Ideas in Practice
hbr.org
HBR.ORG To read the full article, go to
hbr.org/2010/11/extreme-negotiations/ar/1.
Implementing Strategies
in Extreme Negotiations
A conversation with Jeff Weiss and Jonathan Hughes
SPOTlighT On leadershIp lessOns frOM the MIlItary
Spotlight
hBr.Org
ARTWORK Stacy Pearsall, Lead the Way
March 9, 2007, Old Baqubah, Iraq
Extreme Negotiations
What U.S. soldiers in Afghanistan have learned
about the art of managing high-risk, highstakes situations by Jeff Weiss, Aram Donigian,
and Jonathan Hughes
November 2010 harvard Business review 67
In November 2010, Jeff Weiss and Jonathan Hughes, along with
Major Aram Donigian, published an article in HBR called “Extreme
Negotiations.” It described the temptations we all face when
negotiating under duress—for example, acting too quickly or relying
too much on coercion—and suggested that the principles of effective
negotiation become even more important when the stakes are high
and the pressure is on. The authors used examples from military
negotiations in Iraq and Afghanistan to illustrate those principles.
We followed up with Weiss and Hughes to understand more about
how readers could apply these negotiating principles to their own
situations.
Jeff Weiss is an adjunct professor at the U.S. Military Academy at West Point
and a partner at Vantage Partners, a Boston-based consultancy specializing
in corporate negotiations and relationship management, where he focuses on sales
negotiations and strategic alliances. He is also the codirector of the West Point
Negotiation Project. Jonathan Hughes is a partner at Vantage Partners, specializing
in supply-chain management, strategic alliances, and change management.
1 Harvard Business Review Idea in Practice
HBR: In a business context, what
do you define as an “extreme”
negotiation?
Weiss and Hughes: It’s when the
stakes and risks are especially high.
Some examples in the corporate
world would be resolving a dispute
with a joint-venture partner, work­
ing with a government that’s decided to nationalize your assets, or
negotiating with a Top 10 customer
who’s threatening to leave unless
you cut prices drastically.
Remind us of what the
principles are.
W & H: They’re not so different
from strategies you use in other
negotiations—but they’re more difficult to remember under pressure,
and yet even more important to
apply. Understand what’s motivating the other party; come up with
a variety of possible solutions and
invite critiques; use facts to persuade; demonstrate a commitment
to a fair and reasonable outcome;
build trust over time; and focus on
actively shaping the process of the
negotiation.
Idea in Practice Implementing Strategies in Extreme Negotiations
Do these strategies need to be
reciprocated to be effective?
W & H: No, although that is a very common
concern. When facing an adversarial counterpart, you do not need to decide between
responding in kind and giving in. We’ve
found in research with our colleagues at
the Harvard Negotiation Project that most
negotiators act, and react, based on what
the other side does. The bad news is that
such responses are often based on a misinterpretation of the other side’s motives and
intentions. The good news is that you can
lead the way by negotiating in a principled
and constructive fashion, and the other
party will usually respond in kind. As we
stress in the article, we do not mean you
should try to appease the other side, but,
instead, negotiate in a deliberate and strategic fashion, rather than simply react.
Can you give some examples of
questions that will get at the other
side’s motivations?
W & H: Before asking the question, it’s
helpful to brainstorm possible motivations
for the other side. Once you have a few hypotheses, you can begin to test them. Ask
direct questions of your counterpart, but
in a respectful and nonthreatening way,
and you may well get a candid response.
Here’s an example: Let’s say you are
negotiating with a supplier for critical
components. They hit you with a large,
unexpected price increase. Most people react by assuming the worst: They’re trying
to extort as much money from us as they
can. With this assumption, you are likely
to act aggressively, rather than engaging in
a more productive form of negotiation.
Instead, before responding to the
supplier, you might first brainstorm a
number of possible motivations for the
price increase. Did the supplier’s costs
go up significantly? Are they trying to
increase revenue to fund a new R&D or
growth initiative? Do they actually want
to exit this business? Now you can decide
different ways to test these hypotheses. A
few phone calls and some market research
might serve to validate or invalidate a hy-
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pothesis up front. And then, you will probably need to ask them some questions.
Too often, under conditions of stress,
we ask questions in an aggressive or
disrespectful manner, which makes it less
likely the other side will be forthcoming.
Instead of saying: “How the hell could
you try to take advantage of us like this?”
you might say: “We value the long-term
relationship our companies have had, and
it has always seemed you did as well. The
recent price increase you’ve demanded
seemed to come out of the blue, without
warning or explanation. We’d appreciate
hearing more about what’s behind it.”
