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5

Trading Items of Unequal Value

A few years ago, a paper industry executive told me about a multimillion-dollar deal that he just couldn’t close.

“We thought and thought about the deal and the customer, and tried to figure out what they wanted,” said the executive, Larry Stillman, who is now an entrepreneur in Utah. “We finally figured out what it was. It was four basketball tickets.” Tickets to the finals of the National Basketball Association, but tickets nonetheless.

To the customer, this was just the kind of validation it wanted: that its vendor would do almost anything to make its customers happy. As a result, Larry’s company got a paper supply contract worth millions of dollars.

Larry discovered something that day that few people practice and even fewer understand enough to use consciously, consistently, and successfully. It is the notion of trading items of unequal value. All parties value things differently, and often unequally. Once you find out what they are, you can trade them. In the process, you will get what you consider valuable things for yourself. In exchange, you can give up things that have relatively little value to you.

Trading items of unequal value will cause the overall number or value of items in the negotiation to rise, making more available for all. The other party will become less price-sensitive, the relationship will get better, trust will be higher, and your own value to the other party will increase—whether in business or personal life.

Some people call this “expanding the pie.” Others label it “win-win.” Still others call it “interest-based negotiation.” Others describe it as “collaboration.” But none of these catchphrases really captures the mechanism you need to understand in order to use this powerful tool with confidence and consistency. None of these phrases tells you how to do it.

“Trading items of unequal value” tells you what you have to do. First you have to find the pictures in their heads. Then you have to find the pictures in yours. You find out which ones don’t cost one side much but are valuable to the other side. Then you trade them.

The pictures in their heads don’t have to be in the deal itself. They can be from anywhere. In fact, the more you look at the whole world as your potential resource base, the easier it will be to find something the other side wants.

The CEO of a major company in Philadelphia once said that the most important thing he ever did for his most important business client in a twenty-year business relationship was to pick up the client CEO’s mother-in-law at the Philadelphia airport one Saturday night. His action had nothing to do with any deal. But it affected every deal forever after.

As with many of the tools in this book, trading items of unequal value may seem counterintuitive. But the more you practice with it, the more you will see how effective it is.

HOW IT WORKS

In 2000, I taught a two-day negotiation workshop in London for the forty senior mergers and acquisitions (M&A) executives for Tyco International. At that time, Tyco was the world’s most acquisitive company. It was buying an average of a company a day.

One of the executives, Matt Rogers, who was Tyco’s head of M&A, took to heart the concept of trading items of unequal value. The next week he persuaded a British company that wanted to sell Tyco a subsidiary for 3 million pounds (about $6 million U.S.) to instead pay Tyco to take the company off its hands.

Here’s how it happened. The British company’s major condition was that it had to unload the subsidiary within three weeks. By asking questions of the company and others associated with it, Matthew found out that the subsidiary, a closed-circuit TV installation and maintenance business, was losing a lot of money. In fact, its parent company would violate its bank agreements on debt if the subsidiary wasn’t divested in three weeks. “The entire enterprise, worth at least thirty million pounds,” was in jeopardy, Matt said.

So Tyco offered to take the subsidiary off the British company’s hands within three weeks if Tyco got the subsidiary for nothing. Tyco would save 3 million pounds (cost of company), and the British company would save at least 27 million pounds (savings from not losing its bank credit and going under). Matthew promised that Tyco would drop everything if need be to do the deal.

At the last moment, the British company agreed to pay Tyco 60,000 pounds for Tyco’s “administrative costs,” including, of course, dinners at fancy restaurants. That is how Tyco was paid to take a subsidiary off another company’s hands. In essence, Tyco offered to trade the ability to fast-track the sale for a reduction in the sale price from three million pounds down to zero. The British company gave up 3 million pounds instead of its whole company worth 30 million pounds (net savings, 27 million pounds).

“Trading items like this has been part of my negotiation tool kit ever since,” said Matthew, now M&A head of H Control, a cable TV and Internet company based in Miami.

This was terrific; the trade doesn’t need to involve a very big thing. We are all familiar with the positive effect of buying a single flower for a loved one, or bringing back something unusual and inexpensive from a trip. It’s not the monetary value of the gift you are providing that matters much of the time. You are providing respect, friendship, love, and the value of your time. You are valuing the other person. In return, they love you more. And this, as they say, is priceless.

Throughout the book there are examples of ordinary people trading items of unequal value: You do the wash on Monday and I’ll do the shopping on Tuesday. You take the kids on Wednesday and I’ll take them on Thursday. This chapter is designed to give you a structure around which you can do this in a more conscious, effective, and profitable way.

