Book Summary
The book provides a usable framework for thinking and acting in negotiation. If you never get a chance to read, you will enjoy reading this summary. If you have read, this will be a good refresher.
A copy of this book was given to me when I attended a ‘Negotiation’ course at the University of Alberta’s Executive Education. Apparently, this book is recommended to MBA students in almost every business school in North America.
PART I: THE PROBLEM
1. Don’t Bargain Over Positions
Negotiation should be judged by three criteria: should produce a wise agreement if agreement is possible, should be efficient, and should improve or at least not damage the relationship between the parties.
Arguing over positions produces unwise outcomes. More attention to be paid to underlying concerns of the parties than to position. Negotiation over positions can take a lot of unnecessary time and efforts, and endanger ongoing relationship.
PART II: THE METHOD
2. Separate the Problem from the Position
A basic fact about negotiation is that you are dealing with people problems: emotions, deeply held values, different backgrounds and viewpoints, and they are unpredictable. Negotiation, not sensitive to human beings, can lead to disaster. People can get offended, angry, depressed, fearful, hostile and frustrated; their egos can be threatened.
Every negotiator has two kinds of interest: in the substance and in the relationship. But it is important to disentangle the relationship from the substance and deal directly with the people problem. To find your way through the jungle of people problems, it is useful to think in terms of three basic categories: perception, emotion, and communication.
Perception
Put yourself in their shoes. understand empathetically the power of their point of view and to feel the emotional force with which they believe in it. To accomplish this task you should be prepared to withhold your judgement
Don’t deduce their intentions from your fears. People tend to assume that whatever they fear, the other side intends to do.
Don’t blame them for your problems. Under attack, the other side will become defensive and will resist what you have to say.
Discuss each other’s perceptions. One way to deal with differing perceptions is to make them explicit and discuss them with the other side.
Look for opportunities to act inconsistently with their perceptions. The best way to change someone’s perception is to send them a message different from what they expect.
Give them a stake in the outcome by making sure they participate in the process. Even if the terms of an agreement seem favorable, the other side may reject them simply out of a suspicion born of their exclusion from the drafting process. Agreement becomes much easier if both parties feel ownership of ideas.
Face-saving: make your proposal consistent with their values. Sometimes people don't accept the proposal not because it is unacceptable but because they want to avoid the feeling of backing down. If the substance can be phrased differently so that it seems a fair outcome, they will then accept it.
Emotion
In a negotiation, quite often feelings and emotions are more important than talk.
First recognize and understand emotions, theirs and yours, and then ask yourself:
What is producing emotions?
Why are you angry? Why are they angry?
Are they responding to past grievances and looking for revenge?
Are emotions spilling from one emotion to another?
Are personal problems at home interfering with business?
Pay attention to core concerns. Remember, emotions in negotiations are driven by autonomy, appreciation, affiliation (desire to belong as an accepted member of some peer group), role (desire to have a meaningful purpose), and status (desire to feel fairly seen and acknowledged)
Consider the role of identity. As human beings we have a self perception of who we are. Pointing out failings and inconsistency can threaten their identity and sabotage the process of negotiation.
Make emotions explicit and acknowledge them as legitimate. What you and your team feel about the situation and asking what your counterpart and their team is feeling will make the negotiation less reactive and more proactive.
Allow the other side to let off steam. Often, one effective way to deal with people’s anger, frustration, and other negative emotions is to help them release their feelings.
Don't react to emotional outbursts. Releasing emotions can prove risky and can result in a violent quarrel if it leads to an emotional reaction.
Use symbolic gestures. Acts that would produce a constructive emotional impact often involve little or no cost. On many occasions an apology can diffuse emotions effectively.
Communication
Communication is never an easy thing. Couples who have lived together for thirty years still have misunderstandings every day. No matter how clearly you communicate you should expect the other side to hear something different. There are three big problems in communication:
You may be trying to impress a third party or your own constituency rather than trying to engage in negotiation in a constructive way and to work towards a mutually agreeable outcome.
You may be so busy thinking about what you are going to say next or how you are going to frame your next argument, that you forget to listen.