The trick here is to ask questions in a way
that makes it easier for the other side to
answer, and awkward not to.
One other idea is to suggest a possible
resolution and ask the other side to critique it. In the face of disagreement and
high emotions, it is very hard for most
to building trust across cultures: Do what
you say you’re going to do, and deliver
on your commitments. Others vary. In
some cultures, direct eye contact is a sign
of trustworthiness. In others, direct eye
contact is perceived as aggressive and will
impede building trust.
How should you respond if the other
side makes threats?
W & H: People make threats when they
feel vulnerable or they believe it will cause
you to give in. When you respond in kind,
you only exacerbate or escalate the situation. But of course, if you give in, you reward the behavior and invite more of it. It
is often useful to be explicit and state that
it appears the other side is making a threat
and that you will not yield to such tactics.
For example, you can say, “If you want
to ‘negotiate’ by making threats, I can
certainly play the same game. But I doubt
Power in extreme negotiations comes more from
preparation than from how glib or agile you are
at the negotiation table.
counterparts to avoid sharing exactly how
stupid or unreasonable they believe your
idea is. Stay calm, and don’t be distracted
by the manner in which they respond.
Listen carefully because their criticism is
likely to reveal their true interests—and
that is pure gold for a negotiator.
Are the strategies culture-specific?
Do they work in Asian cultures as well
as Western ones?
W & H: The strategies are not culturespecific, but you need to understand
cultural norms when using them. For
example, the underlying motivations
and goals of the other side are rarely
apparent in extreme negotiations. How
you go about eliciting such information
will vary both by culture and by context.
And doing so is tied to another strategy:
Build trust first. Trust is currency in any
culture. There are common approaches
that will lead to an outcome either one of
us will be happy with. Why don’t we spend
some time jointly looking for creative
solutions that will meet both our needs? If
that doesn’t lead us to an attractive deal, of
course we can both go our separate ways.”
There are also other moves you can
make. You can ask them what they would
achieve by taking the action they have
threatened. Their response will likely
reveal their interests, and you can use that
information to improve the potential deal
you are negotiating. You may also, without
being adversarial, expose the fact that
their walk-away alternative to a deal with
you is not as attractive or feasible as they
may have indicated, or assumed.
What work do negotiators need to do
before they start a negotiation?
W & H: Power in extreme negotiations
comes more from preparation than from
Harvard Business Review Idea in Practice 2
Idea in Practice Implementing Strategies in Extreme Negotiations
Seven-elements checklist
1
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5
6
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Think about each party’s interests.
• What are our interests? What might theirs be?
• Are there third parties whose interests should be
considered?
• Which interests are shared, which are just different,
and which conflict?
Think about each party’s alternatives.
• What is our BATNA (best alternative to a negotiated
agreement)? What might be theirs?
• Can we improve our BATNA? Can we worsen theirs?
Brainstorm solutions.
• What possible agreements or pieces of an agreement
might satisfy all sides?
• What solutions can we propose?
Consider ways to legitimize the solutions.
• What external criteria might plausibly be relevant?
• What standards might a judge apply?
Identify commitments that each party can make.
• What is our level of authority to make commitments?
What is theirs?
• What are some illustrative, well-crafted commitments?
• What would be good products of this meeting?
Analyze the relationships in play and how important
they are.
• Which relationships matter? How is each now? How would
we like them to be?
• What can we do to bridge the gap at low cost and risk?
Plan your communication strategy.
• What do we want to learn from them? How can we
improve our listening?
• What do we want to communicate? How can we do
so persuasively?
• What are our agenda and plan for the negotiation?
• How should we handle inevitable disagreements?
Adapted from “Negotiation” by Bruce Patton. From The Handbook of Dispute Resolution,
Michael L. Moffit and Robert C. Bordone, eds. The Negotiation Project/Jossey-Bass, 2005.
For more details on the seven-elements checklist, click here.
3 Harvard Business Review Idea in Practice
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how glib or agile you are at the negoti­
ation table. You have to prepare. But not
in the way that people usually do, by
asking themselves—“What do I want?
What can I give? What threats can I
make?”—and then crunching numbers
to come up with an opening position and
some planned concessions. With that sort
of preparation, you’re set up for zero-sum
haggling and likely to end up with a minimally acceptable compromise; you’re not
armed with information and ideas that
would enable you to negotiate a creative
and truly value-maximizing agreement.
We suggest using a seven-elements
checklist (see sidebar) to more strategically prepare.
How can an individual negotiator
develop the skills needed to use
these strategies?
