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NEGOTIATION BETWEEN LIVING SYSTEMS
Lane Tracy
Department of Management Systems
Ohio University
Athens, OH 45701
Negotiation is a process of exchanging information between and among individuals, groups, organizations, communities, and nations with the purpose of reaching agreement about certain joint or reciprocal acts. The process has been studied by psychologists, sociologists, economists, industrial relations experts, political scientists, and historians. It has been subjected to analysis by means of game theory, communication theory, economic theory, exchange theory, power theory, and political theory. This paper develops living-systems models of thy negotiation process and its outcomes. Living-systems analysis shows that successful negotiation results in an agreed system. Various kinds of agreed system are analyzed. Negotiation is shown to be part of the reproducer process whereby groups, organizations, communities, societies, and supranational systems are born.
Keywords: living systems, reproducer, negotiation, agreement, agreed system, template.
Living systems are found on eight levels: cells, organs, organisms, groups, organizations, communities, societies, and supranational systems. The principle components of each level above the cell are systems at the next lower level. Systems at each of these levels share certain basic characteristics of life that have evolved from one level to the next. Among these characteristics are (1) a template -- genes or a charter -- that provides basic instructions for the system's structures and processes, (2) a set of values -- purposes and goals -- derived from the template that serve as a basis for making purposeful choices, (3) a decider subsystem that utilizes these values to make choices and provide additional instructions, thereby allowing the system to adapt to its environment, and (4) a reproducer subsystem that creates the template for a new system and mobilizes the matter and energy required to build it [4,5].
The environment of living systems consists of other living systems, as well as nonliving matter, energy, and information. One of the most important ways in which living systems interact with each other is through the process of negotiation.
Negotiation is a motivated process of information exchange between living systems with the goal of reaching agreement about certain joint or reciprocal acts. These acts may involve resolution of conflict, exchange of resources, or cooperation on processes directed at the mutual environment. If negotiation is successful, it temporarily establishes a new living system -- a trading partnership or joint venture, perhaps -- which is directed by the terms of the agreement. The parties to the agreement become members of the new system.
The agreement is the template for the new living system, which I will call the agreed system. In administering the agreement, components of the decider subsystems of each member make decisions on behalf of the agreed system in accordance with its template, or else the agreement establishes a separate decider subsystem for the agreed system. Other critical subsystems may be dispersed to the member systems or elsewhere, although long-term agreements such as a merger accord or international treaty may generate a more nearly totipotential system.
Some negotiations, for example plea bargaining or purchasing a house, produce agreements of such short duration that the existence of an agreed system is hardly noticeable. The agreed system may last only long enough to exchange money and property or perform required legal acts, Other negotiations produce an agreed system that combines and submerges the negotiating systems. An example would be negotiations leading to a merger of two corporations.
Negotiation occurs at most levels of living systems. There is no evidence of negotiation at the levels of cells and organs, but the process clearly exists among many varieties of organisms. Tacit negotiation, which requires no verbal communication, is shown in the behavior of many animals and fish. For instance, a young baboon seeking the protection of an older male may approach in a way that indicates subservience, and may offer a service such as hair combing. Both tacit and verbal negotiation are found at all levels of human activity, as well as between levels.
The process of negotiation is employed to reach agreement between and among individuals, groups, organizations, communities, and nations or societies. The process has therefore been studied by psychologists, sociologists, economists, industrial relations experts, political scientists, and historians. It has been subjected to analysis by means of game theory, communication theory, economic theory, exchange theory, power theory, and political theory. As a process that occurs within and across several levels of living systems, it calls for systems analysis as well.
Living systems theory offers a view of the negotiation process that differs substantially from the picture provided by other approaches, such as those found in the fields of economics, political science, or communication theory. The purpose of this paper is to develop a living-systems analysis of the negotiation process and its outcomes. Such an analysis will provide new insights into the negotiation process.