The third problem is misunderstanding. What one says, others may misinterpret.
What can be done about these three problems of communication?
Listen actively and acknowledge what is being said. The cheapest concession you can make to the other side is to let them know that they have been heard. You can at the same time understand perfectly and disagree completely with what the other side is saying. But unless you can convince them that you do grasp how they see it, you may be unable to get them to hear when you explain your viewpoint to them.
Speak to be understood. Don’t blame the other party for the problem. Don’t engage in name-calling or to raise your voice. Smaller the negotiation group, the better. Important decisions are made between two people in the room.
Speak about yourself, not about them. It’s a good idea to talk how you feel rather than what they did. For example, ‘We feel discriminated against’ is better than ‘You’re a racist”.
Speak for a purpose. Before making a significant statement, know what you want to communicate or find out, and know what purpose this information will serve.
Prevention works best
The best time for handling people problems is before they become people problems. Knowing the other side personally really helps. The more quickly you can turn a stranger into someone you know, the easier a negotiation is likely to become.
Negotiators must think of themselves as partners who are trying to search for a fair agreement advantageous to each.
3. Focus on Interest, Not Positions
In order to invent a wise solution, don't focus on what the other party wants, focus on why they want what they want or what’s their underlying interests. In many negotiations a close examination of many underlying interests will reveal the existence of many more interests that are shared and compatible, than ones that are opposed.
How do you identify interests?
Ask why? But make it clear that you are trying to understand their needs, hopes, fears, or desires it serves. For example, a good question can be, what’s your basic concern in wanting to lease for 3 years, not year by year.
Ask why not? One of the most useful ways to uncover interests is first to put yourself in their shoes and think of their choices. What interests of their stand in the way?
In almost every negotiation each side will have many differing interests, not just one.
4. Invent Options for Mutual Gain
To invent creative options, follow these steps:
Separate inventing from deciding
The key ground rule for generating creative ideas is to postpone criticism and evaluation of all ideas.
A brainstorming session with a few participants to come up with a long list of ideas will be helpful.
Start with the most promising ideas first and invent ways to make it better, and at last decide which ideas to advance in your negotiation and how.
Brainstorming can also be done with the other side as long as they are committed to discussing and possibly solving a problem
Broaden your options
Instead of finding one best option, find a variety of options
Examine your problem from the perspective of different professions and disciplines. For e.g. in thinking up possible solutions to a dispute over custody of a child, look at the problem as it might be seen by an education, psychiatrist, doctor, feminist, a civil rights law or any other.
Sometimes thinking of weaker options works better. For e.g. if you can’t decide on outcome, you might agree on the procedure to getting an outcome, maybe a permanent agreement is not possible but provisional is.
Change the scope of the proposed agreement. To prospective business partners, you may want to work on a small project first before you both could decide you would want to work together for a long term.
Look for Mutual Gain
Look for solutions that will leave the other side satisfied as well. Three things about shared interest are worth remembering:
Shared interests exist in every situation, they may not be immediately obvious. Ask yourself: Do we have a shared interest in preserving our relationship? What opportunities lie ahead for cooperation and mutual benefit?
Shared interests are opportunities that you need to make something out of them.
Stressing your shared interests can make the negotiation smoother and more amicable.
Many agreements are the result of differences. For e.g. in the stock market, the seller believes the price will go down and the buyer believes the price will go up.
5. Insist on Using Objective Criteria
The idea is to commit yourself to reaching a solution based on principle, interest, reason and merit, rather than will, force, threat or pressure. A constant battle for dominance threatens a relationship; principled negotiation protects it. It is far easier to deal with people when both of you are discussing objective standards for settling a problem instead of trying to force each other to back down.
Developing an Objective Criteria
At the end of the day, both parties want to feel that they have been treated fairly and had an equal opportunity. Hence, it is important to produce an outcome independent of will, and for that, you can use either fair standards or fair procedures.
Fair Standards
Suppose, for example, your car is demolished and you file a claim with an insurance company. In your discussion with the adjuster, you might take into account such measures of the car’s value as (1) the original cost of the car less depreciation; (2) what the car could have been sold for; (3) the standard “blue book” value for a car of that year and model; (4) what it would cost to replace that car with a comparable one; and (5) what a court might award as the value of the car.