W & H: Based on our experience, we offer
a few key pieces of advice:
Prepare. Focus on structured,
disciplined preparation. Use the seven-­
elements checklist to prepare yourself and
to help others prepare.
Practice. Go out and practice negotiating in low-risk situations first. Also, work
on being able to mentally step out of the
negotiation and look down on what is happening. This “from the ceiling” perspective can help you take purposeful action,
rather than reacting.
Review. Do a postmortem on every negotiation, asking yourself what worked and
what you would do differently next time.
Get feedback. Have someone observe
you and give you feedback about what
you did well and what you might consider
changing next time.
Teach and coach others. Offer to
partner with someone to observe each
other and offer feedback and suggestions.
On an organizational level, what can
leaders do to build the capability to
implement these strategies?
W & H: First and foremost, leaders need to
change their mind-set. Negotiation is not
simply about being skilled in the moment
Idea in Practice Implementing Strategies in Extreme Negotiations
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Sample Negotiation Process
Phases
Analysis, strategy, development, and preparation
Strategy execution
Open Conduct
Close
Transition to implementation
Research and develop “walk-away” alternatives
Activities
• Define objectives
• Form negotiation team
• Conduct preliminary analysis
• Define negotiation strategy
• Prepare to negotiate
• Continually review strategy,
revise and adjust tactics as
needed
• Conduct formal midcourse
review
Go to
• Document and communicate
Ask:
NO alternative
terms of agreement
Is the deal
• Hand off to implementation team
better than
our walk- YES Execute
•D
ocument lessons learned
agreement
away?
Copyright © 2011 by Vantage Partners, LLC. All rights reserved.
at the table. It’s a business process, not an
event. Then, executives need to:
Define negotiation as a process.
Treat negotiation just as you would a manufacturing or quality-assurance process.
Identify the set of activities to be performed
in a disciplined way—getting instructions, developing a strategy, preparing,
prenegotiating, conducting negotiations,
midcourse correcting, closing out the
negotiation, and review. Decide who leads
negotiations, who supports them, and
who is involved in the process from end
dashboards for tracking and reporting on
the process for negotiations, and evaluating outcomes; and they have sophisticated
training and development programs for
those who negotiate, as well as those who
support negotiations in the background.
Send consistent messages. Watch
what you say when you give instructions
or talk about negotiations. Avoid saying
things like, “Just go get a deal” or “Drive
a hard bargain.” Instead, ensure your
negotiators understand the underlying
goals they need to satisfy (so they can be
Treat negotiation just as you would a
manufacturing or quality-assurance process.
to end. See “Sample Negotiation Process”
above.
Make preparation and review integral parts of the process. Every nego-
tiation should be systematically prepared
up front and then reviewed and analyzed
when completed. Lessons should then
be fed back into preparation for future
negotiations.
Develop common tools and methods. Large or even medium-sized com-
panies that are involved in thousands of
negotiations over the course of a year need
the foundation of a shared vocabulary and
mind-set when it comes to negotiation.
On top of that, organizations that are best
in class at negotiating equip their people
with negotiation-strategy playbooks; they
have midcourse deal-review committees
and procedures; they have metrics and
creative) and that they have systematically
analyzed your company’s best alternatives, as well as the other side’s (so they
understand relative leverage in the negotiation and are neither overly aggressive
nor insufficiently assertive).
Our readers often learn from the successes of others. Can you give readers
an example of what success looks like
in a business context with each of the
strategies?
Strategy 1
Get the Big Picture
Start by soliciting the other person or
group’s point of view, and use that understanding to shape the objectives of the
negotiation and to determine how you’ll
achieve those goals.
The situation. During a negotiation between a company and an alliance
partner, one side was under tremendous
pressure to renegotiate the financial terms
of their underperforming partnership.
The assumption. Senior management
had decided that it needed to change their
partner’s incentives because they assumed
their partner had lost interest in selling the
jointly developed solution.
The strategy in action. After talking
to the partner, it became apparent that
they were very committed to the alliance
and actively engaged in joint-account
planning, sharing leads, and pursuing joint
sales. They just weren’t successful in helping to sell the joint solution. In fact, the
company’s partner was in the process of reducing the size of its direct sales force and
had to reallocate much of its experienced
sales resources to other products.
The resolution. Instead of renegotiating the financial terms of the alliance, the
partners explored a more fundamental restructuring. The one partner would take on
primary responsibility for sales of the alliance product and simply leverage the other
partner’s brand and extensive knowledge
of the marketplace. Within two months,
the partners together had significantly
improved their pipeline and had already
begun to close a large number of sales.