Even in business, the thing you trade can be very small, in return for a big benefit (say, getting their account). I often ask executives questions like this: On Monday, you deliver a truck filled with your products to a customer, and they pay a price for it. On Tuesday, you deliver a truck of exactly the same products to the same customer, and they pay the same price for it. In addition, however, on Tuesday you give the customer’s purchasing manager the name—the name only—of a good, inexpensive hotel in the Caribbean for a second honeymoon for him and his spouse. Have you delivered the same product on Tuesday as Monday?

Of course not! You will have increased the value of your customer’s life on Tuesday relative to Monday. Marginally, for sure. But marginally is often all that is needed to succeed in a highly competitive world.

Think of your counterparts as the repository of a billion synapses. Some are in the deal, many not in the deal. The more of those synapses you light up, the less price-sensitive they will be, the better the relationship, the more value in the deal. Some of my clients like the fact that I teach at a university. I provide them and their kids advice on how to improve college entrance applications.

This process is very different from the “interest-based negotiation” that has been a staple of business in recent years. The “interests” usually refer to the proximate reasons why people want things they are asking for: if the bank gives me a lower interest rate on my purchase of a house, I will transfer my accounts there. Or, if you let me watch football with you on your new HDTV, I’ll bring the snacks.

This is good, and you should find as many such trades as you can. But Getting More is much broader. The “interests” or “needs” to be traded can be anything, including respect or help with one’s home computer system: in the deal, outside the deal, rational, irrational, explicit, implicit, long-term, short-term, verbal, nonverbal, big, small.

If I get you some consulting business or let you use my box seats at the sports stadium, you will let me borrow your fancy car. If the bank gives me lower interest to buy a house, I will be the cook at the bank’s annual picnic, using my culinary skills. If I can watch football on your HDTV, I will mow your lawn all summer with my tractor, saving you landscaping costs.

The entire world is at your disposal to get an agreement. You are not constrained by the negotiation subject itself. The chance of Getting More is greater. People want a lot of things in life. The more you find out what they need, the more of it you can use to trade.

Some of my course participants have sought refunds, lower interest, or lower fees from credit card companies because of customer loyalty. When the credit card rep was not able to do that, the participants asked what else could be done that didn’t involve money. The reps then offered double, triple, or quadruple the value of the requested monetary item, by providing frequent flier miles or other benefits almost as usable as cash.

A company may be able to offer its clients travel discounts or office supply discounts through the company’s superior contacts or buying system.

This can enable a company to hold the line on pricing during a discounting cycle: the clients essentially got the “discount” by saving money on travel or supplies.

When you focus on the other party’s needs, you can move a long way from seeing money as the most important part of the deal. The intangibles will substitute for high money requests. Prashant Desai was trying to hire a live-in nanny for his family. A single father had offered the nanny twice the salary that Prashant could afford to pay. So Prashant, a Pittsburgh computer networking expert, invited the nanny over to chat.

He found out she was a single mother and was trying to find local medical care for her son, who had recovered from blood cancer. It was her first job. “I showed genuine care,” Prashant said. “I informed her that my wife is a physician and my father owns a pathology lab. I communicated our philosophy of the nanny being an extension of our family.” He noted the family’s informal lifestyle and support structure. He also showed her comparable nanny salaries demonstrating she would not be underpaid. The nanny took the job with Prashant’s family at half of the competing offer.

“Getting past the salary and knowing her was key,” Prashant said. “In the past, I would not have pursued this deal.” Course tools helped him succeed, he said.

INTANGIBLES

A key driver behind trading items of unequal value is “intangibles.” That is, things besides money that have a value to others. In business deals, for example, the parties often wind up with pretty similar monetary valuations. What usually seals the deal for one party are the things offered other than money—the intangibles—that make the overall package more valuable to the other party. It is often something of small value to one party, but which exactly fits the dream (or fear) of the other party.

Janice Brue of GATX, the big aircraft leasing company in San Francisco, needed to get back a bunch of airline seats it was owed by Air Canada. But it was getting hung up by bureaucracy. Finally, Janice found the right item to trade: a round of golf at Pebble Beach. It was easy for her to arrange, and the executives at Air Canada appreciated the offer.

As you will see later in this book, trading things of unequal value works wonderfully with children. Children trade intangibles all the time: my baseball card for your marble; my doll for your stuffed animal. While the underlying item is tangible, the intangible component is the special attachment that someone has to a specific item. Sometimes the attachment is quantifiable, but often it is not.

For example, a specific item to be sold might be a cookie. If it’s an ordinary cookie, you might pay $3 for it. But if it’s an oatmeal cookie that prompts fond memories of your grandmother’s cookies and the smell of cinnamon, you might pay $5 for essentially the same cookie. The intangible value is $2 to you.

The human economic system started by trading items of unequal value: you have too much meat, I have too much bread, we trade. Money was aimed at standardizing things. But it can never replace the very specific intangible that you might provide them, something perhaps they alone value.

