Proceedings of 31st International Business Research Conference
27 - 29 July 2015, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-80-1
The Great Negotiation Hoax
Leslie J. Shaw*
This paper looks at the criticism of positional bargaining in academic publications on
negotiation, argues that such criticism is based on tendentious assumptions and
advocates a common-sense approach to the subject more in line with the realities of
the business world.
Field of Research: Negotiation
“Despite criticism of positional bargaining, supporters of this negotiation strategy do exist.”
1
Most academic writing on negotiation2 adheres to the theory outlined by Roger Fisher and
William Ury in Getting to Yes: Negotiating Agreement Without Giving In (1981). The concept
of what they termed “principled negotiation” has become all-pervasive in both academic and
general literature as well as in negotiation training.
This popularization of what is commonly referred to as “win-win” negotiation has been at the
expense of what Fisher and Ury condescendingly referred to as “positional bargaining”,
otherwise known as “win-lose” negotiation.
It is now almost impossible to broach the subject of negotiation without getting locked in to a
series of dichotomies based on the opposition between the principled and positional
approach that borders on the Manichaean: integrative/distributive, cooperative/competitive,
collaborative/adversarial, win-win/win-lose, non-zero-sum/zero-sum, interests/positions. The
principled method is frequently referred to as fair, reasonable and efficient, while positional
negotiation is constantly associated with negative terms such as haggling, deception, high
pressure, inefficient, unethical and dirty tricks. Principled negotiation produces wise
agreements, positional negotiation results in unwise agreements. Here is a description of
positional bargaining from an advocate of the “win-win” school:
The positional approach to negotiation, in which the process is viewed as a zerosum game, does greater damage to the positional bargainer than other parties. A
positional bargainer has locked himself into position; moving out of that position
will most likely yield a loss of face. Even worse, moving away from a position may
well diminish the credibility of the positional bargainer so substantially that his
reputation suffers.
Positional bargainers, by taking that approach, are making it clear that they do not
intend to 'play fair' in their negotiations with others. People who feel they have
been dealt with unfairly are going to be reluctant to enter into agreements or, if
they must do so, they will be on the lookout for opportunities to breach unfairlyreached agreements they've felt forced to make.
*
ESCP Europe, 79 ave.de la République, 75011 Paris, France. lshaw@escpeurope.eu
Proceedings of 31st International Business Research Conference
27 - 29 July 2015, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-80-1
The long term consequences of using a positional approach include greater
difficulty in finding people willing to negotiate with you, a reputation for
narrowness and closed-mindedness, and thus great difficulty establishing and
maintaining the reciprocity which is fundamental to rewarding human
relationships.3
Such a schematic treatment of negotiation is not only intellectually dishonest, but runs
counter to common sense. In our experience, many participants in negotiation training
courses are instinctively sceptical of the dismissal of positional bargaining, but refrain
from voicing their reservations as to the utility of principled negotiation, either through selfcensorship or undue respect for the academic or expert who is promulgating it. It is almost
as if calling into question the veracity of what has become the standard view of
negotiation amounts to heresy.
We hold that the theory of principled negotiation is fundamentally flawed, firstly, because
it runs counter to what most negotiators do in the real business world and secondly,
because it is culturally biased, having been developed on the east coast of the USA in an
academic environment characterized by political correctness and a utopian world view.
Even if one were to accept the theory, in practice it would be unworkable outside the
environment within which it was developed.
Despite the assertions of the proponents of principled negotiation as to its superiority, the
fact is that positional bargaining is the method most commonly used in economic
powerhouses such as China, Russia, Brazil and India. It is difficult to imagine principled
bargaining being employed successfully in Latin America, Africa, Asia and even in
Southern, Central and Eastern Europe. In Russia, for example, opening positions tend to
be extreme and they are quick to exploit weaknesses in the other party. Despite this
tough stance, they move rapidly to a conclusion once they realize that they have
extracted sufficient concessions to meet their objectives and that putting further pressure
on the other party is likely to lead to a shutdown. Adopting a “win-win” strategy in such a
business environment is likely to be interpreted as weakness.
The main criticism levelled at positional bargaining is that it is a zero-sum game in which
one negotiator’s gain or loss is exactly balanced by the losses or gains of the other
negotiator. A “good” negotiation should create rather than distribute value. It is also
considered to be inefficient because if both negotiators begin from extreme opening
positions much time will be wasted making incremental steps towards the position of the
other party in order to reach an agreement. This is an unfair criticism that attacks
positional bargaining on the basis that opening positions will tend to the extreme. It also
ignores the fact that in some areas of the world, such as North Africa, extreme opening
positions are the norm.
Positional bargainers are also caricatured as being egotistical, emotional and subjective,
yet there is no evidence to support this assertion. As a consequence they are said to
engage in negative behavior such as attacking, retaliating and manipulating. They are
incapable of identifying their real interests, insufficiently open-minded to explore options
for agreement and lack creativity. Interacting with others and communicating clearly are
skills they are deficient in.
