Thursday, January 08, 2004

The Devine Wisdom of Walt Jocketty
Secret #1 of Great Negotiation  

There's no better petri dish in which to observe & analyze negotiation strategies and outcomes than baseball. Last month, Ken Rosenthal of The Sporting News wrote a three-dot column that included three clarifying lessons about negotiation every manager should internalize. Today's entry includes discussion of the last of the three.

posits that plurality should not be implemented without necessity

In traditional business-speak, Jocketty's Razor is: Keep it simple, stupid.

Rosenthal noted in the piece:

Before acquiring OF J.D. Drew, the Braves thought they might need to involve a third team--perhaps the Angels--to satisfy the Cardinals' desire for a proven starter. Cardinals G.M. Walt Jocketty, however, says he and Braves G.M. John Schuerholz "are too old to do three-way deals."

Jocketty's Razor applied here is guideline for negotiations: When you're trying to get a negotiation done, don't involve other parties unless you need to. The likelihood of closing a deal to three parties' satisfaction (and deals don't get closed as often when each side is not satisfied) is one-third of what it is with two.

This is simple math. Put two big dots on a page. It only takes one line to connect each to each. Put three big dots on a page. It takes three lines to connect each to each. There are three times as many "relationships" among three as two. Make it four parties (yes, there have been baseball trades with four teams) and there are six "relationships". Every relationship adds possibility, for good and ill. In the case above, the Cardinals were really looking for a proven starter, and the Braves didn't have one they were willing to deal for what the Cardinals were willing to give up. A third party might have had a proven starter for the Cardinals, but then the Braves would have had to deliver something that the third party needed.

As baseball has become a higher cash-flow business, these deals get harder to do. On top of the strict needs and wants that would drive the trading decisions of, say, a fantasy team, real teams have many other complicating factors. There are salaries, contracts that change of their term, no-trade clauses, partial no-trade clauses, team luxury taxes and revenue sharing. I suggest to you that in at least half the deals done this off-season, the driving force was economic restructuring and that on-field baseball skill or chemistry was secondary to the financial weighting of the deal.

BEYOND BASEBALL -- Keep the Succotash on the Sideline

The same rule of serving many-sided relationships apply beyond baseball. Yes, there are benefits if the third party can come up with something one of the sides wants more than it can get from a second party and at the same time the third party wants something enough to take what the first or second party is willing to yield. But working it out generally costs more than the benefit.

Jocketty's Razor is a general rule, not an absolute, but it's still the first guideline of a successful negotiation: start with a focus on key things you want and key things you're willing to give in return, and keep the succotash on the sideline (that is, remember that side dishes are not main courses for most people).

So in a negotiation, how do you apply this? I have two basic approaches, based on two most-common types of negotiators. There are a lot more, but these are the most prevalent types in American business society.

Type A is a competitive, zero-sum negotiator. It's not just that he wants to win, he wants to feel like you lost, too. The feelings he gets from believing you got the short end of the stick is the joy he derives from the transaction. Every concession to a Type A on your part will reinforce their sense of power over you and make it less likely he will concede on something else and if you feed that Type A hunger, he will strive for total victory on every point. He believes, consciously or unconsciously that in every negotiation, someone is gonna get sc*ew*d, so it better be you, but it's parallel to bully mentality -- if you come out on top, he will usually consent to be the victim.

Type B is goal-focused. The joy she derives from the transaction is coming away with what she came to the table seeking at a price she considers worth it. Both the "seeking" and the "worth it" will evolve during the negotiation, especially if one or both of the parties have some sales skills. Concessions, horse-trading, favors, succotash swapping, all can be made to work if each side is patient and willing to consider what the other side considers "value".

With a Type A negotiator, I put the core issue on the table first. There's no point in making any concessions. Let the little stuff slide. If you end up with a deal that the Type A considers middle or to your advantage, you can drive your point down his throat on all the little ones, or agree to split the remainder, your call. I normally try to allow the Type A to save face in this situation by splitting the remainder unless he's really given me cause for anger.

With a Type B negotiator, I deal with the side issues first. The two sides get the experience of working things out, establishing trust that both want a win-win outcome, and experience both sides having some victories. Then, when we move on to the most important issue, we have more experience with and confidence in the other's point of view and style.

Even with that going for you, the more issues that are essential to your outcome, the less likely it is you'll resolve all of them to your satisfaction. The more parties you involve, the more relationships, the more difficult compound needs you need to feed. Sometimes it's inescapable (look at the interim government of Afghanistan with so many ethnic groups, religious rivalries, political ideologies -- nothing to be done about that complexity). But usually you can trim side issues from the central core of the negotiation.

So it behooves you to apply Jocketty's razor: fewer parties, fewer core issues, simplify, simplify, if you can.

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