December 23rd, 2020

Interest-Based Negotiation
Picture this: you’re an up-and-coming entrepreneur and starting an orange juice business. The problem is, you don’t have any oranges! So, being savvy, you go and find an orange supplier. You manage to find one and they are willing to sell you their last load of 500 oranges. The catch is, another party has approached the supplier and also wants to purchase the 500 oranges. The supplier has left it to both of you to decide who gets the oranges. [1]
 
So, what do you do? It might seem you only have two options. Either one of you gets all 500 oranges or you find a way to divide the load. Either way, someone is walking away from the supplier without all 500 oranges. So, naturally you and the other party go back and forth arguing over prices and are fighting for every orange.[2]
 
ENTER: Interest-Based Negotiation
 
What if you both could get all 500 oranges? You, being that savvy entrepreneur, decide to ASK the other party what they need the oranges for. It turns out, they are making a serum out of orange rinds. You acknowledge that you only need the juice. And voila – you decide to split the price of the load and you’ll each get the part of the orange you need! Everybody wins.
 
In this simple example, it was easy to find a solution beneficial to both parties if the right question was asked. This is the basis of Interest-based negotiation (otherwise known as principled negotiations, integrative bargaining or interest-based bargaining) - asking questions, uncovering the interests of the other party and collaborating to find a solution that works for everyone.[3]
 
Now let’s back up – what is negotiation?
 
Negotiation has many definitions, one definition is: “Negotiation is a basic means of getting what you want from others. It is back-and-forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed”. – Fisher and Ury, authors of Getting to Yes[4]
 
In negotiations, people tend to think in ways that ultimately hurt their chances for the best deal, such as:
 
1.Negotiations are a zero-sum world and that the other party is an adversary.
2.Either you win or you lose.
3.You both only have your positions.
 
This thinking tends to limit negotiations, as then typically information is not shared among parties and often the best solutions are left aside. People stand firm with their positions and budging on them is felt as losing.
 
Interest-based negotiation removes the thinking of “positions” and replaces it with “interests”. Instead of demands, terms and ultimatums, you have underlying motivations, needs and concerns and THE WHY! [5]
 
The basic method of Interest based negotiations, outlined in international best seller Getting to Yes is as follows:[6]
 
People: Separate the people from the problem 
Every negotiator has two kinds of interests – in the substance and in the relationship.[7] They are interested in solving the substantive issues while also maintaining a good working relationship with the other party. Sometimes, strong emotions from the relationship of the parties can be wrapped up in the substantive issues in a negotiation and cause complications. It is essential that you disentangle the relationship from the substance and try to reach a better understanding of each party’s concerns. Base the relationship on mutually understood perceptions, clear two-way communication and a forward looking, purposive outlook.[8]
 
Interests: Focus on interests, not position

• asking why and why not;
• putting yourself in the other party’s shoes;
• looking behind positions for underlying interests; and
• crafting a solution that meets their interests and yours.[9]

 
Your position is something you have decided upon while your interests are what caused you to decide. [10] Shared interests lie latent in every negotiation, even if they are not immediately obvious.[11] Looking to interests instead of positions will allow you to develop creative solutions that can meet both party’s needs.
 
Options:  Invent options for mutual gain 
Having both a lot at stake and only thinking there is one possible solution inhibits creativity.[12] Do not settle on the first agreement made. Instead, brainstorm a wide range of options before choosing the best one. If getting to the ultimate agreement proves out of reach – try agreeing on smaller, “weaker” options like a provisional agreement or only agreeing on what you disagree about.[13] At least then some issues are discussed, and you have something to build on in the future.
 
Criteria:  Use objective criteria/standards. 
Rely on a fair, independent standard to settle differences.[14] Whether it is market value, replacement cost, an expert opinion or a particular law. People using objective criteria tend to use their time more efficiency to talk about possible solutions and outcomes.[15]
 
Best Alternative to a Negotiated Agreement (“BATNA”)
 
Your BATNA is the best-case scenario if you don’t reach an agreement. The better your BATNA, the more you can ask for in your current negotiation.[16] Understanding your own BATNA, but also the BATNA of the other party is crucial.

For example, you are at a car dealership. You are negotiating the price of a new car. Your current car works fine – you are just looking for a good deal. However, the salesperson has targets he must meet by the end of the day and is desperate for a sale. In this example, your BATNA is stronger than the other party’s, and thus you are able to push for a better price. If the deal doesn’t happen, you still will have a car to drive. It is important to remember that asking questions, doing research and putting yourself in the position of the other party is the only way for you to uncover their BATNA.
 
Knowing your own BATNA and also the BATNA of the other party not only allows you to negotiate more effectively but forces you to consider their interests, motivations and the WHY!
 
The interest-based negotiation method permits you to reach a consensus on a joint decision efficiently. Using this approach will not only benefit your own negotiations but can guide your thought process to overcome differences in many areas of life. Remember to ask questions, uncover the interests of the other party and develop creative solutions for mutual benefit.

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[1] David Wright, Law 508 – Negotiation (Faculty of Law, University of Calgary, 2019)
[2] Roger Fischer & William Ury, Getting To Yes: Negotiating Agreement Without Giving In, 3rd ed (New-York: Penguin Books, 2011).
[3] Wright, supra note 2.
[4] Fischer, supra note 2 at xxvii.
[5] Wright, supra note 1.
[6] Fischer, supra note 2.
[7] Ibid.
[8] Ibid at 23.
[9] Wright, supra note 1.
[10] Fischer, supra note 2 at 43.
[11] Ibid at 74.
[12] Ibid.
[13] Ibid at 71.
[14] Katie Shonk, “Principled Negotiation: Focus on Interests to Create Value” (13 July 2020), online (blog): Program on Negotiation Harvard Law School < https://www.pon.harvard.edu/daily/negotiation-skills-daily/principled-negotiation-focus-interests-create-value/>.
[15] Ibid.
[16] Ibid.