Debbie Simoncini-Rosenfeld, vice president of an insurance company, was trying to deal with her eight-year-old daughter, Jessica, “screaming and yelling” to stay up later than her 8:30 bedtime. Her daughter wanted to read later at night. So Debbie traded her daughter a 9:30 P.M. bedtime in exchange for no bare-belly shirts at school and no riding her bike in the street. Debbie valued her daughter’s decorum and safety more than a later bedtime; her daughter valued a later bedtime more than decorum and safety. “Children like to be involved in making the rules,” Debbie said. “If they get something, they will give up something.” Nobuko Aoki, one of my former students and now at a leading U.S. computer company, was managing a joint venture with a Japanese company. At first, both companies insisted on owning 51 percent. But by closer questioning, Nobuko, now a finance manager, found out that the Japanese company would accept 49 percent if the U.S. company kept the Japanese employees.

Trading items of unequal value has more universal application in business than one might think at first. The legal system’s business judgment rule, which governs most mergers and acquisitions worldwide, says that if you are a company director, you do not have to take the highest stock price offered by a buyer for that company. You can take a lower stock price offer if, in your reasonable business judgment, the lower-priced offer, plus the value of intangibles, makes long-term shareholder value higher.

It used to be that the courts made the directors, particularly of public companies, take the highest price per share offered for the company. The theory was that the directors must get the highest price they could. Even in nonpublic companies, shareholders often sued to force the directors to take the highest price.

In recent years, however, the courts have come to realize that intangibles such as the company brand, the skill of employees, and company reputation may be very valuable. Buyers who offered to protect these intangible assets in some way were sometimes allowed to buy the company, instead of buyers with higher, all-cash offers.

There has been an effort to quantify intangibles. Some years ago it was estimated that the value of United Airlines’ brand was worth 3 cents per seat-mile, or $90 per passenger on a 3,000-mile trip. This is a vast amount of extra value. Coca-Cola’s brand has been valued at $84 billion; two-thirds of Kellogg’s stock value has been attributed to its brand. If you save a counterpart in a negotiation an hour, a week, or freedom from care, or worry about risk—what could that be worth? If you start thinking like that, a whole set of new options will open up to you.

Don’t expect the other parties to think up these things. Often, you will need to do the work for them. They won’t know how to add the value.

Clearly, there are some situations where it is unethical to provide certain kinds of intangibles to people: gifts to doctors by pharmaceutical companies; bribes or favors for government employees. Trading items of unequal value is not intended to encourage illegal or unethical behavior. You need to find an intangible that is legal. And since there are so many intangibles, this is not difficult. A computer expert at one major company got a new client by helping a prospect’s daughter with her computer on a Saturday.

The network acquisitions manager at a large technology company saved hundreds of millions of dollars for his company by getting a more than 90 percent reduction on cable prices. The vendor needed to finance another deal. The big technology company helped them with the financing in return for their extra inventory at low prices.

Eric Schwartz, vice president for law at Johnson & Johnson, was able to persuade his company to develop an artificial pancreas for diabetics not on the basis of the economics, which were uncertain. A partnership with the Juvenile Diabetes Research Foundation improved the rapport with the U.S. Food & Drug Administration, and the positive publicity and the consistency with the company’s credo were intangibles that more than carried the day.

Now, you might think, “He’s asking us to think outside the box.” I’m not. I’m saying, “There is no box.” There is only your ability to be creative, to think broadly about goals, needs, and the pictures in the heads of the other parties. In fact, the more broadly you think about needs that are not part of the deal, the more you can add value to the deal by making the entire pie larger.

NEEDS

Many negotiators like to talk about “interests.” People often have a hard time figuring out what it means. How does it differ from goals? Well, “goals” refers to what you want at the end of the process. In most negotiations I have one goal, and I have various needs that the goal would satisfy—that is, various reasons why I want this goal.

Let’s say you want a salary increase but the company can’t give you one. Your real goal should be to afford a better life. So maybe the company instead can cosign a loan that will get you a better house for a lower monthly payment. Or the company can give you more vacation time so you can do some outside consulting. Or it can provide you with a cheaper way to take that dream vacation. The more that the company knows about your underlying needs, the more of those needs it can fulfill.

Another issue is that “interests” has generally presumed a certain rationality. Most people assume that the parties can have a rational discussion about the benefits they want. Truth is, the world is full of irrational people. The world cannot be made rational, despite efforts by many well-meaning people to make it so. People get angry, adoring, fearful. I’d like to make them rational and calm, but I live in the real world, as do you.

