EXHIBIT 5-8 Power Moves

At 12:01 on the morning of May 1, 2000, the TV screen went blue on Time Warner Cable’s WABC-TV feed, and a scrolling message in block letters began: “D isney H as T aken ABC A way f rom Y ou .” After four months of fruitless negotiations over the rights to retransmit ABC signals over cable, Time Warner yanked ABC stations off its systems in 11 cities, including Houston, Philadelphia, Raleigh, and New York, during a critical period for setting ratings and ad rates. The “alert” aired on WABC-TV Channel 7 in New York, whose cable subscribers in 3.5 million homes went without their local ABC station. Time Warner said it wanted to extend talks until the end of the year, but ABC only offered an extension through May 24—the end of the sweeps. Time Warner laid blame squarely on Disney, ABC’s corporate parent. “Disney is trying to inappropri- ately use its ownership of ABC television stations to extract excessive and unreasonable terms for its cable TV channels—terms that would add hundreds of millions of dollars in cost for Time Warner and its cable customers,” said Fred Dressler, senior vice president of programming for Time Warner Cable. Disney wanted higher fees for the cable rights to ABC and broader distribu- tion by Time Warner for Disney’s own cable programming, especially ESPN. The Cable Act of 1992 entitles over-the-air networks to compensation from cable systems that carry network signals. The previous agreement between Disney’s ABC and Time Warner Cable expired on December 31, 1999. ABC blamed the impasse on Time Warner: “This is a punitive act, but Time Warner is only punishing their own customers through their cable system,” said Tom Kane, president and general manager of WABC.

Source: Fading to Black by M. Larson in Adweek , May 8, 2000, 41 (19), p. C50. Reprinted by permission of Nielsen Business Media, Inc.

Strategic Issues Concerning Approaches

Negotiators should keep in mind the following principles when choosing their approach:

THE PRINCIPLE OF RECIPROCITY The style you use in negotiation will often be reciprocated by the other party. In one investigation, interests were reciprocated the most (42%), followed by power (27%) and rights (22%). 44

INTERESTS ARE EFFECTIVE FOR PIE-EXPANSION Focusing on interests can usually resolve the problem underlying the dispute more effectively than focusing on rights or power. A focus on interests can help uncover “hidden” problems and help identify which issues are of the greatest concern to each party. Put the focus on interests early in the negotiations. This suggestion raises an obvious question: If interests are effective, why doesn’t everyone use them? Ury, Brett, and Goldberg identify several reasons, including lack of skill, the tendency to reciprocate rights and power, and strong cultural or organizational norms. 45

HOW TO REFOCUS YOUR OPPONENT ON INTERESTS (AND MOVE THEM FROM RIGHTS AND

POWER) Suppose you enter a negotiation with an interests-based approach, but your opponent uses rights or power. This makes you angry, and you reciprocate power and rights out of sheer self-defense. Yet, you realize this behavior is creating a lose-lose situation. How do you break out of the spiral? Consider two strategies: personal strategies (that you can use in a face-to-face situ- ation) and structural strategies (steps that an organization can take to create norms that engender an interests-based culture). 46

Personal Strategies.

Do Not Reciprocate! Resist the urge to reciprocate. 47 By not reciprocating, you refocus your opponent. In one investigation, when the other negotiator reciprocated, the focal negotiator stayed with rights and power arguments 39% of the time; however, when the other did not recip- rocate, the focal negotiator stayed with rights and power arguments only 22% of the time (and, hence, was refocused 78% of the time). 48 For example, Rex Tillerson, CEO of ExxonMobil, led tense negotiations for access to underwater fields off Russia’s Sakhalin Island. At one point, a Russian minister let his anger show in a disagreement over a permit and slammed his fist on the bargaining table. Instead of getting angry and reciprocating the minister’s behavior, Mr. Tillerson remained calm, realizing the extensive talks required a gentle touch. He feared the Russian officials would be offended by the Exxon leaders, thinking, “Here come the powerful Americans that won the Cold War, and now they’re going to come in and tell us all how messed up we are and how we got it all wrong,” Mr. Tillerson recalled. “You make yourself very aware of it, and almost go out of your way to make sure there’s nothing that conveys such a sentiment.” 49 Provide Opportunities to Meet. Often, rights- and power-based approaches emerge when parties are out of touch and uncertain about the intentions of the other side. Getting parties

44 _{Lytle, Brett, & Shapiro, “The strategic use of interests.”} 45 _{Ury, Brett, & Goldberg, Getting disputes resolved.} 46 _Ibid.

