1.Lead them into the trading zone.
2.Create more value.
3.Expect the unexpected.
4.Write their victory speech.
5.Protect yourself.
6.Provide leadership.
The strategies offer a means of operationalizing these principles in any negotiation.
Good for You, Great for Me also offers guidance for handling special negotiating circumstances like huge power differentials, relationships that are too important to lose, cross-cultural dynamics, an angry public, and situations where someone appears to be lying.
THE SIX STRATEGIES FOR CREATING DEALS THAT ARE GOOD FOR THEM AND GREAT FOR YOU
Reframe your negotiating partner’s mandate and priorities. There are simple moves you can make to press your negotiating partners to reprioritize their interests. If they aren’t clear about their objectives or are coping with mixed messages from their back table, you can help them reframe their interests in a way that will benefit both of you. You can also raise doubts in their minds about what their back tables want from them. Your goal should be to get them to refine their mandate and think hard about their priorities in ways that will benefit both of you. For example, if you put two rather different but attractive proposals forward at the same time—both of which are acceptable to you—it may force your negotiating partner’s back table to clarify their priorities. By asking the right questions, you can push your counterparts to seek a mandate that is more advantageous to you.
Propose packages that are good for them and great for you. The key to creating value is inventing trades beneficial to both sides. (That’s why it is called the trading zone!) The more value you can create, the more there is to go around; reliable research clearly shows that most negotiators stop far short of generating as much value as possible because they overlook less obvious trades. I demonstrate how to formulate and present trades that the other side cannot afford to turn down, but that are advantageous to you.
Use contingent offers to claim more than the other side. When both sides are clear about the point at which they should walk away rather than accept a bad deal, they can place clear limits on the size of the deal space. Of course, each side wants to be at the edge of the deal space that is most advantageous to them. By using contingent offers (what-if proposals), you can figure out how close you are to the edge that is best for you.
Help the other side sell your best deal to their back table. Too many people see negotiating partners as adversaries when they are in fact important emissaries to back tables. There are simple techniques for providing an emissary with the arguments they need to sell an agreement that is best for you to their back table, the people you usually don’t have an opportunity to speak with directly.
Insulate agreements against predictable surprises. Negotiations are not finished until all commitments specified in an agreement are fulfilled. During the follow-up period after an agreement has been signed, lots can go wrong. Market conditions, for example, might change between the time an agreement is reached and the time contractual commitments must be honored. My Harvard Business School colleague Max Bazerman has made it clear that negotiators ought to be able to anticipate the many things that can undermine implementation of a negotiated agreement. It is not that hard to think of the kinds of things that can go wrong, even if we can’t predict which one will occur. That’s why Bazerman calls them “predictable surprises.” Dispute resolution mechanisms can be incorporated into agreements to insulate against some unpredictable surprises. You need to buffer agreements against such surprises, so I outline ways to make your agreements more robust.
Building your organization’s negotiating capabilities (so winning at win-win negotiation gets easier over time). Negotiation is as much an organizational task as it is an individual one; and most negotiators know that other people in their company can get in the way of their negotiating efforts. Every time you complete a negotiation, let the relevant people in your organization know how the company’s standard operating procedures might be modified to make it easier to find the trading zone and win at win-win negotiation in subsequent negotiations. When negotiators skip this step, everyone in their organization is doomed to generating poorer results in the future.
Six Ways of Winning at Win-Win Negotiation
1
LEAD THEM INTO THE TRADING ZONE
Help Your Negotiating Partners Reframe Their Mandate and Priorities
THE WORLD ABOUNDS WITH DIFFICULT PEOPLE; and the various difficulties they pose are enhanced when they are negotiating with you. There are the stubborn and the irrational; those who have more power than you and aren’t hesitant to use it; the intransigent; and those who absolutely, positively never will allow anything to be built in their back yard. Is it really possible to treat people like this as partners and move them into the trading zone to create deals good for them and great for you?
DEALING WITH STUBBORN OR IRRATIONAL PARTNERS
SUPPOSE YOU’RE AN EXPERIENCED SALESPERSON entering into negotiations for a contract renewal with “Enterprise, Inc.,” a company you’ve successfully done business with for years. Unfortunately, Sue, the head of purchasing at Enterprise, has just been replaced (the memo about her departure noted that she was leaving “to pursue other exciting personal interests”). You call Joe, the new guy, to set up your first meeting and immediately realize you’re in for some trouble.
“Here are my rules,” Joe says, cutting the pleasantries short. “First, we’ll meet at my office. Second, I’ll let you know what we will talk about and what we won’t. Third, I’ll tell you the price range we’ll be working in. And we won’t put anything in writing until we have a deal.”
“I’m fine with meeting at your place,” you say uneasily, putting off his other demands for the moment. “But we should probably include some of my production people and someone from your operations division. We’ve got to make sure we meet their interests as well.”
“No,” Joe says. “That’s not how I do it.”
