Split the Pie: A Radical New Way to Negotiate

“The challenge in negotiation is to frame the problem correctly,” writes Yale management professor Nalebuff (Why Not?) in this thoughtful if uneven guide. The author’s approach is based on his concept of “the pie,” which he defines as “the additional value created through an agreement to work together.” In every negotiation, the author writes, the most important thing is what both parties can “jointly create”; from this perspective, he explains, “neither side is more powerful” and thus “the pie should always be split 50:50.” Nalebuff offers case studies—when his company Honest Tea was in negotiations with Coca-Cola, for example, he put the concept of the pie into action and struck a deal wherein “the two companies would split the pie, where the pie is the value of the extra sales made possible by this deal”—as well as negotiation tactics (“Let’s agree to split evenly what we can create together” is a good go-to phrase). But things get bogged down by some dry math, and much of his argument rests on his belief that “the other side will come around as they realize you have taken a principled stand.” It’s a big claim, but not one that’s amply supported. This is best taken as a handy addition to the negotiation toolkit rather than a universal truth. (Mar.)