The PPP Negotiation Model: Problem, People, and Process

We propose a new conceptual tool to better understand, prepare for and conduct negotiations: the PPP model.  Any negotiation is a process in which people try to resolve a problem.  Problem, people, and process – these 3 P’s thus form the heuristic triangle of negotiations.  Everything in a negotiation may be allotted to either of these legs of the triangle – or to the dynamic interactions between them.

Negotiation theory has of course dealt with elements of the PPP model.  In particular, to separate the people from the problem has since long been one of the maxims of negotiation guides (eg Fisher/Ury, ‘Getting to Yes’).  However, the separate and special relevance of the process level as the third P, and of the repercussions between the process, the problem and the people level have not been sufficiently studied and described yet.  At the same time, in practice, the relevance of process for successful negotiations is huge.  The PPP model proposed here offers a holistic view on all three levels of negotiations and their interplay and thereby encompasses the entire realm of negotiation theory and management.

The PPP model has analytical value in that it helps negotiators identify and locate crucial issues in a negotiation on the correct level.  The model assists in preparing negotiations by highlighting the importance of these three levels in a negotiation and their relevance for achieving a good result.  The PPP model also is a valuable negotiation management tool because it allows the parties to address issues during the negotiation efficiently and manage the negotiation smoothly.

The problem level in negotiations describes the issues which the parties try to resolve (eg the matter in conflict, the claims discussed or any other topics of substance to be dealt with by the negotiators).  On this level, negotiations can be analysed by two main concepts.  First, any given negotiation problem can be studied through the lense of 4 key negotiation factors: interests of the parties, agreement options, alternatives to agreement and perceptions of the negotiators.  This provides a static perspective on a negotiation situation at any given point in time.  Second, every fight over a problem has a dynamic perspective, too.  This dynamic is usually characterised by a tension between creating value – enlarging the pie – on the one hand and claiming value – demanding the largest piece – on the other hand.  Often, claiming value tactics get the upper hand over creating value tactics – either because the parties are tempted to exploit the other side or because they strive at protecting themselves from being exploited by the other side.  As a consequence, real life negotiators often miss out on the potential for value creation, and their results are not fully efficient (‘negotiators’ dilemma’).  Typical claiming value tactics are: anchoring, firm commitments, threats and a focus on positions (instead of interests) and on non-agreement alternatives (instead of agreement options).  Some of these tactics are quite aggressive.

Using these aggressive tools has effects on the people level.  Negotiators are people.  They experience positive and negative emotions.  They communicate more or less effectively.  And they act more or less rationally, often suffering from systematic biases such as over-optimism, selective perceptions, or reactive devaluation (‘If my opponent proposes X, X must be bad for me.’).  A negotiator confronted with aggressive value claiming tactics and pure positional bargaining will usually experience negative emotions such as nervousness, anxiety, or frustration.  These emotions may show in the form of ineffective or even destructive forms of communication such as counter-threats, accusations, a louder voice or the use of strong words.  By the same token, he or she will also be more prone to perception biases.  This, in turn, will provoke similar reactions by his or her counterpart, spurring a downward-spiral of non-constructive personal interaction between the negotiators.

This has a significant impact on the process.  Parties engaging in claiming tactics on the problem level and being captured in a negative and destructive spiral on the people level will experience the process of their negotiation as difficult and cumbersome and not apt for progress.  At the same time, being aware of the process and managing it consciously and constructively can have significantly positive effects both on the people level and on the problem level.  These repercussions between the process level and the other two levels and therefore the importance of process in a negotiation have been much less studied and are much less understood than the problem or the people level alone.

The process level relates both to the ‘outer process’ and the ‘inner process’ of a negotiation.  The former comprises strategic and tactical issues before the parties actually start negotiating at the table:  When should I negotiate, and with whom and where?  The latter is about how the negotiation is going to be conducted at the table.  It comprises issues such as setting up and following an agenda, agreeing on communication rules and tools to manage the negotiators’ dilemma (eg to separate value creating from value claiming), giving orientation by summing up intermediate results and by visualising facts and progress made, and involving third parties as moderators or mediators.

Negotiations can fail for many reasons.  In our experience as negotiators, mediators and arbitrators, they fail very often because the parties lack a sense of the effects of the problem and the people level on the process and of the importance of the negotiation process for achieving a good result; and they fail because the parties lack the tools to handle process issues adequately.  You can be an excellent problem solver and people manager, but you will fail as a negotiator if you are not aware of the importance of the negotiation process and/or if you lack the tools to manage this process efficiently.  The more you consciously observe and actively manage the process as a distinct aspect of your negotiation, and the more you understand negotiations not as a mere problem and people task but rather also as a process task, the more you gain one additional and highly effective tool to counter possible negative effects both on the people and on the problem level.  You design a smoother and more efficient process which allows the people to behave and communicate more constructively.  This, in turn, makes work on the problem easier and facilitates creating value.

The PPP model of negotiations helps you analytically to separate problem, people, and process issues and to be aware of the dynamic interaction and spillover effects between the three levels.  Advanced negotiators benefit from the model as it helps them to orient themselves with respect to an upcoming negotiation and to prepare adequately.  Generally, difficulties in a negotiation should be addressed on the level where they originate.  This is easy if the difficulty does not exhibit spillover effects such as the ones described above.  However, if spillover effects are present, the PPP model allows you to handle frictions and difficulties situation-specific on the right level.  This may be either at the root – on the level from which they originate – or at the surface on which they materialize – which is more often than not the process level.

Horst Eidenmüller is the Freshfields Professor of Commercial Law at the University of Oxford, and Andreas Hacke is a Visiting Lecturer at the same university.


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