Proceedings of 31st International Business Research Conference
27 - 29 July 2015, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-80-1
Competitive/Adversarial negotiators move psychologically against their
opponents, try to maximize their own returns, strive for extreme results, begin
with less realistic opening offers, behave in an adversarial and insincere
manner, focus mainly on their own positions rather than rely on objective
standards, frequently resort to threats, minimize the disclosure of their own
information, are closed and untrusting, endeavour to satisfy the interests of
their own side, try to make minimal concessions, and manipulate opponents.4
Given this extremely negative portrayal of what is after all the most widely used style of
negotiation, it is small wonder that readers of negotiation manuals and participants in
training courses come away convinced that the only acceptable way to negotiate is the
“principled” way. It is both an ideal to be aspired to and a message to be transmitted to
others. The hoax is complete as the converts return to the market place to practice their
newly acquired skills. However, they will sooner or later be confronted with the harsh
reality of the workaday world and find themselves face to face with counterparts who don’t
play by the rules and guidelines used in the classroom and described in the literature.
One is reminded of the passage from Boswell’s Life of Johnson where Samuel Johnson
ridicules Bishop Berkeley’s theory of immaterialism:
After we came out of the church, we stood talking for some time together of
Bishop Berkeley's ingenious sophistry to prove the nonexistence of matter, and
that every thing in the universe is merely ideal. I observed, that though we are
satisfied his doctrine is not true, it is impossible to refute it. I never shall forget
the alacrity with which Johnson answered, striking his foot with mighty force
against a large stone, till he rebounded from it - "I refute it thus."5
We believe negotiation to be an essentially competitive exercise and asserting that
negotiation must always be “collaborative” amounts to a contradiction in terms.
One of the most successful negotiators, yet one of the most publicly reviled, is Ryanair
CEO Michael O’Leary. His aggressive negotiating style is legendary, as the following
account of his negotiation with Boeing demonstrates.
After the attack on the World Trade Center in September 2001, demand for new aircraft
plummeted. Ryanair went against the trend by selecting the Boeing 737-800 to expand
and update its fleet.
Before the negotiations got underway, O'Leary cranked up the pressure on Boeing. He
cancelled options on nineteen 737-800s and announced that instead Ryanair would
source fifty aircraft on the second-hand market. Within the space of a few weeks Ryanair
had offers for six hundred aircraft, all priced at under $15 million.
O’Leary nevertheless made it known that he favoured sticking to his previous policy of an
all-Boeing fleet in order to contain maintenance costs. In addition the 737-800 had thirty
more seats than the rival Airbus A320.
Proceedings of 31st International Business Research Conference
27 - 29 July 2015, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-80-1
At the same time as this positive signal was being sent to Boeing, O’Leary continued
talking to Airbus in order not to let the Seattle negotiators get too confident. He told Airbus
he would consider their counter-offer and used the rivalry between the two aircraft
builders as a deliberate negotiating strategy. Using a tactic that would lead the exponents
of principled negotiation to recoil in horror, every time he got a proposal from one supplier,
he faxed it to the other, asking them to come up with a better offer. This tactic worked
because he managed to cut the Airbus offer to $30 million per plane, fifty percent less
than their opening position. O’Leary had shaken hands on the deal with Airbus CEO Noel
Forgeard but promptly switched back to Boeing and secured the 737-800s at $28 million
each.
During these negotiations both Airbus and Boeing knew what was going on but could do
nothing about it. O’Leary knew that with falling demand for aircraft Ryanair had the upper
hand and he exploited this situation ruthlessly.
This hard-nosed negotiation style is not unique to Michael O’Leary. Tex Bouillion, the
legendary CEO of Boeing, was famous for his uncompromising approach to negotiation
and his determination to win contracts at all costs. When Boeing and Airbus were
competing for the sale of aircraft to TWA in the early 1980s, Bouillion pulled out all the
stops when he learned that the airline had opted to buy the Airbus 310 rather than the
Boeing 767. Knowing that aircraft procurement decisions are often taken on the basis of
political as well as commercial criteria, he wrote personal letters to the Members of the
Board of TWA, appealing to them to buy American. He then made a new offer committing
to pay penalty costs if the aircraft failed to meet fuel performance standards. These
standards were set deliberately high so that the penalty payments were guaranteed and
acted as a hidden discount. Bouillion’s persistence paid off and TWA finally decided to
purchase the 767 from Boeing.
While Fisher and Ury’s book on negotiation is relatively comprehensible to the average
reader, this is certainly not the case for subsequent academic works, which are filled with
jargon to the point of being incomprehensible. Terms such as “parasitic integration”,
“negotiauction”, “motivated illusion”, “hidden constraint” and “deal-design barrier” are now
par for the course in the output of scholars and specialists. The following extracts from a
recent book by two Harvard professors illustrate how far removed from reality negotiation
research has become, oscillating on a scale from the incomprehensible, through
documenting the obvious, to the downright ridiculous.
