Public-Private Strategic Partnerships
INSTEAD OF APPLYING the heavy hand of regulation, some U.S. government agencies are seeking to create public-private partnerships that offer incentives and support to corporations and nonprofit organizations willing to go beyond federal performance standards. In the context of civic redevelopment, for example, environmental agencies have offered developers of brownfields—contaminated, abandoned plots of land—extra latitude in terms of site cleanups, as well as relaxation of zoning limitations, as long as the developers are willing to work with relevant neighborhood organizations and give them the technical and financial support they need to participate. In addition, federal funds are granted commensurate with actual community improvements. Such public-private partnerships, which resemble strategic alliances in the supply chain, should be approached with the same principles in mind.
WHEN THE OTHER SIDE IS A KEY STRATEGIC PARTNER:
•Know their needs and interests
•Create as much value as you can
•Emphasize the value of your long-term relationship
•Give them the benefit of the doubt
•Avoid surprising them
Winning at win-win negotiation with strategic partners requires a light touch. When long-term relationships between companies or negotiating partners are important, how much you win in the short term (in a single deal) is less important than maintaining relationships and leaving open the possibility of doing especially well in future interactions.
Now we’ll move from interactions between separate companies, albeit with long-term relationships, to internal negotiations within a single company. Getting into the trading zone can be just as difficult here, and the difficulties surrounding creating and claiming of value, just as tricky.
MANAGING CONFLICT WITHIN THE RANKS
THE SALES FORCE of a major investment firm, “Wall Street Associates,” sold its financial products on a nationwide basis and reported to national product managers responsible for calculating their annual bonuses. When Wall Street Associates went through a restructuring, it upended this long-standing internal relationship. The salespeople were told they would also be reporting to new regional account managers, who would have a say about their bonuses as well. Around the same time, the national managers revealed that they wanted to alter how the sales force allocated its time and efforts.
The sales staff was up in arms. How could they divide their attention between the demands of two sets of managers at the same organizational level—a matrix management approach? The sense that their loyalties had been split led to a sales staff rebellion. Several superstar staff members threatened to quit.
Many companies have become pressure cookers of late. Internal conflicts boil over when top management imposes broad changes in business practices—demanding a switch to a new companywide computer system, for example, or redrawing lines of authority, as in the case of the restructuring faced by the sales force of Wall Street Associates. Conflicts between coworkers and between divisions waste resources, undermine effectiveness, and distract everyone from their goals.
Internal conflict has become a virtual epidemic in organizations for several reasons:
•Organizations are flatter and more networked than ever before. Many managers find themselves trying to meet responsibilities that extend beyond their authority—a primary cause of internal tension.
•Organizations must adapt to rapidly shifting environmental constraints, such as changing legal and regulatory requirements. Efforts to promote such adjustments often trigger obstructionist behavior.
•Organizations are working to increase diversity, a beneficial change that’s nonetheless often accompanied by individual clashes in culture and style.
•As organizations face mounting pressure to “do more with less,” internal departments often find themselves competing for scarce resources.
The best way to work out these internal conflicts is through direct negotiations among those affected by proposed management changes. Efforts to impose solutions from the top, although still the norm, are not as effective as agreements reached voluntarily by those who know the most about whatever has to be worked out and by those who have to implement new ways of doing business. Even though we are talking about parties who are members of the same organization, these negotiations are no less contentious that those involving parties from separate companies.
Conventional wisdom places primary responsibility for resolving internal conflict in the hands of top management. According to the prevailing view, senior managers should insist that employees put aside personal differences for the good of the organization. Managers should strive to clarify roles and responsibilities because, presumably, conflict results from confusion about lines of authority or from turf overlap. If conflict persists, it’s up to senior managers to dictate appropriate behavior.
This approach may suppress internal conflict, but it won’t deal with its underlying causes. In seeking the path of least resistance, the top-down approach fails to address the organizationwide concerns likely to lead to similar conflicts in the future. It makes much more sense for top management to facilitate carefully structured problem-solving negotiations among those with a stake in whatever needs to be changed.
Rather than demanding compliance, new ways of working are more likely to succeed in flatter organizations if all relevant stakeholders engage in a three-step problem-solving negotiation process: diagnose sources of conflict, build consensus from differences, and sell agreements.
Diagnose Sources of Conflict
THE FIRST STEP, never easy, is getting all parties to agree on the scope and source of the difficulties created by proposed changes. In the case of Wall Street Associates, this was a delicate task because anxieties were running high. A negotiated approach to addressing internal conflicts begins with a formal conflict assessment, so the senior vice president for sales hired “Bill,” an external consultant versed in the mutual-gains approach to negotiation, to assess the situation. Bill conducted private interviews with the national product managers, the regional account managers, and the most experienced members of the sales staff. He then offered a preliminary assessment of the situation.
