MULTI-ISSUE NEGOTIATION

Easy or Hard Issues First? (The answer might surprise you!)

BACKGROUND

A U.S based Fortune 500 company that manufactures high-end bio-technological devices was negotiating a joint-venture with a Southeast Asian family-run business that specializes in sales and distribution of lower end medical products in that region. 

The U.S company stood to gain access to key distribution channels in that region while the SE Asian company looked forward to greater profit margins in the high end products and equity in the US company. 

There were several issues to be negotiated including: capitalization; terms and agreements; profit and equity distribution; staffing; decision-making; and conflict resolution systems (some of which were exacerbated by deep cultural values and differences).

THE PROBLEM

The US company approached us for assistance after similar negotiations with an Eastern European company failed several months earlier. In those negotiations, our clients attempted to negotiate the "easier" issues first leaving the tougher issues for later. As expected, they were able to reach resolution on the early issues quite painlessly. They reached a catastrophic impasse however, over the last couple of very tough issues and the joint-venture was never consummated. Our clients hoped for a better outcome in negotiating with the new SE Asian potential partner.

This raises a much debated question in navigating multi-issue negotiations: Is it preferable to start with the simpler issues thereby building a foundation of agreement before dealing with the more difficult issues. Then again, perhaps it is better rather to deal with the more difficult issues earlier while there is still fresh and optimistic energy at the negotiation table.

We believe that neither is good because difficult issues are difficult regardless of the sequence, and without disciplined technique and process, will likely lead to impasse. Consequently we advised our clients in an altogether different approach.

THE SOLUTION

Rather than to attempt to reach agreement on each issue independently, we advised our client to first explore two or three high-level possible options for each of the issues before committing to any. After generating several possible ideas for each issue, we then advised them to choose those which they all felt had most potential and to further distill, develop and refine those (still without commitment). 

Finally we advised our clients to engage in a process of trading the various options offering their counterparts those that were low cost to them and of high value to the other side and vice versa. We instructed our clients not to commit to anything until there was an elegant, integrated and comprehensive solution package on the table that addressed all the issues. They were able to reach a sound agreement on all the issues and a successful joint venture was born.

By adopting this approach of not committing to anything until you are prepared to commit to everything in a multi-issue negotiation, you avert the entire question of whether to tackle the hard issues first or the easy ones. You are in effect, dealing with them all simultaneously.