Wednesday, June 15, 2005

Underneath it all

I'm up to my ears in preparation memo's that I have to grade for the negotiations class I TA at Stern. The assignment was to review a case (from the excellent people at the Dispute Resolution Research Center), and to write a 3-5 page paper on how one would prepare for the negotiation.

The students that are writing these papers have had 12 hours of class already, most of which focused on integrative bargaining, or "expanding the pie". The number one method we discussed on how to create more value was to focus on the interests, rather than the positions, that the parties bring to a negotiating table. Our professor gave a simple example to illustrate this concept. She and her husband had a disagreement about where to go to dinner - she really wanted to go to Cafe Spice, while he wanted to go to Nobu. Students had to figure out a way to make both of them happy.

Well, I have to admit, people came up with some inventive suggestions: "Go home, and each order take out from different places", "Meet up after dinner", "Have dinner at one place and dessert at the other". However, it took several minutes before a student thought to ask - "Why did you want to go to Cafe Spice, and why did he want Nobu?". The answer, which made the solution much easier was, "I wanted somewhere close to school, and he wanted a nice sit down sushi dinner". Well, at that point, the answer was obvious - Japonica, a nice sushi place just around the corner from Cafe Spice.

A simple yet powerful concept, right? But it is amazing how hard it is to recast your thinking to allow for the probing that is required to do this kind of value creation. The most important step is to listen carefully. Despite having heard about this for the first four classes, many students still wrote the paper based on achieving the positions set out in the case, not satisfying the underlying interests. People display this behavior all the time (myself included), focusing on "winning" based on hitting their numbers or having the other party cave in. However, a lot of the time these "winners" could have achieved even better results by listening carefully.

I think the same skill set that allows for interest-based negotiating can be used in product development and marketing. While market driven product development is important, this has to be tempered with a questioning of the underlying needs. If a customer requests widget x on screen y, a responsive company may have a new build out the next week with that exact widget. However, an interest-based company will work with the customer to figure out WHY they want widget x.

Now this isn't license for companies to respond "you don't really want that". I've heard that as a customer before, and it's incredibly frustrating. "Can you explain why you want that? Maybe we can figure out another approach." is a much more satisfying response, and engages the customer's efforts in improving your own product.

It isn't easy to do, but I think the benefits are great if you can turn your development team into an "interest-based" organization.