Icebreakers can help you walk away and reopen talks in a graceful way. They will allow you to do so without loss of bargaining power. They are effective because they re-involve the self-interest of both parties.
When difference between two parties are large and talks begin to fail, one way to bridge the gap is to do it a little at a time rather than in one large compromise. I call this technique for breaking an impasse “the gradual approach.”
For example, assume you are buying a million toys a year from a Chinese manufacturer. They want to raise the price from $20 to $24 a unit, an increase of $4 million. Deadlock is close. The Chinese feel their $24 price is fair. As the buyer for your company, you have a budget to meet and cannot pay their price.
One of the best ways to overcome such a gap is the gradual approach. The large price increase between $20 and $24 may be bridged by agreeing to accept the increase in increments over a period of time rather than immediately. For example, the price could be $21 for three months, $22 for the next three months, $23 for the next three and $24 for the 250,000 toys shipped during the final quarter of the year.
Stretching out the increase rather than incorporating it all at once has several advantages. Buyer and seller have time to pursue a win-win strategy. They can find creative ways to reduce production costs and thereby make future price increases smaller. With the extra time, the buyer’s marketing people can explore raising toy prices to preserve their profit margins. Change by slow degree allows both parties time to accept and adjust to the situation.
Virtually all legislation passed by Congress is a product of negotiation. Gradualism plays an important part in reaching these compromises. One of the most fiercely fought Congressional battles some years ago concerned the deregulation of natural gas prices. One side favored complete regulation of prices, while the other believed in immediate deregulation. The gap was large. Deadlock was avoided by putting gradualism to work.
Both sides found it easy to agree on one thing. They wanted a law which would increase gas production without damaging gas users. Those against deregulation were afraid that prices would rise threefold if controls were removed. This would injure industries dependent on natural gas for energy. The problem was resolved by deregulating gas over a period of many years. In that way, economic dislocations were minimized. Gradualism permitted changes in price and consumer demand to occur at an acceptable rate.