Book Review
Book Name: NEGOTIATION GENIUS: How to Overcome Obstacles and
Achieve Brilliant Results at the Bargaining Table and Beyond
by Deepak Mehrotra
and Max. H Bazerman
You will have to read the book to know the whole trick, but we
have compiled some of the important points from all over the book, many points
may have been left for which you will have to read the book.
MAIN IDEA
Genius negotiators aren’t born – they get to be that way by
preparing carefully, using a sound conceptual framework of the negotiation
process and by having the insight to avoid the most common errors and biases.
They structure and execute negotiations strategically and systematically rather
than casually and haphazardly.
If you aspire to join the ranks of genius negotiators, focus
on acquiring the three components you’ll need:
1. A full toolbox of ideas.
2. A good grip on the overall framework.
3. A sound psychological approach to negotiating.
“A sentiment once expressed by Ralph Waldo Emerson captures
the essence of our message: ‘Man hopes; Genius creates’. When the task is
difficult, when obstacles arise, when negotiations are unraveling, and when it
looks like the deal is lost, most negotiators will panic or pray. Negotiation
geniuses, in contrast, will only strengthen their resolve to formulate and
execute sound negotiation strategy. We hope to convince you to do the latter,
and provide you with the insights and tools you will need to negotiate like a
genius at the bargaining table – and beyond.” – Deepak Malhotra and Max
Bazerman
About of Author
DEEPAK MALHOTRA is an associate professor at the Harvard
Business School. He works in the negotiations, organizations and markets unit
and carries out research on negotiation strategy, trust development and ethnic
dispute resolution as well as the dynamics of dispute escalation.
MAX BAZERMAN is professor of business administration at the
Harvard Business School. He focuses on the decision-making process of
negotiation. In addition to publishing over 180 research articles and chapters,
Dr. Bazerman is also the author of fifteen books including Judgment in
Managerial Decision Making, Predictable Surprises and You Can’t Enlarge the
Pie. Dr. Bazerman’s consulting, teaching and lecturing assignments include
leading business schools and major public corporations in more than twenty-five
countries
Three Components
Tool box
Negotiation geniuses have a tool box of comprehensive
Principles, strategies and Tactics they use over and over when negotiating.
They don’t rely on gut instinct s, winging it on shooting
from the hip to carry the day.
Instead they prepare thoroughly, and systematically, so they
achieve consistently superior outcomes.
1. Tool box
1a. Claim value
Value is whatever you perceive as being useful or desirable.
It can take many forms and be measured in a variety of different ways but at
the end of the day you generally enter into negotiations in order to end up
being better off than you were at the start of the process. Probably the best
way to negotiate is to have high aspirations going in (so you bargain
tenaciously) but then a low reference point which gets used in hindsight (so
you’ll feel satisfied with what was achieved).
It’s easy to go into a negotiation with no preparation and
expect to figure things out as you go along but in reality, the key to claiming
more value for yourself in any negotiation is to prepare thoroughly beforehand.
This is usually a
matter of:
o
Assessing in advance what your best alternative
will be if you can’t reach an agreement in the
negotiation.
o
Working backwards from your best alternative to
decide what your reserve value or walk-away point will be.
o
Analyzing what the other party’s best alternative will be if they fail to reach a negotiated
agreement.
o
Calculating from that their anticipated reserve
value.
o
Projecting what the zone of possible agreement
will be – which is the overlap between your
reserve value and the other party’s reserve value. Any agreement will need to
fall within this zone to be acceptable to both parties.
Once you know the lay of the land in this way, you can then
start negotiating with the objective of claiming as much value as possible from
the transaction. Be judicious in making a first offer because that offer tends
to establish an anchor point for the rest of the negotiation. It’s smart in
this context to always make a first offer which you know they will not accept.
As long as you can provide some sort of rationale as justification for your
offer, you can then carefully work back to a price which is higher than they
had hoped but workable. This is the only way you can avoid making an initial
offer which is ludicrously low.
Remember to haggle when you negotiate. If you fail to go through
an iterative give-and-take after the initial offer is made, the other party
won’t feel good about the negotiation. They will feel uncomfortable that they
have left money on the table by conceding too much. You have to make some
concessions, let the other party come up with reciprocal concessions and engage
in some spirited give-and-take in order for everyone to feel good about the
outcome of any negotiation.
1. Tool box
1b. Create value
In addition to claiming as much of the value as possible,
your focus as a negotiator should also be to look at potential ways you can
create value for all parties. This idea often gets lost in the pressure of
trying to claim as much of the value as possible but if you can get everyone
focused on finding practical ways to grow the pie as the same time, spectacular
things can result.
