(Conflict Resolution cont. 2)

Creating Value Out of Conflict

Introduction

Disputes can result in value-creation opportunities yet both parties involved can miss these by focusing on the differences.

Four ways to find value in conflict

i) capitalise on shared interests (too often disputes can highlight differences; need to look for non-competitive similarities they can add value of both sides.

For example, a high-tech manufacturer and a small company that licenced a critical piece of intellectual property to the manufacturer differed over how to calculate it appropriate royalties. As both parties were interested in sustaining the market confidence in the new product, they kept their dispute confidential and put the proceeds from the new product into escrow, pending resolution of the dispute.)

ii) explore differences in preferences, priorities and resources (try to keep the focus broad; understand that each party will have a different emphasis on preferences, priorities and resources; the need to be able to spot opportunities of mutual benefit.

For example, a pop group called Postal Service convinced the US Postal Service that it could continued to use the same name on the basis that it promoted the use of USPS to its fans - it even performed at an USPS event)

iii) capitalise on differences in forecasts and risk preferences (
"...one common source of conflict arises from diverging expectations about what will happen in the future..."
Robert C Bordone et al, 2013

It is hard to predict the future with any accuracy (for more details see elsewhere in the Knowledge Base).

Furthermore, the overconfident bias can result in overestimation of the likelihood of achieving some desired outcomes; egocentrism can result in an inflated perception on the fairness of your position, etc. These types of perspectives can result in impasses.

One way to handle this with contingency agreements, ie
"...deal structure that permits parties to bet on their predictions by specifying different payouts based on future events..."
Robert C Bordone et al, 2013

For example, a property developer wanted to build a shopping mall. Yet the local residents feared property values would fall for those living near the mall. They developed  an agreement that allowed the residents to be compensated by the developer if their land value was lower than surrounding areas owing to the mall after several years.)

iv) address potential implementation problems upfront (address implementation difficulties and anticipated possible stumbling blocks by crafting resolution terms that best manage risk and recognise each party's ongoing interests. For example, a staged implementation with a flat fee for predictable aspects of the project and an agreed hourly rate for subsequent work; establish agreements that provide each side with appropriate incentives throughout the life of the deal.)