Monday, September 12, 2011

Negotiation in Crisis, Part 2

“OK,” Verdi said. “I understand. One of the big mistakes around the negotiation our government just had over the national debt was the failure to understand who the parties in the negotiation were.”

“That’s correct,” Tyler Gitou said as he laid his menu on the table. “The very first thing a Deal Whisperer does when working on a deal is map out all of the parties and make sure he or she understands the interests of each of those parties.”

Verdi scowled. “Each of the parties? What do you mean?”

“Let’s go down the list. President Obama: what were his interests?”

Verdi thought for a moment. “I think it was to raise the debt ceiling.”

“That’s not an interest,” Tyler said. “That is an option to meet his interest. Think again.”

“To not cut too much from spending on social programs?”

“Nope. Again, an option to meet his interest. Look at it another way: what was going to happen in the event of no deal? What was President Obama and John Boehner’s BATNA?” Tyler asked.

“Not a very good one,” Verdi said. “Basically a meltdown of the economy!”

“Correct. So it would be fair to say that President Obama’s and John Boehner’s interest was to prevent a financial meltdown. Why?”

“Why? Well, because we’d be in ruin!” Verdi said.

“Maybe. But what would happen to them, as individuals.”

“They’d get thrown out of office in the next election.”

“Exactly,” Tyler said. “Any time you are dealing with politicians you must consider that their primary interest might be self-preservation: what do I need to do to make sure I get elected again? That means producing an outcome that both meets the interest of avoiding a financial meltdown and not damaging their political record for re-election. Each party also has an interest to try and end the negotiation in a way that the other party is hurt to give them an advantage in the next election.”

“Wow,” Verdi said. “There’s a lot going on there! Save the country, save yourself and kill the other guy all at the same time. It’s a shame that all of those interests are treated equally by the parties rather than them getting together and saying, ‘the financial health of the nation trumps any personal interests. Let’s work together as joint problem solvers.’”

“That’s because they are not the only parties to the negotiation.” Tyler said. “President Obama and John Boehner are members of political parties. The members of those parties have interests. The Tea Party has interests. Foreign governments, such as China, which hold a lot of U.S. debt, also have interests. Financial institutions worldwide have interests and finally, the media has an interest: get a good story out of this. All of those parties are influencing the tone and substance of the discussions between Obama and Boehner.”

“So you’re saying it was inevitable that the outcome would end poorly for everyone?”

“Not at all. I’m saying it ended poorly because no one did a strategic analysis of the situation. The Democrats and Republicans viewed it as a fight to have in the media instead of an issue of national interest that required masterful diplomacy and negotiation skills.”

“So what’s the answer, Mr. Deal Whisperer?”

“The same as in any other deal,” Tyler said. “First, establish a shared goal, an outcome, that both parties agree on.”

“Get the Democrats and Republicans to agree on a common goal? That’s asking a lot, isn’t it?”

“No, you can always find an agreed-to outcome at some level. But one party has to have the communication skills and emotional discipline to find that outcome with the other party. Unfortunately, in this negotiation, it was every man for himself. In fact, if not for the deadline and the terrible BATNA if they did not agree, they probably would still be fighting over it today.”

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