47 _{Fisher, Ury, & Patton, Getting to yes; Ury, Brett, & Goldberg, Getting disputes resolved.} 48 _{Lytle, Brett, & Shapiro, “The strategic use of interests.”}

49 _{Ball, J. (2006, March 8). The new act at Exxon; CEO Tillerson, prototype of Texas oilman, must focus on delicate}

together for informal discussions can move them toward interests. When people are face-to-face, they often can’t help but feel some compassion for the other party. Moreover, differences don’t have an opportunity to fester. When the Boston Red Sox’s top executives thought they were going to lose their chance to sign Daisuke Matsuzaka, the Japanese pitching star, they board- ed a private jet to southern California. Unable to come to an agreement and fearful that Scott Boras, Matsuzaka’s agent, was not negotiating faithfully, they went on an unsolicited visit to Boras’s neighborhood, forcing him to negotiate face-to-face. The tactic worked. Just days later, Matsuzaka boarded the plane back to Boston with the Red Sox executives. 50

Don’t Get Personal: Use Self-Discipline. Make sure that you stay focused on the con- flict and the issues. Many negotiators begin to attack the other party’s character. In their classic book, Getting to Yes, Fisher and Ury advocate separating the people from the problem. The same principle characterizes successful marriages! 51 Gottman and Levenson tracked couples over a 14-year period. 52 Based upon an initial observation of the couples’ fighting style early in their marriage, the researchers predicted which couples got divorced and which stayed together with 93% accuracy. The biggest determinant of divorce was not the amount of arguing, nor the amount of anger, but the use of personal attacks.

Use Behavioral Reinforcement. Make sure that you are not rewarding the other party’s rights- or power-based behavior. In other words, if you have been planning to make a concession, do not offer it to the other party immediately after he or she has misused rights or power. If you do, you reward the very behavior you want to extinguish. One of the most effective ways to extinguish a behavior is simply not to react. If you do react, you may unconsciously reward the behavior (e.g., if the other party benefits from the attention associated with a conflict spiral).

Making unilateral concessions is not effective for refocusing negotiations. In one study, concession making was less effective in refocusing negotiations from rights and power (60% refocused), as were other uncontentious communications (77% refocused). 53 Why? A unilateral concession may be seen as a reward for contentious behavior; therefore, it may encourage the repetition of such behavior.

Send a Mixed Message. Reciprocation is instinctive, especially under stress. 54 Thus, you may find that your opponent is making you angry and you need to “flex your muscles.” One effective strategy is to reciprocate rights or power, but combine it with interests-based questions or proposals. 55 Sending the counterparty a “mixed message” (rights and interests) gives them a chance to choose what to reciprocate—interests, rights, or power.

Try a Process Intervention. Process interventions are tactics that are interests-based with the goal of moving the counterparty back to interests-based negotiation. Effective processes can include any of the pie-expanding strategies we discussed in Chapter 4 (e.g., multiple offers, re- vealing information about priorities, etc.), as well as several other dispute resolution strategies (indicated next). In a direct test of the effectiveness of process interventions, Ury, Brett, and

51 _{Fisher, Ury, & Patton, Getting to yes.}

50 _{Curry, J. (2006, December 14). After forcing issue, Red Sox on verge of Matsuzaka deal. New York Times, p. D1.} 52 _{Gottman, J. M., & Levenson, R. W. (2000). The timing of divorce: Predicting when a couple will divorce over a 14-year}

period. Journal of Marriage & the Family, 62 (3), 737–745.

53 _{Lytle, Brett, & Shapiro, “The strategic use of interests.”}

54 _{Lerner, H. G. (1985). The dance of anger. New York: Harper and Row.} 55 _{Ury, Brett, & Goldberg, Getting disputes resolved.}

Goldberg examined the success rate of various tactics: 56 Least effective was reciprocation (66%); the most effective method was process intervention (82% success rate). Other methods included the mixed-message approach (74% success rate), and simply resisting the urge to reciprocate (self-discipline; 76% success rate).

