Getting to Better Than “Yes”
Once you’ve learned how to properly negotiate, you and your counter-party will be happier.
If you visit Istanbul’s Grand Bazaar, you will quickly be engaged by merchants wishing to sell you something. You wave them away, but they nonetheless run after you, shouting “Come, I’ll make you a deal!” Eventually, you are lured into a shop. You haggle for a while, drink thick coffee, and eventually emerge with a high quality probably fake Gucci handbag.
Haggling over the price of a handbag is a positional form of negotiation that takes time and may not end amicably. Imagine spending half an hour in a merchant’s store and being treated to coffee, while you are so intransigent that the merchant becomes resentful?
What if you knew that the merchant simply wanted to make enough profit to go home happy? Or that he needs to move enough product to keep the factory discount? If you knew, perhaps you’d have negotiated differently? For example, what about keeping the same discount but buying more than one bag! This is called principled negotiation.
Principled negotiation focuses on interests rather than positions. Getting To Yes by Roger Fisher and William Ury is a great introduction, and it has been instrumental in transforming the way people think about and approach negotiations. I’m going to reference the book, but go way further.
The examples below are those of big industry and nations, because that’s what gets recorded. However, principled negotiation is for every day use. Just recently, I’ve used principled negotiation to:
- Substantially reduce a vendor’s quote. We traded to get there.
- Simplify the technical approach to a long standing regulatory requirement, based on a refined understanding of the regulators’ true ask.
- Support a new customer seeking our help, when we could barely offer it, simply by better understanding what they wanted and their own capability.
Separate the people from the problem
This guy is Alan Mullaly, former head of Ford Motor Company.
Mulally got the cooperation of Bob King, head of the UAW, and that helped Ford get a new lease on life. While the UAW had every reason to distrust auto companies, Mulally and King had to separate that distrust from the problem. Their common interest was that Ford should survive. They made a deal with significant long term upside for both parties while sharing short term sacrifice. Ford more than survived. With the help of its workers, it prospered.
These guys meeting in Doha, Qatar didn’t like each other either:
But the US wanted out of Afghanistan and the Taliban wanted in. They looked past the people at the table — who often had bad history with each other — to address the problem.
Trust
While the parties to the Doha Agreement were personally repulsive to one another, they had strongly shared interests. At other times, if parties are unwilling to recognize their common interest, a personal approach actually can be used to unlock discussion.
The Camp David Accords are a great example of first focusing on the people so that everyone could then focus on the problem. Jimmy Carter brought together Anwar Sadat and Menachem Begin, who were mutually distrustful. Only after informally sharing time did the two leaders accept that they could negotiate.
Personal enmities are further reduced by exercising mindful respect. Mindfulness means checking yourself against unconscious assumptions. If you feel you have strength, or greater sophistication, don’t deploy it. If you feel inferior, don’t show it. Approach a negotiation with humility and empathy. If the other party is violating this truce, seek to diplomatically reel them back in.
It often helps to have an arms-length participant who is nonetheless allied with you, to provide feedback on how your team is conducting itself. This is a form of team self-management that insures not just your humility but also your discipline.
Focus on underlying interests
As with the merchant, once basic needs were understood, cooperative negotiation became possible. The Reykjavik Summit offers a great example.
Mikhail Gorbachev wanted ballistic missiles banned while Ronald Reagan wanted Star Wars: the ability to shoot them out of the sky. They met at Reykjavik and — I’m not sure it’s remembered this way — made no agreement. But Reagan and Gorbachev did discover the extent of the concessions the other side was willing to make.
This improved understanding between both sides eventually yielded results. In a classic negotiation pivot, the Intermediate-Range Nuclear Forces Treaty was signed in 1987. No agreement was reached at Reykjavik due to irreconcilable positions but by looking past these positions into underlying concerns, the two sides could find a trade that was mutually beneficial: removing intermediate range nuclear missiles. With limited flight time, these missiles offered limited upside to either side; a coordinated removal of SS-20 and Pershing missiles from Europe satisfied their mutual interest.
