strategy+business, June 2, 2022
by Theodore Kinni
Photograph by Say-Cheese
by Barry Nalebuff, Harper Business, 2022
Anyone who has been the underdog in a negotiation is going to eat up Barry Nalebuff’s new book, Split the Pie. The Milton Steinbach Professor at the Yale School of Management, who cofounded Honest Tea as a side gig, combines logic and empathy in a strategy that undercuts power-driven negotiating tactics.
The simple principle that drives Nalebuff’s approach is this: the negotiation pie—that is, the value produced by the deal, over and above the value that the parties to the deal can create on their own—should be equally spilt. It doesn’t matter who has the most power or who needs the deal the most—what matters is the value stemming from the deal and the inability of either party to achieve it without the other. In this sense, all the parties to the deal have a legitimate claim to an equal share of the negotiation pie.
Nalebuff illustrates this concept with an easily followed example: a pizzeria will give Alice and Bob a 12-slice pizza if they can agree how to split it. If they can’t, it will give them half a pie, but unequally divided: four slices to Alice and two slices to Bob. These no-deal slices comprise what Roger Fisher and William Ury called the BATNA (best alternative to a negotiated agreement) in their best-selling negotiation book, Getting to Yes.
Nalebuff’s solution is to focus on the additional slices that Alice and Bob get if they make a deal. He splits the six additional slices in half. This gives Alice a total of seven slices (her BATNA of four slices plus her half of the six slices in the negotiation pie) and Bob gets five slices (his BATNA of two slices plus his half of six slices in the negotiation pie). Voilà.
“The pie framework will change the way you approach negotiations in business and life,” writes Nalebuff, who has been teaching this approach to MBA students and executives at Yale for the past 15 years, as well as online at Coursera. “It will allow you to see the negotiation more clearly and more logically. It will lead you to an agreement where the principle applied doesn’t depend on the specifics of your situation. It will help you make arguments that persuade others by identifying inconsistencies in their approach.” Read the rest here.
Anyone who has been the underdog in a negotiation is going to eat up Barry Nalebuff’s new book, Split the Pie. The Milton Steinbach Professor at the Yale School of Management, who cofounded Honest Tea as a side gig, combines logic and empathy in a strategy that undercuts power-driven negotiating tactics.
The simple principle that drives Nalebuff’s approach is this: the negotiation pie—that is, the value produced by the deal, over and above the value that the parties to the deal can create on their own—should be equally spilt. It doesn’t matter who has the most power or who needs the deal the most—what matters is the value stemming from the deal and the inability of either party to achieve it without the other. In this sense, all the parties to the deal have a legitimate claim to an equal share of the negotiation pie.
Nalebuff illustrates this concept with an easily followed example: a pizzeria will give Alice and Bob a 12-slice pizza if they can agree how to split it. If they can’t, it will give them half a pie, but unequally divided: four slices to Alice and two slices to Bob. These no-deal slices comprise what Roger Fisher and William Ury called the BATNA (best alternative to a negotiated agreement) in their best-selling negotiation book, Getting to Yes.
Nalebuff’s solution is to focus on the additional slices that Alice and Bob get if they make a deal. He splits the six additional slices in half. This gives Alice a total of seven slices (her BATNA of four slices plus her half of the six slices in the negotiation pie) and Bob gets five slices (his BATNA of two slices plus his half of six slices in the negotiation pie). Voilà.
“The pie framework will change the way you approach negotiations in business and life,” writes Nalebuff, who has been teaching this approach to MBA students and executives at Yale for the past 15 years, as well as online at Coursera. “It will allow you to see the negotiation more clearly and more logically. It will lead you to an agreement where the principle applied doesn’t depend on the specifics of your situation. It will help you make arguments that persuade others by identifying inconsistencies in their approach.” Read the rest here.
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