This is part four of our negotiation book, distributive bargaining. So here is
the introduction to distributive bargaining. Let's take a quick look.
Now, the reason I like to begin with this idea of distributive is because I think
we've all been a little bit fooled by our business classes, where we often talk
about win-win. Don't we always learn about win-win? something everyone talks about.
It's so easy to say. It's so easy to just be happy about win-win. We want to win,
win everything, but you know in negotiation, this idea of a win-win is just an idea.
It's very rare that it actually happens that way. We're going to learn more about
why when we do our follow-up and the next chapter in the book. Right now, I
just want to introduce the basic concept of this distributed idea. So one really
good way to think of it distributed situation is a basketball team or a
basketball game. And of course, when you play basketball, everybody knows that
every time you get a basket, it's a two points, right? unless it's a you know long
shot.
So let's say you get two points. Now, if you have two teams, and one team gets two
points, what happens to the other team?
Well, they don't get anything, right? One team gets two, and one team doesn't get
two. Let's say that the first team gets another two . So now they've got four
points, and the other team has zero. Ok. I understand that now the other team gets
two, so one team has four and one team has two. This is 4 and 2 is the same as 0 and
2, right? You just, you know, subtract it out, right? So if they get two, and they get two
or they don't have to they don't have two. So what I'm trying to say is that
that score doesn't really matter as much as every time one team gets something,
the other team is losing something.
It's the same is losing. Now, we don't usually think about it that way because we're
always adding to the scores. We are not subtracting, right? So it's four, to 2, and
they get a basket, now they're going to have six. We don't say, "Oh they stay at
four, and they go to 0." But we could. It'd be the same thing, right? So this idea of
when one side wins, the other side loses, or once I get something, the other side
loses something. Once I'd gained something ,other side loses something--
this is really very common. I would say
normal, and almost always the case in negotiation.
Now, you can talk about win win, we're going to cover that later. But in
distributive bargaining which is the norm,
this is really what happens. So let's look at this a little bit more closely--
this idea of distributive. We can go ahead and call distributive simply
win-lose. Because it means that as one side get something, the other side loses
something. And the word we're going to use in class is distributive bargaining.
Distributive bargaining-- win-lose. Every time one side gains, the other side loses.
So in distributive bargaining, we often think about this idea of if I lose
something, the other side gain something. Now I think this is the way that you
often do think about your personal negotiation because you just don't like
to lose. But at the same time, winning has the opposite effect. When you gain
something, the other side loses something. So in a way, the other side is punished
by your winning. So, of course, what's our goal in business? What we would rather be
on the winning side than the losing side, right? So how are we going to be on the
winning side rather than losing side? We need to be honest with ourselves and
understand that there is this win-lose situation, and don't believe that it's
win-win,
unless you're really one hundred percent positive it
is. Because if you believe it's win-win or you want it to be win-win you say,
"Oh, let's win-win. I'll do what you want. You do what I want, and we all win...", but it's not
win-win to the other side, then you're going to be the one that loses. So we
don't want that to happen. So we need to really be thinking about this idea of
maximizing how much I get, maximizing how much I win, even though it's at the cost
of the other side. Now, why is this the case? Why Cannot everything just be
win-win? Why is the world not easy and simple?
Well, the the answer to that is resources, resources are limited. So in a situation
where resources are limited, not everyone can get everything they want.
So once I get some more, the other side is going to have to lose, and this is
this idea of fixed or limited resources.
That's really the situation that makes it a win-lose negotiation context. What
is a simple example? I think one really easy example we all understand is
something like ebay or yahoo auctions.
How does an auction work? Well, I think we're all very familiar with auctions.
Aren't we? In an auction, somebody wants to sell something, and somebody else
wants to buy something. So in this example, we can say there's someone like
Bob, and he wants to sell his notebook computer, so he's going to sell his
notebook computer online. So he goes online. He's going to try to sell it.
John wants to buy an online computer, and he was going to buy it use because he
wants to get something cheap, so that's part of his goal. So every dollar that
John increases his bid is one more dollar that Bob will make. So when the
buyer increases the price, the seller will make one more dollar of that price, and
the buyer will lose one more dollar in that sale right, in that transaction.
So because John is only going to buy one notebook and bob is only selling one
notebook, they're not going to really know each other in the future, are they? 77 00:06:27,790 --> 00:06:33,340 So this relationship is really a zero relationship. So they can ask themselves,
each side can ask themselves what's the strategy they're going to do, and they
can ask themselves about this question how important is the outcome of this
negotiation now, and how important is the future relationship. And as I say, if
you're buying a notebook online,
probably it's zero relationship because you're going to be just buying it one
time. After this one time, you'll never talk to this person, to see this person
again. In a distributive negotiation, of course, your goal needs to be to win now.
If your goal is to lose, that doesn't really make sense. If you're in a
distributive negotiation that is I'm going to buy something.
It's important to me now, and you know the relationship is not important, so I
need to try to win, and the other side will have to lose for everything I
win. If I'm going to lose in the end, I might as well just not negotiate. In
other words, I'm gonna pay more for the notebook computer than its worth to me
because I've already decided what my goal package is, then I should just not
negotiate, not do it. I need to try to win. This is a key part of our RPG. A lot of
students kind of forget this when they play the RPG. You really need to be
trying to win if it's a distributive negotiation, which it almost always is,
almost always it's about this win-lose situation. So it's important for you to
get this attitude. I'm going to try to win. I really need to try my best to win,
and everything I can get is something that the other side gives me, and that
they lose. And I need to get as much as I can. So this idea of the auction online,
where every dollar counts because every dollar is going to be one dollar that
one side gets, and the other side loses. Now, of course, we can talk about the
limits, right? the resistance points.
How much is Bob willing to...what's his limit? and how much is John willing to
limit? What's his limit? So these are the limits, and if they go over the limit,
they can just walk away. They're not gonna sell, and I think in an auction, you can
actually do that, right? You can just go ahead and cancel the auction or you can
just go ahead and say that the auction is not meeting your minimum price
requirement, right? So auctions, actually, have this built-in, this idea.
Ok. So, again, I want to emphasize, and it's really important because I this is my
biggest hesitation or problem in our class: It's that most of our students are
young. They don't have a lot of experience in business and they just say,
"Well, this is an assignment. I just do the best I can, and then if everybody can be
happy, everybody be happy." Or in Taiwan, people say all past, everybody do OK is
OK. But in negotiation that is not the way it works. In our RPG, in our game, its kind
of fixed into the game that you really need to try to win. That doesn't
mean if you win, the other side is going to suffer or do horrible. It does
mean that the more you get, the other side gets less. But then another time,
they'll play against another team and we'll try to do their best and get as
much as they can. And another team will do a little bit worse. So all the teams
work harder. Actually, the whole negotiation for everyone, the quality
goes up.
That's very different than if everyone just says, "Oh, well, whatever you want,
we'll just cut it in half and we'll just compromise, and you get half. I get half.
We're all happy." That makes our negotiation value go down, or what I call the
market valuation, the whole evaluation of all of the exchange going on.
So really helps to push to win. Get that thinking in your head. "I'm going to win
this negotiation.
This is a distributive negotiation, and I have to push on it. And everything I give,
every two points in this game is going to put me behind. I need to get ahead.
Good luck!
yeah