As mentioned earlier, preparation for negotiation is critical, probably takes up more time than any other aspect of the whole negotiation process, and there's seven key questions to ask. And we're now at question number two, which is to try to step back from the negotiation and decide whether the negotiation is a position-based negotiation or an interest-based negotiation. So in other words, once you get on this path of yes, you're going to negotiate, your next question is, is it position-based or interest-based? Traditionally, negotiations were very much positional. I take one position. I want a high price. You take the other position, low price, and then we fight over whether the price is a high price or low price, or maybe something in the middle. Sometimes people confuse positional negotiation with being happy or not. Often people can leave a positional negotiation pleased with the results. You might think of the old story about, let's say, a couple of kids dividing a pizza. Or let's say you and I want to divide a pizza, and it's an anchovy pizza. And I want the pizza and you want the pizza, so we each have a position. Who's going to be the winner, who's going to be the loser? So what's a away to dissolve the dispute? Well as any parent knows, one possibility is to ask you to cut the pizza in half and then I get to pick which half I want. And we might leave that negotiation feeling very pleased or happy. I've talked with people from very large corporations, from consulting firms, who worked with these companies on negotiation. And basically they think of win-win negotiation as each side leaving happy. However, I think we have to distinguish positional bargaining from interest based bargaining, which developed in the 1980s. Especially with the publication of a classic book on negotiation called Getting to Yes. In Getting to Yes the authors emphasized moving beyond positions and trying to ask, what are the underlying interests that the people negotiating are interested in? In other words, don't ask somebody else what do you want? What's your position? Instead ask, why do you want it? What is your underlying interest? And so in the pizza negotiation, lets say that, for instance, we are negotiating over anchovy pizza, and again a positional result might be to cut the pizza in half and one person cuts and the other person chooses. With an interest based negotiation, we would ask both sides, why do you want the pizza? So if I asked you why you want the pizza? Maybe it's because you love the anchovies that are on the pizza. But as it turns out, you just want the center of the pizza. You don't want the crust. You ask me, why do I want the pizza? Well, I want the crust. As it turns out pizza crust is excellent for converting into bread crumbs in adding to pasta. I've seen some great recipes by the way for this pizza crust addition to pasta. Doesn't sound especially good to me, but I know it's very popular. But, by asking why, by identifying the interests, we've created a real win-win situation. Because I get what I want without taking away what you want. Now, this gets a little complicated. When you start with this basic strategy, one side dividing the pizza that's positional bargaining, the other side trying to build a larger pie that benefits both sides. On the surface that looks simple, the two types of negotiation. But it gets complicated because of the terminology used by negotiators, by teachers, and in negotiation books. For example, dividing the pie is often referred to by academics as distributive negotiation. You're taking the fixed pie and distributing the pieces of the pie, versus enlarging the pie, which is called integrative negotiation, where you try to find the interests of the parties, integrate those interests, and build a larger pie. Dividing is sometimes referred to as competitive as opposed to cooperative. Win lose, versus win win. Zero sum negotiation versus non-zero sum. Adversarial negotiation versus problem solving. Position based, as we've just discussed, versus interest based. My personal favorite is dividing the pie could be called claiming value, as opposed to enlarging the pizza which is creating value. And so somehow you have to cut through all this verbiage. And keep in mind the central issue, which is what type of negotiation am I involved with, is it dividing the pie or enlarging the pie? And that will help shape your strategy. If it's a negotiation that creates opportunities for building a larger pizza, then you'll want to spend a lot more time searching for mutual interests that enable you to do this. Now when I've taught negotiation around the world, I've discovered that some people love the concept of focusing on interests and trying to build a larger pizza. Another group of people, often very experienced business people say well, that's interesting, there's no harm in searching for underlying interests. But, in most negotiations it's simply a waste of time. How can I build a larger pie when I'm selling you my car, and we're fighting over price? How can I build a larger pie when I'm a manufacturer, and I'm selling goods, and I want a high price and you want to pay a low price? They argue that most negotiations are positional negotiations. So again, two groups. One group very enthusiastic about interest based negotiation, the other group very skeptical. Well who's right? I would argue that both are right because with any negotiation, you're probably going to start from a position. Then I would argue you should always search for underlying interests. You should always ask why do you want what you're requesting? What's the reason for your position? Now what's going to happen at that point? Well, either you are not going to be able to identify interests and build a larger pie, in which case, you return to positional bargaining, or you are able to identify interests and build a larger pie. In which case, you're also going to return to positional bargaining, because you still have to argue how big of a piece of this larger pie am I going to get. So bottom line, I think both sides are correct, and I think that the key takeaway here is, regardless of whether a negotiation appears to be position based or interest based, always try to search for the underlying interests in an attempt to build a larger pie. But always be ready for positional bargaining, even when you are able to build a larger pie. So that concludes our look at this very important question of determining at the outset whether the negotiation is position-based or interest-based.