Transcript

Nolan Martin : Hello and welcome to the NEGOTIATEx podcast. I am your co-host and co-founder Nolan Martin.With me today is my good friend, co-founder AramDonigian.Aram, how's it going man? How are you doing?

Aram Donigian : I'm good. It's a beautiful day here. How are things in your neck of the woods?

NM : It's actually rainy and it's still into March. So in cold, I'm hoping that it gets warmer soon and I'm looking forward to all the flowers and trees and everything coming back. So it's really what I'm looking forward to.

AD : Yeah, it's always that breath of new life, right. That's kind of the fun, the fun of spring starting, although up where I live, we kind of call the beginning of spring mud season. And so, not as enjoyable and pleasant as it gets wet and mucky for a while.

AD : You gotta deal with the bad though, if you wanna enjoy the good, right?

NM : Yeah, I guess so. I am glad that I am not living up there. I don't think I could do that, at least not right now. Hey, let's jump right into it. Now, this is a question that got brought up- I was doing military training recently with an organization-and one thing that I think really stood out to the participants of the training was really digging into interests. And when we think about interest, thinking about it from the company, the organizational perspective, and then the individual perspective. SoAram without further ado, let's jump into this podcast. How's that sound?

Exploring Interests In A Negotiation [2:34]

AD : That sounds great. Yeah. Let's I think interest comes up quite a bit Nolan. We define interest as what motivates a party to negotiate in the first place. It's what they're trying to satisfy through a negotiated agreement. We would give it further definition and we would distinguish interest from positions.Positions being wants, demands, singular solutions to a problem.Interest being the underlying needs, fears, concerns, and motivations that again are driving somebody to negotiate.

NM : When you're talking about organizational interest, you're really thinking about the strategic, the financial, operational, relational, and then we're gonna add that fifth component and that's personnel.All of these are going to be interest of the organization. SoAram, with strategic organizational interest, what are we talking about here?

AD : Yeah, so I think we're talking, you know, building a brand image, being able to keep customers happy, managing risk really well, particularly in this volatile environment that we have experienced between a pandemic and now a war in Eastern Europe that is affecting so many things. We just need to manage risks, streamline supply chain constraints. Oftentimes businesses are trying to manage their margins. They're looking to expand into adjacent markets or potentially respond preemptively to different competition that they're anticipating, competitive threats, expanding their product line, their services, maybe to existing customers or to future customers. So they might be trying to expand their customer base. Obviously, organizationally companies are always trying to increase efficiencies of their operations.You know, how they're handling fixed costs versus variable costs and managing their cash flow and all those things show up so often in interest. And to your last point too, they're trying to manage human talent, right? It's very costly to let your employees turn, you know, have a high turnover rate with employees. So they're trying to keep people engaged, keep people happy. That's a number of things that companies are trying to achieve through negotiation.

NM : Yeah. And so whenever you're negotiating, you really just have to think about what's the overall different interest so that as you start to prepare and plan how you are going to move through the negotiation, you at least have some sort of thought.And these are assumptions and we can always test our assumptions as we talk with our counterparts to really understand the interest of all of the different stakeholders that are involved in the negotiation. So anything else here?

AD : Yeah, I would build on what you said about, we do make assumptions about what their interests might be.If we prepare well in negotiation, we've spent time thinking about hours and I know we're gonna get into individual interests in a moment, but we thought about our organization's interests and hopefully we've spent some time thinking about their organization's interests. And so as we get into the negotiation, a few helpful things to kind of start getting the conversation flowing around interests are, you know, is sharing our own, building some reciprocity, get them to share back and inquire about theirs, right. I've thought about what yours might be curious, what I have wrong, let me test my assumptions. I understand what your position is, why that position, how does that help you? Those are some good ways to really get to those underlying organizational concerns they might have.

NM : And so what makes this all very complex is that the individual also has interest. So although it may be an organizational negotiation, that individual that is your counterpart is going to also have some, probably not for selfish concerns, but definitely some of their own interests. Isn't that rightAram?

AD : Yeah, that's absolutely right. I think you've said it well. And I think sometimes our tendency, now, if we've done a good job of thinking about our organization's interests and their organization's interests is we start to ignore or forget that there's a human being there across the table from us, right. Or hopefully if we've reframed the setting, maybe next to us at the table, and we're solving this problem and that person has interest too. And those come in a variety of, of shapes too, right? They're trying to earn a bonus perhaps, or meet a certain performance metric or they're trying to just avoid the hassle or inconvenience of going back and explaining to their boss something that is opposite of what their boss wanted. They've got interest around building new skills, demonstrating some competency as a negotiator, as a problem solver at the table,

they're probably looking for, you know, both immediate and future positioning career opportunities within the organization. They're trying to maintain internal relationships. If this is a long term- I can imagine a long term kinda supplier relationship-they're concerned about keeping us happy and are maintaining that relationship, but not at any cost, right. Doing something that's fair and reasonable. And I think if you get, you know, a little higher up, uh, we sometimes talk about Maslow's hierarchy of needs; I mean, people wanna be respected. They wanna do work that really has meaning and, and matters for the world or matters for the organization. And so I think those sort of things come into play too. We often think about interest as being, not just the tangible or substance components to a negotiation, but also being some of those psychological and emotional things too, that are occurring for a person and to an organization as well.

