189. Conducting Effective Negotiations When You HAVE TO Have The Deal

22 takeaways from this lecture:

00:00:40 Rule number one in effective negotiations:

Don’t put yourself in a position where you HAVE TO have the deal.

00:08:07 Negotiation can be defined as “getting what you want at a price that is acceptable to you.” Communication can be defined as “an informal process of give and a take.” Meaning who you are and where you are in life at this moment is based on your having accepting the deals which you have been offered.

00:10:04 Amateur and inexperienced negotiators define successful negotiations as getting the best:

• Price
• Terms
• Time frames and deadlines
• Warranties
• Remedies in case of errors or breaches of contract

Mature and experienced negotiators define successful negotiations as:

• Achieving the objectives you had set prior to the negotiation
• How well you manage the environment and situation surrounding the negotiation
• All parties involved leave the negotiation with mutual respect.

[EDITOR’S NOTE: For more on this process, watch the lecture 20 Tips to Better Negotiate Your Job Offer & Compensation Package by Deepak Malhotra at Harvard University.

Also, check out the extremely informative books:

• Defending Your Brand: How Smart Companies use Defensive Strategy to Deal with Competitive Attacks by Tim Calkins.
• What They Don’t Teach You At Harvard Business School by Mark McCormack]

00:13:14 Some underhanded techniques negotiators have used include:

• Over-feeding the other negotiating party with plenty of water and food, and then keeping the negotiation going as long as possible to limit bathroom breaks.
• Using the other party’s travel constraints to their advantage.
• Conducting multiple negotiations with competitors, and when approached they claim “I had no idea my company was doing this.”
• Making the room physically uncomfortable, such as smoking heavily in a poorly ventilated room, or making sure the sun shines directly into your eyes.
• Using unnecessarily strong or abusive language.
• Being very polite and accomodating with you face-to-face, but then going behind your back and doing what they want without regard to what you negotiated.

There are many productive ways of dealing with such underhanded negotiators and their techniques, such as:

• Publically calling out the negotiator and/or the deceptive tactic. For example, during a cross examination in the court of law an angry lawyer may get in your face and scream “Why did you cause this problem!” However, in the official court transcripts, the emotionally-laden context will be removed and only the lawyer’s question “Why did you cause this problem?” will remain. So if you respond with the same emotional response to the question, the transcripts may tell a different story about you after the fact. If however, you calmly respond “Why are you raising your voice and leaning into my face?” The context goes on the record.
• Asking inoffensive, information-seeking questions to better understand the situation is very effective in diffusing and overcoming manipulative tactics.
• When planning your negotiation timeline, secretly allow for an extra day or two extension so if other party attempts to use your deadline against you, you can turn their technique back around against them and say “Well, I’ve already missed my return ticket home, so we might as well stay all night and work on this until it is finished.”

00:14:01 The consequence is perhaps the same – you resent the negotiator in front of you, however a distinction should be made between:

• Incompetence – when a negotiator unintentionally uses manipulative tactics
• Bad faith – when the negotiator intentionally uses manipulative tactics against you.

Any negotiator who learns and relies on manipulative tactics to get deals done may get a good deal in the short-term, but its highly unlikely that that deal will lead to a durable, long-term and mutually-beneficially relationship.

Effective tools to successful negotiation:

00:22:36 Make sure you’re negotiating with the right party. It’s perfectly reasonable to ask about the decision-making structure in the other party’s company before you begin negotiating, that way you can plan your concessions accordingly.

00:23:08 Demonstrate you’re a trusted negotiator through your character, competence, and power.

If you will be conducting multiple negotiations with a company or a particular negotiator, it’s worth taking the time to develop rules you will each abide by when conducting negotiations. This will ensure they run more smoothly, everyone benefits, and that there will be no unnecessary surprises.

[EDITOR’S NOTE: From a human behavioral biology point of view, watch Robert Sapolsky’s lecture Where Game Theory & Evolution Collide at Stanford University for a list of tit-for-tat negotiation strategies to protect yourself during serial negotiations.]

BUT! Think very carefully about your reputation and what you want to be known for. If you develop yourself as a win/win, risk-averse negotiator, then the other party may use that to their advantage by threatening you and creating a situation where they know you won’t want to damage your reputation over.

Every strength can become a weakness if you put it into the right context.

00:23:42 Know your and the other party’s BATNA (Best Alternative To A Negotiated Agreement): What would you do if this negotiation falls apart? Knowing this gives you an alert when your negotiation has reached a point where you could find a better deal elsewhere.

Don’t be self-centered; thinking only of yourself. Do your research and estimate the other party’s BATNA, that way you have a better idea of how to start your negotiations and gauge their reactions.

00:24:54 Internalize Fisher and Ury’s map. Fisher and Ury’s books Getting To Yes: Negotiating Agreement Without Giving In ;and Getting Past No: Negotiating In Difficult Situations are must reads for every negotiator. Competent negotiators will have studied these books, and competent negotiators can tell if you have studied these books or not.

