We now continue with our look at preparing

for negotiation by asking the question. Is this a dispute resolution

type negotiation or a deal-making type negotiation. So in other words, once you've
decided to go down the path of yes, you're gonna to negotiate. It's important to
step back and ask, am I negotiating the resolution of
a dispute or am I making a deal? A while ago, there was an article
published by Frank Sander and Jeff Rubin called, The Janus Quality of Negotiations,
which gave a very clear perspective on the difference between dispute resolution
negotiation and deal making negotiation. Frank Sander by the way, is one of the
fathers of alternative dispute resolution, ADR which we're gonna be
talking about in a few minutes. He's a friend of mine who teaches
at the Harvard Law School. In fact, he invited me to teach for
a week in his course once and that he's a true pioneer in
the field of dispute resolution. And Frank and Jeff in their article,
clearly noted that when you're making a deal,
you tend to be forward looking. It's the face of the Roman God Janus
that's looking to the future. You're forward looking, you tend to be
focused on interest of the parties, or at least you should be and
on problem solving. Where as if you're the face of
the God Janus looking toward the past and trying to resolve a dispute, you're
looking backward, you're more positional and the negotiations tend
to be more adversarial. So it's very important from the outset
to think about this distinction. However, even when you're dealing with
the dispute resolution negotiation, you should be thinking, how can I focus
on the interests of the parties to make a larger pie to develop a solution
that benefits both sides? For example, in my course in Ann Arbor
at the University of Michigan, I give my students a scenario involving
a real-life conflict between a software company and a licensee who had acquired
a license to some of the company's software and then try to develop
the software and sell it on their own. So basically, it was an intellectual
property dispute and a very contentious dispute. Well, what many students
discovered
in wrestling with this dispute, is that, actually there was an opportunity
for the licensee and the software company to form a joint venture,
which was beneficial to both sides. And so, even though you're in
the dispute resolution side, try to think of opportunities for
an interest-based negotiation. Now, if you are on the dispute side,
you're trying to resolve a dispute. There are a number of processes that you
can use in addition to negotiation for resolving the dispute and let's take
a look at some of these processes. Here's an example of a recent
dispute at my university. Students at my university love basketball
and when there's an important game, they will wait in line for
many hours to try to obtain tickets. And so, recently on a February morning,
a line of students developed, they began forming the line at 4:00 AM
in the morning, on a very cold morning. Around 7:00 AM,
another line of students developed and there was an argument as to which
line was in the right place. And the students who arrived at seven
argued that the students who were waiting since four had to go
the back of the other line. And this led to a big dispute. They had to call in
University Police. Here's the basic scenario, 4:00 AM,
the students began forming the line, 7:00 AM other students
formed a second line. And my question to you is,
when we have this type of dispute, what processes do we as human beings
use to resolve this type of dispute? Please hit pause. Think about this for a
second and
write down a list of processes that might be possible for
resolving this dispute or any dispute, any personal dispute or
any business dispute. I'll give you a hint there
are six main processes, try to see if you could come up
with at least five of those six. So hit pause and then we'll continue. Here's a
spectrum showing
the six main processes. You can start on the right hand side,
Avoidance. One line of students might simply say to
the other line of students, okay, you win. We're not gonna challenge you,
we'll move to the back of your line. That's avoidance. The second of course, is
Negotiation. Which is used for both deal making and
dispute resolution. A third process is Mediation, which involves bringing in a
third
party to mediate the dispute. A mediation is a negotiation, but it is
a negotiation assisted by a third party. A fourth possibility is Arbitration.
Bringing in a third party, but in this case the third party has
the right to decide the dispute. Which is also true of Litigation. So arbitration
and
litigation are very similar. And later in this course,
we're gonna look at them in more details, especially arbitration. I'll show you a
video
clip of an arbitration. But for now, think of arbitration as
simply a private form of litigation. And then finally we've
got the power option. The students could begin fighting
with each other, pushing back and forth to determine who would
be at the head of the line. In this particular case,
what happened is that they used a combination of mediation and
arbitration. First of all, the police came in. And as arbitrators,
ordered the students from one line, the students waiting since 4 o'clock,
to the back of the other line. Then, a representative of
the athletic department came out, and acted as a mediator trying
to mediate a resolution and actually came up with some additional
tickets to satisfy both sides. And in the following day the students met in a
negotiation to prevent
this from happening again. So, they actually used three
processes in resolving this dispute. Now, you can look at these
dispute resolution processes through a variety of lenses. And let's take a look at
three of those lenses. The first of which is called alternative
dispute resolution, or shorthand is ADR. Several years ago, people in business
began to become concerned about
the high cost of litigation. And they started to ask this question. Why is it that
when we are involved
in a business dispute, we outsource the dispute to lawyers and
to the legal system? We have the business skills
to resolve disputes. Why aren't we using those skills? And so they started to
develop
alternatives to litigation. I remember when this happened
in the mid 80s, because the CEO of a large
corporation called Citicorp called in a group of us from 10
leading business schools for lunch. We had a long lunch and a long meeting. And at
the meeting,
his name was Walter Riston. At the meeting Mr.