Maslow’s Hierarchy Of Needs [8:02]

NM : Yeah. And I think jumping into psychology 101 here, I'll kind of rewind a little and explain the Maslow's hierarchy. I'm sure majority of our listeners have already heard this once in their life, but I'll basically go over it one more time. So Maslow's hierarchy of needs is basically a pyramid. And at the base level you have your physiological needs. And so these are the most important things that someone needs to satisfy before they can start getting at the other levels, which I'll get to here now. So the fourth level is gonna be safety needs. So as long as they feel safe, then that addresses that level. Then you're gonna have belongingness and love. So it's the third level up from the bottom. Then at the second level to the top, you're gonna have esteem needs and then at the very top is self-actualization. So what Aram just said is that we can't immediately jump to trying to put someone's name on a library and think that we have satisfied safety needs. So if there's a safety concern that needs to be addressed first, before we can really start digging at interest, that may be up and above that on Maslow's hierarchy of needs. Does that make sense, Aram?

AD : Yeah, it does. And I think the discipline is in digging around what those needs are. Let me give you an illustration that I like using. I walk in the other day to our kitchen and my two youngest daughters who are five and three are fighting over the very last orange that we have in the house. Okay. And my five-year-old who's a little taller is holding up over her head and says, “I got the orange, I got the orange, it's mine, it's mine”. And, and I walk in, right. And I'm trying to get work done. I can't remember if you and I maybe been on a call or something, but anyway, so I grab the orange, right? And then the wisdom of Solomon, I grab this thing, which I know looks very scary. This was a gift from my mother.

It's a meat cleaver. Right. But I grab it. And in the wisdom of Solomon, I put it down and Ichop that orange in half, problem solved. They both get half the orange problem solved.But the problem's not really solved,is it? Because if I watch them for a little bit, I notice something. I notice the three year old who has sugar problems carefully. I mean, she just needs energy. She's hungry all the time. It seems like she's grown. She's a growing little lady. She's peeling the orange very carefully eats the fruit of the orange, but she doesn't feel greatcuz she really needed to satisfy her hunger. She really needed a whole orange. She really needed that sugar from an entire orange. And if I watch my five year old, who's just starting to learn how to bake and has a great class that she goes to, kids she had promised them, she'd bring in some chocolate orange brownies.

Well, if I watch her, she, she cakes her half of the orange and she carefully peels it. And then she uses the orange peels. She grates it to make some chocolate orange brownies, but she can only make a half batch. So now she's not gonna have enough for the entire class and she's gonna let her teacher down and she's gonna let her classmates down. And so she's disappointed, right? She's frustrated. They had different interests that I didn't take the time to uncover. And had I done that, I could have potentially solved for the real problem. And that's why, as you lay outMaslows, it's really important to spend time digging into these layers of, of interest.

NM : And that's not the only story or the only illustration that we're gonna bring to this. And for those of you who are just listening to the podcast, Aram just actually went through all of that in the video. So check it out. It's gonna be on YouTube.

AD : You get to see me wielding a meat cleaver

NM : You did an awesome job explaining this though. Like I could have visualized it, even if I wasn't watching you down here on my screen. So great job with that.

AD : Alright

NM : So what's this other illustration. I know we had talked about it, uh, in the pre-call.

AD : Oh, there's so many, you know, there's so many examples. So one is why, because you and I would say that interests are the essential foundation for all the sort of work we do. And the reason that we tried to build working relationships and develop good effective two-way communication, manage the processwell, the reason that we're able then to get creative around options and different possible solutions, find things that are fair, reasonable, defendable, and make commitments that last is because we understand interest. In fact, I would say to our ability to know our walk away, if we bring in the seventh element there of alternatives is really enhanced because I know what I'm motivated by. I know what my needs are. And so I like to another illustration. I mean, just to emphasize why these things are important is to use Lego blocks. And if you, if you ever take a look back and again, folks that are just listening, I have on my shelf here, I have one of my favorite Lego sets. I love Legos. They're so much better than when we were kids Nolan.

NM : We were kids?When you were a kid. And then I probably was born.

AD : Ouch, ouch. That hurts.Shots fired. Yep. Shots fired is what my wife and I, and my wife. And I like to say, all right, that is, that is my Seinfeld Lego set. Okay. So it just tells you how much I like Legos when my kids get me a Lego set once a year or so. That was a show about nothing. By the way, I hope ours is a show about something.