So, to meet people’s intangible needs and make the pie larger, you need to know the emotional and irrational needs of others, too. These may include fears like being alone, having an office on a high floor, or bugs of any kind. They may include dreams like baseball camp with the pros or a seminar on fishing. We ask people in our courses for their dreams and fears. We get dreams like travel, sailing, owning a restaurant, running a marathon, and running a company. We get fears like snakes, crowds, public speaking, flying, and heights.

If you know that the other party likes travel, you can use it in a conversation to break the ice or offer them something you know about the subject. If you know a prospective employee fears heights, you can offer an office on the ground floor. And the employee will trade something for it.

The point is, the more you find out about the other party, the more persuasive you will become in the negotiation. You expand the pie, meet your goals, find options, trade items of unequal value.

Take the case of family-owned businesses. More than 90 percent of all businesses in the world are owned by families. At least two-thirds of the gross national product of developed countries comes from family-owned businesses, as well as two-thirds of employment. The numbers are higher in developing countries. The world of The Wall Street Journal, that of widely held public companies, is not where most people spend their time.

In the world where most people spend their time, intangibles are much more important than most people think. In many family-owned-business deals, the founder and builder of the company often asks an outrageous price to sell his company. But, probing deeper, you might find that what he really often wants are intangibles. He wants respect; he wants to keep the brand name; he wants to have his picture prominently displayed in the lobby of the building; he wants to get a summer job for his niece, or be appointed emeritus on the board. In other words, he will accept a lower price plus intangibles.

Missing these cues makes you less likely to make a deal. In much of business, money is not the most important item of importance to either side, regardless of what they say. The price has to be reasonable, but so much more is required.

Intangibles can bridge the gap between seemingly inflexible positions. Geoffrey Dubus’s wife wanted him to kill the two mice that sometimes ran around their apartment. “They transmit diseases,” she said. Geoff, a venture capitalist in Paris, didn’t mind the mice. He thought of them as “inoffensive living animals.” Whatever you think about their positions, the real need of Geoffrey’s wife was not to kill the mice. It was to not have them in her apartment. So Geoff found the holes where the mice entered their apartment and plastered them up. Everyone was happy: Geoffrey, wife, and the mice.

Rosemary Ford, then a Penn Law student, had given her five-year-old daughter a department store fashion catalogue that Rosemary was finished reading. By and by Rosemary decided she wanted the catalogue back to copy a design from the cover for a craft project. So she asked her daughter, Cordelia, to give her back the catalogue, but Cordelia refused. She hid the catalogue. “It’s my magazine, Mommy, you gave it to me.” Instead of getting angry or annoyed, Rosemary tried to find out her daughter’s intangible needs in wanting the magazine. “Why do you want the magazine?” Rosemary asked. “To look at all the pretty pictures inside,” Cordelia responded.

So Rosemary, now an attorney in Philadelphia, said, “Well, Mommy wants to copy a design from the cover. Why don’t you get the magazine, give Mommy the cover, and keep all the pretty pictures inside?” Cordelia got the catalogue, carefully tore off the cover, gave the cover to her mother, and kept the rest of the catalogue. Whereupon Rosemary explained to her daughter the principle of trading items of unequal value.

Rosemary’s five-year-old daughter thought this was so cool that she spent the next week telling everyone she could think of about this: friends, family, neighbors. And finding items of unequal value herself to trade. This is an example of how a mother made her daughter a better negotiator and improved their relationship. If you want to have better negotiations, don’t hide the process from your counterparts. Tell them about it.

GETTING THE INFORMATION

What if the other side won’t tell you what they want? Not everyone is as forthcoming as you would like. Some people are scared, some are reticent, and some just don’t know. What you do is guess. If you guess right, you will usually get the information you need. You will likely improve the relationship and the chance of a deal. If you guess wrong, they will often tell you so and give you information about their needs. Either way, you get more.

Again, nothing is perfect. The point is, if you do all of this, you will be more successful—you will get more.

For every important meeting you attend, find out as much about the individuals at the meeting as you can. This goes for a job interview, a meeting at work, a conference call. Do research before the meeting. Ask people.

I tell my students to find out before an interview exactly who is interviewing them. Research the interviewer. What has he or she written? What are their likes and dislikes? What about the firm? What have been its biggest successes and biggest concerns? By the time a company has decided to interview you, it probably thinks you can do the job. The rest is intangibles: fit, motivation, loyalty, interest in the company. They are already mentally putting you in the company and thinking, how would this person react as an employee?

One student was in his final interview at an investment bank. He researched the managing director, but when he arrived at the investment bank, the bank had changed interviewers because of scheduling issues. He was escorted into the office of another managing director, about whom the student knew nothing.

As the student was being introduced, he looked around the office casually to establish some point of connection. He saw a small picture in a frame on a stand behind the managing director’s desk. It looked like a picture of the director and two of his kids standing in front of a sailboat.

