offer—unsuccessfully. In fact, the supplier was balking because a relative’s company needed a small amount of the ingredient to make a local product. Once the real motivation surfaced, a compromise quickly followed.

Understanding the other side’s motives and goals is the first principle of investigative negotiation. The second is to figure out what constraints the other party faces. Often when your counterpart’s behavior appears unreasonable, his hands are tied somehow, and you can reach agreement by helping overcome those limitations. The third is to view onerous demands as a window into what the other party prizes most—and use that information to create opportunities. The fourth is to look for common ground; even fierce competitors may have complementary interests that lead to creative agreements. Finally, if a deal appears lost, stay at the table and keep trying to learn more. Even if you don’t win, you can gain insights into a customer’s future needs, the interests of similar customers, or the strategies of competitors.

The Idea in Brief

You’ve just asked a supplier for exclusive rights to a new ingredient for a product you intend to market globally. He balks. You sweeten the deal by offering a higher price. But he still won’t budge.

You could assume the situation’s hopeless and walk away. However…you decide instead to ask why the supplier won’t provide exclusivity. He says another buyer needs a tiny amount of the ingredient for a locally sold product. You propose exclusivity with the exception of this small amount. The supplier agrees.

You’ve just practiced investigative negotiation, recommended by Malhotra and Bazerman. To be an effective negotiator, focus less on selling your position on the issue at hand. Instead, pose questions to uncover information about the other party’s constraints, interests, and priorities. Armed with that data, you’ll expand agreement options. And you’ll forge far more successful deals.

The Idea in Practice

Malhotra and Bazerman delineate five principles of investigative negotiation:

Ask why the other side wants what it wants. Don’t just discuss what your counterparts want; find out why they want it. By asking this question, you uncover a wider range of options for crafting a mutually satisfying deal.

Mitigate the other party’s constraints. Collaborating on solutions to other parties’ concerns can prevent their problems from becoming your problems once a deal is implemented. Example:

After a manufacturer had negotiated an order with a parts supplier that specified delivery within three months, the supplier seemed uneasy about the delivery deadline. Realizing that a delivery delay would cost her company $1 million, the manufacturer offered to accept a potential delay if the supplier dropped his price by that amount. He refused. She asked, “Why can’t you cheaply manufacture the parts in three months?” He said: “We can—but we can’t cheaply ship the order to arrive on time.” The manufacturer had favorable terms with a shipping company and offered to have it deliver the parts in 2.5 months. The supplier agreed to pay shipping costs and drop his price by $.5 million.

Interpret demands as opportunities. Consider what seemingly unreasonable demands suggest about the other party’s needs and interests. Example:

A builder and developer were negotiating a contract. When the developer demanded the builder pay large penalties if the project fell behind schedule, the builder speculated that the developer might value early completion. He proposed paying even higher penalties if the project was delayed but suggested the developer pay him a bonus if he finished ahead of schedule. They sealed the deal.

Create common ground with adversaries. Don’t assume that your industry competitors are always adversaries. Consider them as potential allies. Example:

In the 2000 U.S. presidential elections, Green Party candidate Ralph Nader entered the race, threatening to turn votes for him into votes for George W. Bush, and a loss for Democrat Al Gore. A small group of supporters from the Gore and Nader camps looked beyond their differences and realized that they were not, in fact, aiming for the same goal. Nader wanted to secure only enough votes to qualify his party for federal funds in the next election. Gore wanted to win the presidency. How could both parties benefit? A Gore supporter from a state where he was certain to win could “trade” his vote with a Nader supporter from a state where the Bush-Gore race was extremely tight. This way Nader would still get the popular vote he needed, and Gore would be more likely to win enough electoral votes. The supporters from the Gore and Nader camps set up websites to help voters from different states pair up and pledge to support each other’s candidate.

Investigate even if the deal seems lost. New information may help you save a seemingly unsuccessful negotiation. Example:

A manufacturing CEO learned a prospect had decided to purchase from a competitor. She asked the prospect’s VP why. He said the competitor, despite charging more, included product features he valued. She had assumed he cared mostly about price so had originally offered a bare-bones low-cost deal. She revised her offer to give him the best price and competition-beating features. Her prospect accepted.

Chris, a Fortune 500 executive, is known in his firm as a gifted negotiator who can break impossible deadlocks. Consider his performance in the following deal.

A version of this article appeared in the September 2007 issue of Harvard Business Review.

Deepak Malhotra is the Eli Goldston Professor of Business Administration at Harvard Business School and the author of Negotiating the Impossible.
Prof_Malhotra
MB

Max H. Bazerman is the Jesse Isidor Straus Professor of Business Administration at Harvard Business School and the author (with Don A. Moore) of Decision Leadership: Empowering Others to Make Better Choices (Yale University Press, 2022) and Better, Not Perfect: A Realist’s Guide to Maximum Sustainable Goodness (Harper Business, 2020).

Investigative Negotiation

The Idea in Brief

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