In practical terms, the best opportunities to actually
create added value through a negotiation are usually:
■
Instead of negotiating a single issue, negotiate across multiple issues – which
enables you to learn the priorities and interests of the other party to your
negotiation. If you’re lucky, you might be able to identify something the other
party or parties values more highly than you do. You can then give them that
item and in exchange take something which has a higher priority for yourself.
■ Add
in more stuff than was originally envisaged –
and try to come up with a deal which is more comprehensive. The more issues you
have on the table, the easier it becomes to identify those factors which are
valued higher by the other party than by you. Instead of just negotiating on
price, add in:
• Delivery dates
• Exclusivity clauses
• Financing arrangements
• Quality checks and assurances
• Opportunities to do further business in the future
■ Add
contingency clauses to your negotiated contracts –
which set out how any additional value will be split between the parties if
assumptions turn out to be too modest and some future event turns out to be a
raging success. Admittedly contingency clauses can be dangerous if you don’t
know what you’re doing and they can also have the unintended consequence of
creating an incentive for the other party not to perform if you’re not careful
so you need to do your homework beforehand. Also keep in mind you’ll have to specify
a scoring system which is impartial and open for contingency clauses to be able
to work.
■ Be
prepared and willing to negotiate multiple issues simultaneously – because this is usually the best environment in which value
creation occurs. Sequential negotiations often end up being zero-sum situations
where the only way one party gains something is for the other party to lose.
When you have a number of different issues and packages on the table and under
active consideration at the same time, it then becomes easier and likely that
different combinations will emerge which nobody had really considered before.
“Remember, to take what is there, you must work with the
other side to make what is there. And if you care about your reputation and
your relationship to the other party, all the more reason to exercise the
genius of value creation.” – Deepak Malhotra and Max Bazerman
Probably the best way to negotiate is to practice
“investigative negotiation” – which simply means you approach negotiations in
the same way as a detective approaches a crime scene. You learn as much about
the situation and the players involved as possible in advance and then
negotiate accordingly. The seven key principles of investigative negotiation
are:
1. Always ask “why?” – don’t assume that you know why the
other party is acting the way it is until you’ve genuinely found out what they
want. Put aside your assumptions and get the facts first and foremost by asking
why.
2. Focus on aligning underlying interests, not demands –
which happens when you think more broadly and creatively. It’s not always
feasible to align everyone’s demands but interests can be aligned more often
than not.
3. Try and create common ground with unlikely or uncommon
allies – because doing this can generate some highly creative ideas and
arrangements.
4. Always look at every demand the other party makes as an
opportunity to create added value – focus on their needs and then use that
information to create more value for you and them. Capture as much of that added
value as is feasible.
5. Don’t dismiss anything as being the other party’s problem
– because in any negotiation the other party’s problem has a way of quickly
becoming your problem as well. At the very least, if they can’t fulfill their
obligations, what you have jointly promised to deliver will not eventuate. Talk
about constraints and find ways to solve the other side’s problems and you
might create sizable added value.
6. Never let a negotiation end with an outright rejection of
your offer – but always take the opportunity to ask why your final offer was
rejected. If you approach the other party and explain you respect their
decision and would like to know why they rejected this offer so you can improve
in the future, they may well tell you. You may then find there are better ways
the deal could be structured which they would agree to. Or you may even be able
to submit a revised offer they are more likely to accept. When you hear “no”,
that’s a clue to investigate further and not to walk away.
7. Understand the difference between “selling” and
“negotiating” – namely selling means actively promoting the virtues of your
product whereas negotiating entails focusing on the other side’s interests and
priorities and structuring something which will create value for both parties.
Put another way, selling requires strong presentation skills while negotiating
hinges on your ability to listen and respond.
“Negotiation is an information game. Those who know how to
obtain information perform better than those who stick with what they know. The
investigative negotiation approach can help you transform competitive, zero-sum
negotiations into ones that entail the possibility of cooperation, value
creation and mutual satisfaction.”
– Deepak Malhotra and Max Bazerman
Information- Three components
2. Framework
Too many people think of negotiation as being all art and no
Science. Negotiation geniuses don’t think this way. Instead they study how
people think and they identify their biases. They have practical ideas to stop
fuzzy thinking derailing on otherwise sound negotiation strategies.
