When facing a possible gain, most people become more risk averse—our desire to hold onto our gain and not lose it is stronger than our desire to try to win more. Casino operators know this. Winners usually want to hang onto their winnings and quit. Losing gamblers will usually keep playing in the hopes of overcoming their loss. This approach works for the casinos because it’s a numbers game for them—they don’t have to know the risk appetite of every guest. But in the negotiation setting, it pays to know the risk profile of your individual counterpart and frame the issues accordingly.
It is also important to know your own risk profile and frame. A negative frame leads us to be less flexible, to offer fewer and smaller concessions, and to be less satisfied with the outcome and the process. It also makes us more prone to impasse and quicker to resort to litigation.
The best negotiators think about how to frame issues to their advantage. By framing an issue or wording a proposal a certain way, you can influence the way your counterpart responds. Do you advocate a proposal based on what the other party stands to gain by doing the deal, or what he will lose by not reaching an agreement? You can also frame issues in other ways, such as fair/unfair, popular/unique, traditional/cutting edge, and so on. Just remember that the frame needs to be believable, so be sure you are able to justify it. For example, in business we don’t like to use us the word “problem”; we would rather frame it as a challenge or maybe even as an opportunity. But it would not have been believable for the Apollo 13 astronauts to say, “Houston, we have an opportunity!”
Once upon a time, our family car was nearing the end of its useful life, and my wife said to me, “We need a New Car.” That, of course, is a position. Our interest was in finding a way to meet the transportation needs of the family. A New Car would do it, but there could be other ways of addressing that need. The transportation situation had changed a lot since we got our Old Car. A new train station had opened near our home, where before there was none. Our daughter had grown up and was able to get around independently, where before we had to drive her. We now had Uber and other ride-sharing options, which did not exist previously. Times had changed, and we had to change with the times. So I proposed to give my wife and daughter a monthly Transportation Allowance that would allow all of us to get around for much less than the expense of a car, insurance, gas, parking, tolls, road tax, etc. We could save money and fully satisfy our interests, all because I was able to frame the situation in such a way that the alternative to Old Car was Transportation Allowance rather than New Car. It was sheer brilliance!
My wife did not accept my frame, and viewed having a car as non-negotiable. So we ended up getting the New Car. In negotiation as in life, you have to know when to concede.
MAKE IT EASY FOR THEM TO SAY YES
Abraham Lincoln said, “When I’m getting ready to reason with a man, I spend one-third of my time thinking about myself and what I am going to say, and two-thirds thinking about him and what he is going to say.” How many negotiators put that much effort into thinking about the other side?
When my daughter first started to walk, she would explore everything within reach. If I went into the storage room, she would follow me and pick up screwdrivers, light bulbs, batteries, and other items not meant for toddlers. I would tell her to put those things down, they were not toys, they were dangerous, she could hurt herself, and so on. None of these reasons worked. I should have known they were doomed to fail, because from her perspective, she had no reason to agree to my demands. She was having fun, and I was asking her to stop having fun. She had nothing to gain and everything to lose.
I had to reformulate my request to make it acceptable to her. I asked her, “Would you like to close the door?” I can only imagine her thought process: “Close the door? I’ve never done that before, but I think I can do it. It sounds like fun. My dad will be so proud of me.” She immediately dropped everything, slammed the door shut, and ran off with a triumphant grin on her face. She gave me exactly what I wanted, but I had to present it to her in a way that appealed to her interests. She viewed this as a net gain for her, and so agreed to my request. There was nothing to negotiate or clarify, she could simply say yes.
I like to think I am more powerful than my daughter and can demand her compliance. By traditional measures of power such as size and strength, I am more powerful than she is. A lot of negotiators like to think this way. However, it is counterproductive. It causes resentment and harms the relationship. Wouldn’t it be better to gain someone’s willing and enthusiastic cooperation rather than her grudging compliance?
The key to reaching an agreement or resolving a conflict lies in understanding the way the other person sees things. While it is certainly important to think about what we really want and how to get it, we need to think even more about our counterpart, what he wants, and why he might agree to our request.
You are not simply making a request. You are asking the other person to make a decision—to accept your proposal or reject it. Ask yourself these questions:
• What do I want him to do? Is my request clear?
• From his perspective, why would he agree to do it?
• How will he view the consequences of doing or not doing what I ask?
This exercise should give you some new insights. Your demand must be realistic—something your counterpart could agree to. You may conclude: There’s no way he will ever agree to that! If that is your first reaction, it will probably be your counterpart’s as well. So don’t ask. Put yourself in the other party’s shoes. She won’t do anything simply because you want her to do it. She will only do things because she wants to do it. Try to understand what she wants, bearing in mind that she may not want the same things you want. Try to formulate your request so that it makes sense for your counterpart to agree.