Strategy 2
Uncover and collaborate
Uncover motivations and concerns, take
responsibility for proposing multiple solutions, and invite the other side to critique
or improve on those ideas.
Harvard Business Review Idea in Practice 4
Idea in Practice Implementing Strategies in Extreme Negotiations
The situation. A company had
developed a new, promising technology,
and had built its business model around a
combination of license fees for use of their
proprietary technology and service fees.
A customer they had been working with
for over a year finally said they wanted to
proceed with full-scale deployment of the
technology. But as soon as the issue of fees
came up during negotiations, the customer refused to pay license fees.
The assumption. The technology
company presented analysis showing
that the license fees were minimal in
terms of the revenue stream the customer
would generate with the technology. The
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customer still refused, and our client suspected they were simply playing hardball.
The strategy in action. Rather than
react defensively, the company asked
more questions: “This doesn’t really
seem to be a financial issue—so what is
it?” The response was: “We have a policy
against paying license fees when we
Common (and Risky) Responses to Dangerous Negotiations
Even skilled negotiators adopt less than ideal behaviors in high-stakes situations.
Here are strategies to respond to danger, rather than react to it.
Danger produces …
… often leading
negotiators to …
… resulting in
In contrast, the skilled negotiator …
Pressure to act fast
Begin negotiations with little
preparation; act to project
maximum confidence and
thus negotiate based on
perceptions rather than facts
Unnecessary conflict and
often a negotiated solution
that fails to address the real
problem or opportunity
Starts by soliciting his or her point
of view and uses that understanding
to shape negotiation objectives and
strategies
Perceived need
to look strong
Stake out a strong position,
convey little willingness to
compromise, and forcefully
demand concessions from
the other side
Exacerbated resistance from
the other side, contentious
and inefficient negotiations,
and the risk of no agreement
when one was possible
Uncovers underlying motivations and
concerns, takes responsibility for
proposing multiple possible solutions,
and invites the other side to critique or
improve his or her ideas
Temptation
to use force
Negotiate
based on threats
Resentment that sows the
seeds for future conflict
and compromises future
negotiations
Uses facts and principles of fairness to
persuade the other side, arm the other
side with justifications to defend the
outcome to constituents, and create
useful precedents for future negotiations
Strong desire
to defuse tension
Make concessions in an
attempt to develop a
positive relationship
Missed opportunities to
develop true relationships
based on mutual under­
standing, respect, and trust
Deal with relational issues head-on,
address them on their own merits, and
make incremental commitments to
systematically build trust and encourage
cooperation
Desire to avoid harm Give in on critical issues to
Agreements that create
to oneself or one’s
avoid or minimize immediate enormous future risk
constituents
threats
exposure
Copyright © 2011 by Vantage Partners, LLC. All rights reserved.
5 Harvard Business Review Idea in Practice
Consciously changes the game by
not reacting to the other side and
deliberately taking steps to reshape
the negotiation process, as well as the
outcome
Idea in Practice Implementing Strategies in Extreme Negotiations
help a supplier develop or prove out new
technology.”
The resolution. This insight led to a
series of productive conversations in which
both sides jointly considered various commercial arrangements, including a joint venture. Ultimately, an agreement was reached
that included no license fees but did include
upside payments to the supplier based on
the performance of their technology, clear
commitments of service support during the
transition to commercial-scale deployment
(with fees tied to specific services), as well
as their customer taking a small equity
stake in the company.
Strategy 3
Elicit genuine buy-in
Use facts and the principles of fairness
(not brute force) to persuade others, arm
them with ways to defend their decisions,
and create useful precedents for future
negotiations.
The situation. During a negotiation between a large electric utility and
a single-source supplier for a major
capital construction project, the supplier
demanded a huge up-front payment. But
paying it would jeopardize the economics
of the entire project for the utility.
The assumption. The utility felt like
they had no leverage, and thus no choice
but to pay the fee. However, rather than
agree to pay it, refuse to pay it, or haggle
over the number, the utility asked the supplier why they were asking for such a large
up-front payment. The supplier responded
that they needed to place orders with their
own suppliers for expensive, long leadtime items.
The strategy in action. The utility
then conducted research as to what these
items would likely cost. They came up
with an estimate of about 20% of what the
supplier was demanding. They went back
with their analysis and said, “We agree in
principle that we should cover your costs
to purchase equipment for this project.
That said, here’s our estimate of what
those costs should be. What are we missing here?”
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The resolution. The supplier asked
for a few days to review the numbers and
then came back and said they had done
a very rough estimate and failed to catch
a couple math errors. They agreed with
the alternate figure. The key was to avoid
an argument over arbitrary numbers and
focus on getting the other side to agree to
something they could not deny was a fair
and reasonable figure.
