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 going to negotiate, it's important to step back and ask am I negotiating the resolution of dispute or am I making a deal? A while ago, there was article published by Frank Sander and Jeff Rubin called The Janus Quality of Negotiations which gave a very clear perspective of the difference between dispute resolution negotiation and deal making negotiation. Frank Sander, by the way, was one of the fathers of Alternative Dispute Resolution, ADR, which we're going to 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 he is 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 interests 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 a 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 tried 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 7:00 argued that the students who were waiting since 4:00 had to go to the back of the other line. And this led 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 can 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 going to challenge you, we'll move to the back of your line. That's avoidance. A 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, bring 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 going to look at them in more detail, 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 then the following day, the students met in a negotiation to try 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're 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 Wriston, at the meeting, Mr. Wriston 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 negotiation 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 your 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 this 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've 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 part 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 a 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 determining 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 interest oriented. And what you should have written down is that the rights processes are litigation and arbitration where a judge or arbitrator decides who's right or wrong, usually based on a legal rule. The interests 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, and interests. 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 it's from an internal company document. And I paraphrased, but what they say in the document, if you are 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. Were 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 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 an additional final prospective 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 detailed 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 had 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, 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 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? And he said yes, we have completely explored facts. Okay, I said second, have you explored all of your BATNA options? Now that's not going to mean anything to you right now but it will shortly. BATNA is a critical concept, and his basic answer was yes we have 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? 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 going to 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, when you 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 and interests lens. And finally consider using dispute resolution processes for deal making, such as mediation and arbitration.
