IDEA Box #9 – Negotiation
Welcome to our December 2020 IDEA Box blog where we are discussing ‘Negotiation’. This month we discovered the benefits of Getting to Yes, became Negotiation Geniuses (sort of) and learned why we should Never Split the Difference.
This month’s article shows that Donald Trump still has plenty to learn about negotiation, the podcast is from Stanford University professor Margaret Anne Neale while the video is a tense negotiation scene from the movie Nightcrawler.
Thanks for reading. We hope you enjoy it.
Getting to Yes: Negotiating an Agreement Without Giving In, Roger Fisher and William Ury
The most widely read book on the topic of negotiation, Roger Fisher and William Ury’s famous study suggests that the best way to approach a negotiation is by engaging in cooperative problem-solving. Here are four takeaways:
- Look for shared interests when negotiating: In many negotiations, more interests are shared or compatible than we realise; “Behind opposed positions lie shared and compatible interests, as well as conflicting ones. We tend to assume that because the other side’s positions are opposed to ours, their interests must also be opposed.”
- Having a deeper understanding of the other side will make you a better negotiator: The authors suggest separating the person from the problem when approaching a negotiation; “A working relationship where trust, understanding, respect, and friendship are built up over time can make each new negotiation smoother and more efficient.”
- Decide beforehand on your Best Alternative to a Negotiated Agreement (BATNA): As some conflicts cannot be negotiated the authors suggest developing a BATNA. In more recent times some negotiation experts have moved away from the BATNA strategy suggesting it creates a psychological resistance to pushing for the best deal.
- Try to avoid escalation and cycles of reaction: A negotiator should develop “negotiation jujitsu”, or as the authors put it; “When the other side sets forth their position, neither reject it nor accept it. Treat it as one possible option. Look for the interests behind it, seek out the principles which it reflects, and think about ways to improve it.”
This book, which is based on the work of the Harvard Negotiation Project, helped to develop the Win-Win approach to negotiation. It is available in all formats.
Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond, Deepak Malhotra and Max H. Bazerman.
Another product of the Harvard Business School assembly line, Negotiation Genius provides a detailed framework for developing negotiation skills. Here are four takeaways:
- You can overcome a weak BATNA: Having a weak BATNA is only an issue if your counterparty becomes aware of it. Consider the following example. During the 1912 US presidential campaign, Theodore Roosevelt’s campaign manager woke up to a blunder. They had printed three million pamphlets with Roosevelt’s photograph without seeking copyright permission from the photographer. If the photographer sued, the cost of the oversight could come to more than $3 million. The photographer, however, was unaware of Roosevelt’s weak position, and realising this the campaign manager sent the following telegram: “We are planning to distribute millions of pamphlets with Roosevelt’s picture on the cover. It will be great publicity for the studio whose photograph we use. How much will you pay us to use yours? Respond immediately.” The photographer fell for the bait and offered to pay $250 to get the photograph printed.
- Put yourself in your counterparty’s shoes: While the result of the Cuban missile crisis might seem unremarkable it is worth remembering that the advice of JFK’s generals was to attack Cuba. It only became evident years later that Cuba had enough nuclear warheads to obliterate the U.S. Eastern Seaboard and was authorised to deploy the missiles if they came under attack. Kennedy’s strategy was to methodically consider Khrushchev’s position. He was careful not to disgrace or back his counterparty into a corner. The result was a masterclass in brinksmanship and diplomacy.
- Be prepared: Most mistakes occur before the negotiation actually begins. The authors suggest taking the following steps to ensure preparedness; 1) Assess your BATNA, 2) Calculate your reservation value, 3) Assess your counterparty’s BATNA, 4) Calculate your counterparty’s reservation value, 5) Calculate the ZOPA (Zone Of Possible Agreement). Nothing prepares one for negotiation success better than a good acronym, it would appear.
- When it is ok to lie in negotiations: Never according to the authors. Lying is not worth the costs. Instead, we should focus our time and energy on honing our negotiation skills.
