The following is a summary of Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond by Deepak Malhotra & Max Bazerman
Pre-negotiation
- Exhaust all pre-negotiation sources of information.
- Identify your assumptions as well as what you do not know.
- Create a scoring system so that you can quickly and objectively compare the value of offers spanning your multiple interests
- Evaluate the zone of possible agreement (ZOPA) as the range between the reservation value of your best alternative to a negotiated agreement (BATNA) and your counterpart’s BATNA. In other words, this is the range between the least value the seller will accept and the most value the buyer will give.
- Determine & write down your aspiration value, the most value the seller can justifiably expect to accept or the least value the buyer can justifiably expect to give.
- Formulate a pre-planned exit strategy in the event you cannot reach an agreement. Decide, in advance, how much money and time each was willing to spend to try to win.
- Know when not to negotiate – when your BATNA stinks ( and everyone knows it ), when negotiation would send the wrong signal to the other party, when the potential harm to the relationship exceeds the expected value from the negotiation, when negotiating is culturally inappropriate, or when your BATNA beats the other side’s best possible offer.
During negotiation
- Only if you have objectively superior information, make the first offer of your aspiration value so that you can establish an anchor. Share your justification and dwell on the anchor to make it more powerful. Your first offer should be outside of the ZOPA – one that you know the other side will not accept.
- If the other side makes the first offer, first separate information from influence, then counteroffer with your original (or even more aggressive) aspiration value. Avoid dwelling on their anchor. If their offer is not even a basis for starting the discussion, then give them time to moderate their offer without losing face.
- If your counterpart makes an offer you love or are positively surprised by, you should still take some time to ponder it (What do they know that you don’t?) or even ask for additional concessions. Satisfaction has less to do with how well someone actually negotiated and much more to do with how well they think they negotiated.
- Focus on your aspiration value and their reservation value
- Seize every opportunity to create value by ‘logrolling’ – the act of making trades across multiple issues. If the other party values something more than you do, let them have it — but don’t give it away, sell it.
- Negotiate multiple issues simultaneously with package offers.
- Make multiple offers simultaneously – esp. in the likely event that you do not know their true interests and needs. If they do not accept either, then ask, “Which offer is closer to something you might accept?”
- Be comfortable with silence in general and especially after making each offer or counteroffer.
- Ask questions, esp. “why” questions, to test your assumptions and to identify their interests and priorities.
- Seek to identify and reconcile differences (not demands). Demands are opportunities to learn about the other party’s interests and needs to that you can create and capture value.
- Avoid making unilateral concessions. ‘Label’ your concessions as costly to trigger reciprocity. Even better, specify what you expect in return. You can also make contingent concessions, for example, “I can pay a higher price if you can promise me early delivery.”
- Protect yourself with contingency contracts – agreements that leave certain elements of the deal unresolved until a future event (ex: on-time bonus paid to the seller or over-time penalty paid by the seller).
- Here are a few of the negotiable issues that you can introduce into the discussion the next time the other side appears entirely focused on price: delivery date; financing; quality; contract length; last – look provisions; arbitration clauses; exclusivity clauses; the level of service support; warranties; future business.
- Build trust by sharing information regarding your priorities across different issues (though don’t necessarily say which ones you don’t care about since you can use those for concessions). This will trigger reciprocal information sharing. However, you should rarely give away your reservation value, and certainly not early in the negotiation.
- Avoid negotiating under time pressure. Partition the negotiation across multiple sessions. Similarly, give others time to think and prepare since that will facilitate value creation.
Post-negotiation
- When the negotiation is over, shift your focus to your reservation value so that you feel better about the outcome
- Realize that your negotiation should not end when the deal is signed — it should end when you feel that you have exhausted all options for value creation.
- Don’t let negotiations end with a rejection of your offer. At the very least, ask “What would it have taken for us to reach an agreement?”
- Debrief multiple negotiations simultaneously. Negotiation geniuses make it a habit to review important negotiations after they are completed.
Bias & Influence
- Fixed-pie bias: It is always better to first try to enlarge the pie. In the process, do not denigrate or devalue the other party’s concessions.
- Vividness bias: Avoid overweighting vivid information that comes up during the course of the negotiation by falling back on your pre-negotiation scoring system and by separating information from influence.
- Non-rational escalation of commitment: Anticipate and prepare for the escalation forces you are likely to encounter.
- Susceptibility to framing: We are risk-averse when thinking about gains and risk-seeking with thinking about losses. Hence, use loss-framing against your counterpart – for example, “You will miss out on the opportunity to have X if you do not increase your bid.” But, process their offers in your mind by gain-framing.
- Biases of the heart: Try to imagine what you would believe to be fair if you did not know your role in a given negotiation or dispute
- Disaggregate their gains (ex. Space out your concessions) and aggregate their losses (ex: make comprehensive demands)
- Door-in-the-face technique: Make an extreme demand you expect will be rejected so your counterpart accepts a moderate one that you make soon after.
- Foot-in-the-door: Make a moderate demand you expect will be accepted then after time has passed, a more extreme one. This takes advantage of consistency bias.
- Leverage the power of justification (I am asking for X because …)
- Leverage the power of social proof
- Take the Implicit Association Test (IAT) on Harvard University’s website http://implicit.harvard.edu
Mindset / Other
- Consider the context of the relationship – your goal is to get the best possible package deal while strengthening the relationship and your reputation.
- Don’t dismiss anything as “their problem” since their problem quickly becomes your problem.
- Build trust when you’re not negotiating. Your greatest opportunity to build trust comes when your cooperative, benevolent, or ethical behavior cannot be interpreted as self-serving.
- Before & during negotiation, assign and reward a “devil’s advocate” who has no stake in the outcome and whose job it is to criticize your decisions and find faults in your logic.
- Consider the impact of their actions on others and to think through the competitive dynamics that will result from their strategy. Competitors often fail to assess the strength of their competition when deciding whether to enter a market — an extremely costly mistake.
- We need to think through the decision rules, constraints, and politics of the other side.
- To eliminate the motivation for your counterpart to lie, (a) look prepared (b) signal your ability to obtain information, (c) ask less threatening, indirect questions, (d) don’t lie. To detect a lie, look out for responses that do not (completely) answer the question you asked – when misleading others, people still strive to technically tell the truth. If you catch someone in a lie, give them a face-saving way out.
- It is best to give the other side the benefit of the doubt — but to also be more careful as you move forward
- When negotiating from a position of weakness: (a) don’t reveal that you are weak (b) leverage their weaknesses (c) leverage your distinct value proposition = your strength (d) consider relinquishing what little power you have and simply ask them to help you – ex: “I gratefully and unconditionally accept your job offer but ask that you look at comparable salaries from our career services offers and consider an adjustment” (e) build coalitions with other weak parties (f) attack the sources of their power – ex: ‘Pledge-a-picket’ program where clinic asks supporters to pledge donations on a per-protester basis
- Be very careful labeling someone as “irrational;” instead, strive to understand their information gaps, interests, needs, constraints, and perspectives. If you do not give an angry negotiator the opportunity to voice his frustration, he will likely become even angrier — or, at the very least, resentful. When the other side is angry, do not allow yourself to be the target by taking it personally.
- To deal with threats and ultimatums, you can either (a) ignore the threat (b) neutralize the threat by being the first to voice their concern (c) let them know if you don’t find the threat credible in a way that helps them save face.
Negotiation examples/exercises mentioned in the book
- Hamilton Real Estate case
- Mom’s Inc.
- Auction off this $100 bill where the 2nd highest bidder must also pay the amount he or she bids
- Pledge-a-picket program