A Living System View of the Negotiation Process
From a living systems perspective negotiation is a partial merging of the decider subsystems of the participants. It is a merger because the outcome is a joint decision; it is partial because during the bargaining process the participants pursue their own purposes and goals as well as those of the joint enterprise.
Such joint decision making occurs because, under certain conditions, it is beneficial to all participants to act together rather than separately. Mutual benefit may accrue from several sources: economies of scale, shared interests, mutually preferred positions, and various differences in values that permit mutually satisfactory exchange. Thus, as Lax and Sebenius put it, negotiation is partly a process of creating worth for the participants [3]. To create worth the negotiators must define joint or compatible goals, share information, jointly develop alternatives, and agree on the choice of acts.
But negotiation is also a process of claiming, of partitioning the newly-created worth and apportioning it to the participants. In this part of the process the participants pursue their own goals, which are often incompatible with those of other participants, They withhold information, develop alternatives favoring their own interests, and try to persuade other participants to agree with their own preferred choice.
Negotiators, as representatives of the participating systems, are often caught in the middle of these conflicting aspects of the process. The negotiators are the primary components of the merged decider, but they are also components of the deciders of their respective parties. Thus, negotiators may be torn between pursuit of joint goals and separate goals; between sharing information and withholding it; between developing alternatives for mutual gain and for separate gain; and between choosing the optimal joint outcome or the optimal selfish outcome.
Models of Negotiation
Many models of negotiation have been proposed, particularly for predicting the outcome of bargaining. As noted above, these models come from a variety of fields of knowledge. An examination of the models proposed in even one field, such as labor relations, would (and does) fill a book. Thus, in this paper I will offer only limited comparisons with existing models.
Certain features are prominent in most, if not all, models of negotiation. For instance, negotiation obviously involves communication between the parties. Messages may be extensive, consisting of complex Proposals, arguments for those proposals, arguments against the other party's position, and warnings of the consequences of failure to agree. Or the messages may be very limited, consisting only of tentative moves or statement of specific positions without explanation. But some amount of communication is necessary, In certain models the communication process, itself, becomes the focus of analysis.
Another feature of most models is iteration. Negotiation usually involves a series of proposals and counterproposals, gradually moving toward a central range of positions that are acceptable to both (or all) parties. The proposals and counterproposals may be preprogrammed to some extent, but it is ordinarily assumed that they are also responsive to each other, That is, my counterproposal depends on the substance and/or style of your proposal.
Finally, most models are concerned with determinants of the final outcome. How is agreement reached, or what causes an impasse? Given a range of outcomes acceptable to all parties, what determines which of these outcomes will actually be chosen? How can one party influence another in order to obtain an outcome that is preferable to others within the acceptable range? What is the effect of power on the outcome?
Other features of the process are less frequently modelled. For instance, there is relatively little concern for implementation of the agreement. Yet those who have looked at this feature have found that the way in which the process is carried out has substantial effects on implementation (3]. A negotiation that leaves one of the parties barely satisfied, while enriching the other party or parties, may be difficult to administer. The disgruntled party may find ways, in essence, to continue the negotiation by being uncooperative in carrying out the agreement. In labor relations, for example, a union that is forced to agree to wage and benefit reductions may file a large number of grievances, making it difficult to administer the labor contract.
Another aspect of negotiation that has only recently become the focus of concern is how the process can be shaped to lead to an improved or expanded set of outcomes, Traditional views of the negotiation process have taken the range of possible outcomes as a given. It is now recognized, however, that the negotiation process may provide means to create value for the parties, as well as coming to agreement about the apportioning of that value. In order to create value, however, communications must become more open and must focus on interests rather than positions [1]. When these steps are taken, negotiation becomes in part a problem-solving process. Nevertheless, it results in an agreement that forms the template for an agreed system of interaction.