2. Framework
2a. Cognitive biases
In the context of decision-making and negotiation, people
tend to make four mistakes which are systematic and therefore highly
predictable:
1. The fixed pie bias – they assume there is only a fixed
pie of value or resources to go around and therefore it is necessary to focus
exclusively on capturing as much of that pie as possible. The fixed pie bias
causes negotiators to ignore options which would have the impact of creating
more value everyone could share. It’s far better if you enter every negotiation
with the assumption ways can be found to creatively enlarge the pie for
everyone by working together rather than assuming you’re in mortal combat for everything
you can get with everyone else.
2. The vividness bias – where people pay too much attention
to the vivid or obvious features of offers and pay not enough attention to the
minor details which actually have a greater impact on the outcome of the negotiation.
To avoid giving too much weight to vivid information in any
negotiation:
o
Create a scoring system focused around your true
interests and cross-check your strategy and your reactions to various offers
against your system.
o
Separate information from influence by asking
whether the information is valuable or is it just influencing you to act in
some way the presenter has a vested interest in.
3. Nonrational escalation of commitment – which occurs when
competing bidders escalate their commitment to a failing strategy. This sends
the dispute spiraling out of control and ends up producing disastrous results
for everyone involved.
To avoid escalating your problems in the heat of battle:
o
Always start with a preplanned exit strategy or
point at which you will cut your losses and stop bidding.
o
Have an in-house devil’s
advocate who will openly criticize your decisions and find faults in your
logic.
o
Anticipate the escalation forces you’ll encounter and refrain from making any public commitments.
4. Susceptibility to framing – how the situation is
described and the reference points which are used as the foundation for any
discussion can profoundly impact your negotiation strategy. Framing is
completely irrational because the facts are the same even when differing
reference points are used to frame the negotiation.
To avoid framing problems:
o
Be aware of the impact of your various reference
points and pick the ones that seem most appropriate for you rather than
automatically using those others use.
o
Evaluate whether your strategy would still make
sense if dramatically different reference points were in use.
o
Before you do something risky (like issue an
ultimatum), pause, change your frame of reference and question whether it still
makes sense to do what is contemplated.
These are the mistakes in judgement we sometimes make in
order to see ourselves and the world in some particular way. We automatically
want to see ourselves as fairer, kinder, more generous and more deserving than
others and this can influence our negotiation outcomes to a large degree.
The seven main motivational biases are:
1. Conflicting motivations – the dynamic between what we
want to do and what’sactually good for us. Negotiators need to anticipate this
and decide what to do in advance rather than in the middle of a negotiation
when emotions are involved.
2. Egocentrism – our tendency to always want to bias all our
perceptions and expectations in our own favor. To overcome this, negotiators
decide what would be considered a fair outcome if they did not yet know which
side of the party they would be representing in the negotiation at hand. This
injects a handy veil of ignorance.
3. Overconfidence – the belief your party to the negotiation
can do more than it actually can. Negotiators work hard to offset this by
constantly taking off their rose colored glasses and injecting great dollops of
reality into discussions.
4. Irrational optimism – the belief nothing bad can happen
and one preplanned course of action will win out regardless of anything which
will arise. Negotiators counter this by being willing to entertain and evaluate
alternative courses of action to decide what will be less damaging to the
parties.
5. The illusion of superiority – where negotiators view
themselves as inherently more “fair”, more “honest” and more “rational” than
the other party. Skilled negotiators counter this illusion by considering
seriously any and all ideas put forward by the other party and treating them
equally on their own merits rather than rejecting them out of hand.
6. Self-serving behaviors – which arise when negotiators
view the other party as “unethical” or “overly competitive” and therefore feel
entitled to act unethically in dealing with them. Skilled negotiators allow for
this bias by understanding the need to build trust in negotiations and by
taking the time to find out why others act the way they do before reacting.
7. Regret aversion – an emphasis on what might have been
rather than dealing with the realities of the situation at hand. It’s often
easy to see things in hindsight which are not obvious at the time so expert
negotiators try and find ways to leverage that hindsight.
The best way to do this is by focusing on what has been
learned from the past which will help make you a better negotiator in the
future.
“It’s important to remember that even highly educated,
intelligent people who have a desire to be fair and objective are susceptible
to psychological biases. We are biased because we are human, not because we are
mean or stupid. This means we need to be ever vigilant in our efforts to
overcome our biases. It also means that we should be more understanding of the
biases exhibited by others – and that we may even want to help others overcome
them.”
– Deepak Malhotra and Max Bazerman
“Would-be negotiation geniuses can learn to appreciate and
compensate for not only the peculiar working of the mind, but also the powerful
influences of the heart.”
