Negotiation is stressful. It can bring out the worst in people. Wouldn’t it be better if there were a principled way to negotiate? Wouldn’t it be even better if there were a way to treat people fairly and get treated fairly in a negotiation? Barry Nalebuff is the Milton Steinbach Professor at the Yale School of Management. Nalebuff applies game theory to business strategy and is the co-founder of one of America’s fastest-growing companies, Honest Tea. In his new book, SPLIT THE PIE: A Radical New Way to Negotiate he outlines his tried and tested practical negotiation methods that reveal the true power of the players and what they bring to the table. From years of real-world negotiation, and deep research on game theory, Nalebuff identifies what’s really at stake in a negotiation: the “pie.” In his model, the negotiation pie is the additional value created through an agreement to work together. Seeing the relevant pie will change how you think about fairness and power in negotiation. You’ll learn how to get half the value you create, no matter your size.  In this interview I speak to Professor Barry Nalebuff about how we can apply his negotiation model to understand and reframe everything from every-day to high-stakes negotiations. We delve into the psychology of the negotiation and how deploying empathy can help reach great solutions.

Thought Economics

In 2009, a St. Louis glassblowing artist and recovering computer scientist named Jim McKelvey lost a sale because he couldn’t accept American Express cards. Frustrated by the high costs and difficulty of accepting credit card payments, McKelvey joined his friend Jack Dorsey (the cofounder of Twitter) to launch Square, a start-up that would enable small merchants to accept credit card payments on their mobile phones. With no expertise or experience in the world of payments, they approached the problem of credit cards with a new perspective, questioning the industry’s assumptions, experimenting and innovating their way through early challenges, and achieving widespread adoption from merchants small and large. But just as Square was taking off, Amazon launched a similar product, marketed it aggressively, and undercut Square on price. For most ordinary start-ups, this would have spelled the end. Instead, less than a year later, Amazon was in retreat and soon discontinued its service. How did Square beat the most dangerous company on the planet? Was it just luck? These questions motivated McKelvey to study what Square had done differently from all the other companies Amazon had killed. He eventually found the key: a strategy he calls the Innovation Stack. In this interview I speak to Jim McKelvey, Co-Founder of Square and author of The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time. We talk about how to build a pattern of ground-breaking, competition-proof entrepreneurship that is rare but repeatable. And how we can find the entrepreneur within ourselves and identify and fix unsolved problems–one crazy idea at a time.

Thought Economics

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