Management Wednesday

Management 101 - Negotiating

Observe yourself negotiating

The more time one spends preparing is directly related to win/win results

People undervalue value creation opportunities.  

Once again, People undervalue value creation opportunities

However, value creation and distribution are hard areas to get right

There is a tension between creation and distribution

Beware, one can exploit cooperative behavior. 

Do not be aggressive.  Aggressive behavior can spiral downward.

Act with purpose, not reactively.

 Think of negotiation as teaching.  Teach others why you are right.

 Explicit discussion helps

 Maintain a separate relationship from substance

 NEVER try to buy the relationship

 Unconditionally offer a great relationship

 Be easy to work with

 Be trustworthy

 Be respectful, polite, kind, cheerful, etc….

 If one is the seller, ask questions.  Attempt to ask significantly more questions than statements.

 ACTIVE listening skills - Talk to them as if they were a friend

 Ways to encourage active listening - Silence, Minimal encourages, Paraphasing, Emotional labeling, Summarizing, Open questioning, and, lastly, I statements.

<RANDOM tidbit> If you deal with kidnappers, make it a pain in the ass for the kidnappers to get your money.  Most mexicans, columbians, and the sort kidnappers will not deal with americans due to the pain induced by the FBI etc.  “You want me to sell my house?  Oh, ok. I talked to my realtor and says that it isn’t a good time to sell.  I can send you all of the money in my checking account….”

 Find out their interests

 Ask about them, what they want, their interests - Make sure to see what they talk about and how long. Give them the freedom to talk.

 Suggestion options, ask for criticism - ask them to criticize your idea.  “What are the problems with my idea?”

 Tell them what you think their interests are - offering them a draft that they can markup

 Tell them your interests.

 Give them a role in problem-solving - think of them as a role in a movie where they get to solve the problem, being the hero of the movie -  we can do the password like this or we can do it like that.

 Knowing interests typically helps the relationship

 Give them time to find solutions.   “I do not need an answer now but lets think about how to solve this….”  If there is no answer in some acceptable time frame, then take charge….

 Generate options - make sure to control the negotiations.  Do not loose control.

 IF one can control the negotiations, he/she can influence the attention.  Never ask THE question, aka “Do you want to buy a car?”

 Invent creative ideas for each issue.

 Invent in preparations and in negotiations - Talk about options each side agrees in.

 Explicitly disavow commitment.

 Encourage stupid ideas

 Rearrange packages to add value

Present them with choices - would it be better for you to do it this way or that way?  Listen, I have three ways to satisfy my needs and requirements.  What do you prefer?

 If one is able to model the negotiations in a simple manner with weights and measures, use Pareto Efficiency modeling.

 At the onset of the negotiation, look for high and lows.

 Ask yourself, “How we can earn trust at the start?”

 Read a few of the papers by Kathleen McGinn -> You will see those with no emotional baggage or ties win overall.  This emotional game is nested in every negotiation with every situation.  MAy make people more easy going.

 One can use the Ultimatum game to show Humans are irrational.  Economists/negotiators HATE this and need to recognize this.  Most people are irrational because it is worth some value of resource to punish the other person.  Rather rational behavior ;-)

 Study Nash Equilibrium then realize it doesn’t hold true.  Humans have a sense of reciprocity.  Gender and moral/cultural norms override Nash’s equilibrium.  

 Lastly, insist on fair criteria

  The Fair criteria should be independant standards which suggest what the outcome should be.  

 Beware, fair criteria can be used as a sword - “Here is why this is fair..” and/or as a shield - “How can I explain to my boss why that is right….”

 Truly, how do I know this is fair?

 Your other party will be open to persuasion if they see that you are


 The same agreement is worth more if it comes with a story of why we won

 Embrace stupidity as a tactic