Of Oranges and Men - Extracting All the Value
A couple of years ago, I was much, much younger. At least by a few years, if not more. I was also fortunate enough to enroll into an EMBA program. I sort of had the money, sort of had the time, and definitely had the support of my better half and family.
Long story short, that’s long gone. However the alumni learning events keep going, and they are always interesting. Earlier this month one such event was held, and an example they gave resonated with me.
Learning About Negotiations Through Misplaced Oranges
We’ve been told time and again. Instinctively, we also think of negotiations as a contest. There needs to be a winner, and of course there needs to be a loser. Usually, the loser is the other guy. Maybe I’ve just been unlucky with the negotiations I’ve been involved with, and the ones I’ve been told about, but so-called “win-win” deals were basically just split in the middle. One side would give up some of their claims, the other would make concessions, and both parties felt relatively pleased with the results. “Let’s meet halfway.”
One such example provided during class was very simplistic, and yet it was also very interesting.
Say you and your friend find an orange. You both like oranges, and would both like to have it.
Simple enough, split it in half and go on your merry way. This is the best deal, everybody wins. Case closed, right?
The next day you meet up with your friend again, and you ask him how he enjoyed his half of the orange bounty. “Oh, I used the peel to make an orange pie. Unfortunately the recipe doesn’t work too well with only half, so it was rather small and bland. What about you?”
“I pressed my half of the orange, and got a bit of juice. It was good, I just wish I could have had more.”
Wouldn’t it have been better to peel the orange, give your friend all of the peel while keeping all of the pulp?
That’s a whole different deal now! In fact, both parties would have captured 100% of their perceived value from the orange, without giving anything up.
But wait, there’s more!
Say you and your friend find another orange. Maybe there’s an orange genie walking around, maybe someone is playing tricks on you, who knows, it doesn’t really matter … You find another orange.
“Say…, I’ll keep the pulp, I give you the peel. Surely we have a deal, right?” you say, pressing your thumb into the skin.
“What?? No way, you keep peel, I want the pulp too! Take. Your. Thumb. Off!”
Looks like the first time was just a fluke, it’s time to slice it up and drink another half glass of orange juice.
What if you took a step back and asked why your friend wanted the pulp, instead of just assuming this was a need in itself?
“No special reason, I’m parched. I need to drink something. Anything. What about you?”
“I LOVE ORANGE JUICE MAN!! IT’S THE BEST EVER!! What if I took the orange, and gave you this bottle of water I have? It’s not even opened?”
Too often, we stick to our guns and negotiate based on our positions, without taking the time to truly understand what each other’s intents truly are. Negotiating is not like playing a poker game. Unless it weakens your position, revealing your intents should not be seen as a weakness.
What would you have lost in both cases by stating upfront your intention to turn the pulp into orange juice because you loved orange juice?
Chances are, you would have lost nothing, but increased your odds of getting a full glass. Worse comes to shove, you both love orange juice, in which case the only winning solution may be to split it in half.
Unless there’s something else of value which can be thrown into the mix, something which you value more than I value orange juice….
If Only Life Were As Simple As a Glass of Orange Juice
At Spiria, last I heard, we did not sell oranges. We have been making custom software for the past decade, and we are good at what we do. So what do oranges have to do with mobile applications?
Absolutely nothing, and yet everything.
Whenever we discuss a project with our clients, we like to understand the true reasons behind the request. Without knowing what you are trying to accomplish, we cannot maximize the value created on your project using your given budget.
Your budget. Surely that’s not something you should share with us. After all, if we know your budget, you’re guaranteed we’ll just waste it, right?
Most definitely not! However, this is getting rather long and I’ll have to cover this in a future post. Meanwhile, try to apply the orange examples to some of your past project negotiations. Would you have gained more by divulging more about your project and your real intents?