“For years,” you continue, “your predecessor always brought along your head of operations. I think that’s why everything always went so smoothly. We need to talk about more than just price. We want to make sure that our components meet your company’s unique needs.”
“Let me worry about that,” Joe says.
You are completely taken aback. Joe seems impossible to deal with. Is he truly irrational or just trying to drive a hard bargain? Is he interpreting his mandate too narrowly? Is he clear about his back table’s or his company’s interests? How can you find out for sure?
One of the trickiest aspects of negotiation is figuring out how to deal with an individual who cannot be convinced by the merits of evidence or arguments. How can you put a stop to irrational behaviors and demands—those that don’t appear to contribute at all to the effectiveness of a negotiation? How can you get someone to be reasonable? How do you move someone like this into the trading zone? We’ll look at how this story of the new purchasing agent can help you analyze the various possibilities you face when confronting an adversary who seems stubborn, irrational, or even downright crazy. Obviously, you can’t win at win-win negotiation unless you figure this out and find a way to move them into the trading zone.
Your negotiating partner is perfectly rational; it’s just that you don’t understand how the world looks to him. One of the first rules of negotiation is to assume that your partner is rational. Approach each new negotiation with an open mind. Differences in life experience may lead to what look like strange behaviors, so instead of jumping to conclusions, try to imagine how the negotiation might look to the other side. Max Bazerman, the psychologist at Harvard Business School I mentioned earlier, has described many of the cognitive biases that can lead people to read and react to the same situation in totally different ways.
When faced with a partner as stubborn as Joe, imagine what might be going on in his head. Perhaps he’s dealing with some new corporate guidelines that govern how
he is supposed to proceed. Maybe he’s been burned in the past because he wasn’t able to manage his internal negotiations while proceeding with external negotiations simultaneously. Perhaps he’s nervous about having his performance judged negatively by others in his organization.
How can you address such concerns? First, try asking directly what problem your new partner is trying to solve. “I know you may be feeling some heat back at the office,” you might say. “Maybe if I understand what you’re up against, we can add some new items to the equation.” You might offer to help Joe protect himself, such as by promising to circulate a draft summary of any tentative agreement to both sides. This wouldn’t create problems for you and it might help Joe.
Second, you might agree to a couple of Joe’s demands, while reserving the right to pause the conversation if they turn out to be counterproductive. Sometimes you might have to try proceeding in a new way, even if it feels unproductive. At the very least, an ongoing failure to move talks forward will provide a shared basis for arguing on behalf of a better approach. As long as you don’t agree to anything that fails to meet your company’s interests, you won’t lose anything by agreeing to what appear to be unproductive demands.
Suppose you agree to meet Joe one-on-one at his office, and you start off the talks like this: “We clearly have common interests. Your company needs our components to stay competitive globally. We’re prepared to keep providing them, as long as you maintain or increase your current order. As you know, we have to make continual adjustments in our production systems to get you just what you want, when you want it. If I can come back to my people with a minimum five-year deal, at stable or increasing sales volumes, we can probably remain at the current price with only modest annual adjustments for inflation. What do you think?”
“No way, no how,” says Joe, crossing his arms.
“What do you mean?”
“I’m not interested in doing business if you can’t give us a substantial reduction in the current unit price,” Joe says. “Also, we need to be able to adjust our order up or down. We also want the right to abandon the contract at any time, with no penalty. And you’ll have to guarantee on-time delivery or else pay a big penalty.”
“Wait a minute, wait a minute,” you say. “A penalty if delivery gets held up for reasons beyond our control? A reduction in unit price? Unpredictable sales volumes? Where is this coming from? No one is paying less than you are for our components. But sales volumes will have to remain constant at least or we can’t provide customized service.”
“If you want to keep our business, you’ll have to find a way to cut prices and eliminate any delivery risk,” says Joe. “Now, listen. I promised my guys that we’d have something signed by now. What’s it gonna be?”
“Look,” you say. “Our companies have been working together for almost a decade. We ought to be able to sort this out. Your predecessor and I always put all our cards on the table. What’s going on? Is there some problem you’re not telling me about?”
“I’m sure you and Sue got along great, but times have changed. Gotta get the price down. Gotta reduce the risk. Gotta maintain flexibility. Those are the rules. Do we have a deal, or not?” Joe faces you with a smug smile on his face.
Your partner is perfectly rational but has adopted a seemingly irrational stance as part of his hard-bargaining strategy. Joe may just be pushing to see what he can get away with. If you don’t push back, he’ll keep claiming even more. This strategy is not irrational, especially for someone who has used it successfully in the past.
My Golden Rule of Negotiation says that you should treat your partner the way you’d like to be treated yourself. Negotiation theory suggests that you focus on interests, not positions; separate inventing from committing; invest heavily in what-if questions; insist on objective criteria; and try to build nearly self-enforcing agreements. This advice does not preclude making it clear that there are limits beyond which you will not be pushed. “If you can’t be more flexible, we’re done,” you might tell Joe. “No one is going to give you a better product and better service at a lower price. But if you want to look around, go ahead; then get back to me.”