– Deepak Malhotra and Max Bazerman
2. Framework
2a. Rationality
In order to negotiate rationally and manage your own biases,
there are three strategies you can use:
1. Use “system 2” style thinking – where you think things
through deliberately and judiciously rather than making quick decisions on the
strength of your intuition alone (which is “system 1” thinking). Identify
situations in advance and then make a deliberate choice to engage in systematic
system 2 thinking in that situation rather than stay in automatic system 1
mode.
2. Learn through the use of analogies – debrief important
negotiations and analyze what you did well and where what you did left
something to be desired. Look for similarities between multiple negotiations
and try to draw out keystone principles which would be useful to apply in your
future negotiations.
3. Adopt the “outsider” lens – where you deliberately look
at everything that happened as if you were a complete outsider with no inside
information. It may even be helpful to hire an expert or a consultant and get
them to give you their slant on things. When you’re not immersed in a
negotiation, things can look quite different.
While it’s certainly helpful to manage your own biases when
negotiating, your negotiation outcomes will improve if you also help your
counterparts overcome their own irrationalities and biases. These are three
strategies you can use to achieve this:
1. Incorporate the flow-on consequences of their biases in
your own strategy –anticipate the biases they will more than likely bring to
the negotiating table and structure your offer to allow for those biases.
Creatively structure your offer to accommodate their needs and preferences and
you increase your own chances of success.
2. Help your counterpart think more clearly and become less
biased – in a tactful way.
For example, you know a negotiator under time pressure is
more likely to make a bad decision than someone who isn’t working to a tight
deadline. Ask the other side to think things over rather than give you an
immediate answer. Encourage them to explore alternatives so they can be
convinced your offer is superior. Put together package offers rather than force
your under-prepared counterpart to weight multiple issues on the fly.
3. Calibrate all information provided by others – don’t rely
solely on the input of one party but ask three or four competitors to bid on
the negotiation and provide their data.
This will allow you to tell if someone is being overly optimistic
in order to get your commitment only to later scale back their estimates with a
claim of being more realistic of the current state of the marketplace. Gather
more data at the outset when things can change rather than later when you’re
locked in to one particular trajectory.
“Negotiation geniuses do not assume that they are immune
from bias. Rather, they accept the fact their intuition, like that of other
smart people, is fundamentally flawed.
They attempt to reduce the degree to which they are affected
by biases and, when necessary, adopt more systematic decision processes to
avoid bias. In addition, rather than expecting rationality from their
counterparts, negotiation geniuses anticipate bias in others and use strategies
to respond to those biases.”
– Deepak Malhotra and Max Bazerman
3 APPROACH
Once you have a reasonable tool box and a workable
framework, the last step in acquiring the negotiating genius status for
yourself is to understand how to offset all of the little traps which can
derail the real world negotiations.
In particular, get familiar with how you can achieve a
worthwhile outcome even:
o
When you believe that the other party is
incompetent or lying
o
When you have little power to influence
o
When the other is reluctant to agree to anything
o
When it is necessary to inject the ethical
considerations
o
When you are dealing with the competitors or
enemies
Simply put the popular notion of always trying to achieve
‘the win-win agreements” in any negotiation just isn’t feasible all the
time. In complex negotiations, it is,
sometimes isn’t even possible to tell what “win-win” really means. Such complexities are commonplace, and
therefore it is essential that you have the ability to deal those issues
systematically. You have to preserve the virtues of the win-win set at the same
time as you use sound negotiation techniques.
3 APPROACH
3a. Strategies of Influence
Whenever you’re negotiating, be very aware of the fact the
other party will use strategies of influence to try to get you to agree to
their terms without improving them.
For example, they may:
o
Highlight your potential losses very vividly.
o
Aggregate losses but drip-feed in gains.
o
Make outrageous demands or try foot-in-the-door
tactics.
o
Attempt to leverage social pressures and other
justifications.
o
Use extreme reference stories to make their
offers reasonable.
o
Make token concessions linked to outrageous
demands.
To defend yourself against these strategies of influence,
there are a few reasonable steps you can take:
o
Prepare systematically – so
you have comprehensive data available to debunk their unfavorable offers. You
might even introduce a scoring system for comparing different offers.
o
Explicitly separate information from influence – before responding. Separate the fact from the fiction and
you’re better positioned to respond intelligently.
o
Regularly pause and rephrase their offer in your
own words – because the language you use can
have a far-reaching impact. Couch all their proposals from your own perspective
and do a gut check they make sense before moving forward.
o
Appoint a designated devil’s advocate – someone
who will check on the progress of negotiations periodically and point out the
weak points you may be tempted to gloss over in your enthusiasm to get an
agreement.
o
If at all feasible, remove time pressures from
your negotiations – because most strategies of
influence have a greater impact if you’re forced to respond quickly. Set aside
ample time and get comfortable asking the other party or parties to allow time for
consideration.