So the student asked the director if that was a picture of him and his children. It was, the director replied. Whereupon the two started talking about sailing. The student didn’t know much about sailing, but he didn’t need to. He asked, “Do you sail a lot? Where do you sail? Do you race, or do you just sail recreationally? How would someone learn about sailing?” And so forth.

The two then spent forty minutes talking about all sorts of subjects—sailing, other sports, travel, food. Not once did any business subject come up. At the end of the forty minutes, the managing director offered the student a job. Did they have a business discussion?

Of course they did! What business information did the director learn about the applicant in the course of having a forty-minute discussion about nonbusiness subjects? Well, the director learned that the student was a great listener. Curious. Perceptive. Interested and interesting. Would probably be great with clients. Can think on his feet. Someone the director wouldn’t mind working all night with. Terrific people person, good for sales.

By the time you have a final interview at an employer, they are already sure you can do the job. It is not your hard skills they are looking for, but your soft skills. The intangibles.

Getting the information on what they value had particular significance for Mike Leskinen, a mutual fund principal in New York. He said his mother lived on some land the family owned in Pennsylvania and received $500 a month from a company that had built a cell phone tower there. Eventually the company needed to get a permanent easement and offered his mom $80,000. He and his mother thought they’d be thrilled with $120,000 as negotiations began.

Mike consulted course tools. “I tried to figure out what this was worth to them, not just to me,” he said. “I did research on the Internet. I thought about the pictures in their head,” including moving the tower. After doing all that, he called the company. They paid his family $750,000. But he wasn’t greedy; the value was up to $1.2 million, he said.

EXPANDING THE PIE

The information you collect from others gives you the ability to better meet your goals and fulfill your needs. Remember, it is not about gaining power at the expense of others. Your having more power doesn’t mean less power for the other person. The pie is expanded. It is like the development of new technology. While certain kinds of jobs are lost, overall both employment and prosperity almost always increase.

If you know the other person’s needs or interests (broadly), you can also deal more effectively with hard bargainers. Let’s say you have figured out how to expand the pie: include more in the deal than originally thought. They, on the other hand, keep insisting you take a lower price if you’re the seller, or pay more if you’re the buyer. They don’t want to talk about anything collaborative.

So you say, “You don’t want to talk about the much greater value in this deal? The greater profit for you? Our paying you more money? If you don’t want to talk about this, is there someone else in your organization—a business development person perhaps—who will talk to me about the larger profit available here that you are not asking about?” They wouldn’t dare turn down a discussion on that subject. They could get fired if a higher decision-maker in their company found out about it. You own this negotiation. So whether the other party is a hard bargainer or soft bargainer, there are tools for both. With collaborators, expand the pie together. With hard bargainers, offer to show third parties how the pie can be expanded.

Counterparts in negotiations have said to me things like, “I want $100,000!” To which I have replied, “Why not $200,000? Why not $300,000?” And they’ve responded, “What?!” And I’ve said, “Well, we don’t even know what’s in the deal yet. How do you know I won’t pay you more? I need to know first, what’s in the deal? When I know all of your interests, all of your needs, I can make a proposal.” For example, there may be cross-selling opportunities, there may be potential operational synergies (from back offices to travel). So let’s address needs and intangibles first, and make proposals later. When they say, “What’s your proposal?” you should say, “I don’t know, what’s in the deal?” Others are not going to know how to do this. You’re going to have to help them at first. The more they understand the process of expanding the pie by trading items of unequal value, the easier the negotiations you will have with them. Clever clients have even brought their own customers to my workshops. The result was much better deals among all parties.

One of the more remarkable business success stories of expanding the pie involves Brad Oberwager, the founder and CEO of Sundia Corporation of Oakland, California, producer of high-quality fruit cups. Brad, who took my course about fifteen years ago, has raised trading items of unequal value to a high art.

Several years ago he approached ten of the twenty largest watermelon growers in North America. He offered them part of his planned fruit cup business if they would simply let him put “Sundia” stickers on the watermelons they sold in stores. It cost the growers nothing. For two years store owners saw the stickers. Then, one day, Brad, with the growers’ support, started making sales calls to the stores. He offered a fruit cup with higher value added than the brand they had come to know. “Overnight we represented thirty-two percent of the market,” he said.

He said he has reduced overall his business strategy to one question he learned in class: “What costs you nothing that gives me what I want, and what costs me nothing that gives you what you want?” He added that he discloses a lot of information, is transparent about his plans, and over-prepares. “Being smart is not what makes you a good negotiator,” he said. “You are a good negotiator because you can see the future. And that comes from preparation.” LINKAGES

A key memory aid to think about in all of this is linkages. You link things together that are not necessarily related: they may be inside the deal or outside the deal. You can link them by issues, time, or other parameters: if you do this for me now, I’ll do something for you later.

