Once you are clear about your BATNA, you should try to improve it. Successfully doing so strengthens your relative negotiating position.
An intelligent estimation of your partner’s BATNA helps you assess your relative negotiating strength.
Consider whether you can weaken the other side’s BATNA.
Negotiating strength hinges on perception. It is not the actual relative strength of the parties’ alternatives that determines power but their perceptions of it. Work to influence this perception.
Notes
1. Roger Fisher, William Ury, and Bruce Patton, Getting to Yes: Negotiating Agreement Without Giving In, 3rd ed. (New York: Penguin Group, 2011), 104.
2. G. Richard Shell, Bargaining for Advantage: Negotiation Strategies for Reasonable People, 2nd ed. (New York: Penguin Books, 2006), 110.
3. Ibid., 117.
Chapter 7
The Preparation Phase
As is often the case in life, thorough preparation is fundamental to success in negotiating. Research shows that our habit and method of preparation prior to a negotiation is the single most important determinant of our performance when actually engaged with our partners. To do it well involves devising a plan of action that’s tailored to the situation at hand. To structure our preparation, though, we need a solid understanding of the negotiation we are entering.
Where Do We Hope to End Up?
Begin by trying to assess where you want to end up. To a great degree, we are revisiting my favorite question: What is a good outcome? In particular, consider: What will be a good outcome for me? What will be a good outcome for my team or group? (Sometimes these are very different.) What will be a good outcome for the folks on the other side? This inquiry can be broken down into several parts.
Substance and relationship each deserve careful consideration. G. Richard Shell tells us, “Every negotiation . . . combines some measure of conflict over substantive issues with a degree of sensitivity to the way people should treat each other.”1 These two dimensions—the substance and the relationship between parties—form the basis of a thorough situational analysis. So we can consider good outcomes from both substantive and relationship aspects. In the end, the best possible outcomes blend these and other pieces back together.
Consider the Substantive Issues
In sizing up the substantive issues, we ask: How significant are the stakes in this negotiation? How essential is this thing to us? Is the specific subject being negotiated over critically important to me? This is, of course, highly subjective. We can imagine two standby passengers negotiating with an airline employee over the last seat on a flight. One needs to get home to be at the bedside of a critically ill spouse; the other has an important professional paper to deliver that evening in the destination city. They will surely see the stakes quite differently, even though the substantive issue is identical. What’s important here is that we’re as honest as possible with ourselves. What are we really after, and what interests lie deep below the position we have initially staked out?
Once we have asked ourselves these questions, we should put on the other party’s shoes and revisit them. How important do they perceive the substantive issues to be? How badly do they need agreement? Critical to our effectiveness is an understanding of not only their perceptions but also the disparities between their perceptions and ours.
Then Consider the Relationship Issues
Having considered the substance from each side’s point of view, we begin thinking about relationship issues. How central are these to a good outcome? To us? To them? How great is the importance of the relationship between the parties when compared with the weight of the substantive issues?
There is a story told in certain business circles about a sales representative who was invited to Bentonville, Arkansas, to meet with Walmart. He had worked long and hard to convince the giant retailer to sell his company’s products. Now he was finally getting a shot at nailing down a contract. He knew all the rumors detailing how fierce Walmart can be about demanding price concessions, so he decided to lead with his toughest hardball negotiating stance. He determined at the outset that he would not go below a price of $3 per unit. The Walmart representatives demanded that he come down 20 percent below that. He held his ground. Finally, the Walmart people agreed to $3 per unit and said they would start with a relatively small contract and see how well the item sold. The sales representative was elated. He had stuck to his guns and won a great victory on price. As he was leaving the building, though, he overheard some of the Walmart buyers whispering among themselves. “Yes, that’s him. He’s the jerk. We gave him a contract, but I don’t ever want to deal with him again. We don’t need his product that badly.”
Walmart is the largest retailer in the world. Building a solid working relationship with that company may be far more important than winning an initial skirmish on price.
Our relationship with the other parties may well change as a result of the negotiation. At the outset, we should ask ourselves how important we perceive our future relationship with the other side to be. What do we want that relationship to look like after this negotiation is concluded? Is this a one-time transaction where we expect little or no further interaction with the other parties? At the other extreme, is this akin to a marriage? More often than not, the parties’ dealings with each other don’t end abruptly with the negotiated agreement. And as with most things that require some measure of trust, relationships are far more easily damaged than they are repaired.
You Want Good Substance and Good Relationships—But Don’t Trade One for the Other
Notwithstanding their relative weightings, a good outcome in most negotiation situations involves a good substantive result and maintaining or improving the kind of relationship we want. There is a great danger, though, if you can be coerced into trading the one for the other. Good negotiators refuse to concede on substance in exchange for an improved relationship. Just as we have long-ago memories of a schoolyard promise to be your best friend in exchange for some lunchroom concession, so, too, we remember a recent insistence on a substantive concession to preserve the relationship. Any time someone demands a compromise on price or terms in exchange for strengthened relations, your reply should always be the same: “I deeply value your friendship, and I offer you all the aspects of good friendship that I can. As for the substance, though, that has to be decided on the merits based on fairness.” Remember to use substantive tools for deciding substance and relationship tools to build relationships. And refuse to trade the one for the other.
