How narrow focus at the negotiating table can get you into trouble.
Imagine you are the CEO of a company. Your business has been a bit sluggish lately. Your company's manufacturing operations are outdated, slow, and inefficient. You currently have the opportunity to merge with one of your competitors. This enables you to use the competitor's production know-how to modernize your own production. In the course of the M&A negotiations, it was calculated that the modernization of your production would result in added value of EUR 600,000 would arise. It is now about the division of this expected added value. Like most people, you (CEO) will feel in a weaker position, after all your production is outdated. If your counterpart claimed the full EUR 600,000 for yourself, you would probably be inclined to agree.
This situation reminds me of a parable I wrote in Prof. Gino's book "Sidetracked and which I would like to share with you:
“Not too long ago I stumbled upon an ancient Chinese parable. It is about an old Chinese woman who owns two large jars. Both jars are attached to the ends of a pole and the woman carries them behind her neck. Every day is the same. She runs to a nearby river, fills both jars with water and runs back home. When she gets there, one of the jars is full, but the second is only half full of water. It has a crack, so water is lost on the long way home. For two years the old woman brought home only one and a half full jars a day, although both jars could be full.
The two pitchers reacted differently to this situation. The whole pitcher was proud of his accomplishments. Every day he made sure that a full jug came home. The pitcher with the crack, on the other hand, felt terrible. He was ashamed of his inadequacy and disappointed that he could only half fulfill the task for which he was created.
After two years, the cracked jar decided to share his feelings with the old woman. "I'm ashamed of myself," he confessed to her, "my crack, as you may have noticed, only allows me to bring half the water home safely". Aware of the crack, the old woman smiled at the jug. She asked him if he had noticed that there were flowers growing on his side of the path and not on the side of the whole pitcher. Knowing about the crack, she decided to plant flower seeds along the way and water them every day on the way home. "For two years," she told him, "I was able to pick fresh flowers from the roadside and decorate my table. Without you being the way you are, I would not have been able to decorate my house so beautifully". By focusing too much on his inadequacy, the pitcher with the crack failed to see that he was accomplishing something worthwhile on a daily basis. He couldn't see the forest for the trees. He was so focused on the details of his problem that he missed the big picture.
Let's go back to the example given at the beginning. It is important to keep in mind what negotiations are about. create value through cooperation and claim a fair piece of the pie. The added value i.H.v. EUR 600,000 is only - and exclusively - due to the decision of both companies to merge, although one party has a lot of production know-how and the other does not have efficient production. If both companies had modern production facilities, this added value would not even be on the negotiating table. As a CEO, you could say, "I understand that your request sounds logical to you. But just because our production is so bad, you can use your know-how and generate added value at this level. We should split the amount in half".
When things heat up in a negotiation, there's a good chance your focus will narrow. Be aware of this and don't lose sight of the big picture. Take a colleague, partner, etc. aside who will always help you to see the "big picture".
ISMAN & Partner is a management consultancy that supports national and international corporations, medium-sized companies and start-ups, organizations and institutions in complex negotiation and conflict resolution processes. Founded in 2015 by Calin-Mihai Isman, the experts for negotiation & mediation support managers and employees from the areas of sales, purchasing, M&A, contracting, HR or IT.
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