This book’s principal lesson is to gather as much information as possible and seek to create value (ideally for both parties) where possible. It is available in e-book, paperback, and audiobook.
Never Split the Difference: Negotiating as if Your Life Depended on It, Chris Voss
The Harvard stuff is all well and good but as Chris Voss, a former FBI hostage negotiator puts it; “have you ever tried to devise a mutually beneficial win-win solution with a guy who thinks he’s the messiah?” Indeed …. or in my world with a 4-year-old who won’t give you back the remote control. Here are four takeaways:
- Listen to your counterparty: Listening is the cheapest and most effective concession we can make. People want to be heard and understood. Listening intently demonstrates empathy and builds understanding. It is not how well you speak but how well you listen that determines the value of negotiation.
- You have more leverage than you think: A hostage’s family is the only customer for the commodity the kidnapper is selling, so they have more leverage than one might think. There are three types of leverage; 1) Positive: providing or withholding what the other side wants, 2) Negative: threat-based leverage that makes the other side worse off, 3) Normative leverage: Using norms and social standards to encourage consensus.
- Be open-minded: Hold multiple hypotheses and approach the process with a mindset of discovery. The goal is to gather as much as you can. According to the author; “until you know what you’re dealing with, you don’t know what you’re dealing with”.
- Prepare a negotiation “One Sheet”: This sheet should include; 1) The goal: focus on the best outcome, not the BATNA, 2) Summarise the known facts that have led to the negotiation, 3) Prepare a list of “Labels” (verbal observations of your counterparty’s feelings), 4) Prepare a list of calibrated questions, 5) Prepare a list of non-cash solutions.
Makes sense. Now to put all of that into action, reclaim the remote control and end the My Little Pony reign of terror. Available in all formats.
What Donald Trump Doesn’t Understand About Negotiation, Deepak Malhotra and Jonathan Powell, Harvard Business Review, 2016
In 2016 Jonathon Powell (former British chief negotiator in Northern Ireland) and Negotiation Genius author Deepak Malhotra predicted that Donald Trump’s combative negotiation style would see him fail to deliver meaningful political agreements. Here are two takeaways:
- Don’t use ultimatums: Ultimatums create unnecessary barriers to negotiation and often escalate tensions, entrenching positions and making it difficult to find common ground.
- Even the most generous proposals will be rebuffed if your opponent loses face by accepting them: Belittling and embarrassing counterparties ensure that they can never reframe your proposals as any type of victory. They are therefore more inclined to walk away from the negotiating table.
Stanford Entrepreneurial Thought Lab: Margaret Anne Neale
Stanford professor Margaret Anne Neale believes; “If you really want to win at negotiation, stop fighting and start listening.” Here are two takeaways:
- Power plays a role: A 1960’s study found differences between male/female and minority/non-minority negotiators. The study was replicated in the 1980s and no differences were found. The researchers attributed this to societal developments and the presence of power as an unmeasured variable in the initial studies. Power, they suggested, plays a greater role than demography in explaining differences in negotiation styles.
- Complex negotiation is not a sum-zero game: Substantive agreements are based on both sides working collaboratively to find creative and mutually beneficial solutions.
This podcast is well worth a listen. Here’s the link.
Nightcrawler, 2014: Negotiation Scene
In this scene from the movie, Nightcrawler Lou negotiates the sale of exclusive footage to Nina, a TV station manager. Here are two takeaways:
- Start with an extreme anchor: All negotiations begin with a “No”. Getting to No is often the first step in getting to Yes. Lou sets his price at €100k and the negotiation begins.
- Be clear on your reservation price: The reservation price is the least favorable point at which you will accept a negotiated agreement. Based on his previous deals with Nina, Lou is very clear on what he feels his commodity is worth. He is willing to walk away if this reservation value is not met.
It’s been a very tough year for people running retail, food, and hospitality businesses. More than ever these local businesses need our support. If you’re looking for Christmas present ideas and plan to keep it local this list of 400 online Irish retailers will help to get the juices flowing.
Thank you for reading our blog. Next month we will be discussing Habits.
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