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Off-topic: The Art of Negotiation

Summary:
Recently I’ve spoken to a few Trump supporters who think Mr. Trump has extensive negotiating experience. They are wrong.In general, there are two types of negotiations. There is the “win-lose” type (or Distributive negotiation) where one party receives more and the other party receives less. This is the common approach when buying a car or real estate, or haggling at a street market.The other type of negotiation is “win-win” (or Integrative negotiation). This type is used when negotiating between a company and a worker’s union, with long term suppliers, negotiating agreements between international allies – and even with adversaries.The tactics for the two types of negotiations are very different. In the first type (win-lose), bluffing, threats (like threatening to walk away), even

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Recently I’ve spoken to a few Trump supporters who think Mr. Trump has extensive negotiating experience. They are wrong.

In general, there are two types of negotiations. There is the “win-lose” type (or Distributive negotiation) where one party receives more and the other party receives less. This is the common approach when buying a car or real estate, or haggling at a street market.

The other type of negotiation is “win-win” (or Integrative negotiation). This type is used when negotiating between a company and a worker’s union, with long term suppliers, negotiating agreements between international allies – and even with adversaries.

The tactics for the two types of negotiations are very different. In the first type (win-lose), bluffing, threats (like threatening to walk away), even lying are commonly used.  (Sound familiar?)

The approach to an integrative negotiation includes building trust, understanding the other party’s concerns, and knowing the details of the agreement – with the goal to reach a mutually beneficial agreement.

It is important to understand when each approach is appropriate. A used car buyer could use the Integrative negotiation approach, but they probably wouldn’t get a very good deal.

A company could use the “win-lose” tactics with a worker’s union, but they would probably face an extended strike followed by a long period of ill-will.

This brings me to Mr. Trump. He has experience in “win-lose” negotiations (buying and selling real estate), but apparently little or no experience in Integrative negotiations.

Mr. Trump keeps using the tactics of “win-lose” in negotiating with Congress, allies and adversaries. Not only has this been ineffective (members of Congress have repeatedly called his bluffs), but it is damaging to long term relationships. Mr. Trump’s use of “win-lose” techniques with North Korea have made him look weak and ineffective (a “dotard”), and have increased the risks of a major misunderstanding and possibly a war.

So, what can Mr. Trump do to be effective? First, he needs to realize he lacks the negotiating experience that is required for these types of negotiations. He needs to stop with the empty threats, bluffs, and lying. And he either needs to learn the integrative negotiation approach (and become a student of the details), or hire people with relevant negotiating experience (and remove himself from the process).   All of this seems unlikely, and I expect Mr. Trump to continue using inappropriate tactics - that betray his lack of negotiating experience.
Bill McBride
A full time blogger, Mr. McBride retired as a senior executive from a small public company in the '90s. Mr. McBride holds an MBA from the University of California, Irvine, and has a background in management, finance and economics.

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