Let’s Talk and Then Fight. Another strategy is to agree to talk for 20 minutes or so, and then argue. By agreeing up front on a process, both parties commit to listen to one another at least temporarily.

Strategic Cooling-Off Periods. It is easy to muster a rights-based response or power display in the heat of conflict. An interests-based approach requires deeper levels of cognitive processing. Thus, it often serves parties’ interests to build in some cooling-off periods that allow them to better assess their own needs and interests, independent of rights and power issues.

Paraphrasing. Many times, negotiators struggle in their attempt to transform a rights- or power-based argument into an interests-based discussion. Negotiators should not abandon their interests-based approach but, rather, persist in their attempt to understand the other party’s under- lying needs. Stephen Covey suggests that parties to conflict should be forced to empathize with each other. 57 He has a strict ground rule: “You can’t make your point until you restate the other person’s point to his or her satisfaction.” 58 People are often so emotionally invested that they cannot listen. According to Covey, they pretend to listen. So he asks the other party, “Do you feel understood?” The other party always says, “No, he mimicked me, but he doesn’t understand me.” The negotiator gets to state a point only after satisfying the other party. (For an example of this intervention, see Exhibit 5-9 ).

Label the Process. If the counterparty uses a rights- or power-based approach after you have tried to focus on interests, it might be useful to label the strategy you see the counterparty using. Recognizing or labeling a tactic as ineffective can neutralize or refocus negotiations. 59

Structural Strategies. Ury, Brett, and Goldberg suggest several methods whereby dis-

pute resolution systems can be designed and used within organizations, some of which are de- scribed here in detail. 60 Each of these strategies is designed to reduce the costs of handling disputes and to produce satisfying, durable resolutions.

Put the Focus on Interests. When International Harvester introduced a new procedure for oral (rather than written) handling of grievances at the lowest possible level, the number of written grievances plummeted to almost zero. 61 Some organizations stay focused on interests via use of a multistep negotiation procedure , in which a dispute that is not resolved at one level of the orga- nizational hierarchy moves to progressively higher levels. Another strategy is the wise counselor , in which senior executives are selected to consider disputes. By creating multiple points of entry , negotiators have several points of access for resolving disputes. In some instances, mandatory negotiations provide a way for reluctant negotiators to come to the table. By providing skills

59 _{Fisher, Ury, & Patton, Getting to yes.}

60 _{Ury, Brett, & Goldberg, Getting disputes resolved, p. 42.} 61 _Ibid.

56 _Ibid.

57 _{Covey, S. R. (1999). Resolving differences. Executive Excellence, 16 (4), 5–6.} 58 _Ibid.

and training in negotiation, people are better prepared to negotiate in an interests-based fashion. Finally, by providing opportunities for mediation in which a third party intervenes, negotiators can often focus on interests.

Build in “Loop-Backs” to Negotiation. Rights or power contests can be costly and risky, and therefore negotiators need to be able to loop-back to interests:

• Looping back from rights. Some loop-back procedures provide information about a negotiator’s rights, as well as the likely outcome of a rights contest. Consider information procedures in which databases are created that can be accessed by negotiators who want to research the validity and outcome of their claims. Advisory arbitration is a method whereby managers are provided with information that would likely result if arbitration were to be carried out or the dispute were to go to court. Minitrials are procedures EXHIBIT 5-9

Resolving Differences

The following is a summary of an intervention led by Steven Covey between two parties who had no trust for one another:

The president of Company A asked Covey to act as a third-party facilitator in a lawsuit with Company B, the key reason being that there was no trust between the parties.

Covey stated that the disputants did not actually need a third party because they possessed the power to handle the conflict themselves. Covey suggested putting all the issues on the table and asking if they would be willing to search for a solution. Covey called the president of Company B and made the invitation. The president of Company B declined the offer and said he wanted the legal process to handle it.

The president of Company A suggested that he send his material and documents to Company B and meet face-to-face. He promised not to bring an attorney and told Company B president that he could bring his attorney if he wished. He further said it was not even necessary that Company B president speak. They could just have lunch. In short, there was nothing to lose and possibly everything to gain.

The presidents met for lunch and Company A president said, “Let me see if I can make your case for you since you are not going to speak.” Company A president tried to show genuine empathy and took pains to describe Company B president’s position in depth. He then asked if his understand- ing was correct or not.