The five fundamentals of Fisher and Ury’s map:

1. Separate the people from the problem. Don’t blame the other parties for things they are bringing to the table, but aren’t necessarily guilty of having done.
2. Know your and the other party’s BATNA
3. Focus on interests, not positions. See the other party’s intentions and desired end results, not just what they are arguing.
4. Invent options together for mutual gain.
5. Seek out objective criteria, and base your negotiated outcome against these criteria.

00:25:02 Distinguish battles and wars. Some negotiation points are more important than others, and some negotiation points you should be willing to give up and give away for the sake of the total negotiation package.

You must decide when it is the right time to do so, but it’s possible that simply starting the negotiations by transparently stating what you want at the price you want may be the best way to get what you want, both in the short- and long-term.

Internal negotiations can be the hardest to manage because if the outcome isn’t win/win, then it will probably be lose/lose because nobody wins in an internal conflict.

00:26:32 Be aware of them, but don’t worry too much about manipulative tactics. You can learn things about the situation, the negotiation, and your negotiator with every communication. Observe it, note it, and use it to your advantage.

00:27:20 Understand the other party’s needs and wants. This enables you to propose a solution and a story which justifies your solution so well that makes it nearly impossible for the other party to disagree with.

There will inevitably be times when you do not share the needs, wants, culture, and perhaps even the ethics and morals of the other side. In these cases you may even question whether or not the negotiator is being forthright with you or manipulative, is experienced and intentionally being manipulative or is amateur. Possible solutions are to:

• Find other people within the company to negotiate with (assuming from above that there are in fact other people in the company with the authority to make negotiating decisions, otherwise you’d be wasting your time).
• Point out the fundamental differences and see if all parties can get to a deeper level, look beyond your differences, and find a common ground on which to negotiate business transactions. A simple and honest question “What would it take to be able to do business together?” would reveal a lot about how exactly you can bridge those cultural, personality, ethical and moral gaps without losing respect for one another.
• If all else fails, never put yourself into a position where you ONLY have one person to negotiate with (no other BATNA) and thus HAVE TO strike a deal with this person, or else. It’s not always feasable, but the more options you have, the better.

[EDITOR’S NOTE: For more on intercultural relationships, watch:

• My lecture Managing Age, Culture & Personality Differences, Jerks & Assholes.
• Matthew Hill’s talk The Cost of Expatriate Failure
• Armin Trost’s lecture Local to Global Human Resources Department Models.]

00:50:50 A negotiation really is nothing more than a simple conversation; and you probably talk to people informally all the time. In this case, any agreements you make should be “durable,” meaning that it lasts as long as it is supposed to without ending in a lawsuit or accusations of a breach of contract. Durability is directly related to the amount of trust you have developed with all involved parties.

Build up enough trust during the negotiation – and even with a reputation beforehand, and the first thing parties will do is call each other, not immediately call up their lawyer and see what the legally-binding documents say.

[EDITOR’S NOTE: For more on the strategy of conversation, watch:

• My lecture How to Introduce Your Startup So Investors Want to Invest
• Think Fast; Talk Smart: 4 Effective Speaking Tips In Spontaneous Situations by Matt Abrahams at Stanford University.]

00:52:30 In a negotiation you’re not just accountable to yourself; you’re accountable to everyone in the negotiation as well as those affected by the outcome of the negotiation. Taking the other side for all they are worth could lead to 200 people from the other party losing their job. Likewise, taking into consideration how others would be affected can be a useful argument for you at the negotiation table.

00:53:28 In Poker, bluffing is a normal part of the sport because other than the tells you give off, you are certain the other players do not know your hand. In negotiations, however, you have no idea how much the other party knows, whether or not they have trusted sources inside of your company or have employed economic intelligence experts to investigate you behind the scenes, and what internal information and documents you believe to be confidential is actually public information.

Therefore, in negotiation, bluffing should be considered a fool’s game. One bad bluff, and your reputation is ruined.

00:54:24 Good negotiators and communicators study you to identify your baseline – how you communicate verbally and non-verbally under normal circumstances. This makes it easier for them to recognize when you are positively or negatively interested in a position.

Being able to read people’s body language is an important tool to effective communication. Your body language is also difficult for you to control.

A person who calmly and seriously says “I will never do that” will sound much more convincing than a person who throws objects, stands up and walks out, curses and says “I will never do that.”

The message you want people to receive is that you are serious and that you mean what you say; not that you’re some unpredictable, bad ass wild card.

But, people are also measuring you by your level of authenticity. So work to control your emotions and stay rational, but don’t try to become someone you are not, because it will show. Modulation is key.

00:57:40 Intermediaries can be useful because they can smooth over misunderstandings and ensure you are not so involved in the process that you lose sight of your goal, but be aware of the reputation of the intermediairies you choose to work with, because they are an extension of your reputation as a negotiator.

Conduct as many face-to-face meetings at the beginning of every new relationship as possible. It’s more work in the short-term, but less work in the long-run.

[EDITOR’S NOTE: For more great information on the worth of a good lawyer and what to negotiate when working with companies, watch Mike Monteiro’s talk F*ck You, Pay Me at Creative Mornings.]

01:01:11 Be likeable. Other people may hate what you’re offering them, or know that they’re not getting the best negotiated deal, but if they cannot find a reason to hate you, they will like you, and you will get more out of your negotiations more frequently.

Treat every negotiation like a marriage.