Fair Procedures
Consider, for example, the age-old way to divide a piece of cake between two children: one cut and the other chooses. Neither can complain about an unfair division.
In a divorce negotiation, for example, before deciding which parent will get custody of the children, the parents might agree on the visiting rights and responsibilities of the other parent. This gives both an incentive to agree on visitation rights each will think fair.
The parties can also consider involving a third party or expert for guidance and advice. They can also ask a mediator to help them reach a decision. Or they can submit the matter to an arbitrator for an authoritative and binding decision.
Negotiating with objective criteria
Frame each issue as a joining search for objective criteria. If you are negotiating to buy a house, you want to buy at a lower price and the seller wants a higher price. Together, you both need to determine what a fair price is. Discuss the principles and then standards and procedures you will apply to come up with a fair price.
Reason and be open to reason. What makes the negotiation a joint search is that, however much you may have prepared various objective criteria, you come to the table with an open mind. A principled negotiator is open to reasoned persuasion on the merits; a positional bargainer is not. It is the combination of openness to reason with insistence on a solution based on objective criteria that makes principled negotiation so persuasive and so effective at getting the other side to play.
Never yield to pressure. Pressure can take many forms: a bribe, a threat, manipulative appeal to trust, or a simple refusal to budge. In all these cases, the principled response is the same: invite them to state their reasoning, suggest objective criteria you think apply, and refuse to budge except on this basis. Never yield to pressure, only to principle. Your goal is to insist that negotiation be based on reasoning and merits.
PART III: YES, BUT...
6. What If They Are More Powerful?
(Develop Your BATNA — Best Alternative To a Negotiated Agreement)
What do you do if the other side has a stronger pession? What do you do if the other side is richer or better connected, or if they have a larger staff or more powerful weapons? In that case, you need to meet two objectives: first, to protect you against making an agreement you should reject and second, to help you make the most of the assets you do have so that any agreement you reach will satisfy your interests as well as your position.
Protecting yourself
You must avoid the desire to reach an agreement so that you are not too accommodating to the views of the other side—too quick to go along. The greater danger is that you are too committed to reaching agreement.
You must avoid deciding on the bottom line. If you are buying a house, a bottom line is the highest price you would pay. If you are selling, a bottom line is the lowest amount you would accept. While adopting a bottom line may protect you from accepting a very bad agreement, it may keep you both from inventing and from greeting to a solution it would wish to accept.
Know your BATNA. Rather than focusing on the bottom line, the right question to ask is what you will do if you don’t reach an agreement by a certain date? If you have not thought carefully about what you will do if you fail to reach an agreement, you are negotiating with your eyes closed.
What is your BATNA—your Best Alternative To a Negotiated Agreement? That is the standard against which any proposed agreement should be measured. That is the only standard that can protect you both from accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.
Making the most of your assets
The better your BATNA, the greater your power. The relative negotiating power of two parties depends primarily upon how attractive to each is the option of not reaching agreement. Attractive alternatives are not just sitting there waiting for you; you usually have to develop them. Generating possible BATNAs require three distinct operations:
investing a list of actions you might conceivably take if no agreement is reached;
improving some of the more promising ideas and converting them into practical alternatives; and
selecting, tentatively, the one alternative that seems best.
Consider the other side’s BATNA. You should also think about the alternatives to a negotiated agreement available to the other side. The more you can learn of their alternatives, the better prepared you are for negotiation. Knowing their alternatives, you can realistically estimate what you can expect from negotiation. If both sides have attractive BATNAs, the best outcome of the negotiation—for both parties—may well be not to reach agreement.
When the other side is powerful, it’s important to establish your negotiation on merits and principles. Developing your BATNA is perhaps the most effective course of action you can take in dealing with a seemingly more powerful negotiator.
7. What If They Won’t Play?
(Use Negotiation Jujitsu)
How do you deal with the negotiation, while you are trying to discuss interests, the other party states their position in unequivocal terms. There are three basic approaches for focusing their attention on the merits:
You yourself can continue to concentrate on the merits, rather than on positions.