Our preparation for good outcomes weaves substance and relationship goals together. Once we get clear on what a good outcome looks like in the matter we are preparing for, we go on to considering better outcomes. Can we raise the target? What might the best possible overall outcomes look like?
Set High, Achievable Goals
Shell urges the importance of setting high but attainable goals as part of good negotiating practice.2 This process begins during the preparation phase. You want to set tentative goals. It is worth noting, though, that in the early stages of a negotiation you probably will not have enough information to appropriately determine your final goals. Rather, you continue to gather information throughout the negotiating process and, as you do, reset your goals as you learn more.
Gathering information begins during the preparation phase of a negotiation and continues beyond it. You will want to know all you can about the other negotiators, parties not present, the situation as they see it, and what they are trying to achieve. Your initial research begins before you sit down with others. As you plan, you begin to both gather information and understand what further information you will need.
Who Are These People Who Will Soon Be Sitting Across from Us?
Among the subjects you are learning and gathering information on are the people who will be sitting at the negotiating table. Who are they and what individual characteristics are important for you to know about them? In the first cha
pter of Shell’s book, five distinct bargaining styles are identified. Avoiders, compromisers, accommodators, problem solvers, and competitors are each explained.3 In his final chapter, Shell gives useful advice for how people in each style can be become more effective.4 There is significant advantage in knowing which of these most closely fits each of the negotiating partners you will soon be sitting down with. And, of course, having more self-insight about where you fall on this scale and how your style can be most successfully deployed will be tremendously useful.
Adam Grant delineates between givers, takers, and matchers in his book, Give and Take.5 Here again, knowledge of who you are dealing with, along with self-insight, is of great utility. We begin gathering these understandings in the preparation phase.
Of course, there are limits on how much we can learn about other people through indirect evidence. Our knowledge of the bargaining style, personality, generosity, and mannerisms of negotiating partners will be greatly enhanced later in the process. Then we will be able to both observe and question them directly. For now, though, as we prepare, we gather what we can. We also make lists and take notes on what we will need to learn in the later stages.
In light of the type of relationship we expect and the style and personalities of the negotiators, preparation should include choosing the most appropriate setting and means of communication. Where should the talks take place, using what media, over what time frame? Can you alter the mood and tone in ways that will be advantageous? Will you want to brainstorm with these partners? If so, where and when? Might you set things up to facilitate separating inventing from deciding? The best negotiators put real thought into every aspect of the process, as being deliberate with procedure can have very real implications for both the negotiated agreement and the negotiated relationship.
Preparation for any negotiation is not complete without initial consideration of what path to take if a deal cannot be reached. This is the analysis of alternatives and BATNA discussed in Chapter 6. It must begin during the preparation phase. Like many of the areas discussed here, though, further consideration will be needed in later stages. BATNA is a dynamic and constantly changing thing, and consistent attention to it throughout the various parts of a negotiation is the way to improve outcomes.
Chapter Summary
Being fully prepared is one of the most important determinants of success. Don’t skimp on preparation.
Every negotiation consists of substantive issues and relationship considerations. Your preparation should consider each in its turn.
The best negotiating outcomes involve a good substantive result and a relationship that has been improved or at least not harmed or weakened.
Setting high but achievable goals will help improve outcomes.
Good preparation includes increased understanding of whom you are dealing with. Learn as much as you can about the other people involved, and prepare to adjust your negotiating approach based on the type of negotiator sitting across the table.
Notes
1. G. Richard Shell, Bargaining for Advantage: Negotiation Strategies for Reasonable People, 2nd ed. (New York Penguin Books, 2006), 121.
2. Ibid., 22.
3. Ibid., 10.
4. Ibid., 229.
5. Adam Grant, Give and Take: A Revolutionary Approach to Success (New York: Viking, 2013), 4.
Chapter 8
The Exchanging Information Phase
With the commencement of the information exchange phase, we are for the first time metaphorically sitting down together with the people with whom we are negotiating—even if we are on opposite ends of the earth. We are beginning to interact directly with them.
This stage of the negotiation process offers us a number of critically important opportunities. First of all, we want to gather information from the other parties. They know a great deal about a whole lot of subjects we would like to learn more about. They can share with us information we did not previously have, data that we gathered in an incomplete fashion, and things we did not even know about. They can also straighten us out on subjects we learned of but misunderstood.