Extract 1
The particulars of a proposed deal define the value of "yes." But how is the
value of "no" determined? It depends on how well your interests are served by
choosing your best "no-deal" option - the most promising course of action you
would take if you decided to say no to the proposed deal. Along with getting all
the parties right and mapping their interests accurately, understanding - and
often shaping - everybody's best no-deal option is the third fundamental
element of a negotiation's set-up.
This is no more and no less than a rehashing of Fisher and Ury’s BATNA concept (best
alternative to a negotiated agreement).
Proceedings of 31st International Business Research Conference
27 - 29 July 2015, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-80-1
Extract 2
One simplified way to view negotiations is to see them as a sort of tug of war a battle that takes place along an adversarial line segment (the "rope"), with the
seller tugging toward "high" and the buyer tugging toward "low." The buyer's
closely-guarded true maximum determines the one end of the line segment
(i.e., the maximum acceptable price if there is to be a deal), and the seller's
equally well-guarded true minimum bounds the other end (i.e., the minimum
acceptable price if there is to be a deal). It doesn't much matter whether the tug
of war concerns the price of a car or a house, an insurance settlement, or the
sale price of a company. In all cases, you should keep the mental image of the
"price line segment" in mind; it has a very tight relationship to each side's best
no-deal option.
You don’t need a Harvard professor to tell you that buyers and sellers have target prices
that they don’t reveal to each other before the negotiation.
Extract 3
To be more concrete, let's say that Joe is selling his condo and has an
acceptable offer (to him) for $450,000. Betty, meanwhile, would pay up to
$500,000 for Joe's condo, rather than (a) buying another condo or (b) doing
without a condo. The Joe-Betty ZOPA, therefore, obviously exists and is the
set of prices between $450,000 and $500,000.
Of course, it's easy to imagine a scenario with no ZOPA. For example: If Joe
already had a $500,000 offer while Betty could buy exactly what she wanted
elsewhere for $450,000, there'd be no ZOPA for Joe and Betty. 6
Negotiation scholars and experts often tend to use examples that are so simple they
verge on the ridiculous.
If Amazon has almost 27,000 books about negotiation for sale, the number of articles and
papers on the subject is impossible to calculate, but probably runs into the thousands, if
not tens of thousands. This brings to mind Professor Colin McCabe’s memorable
comment on academic research:
Future ages will look back with astonishment and contempt on the amount of
wasted labour involved in the production of unread academic work.7
The problem with much academic work on negotiation is that it finds its way into popular
books on the subject, as well as providing a foundation for training courses delivered to
vast numbers of students and practitioners. Besides giving them unrealistic expectations
and unusable techniques, such training is, at best, likely to cause participants to waste
time on applying the theory before defaulting back to the tried and tested method of
positional bargaining and at worst, to lead to failed negotiations as they try to deal in a
“principled” way with counterparts who do not share the utopian world view of academia.
Proceedings of 31st International Business Research Conference
27 - 29 July 2015, Ryerson University, Toronto, Canada, ISBN: 978-1-922069-80-1
The “win-win” view of negotiation is highly normative and is grounded in the belief that
there is a “right” way to negotiate. It ignores the basic fact that in the real world
negotiation revolves around positions which, by definition, reflect the interests of the
negotiators. Nobody would deny that in a sales negotiation the seller’s interest is to obtain
the highest price possible while the buyer will seek to achieve the lowest price he can get.
The agreed price will depend on factors such as the balance of power between the
parties, reflected in their ability to impose conditions and extract concessions. The most
effective way to conduct such a negotiation is to set objectives and opening positions for
each of the variables involved, support those objectives and positions with factual
information and arguments and seek to persuade the other party to accept them. The
price and other terms agreed will of necessity be the result of a process of positional
bargaining and there is no getting away from that. If the initial price proposed is reduced
by 10%, the seller suffers a loss and the buyer realizes a gain. To assert that there is
something unethical about this process is unrealistic. Even if one or both negotiators were
to adhere to the “principled” method, they would still have to go through the mechanics of
positional bargaining, while disguising their behavior and changes of position as a
disinterested quest for mutual interest.
The output of negotiation researchers and educators would be more useful to
practitioners if it focused on increasing the efficiency of the positional bargaining method
rather than criticizing it on pseudo-ethical grounds.
However, negotiation publishing and education is a multi-billion dollar business and as
long as there are people willing to spend money on the products peddled by these snakeoil salesmen, the Great Negotiation Hoax is likely to continue.
1
Brad Spangler, Positional Bargaining June 2003 http://www.beyondintractability.org
accessed 26.03.2015.
2
3
In March 2015 Amazon.com listed 26,591 books on negotiation.
http://www.negotiationskills.com/qainterest1.php accessed 26.03.2015.
4
Charles Craver, Negotiator Styles in Bargaining http://www.negotiations.com accessed
26.03.2015.
5
James Boswell, Life of Johnson London, 1953, p. 333.
6
David A. Lax and James Sebenius, 3-D Negotiation: Powerful Tools to Change the
Game in Your Most Important Deals, 2006.
7
Colin McCabe, Critical Quarterly, March 2005.