As we finish our debrief of the house on Elm Street, let's return to the two psychological tools and traps we put on the shelf during our earlier discussion. The first is the Mythical Fixed Pie Assumption, the assumption that our interest conflict with the interests of the other side. And the second is the Big-Picture Perspective, don't get lost in the details. And let's look at how these two in combination might change the results in your negotiation. Remember that we started with this bag of money, that the buyer brings into the negotiation, $250,000. And one of the fundamental questions in the negotiation is how much of that money goes to the seller, and how much does the buyer get to keep? And so with that perspective in mind, I asked you earlier, is this a dividing the pizza type negotiation, or an enlarging the pizza negotiation? And of course we've gone through these various words that are used to describe each type of negotiation. And I think that the basic conclusion earlier was this is a dividing the pizza type negotiation. This is a distributive negotiation. Competitive. Win-lose. Zero sum. Adversarial. Position-based. And a negotiation where you want to claim as much value as possible. So with positional negotiation, you still, as we pointed out earlier, want to try to find underlying interests and to build a larger pie. And we combined that with a Mythical Fixed Pie Assumption, which is, when we identify those interests, can we also identify interests where the seller's interests do not conflict with the buyer's interest? This creates especially a chance to build a larger pie. So another way to view this is, we started with that bag of money containing $250,000, and let's assume that the result of the negotiation, a common result, is that the seller sells the property for 170,000, which means that the buyer, or buying company gets to keep 80,000. And the question is, can we build a larger pie, can we in effect build a larger bag of money? So that the seller walks away with $200,000 rather than 170, and the buyer gets to keep 200,000 instead of 80,000. In other words, how can the two parties take $400,000 worth of value out of a bag of money that initially contained only 250,000? To answer that question, we have to do an interests analysis to try to find the interests of each side. So let's go back to our interests slide, we went through earlier, these various interests of the two parties. So for example, when the uncle's position is, I need 150,000, the why question would lead to a search for the reason why the uncle needs the 150,000, and that is he needs it for a senior apartment. That's the interest that underlies the position. So, as you look at these interest that you would develop with an interest analysis, then the question is, do you see any interests that are not in conflict? So obviously, the seller wants as much money as possible. The buyer wants to keep as much money as possible. That looks like a conflict. The seller wants to keep possession for three months. The company needs possession in one month. That's a conflict, etc. So where are the interests in conflict and where are they not in conflict? Can you identify, especially, an interest on each side that is not in conflict, that represents the key to developing a larger pie?. Think about that for a second. Press pause if you want to. Okay, let's go back to the interests slide one more time. And what we see here in red is that a key underlying interest of the uncle, and that's the reason why he's selling his house, is h e needs a senior apartment. He can no longer maintain this big old Victorian house. And the company has this business interest. This is why the company is doing business in the United States. The company builds senior apartments. And sales are slow. The buyer's role mentions that the company has a very large inventory of empty apartments. So when you think about that, think about how you can connect the dots to create a larger pie. And there are a number of possibilities. Let me explain one possibility. So we start with the initial contract. The seller is selling the house to the company for 170,000. But what would happen if instead of paying the seller 170,000, the company gave the seller, the uncle, one of its senior apartments, one of its many empty senior apartments?. They're on the market for 200,000. So the uncle, instead of ending up with 170,000, ends up with a $200,000 senior apartment. Furthermore, according to the buyer's role, it only cost the company 150,000 to build the apartments. So you could say that the company has saved the difference between the $200,000 and the 150 that it cost to build. That reduces the buyer's cost to 150,000. And then remember the company does not need the entire lot. They just need the back third of the lot. So what the company could then do is to transfer the house and the front two-thirds of the lot to Tracy, the relative of the uncle who really wanted the house, but couldn't afford it. The company could sell it to Tracy for, let's say 100,000. The company could finance the purchase. The buyer's role states that they've arranged financing with the bank. And so this reduces the company's costs by another 100,000, which brings their net cost down to 50,000, and which means that they get to keep $200,000 from that bag of money, in effect. So you look at this solution and look at the interests that it satisfies. The seller's interests are met, plus the seller has made another $30,000 by getting the $200,000 condo, instead of the 170,000 in cash. Tracy's interests are met. Tracy got the house he or she wanted. The company's interests are met. They get the land they need for a parking lot. They have achieved additional shareholder value, by keeping $200,000 out of that bag of money. And they maintained their community reputation. They're not tearing down one of these beautiful old homes in a residential neighborhood. And Pat hopefully will get the job with the company. So what this takes, and what it takes in many negotiations, is the ability to not get lost in the details but to step back and look at the big picture. Not get lost in the details, well, how much will the company pay for the house? What's the purchase price? But step back and ask, looking at a big picture, what kind of business is the company in? And how might their interests match the interests of the uncle? Find situations where the interests aren't in conflict. I hope that you had a chance to look at the basketball video that I assigned earlier. As you noted from that video, when you count the number of passes made by the players wearing white shirts, you get so lost in the details that you miss the large gorilla who walks out to the center of the video and pounds its chest before walking off. It's easy to miss even a large gorilla when you focus too much on the details. So bottom line, this is the way in which you can start with a bag of money containing 250,000, that is put 170 versus 80, and build a larger pie, so that each side benefits by walking away with $200,000. So this negotiation has given us a chance to look at the big picture of the course, to bring all of the elements together. We've just gone through the four stage negotiation process, as it applies to this negotiation. Now, the important final step for you is to finish the end game by doing an evaluation. And so you should do a self-assessment. What did you do well? How can you improve in future negotiations? And then very important, give assessments to each other. Be very candid and honest. What did the other side do well? How can they improve? Because this course provides virtually the only opportunity to get that type of candid feedback. And as you do your self assessment, and as you asses the other side remember this list of assessment questions that we reviewed before. So, that pretty much wraps up our course. We've covered a lot of material in a short amount of time, and I want to thank you. I want to thank those of you from the United States, and those of you from around the world for participating in this course, and I'd like to leave you with a blessing. In my courses at Michigan, I do a cross-cultural negotiation that involves a negotiation between a financial services company, and a Native American tribe. And this particular Native American tribe has a blessing that I would like to share with you, which is, may you walk in beauty. And by that, they mean, may you achieve balance and harmony in life. And I hope that by taking this course that you have had a chance to consider some strategies and some skills that might enable you to achieve balance in both your business life and your personal life. Good luck.