Riston basically challenged us. He said why aren't you teaching
ADR in business schools? Litigation is costly. In terms of time and money to
businesses, you should be teaching future
business leaders how to use ADR. And the ten of us went
back to our campuses and we began developing courses on
negotiating and dispute resolution. So my question for you is,
look at this spectrum. Which of these processes would you
call alternatives to litigation? Litigation is the enemy. Which are alternatives?
Write down you answer. And the alternatives you should
have written down are arbitration, mediation and negotiation. And we're going to
explore
these later in the course. And I'm going to give you some
tools that you can use for avoiding litigation later on. A second lens that you can
use in looking
at the spectrum of processes is the so called third party lens. When you read the
newspaper, often you'll read that a business
was involved in a dispute, or in litigation, and they used a third
party process to resolve the dispute. Which of these processes would
you call third party processes? Please write down your answer. And you should have
written down based
on our earlier discussion litigation. The third party is a judge, arbitration,
which involves bringing in an arbitrator. And mediation,
which is assisted negotiation where a mediator helps
the parties resolve the dispute. Now, in thinking about these
third party processes, you can think about
your external disputes. Your disputes with other parties
where you bring in the third parties. But, there are also internal third party
processes where you as a manager or as a leader in a company will
play the role of an arbitrator or a mediator in resolving a dispute. And so later
when we look at
a film clip of the mediation you will see some techniques and tools that
you can use as a business leader for resolving disputes within your company. The
third lens I'd like to look at
is an academic lens called power, rights, and interests. Academics love this
framework. Of course, power is obvious, but
which of these processes relate to rights? That is to determine who's right and
wrong. And which of these processes relate to
finding the underlying interests of the parties and trying to build
something that benefits both sides? Think about that for a second,
write down your answer. Which of these processes
are rights oriented, and which of these processes
are interests oriented? And what you should have written down is that the rights
processes
are litigation and arbitration. Where the judge or
arbitrator decides who's right or wrong usually based on a legal rule. The interest
option,
are mediation and negotiation. Again, mediation is simply a form of
negotiation assisted by a third party. Now, even though this is an academic
construct, power, rights of interest, I personally think it's
a very practical tool for giving you options when you
are faced with a dispute. And in fact,
some companies use this as a tool. Here's an example, I won't identify the
company but its from an internal company document and I paraphrase, but
what they say in the document, if you were involved in a dispute involving
our company, here are your choices. First of all you can use a power option. You
can force the other
side to do what we want. Let's say we're in
an argument with a supplier. We're powerful and
regardless of whether we're right or wrong we can force them
to do what we want. Second, we can try a rights option. We can go to a judge or an
arbitrator
who will decide who is right or wrong. Third, we can use avoidance. We can withdraw
from the dispute. Let them have what they want. Let's say we're in a dispute
with a key customer and we don't want to lose the customer. Even though we're sure
we're right,
we'll let them have what they want. And then finally there's
the interest option, try to negotiate an agreement
based on our needs. So, those are the three lenses. Now, there's a additional final
perspective for looking at this spectrum and that is,
can these processes be used for deal making Instead of dispute resolution. All of
these processes can be used for
resolving disputes. But what if you're doing a deal? Traditionally with deal making
the focus is on negotiation. Whereas the other processes
relate to dispute resolution. However, there has been a major
change over the last decade, where some of these processes
such as arbitration and mediation are used for deal making
as well as for dispute resolution. And I'll give you some detail
examples later in the course. But for the time being,
here's a quick example. A few years ago, I was teaching
a negotiation course in Hong Kong and one of the participants came up
to me during a coffee break. And he said,
that he was a negotiation consultant. He was working with a large
power company in Hong Kong, and that he was negotiating, and
let me get the exact number here. He was trying to negotiate a contract
that was worth $10 billion that would run over 25 years. The power company wanted
to purchase gas,
basically. And they have been negotiating for
months and they were stalled, they were not making any progress. And so he wanted
my advice on
how to move things forward. Now i'm thinking to myself, now let me
get this straight, you're a negotiation consultant, you're a professional
consultant, you've been working on this for months, and you want me to solve this
problem during a 15 minute coffee break. That was my first thought,
which I didn't say to the other person. But then I started to ask this
person a couple of questions. That I'm sure you would ask,
especially after you finish this course. Number one, have you completed all of
your fact finding, have you presented all possible facts to the other side
that might change their perspective. They said yes,
we have completely explored facts. Second, have you explored
all of your BATNA options. Now that's not gonna mean anything to
you right now, but it will shortly. BATNA is a critical concept. And his basic
answer was yes, we've thoroughly looked at
all BATNA possibilities. So I was running out of questions,
but then I asked a final question, have you thought about bringing in
a third party, an arbitrator or a mediator to help you with the more
difficult aspects of this negotiation? And at that point, the light went on. He had
not thought about
using arbitration or mediation for deal making,
as opposed to dispute resolution. And he left with that takeaway idea. So we're
gonna get into
this in more detail later, but think of these two processes,
arbitration and mediation, as useful not only for deal making,
but also for dispute resolution. So, in conclusion, we think about the distinctions
between
dispute resolution and deal making. I encourage you to search for interests, even
when you're in
a dispute resolution negotiation. It's important to understand the six
types of dispute resolution. And the three lenses that you can use for
looking at these types. The ADR lens, the third party processes
lens and the power/rights/interests lens. And finally, consider using
dispute resolution processes for deal making, such as mediation and
arbitration.