Focus on what they may do. It counters the basic moves of positional bargaining in ways that direct their attention to the merits. This strategy is called negotiable jujitsu.
If above approaches don't work, you may consider including a third-party trained to focus on the discussion on interests, options, and criteria.
Negotiation Jujitsu
Do not push back. When they assert their positions, do not reject them. When they attack your ideas, don’t defend them. When they attack you, don’t counterattack. Break the vicious cycle by refusing to react.
Instead of pushing back, sidestep their attack and deflect it against the problem.
Typically their "attack will consist of three maneuvers: asserting their position forcefully, attacking your ideas and attacking you. Let's consider how a principled negotiator can deal with each of these.
Don’t attack their position, look behind it. When the other side sets forth their position, neither reject it nor accept it. Treat it as one possible. Look for the interest behind it, seek out the principles that it reflects, and think about ways to improve it. To direct their attention toward improving the options on the table, discuss with them hypothetically what would happen if you accept their position.
Don’t defend your ideas, invite criticism and advice. Rather than resisting criticism, invite it. Ask them what’s wrong with the options and ideas you have suggested. Examine their negative judgments to find out their underlying interest and to improve your ideas from their point of view.
Recast an attack on you as an attack on the problem. When the other side attack you personally, resist the temptation to defend yourself or to attack them. Instead, sit back and allow them to let off steam. Listen to them, show you understand what they are saying, and when they have finished, recast their attack on you as an attack on the problem.
Ask questions and pause. Use questions instead of statements. Statements generate resistance, whereas questions generate answers. Questions allow the other side to get their points across and let you understand them. Questions can be used to lead the other side to confront the problem. Questions do not criticize, they educate.
Silence is one of your best weapons. If you have asked an honest question to which they have provided an insufficient answer, just wait. People tend to feel uncomfortable with silence, particularly if they have doubts about the merits of something they have said. When you ask questions, pause. Don’t take them off the hook by going right on with another question or some comment of your own. Some of the most effective negotiating you will ever do is when you are not talking.
Consider the one-text procedure
“If you cannot change the process to one of seeking a solution on its merits, perhaps a third party can. More easily than one of those directly involved, a mediator can separate the people from the problem and direct the discussion to interests and options. Further, he or she can often suggest some impartial basis for resolving differences. A third party can also separate inventing from decision-making, reduce the number of decisions required to reach agreement, and help the sprites know what they will get when they do decide. One process designed to enable a third party to do all this is known as the one-text procedure.”
The essence of this approach is that ‘only one draft gets prepared for both parties and gets through several revisions’. By the time both parties move towards one final draft, both are heavily invested. The final decision is either “Yes” or “No”.
8. What If They Use Dirty Tricks?
(Taming the Hard Bargainer)
People can use many tactics and tricks (lies, psychological abuse, etc.) to take advantage of you. The question is, how do you negotiate about the rules of the game?
There are three steps in negotiating the rules of the game where the other side seems to be using a tricky tactic: recognize the tactic, raise the issue explicitly, and question the tactic’s legitimacy and desirability — negotiate over it.
Try to know particular ploys that indicate deception, those designed to make you uncomfortable.
After recognizing the tactic, consider bringing it up with the other side. Discussing or simply raising a question about a tactic may be enough to get them to stop using it.
Negotiate about the rules of the game
When negotiating the rules of the game, keep the following in mind:
Separate the people from the problem
Focus on interests, not positions
Invent options for mutual gain
Insist on using objective criteria
As a last resort, turn to your BATNA (your Best Alternative To a Negotiated Agreement) and walk out.
Some common tricky tactics
Deliberate deception
Phony facts. Beware of false statements. Disentangle the people from the problem. Unless you have good reason to trust somebody, don’t
Ambiguous authority. Once you think you have come to a firm agreement, the other side might announce that they must take it to someone else for approval. This technique is designed to give them a “second bite at the apple.” Do not assume that the other side has full authority. Before starting on any give-and-take, find out about the authority on the other side. It is perfectly legitimate to inquire.
