We feel smarter when talking. But studies show that people who listen more are usually considered to be smarter than people who talk a lot.
Negotiation Blog - Hardball
Can you shift your negotiating counterpart from hardball to collaborator?
By Marianne Eby
Getting your negotiating counterpart to turn collaborative is no easy task. One strategy is to diplomatically confront the behavioral problem by offering your hardball counterpart a chance to save face and proceed on a more collaborative path.
Last month I received a Need Help Now call from a former workshop participant (let’s call him John) who was struggling with an extremely difficult negotiating counterpart (let’s call him Jessie) from an important customer. John reported some success to me today.
Jessie constantly made demands and focused on penalties for late deliveries, but John felt sure that if Jessie would just discuss the situation more openly, they could solve the problems they were having with delivery expectations and compliance. John felt attacked from the start of any conversation with Jessie, and although he promised himself he wouldn’t do so, ultimately he would respond in kind, thus escalating the tension between them.
We discussed several strategies to turn Jessie into a more collaborative negotiator, at least in his conversations with John.
When the next delivery problem occurred, John tried the first strategy -- to model collaborative behavior. Rather than respond directly to Jessie’s accusations and demands, he posed possible solutions and suggested alternatives. He was persistent, but seemed to hit a brick wall. As we had planned, though, he ended the conversation in a friendly tone and promised to look into the situation and call back tomorrow.
When John called Jessie the next day, he tried the second strategy -- he confronted the behavioral problem rather than move straight to the delivery issues on the table. He told Jessie that he was really glad to have this chance to talk with him again, because he realized now why their conversations might have been so tense, and that he hoped he could do his part for them to find a better approach. He told Jessie that he read some recent press about his employer, and saw that there had been a lot of layoffs recently. He could understand if there was a lot of pressure on Jessie to deliver results, and he wanted to find some solutions so that the problem with late deliveries would end. He asked Jessie if he would work with him to make their conversations more productive.
John reports that he and Jessie started talking about the layoffs, and Jessie’s worries that he could be next. What followed was their most productive conversation about how to solve the delivery timelines. By the end of the conversation, Jessie actually apologized if he was difficult to deal with, and thanked John for working the problems out with him.
Prevent An Ambush: Five Tips
By Marianne Eby
In a recent seminar, a client described a negotiation crisis he'd had: at a meeting he believed was going to be an information exchange with his wholesaler, he was ambushed: without warning, the other side brought a team of eight from his company, made a lowball offer, and then announced that they no longer needed our client's business. What to do?
Our client was less stunned than he might have been -- the same person had pulled the same stunt two years before. Why was our client still doing business with him? A surprise attack is for competitive, not collaborative negotiations, since it tends to sacrifice the relationship to the outcome. And indeed, our client had avoided contact with the bully after the last deal, believing he would be gone by the time the contract needed renegotiation. Ending the relationship was difficult, because the bully's company had become our client's sole source of distribution.
When you have to negotiate with a bully, here are five tips for preventing and defending against a surprise attack:
- Keep Working on Relationships. Like nasty neighbors, hostage-takers, dictators, oligopolies, and sole-source suppliers, a wholesaler who is has a large portion of your market is difficult because you can't avoid them -- you have to find a way to have a relationship with them. Prior to bargaining, work harder than you otherwise might to find affiliations, make gestures of friendliness, and get to know other people on the team and in the company. Even if you find the "bully" difficult to deal with, you will get to know him or her better, which will help you anticipate tactics and resist the angry reaction that a surprise attack can trigger.
- Build a Strong BATNA. Your BATNA is very important in this kind of negotiation, because it is more difficult with a sole distributor. Finding alternatives to a deal with your main distributor requires a lot of probing, conversation, and relationship-development with other potential wholesalers and retailers. You may be able to negotiate with second-tier wholesalers, or plan an "end-run" around the bully and offer a deal directly to retailers. Do this legwork before an information exchange.
