Thursday, November 07, 2013

Once Again on Smithian Bargaining

Jim Camp, a negotiation coach with a global clientele, and the creator and CEO of Negotiator-Pro, an insight negotiation training and strategy platform, writes in Forbes HERE
“Peter Drucker: The Inspiration for the Camp Insight Negotiation System's Valid Mission and Purpose”
“Having a “valid mission and purpose” is the foundation of every one of my negotiations, and I want to share with you what led me to making this the cornerstone of the Camp system. It was Peter Drucker who "underscored the need of all business owners and executives to understand what their business truly does. He called that the “mission and purpose.”
But where it all came together for me was the final chapter of his Innovation and Entrepreneurship, in which he describes strategies for creating customers. These strategies, he said, must include “delivering what represents true value to the customer.” And that’s the first thing I insist my clients understand when they’re faced with a crucial meeting with an adversary. Your discussion with the other party must paint a vision of the benefits that will accrue to them – not to you – if they embrace your proposal.
A most interesting insight into negotiation from Peter Drucker.
Its intellectual origins, however, are not something Drucker learned and passed on to clients and readers of his many best selling books and enunciated in his talks and practice as America’s leading business guru, also well known world-wide in the 1970s.
They are in fact precisely as expressed by Adam Smith in his Wealth Of Nations (1776) in his famous paragraph in Book 1, chapter 2, paragraph 2, in the “butcher, brewer, and baker” example of negotiation:
Man sometimes uses the same arts with his brethren, and when he has no other means of engaging them to act according to his inclinations, endeavours by every servile and fawning attention to obtain their good will. He has not time, however, to do this upon every occasion. In civilized society he stands at all times in need of the co–operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals each individual, when it is grown up to maturity, is intirely independent, and in its natural state has occasion for the assistance of no other living creature. But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only.  He will be more likely to prevail if he can interest their self–love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self–love, and never talk to them of our own necessities but of  their advantages (WN I.ii.2: 25-6).
If you want to refresh your approach to negotiating, start with Adam Smith (or, indeed, Peter Drucker).  Your task is not to outwit or beat the other side – they are not the enemy – they are potential co-operators you need to fulfill your own goals.
I spent thirty years (now retired) emphasising to a global clientele while at the University of Strathclyde Business School (Glasgow) and at Edinburgh Business School, Heriot-Watt University, Edinburgh, as well as my international consultancy firm, Negotiate Limited, of the need for managers to address the needs and interests of the other party when seeking a negotiated settlement of something important to themselves, always using the format of "IF you give some of what I want, THEN I shall give you some of what you want" (the Adam Smithian assertive conditional proposition).
[See my “Everything is Negotiable” (4 editions), Random House, and “Kennedy on Negotiation”, (Gower).


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