The Zero-Sum Fallacy in Negotiation and How to Overcome It
The zero-sum fallacy can be self-fulfilling, so you need to work to avoid it.
Posted April 13, 2018
The zero-sum fallacy is the idea that there is a fixed pie and if one person gets more that means the other person gets less.
This is the way most people think about negotiation, but it couldn't be further from the truth.
Negotiation should always be thought of in relation to creating value. Importantly, you should think about how you create value for the other party.
If you want your parents to pay for something, or your employer to give you a raise, or a firm you're negotiating with to lower its price, or an employee to work harder, what is going to motivate them to do that?
Of course, you can just ask. That often works. The person being asked often interprets this as a way for them to create value for you at little cost to themselves.
But (and this is a big BUT) they might also interpret the request as you essentially trying to get more of their pie! So you need to help them create a narrative where they see themselves as being enriched by helping you and you do that by making sure they get value. That's creating value.
Here are a few examples of creating value in the cases I've listed above:
1. You want your parents to pay for something: That something might increase your ability to spend time with them, make you more intelligent and therefore more viable in the economic marketplace (and therefore implicitly more likely to be able to help them when they're old or bring healthy and intelligent young grandchildren into the world, which is what parent's want whether they know it or not), or allow you to do something specific for them.
2. You want your employer to give you a raise: In this situation creating value often means identifying where you are already producing value worthy of a raise. Some people do this by attempting to get a job offer making more money elsewhere, at which point they can negotiate based on the value that others perceive them to have. Some people attempt to make a principled argument based on the money they bring into the corporation or someone else's salary (which is higher) for doing the same job. In all these cases, you are pointing out the value you already apparently create.
3. You want a firm you're negotiating with to lower their price: So you look for things they want that are not necessarily money, like legacy (how will you promote their business into the future), added product value (how you will enhance their product above current expectations), and stability (what guarantees can you provide that this is a long-term commitment).
4. You want an employee to work harder: Here added value could come in terms of monetary compensation or greater choice (they can choose some area they want to work on) or greater autonomy (less oversight if they reach some benchmark) or the opportunity to lead a new project (again, contingent on reaching some benchmark). You should also identify value the employee already adds, thereby showing that you recognize the value they already create, and then let them know where you see the additional potential and how they might reach their own goals (again, more added value for them).
The zero-sum fallacy is a fallacy because it is a false belief. Unfortunately, it a belief that can be self-fulfilling. If you believe there is no alternative but to split a fixed-pie, then you may fail to look for places to create value. That is a real mistake.
Follow Thomas Hills on Twitter