There's a number of good Seinfeld negotiation videos. But if you think of interest versus positions as building blocks, if, if you negotiate around a position, a demand, okay. The, the surface level, what somebody wants, that's like uncovering two or three Lego bricks. And you know, you put these things together. If I can get 'em put together, you can't build a whole lot, right? There's not a lot of room for creativity. What you can create. All right. When you bring an entire bag and I've got an entire bag here, I don't wanna try to pour it out, but these, I mean, Legos are so cool these days in terms of all the different shapes and sizes, just like interests, right? The things you can then build together is just enhanced. So this whole thing that we're gonna try to get to around value creation is only, it's only possible if you understand all the interests that both parties bring and in your, you know, both organizationally individually.

NM : I think that's an awesome illustration. And I think that the props is definitely, probably gonna be something that we have to continue bringing into our videos now, cuz I'm sure everyone's gonna love it. All right, Aram. So now that we understand interest really well, let's also think about some of the applications that we've had in our life. And I know that, there's a story about you in Afghanistan that you’d like to share to also highlight where you may have failed in under covering the interest. You wanna tell us that story?

AD : Yeah, absolutely. So in 2010, I was in Afghanistan doing a variety of work. I was working in national mobile academy. I was doing some kind of freelancing with different organizations too, looking at their key leader engagement. So I was at a fob with a particular unit. There was a supply truck coming in. It had been attacked and the commander of the fob and the police chief who was housed on the fob with them and they wanted to work together was the desire. That's what the commander wanted to go out and address this, but he really wanted the police chief to take lead. And so it became this tug of war around positions, which was, you go do it, we'll follow. No I won't. Will you go do it? And maybe we'll follow. And it became a like this positional debate about who should go.And they fight for about half an hour ineffectively.

So no one's gonna go deal with this vehicle that's been attacked.Police chief leaves and the commander just kinda looks at me and says, listen, you know, I know what he's thinking. There's no way around this. I don't particularly find that approach helpful cause we're not digging into why not. Let's explore the interest. So I followed the police chief out and went to his office and I said, Hey, tell me more. I'm kind of new to the fob. What's going on here? And he said,“I would be more than happy to go address this”,he goes, “however, communications with the Americans through our current radio systems have been really poor.” He says, “I am concerned about not the initial approach, but if there anything happens, kind of the follow up are my troops kind of prepared to handle this. “

AD : And three, he goes, there's a few pieces of equipment we've been asking for for some time that would, might be helpful and able to help us, right? Those are the interests. Those were the things that he had wanted address that never got brought up in the conversation. And so I sat and listened to her a while and eventually his sense of pride, which is an interest right. And being respected, took over and he said, “I'm gonna launch something”. And so he ends up launching a response that never gets coordinated with the American unit because the communication is broken down. So in a way, the American commander got the action that he wanted, but it didn't really solve the bigger problem. And what was interesting enough is that night I'm there again, there at the headquarters again.They pick up on their big eye in the sky camera, a couple of guys putting in an IED down the road, same conversation as earlier that afternoon, like you to go deal with it.

No, we won't. We want you to deal with it. And they're back fighting over positions again, versus getting to these underlying interests. So sometimes you can get a behavioral action that you want by negotiating around positions, but it's not really what you wanted. Right. You're creating more problems down the road. So that's an example of a failure. Do we have any moment for maybe a success too?

NM : Absolutely.

Managing Interests Successfully [17:00]

AD : Okay. So let me put something maybe more in a business term here. So colleagues of Nolan and myself years ago were advising a company that was buying a number of patents from an individual. And this individual actually made these little cardboard boxes that, you know, that burgers come in. Sometimes you'll see 'em at like a fast food restaurant, like a little take home box. And that was one of the patents.

And they'd gotten most of the terms had been settled except for the final kind of royalty or the ongoing royalty fee. And the company was like, we're not giving you more than 1% on these patents. And he was insisting for no less than 3%. There are only a couple percentage points off. You can say that's insignificant, but over time it's, it's actually a fairly good amount of money. And so our colleagues were brought in to help consult on this issue. And the first thing they did is said, “Hey, can we go talk to this individual who you're buying the patents from?” And they said, sure. And sothey go down to meet with this person. And he goes, “do you even understand the nature of these patents? The things that I'm creating” and they said, no, we don't.

AD : Would you teach us right. Various, some openness, right. And that's really important what comes to interest. And so he, he takes 'em down. He shows them one of these machines for these kind of cut out these, these burger boxes, lots of blades, lots of sharp stuff. And he said, “I am concerned that if I sell the patents for this, somebody's eventually gonna lose a finger, lose something, and I'm gonna get sued even though I'm disconnected from it. He goes, I want protection. I want some way to manage my risk. I need some insurance.” And so he goes that “that extra percentage allows me to do that.” And not only that, he goes, “I promised my wife that when I retired and took it easier, we would go on a bit of vacation. I'd like to be able to afford a really nice vacation over to Europe for a few weeks, be able to do something fun and truth is I've got other patents that I'm some of these patents that they're asking for.