To ensure that all stakeholders found his assessment meaningful, Bill grounded his presentation in benchmarks, documenting the impacts of the new matrix management approach. Based on what he heard, he suggested that it ought to be possible for everyone involved to benefit from the restructuring: national product sales could be increased through regional sales, thereby increasing everyone’s sales commissions. His reframing of the proposed management change was aimed at moving everyone into the trading zone as quickly as possible.
Top management encouraged Bill to initiate a negotiation process aimed at resolving tensions between the national product managers and the regional account managers. To achieve support for this, Bill organized a one-day meeting at which top management confirmed that it was committed to finding a solution that met everyone’s interests.
Based on his extensive one-on-one confidential assessment interviews, Bill produced a map of the conflict. This included a chart identifying the urgency of each stakeholder group’s concerns. He also prepared a work plan that set ground rules to guide the problem-solving effort and expressed the need for additional fact-finding. By verifying the map’s accuracy with the interviewees, Bill helped all parties understand the essence of the conflict.
It’s important for stakeholder groups to choose members to represent them in any problem-solving negotiation. After reviewing the assessment, the three key groups—national product managers, regional account managers, and sales staff—met to clarify their interests and to identify three representatives from each group who would meet to try to work things out. Bill organized a preliminary meeting of these nine individuals. In this case, finding the trading zone required careful representation of all of the relevant interests.
Build Consensus from Differences
T
HE SECOND STEP in this internal problem-solving negotiation was to identify a package of trades that would help make the matrix management plan work for everyone. Bill facilitated three half-day meetings of the nine-member task force over a period of several weeks. The process began with Bill prompting the group representatives to rank their interests. Some were tempted to present positions rather than interests. When this happened, he pressed them to explain the thinking behind their positions.
Once all groups had clarified their interests, they worked to develop ways of meeting one another’s interests. How could the sales staff respond to their national product managers and to their regional account managers at the same time? What communication and coordination tools might help the sales staff achieve their quarterly targets? At one point, a factual disagreement regarding the sales force’s employment contracts emerged. The group designated a subcommittee to investigate the matter and report back with answers. Such joint fact-finding enhances the likelihood that all stakeholders will trust the information collected. Thus, value creation in internal negotiations depends on joint fact-finding as much as it does in negotiations involving independent organizations.
Ultimately the group pulled together a package of suggestions. Each group representative offered justifications for the packages he or she liked the best, explaining how modifications in the proposed matrix management plan would meet the interests of their group and produce the best possible result for the company as a whole.
At the center of the task force’s agreement were recommended changes for the reporting structure and new guidelines for allocating sales-force time to national and regional accounts. The salespeople had rebelled primarily because the new matrix management approach made it extremely unclear how each of them could match or beat previous commissions. The task force recommended that each salesperson negotiate a single annual sales contract signed by the two managers to whom the salesperson reported. It also proposed an appeals process for salespeople who felt their performance had not been properly assessed at bonus time.
All but one of the nine participants signed the proposal, which was then forwarded to the senior vice president for sales.
Throughout this process, Bill played a crucial role. Without neutral assistance, it’s unlikely that a task force made up of disputing factions would have reached the trading zone quite so quickly. The consultant kept the members of the group on task, prodded them to come to meetings prepared, and urged them to stay in touch with their constituents. As the voice of reason, he helped keep individual members from skirting the process in an effort to advance their own interests. Finally, he agreed to lead the follow-up activities spelled out in the agreement.
Each faction was seeking to win, that is, to reshape the proposed matrix management plan in a way that would help them earn the greatest amount of money possible. Once Bill got them into the trading zone, they were able to discern a deal space in which no one would be worse off and everyone had a chance of generating higher commissions than they received in the past.
Sell Agreements and Overcome Resistance
THE TASK FORCE had reached an agreement, but their work wasn’t finished. They still needed to cultivate support, frame the agreement strategically, and build a coalition to ensure implementation. As my colleague Deborah Kolb points out, all problem-solving negotiations inside a single organization must accomplish these three objectives.
First, cultivate support. Task force members can cultivate support for their agreement through “appreciative moves”—conversations that acknowledge the concerns of others. Along these lines, the task force members and the consultant, Bill, invested a great deal of time in one-on-one meetings with people who were not directly involved in the conflict but who might have had questions about what the group was proposing. The representatives came prepared with face-saving suggestions for those who might have been opposed to specific elements of the agreement. For example, task force members assured those opposed that they’d publicly receive credit for their role in instituting change. The way for one group to “win” at these negotiations was to be certain that other segments of the company had opportunities to increase their commissions as well.