Strategy 4
Build Trust First
Deal with relationship issues head-on, and
make incremental commitments to build
trust and encourage cooperation.
The situation. A leading global IT
outsourcing provider and one of its top
customers were preparing for the renewal
of what had been a five-year contract. The
relationship was strained due to a major
outage and what the customer perceived
as a set of broken promises. In fact, the
customer said it expected a major discount to repair the relationship and keep
the contract.
The assumption. Given the size of the
deal, it was tempting for the IT company to
simply give in but it knew doing so would
send a message that the customer could
hold the relationship hostage whenever
they wanted a price reduction.
The strategy in action. Instead, the
IT company scheduled a set of meetings
with the customer. In the first meeting,
the negotiation team explicitly noted two
issues: the damaged state of the relationship and quantifiable damages due to the
outage. They produced a check for the
latter, and proposed another meeting to
explore how to rebuild trust and improve
collaboration. They said nothing about
making price concessions due to the
strained relationship. In the second and
third meetings, the team led a discussion
about each side’s perceptions of broken
A critical shift in negotiations approach
Taking a purposeful approach to negotiations, rather than a combative one,
requires a shift in mind-set.
From
To
What do you want?
Why do you want it?
Will you accept/give up?
What are some different possible
ways we might resolve this?
How about we just split it?
By what criteria/legitimate process
can we evaluate (and defend) the
best answer?
Saying, “I understand”
Showing I understand
Thinking my strength comes from
knowing I am right, anchoring well, and
effectively using threats
Thinking my strength comes
from being open to learning and
persuasion, being skilled at figuring
out their motivations, and being
extremely creative
Copyright © 2011 by Vantage Partners, LLC. All rights reserved.
Harvard Business Review Idea in Practice 6
Idea in Practice Implementing Strategies in Extreme Negotiations
promises, and jointly crafted a set of plans
to minimize the chance of unmet expectations and improve how both sides worked
together. The company made a series of
commitments to their customer, starting
with some they knew they could deliver
within weeks. By the time the customer
issued the RFP several weeks later, the
IT company had delivered on many of
its commitments, and the talk of paying
tions company involved in a postmerger
integration was engaged in constant,
high-stakes negotiations over strategy,
organizational structure, new reporting
lines, budgets, and staff. They repeatedly
found themselves deadlocked. Relationships were fraying, and the success of the
merger was in jeopardy.
The assumption. They were negotiating over very “big” issues. For example,
More than time per se, these strategies require
patience and persistence.
“compensation” to “rebuild the relationship” had disappeared.
The resolution. In the ensuing
months, the customer updated its requirements to include risk-sharing provisions.
Ultimately, they decided they needed
a partner they could respect and trust,
rather than the lowest cost vendor, and
signed a new five-year agreement with the
incumbent IT provider.
Strategy 5
Focus on process
Consciously change the game by not reacting to the other side, and deliberately take
steps to shape the negotiation process as
well as the outcome.
The situation. The new senior
management team of a telecommunica-
7 Harvard Business Review Idea in Practice
should we have a centralized IT function
or separate IT departments for each business unit? But underneath these questions
were smaller issues and a range of interests: Will we have one corporate IT budget
or separate business-unit IT budgets? Will
help-desk staff be centralized, or assigned
to business units? Without breaking down
the big issues into smaller constituent
issues, negotiations were almost always
framed as a zero-sum debate over which
the company’s prior way of doing things
would prevail—with little ability to explore
new or hybrid solutions.
The strategy in action. We helped
both sides fundamentally change the tone
of the debate by jointly discussing how to
break down the big questions into smaller,
more manageable issues. This allowed
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them to sidestep many turf issues and
start to explore new solutions and creative
hybrid models.
The resolution. Doing this as a shared
task before negotiating over the substantive answers laid the groundwork for
a more collaborative environment and
more innovative solutions.
One last question. These strategies take
time and patience, and yet, in extreme
negotiations, executives
are under immense pressures. How
can negotiators manage the real pressures they face while allowing time
for the negotiation to take its
course?
W & H: In our experience, these strategies
don’t take more time than other approaches, especially in extreme circumstances. What most often takes up time
is nonconstructive behavior. Typically,
people lock into positions and default to
reacting to what the other side does—and
thus end up in a protracted, dysfunctional
negotiation.
These strategies may require more time
up front, but we believe they generally
shorten the total negotiation time and
generate better results more quickly. More
than time per se, these strategies require
patience and persistence.