If modeling effective behavior doesn’t cause your difficult partner to act reasonably, don’t despair. There are several other tactics you can try. First, to test your interpretation of events, insist on bringing others from your organization into the negotiation and press your partner to bring in colleagues as well. In addition, be sure to summarize what’s said in writing and distribute memos after each exchange. By doing so, you’ll put your difficult partner on notice that others will be aware of what he’s up to. Next, put forward multiple proposals that meet your interests very well and that seem to meet the other side’s interests at least reasonably well. Even if you don’t reach a deal, your offers will be on record. Finally, never make unilateral concessions just to appease your partner. You’ll only encourage more of the same unproductive claiming behavior.
Once Joe realizes that there are, indeed, limits to how far he can push you, he may very well temper his demands: “I know you guys do a pretty good job, but there’s always room for improvement, right? How are you going to get me a better deal?”
Your partner really is irrational. If so, all rules of normal discourse go out the window. Suppose you’ve tried all of the strategies outlined above, but they’ve failed. Joe refuses to listen to your mutually beneficial proposals and won’t be convinced by arguments on their merits. Now you’re convinced that you are dealing with a truly irrational negotiating partner, someone willing to risk everything to make sure you get nothing. What can you do?
First, prepare a written memorandum laying out several possible deals, and then set an explicit deadline for ending negotiations. Make sure to enumerate all of the evidence and arguments to back up what you are proposing, and spell out why your proposals meet both sides’ interests. Though it can be difficult, try to get the memo into the hands of your partner’s higher-ups.
If Joe refuses to make progress in your one-on-one exchange, fails to respond to a reasonable set of proposals, and remains unwilling to allow others to attend the negotiations, there’s not much reason to go forward. Through his statements, he has signaled a commitment to hard bargaining for its own sake. You’ve made a number of mutually advantageous proposals, and you’re still getting nowhere. It’s time to call off the game, break off talks, and wait to see whether Joe will suddenly back down, as hard bargainers sometimes do.
WHEN YOUR NEGOTIATION PARTNER SEEMS IRRATIONAL:
•Don’t respond to irrational behavior in kind
•Don’t make unilateral concessions to win them over
•Don’t lose your cool out of frustration
•Focus on meeting your own interests
•Prepare carefully for each interaction
•Summarize each negotiation exchange in writing
•Know when it’s time to walk away
Personally, I don’t believe that what we assume to be irrational behavior truly is irrational most of the time. Rather, experience tells me it’s more likely that people behave according to Possibility #2: they’re trying to advance their interests by shutting down the other side through hard bargaining. They may simply be bad negotiators, not irrational ones. In the final analysis, negotiating with a seemingly irrational partner isn’t so different from negotiating with anyone else you hope to lead into the trading zone, where great deals might emerge. Going around a negotiating counterpart to their back table may be the only way to help your negotiating partner get a change in their mandate or their organization’s priorities.
Sometimes, the best way of dealing with a negotiating partner who has adopted an irrational negotiating posture is to confront them with the facts and, if possible, try to involve them in a process of joint fact-finding.
FIRST, FIND THE FACTS
LET’S LOOK AT A SITUATION that is all too familiar: “The Anaconda Company,” a major manufacturer of compute
r chips, wants to build a new facility on the outskirts of a large city. Both the abutters (the people who live in the area) and regulators demand evidence that the new plant will not increase pollution or diminish property values. Anaconda’s management responds by hiring consultants who produce studies backing its claim that the plant’s negative impact on the area will be small, if in fact negative at all. Plus, the consultants cite the promise of positive economic impact, especially the creation of jobs. In the meantime, the abutters, fearful of potential health risks and financial losses, hire their own consultants, who produce a report finding that the plant will indeed pose a host of threats, including tainted water, traffic congestion, and damage to local infrastructure. In subsequent face-to-face negotiations, Anaconda disparages the abutters’ findings and presents additional commissioned studies. The abutters’ experts counter that the possible risks posed by the new plant require additional study and delay. There doesn’t seem much hope that they can find the trading zone, let alone create value for mutual gain.
What’s the way out of such a predictable mess? Peter Galison, a professor of physics and the history of science at Harvard University, defines the trading zone as a place where conflicting ideas and methods can merge into a shared understanding. He describes the ways in which scientists in distinct but related fields find a common language, or “interlanguage,” that allows them to exchange ideas and work through problems.
But in the brouhaha between Anaconda and the abutters, as in many negotiations, disagreement on facts and forecasts hinders people involved in the negotiation in their efforts to find the trading zone. Negotiators often lack the technical expertise necessary to formulate credible solutions to their disputes or find answers to questions such as: What effects will a specific action, such as a new plant, have on key constituents? How might possible effects be enhanced or mitigated? Talks are likely to remain at a standstill until answers are generated that all parties at the table accept and understand.
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