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Become A Master Negotiator With Yale Professor Barry Nalebuff

Stephanie Ricci contributed to this story.

After over 30 years of teaching negotiation, innovation, and strategy, it would be fair to say that Barry Nalebuff is a world-class negotiator.

From advising the NBA in their negotiations with the National Basketball Players Association to helping his mother buy a house from her landlord, the author and professor at the Yale School of Management holds extensive experience consulting with over 50 multinational companies.

Nalebuff is the coauthor of seven books, including the Thinking Strategically and The Art of Strategy, which explore game theory with over 400,000 copies in print.

His latest book, Split the Pie, which is inspired by 15 years of teaching a negotiation course, presents a theory-based and field-tested method to approaching negotiation that allows both sides at the negotiation table to shift their energy toward sealing a deal that creates the biggest possible return.

The course, which is also offered online on Coursera, counts 400,000 active learners, and holds the second-highest rating on the platform.

The entrepreneurial story behind it

“One of the great things about being a professor is you get the first look at your students,” said Nalebuff. “One of them was Seth Goldman, who I had advised on his entrepreneurship project when he as an MBA student.”

A casual conversation with former student Seth Goldman about the lack of beverage choices that were neither “too sweet” nor “too boring,” turned into a multimillion-dollar business three years later. Nalebuff ended up cofounding the ready to drink organic tea company Honest Tea, which was later acquired by Coca-Cola in 2011.*

“The negotiation over the sale to Coca-Cola is where the ideas to Split the Pie first left the classroom and came into practice,” Nalebuff said.

As the chairman of the company, experiencing the high-stakes negotiation revealed that his theory could work not only in terms of building a business, but also selling a company.

This prompted him to write his seventh book, which revolves around three key ideas.

First, the author defies the misconception that bargaining power rhymes with aggressiveness, where the good negotiator harasses the other party to get their way out of a deal. “You don’t have to be a jerk to succeed in negotiation,” he said.

Second, one should use principled negotiation by leveraging common values and consulting objective criteria to base your agreement upon.

Lastly, the guide is meant to change the way in which people negotiate instead of arguing about a price, and flirts with the idea of co-opetition—competing whilst cooperating.

“I want people to start negotiation by talking about how to negotiate,” said Nalebuff. “Ask if we can agree to split the pie, because if we can do that upfront, then we can focus our efforts on making the pie bigger.”

So, how exactly does one do this?

The author brings his theory to the real world with a classic mathematical example:

Alice and Bob have a 12-sliced pizza to divide if they can agree on a common ground.

If they can’t, Alice will get four slices and Bob will get two. The question is, how should Alice and Bob agree on dividing up the 12 slices?

According to the author, most people will have one of two approaches—they either split the pizza in half, where each gets six slices, or they may argue that because Alice has twice the “power” of Bob, she should get twice as much. Hence, it should be an 8-4 division.

Both of those answers are misguided because they don’t understand what the negotiation is about,” explained Nalebuff. “It’s not about the 12 slices. They can get six slices between them with no agreement. The whole purpose of this negotiation is to go from six to 12. Those extra six slices are what this negotiation is about.”

“The extra six slices should then be divided because Alice and Bob are equally essential to make that happen,” he added. “Thus, Alice gets the four plus three, and Bob gets the two plus three.”

Therefore, the negotiation pie is the additional value created through an agreement to work together.

This example is one of the many in-depth case studies found in the book. This pie framework can be applied anywhere from everyday negotiations to major business decisions, and helps you employ logic to identify equitable solutions, become a well-trained negotiator, and ensure you grow your slice.

Editor’s note: Coca-Cola recently decided to discontinue Honest Tea. Goldman and Nalebuff have brought the band back together with their launch of Just Ice Tea.


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