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Pizza and the ART of Negotiation

OOH ...Here’s One Thing by Jim Johnsen

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OOH …Here’s One Thing  

by Jim Johnsen,
Managing Director, Johnsen, Fretty & Company

My friend Bill Board, was kind enough to invite me to write a periodic #OOH column.  Since I am a man of few words, I promise to keep my riffs short and focused on one thing.

 

Pizza and The Art of Negotiation

This past week I had the good fortune to attend the IBO conference in Savannah. For those of you who have had their heads too close to the grindstone for too long, the IBO was formed a number of years ago largely because many of the independent operators felt like they had been left out of the discussion at the OAAA. Given how quickly it caught on and how popular it has become, I would say Chris Cowlbeck is on to something! Hats off to you Chris, for germinating the idea and building the IBO into what it is today. Not sure if it is true or not but it seemed like record attendance at this conference. Also when Barry Frey shows up, I would say that’s an automatic legit stamp. (Ironically, I discovered at this conference that Barry’s wife and my wife attended the same high school. Now that’s a small world.)

Speaking of reunions, I was not “off” as Bill Board mentioned last week, but was attending my 30th reunion from business school. Its amazing how 30 years can pass without any contact with someone and yet within 5 minutes it feels like you just spoke to that person yesterday. There must be something in our dinosaur brains that makes us hardwired that way. Probably plays into the psychology of trust which I referred to in an earlier article and hope to revisit at sometime in the near future. I got into a discussion on risk with one of my classmates and he mentioned a book called Antifragile: “Things That Gain from Disorder” by Nassim Taleb. Here’s a brief snippet from Amazon:

“Just as human bones get stronger when subjected to stress and tension, and rumors or riots intensify when someone tries to repress them, many things in life benefit from stress, disorder, volatility, and turmoil. What Taleb has identified and calls “antifragile” is that category of things that not only gain from chaos but need it in order to survive and flourish.”

Looks like a fitting book for today’s world!

Speaking of classmates, I caught up with one that now runs HR for Airbnb, one that is now the Minister of Transportation for the country of Columbia (anyone want to go south and build some boards?), one that recently became senior advisor to U.S. Secretary of Energy and another that stepped down as Treasurer of New York City to start a $3B private equity firm. Needless to say, I was just happy to be in the back of the class.

Speaking of class, I had the opportunity to attend a lecture while at the reunion (they do that before asking for your money :). It was a great talk by Professor Barry Nalebuff on negotiation. Google him if you are interested. He not only lives in the ivory tower but exploits it too. He co-founded Honest Tea a few years back and then sold it to Coke for mega bucks. He has now started Maker Overnight Oats and it looks like he is off to a good start on that one. As an aside, if you haven’t heard of overnight oats…its a game changer. Mix a few ingredients in a jar at night and in the morning you have a delicious MRE.

I digress. The best way I can summarize Nalebuff’s lecture is with the following quote: “Blowing out someone else’s candle does not make yours shine brighter.”  Long short, he is all about understanding “the pie”, or as he puts it, whats at stake. He claims that most business people spend the vast majority of their time focused on how do I grab most of the pie without really stepping back to define what the pie is. I am sure we can all relate to being across the table from that guy or gal! Here is a very simple example:

Karl brings $10 to the table. Arte brings $5 to the table. (he didn’t use Karl and Arte…but hopefully you appreciate the humor). By bringing the $15 to the table and doing a deal, together, they will create $100. How should they wack it up? Most would argue that Karl should get $66 plus $10 and Arte should get $33 plus $5. I mean after all that seems fair right? Get a slice of the pie equal to what you brought. Professor Nalebuff’s response…”WRONG!” He argues that both Arte and Karl need each other in equal amounts to make the $100 happen. This is where the fun begins! I won’t give away the punch line (a) because I am probably not smart enough to explain it all the way through and (b) I would like to take the free Coursera course online before I wade in. Suffice it to say though that the answer is not for Karl or Arte to bully their way to the biggest chunk of the $100, nor is it to micro focus just on the $100 or the $15 that they are going to invest.

Interesting stuff right? And I would venture a guess that we use it everyday in business without really thinking about it. In any event, happy negotiating everyone.

Here’s the link the free course: https://www.coursera.org/learn/negotiation

and to a couple of his talks: https://youtu.be/5irYVz1lV4U    https://youtu.be/6MJzS2irGc4

 

Jim Johnsen

 

jfco.com
Securities transacted through StillPoint Capital Member firm FINRA/SiPC

 

 

 

 

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