Last month the world watched as the U.S. president and Congress brawled fiercely in a dispute over funding of the federal government, failing to reach agreement for weeks, forcing the government to partially shut down, laying off 800,000 workers and allowing the nation to hurtle recklessly towards financial default. Warren Buffet called it “pure idiocy.” The U.S. Treasury called it potentially catastrophic.

But was the drama a display of utter incompetence, or reasonable tactics employed by skilled negotiators, fully conscious of the risks and acting within the constraints of the circumstances to maximize gains for their constituents? Regardless of one’s political affiliation, it’s interesting to examine the events to see if they may impart any lessons for those who negotiate business agreements.

Re-Negotiating a Done Deal

Initially, the crisis was triggered by efforts to re-negotiate an agreement that many felt had already been concluded, with some lawmakers seeking to de-fund or delay implementation of the Affordable Care Act (“Obamacare”), or allow the government to shut down if they failed to get their way, despite the Act having been lawfully enacted and found constitutional by the U.S. Supreme Court.

Many were outraged by this refusal to accept validly enacted legislation. The president stated his refusal to re-negotiate a done deal. Television host Jon Stewart compared it to a football team demanding 25 more points after losing a game by 24 points. Many agreed. After all, in the West, once a deal has been fully negotiated and agreed upon, it is customary to regard it as final, so any further demands ordinarily must be resolved by amendments requiring additional consideration and mutual consent.

However, not all cultures regard a final agreement as final. In Chinese culture, for example, it is common for parties to continue raising substantial new demands continuously until signing of an agreement and often afterwards. Chinese parties often treat the contract as less important than the relationship, knowing that once another party is committed, that party may find it impossible to back out and may feel compelled to accept even grossly unreasonable new demands. The Chinese party may state that unless its new demands are met it will be forced to back out of the deal, despite what it previously agreed to and the other party may feel it has no choice but to agree.

When faced with such tactics – with substantial new demands after an agreement has been reached – it is important to recognize the tactic, remain calm and respond rationally. One may firmly reject the new demands or raise one’s own new demands in response; but, in any event, one should continuously re-evaluate and work to improve one’s BATNA (best alternative to a negotiated agreement), so one may walk away if necessary.

Integrative v. Distributive

In their best-selling book, “Getting to Yes,” Roger Fisher and William Ury made popular the idea that negotiators should generally focus first on integrative (win/win) tactics, before resorting to distributive (win/lose) tactics. That is, they should seek to expand the pie before dividing it. The book lays out four strategies to help achieve integrative negotiations: (i) separate the people from the problems, (ii) focus on interests, not positions, (iii) invent options for mutual gain, and (iv) insist on using objective criteria.

Those principles are now widely accepted, but were apparently overlooked in last month’s crisis. Many participants appeared to demonstrate intense personal animosities, employing harsh rhetoric and hyperbole (comparisons to Nazis and references to guns to the head) that heightened the divide, rather than seeking to defuse the animosity and work together to search for solutions. Instead of trying to understand and somehow accommodate each other’s underlying motivations and concerns, the parties treated their positions as paramount and there seemed to be little brainstorming for mutually acceptable solutions.

In short, each side wanted all or nothing. Each took an extreme stance, dug in its heels and began pulling in opposing directions, based on the assumption that they were dealing with a zero-sum game, where it was necessary to defeat the opponent in order to achieve victory. That assumption is usually wrong.

Distributive bargaining has its place. In some cases integrative efforts fail and haggling for the best deal may be the only option. In other cases the parties succeed in expanding the pie, but one may then want to grab the larger piece. However, it usually makes sense to begin with integrative tactics, sharing information, listening to concerns and working together amicably to explore options for a mutually-acceptable, win/win solution – attacking the problems, not the people. After all, cooperation generally requires mutual trust and respect, and it is difficult building trust and respect after mutual hostilities.

Brinkmanship

Brinkmanship is the pushing of events to the brink of disaster in order to gain more favorable results in negotiations. It’s a game of chicken, with both sides facing a terrible outcome and each seeking to convince the other it is willing to accept that outcome if its demands are not met.

Examples include the nuclear build-up during the Cold War, North Korean missile tests, labor strikes, professional sporting season shutdowns, and threatening a party with imminent litigation. Of course, it is also brinkmanship to make demands in the face of impending government shutdown and default in the hope that the other party will accept the demands out of fear. Essentially, it involves getting ones way through threats, force and intimidation.

Brinkmanship can be an effective means of bringing an end to an impasse in negotiations, or allowing a party with less power to enhance its power. However, it carries huge risks, starting with the risk that the other side may not budge and both sides may be forced to accept the terrible outcome. In fact, brinkmanship often backfires, as a party that feels it is being unfairly bullied will often push back. Moreover – because brinkmanship seeks to obtain consent through force – it tends to create serious and lasting damages to relationships.

Consequently, brinkmanship should generally be used only as a last resort, after other efforts have failed, and only with respect to major issues. One should make sure the disaster is real – don’t bluff – and ensure that one’s constituents are fully informed, agree to the strategy and are prepared to live with the consequences if both parties tumble over the brink. After creating the crisis, one should remain flexible and continue searching for potential solutions, especially solutions that may allow the other party to back out without losing face. Finally, think long and hard before using brinkmanship against partners with whom one hopes to have a continuing relationship.

Conclusion

It seems clear all parties lost in last month’s crisis. Polls showed U.S. voters overwhelmingly disapproved of the shutdown and hold all parties accountable: Congress and the president, Republicans and Democrats. Moreover, nothing substantial was accomplished. While the parties ultimately reached an agreement to prevent the U.S. from tumbling into financial default, the agreement fails to resolve most of the contentious issues between the parties, such as healthcare and taxes, and provides only temporary financial relief until January 2014, when the parties must meet again to negotiate a new agreement.

Consequently, it seems fair to say the parties negotiated poorly. They staked out extreme positions, engaged in extreme tactics, lost control of emotions, launched threats, ultimatums and personal attacks, increasing the divide and making it harder to back down, rather than attempting to listen to concerns and working together amicably to search for potential integrative solutions. We can only hope that Congress and the president learned something, so next time their negotiations will be more successful. In the meantime, we can all benefit from observing those same lessons, whether for personal or business negotiations.