One way to do this is by using what Roger Fisher calls a “yesable” proposition.* There are two steps to this method. First, put your request into a form where the other party can reply with a clear yes or no. We are not always clear about what we want the other person to do. If our thinking is not clear, our request will not be clear either. If our request is not clear, the other party will not have a clear choice. A confused mind always says no. Cast your request in a form that is so clear and simple that your counterpart’s choices could be to check a box marked yes or no.
Second, arrange the incentives and disincentives such that your counterpart finds it advantageous to say yes. No one is likely to agree to anything that does not leave him better off.
Give your counterpart a yesable proposition, a request phrased so she can respond immediately with either a yes or a no. If you truly understand her thinking and interests, and phrase your proposal the right way, you’ll get a yes.
ATTITUDE AND CONFIDENCE
The most important tool a win-win negotiator has is his attitude. A win-win negotiator is positive, optimistic, collaborative, and objective. He understands that a win-win outcome is rarely an accident, but the result of systematic application of certain principles. These principles are:
• Approach the negotiation as a problem to be resolved in collaboration with your counterpart. Do not enter a negotiation looking for ways to beat your adversary. Think win-win instead of win-lose. Look for ways to enlarge the pie so that everyone gets a bigger piece.
• Be objective. Don’t fall in love with the subject of the negotiation. Be aware of the roles of emotion and biases. Take calculated risks.
• Be positive and optimistic. Aim high. Negotiators with higher aspirations generally end up with more. Set an aggressive anchor and justify it.
• Be persistent. Continue generating options and looking for ways to create value. Remember that the reason win-win outcomes are so rare is not that it can’t be done, but that the win-win solution has not been found yet. Compromise only as a last resort.
• Keep your Plan B in mind and be prepared to exercise it. Negotiation is a voluntary process. Be prepared to walk away if you can’t
get what you want on satisfactory terms. No deal is better than a bad deal.
• Treat the negotiation as a game. Learn the rules and practice the skills. Take the game seriously but not personally. Have fun and try to improve over time.
The most successful negotiators are also confident. Confidence is largely a matter of attitude. You feel ready, positive, and have high expectations. Confidence is also a function of preparation. When you are well prepared you are confident, and when you are not prepared you are not. If you are not prepared, you should not be negotiating.
Confidence is more than just a feeling or state of mind, something internal to you. It is also what the other party sees in you. It is largely a matter of perception. You can appear confident even when you may feel some uncertainty or doubt. You can project confidence by:
• Being comfortable with others and the situation (smile, be friendly and outgoing, calm and relaxed).
• Having strong body language (eye contact, handshake, posture, gestures).
• Speaking in a strong (not necessarily loud), sure, and measured voice. Being articulate and having a deep, lowpitched voice is a big plus.
• Being decisive and avoiding weak words such as maybe, kind of, I guess, um, and so on.
• Looking like a successful businessperson (clothing, grooming, accessories).
• Being enthusiastic!
In business dealings, the more confident person usually prevails. Be that person.
CONSIDER AND EXPLAIN
Most negotiators reject an offer or proposal without giving it much thought. Perhaps they respond immediately with their own counter-offer. They feel they are projecting confidence and strength by showing their conviction about what they want and don’t want. They fear that any wavering on their part will be seen as a sign of weakness by the other party. And rejecting a proposal allows them to feel in control: they are in the driver’s seat and won’t be led around by anyone.
Win-win negotiators know better. An immediate rejection is insulting. It shows a lack of respect. That offer is a product— and an extension—of the other party. You do not help your case by abruptly rejecting your counterpart. By pausing to consider an offer, you show you are taking both the offer and the other person seriously.
Also, by thinking about your counterpart’s offer, you just might find some merit in it. You may find some common ground that you would otherwise miss with an out-of-hand rejection. After considering the offer, explain what you like about it and what you don’t like. Finding even a shred of value in his offer and working with it will place you in higher regard with your counterpart than if you had rejected his offer completely. Remember, win-win solutions depend on collaboration and joint problem solving, not on prevailing in a battle of wills.
By rejecting an offer, you are saying “I don’t like your idea; I want to do it my way.” But by considering their offer, focusing on an element that you agree with, and building on it, you can still end up in a place that’s acceptable to you—but they think it was their idea! This is the essence of the old saying that diplomacy (which is really negotiation) is the art of letting the other guy have your way.
Finally, give a reason why you don’t like the offer. People like to know why. It makes your rejection easier to accept. It also helps your counterpart understand your needs and interests, improving the likelihood of a win-win solution.