A basic assumption of all negotiation models is that the parties will be collectively better off with an agreement than without one. That is, the joint payoff to the agreed system is greater than the sum of separate payoffs to the negotiating systems if there were no agreement. There is no assumption, however, that each of the negotiating systems will individually be better off. A rational system might agree to cooperate with others if there is no net loss in doing so. Long-range considerations (e.g. development of an obligation) or the exertion of power by another system may, indeed, cause a system to agree to a negatively-valued proposal.
The values of the negotiating systems ultimately determine the viability of any agreed system. So long as the agreement continues to produce benefits or reduce liabilities for all of the members, the agreed system is likely to continue. For example, the NATO organization was quite durable so long as it was seen as providing a deterrent to Soviet aggression, but its existence has become quite tenuous with the dissolution of the Soviet Union.
A Living Systems Model
To develop a descriptive living systems model of the negotiation process, we must first recognize that bargaining involves an exchange of information between two or more living systems. To simplify the model I will consider only the two-party case, but the model is generalizable to multi-party negotiations. For two cycles of the iterative process the exchange of information may be analyzed by employing the systems dyad, as shown in Figure 1 [7].
Figure 1. Dyadic negotiation system.
In the model system A conveys a proposal to system B, expecting as a response either agreement to the proposal or a counterproposal. System A may also transmit power messages and arguments in favor of the proposal, Figure 1 shows an iterative negotiation, in which B offers a counterproposal in the first round but agrees to A's counterproposal in the second round. System B could also respond by refusing the proposal and withdrawing from negotiation. This would indicate that B sees no gain from agreement, even though A does.
The model is symmetric in that either A or B may initiate the process. There is no assumption that A and B are equal in status, power, or system level, however. One of the advantages of the living systems approach is that it can easily handle situations in which the parties are on different system levels, such as negotiation between an individual and the government.
In many negotiations the negotiators are acting as agents for other systems. The negotiators are bargaining not only with each other but also with their constituents. Often an agreement reached between the negotiators is less beneficial than their respective constituents expected; the negotiators must then bargain with their consituents to get them to accept the deal. Thus, in Figure 2 we see a three-way negotiation in progress.
Another level of complexity occurs when the parties are represented by teams of negotiators rather than individual agents, Although it is typical to have one person, the chief negotiator or spokesperson, in charge of the team, that person must often negotiate with other team members concerning strategy, tactics, and positions to be taken.
Figure 2. Three-way negotiation of representatives and constituents.
If the negotiations are conducted by teams and the constituents are organizations or societies, there may also be another level of negotiation going on within the hierarchy of these systems. There may be disagreement within the negotiating team. A proposed agreement may be viewed more positively at some levels of the constituent hierarchy than at others. These differences of opinion must be resolved, often through negotiation, before the agreement can be ratified. An example would be negotiation between the U.S. Senate and the President over ratification of an arms reduction treaty. Major negotiations involving organizations, communities, and nations tend to fit this more complex, multi-layered model.
The outcome of all these negotiations, if they are successful, is an agreed system. In fact, there may be several agreed systems corresponding to the many levels of negotiation. To illustrate, let us assume that the negotiation is between teams representing two corporations over development of a joint venture. The decider hierarchy of each corporation negotiates an internal agreement as to how it will act during the negotiations, what instructions it will give to its negotiating team, and how it will respond to various proposals from the other side. It then negotiates with the team of representatives to obtain agreement on how the team will act on behalf of the corporation. This provides a basic template for the team. Thus, each negotiating team is itself an agreed system.
Bargaining within the team then provides role instructions for each member, The teams bargain with each other to decide the terms under which the joint venture will operate. They are thus jointly designing the template of a new agreed system. In doing so they are acting as a partially merged decider subsystem.
Negotiation is a process by which the decider subsystems of two or more systems may be temporarily joined in order to make decisions concerning joint or reciprocal acts, Those acts constitute the behavior of an agreed system, In some cases, such as the illustration above of negotiation of a joint venture, the agreed system is expected to continue for some time, which means that it will require a decider subsystem of its own. The template for the agreed system must then be elaborate enough to provide instructions for its decider subsystem and other subsystems.