Dubious intention. If you doubt the other side’s intention about fulling agreement, build compliance features into the agreement. For example, if the other side has to make monthly payments for five years, what should happen if they miss two consecutive payments?
Psychological warfare
Stressful situation. Be sensitive to where a meeting should take place. Contrary to the accepted wisdom, it is sometimes advantageous to accept an offer to meet on the other side’s turf. It may put them at ease, making them more open to your suggestions. If necessary, it will be easier for you to walk out. If you feel stressed, ask yourself what is making you stressed? Location, room or if the place is noisy, temperate is too hot or cold. If you find the physical surrounding prejudicial, do not hesitate to say so.
Personal attacks. Other side may use verbal and nonverbal communication to make you feel uncomfortable. Recognizing and bringing it up explicitly will probably prevent a recurrence.
The good-guy/bad-guy routine. You might know about this technique from movies. The first policeman threatens the suspect, pushes him around, then finally takes a break and leaves. The good guy comes and offers the suspect a cigarette, and apologizes for the tough policeman. He says he’d like to control the tough guy, but he can’t unless the suspect cooperates. The result: the suspect tells all he knows. Similarly in a negotiation, two people on the same side will stage a quarrel. One will take a tough stand and other will make a minor concession. Knowing this game will help you to understand what they are trying to achieve.
Threats. Threats are pressure; don’t resort to threats. Feel free to tell them that you only negotiate on merits and you will not respond to threats. However, warnings are much more legitimate than threats. For example, it is appropriate to outline the consequences, in good faith, if both parties are not able to reach the agreement.
Positional pressure tactics
Refusal to negotiate. This tactic is often used as a possible negotiating ploy: an attempt to to use their entry into negotiation with an upper hand. Find out about their interests in not negotiating. Suggest some options, such as negotiating through third parties, sending letters, or encouraging private individuals like journalists to discuss the issues. Finally, insist on using principles.
Extreme demands. Negotiators will frequently start with extreme proposals like offering $175,000 for your horse that is apparently worth $300,000. The goal is to lower your expectations with a goal to get a better end result. Bringing the tactic to their attention works well ehre. Ask for principled justification of their position until it looks ridiculous even to them.
Escalating demand. Negotiation may require many agreements on different matters. Other side might agree on something but might ask you to make a concession on something else you thought you already have an agreement on. Recognize this, call it to their attention or perhaps take a break to avoid impulsive reaction.
Lock-in tactics. Other side may have announced publicly what they want out of negotiation and they will not accept less than that. Never yield to pressure, only to reason.
Hardhearted partner. “Perhaps the most common negotiating tactic used to justify not yielding to your requests is for the other negotiator to say that he personally would have no objection, but his hardhearted partner will not let him.” You can still get his agreement to the principle involved—perhaps in writing— and then if possible speak directly with the “hardhearted partner.”
A calculated delay. One side may try to postpone coming to a decision until a time they think favourable. Look for objective conditions that can be used to establish credible deadlines.
“Take it or leave it.” Don’t give up when you hear this phrase. Keep talking as you didn’t hear, or change the subject, perhaps by introducing other solutions.
Don’t be a victim
It is often hard to decide what it means to negotiate in "good faith." People draw the line in different places. It may help to ask yourself such questions as: Is this an approach I would use in dealing with a good friend or a member of my family? If a full account of what I said and did appeared in the newspapers, would I be embarrassed? In literature, would such conduct be more appropriate for a hero or a villain? These questions are not intended to bring external opinion to bear so much as to shed light on your own internal values. You must decide on your own whether you want to use tactics you would consider improper and in bad faith if used against you.
It may be useful at the beginning of the negotiation to say, "Look, I know this may be unusual, but I want to know the rules of the game we're going to play. Are we both trying to reach a wise agreement as quickly and with as little effort as possible? Or are we going to play 'hard bargaining' where the more stubborn fellow wins?" Whatever you do, be prepared to fight dirty bargaining tactics. You can be just as firm as they can, even firmer. It is easier to defend principle than an illegitimate tactic. Don't be a victim.”
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