Why do families fight over where they are going to go on vacation this year? Unless you are all going to die this year, there is next year. There is also, for this year, not just where you go but what you do when you get there, how you get there, what you eat, how much you spend—all sorts of things to trade. And there are things outside the deal that you can trade, too.

If you think more broadly about the things you can trade off, you will make your relationships better. Things that seemed completely inflexible and difficult suddenly will become easier. That means if you really have to have the Corvette, then your wife should get something for her hobby, too. If he helps with the gardening, she doesn’t complain when he watches football. She decorates the living room, he decorates the garage. He plays cards with his buddies; she has a “girls’ night out.” We do negotiation clinics at school. A student with a negotiation problem sits in front of the class and has to negotiate each side, successively, with me and other students, as we all offer ideas on how the negotiation can be improved. At one point, we had two people in the class who were engaged to each other, and of course this raised all sorts of interesting negotiation issues.

For one thing, the male student had a job offer in New York City, while his fiancée had a job offer in Los Angeles. They had argued for months about where they were going to live and which one of them was going to give up a hard-won job. So we put them together to negotiate with each other in front of the class. She hated New York and he hated Los Angeles, where he was born. Her job in Los Angeles was much better than his in New York. The economy had just turned sour; there were many fewer investment banking jobs in Los Angeles for him than in New York.

The class gave various pieces of advice to the students, using course tools. Finally, the male student said, “I’ll be glad to move to Los Angeles, without a job, and look for a job, as long as I can (a) set up and make every decision regarding the wedding, (b) pick the honeymoon location, and (c) pick where we are going to go on vacation for the next ten years.” The underlying question he was raising, of course, was, “What are you willing to trade for me to be jobless?”

His fiancée thought about this for less than a minute. Then, she said, “I’ll stay in New York if I don’t have to work.”

Suddenly, the whole negotiation had changed. It was clear that she had an intangible need that they had never discussed in all their months of haggling. Her future husband had thought there was nothing he could do to get his wife to stay in New York City. But working wasn’t as important to her as it was to him, or as he had thought it was.

We didn’t need to finish the negotiation for them in class. We had reestablished a meaningful negotiation for them. They would be able to reach an agreement in private.

Even in the most hostile situation, you can try to expand the pie. And you will be able to do it at least some of the time. In other words, you’ll get more. If the other person says, “I’m going to wreck your business,” your next comment should be, “Okay, but can we make more money in some other way?” Such a response seems counterintuitive, but it works.

I co-own and head a small cargo airline in the Caribbean, which operates from various properties—warehouses, hangars, offices.

A company named IvyPort had been leaving its ground handling equipment—belt loaders, tugs, trucks—on one of our properties for months. Our people had called the company repeatedly to move the equipment, but had gotten no response.

After eight months, I told my people to start using the equipment. Within hours, I received an angry call from the owner, Alfonso Fernandez Jr., now associated with Ivy Investments, telling me that I had stolen his property and he was going to call the police.

“You don’t know the laws in Puerto Rico!” he fumed on the phone. “I’m an attorney! You can’t do this!”

“Oh,” I said calmly. “You’re an attorney. That’s great. I am, too. Where did you go to law school?”

“Columbia,” he said. So I responded, “Congratulations! Columbia is a great school. I went to Harvard Law School, just up the road, so we’re practically neighbors.”

“I also have an MBA, so I know about business,” he said. “And what you did wasn’t businesslike.” I responded, “That’s great. Where did you get your MBA?”

“Wharton,” he said. “Me, too,” I said.

“And,” he said, “I’ve taught business.” “Me, too,” I said.

By not being reactive, and continuing to find out about the other party, we both got more. A lot more. He could keep his equipment on our property at no charge, and we could use his equipment at no charge. And, over the next couple of months, he gave us $100,000 in cargo warehousing business from his clients that we could accommodate at lower prices. We became friends.

You might say we were lucky. This doesn’t apply all the time. Again, of course it doesn’t! What is important is the process—trying to get more from every deal. I would venture to say that too few people put themselves in a position to get more in this fashion. They are too busy being defensive, accusatory, or argumentative. Remember, you just want to get that one extra hit every nine games.

Managers I know say to their counterparts: “Why fight each other when we can profit together?”

A CHANGE IN ATTITUDE

What all this involves is an attitude change. It means thinking more about the upside than the downside. It has a lot to do with the way people look at problems.

Here is the thought process: You are going to get hit with a certain number of problems in your life. You will have to spend time dealing with them. The attitude adjustment you should want to make is, as long as you have to deal with these problems, what kind of opportunity can you make out of them? You only have so much time in your life. Why not use it more wisely?