Living systems models of the negotiation process reveal that it is, in fact, part of the reproducer subsystem of each of the negotiating systems. The output of the process is a template for an agreed system. That system may be evanescent or long-lived, completely dependent or very independent. Let us now look at the various kinds of agreed systems in more detail.
The Nature of Agreed Systems
Agreed systems vary greatly in duration and complexity. In some cases they are so transitory that it is difficult to perceive their existence at all. In other cases the whole point of the negotiations is to create a system that will endure.
The key to differences in agreed systems appears to lie in the goals of the negotiation. Negotiations may be intended (1) to resolve or manage conflict within systems, (2) to determine the terms of an exchange between systems, (3) to set up the conditions for continued cooperation between and among systems, or (4) to create a new system. In what sense is an agreed system generated by each of these types of negotiation?
Conflict resolution. When negotiation is used to resolve conflict within a system, the agreement focuses on how the conflict-generating parties will behave in the future to avoid or minimize conflict. For example, a married couple fighting over money may negotiate an agreement as to how much spending money each member will have, who will pay the family bills, who will hold the checkbook, etc. In this case the agreed system (i.e., the marriage) already exists, but negotiation amends its template. The same is true of an agreement between two bickering departments of a firm. The agreed system of the firm already specifies role behaviors for these components, but negotiation may be necessary to clarify or amend the template so that departmental behavior can blend into the system more easily. Tasks may be redefined, rewards may be modified, and joint goals may be emphasized in order to reduce the conflict.
Terms of exhange. Negotiation to set the terms of an exchange, such as purchase of a used car, acquisition of a business firm, or a prisoner swap, usually creates a very temporary agreed system. The decider subsystem of the agreed system is simply the merged decider of the negotiators; the template is the oral or written contract, As soon as the agreed-upon terms of the exchange are carried out, including any required legal processing, the agreed system ceases to exist.
Terms of continuing cooperation. Some forms of exchange, on the other hand, require a continuing agreed system. A purchasing contract for a steady supply of goods over a period of months or years, for instance, needs some sort of system to implement and monitor the exchange. It is usually not the negotiators who carry out these continuing processes of the agreed system. Rather, other agents of the contractual parties administer the agreement. But note that these agents are acting under the template established by the contract. Thus, they are acting as components of the agreed system.
A purchasing contract for a steady supply of goods is a simple example of the third type of agreed system, since it involves continued cooperation between the parties. More complex examples include labor contracts, service contracts between business firms, waste disposal agreements among communities, and treaties among nations for arms reduction, pollution control, and sharing of natural resources. In each case an agreed system, such as a joint committee or inspection group, is set up. The agreed system cannot exist independent of the contractual parties. Instead, it relies on the services of components from the contractual parties acting under the template of the agreement.
A labor contract, for example, requires that the union members act for the good of the firm and under the direction of the firm’s management team during the agreed-upon hours of employment. It also requires that managers and supervisors act in accordance with the terms of the contract. Furthermore, it sets up a joint decider subsystem in the form of a grievance process to resolve disputes about terms of the contract and the way that it is administered.
Creation of a new system. The fourth type of agreed system is a relatively independent system set up by agreement of two or more other systems, Examples include marriages, partnerships, joint ventures, and supranational systems such as NATO, the European Community, and the United Nations. The intent of negotiations in these cases is to agree upon the template of the new system. Marital negotiations in many cultures are pro forma, but they may also involve questions of dowery, religious upbringing of children, change of name, ownership of prenuptial property, and who will love, honor, and obey whom.
Joint venture negotiations are typically very complex, involving questions such as how much authority will be delegated to the agreed system, how much technology transfer will occur, how much and what sort of capital each partner will contribute, how rapidly the joint venture is expected to grow, and under what conditions it might be terminated. In many cases the joint venture is given very substantial scope for independent decision making, simply because the partners are unwilling or unable to manage it closely themselves.