“Negotiators who rely exclusively on influence strategies
are likely to achieve only limited success. They forgo opportunities to learn
about the other side’s interests and, as a consequence, to create value.”
– Deepak Malhotra and Max Bazerman
3 APPROACH
3b. Blind Spots
Not all negotiations go smoothly or proceed in an amicable
and positive environment.
For example, many times organizations and individual
negotiators make poor decisions because they overlook other parties who are
lurking in their “blind spot”. What these other parties subsequently end up
doing can have a dramatic impact on the success or failure of any specific
negotiation.
When negotiators focus too narrowly on the information at
hand and ignore other obvious considerations, they can create a blind spot.
Within this blind spot might be:
o
Competitors or other industry players who are
free to make counter offers which can completely derail any offers you have
carefully put together with another company.
o
Side-bar agreements the other party to your negotiation
may have in place but which have not been disclosed to you. For example, if
you’re attempting to acquire a company, you may found the three founders have a
shareholder’s agreement in place which provides veto power over any acquisition
proposal you are attempting to negotiate.
o
Common knowledge within the industry about the
imminent release of new technology which will completely change the competitive
dynamics of the entire industry.
Expert negotiators realize that to be successful, they
actually need to have the best of both worlds. On the one hand, they
acknowledge the need to focus intently so as to put together an agreement which
creates added value for everyone involved. On the other hand, however, they
also attempt to broaden their focus and expand their awareness of other
elements which typically reside in their blind spot. How can you achieve this?
o
Try and make an educated guess of what factors
will likely fall in your blind spot during any negotiation – and take the time
to get up to speed in those areas before the pressures of negotiating build.
o
Be vigilant –
actively seek out information which would typically fall in your blind spot.
o
Reflect on your previous negotiations – and identify any systemic errors you made in the past. Then
use these hints to enhance and bulk up your information gathering activities.
o
Enlist the help of others in your organization –
get them to expose your blind spots and make certain those key points are taken
into consideration. Revise your strategy to incorporate the expertise of other
members of your team in these areas.
o
Approach each negotiation as a mystery to be
solved – and use the general approach of investigative negotiation.
o
Identify all your information sources – and make a conscious effort to gravitate towards the sources
of information which most negotiators will tend to ignore.
o
Try and build contingency clauses into all
agreements –so you can change terms as more information emerges.
“It is when we overestimate the value of what we know and
underestimate the value of what others know that we fall victim to those
elements of negotiation that lurk in our blind spot. By adopting an
investigative mind-set, negotiation geniuses avoid this fate.
Genius, then, is sometimes nothing more than taking the time
to see that to which others have turned a blind eye.”
– Deepak Malhotra and Max Bazerman
Sooner 3 APPROACH
3c. onfront deception
or later, you’ll get into a negotiation where you know
immediately or find out later you’ve been lied to. It’s hardly a revelation
that people can act unethically when under pressure. The best defense you can
mount against lies and deception as an expert negotiator is to eliminate your
counterpart’s temptation to lie. Simply put make it impossible for them to get
a better deal by telling lies.
So how can you achieve this in practice?
o
Always look and act like you have prepared
carefully – because the more prepared you
seem, the less likely it becomes the other party will attempt to lie at all. It
becomes too risky for them to even try.
o
Signal clearly your team’s
ability to gather or obtain more information if required –and this will
discourage them from making unreasonable demands which can later be uncovered
as highly opportunistic.
o
Ask less threatening indirect questions – rather than point blank demanding the other party reveal
their true costs. If you ask about their supply chain, who their other customers
are and what size purchase you’d need to make in order to qualify for a price
concession, you can pretty much estimate their costs with a reasonable degree of
accuracy.
o
Never, ever lie yourself – but always tell the
truth. If you make it a point of principle never to lie, then the other parties
don’t feel any need to protect themselves from being the only sucker at the
negotiating table. They won’t feel any pressure to lie under the guise of
self-defense. You can signal your intentions in this area by revealing to the
other party information which is commercially sensitive to you. More than
likely, they will reciprocate by treating you openly and honestly in return.
You also avoid the possibility of being trapped by your own lies in the future.