Second, frame agreements strategically. To keep ideas on the agenda in the face of opposition, use “process moves”—interventions aimed at shaping positive perceptions, such as publicity for small victories. Again and again in meetings with organizational members, the task force emphasized that contending groups within the company were working together to solve the problem. Their goal: to make it clear that everyone would benefit if the task force’s work caused quarterly sales to rebound.
Build a coalition to support change. Task forces such as this one can build a supporting coalition by making “power moves” that capitalize on the resources and agenda-setting powers of those in leadership positions. The task force was able to win over a number of high-level fence sitters by arguing that negotiated problem-solving, if successful, might well be used to solve other unresolved internal conflicts. As supporters of the task force report made themselves known, blockers were isolated, and a winning coalition emerged. Top management was delighted to move forward in the way the task force suggested.
As the example of Wall Street Associates illustrates, internal conflict should be addressed not as a short-term problem but rather as an opportunity for an organization to get better at resolving conflicts so that future management changes that might generate opposition are easier to deal with. Winning at win-win negotiation in internal situations requires the same commitment to getting into the trading zone, and creating and then claiming value, as winning in negotiations with external partners.
WHEN YOU SHOULDN’T GO IT ALONE
I’VE FOUND THAT when organizations carefully hand-pick agents to represent them in new or difficult negotiations, and give them appropriate instructions, these skilled individuals can almost always lead their organization into the trading zone and help it win at win-win negotiation. Agents are often in the best possible position to create value since they can take a less competitive stand toward the other side, at least at the outset of a negotiation.
“Prometheus,” an American manufacturer of medical equipment that recently completed its fifth year in business, had just secured a patent on its primary product, a heart monitor that looked like a significant advance in the state of the art. The potential market, in fact, is even stronger than the company had imagined, but there is a problem: its second round of venture capital funding is coming to an end. A few other manufacturers are about to go public with competitive products, albeit ones that have not tested as well as the Prometheus product. To shore up funding for the big launch of its latest product in an entirely new market, Janice, the CEO, decided to explore joint venture possibilities with several overseas partners.
There is another problem, though. Janice has never been involved in joint venture negotiations before; what’s more, she has never done business with an overseas investor. Also, it turns out that one of the European companies she approached knew all about her company’s internal strengths and weaknesses, including its lack of overseas experience. Janice knows she is the one in the best position to represent her small company’s interests in the upcoming negotiations, but she is extremely nervous. The company’s future is on the line. Does she have enough knowledge and experience to succeed?
When you’re approaching a new kind of negotiation, you need to be able to recognize when you’re in over your head. In such cases, it might be smart to quit before you even begin. That is, it may make sense to have someone more experienced take your place at the table—an agent. There are circumstances in which agents will probably get better results than negotiators could ever hope to achieve on their own. To compensate for her lack of experience, Janice could bring in an agent to make contact with overseas investors, explore their interests, help her and her team examine their own interests, generate the terms of possible partnerships, assist in evaluating offers
, and even close the deal. By hiring an agent as her adviser or stand-in, Janice could vastly improve her chances of concluding a successful joint venture. The mandate she should give the agent is to devote as much time and energy as possible to creating value.
If Janice’s potential partners balk at dealing with her representative, she might involve the agent only at key moments. If, on the other hand, the partners bring their own agents on-board, the agents might converse among themselves, negotiating possible packages in consultation with their principals.
Some experts suggest that agents can prevent negotiators from discovering the trading zone—from making the transition from adversaries to cooperative problem solvers. According to this logic, an agent may have personal interests that clash with those of his principal, and this could keep negotiators from finding common ground. Yet I’ve found that when negotiators give appropriate instructions, their carefully chosen agents can almost always generate mutually advantageous deals.
When to Use Agents
THERE ARE THREE CIRCUMSTANCES in which you’ll be better off tapping an agent to take your place at the bargaining table (at least for part of the negotiation process). This is especially true in the early stages, when value creation is easiest.
You’re unfamiliar with the issues and rules at hand. Sometimes negotiations lead you out of your comfort zone and into unfamiliar territory. When you’re unsure of the issues under discussion or the rules of the game, you’d be wise to seek an experienced agent. For instance, a scientist interested in securing support from investors for a new start-up would benefit from having a skilled lawyer or IPO specialist represent him. Similarly, someone who has never sold a house might prefer to have a real estate agent negotiate with prospective bidders and generate mutually advantageous trades. If the agent makes clear that he or she needs to check back with their principal before a deal can be closed, it sometimes creates more room for value-creating discussions.
Good for You, Great for Me Page 6