KEYS TO A WIN-WIN
While we hear much talk about the coveted win-win outcome, the fact is this result is not common. There are several factors which make a win-win outcome more likely:*
• Focus on interests rather than positions
A position is what you say (and perhaps really believe) you want, while an interest is what you truly need from the negotiation. It is not always easy to identify our own true interests, let alone our counterpart’s. What we think we want may not be what we really need. Sometimes, we have to think out of the box to see the difference. And you may also learn that your counterpart has no idea what his interests are. Identifying interests—yours and theirs—and addressing those, rather than positions, is a key to negotiating win-win agreements.
• Know the currencies
A currency is anything of value, tangible (money, goods) or intangible (ego, peace of mind, branding), that can be exchanged in a negotiation. Currencies are sometimes hard to identify. If we do not value a certain asset that we possess, we may not realize that our counterpart finds value in it. We may not even be aware that it exists. Understanding the currencies that are available helps us create win-win outcomes.
• Negotiate multiple issues and create multiple options
An option is a possible solution to your negotiation problem. An option is also a package of currencies. There may be many potential solutions to a negotiation. We may only think of one. Or we may think of a few, decide one is the best, and not realize that there may be even better ones out there. The more options we can generate, the more likely we will find one that presents a win-win solution. But if you are negotiating a single issue, such as price, you are setting yourself up for a win-lose or partial win outcome.
• Use fair and objective standards
You need to convince your counterpart (and help her convince her stakeholders) that your proposal has merit. Having a sound standard to measure your proposal against can help you persuade her of the merits. This standard could be a competitive price, precedent, index, industry practice, or some other benchmark.
• Good communication and sharing information
Negotiation is a form of persuasive communication. Most negotiators are reluctant to share information for fear of giving the other party an advantage. This makes it harder for them to help you solve your problem. While some information should not be divulged, sharing information about interests is a key to a win-win.
• Good relationship based on credibility and trust
In business relationships, trust is important in fostering communication and streamlining the negotiation process. A poor relationship or lack of trust is not insurmountable, but it makes negotiating much more challenging.
• Creative thinking
The essence of creativity is making connections between things or ideas, and understanding how they relate to one another. Creative negotiators recognize patterns and know when to follow them and when to break them. Precedents, accepted practices, norms, and other patterns provide us with shortcuts. We follow the pattern and it makes our life easier. At least it does most of the time. However, if you do the things other people do (follow the pattern), you will get the results other people get. If you want something better—such as a win-win—you need to do things differently. Average negotiators come up with obvious solutions. Win-win negotiators think creatively.
We have just glossed over some key concepts in negotiation: positions, interests, currencies, and options. We will discuss them in detail in the next chapter.
* Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47(2), pp. 263–291, March 1979 and subsequent work.
* I first encountered the yesable proposition in Professor Roger Fisher’s book International Conflict for Beginners (1969). In Fisher’s metaphor, it is not enough to let them know there are carrots in the barn (step two); you must first show them the barn door (step one).
* Roger Fisher and William Ury, Getting to Yes (1981).
CHAPTER 3
POSITIONS, INTERESTS, CURRENCIES, AND OPTIONS
“Price is what you pay. Value is what you get.”
— Warren Buffett
POSITIONS VERSUS INTERESTS
One of the keys to reaching a win-win agreement is to understand the difference between positions and interests. Although the terms are often used interchangeably, they are not the same.
Positions are the demands and offers made by the parties in a negotiation.
Interests are what the parties consider most important to them— what they truly need, or why
they want it.
Simply stated, a position is what you say you want, while an interest is what would actually satisfy your needs. Believe it or not, many people think they know what they want, yet they may not be aware of what their real interests are.
It may help you to think of interests and positions as parts of an iceberg. Positions are the tip of the iceberg that you can see, while interests are the more substantial part hidden beneath the surface, out of sight and unrecognized. You need to look beneath the surface to uncover what’s really important.
For example, suppose you ask your boss for a raise. Your boss tells you that he would like to grant your request but there is no money in the budget for a raise. You then either quit your job for one that pays better and hope you like it as much as your previous job, or you continue to work unhappily while the resentment builds. Nobody wins.
Do you really need a raise? Or is that simply your position, that is, what you think you want? Why do you want a raise? What is your real interest? It’s probably not the money itself, but some means of maintaining or improving your lifestyle. While a raise could help you satisfy this interest, there are also other ways to satisfy it. A company car, health benefits, or a housing allowance might serve the purpose as well. Your boss might be able to satisfy your interests through one of these means, even if a raise is out of the question.
WIN-WIN Page 4