To avoid feeling any pressure to lie yourself while
negotiating, there are some smart alternatives you would do well to consider:
o
Always take a long-term view – and incorporate the potential loss of reputation and
relationship costs into your calculations. If you lie, you may end up with a
short-term gain at the cost of long-term problems in the business relationship.
Be truthful even if this costs you money in the short run because the long-term
payoff is worth it.
o
Prepare in advance how you’ll answer difficult questions –so
you don’t get flustered and blurt out something
expedient which is also untruthful and likely to be exposed.
o
Try not to respond to questions immediately –
but ask for time to get your facts right first.
o
Be comfortable refusing to answer certain
questions –by saying something along the lines
of: “As you will appreciate, the answer to your question is commercially
sensitive to us. It also depends on a number of variables. I could try and give
you an answer right now, but if it’s okay with you, I’d like to take some time
to get the facts and give you a more complete response later.” Or offer to
answer a different question right away if they prefer.
o
Change your reality so you feel less pressure to
lie – do things you can allude to which offset any potential red flags. For
example, before a job interview, send out resumes. You can then truthfully
state you have sent out other resumes and expect to be scheduling more
interviews soon.
In order to negotiate successfully, you really need to
resolve all your ethical dilemmas and conflicts of interest in advance. There
are potential problems ahead as a negotiator if you cannot look people in the
eye and say: “Yes, I will benefit personally from concluding this negotiation,
but I wouldn’t try to put together an agreement in the first place if this
wasn’t a good deal for you and your company”.
3 APPROACH
3d. Resolve dilemmas
Some of the ethical negotiation dilemmas you need to
consider in advance are:
1. You need to be highly vigilant and careful about conflict
of interest situations – where you will gain a financial advantage by favoring
one party over another. If possible, state your conflict openly and recuse
yourself from the decision-making process. At the very least, make certain
everyone else you negotiate with is aware of your conflict of interest.
Being aware your product is of a lower quality than the
buyer thinks he or she is buying is also a form of conflict of interest and can
be a trap for the unaware.
2. Be aware of the possibility you may be unconsciously
discriminating on the basis of race or gender – and become proactive in
reducing your tendency to award business to only those firms you feel
comfortable dealing with. Get others involved in the decision-making process
and audit your negotiations to ensure these kinds of ethical issues are not
showing up more than they should.
3. Whenever you’ve created added value in a negotiation,
pause and analyze it – identify exactly where the new value is coming from. If
you’ve created an arrangement that ultimately means consumers pay more for
something than they would in the open marketplace, or that favors special
interest niches at the expense of the broader public, there may be problems. At
one extreme, your new arrangement may be illegal. At the other end of the
spectrum, it may be unwise and unethical. Avoid any negotiations which have the
end effect of helping each of the parties charge their customers more.
4. When allocating credit for any agreements you negotiate,
be careful not to overstate your own role – or give credit to those you like.
It’s a very easy human tendency to overweight those factors on which you
perform strongly and underweight those where you perform poorly. Be even handed
about valuing the contributions of others.
5. Keep in mind you may have to deal with the biases of the
other parties to the negotiation – so be prepared to put in place contingency
contracts which will require external auditing and verification before
enactment. Ask for unlikely claims to be audited by third parties before
becoming effective. Ask for the quality of products to be measured and verified
before payment falls due. If the other party is being deliberately unethical,
these types of contingency contracts will give them cause for concern. If they aren’t
aware they are being unethical, this may jolt them out of their illusions.
“An ethical negotiation genius is one who wants to try to
eliminate unintended ethical behaviors along with more obvious intentional
ones. Just because many of these unintended unethical behaviors are common does
not mean they are ‘okay’. Ethics is all about actively striving to be a better
person, not reaching – and settling for – an ‘acceptable’ status quo.”
– Deepak Malhotra and Max Bazerman
3 APPROACH
3e. Position of weakness
Seasoned negotiators know they won’t always be dealing from
a position of strength.
Many negotiations will be held in circumstances where the
other party literally or figuratively holds all the cards. To improve your
prospects of putting together a good deal when you have no meaningful
negotiating power:
1. Understand that your position may not be obvious to the
other side – so don’t reveal that you are weak. Let them figure that out for
themselves.
2. Leverage their weak points creatively – because more
often than not they will have weaknesses in different areas to you. It’s not
unusual for all parties to a negotiation to be equally weak and the key is to
make the other side’s weaknesses assume more importance than your own.
3. Change the game you are being forced to play –by
introducing other elements of your value proposition you can leverage into the
negotiation. Instead of talking price alone, introduce quality, service and
brand assets you bring to the table. Identify and then leverage what you’re
good at. Be prepared to submit multiple proposals which integrate these
additional factors in varying levels and gauge their interest in broadening
their decision criteria.