Focusing on interests needs continual lubrication. Freely acknowledge the other parties’ concerns, showing them that you are listening and hopefully making them more amenable. Make satisfying their interest part of any solution and be explicit in how this is done.
Dig
Parties need the truth about each other in order to advance their interests. But in a negotiation, why would anyone reveal their underlying position? Rather than approach this head on:
- Ask “Why?” to encourage counter parties to reveal more about their rationales, eventually leading to their core interests.
- Asking “How am I supposed to do that?” will bring your counter party into your perspective.
- Prep, so you can more quickly understand your counter party and what they might be revealing. This prep might also include their organization’s culture. Be careful though about inferring anything based on ethnicity, national culture, or demographic.
- Track the dynamics of the negotiation. By tracking dynamics, you may be able to unearth unique cultural aspects of your counter party that are specifically relevant to the negotiation while cutting away any noise, such as personalities and culture that is not affecting the negotiation. For those of you who like physics, here’s an analogy for you: while you sometimes can’t determine an absolute reference point, you can determine distance between two points by inertial reference.
- Propose repeatedly, staying inside your safety lane each time, but switching up your offer. In this way, you can signal your true interests, plus your dear and pain points, and even which ones dial up and down together. When negotiations are cooperative, it’s ok to reveal your truth, but better to do so gradually in the manner of repeated offers, which better projects strength.
- While you are busy proposing, you also should be mapping out your counter party’s BATNA — the best alternative to a negotiated agreement — the point at which they’ll be prepared to walk away. As the negotiation proceeds, with luck you’ll have an ever clearer idea of their BATNA. Keep in mind that in a complex negotiation with many nonmonetary interests, BATNA may be tied to the monetary part, but might be adjusted by other factors, such as earn out.
Explore
Negotiations should not shy away from creativity. My standby for insuring creativity is to bring in diverse actors; seeing things differently is a surefire way to obtain interesting ideas.
Another path towards creativity is putting forward more proposals, perhaps multiple weaker agreements that might be acceptable in whole or part to either party, but which don’t achieve maximum benefit. However, this must be counterbalanced against potential harm to your credibility.
Another option is to parse the negotiation into greater and lesser. Oftentimes, side agreements can be hashed out that ease progress on greater questions. Side agreement negotiations also permit counter parties to more safely explore one another. These often have tendrils into the greater agreement, providing additional returns.
My own domain — software — frequently engages another factor: scope. It is astounding how often scope is missed, because modulating it can change the entire discussion. Fisher and Ury provide a great example, of the long-standing dispute between India and Pakistan over the use of the Indus River. The World Bank changed the scope by providing financial assistance to both countries to help them build the necessary infrastructure to manage the river’s water resources. The treaty has been in place for over six decades and is considered a significant achievement in international water management.
Conclusion
I’ve not delved into other ideas in negotiation, such as information asymmetry, framing, contrast effects, and the anchoring effect, because I consider them to be exploitative. But in the spirit of full disclosure, here they are:
- Information asymmetry — you know things your counter party does not. For example, the horse you want to sell has a secret lineage that only you know.
- Framing — you tell the other party what a great deal they’re getting. That makes them think twice about switching from this position.
- Contrast effects — an opening ask that’s unrealistic, followed by acquiescence, to show how reasonable you are. But you really aren’t.
- Anchoring effect — you start out with an offer, maybe one that’s extreme, that affects all subsequent negotiation. It’s a form of cognitive bias being introduced, that distorts subsequent consideration.
I’ve also not discussed multiparty negotiation. Suffice to say, with two parties you have just one connection but as parties increase, you have n(n-1)/2. That opens up a lot of opportunity and also additional techniques such as divide and conquer and deal protection.
There also are various obstacles to principled negotiation that you have to constantly guard against: the tendency to take positions, the pressure to concede, and the fear of losing face.
Negotiate in a way that benefits everyone and you’ll have seeded new opportunities to create value and build relationships.