- Develop a joint agenda. Get the other party to agree ahead of time on what will be discussed in a meeting. If an ultimatum or something comes up that you didn’t discuss when you negotiated the agenda, remind the other side that their new item is not on the agenda both parties agreed to and will have to wait for the next session.
- Focus on Interests. One way to help distract from the hostility or negativity created by a tactic like a surprise attack is to focus on your own interests, and on the legitimate interests of the other side. What is the real reason for the hardball tactic? What do you really need out of the deal? Consider your BATNAs and the possible BATNAs for the other side.
- Manage emotions. If you find yourself faced with a surprise attack despite your attempts to prevent it, it will be critical to keep your cool. Anger blurs thinking. Our client wisely did not respond to his counterpart's ambush and mostly kept his cool -- then went to gather intelligence about the other side. He found that the bully had treated a number of other companies to a similar tactic, but had not met with most of them. Thus our client discovered he had more bargaining power than he realized.
Our client's plan after our discussion was to circle back to other retailers and wholesalers and explore his options and strengthen his BATNA before returning to the bully. Stay tuned for an update!
Six Halloween Tips to Unmask the Hardball Negotiator
By Marianne Eby
Do you ever feel like your negotiating counterparts are wearing the same Halloween masks that show up trick-or-treating at your door? Are the mad rush of negotiations in your business to spend year-end budgets and internally as you plan for the next fiscal year really any different than what goes on among the children’s back-room deals over their stashes of candy? Here are 6 tricks (or tips) to unmask the hardball negotiator.
Tomorrow night Halloween in the US evokes images of costumed children asking to trade a trick for a treat – the trick is they are masked as real and fantasy characters and in exchange they want lots of candy – a trade at the heart of every negotiation. With a strong commercial foothold in the US and Canada, this strange bargaining called Halloween has spread in recent decades to parts of Europe and Asia, and is also popular in Latin America.
Halloween celebrations permeate the US culture. More than $7 billion was spent on Halloween last year and about 74% of adults celebrate this holiday, defined by costumes, masks, and out of bounds behavior. Businesses and professionals often consider how to participate in the late October frenzy, since employees and customers experience and relish Halloween as a community celebration. In offices and schools and neighborhoods, in big and small businesses, in penthouses and party rooms, in C-suites and hotel suites, Halloween fun and zany antics are planned, encouraged, enjoyed.
For most businesses, there's also a scene behind Halloween. Often, late October marks the beginning of the end of the annual business cycle. Wrap-up issues are on the table, and plans are being made for the upcoming year. And if your house is like mine on Halloween night, the real bargaining goes on after the candy is collected, when the kids spread out their winnings and begin to trade. That's when we see the real masked characters using the best and worst of negotiating behaviors to get what they want!
Even if the Halloween fete and the year closing create a tension of opposing demands, deals will get closed. For example, while we are spending $1.2 billion annually on Halloween costumes, $85.5 billion is also being spent on computers. Corporate negotiators are working computer deals, equipment leases, supply contracts, phone usage and supplier agreements that keep businesses running, while $21.5 billion in candy passes from hand to mouth. Company representatives in all corners of the world commute their own shares of the $85 billion computer spending, or source and set prices for personnel who can create and support the internet architecture that will permit a share of the $255.5 billion in annual on-line sales. (Data source)
Negotiating is never frivolous and is not always sweet. The scary part is when our negotiating counterparts come to the bargaining table wearing their Halloween masks. We find ourselves faced with people dressed up as superheroes, who want to play “hardball.”
Hardball negotiators use tactics to distract, manipulate, or trick us into moving off our position. They believe that they can win more by playing hardball than by collaborating to create value. The hardball negotiator wears masks – meaning they don’t share their interests – why they want what they want, and don’t care about our interests – why we want what we want.
We want to make a deal, and our hardball counterparts seem only to be willing to make their deal. We are looking for flexibility, and our counterparts seem determined, inflexible, even intimidating. Whether we are are sales or procurement or management, trying to meet quotas, move excess inventory, or gain savings from volume and vendor choice, hardball counterparts are entrenched in their position and tactics.