It is worth noting that one whole level of living systems, the supranational systems, consists of agreed systems. Societies have seen various advantages in agreeing upon joint structures and processes. The only reasonable way to develop them is through negotiation leading to a template for a higher-level system. But many groups, organizations, and communities also originated as agreed systems.
In some cases the negotiation to create a new system is tacit. For instance, employees tend to form work groups on a trial and error basis, discovering their joint interests through behavior more than through discussion. Communities often originate in a similar way through tacit negotiation among neighbors, though later the community may grow by negotiating with neighboring communities for consolidation or annexation.
Organizations such as business firms often originate primarily through the efforts of single individuals. At some point in the growth of these organizations, however, it becomes necessary to restructure the decision making hierarchy and delegate authority. The need for more capital may also dictate dispersal of ownership to stockholders. At these points, if not before, negotiation becomes necessary to modify the template of the system.
A good example of negotiation at work in the creation of a society js the process whereby the Constitution of the United States was written. A convention of representatives from sovereign states, holding many different views about the appropriate stucture of a union of those states, were able to overcome or compromise their differences in order to construct a template for a new nation. The process of creating the European Community shows many similarities at the supranational level.
Conclusions
Living systems analysis makes it clear that negotiation is a part of the reproducer process whereby groups, organizations, communities, societies, and supranational systems are born. In some cases negotiation produces lower-level systems, as when several communities create a joint commission to administer a combined sanitation district. Sometimes, as in the creation of a joint venture, the offspring is at the same system level as the parents. Perhaps the most interesting cases, however, involve creation of a template for a higher-level system. Individuals negotiate the formation of new family groups and organizational partnerships; families jointly decide to form communities; nations negotiate to create military, economic, and political alliances. In every case the process of negotiation provides a method whereby the decider subsystems of the participants can operate jointly to create a template and mobilize resources for a new living system. This analysis adds detail to the description of the fray-out process by which higher levels of living systems evolve from lower levels [4,5].
At this point only descriptive models of the negotiation process have been developed. These models indicate that, in most instances, negotiation is a complex process involving several levels and stages, as befits a process of such importance. Economists and political scientists have developed deterministic models for simple cases, but these models cannot cope with the complexities of multi-party negotiations, intraparty bargaining, and value-creating processes [2,6].
A more promising procedure may be to try to develop a variety of models for different cases. Along those lines it might be worthwhile to construct separate models for the four types of negotiation described above, according to the kind of agreed system that is required. The negotiation process that leads to an elaborate template for a new, relatively independent system is surely quite different from the process required to generate a temporary, dependent system that will disappear as soon as the deal is implemented. A model that focuses on what is required to implement a negotiated agreement would be more complete and more useful than the current models, which only concern themselves with how to arrive at that agreement.
Negotiated agreements, particularly in the cases of continuing interactions and the creation of new systems, generate living documents. No static view of the process can properly model such cases. Further analysis from a living systems viewpoint is called for.
[1] R. Fisher and W. Ury, 1991, Getting to Yes, Second Edition. New York: Penguin.
[2] J. C. Harsanyi, 1956, "Approaches to the Bargaining Problem before and after the Theory of Games: A Critical Discussion of Zeuthen's, Hicks', and Nash's Theories." Econometrica, Vol. 24: 144-157.
[3] D. A. Lax and J. K. Sebenius, 1986, The Manager as Negotiator. New York: Free Press.
[4] J. G. Miller, 1978, Living Systems. New York: McGraw-Hill.
[5] J. L. Miller and J. G. Miller, 1992, "Greater than the Sum of its Parts: Subsystems which Process both Matter-Energy and Information." Behavioral Science, Vol. 37: 1-38.
[6] T. Schelling, 1960, The Strategy of Conflict. Cambridge, MA: Harvard University Press.
[7] L. Tracy, 1989, The Living Organization. New York: Praeger.
