Sunday, April 29, 2012

Yin - Yang in negotiations

The “Tai Chi Chu” is a symbol for the philosophy of Yin-Yang that was taken from the Chinese book of changes called “I Ching”. Yin-Yang takes one thing, and notes that it can be expressed in two opposite ways. A hill has a dark side which gets less sun. This is the “Yin” side. The hill also has a sunny side which is the “Yang” side. Yin is the negative expression of the situation, Yang is the positive expression of the situation.

For example:
A glass is half full (Yang), or half empty (Yin)
A day can be sunny (Yang) or dark (Yin)
Business may be expanding (Yang) or contracting (Yin)
A task may be easy (Yang) or hard (Yin)
An issue may be good for one party (Yang) but bad for the other party (Yin)

In negotiations every issue can be characterized and be expressed in opposite terms similar to Yin-Yang depending upon the perspective you have. For you to “Win” the other party must “Lose”. In “give and take”, for you to take the other party must give. Issues that may be conceptually simple to you may be complex for them. Issues that are complex to you may be simple to them. For you to get improvement on the price they must reduce their margins. Each recognizes there is a limited base. It highlights that just like Yin-Yang there are two sides to each issue.

One of the keys in negotiations is to always consider both sides. If you only look at issues from your perspective, your view will be always focused on what would be good for you (the Yang side). You won’t understand what the impact may be to the other party that that they may view as their Yin side and that may affect their willingness to agree. In a negotiation, when the other party takes a position that will be a problem for you, explain the problem and the behavior that their position will drive. That will show them the Yin side of what they propose. In a negotiation for a supplier that would possibly be a single source I would always want a long term commitment on the having the product be available. When a supplier would tell me that they won’t provide me with that commitment I would use Yin-Yang in responding to them. I would agree that for them that may be potentially best for them (the Yang side). Then I would explain to them the Yin side of that position which was:
1) We wouldn’t invest in qualifying their product without that commitment (which would result in potentially no sales, and
2) If we did qualify them we would never consider them as a primary or single source of supply.
When you explain the Yin side that they may not have considered, they can then decide whether they want to maintain their position or change it because of the impact their position would have on them.

In writings about principled negotiation the suggestion is to “expand the pie”. The concept of “win-win” negotiating goes directly against Yin-Yang. It requires that there be two positive sides and no negative sides which may simply not be possible. Many times “expanding the pie” may not be something that you can do or may want to do. Expanding the pie may provide you with a Win or Yang, but under the Yin-Yang philosophy you also need to consider what you needed to give up to get that win (the Yin).

Many companies will have a mix of relationships with suppliers, which you could also consider as a form of Yin-Yang. Having a mix of relationships helps balance out the highs and lows. You have standard relationships where what you pay will vary based upon the market. You may also have strategic relationships. When you have a buyer’s market your purchase cost from the standard relationship will be low making it Yang activity. Your purchase from a strategic supplier will be higher making it a Yin activity.
When it’s a sellers market the reverse occurs.

When you negotiate and are trying to persuade the other party always phrase what you offer on the positive (Yang) side for them. When you are responding to a proposal from the other side always provide them the negative (Yin) perspective to you.

Yin-Yang is about balance. I don’t know If Sir Issac Newton ever read I Ching, but his third law of motion seems to state the same basic philosophy “for every action there is an equal and opposite reaction”.