4. If all else fails, consider relinquishing whatever power
you do have – and make a direct appeal for help. By making it clear you have no
intention of fighting, you may find they moderate their own stance and look for
ways to work together at a level that is sustainable for all parties. They
probably don’t want to drive you out of business so let them be reasonable.
5. Look at your entire portfolio of customers – and be
prepared to take bigger risks to keep the clients who add the most value for
you. Be prepared to lose money in some negotiations in order to stay in the
game and make much more money in other negotiations.
The other way to approach negotiating from a position of
weakness is to find some workable ways to upset the current balance of power.
To try and turn the tables around:
1. Consider whether it’s practical to build coalitions with
other weak parties – so you can present a unified front when negotiating.
Coalitions of this nature make it harder for the dominant party to pit one weak
party against another.
2. Leverage your own weaknesses – by making it clear you can
create more value in the marketplace by working together than by having a
monopoly situation. You might be able to convince them you’re a better choice
as a competitor than having some other better funded corporate entity be
attracted by the hole in the market you would leave if forced out of business.
3. Attack the source of their power – build your own
stronger relationships or lock suppliers in to highly attractive multi-year
contracts. Get creative and do whatever it takes to dilute the other party’s
competitive advantages.
“While being in a position of weakness is sometimes
unavoidable, you will negotiate most effectively when you leverage the
fundamentals – systematic preparation and careful strategy formulation.
Unfortunately, many negotiators compound the problem of weakness by becoming
obsessed by the factors that make them weak. Those who ‘think weak’ inevitably
also ‘act weak’.”
– Deepak Malhotra and Max Bazerman
From time to time, experienced negotiators have to deal with
irrationality, distrust, anger and threats from the parties they negotiate
with. If these situations arise in your own negotiations, keep a few pointers in
mind.
3 APPROACH
3f. Deal with problems
When dealing with irrationality:
o
Assume they are most likely uninformed – so try and educate them on the true facts of the situation
before escalating matters. Make sure they understand it’s not in their best interests
to act irresponsibly.
o
Probe whether there are hidden constraints you’re not aware of – and bend
over backwards to help other parties overcome those constraints by other means.
o
Look for hidden interests – and do what you can to structure flexible deals which address
their other concerns.
If dealing with an environment of distrust:
o
Educate all of the other parties intensively.
o
As a last resort, suggest mediation rather than
litigation.
o
Work to rebuild trust over time.
When dealing with anger:
o
First
seek to understand – the source of their anger.
o
Articulate their concerns – because by giving voice to their anger, you give them a chance
to vent their frustrations and then become prepared to move on.
o
Sidestep the emotion – by
not taking it personally but instead suggesting there are issues which need to
be looked at in the future but in the meantime perhaps negotiations should
continue so as to create more value for everyone.
o
Get everyone to focus of their genuine
underlying interests – by asking: “Okay, is there anything else you’d like to clarify before we
return to the substantive issues you highlighted earlier on?”
If dealing with threats or ultimatums as a negotiator:
o
Ignore completely any take-it-or-leave-it
demands – and come back with responses that soften
these statements so they don’t become barriers to making progress in the future.
o
Pre-empt any additional threats – perhaps by threatening to drag out the negotiations for an
extended period should other parties need to get involved as a result of the
threatened course of action.
o
Let them know when their threats are not
credible –by pointing out their own constraints or
their own interests would be unlikely to actually let them follow through on
what has been suggested.
o
Provide a way for them to save face – by making statements like: “I
realize you’re doing me a great favor by
reducing your price beyond what is normally feasible. I appreciate this gesture
and want to come up with some practical wayswe can acknowledge that in our
future dealings with your firm.”
“Negotiation geniuses approach ‘ugly’ negotiations the same
way that they approach ‘beautiful’ ones – with an investigative approach that
focuses on each side’s underlying interests. Save the histrionics for the
stage, and bring your negotiation genius to the bargaining table.”
– Deepak Malhotra and Max Bazerman
3 APPROACH
3g. Know when to negotiate
To become a negotiation genius, you not only have to know
how to negotiate but you also have to understand when to negotiate and when negotiation
is not the best option.
There are actually five situations in which you’d be better
advised not to negotiate:
1. When time is money – and the costs of negotiation will
far outweigh the amount you stand to gain. Sometimes negotiators get so focused
on getting the best deal possible they end up wasting resources on gaining
trivial benefits. Skilled negotiators know the value of their time and
attention and don’t waste these valuable resources on situations of marginal
worth.
