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Negotiation Blog - Assumptions
Why don’t we start high enough in negotiations with our opening offers?
By Thomas Wood
All good negotiators know that their opening offer should be
- Assertive (but not so aggressive as to be thought ridiculous)
- Achievable (even if rarely achieved)
- Reflective of your ideal outcome
Yet, more often than not, we don’t open high enough (or low enough depending on your perspective). Knowing why this happens helps us avoid making this mistake.
A group we worked with recently identified five factors at play:
- No patience: Several team members felt the result of the negotiation was inevitable, and didn’t want to waste time starting high only to arrive at some expected middle ground. But those in the group who started at the middle ground ended up at their walk-away position.
- Untested Assumptions: Some folks started as high as was reasonable under assumed circumstances, only to realize later that if they had discovered some interesting facts earlier, they would have felt comfortable asking for more from the start.
- Anchoring: Others reacted to their counterpart’s opening offer. They adjusted their own first offer based on their counterpart, rather than based on the facts and circumstances known to them. This is what we call being “anchored down” by the other side.
- Competing needs: Some in the group struggled with competing interests: They didn’t want to risk harming an otherwise good relationship by an assertive offer when in truth they would be satisfied with less. This need to be liked, or be seen as cooperative, competed with the best practice of opening at a more desirable outcome.
- Negotiating with yourself: Two people planned to open with better but still reasonable terms, but at the last second they predicted the other side’s reaction and lowered their offer. They literally negotiated against themselves.
All of these factors are common mistakes. Remembering that a negotiation is a dialogue with an outcome in mind is the first step. Racing to the end eliminates the potential for either side to develop mutually beneficial solutions. Test assumptions with your counterpart, and not in your own head. And stick to your plan until you learn information that justifies a new strategy.
3 Common Mistakes in Negotiations with Neighbors
By Thomas Wood
Are you “on the fence” about your neighbors? I train seasoned business professionals to negotiate in a wide range of industries and professions, and it never fails that I get asked to help with someone’s latest negotiation problem -- not with a key customer or difficult supplier -- but with a neighbor. Everyone has a story to tell! Learn from the mistakes even I succumbed to in neighbor negotiations.
You don’t get to choose your neighbors, and you don’t have to like your neighbors. But unless you are a billionaire like Mark Zuckerberg and can purchase your neighbors' properties in order to protect your own privacy and view, you will have to deal with your neighbors. Here's my tale of hard lessons learned.
My wife and I bought a house next door to a sophisticated widow of considerable wealth - we called her "Lady H." Lady H had previously owned our adjoining lot, with her house being grand and ours being, well, quaint - a more modest guest-house. Lady H lived alone in her old age and wealth, and barely recognized the existence of my family despite our attempts to win her over with fresh picked blue berries and smiles across the lawn.
Years earlier when Lady H owned both parcels, she had a fence placed near our joint property lines but located squarely on my parcel – a chain link fence that was now in disrepair and unsightly. My wife and I were ready to upgrade our property, and assumed that Lady H would appreciate the investment, as it would add to the value of her property as well. We decided to tackle the thing most unbefitting to our properties – the rusted chain link fence on our parcel.
As an expert negotiator who coaches others, I knew exactly what to do – prepare my options and strategies before negotiating a deal with Lady H. We did our research and formed our strategy, and then dropped by to see Lady H. I told her we were taking the old chain link fence down, and handed her a brochure that showed fences with the same open air view as her chain link fence, but added sophistication befitting her estate. While my wife and I were ok with all the options, I didn’t share that with her, as I wanted to see what Lady H wanted first. I had planned to then reluctantly accept her fence preference in exchange for several other things we wanted, like for her to have a dead tree on her property taken down that posed a threat to our safety.
I was ready to discuss options and begin some give and take, but she cut the conversation short. Pointing to the most expensive option, a decorative iron fence, Lady H nicely said, “I like this one. Do what you need to do,” and thanked me for coming by. I was surprised, but pleased at least with the efficiency of our “negotiation."
When our new and very expensive iron fence was installed, I was thrilled. We could see each other’s lovely gardens but without having to look through the eye sore of that rusted chain link fence. My satisfaction was short lived.
A week later, Lady H installed a taller, builder-grade, wood privacy fence on her property, abutting and completely overshadowing the new iron fence. What had I done wrong? Everything, pretty much!
First, know your neighbor's true interests.
I didn't bother to learn Lady H's interests - why she wants what she wants. It turned out that Lady H regretted having sold the adjoining property because she now had a young noisy family that liked to spend time laughing and playing outside - ours. Lady H had grown older since the days when she had installed that chain link fence, and her interests had changed; she now wanted quiet and privacy.
Second, understand who you are dealing with.
Lady H could have simply proposed a privacy fence, and not had to spend her own money to get the privacy she wanted. Why didn’t she? Easy to see why in retrospect:
- Lady H didn’t share her interest with us because we had no relationship (see the 2nd article in this series coming soon), and I didn’t bother to ask her what mattered to her. My assumptions about what mattered to Lady H proved entirely wrong.
- I underestimated Lady H’s ego need to control her surroundings. I opened with our decision to take the chain link fence down, when I could have just as easily met her outside and, while not invading her side of the fence, showed her that time had taken its toll on that fence and simply asked if she'd like to see it in better shape again. I could have begun a conversation rather than take control. My ego bruising led Lady H to take revenge rather than discuss a solution.
- And last, Lady H’s plan B (BATNA) was very strong (and I didn't bother to think she had one since the fence was on our property); she had resources to out maneuver us. From her side Lady H would now see the nice side of her privacy fence. And she didn't really care that from our side we saw our investment erode, with the ugly side of her privacy fence pressed against our new iron fence.
Third, to negotiate a solution requires collaboration.
I did not trade value to reach a mutually beneficial solution, which is how you capture value in collaborative negotiations. When the other party says “Yes” right away, you can be sure that either you did a great job of convincing them, or like in my situation, you are being outmaneuvered. Maybe you unwittingly offered them more than they ever thought they could get, so they jump at your offer, or maybe like Lady H, they have a strong plan B that they are ready and willing to implement. A quick and easy win in negotiations usually turns out not to be a win at all.
With neighbors and in business, knowing the other party's ego needs, interests and BATNAs, engaging in a collaborative conversation to solve your interests and theirs by trading for value – determines whether you actually get what you want. Robert Frost's famous line - Good Fences Make Good Neighbors -- perhaps should have been Good Negotiators Make Good Neighbors.