In the spirit of this Halloween season, consider these responses to the hardball negotiator:
- Consider the tactic what it is – just a trick for a treat. Compliment your counterpart for their tough negotiating style as you would the costumed child at your door. Then suggest you are likely to give better concessions if you can get a commitment to collaborate. Once people make a commitment to be cooperative, most feel bound by it. Remember that their inflexibility is just a costume that can be removed.
- Model collaborative behavior by asking questions to discover your counterpart’s interests. Then offer to address any interests you learn about if they are willing to shift to a collaborative approach.
- Label the hardball tactic (not the person). For example, when they tell you their boss won't go for it, respond, “I see you've brought your bad cop in the room today. I could bring mine in too, or we could just get back to discussing possible solutions.” Then Probe, with sincere curiosity. Same if they tell you that discussing options is no use because they don't have any authority to commit to a different solution. You should say something like -- "We both have limited authority and for good reason; now let's talk possibilities so you can go back and get the authority you need."
- Negotiate the ground rules. Propose that the parties step back and mutually determine how negotiations are to be conducted, building in discussions of challenges and possibilities, proposals, brainstorming, counterproposals, etc.
- Co-opt them. Become friendly. It is always more difficult to attack/deceive a friend than an opponent. Ask yourself: Was rapport built in Exchange stage or did you skip it? Can you step back and build rapport now or interweave it throughout the remainder of bargaining?
- Respond in kind. For example, when the other side opens with an outrageous offer (high or low), respond with an equally outrageous counteroffer, and a smile. This works well if they are simply testing YOUR resolve, or if they are bluffing. If they see you are also skilled in hardball tactics, they may try these strategies to get you to be more collaborative. But be warned, people have a tendency to reciprocate negative behaviors more than positive behaviors.
As we begin closing our current year and preparing for the upcoming year, our negotiating teams can benefit from reviewing the collaborations and hardball negotiations we’ve encountered, just as we review our numbers. Remember to assess strategies to disarm the masked negotiator, since collaborative negotiations create bigger wins for all of us.
Donald Trump's "Art of the Deal" - What's his final grade?
By Leslie Mulligan
Donald Trump is certainly dominating headlines these days as he campaigns for President – he is all over TV news, social media and can’t help but pop up in our daily conversations with friends and family, regardless of your political leanings. But he has never been shy, as a long-time fixture on the NY real estate scene; he promotes himself as a skilled “deal-maker.” As a negotiating expert and trainer myself, I was compelled to read his first book, Trump: The Art of the Deal, to explore what negotiation concepts he relies on, and maybe to see what he misses. Regardless of his own “pomp and circumstance”, based on the ideas in his book, what grade would Trump get in Negotiation Fundamentals – Pass or Fail?
Let’s walk through the book a bit before we grade Mr. Trump. Overall, the book is a good read, shedding light on this provocative political candidate with deep dives into many of his real estate deals. He does frame a few negotiating fundamentals, but the narrative really serves as a showcase for Trump’s inimitable style. He liberally uses old-school negotiating tactics, which may work one time, for one deal, but do not necessarily play well in long-term business relationships. Does Donald Trump “play well with others?" His book highlights mostly his successes, as you would expect. But in this blog, I will dissect his view of Negotiating a bit, with lessons learned for all of us. In any case, the stage has now shifted, as he plunges into the political arena. In fact, Trump himself proclaimed in his presidential announcement last June: “We need a leader that wrote The Art of the Deal.”
Although originally published in 1987, I read Trump's book this year for the first time. In fact, with Trump’s recent political ascendancy, many people have been prompted to buy the book; The Art of the Deal’s sales have jumped, to the point where the book is hovering around the Top 100 books on Amazon – quite a coup for an almost 30–year old book (that sold millions when originally released). It is also the #3 Best Seller in Amazon’s Business Professionals Biographies.
Politics aside, here is my critique of Trump's first book and his thoughts on deal–making. How would Donald Trump do in a class on Best Negotiating Practices?
