book.chapter Lever #1 – the power of reframing .

Highly effective negotiators understand that the way you frame or structure your proposal can significantly impact its attractiveness, regardless of the proposal's actual substance. This principle suggests that deals, which are fundamentally the same, can be perceived differently based on their presentation. Therefore, it is always beneficial to consider how proposals can be reframed to appeal more to the other party and their constituents. A prime example of the power of framing in negotiation can be observed in the 2005 dispute between the National Football League (NFL) owners and players over the division of the league's projected $10 billion in revenue. The owners proposed a $2 billion "off-the-top" deduction for their investments, offering the players 58% of the remaining revenue. The players, however, rejected this proposal, demanding a straight 50-50 split of the total revenues. The deadlock persisted for months, with both sides resorting to hardball tactics and even appealing to Congress for intervention. The breakthrough came when the negotiators introduced a novel agreement that categorized the NFL's revenue into three distinct segments, each with its own revenue-sharing formula: 55% of League Media revenue to the players, 45% of NFL Ventures/Post-season revenue to the players, and 40% of Local revenue to the players. This arrangement ensured that the players received between 47% and 48% of the total league revenue, with provisions to adjust the deal if the percentages deviated from this range. By adopting a three-bucket framework, both parties could claim victory: the owners highlighted their larger share of stadium revenues, reflecting their significant investments, while the players celebrated their majority share of the lucrative TV rights revenue. This scenario underscores the significance of framing in negotiations. Even when parties appear to have irreconcilable differences, a well-structured reframing of the solution can facilitate a mutually acceptable compromise, allowing both sides to maintain their dignity. Framing is more about the optics and structure of a proposal than its actual content. Consider a negotiation between a startup and an established company over launching a new product. The startup initially seeks a 5% royalty, which would increase as sales grow, while the established company prefers a near-zero initial royalty that increases over time before decreasing at higher sales volumes. Despite the apparent incompatibility of these positions, a cleverly framed agreement was reached by devising a royalty schedule that decreased over time but increased actual payouts as sales targets were met. This approach satisfied both parties by addressing the issues of time and quantity in a way that allowed the rate to rise and fall simultaneously. Deepak Malhotra emphasizes that the success of a proposal depends not only on its substance but also on its presentation. Negotiators often overlook the importance of how a deal is perceived, focusing solely on its value to the other side. To effectively harness the power of framing, negotiators should avoid single-issue negotiations by keeping multiple issues on the table, allowing for greater flexibility and trade-offs. Being firm on substance while being creative with the structure can help parties reach an agreement. Leveraging social proof and precedents can also enhance the perceived appropriateness of a proposal. Presenting an offer as the default option or starting point can lend it implicit legitimacy and serve as an anchor. It is crucial to justify an offer by articulating the value it provides, establishing reasonable reference points to ensure the price seems fair. Strategic ambiguity can maintain flexibility, but it should not replace real agreement on substance. Some level of ambiguity can be beneficial for initiating long-term relationships. Controlling the framing from the outset by suggesting initial templates or pivoting discussions can prevent conflicts. Negotiation is fundamentally about human interaction, which can vary in difficulty. However, effective framing and engagement can lead to a better understanding and more favorable agreements.