Licensed image, Let’s talk business
Nobody wants to get ripped off, yet it happens time after time to so many people. I still remember when it happened to me. I was browsing cars in a dealership when “he”, this slender, assertive, smiley and friendly sales rep, literally had me give it all for so little. From all persons, he ripped me off!!
Why did that happen? Why?
Negotiations literature blames fear, lack of preparation and a misperception of what win-win negotiations are. I invite you to join me in my overpriced ride to understand and overcome each one of the blamed factors. Here we go:
This one is simple. Alan M. Webber (founder of Fast Company magazine and a former managing editor of the Harvard Business Review) expressed excellently what goes on: “[…] fear can make us act meek and obsequious – which means that we are likely to end up with our goals unmet. Or it can make us behave aggressively and angrily – which would break down the discussion altogether”. Now that we know what fear does, the question is, how do we leave it behind? To make my point, I will borrow some of JD Shammer’s advice to overcome communications fear (negotiations are no other thing than tough communication situations):
- Practice asking for more (or less). Just as simple as that. Asking for more can be the most uncomfortable thing; sometimes words just don’t come out right. If you practice asking for more (especially how you are going to say it), you will feel much better.
- Visualize success. You need to know what you want and how much is worth what you have to visualize success. No matter how inexperienced you are, that slender smiley guy is no better or worse than you. Trust yourself and project confidence. When you negotiate, aim high and you will probably get the real value of what you have. Will this make your negotiations process tougher and longer? Probably, but just with yourself (the very first person you will negotiate with). Never underestimate what you bring to the table.
- Remember, you are the owner of your time. Don’t let anybody put a ticking bomb in front of you. If it happens to be there, you can always ask for a longer deadline, do a counter offer or simply use the famous “Farpoint Gambit”. The tactic is so good that I have to include the classic Startrek dialogue that explains it (isn’t it awesome? Robert J. Robinson found the concept’s origin in a TV show): Unfair, crazy alien judge questioning the captain of the Enterprise says to bailliff: “Bailiff, if the next word out of the captain’s mouth is anything but guilty, kill him!” Right after that, he turns and asks the captain: “Defendant, how do you plead?”. The captain thinks for a moment and then says: “Guilty”. As the courtroom gasps (and after an inevitable television commercial break), he adds, “Provisionally”. There it is, the Farpoint Gambit at its best.
- Remember, business no matter how cozy it gets, is always business. No matter what happens or how much time you have spent in a negotiation, you can always walk away.
Lack of preparation
We slightly touched the item when I talked about practice, however, preparation is much more than that. In a nutshell to be prepared you have to:
- Do your research (a LOT of research)
- Know what you want and know what the other party wants
- Know who you are negotiating with (in my case, I should have known that I was talking with a car seller, not a pal that happened to sell cars and that was willing to give me the “greatest deal”)
- Know what your BATNA is (best alternative to non-agreement), it will tell you when is right to walk away
- Have a plan. The plan shall include a purpose (what do you want to get out of the negotiation?), an agenda (what items are you going to cover?) and a pace (how long is it pertinent to negotiate?)
- Find the right framing. It is different to say “I am looking for a mini-van for my family of five” than saying “I have a family of five and I want to see if I can afford a mini-van”
A misperception of what win-win negotiations are
Win-win negotiations are not negotiations where both parties get what they want. Win-win negotiations are negotiations where both parties get what their negotiated items are worth.
When we negotiate, we have to make sure that our side of the win-win equation is calculated correctly. I can’t count the number of individuals I have seen give away the store (including myself), just because they forgot to look outside of themselves or of their own internal valuation of things. A win is not just getting what we want, a win is getting what our side of the table is worth to the market, even if our side of the table is worth nothing to us. In the case of my car, paying $500 extra dollars for the tire insurance felt like nothing in the greater scope of things (It now hurts to think that such insurance was not worth that much).
[I need to insert a note here: Sometimes the market doesn’t recognize the value of what you have and you have to settle just with what you want instead of with what the asset is worth. That’s ok, in those situations, you just need to do every effort to embed the contracts with clauses that allow you to get back what was given away if it ever becomes worth more.]
Easy right? And yet, I failed… if only I had known then what I know now. But oh yes! Rest assured, in this world, there is no other person that enjoys more buying a car than me. It is not a matter of transportation, it is a matter of honor.
Webber, A. How to Get Them to Show You the Money. Issue 19, Oct 1998. Fast Company Magazine.
Robinson, R. Defusing the Exploding Offer: The Farpoint Gambit. Negotiations Journal. July 1995. Kluwer Academic/Plenum Publishers.
Lewicky, R. et. al. 2003. Negotiations: Readings, exercises, and cases. McGraw-Hill.
JD Schramm. How to Overcome Communication Fears. Academia posting at the Harvard Business Review Blog. Mr. Schramm is Director of the Mastery in Communications Initiative at Stanford’s Graduate School of Business