Bridge over ocean
1 March 2014 CFA Institute Journal Review

Playing with Icebergs: Negotiating Improvisationally (Digest Summary)

  1. Biharilal Deora, CFA, CIPM

Negotiators face challenges when they attempt to quickly and skillfully process new information. They should be prepared to listen rather than become entrapped in their planning. The authors discuss using an improvisation model to get ahead in negotiations, which are usually founded on interests and, ultimately, perceptions.

What’s Inside?

The authors provide a three-tiered model of improvisation for use in negotiation. They explain that negotiators must work with the other party in the negotiation to achieve success and to change dynamics at short notice. The process they recommend includes considering the needs, values, perceptions, and emotions of the other party.

How Is This Article Useful to Practitioners?

The authors suggest viewing negotiation as “structured spontaneity” and explain that negotiators can be more successful if they can show empathy for and understand the interests of the other side. Often during negotiations, parties do not reveal their true interests. But it is important that both parties see the bigger picture, including finding common interests that can create value for both.

The model presented by the authors is an improvisation-based version of Harvard University’s standard negotiation model but with more importance placed on having a flexible response versus simple strategic preparation. Every negotiation has three levels of awareness: positions, interests, and perceptions.

The improvisation model suggests building on an existing, accepted idea from the other party with three additional levels: head, heart, and core. The head level consists of observing the verbal and nonverbal responses of the other party to draw smart conclusions and prepare counteroffers, and the heart level is establishing the status of the interests of both parties. The core level is the bottom line, in which positions based on business philosophy, culture, and values are expressed to create the final connection. This approach allows negotiators to understand the process and adjust easily while negotiating according to the macroeconomic issues, tension, and changeable externalities of the situation.

Abstractor’s Viewpoint

The authors explore the fundamental traits of any business negotiation—clarity of needs and flexibility on how to achieve them. Their model encourages negotiators to consider the bigger picture and to create value for both parties in a business deal versus focusing only on the interests of their own party. To do so, negotiators must access the values, needs, prejudices, emotions, and fears brought to the negotiation by the other side.

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