Some of the things we want to learn include everything about them as people, all about their business and their industry, and as much as possible about their character and their ethics. We will seek to find out what they know, what they don’t know, and what they are trying to learn. We will attempt to find out as much as we can about their goals, targets, and objectives as they see them. We will also ask questions to uncover their underlying interests—even if they are not fully aware themselves. We seek to know what they really, really want.
We also want to explore with them their understanding of fairness as it relates to the negotiation at hand. What are they going to experience as fair? Which authoritative standards and norms are going to resonate with them? Later in the negotiation process, we may very well need to close the deal by showing them that we are being fair. Every insight we can now gather up as to how we might do that will be very valuable. Furthermore, the fair deal we will eventually try to put together will need to meet their legitimate interests and needs. Now is our chance to find out in detail what those are.
Ask Lots of Questions
Our method for learning all of this is to ask them questions. Get them talking. Seek clarification of what they share with us. Show interest in what they have to say, and ask them to tell us more. Much of the discussion is about their very favorite subject—themselves. Since most people are delighted to talk about themselves and their situation, all we need do is give them a little bit of encouragement.
Good negotiators ask more questions. A much-cited study reinforces this.1 It found that skilled negotiators spend almost 40 percent of their time acquiring information (asking questions) and clarifying information (restating and reframing what they’ve heard to verify that they’ve understood correctly). Average negotiators spend about 18 percent of their time on the same behaviors. In other words, average negotiators ask half as many questions as skilled negotiators. The key here is to ask questions and listen well enough to pose precise follow-up questions. The latter is just as important as the former. Although you can prepare a good set of queries ahead of time, probing and clarifying the other party’s position requires you to listen carefully and continue to formulate good questions. Good listening skills, along with good preparation habits and the ability to express thoughts clearly, consistently show up in the research as among the top traits of the most effective negotiators. Talk less, ask more, and keep your ears perked up.
Our ideal situation in this second phase of a negotiation is that we just ask question after question, and they happily give us answers. The problem with this plan, though, is that no skilled negotiator is going to let us get away with that. Just as we want to learn everything possible about them, so, too, they want to learn about us. As a result, a sharing of information and details usually results. Very often, good negotiators end up in a sharing back and forth that looks almost like a dance. You tell me some things, and I will tell you some things. You elaborate, and then I will elaborate. Such a negotiation ballet is a very good thing.
Strengthen Your Bonds with the Other Parties
A separate but important function of the information exchange phase is to attend to the relationship between parties. Do not underestimate the importance of building rapport with the other people; setting the tone of ongoing interaction will pay off nicely. Not only is it a means of ensuring that the relationship remains intact for future interaction but also, as research has confirmed, it makes it more likely that a negotiated agreement is reached at all.
Consider a study of MBA students wherein half the students were provided only with the other party’s name and e-mail address. The other half got a photograph of their counterpart, as well as explicit instructions to exchange information on hobbies, families, job plans, and hometowns prior to discussing anything related to the negotiation at hand. Although the rapport-building measures in the experiment were forced,
94 percent of the socializing groups reached a deal, and only 70 percent of the other pairs made it to agreement. A similar study conducted among law students brought similar results: “Negotiators who shared a getting-to-know-you telephone call before initiating e-mail negotiations were more successful than those who did not.”
Regardless of method of communication or choice of location, good negotiators begin their interactions with getting-to-know-you conversation with the people involved. They make sure to strengthen the relationship between parties as much as possible before introducing any matters that might strain it.
If you have good social skills and people tend to like you, do not hesitate to let your personality shine through. Be yourself. Being personable costs you nothing. On the other hand, maintaining a pretense of stiff or detached formality in a negotiation is unhelpful at best and counterproductive at worst. You want the other side to see you as a person, and you’ll do best if they like and trust the person you are. In the period of initial discussion, it is unwise to discuss anything of substantive importance. Rather, use those encounters as a means of breaking the ice. Set a conversational tone, and engage in an open and accessible way.
Psychologists refer to the similarity principle when explaining why people place greater trust in those they perceive as like themselves. We are more comfortable with someone when we feel that person shares something—an experience or affiliation, an interest or attitude—with us. This tendency should not be ignored.
Look for common ground, and introduce it as soon as possible: bring up a shared alma mater, a mutual hometown, a son or daughter, or a love of baseball. Even if the common ground itself seems trivial or superficial, the benefit of finding some solidarity with your partner is proven and consistent. Even the most seasoned negotiators won’t balk at a genuine connection. It is important, though, to be genuine. Be careful not to suggest an ulterior motive by overdoing flattery, stretching the truth, or attempting to link commonalities to some substantive purpose. Such tactics are bound to backfire. No one wants to feel manipulated, particularly not under the guise of building an alliance. By the same token, be on your guard if the other party tries to exact a concession from you based on the success of their schmoozing. Remember that your goal here is to open channels of communication and create an environment conducive to later negotiation.
Negotiating Your Investments Page 9