Sample frameDay 161·Negotiation · Close

Good morning. Three people on your side have to live with whatever you sign this week. Nobody's asked them.

Negotiation.

The Two-Level Game

5 min read·Apply by lunch

The question

Picture yourself carrying this week's deal back into your own building: name the three people who have to live with it, name what each one will object to, and then notice that you've been planning to win them over afterwards rather than consult them first. That is a decision to spend your negotiating position on a fight you could have had for free.

The idea

Robert Putnam, professor of public policy at Harvard University and later the author of Bowling Alone, published a paper in 1988 in International Organization that has outlasted most negotiation textbooks: 'Diplomacy and Domestic Politics: The Logic of Two-Level Games'. Working from the 1978 Bonn economic summit, he observed that a leader at an international table is playing two games at the same time. Level one is the bargaining with the other country. Level two is the negotiation at home, with the constituents who have to ratify whatever gets agreed. Putnam called the set of deals that would survive ratification a win-set, and the conclusion follows immediately: agreement is possible only where the two win-sets overlap, and no amount of skill at level one produces a deal that level two won't pass. He also named the failure this creates. Involuntary defection isn't bad faith. It's a negotiator who agreed sincerely and then couldn't deliver their own side.

The framework

01
Map your own side before you map theirs.
Write the list of people on your side whose agreement this deal actually needs: the ones with a formal veto, and the ones with the informal kind, such as the delivery lead who has to staff it, the finance person who has to fund the terms, the co-founder who inherits the clause nobody showed them. Next to each, write the single thing they'll object to. It takes twenty minutes and it is the cheapest work in the whole deal, because every objection you find here is one you're not finding after you have shaken hands.
02
A number is a target. A mandate is authority.
Plenty of deals get run on a target and nothing else. A mandate is the range you may agree without going back, the terms you may not touch at any price, and the named person who can approve an exception while the meeting is still running. Get it agreed in writing before the first session, because a negotiator who has to check everything is slow, and a negotiator who checks nothing is about to promise something their own side won't honour. Ambiguity about your own authority is a gift you hand across the table.
03
Who else has to sign on their side?
The person opposite has constituents too, and their strange behaviour usually makes sense the moment you can see them: the board that must approve anything above a threshold, the partner who lost the last internal argument, the precedent their legal team refuses to set for other customers. When they can't move on something that looks trivial, the obstacle is rarely stubbornness. Ask who else has to sign, ask what would have to be true for that person to sign, then help them build the case. An argument they can carry home is worth more to you than a concession they can't get ratified.
04
Sequence the ratification, and treat a narrow mandate as an asset.
Putnam noted the paradox that a small win-set can strengthen a negotiator, because a limit imposed by your own side is one you can't be argued out of. That only works when it is true and when it is named early rather than produced at the end as a surprise. So sequence deliberately: settle your side's non-negotiables before anybody names a figure, bring your hardest internal sceptic into the process instead of presenting to them afterwards, and give every approver the version of events they will need on the day. A deal that arrives unannounced at level two is a deal that gets renegotiated.

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