2. When your best other alternative stinks – and everyone in
the negotiation knows it. In this situation, the only thing you can rationally
do is accept the offer immediately and then create a situation where the other
party values what you do more highly and is prepared to move their offer
upwards. This is not negotiation. It’s changing the game in your favor by over
delivering and then relying on their sense of fairness to compensate you
accordingly.
3. When negotiating sends the wrong signal – perhaps that
you’re more interested in money than you are in being part of something
influential and far reaching. If an outstanding opportunity for advancement
comes along, instead of negotiating your new salary it might be better to
state: “I fully trust you will help make my transition to this new position
both successful and mutually rewarding”. That will send the signal you’re a
team player and you trust the management team. If you try and haggle, they may
conclude they’ve chosen the wrong person.
4. When strong relationships might suffer – which you would
prefer to preserve intact and ideally strengthen further. If the potential harm
to the relationship would far exceed the expected gain, then it’s entirely
reasonable not to try and negotiate. Often your long-term relationship will
flourish if you forego the opportunity to aggressively squeeze every last
dollar out of every transaction that comes along.
5. When negotiating is culturally inappropriate – and it’s
more important for you to have solid local relationships than it is to worry
about whether there are cheaper options worth exploring. If you’re uncertain
about local customs when working overseas, you may prefer to put in place an
initial agreement which strongly favors your local partner as the foundation of
attacking future joint ventures with their full and enthusiastic cooperation.
“More often than not, negotiating allows you to create value
above and beyond your alternatives to reaching an agreement. But it is worth
keeping in mind not every aspect of life is a negotiation. By considering the
context of the negotiation, the relationships involved, and your alternatives
away from the table, you will become adept at identifying when to negotiate,
when to accept a deal without negotiating, and when to simply walk away. Some
negotiation ‘experts’ will tell you that ‘you can negotiate anything’. Perhaps
you can – but that does not mean you should. Often, there are better things to
do than negotiate. Negotiation geniuses are able to recognize and leverage
these opportunities.”
– Deepak Malhotra and Max Bazerman
3 APPROACH
3h. keep working at it
“Experience is a dear teacher, but fools will learn at no
other.”
– Benjamin Franklin
You will never become a negotiation genius by taking a
course, reading a book or even by engaging in similar negotiations over and
over. Instead, to become an expert in this field, you need to combine
experience with expertise. Not only do you have to engage in negotiations under
a broad range of settings but you also have to be able to infuse your
experiences with a strategic understanding of what you’re doing right and what
you’re doing wrong.
The path to becoming an expert in negotiation is to think
more deeply and analytically about what you’re doing each time you negotiate.
You need to leverage both your experience and your expertise. One way to do
this is:
o
Decide now you want to learn more about
negotiating – and therefore it’s more important that you understand what is happening in a
negotiation than it is to simply reach an outcome you feel good about. Commit
to analyzing the underlying dynamics and not just the end results.
o
Realize that sometimes being “perfect” can be the enemy of being “good” – and therefore if you try and
do too much at once, all that will happen is you will become overwhelmed.
Instead, recognize the virtue of making ongoing incremental improvements to
your negotiating skills.
o
Make a list of the negotiation strategies and
tactics you want to master – and then focus on working on just one of these
ideas each week. Set aside time to think about this concept and how you can
apply it to your negotiations. Tackle no more than one new idea each week.
o
Have your friends and colleagues critique you
periodically – so you can assess your progress. Not only will talking to these
people help you see things objectively but they will also help point out any
mistakes you may have overlooked.
o
Put more effort into planning your negotiations
systematically – so you apply additional strategies rather than shooting from
the hip.
o
Debrief every negotiation – and write down which strategies you could have applied but
did not. Plan how you might get progressively better.
o
Create an environment where your expanded
negotiation skills can find full expression – which basically means you look
for every feasible opportunity to use your skills at work. Remove any
constraints which are unhelpful or at the very least ask your organization’s
leaders to help you do that. Become more actively involved in negotiating
everything.
o
Come to view your negotiation skills as a set of
basic principles for productive human interaction – and therefore they apply in
all situations and circumstances.
“Genius is often a combination of natural ability and a lot
of hard work. You do have the raw materials needed to become a negotiation
genius – almost everyone does. If you now put forth the effort, then you will
become a negotiation genius – someone who finds it easy to achieve brilliant
results in all types of negotiations. We hope you put forth this effort.”
– Deepak Malhotra and Max Bazerman