I'm still tinkering with. And I'd still like to do that. Even, even though I'm in a semiretired state”.Those were his interests. And once those were taken back to the company, the company said, “Well, gee whiz, we would really like to be able to consult him from time to time. I wonder if we could put him on some sort of like dollar a day or dollar a year sort of program, bring him in, get him on the company insurance. Now he's completely protected if there's ever a lawsuit. Not only that, but if as an employee, we've got some resources company transportation that can help with that vacation. And we didn't want all the patents in the first place!We thought we had to take'em all, we're more than happy for him to keep some of the ones that he's continued to tinker with.” Right? That solution, which was better for both of them only came about because of understanding the interest and the punchline is, is that, that percentage difference, right? Three and one that they were fighting over, it actually went down to about a half. So it actually went lower because the interest got satisfied, which is the power of interest.

NM : Yeah. And I think that that is like super powerful story there. I mean, when you start to understand everybody's interests, the end result could be that much better because you're able to combine everything. You're able to identify everything. And like you said, you come up with a much better solution. So great job to our colleagues who figured that one out. That was a pretty cool story.

AD : Yeah. They'll tell you that it was the win-win for the two parties involved, but it was not the win, win, win

NM : As Michael Scott would like say

AD : Yes, because they were not [laughs] they did not bill. They should have billed by the amount of savings they were able to achieve rather than by the hour. Because by billing, by the hour, they did not come out nearly in as good a shape as if they would've billed based on the

NM : Result.

AD : The savings.

NM : Yeah. Lesson learned. Yeah. For sure. All right. Well, let's close this thing out. I think we did an awesome job, especially with all your demonstrations. You had two great stories there. One failure, one overwhelmingly positive result that highlights interests a over to you for key takeaways.

Key Takeaways [21:34]

AD : Yeah. So just a couple things folks.First of all, how do you pull out interest?One, share your own.Two, ask about theirs, test your understanding of theirs.And then three, use options. These possibilities, give 'em to compare some options, get 'em to critique. Crazy idea. Don't ask 'em for a commitment. Just say, Hey, what's wrong with this? All those things are gonna help uncover fears, needs, concerns, and motivations for folks watching the video let me give you one more illustration that I often use with students and they enjoy it. You know, my wife and I back in the holidays where looking at buying some bricks for our kids or not bricks, but yeah, wooden blocks. We like a number of things about these blocks. They're wood. They're two toned. Right. You can see, they have these pretty dovetail joints on them and they slide.

Okay. We just think that's cool. And so we really wanted to get 'em a collection of these little blocks. The problem is, is that, you know, my wife's from the south originally. And so she, her orientation on the world's a little north-south, that's how she sees things. I grew up in Oregonso I see the world east-west, just different orientations. And so what we wanted was a wooden block. That's that's two toned and has these pretty dovetail joints, but we wanted 'em on all four sides. Right? Cuz she was insisting that they'd be on the north and south side. And I was insisting they'd be on the east and west side and we want it to still slide. Okay. And if you're like, that's impossible, somebody's gonna have to compromise. Right. You can't have all those things met. Okay. And still have a block that’s gonna slide.

You would be absolutely correct. If you're making the assumption that the inside of the block has to look like that. The whole point, what Nolan and I've been talking to you about though today is that while positions east, west, or south, whatever the position might be, may be in conflict; interests do not need to be all right. So if we're willing to dig in, understand interests, check our assumptions, maybe it is possible to find a two-tone wooden block that has those pretty dovetail joints on all four sides. And that does slide, right? Because we can get creative about what the solution needs to be there. No, that's my

NM : That's awesome. Aram kudos, man. You never showed us that at West Point. When did you come up with that story?

AD : I'm hurt. I did share it at West Point. And you don't remember

NM : All right. I must have been absent that day or something like that.

AD : It was the last class. Yes. You probably were absent.

NM : no, that's a great story or yeah,

AD : Sec, second semester. Firstie we know how second semester seniors are. Right. We all get a little bit of

NM : Yep.

AD : I'll forgive you.

NM : All right. Well, great story for me now. Thank you for showing it to me again. It was obviously very memorable the first time. So [laughs] I really appreciate it. Hey to everyone listening. Thank you so much. This was a great episode. It was a lot of fun for both Aram and I. If you have any questions or want to highlight any topics that we could cover, you can send us an email at team@negotiatex.com. We'll be happy to answer any of your questions or take any of your feedback. If you could please rate, review and subscribe wherever you listen to this podcast, we greatly appreciate it. And we'll see you in the next episode.