At this point, the silence was broken. The president of Company B spoke up and said that the summary was 50% accurate but he wanted to correct some inaccuracies. At that point, the attorney advised Company B president to not say another word. At this juncture Company B president told the attorney to shut up because he could feel the power of the dialogue that was happening.

The lunch meeting progressed with both parties standing shoulder-to-shoulder making notes, using flip charts, and brainstorming alternatives. At the close of the lunch, the disagreement was resolved.

whereby “lawyers” (high-level executives in the organization who have not been involved previously) represent each side and present evidence and arguments that are heard by a neutral judge or advisor. Minitrials put negotiation in the hands of people who are not emotionally involved in the dispute and who have the perspective to view it in the context of the organization’s broad interests.

• Looping back from a power conflict. A variety of strategies can be used to move parties away from power contests back to interests. Crisis procedures , or guidelines for emer- gency communication written in advance, establish communication mechanisms between disputants. For example, in disputes between the United States and the Soviet Union, a hotline served a crisis procedure purpose; in addition, U.S. and Soviet officials established nuclear risk reduction centers, staffed 24 hours in Washington and Moscow, for emergency communications. 62 Finally, intervention by third parties can halt power contests. For example, when Detroit public school teachers were unsatisfied with their pay, they went on strike and entered negotiations that went on for more than two weeks. Unable to come to an agreement, Mayor Kwame Kilpatrick stepped in. He called everyone into his office, where negotiations continued for the next 11 hours. They dealt with one issue at a time, finally settling on a definitive agreement. 63

Provide Low-Cost Rights and Power Backups. Should interests-based negotiation fail, it is useful to have low-cost rights and power backup systems. Conventional arbitration is less costly than court or private adjudication. Ury, Brett, and Goldberg note that 95% of all collective bargaining contracts provide for arbitration of disputes. 64 Med-arb is a hybrid model in which, if mediation fails, the mediator serves as an arbitrator. With the threat of arbitration in the air, par- ties are often encouraged to reach a negotiated solution. In final-offer arbitration , the arbitrator does not have authority to compromise between parties’ positions but, rather, must accept one of the final offers made. Thus, each party has an incentive to make a final offer appear the most reasonable in the eyes of the neutral third party. Arb-med is also a hybrid model traced to South Africa in which an arbitrator makes a decision and places it in a sealed envelope. The threat of the arbitrator’s decision sits on a table and is destined to be opened unless the parties reach mu- tual agreement. Arb-med is more effective than conventional arbitration. 65

Build in Consultation Beforehand and Feedback Afterward. Notification and consultation between parties prior to taking action can prevent disputes that arise through sheer misunderstanding. They can also reduce the anger and hostility that often result when decisions are made unilaterally and abruptly. Postdispute analysis and feedback is a method whereby parties learn from their disputes to prevent similar problems in the future. Similarly, by establishing a forum , consultation and postdispute analysis can be institutionalized to create an opportunity for discussion.

Provide Skills and Resources. People who lack the skills to resolve disputes often resort to rights- and power-based actions (i.e., lawsuits or firings).

62 _Ibid.

63 _{MacDonald, C., & Jun, C. (2006, September 3). How mayor brokered end of school strike; No wage givebacks, but}

benefits cut. Detroit News, p. A1.

64 _{Ury, Brett, & Goldberg, Getting disputes resolved, p. 56.}

65 _{Conlon, D. E., Moon, H., & Ng, K. Y. (2002). Putting the cart before the horse: The benefits of arbitrating before}

HIGH COSTS ASSOCIATED WITH POWER AND RIGHTS Focusing on who is right or who is more powerful usually leaves at least one person feeling like a loser. Losers often do not give up but instead appeal to higher courts or plot revenge. Rights are less costly than power. Generally, power costs more in resources consumed and opportunities lost. For example, strikes cost more than arbitration, and violence costs more than litigation. Costs are incurred not only in efforts invested but also from the destruction of each side’s resources. Power contests often create new injuries and a desire for revenge. Interests are less costly than rights. In summary, focusing on interests, compared to rights and power, produces higher satisfaction with outcomes, better working relationships, and less recurrence; it may also mean lower transaction costs.