It doesn’t take a lot of time to figure out opportunities hiding inside problems. You just have to look for the opportunities. Instead of thinking that a problem is a drag to deal with, think of a problem as an opportunity waiting to be recognized and developed.

Every time you have a problem with another party, think: How can you make money from this problem? Is there a way to trade intangibles? How can the pie be expanded? And slowly but surely, you will start to get more.

This process does involve going out of your way to try to make the other person happy. That means you have to all but give up the idea of getting “leverage,” advantage or power, over others, unless it’s a hard-bargaining situation. Pushing other people just causes others to try to protect themselves—or hurt you—instead of expansively finding opportunities.

It reminds me of a joke. A guy goes into a store and buys a lamp. He goes home, rubs the lamp, and a genie comes out. The genie says, “I’ll give you anything you want, but your neighbor has to get twice as much.” The guy says to himself, “I want a house—but my neighbor will get two houses! I want a million dollars—but my neighbor will get two million.” Finally, the guy gets an idea. “I know what I want,” he says to the genie. “Put out one of my eyes.” Yes, this is sick. But isn’t this how many, if not most, people negotiate? “This will hurt you more than it hurts me.” “You’ll lose more than I will.” Rather than figure out who can hurt the most—the seeming basis for all Cold War and many legal negotiations—why not talk about the opportunity for everyone involved? When people threaten to walk out of a meeting, I usually try to get everyone to agree in advance that anyone can walk out of a meeting and be fine. “Having said that,” I say, “is there a better deal we can do in the room?” As with standards and other negotiation tools, framing is a big part of being persuasive in trading items of unequal value. Try to frame their needs in a way that meets your goals. Dawn MacLaren, the management consultant mentioned in Chapter 2, had a sixty-six-year-old father who was hard of hearing. For more than two years he refused to get a hearing aid—he was a stubborn man.

Finally, Dawn went to see him one afternoon. She said to him (in a loud voice), “Dad, don’t you want to hear the sound of your children’s voices?” He got a hearing aid that day. She achieved her goals: her father got a hearing aid. And he satisfied his needs: to hear his children’s voices.

If you want to work on a particular project that you think is promising, a good way to approach your boss is to say, “Boss, I have an idea on how to increase the department’s profits this year.” I can guarantee you that your boss wants to increase profits (needs). And you want to work on a particular project that increases profits (goals).

One of the more interesting assumptions about negotiations is that the more things that are on the table at a negotiation, the more difficult and complex that negotiation is. Actually, the more items on the table at a negotiation, the easier the negotiation is. That’s because you have more items of potentially unequal value to trade. I like to get as many issues and items on the table as possible.

Many people assume it’s hard to get others to disclose their needs. People often play their hand close to the vest, to use a poker analogy. I have found the opposite. When you start trying to figure out the needs of the other party, and let them know you are trying to meet their needs, the problem is not getting them to talk. The problem is getting them to shut up.

A Wharton Executive MBA Program student once asked me to help resolve a business dispute that had been going on for six years. The owners of a software products company were a husband and wife in the midst of a divorce. He owned 60 percent, she owned 40 percent.

The company had no money. However, a public company was interested in merging with them. The public company had a great stock price but no product. Separately, neither could make it. Together, they were worth more than $300 million.

But the merger couldn’t occur because the wife refused to vote her 40 percent stock, effectively blocking the merger. Both companies were on the verge of litigation. Her company was about to go bankrupt without the merger.

I went to see the wife. She had no money, her savings were almost depleted, and her husband was late on payments he promised to send to her. I asked her what she wanted. She said she needed some money to live on. She said she wanted sole custody of the children. And she said she didn’t want her husband to get more than she did—she wanted her husband to feel more pain than she did.

I told her that she could never bring back the better times of the past, and she would never be able to hurt her husband in the way she’d like to in the future. I asked her why sole custody was so important to her when her children would be leaving home for college shortly, and why was it so important to fight each other and lose several more years of her life? And I asked her, in particular, why was it so important for him to feel pain, since she’d have to feel pain, as well? That was because without the merger, everyone would be broke.

Finally, she saw that her actions were not helping her to accomplish her real goals and needs. She agreed to get the divorce and do the merger. I told her I had to talk to her husband, too. After all, both parties had to agree; that’s how it works. She was understandably nervous about this. But she finally agreed to let me talk with him.

So I went through the same drill with the husband. He had his own set of issues, which we walked through. He finally came to realize that he would never meet his goals in life, never meet his needs, unless he left his wife with enough for her to live on comfortably for the rest of her life. And it wasn’t reasonable for a mother not to be able to see her children (he wanted sole custody, too). He agreed to the divorce terms.

Both of them then wanted me to represent them in the merger with the public company. I did, going through the same process that I did with the husband and wife. I talked to each side about their needs, their goals, their perceptions, what was bothering them, and so forth. The merger went through.

What was most interesting about this is that none of it is rocket science. It just involves asking people about their needs and goals, finding out the intangibles that matter to them, and focusing on the upside, not the downside. What is it that will make them happy? What’s also interesting here is that until you see how to do this, it is invisible.

The following story ending this chapter is near and dear to my heart, literally and figuratively. It shows how helpful these tools can be, even in life-and-death situations.

In January 2001, I had two heart attacks. I was being stabilized at a hospital in Philadelphia in preparation for open-heart bypass surgery. But the hospital kept giving me medicines that produced bad reactions, so I wanted to get the surgery elsewhere.

I checked around for the best heart surgeon I could find. I came across the name of Dr. Wayne O. Isom, one of the world’s best heart bypass surgeons. He did the bypass surgeries on David Letterman, Larry King, and Walter Cronkite.

Of course, I couldn’t get near Dr. Isom. His schedule was full for months. He didn’t know me, I didn’t have any connections to him. Moreover, the only access I had to him was by email. And as we know, email is imperfect at best as a persuasion tool.

How could I establish a connection with him through email that might be meaningful enough for him to operate on me? So I started doing research on Dr. Isom from my hospital bed in Philadelphia. I searched for who he was, what his interests were, how he spent his time, what kind of person he was: I was looking for a point of connection.

One of Dr. Isom’s main research topics at the time was small artery cholesterol build-up. I have small arteries. So I did research on his research, and wrote him an email. I told him who I was (a professor and former journalist), gave him some of my heart history, and asked him if he could operate on me. I acknowledged that he might be too busy to do the operation. I understood that he had a long waiting list.

Even if he could not operate on me, I mentioned, we did have a point of connection, which I described. Could he do a consultation with me? I asked a couple of specific questions from my research. I wanted to convey to him that I hadn’t just dashed off a letter to him, but that I had really studied some of his life’s work and taken the time and trouble to understand it.

My family and I also contacted every person we knew in New York who had had heart surgery and asked if they knew a doctor who practiced at the same hospital as Dr. Isom. We found one, a cardiologist, Dr. Michael Wolk, who called Dr. Isom’s office.

To make a long story short, Dr. Isom cut short a vacation by one day and came back to New York City to operate on me. The results were fantastic.

I asked Dr. Isom why he cut his vacation short to operate on me. Certainly someone of his stature didn’t have to do this. I asked him again in a lovely meeting we had in his office as I was writing this book. He said it certainly helped that Dr. Wolk, a highly respected cardiologist I had found through third parties, called his office. But he said it was more than that: I was one of the few patients who had ever asked him about his research. I had made a “personal connection” with him.

Imagine that! The negotiation tools discussed in this chapter worked: Understand who the other person is, understand his concerns and perceptions, his needs and intangibles. Trade items of unequal value. In effect, I was negotiating for my life.

I later read a news story that said former president Bill Clinton wanted Dr. Isom, too, but Clinton’s staff would not even tell the surgeon who the “VIP” patient was. Dr. Isom suggested that someone else do the operation. It might have been different if a personal connection had been made, Dr. Isom said.

Dr. Isom said that even as he has gotten more skilled at medicine, he has found that personal connections are at least as important. He said he has operated on the indigent, whether or not they could afford it, because of their efforts to make a personal connection with him. After her operation, an indigent woman from Brooklyn gave him a $50 contribution for his research, something that was a bigger percentage of her income than some of the $5 million contributions that come in, he said.

What this means for negotiation is that no product or service is ever just a “commodity” as long as you make sure that you key on the personal connection. It is your synapses, your experiences, your time, your efforts, your interest in others that you have to trade. And that differentiate your offering from everyone else’s. Those are the intangibles that enrich the lives of others and cause better deals to happen. It causes everyone to get more.

But why end there? The use of the negotiation tools I’ve described in this chapter found other uses in the hospital, too. Even in great hospitals like New York Presbyterian, I realized, nursing care varies. I needed to stay in the hospital for a few days before the operation for tests and to be stabilized again since I had moved from Philadelphia.

So I let every nurse, nurse’s aide, and nurse practitioner who happened to come into my room know that I taught negotiation—and that I was available for free, 24/7 consultation on how to get a better job at the hospital, how to get a raise at the hospital, and in fact any subject on which they wished negotiation advice.

I had a steady stream of nurses, nurse’s aides, and nurse practitioners coming into my room, both before and after the operation. And I received great care. The staff could not ask me enough about what I needed. (“Want more morphine? No problem!” “We’ll get the doctor right away!”) I was also moved from the hall side of a two-bed room to a VIP room with three big windows facing the East River.

Trade items of unequal value. It works.