The original New York Times book review had an intriguing closing comment, perhaps prophetic for current Trump loyalists: “Mr. Trump makes one believe for a moment in the American dream again.’’ After an introductory chapter that chronicles a week-in-the-life of Mr. Trump, Chapter 2 tackles the substance (and style) of his deal-making prowess – The Elements of the Deal – opening with an autobiographical perspective:
"My style of deal–making is quite simple and straightforward," he writes. "I aim very high, and then I just keep pushing and pushing to get what I'm after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want."
He then illustrates 11 key elements of “the deal”, which are articulately summarized in a recent Business Insider article. When I ponder a highly successful negotiation that yields win–win results, 6 of Trump’s eleven Key Elements resonate quite loudly with me (we will revisit the remaining five later in Part II of this blog).
1– THINK BIG
The first and perhaps most important Key Element is Trump’s call to action: Think Big! He urges “If you’re going to be thinking anyway, you might as well think big”. This is Negotiating 101 – and so is definitely worth exploring further. Any negotiation eventually produces some give and take; you rarely close at your very first offer. In fact, be forewarned – if you do close at your very first offer, you may have used persuasion, not negotiation, and later, the other side may have “remorse” about the deal.
But in a normal give and take, to maximize your results you start by opening big, as you will inevitably come down off of that first offer through the course of bargaining. What Trump misses is that if you start so aggressively that your opening is indefensible, you lose credibility and trust. So think big, but be sure that you can make a substantive, realistic case for your first offer – you want to be taken seriously on every offer that follows.
Trump tries to separate himself from lesser negotiators:
“Most people think small, because most people are afraid of success, afraid of making decisions, afraid of winning.”
I disagree. The negotiators I work with may be less skilled, fear conflict or lack confidence, but they do want success. So I challenge you to quell your anxiety, and most importantly, do not negotiate against yourself before you ever sit across the table from a negotiating partner – go ahead, stretch and think big.
2– PROTECT THE DOWNSIDE, AND THE UPSIDE WILL TAKE CARE OF ITSELF
Donald Trump is a realist, well, maybe more of a pragmatist, too. His 2nd Key Element is "Protect the Downside and the Upside Will Take Care of Itself." To me, this means that although he thinks big, he definitely considers his “bottom line”, so that he knows when to stop in any negotiation – self-protection, if you will. In negotiating parlance, we define a Negotiating Envelope (also known as the Zone of Possible Agreement) – two end points that establish your Most Desired Outcome (MDO) by thinking big, but also your Least Acceptable Alternative (LAA) that protects your downside, by contemplating the lowest you are willing to go. Savvy negotiators push themselves, stretching when they set their objectives initially, and then confidently open at the negotiation table, but only after privately setting a walk-away point. This focus on your plan will frame your success.
3– KNOW YOUR MARKET
I wholeheartedly support Mr. Trump for emphasizing Planning – preparation is critical in any negotiation – actually, the more prepared you are before you sit down at the table, the more confident you will be. And we know that Donald Trump does not lack for confidence. This idea is echoed in another of Trump’s Key Elements – "Know Your Market." He may mean this primarily in the real-estate/business sense, but any good negotiator knows that the more prepared you are, the more you increase your chances of success. Think through not only your Negotiating Envelope, but also the other side’s, consider what the other side is most likely to offer – and really want. The best negotiators spend much more time planning and preparing than they ever do in the actual negotiation. Never sit down with the other side until you have thoroughly vetted (or at least thought about) not only your own negotiating strategy, but your negotiating partner’s, too. Our refrain is, “A failure to plan is a plan for failure.”
4– MAXIMIZE YOUR OPTIONS
During the planning phase of negotiations, do not get fixated on only one approach – having back up options gives you leverage. Trump knows this, as he commands us to "Maximize Your Options:"
“I never get too attached to one deal or one approach.... I always come up with at least a half dozen approaches to making it (a deal) work, because anything can happen, even to the best–laid plans.”
Plan B and Plan C, alternatives to any deal you are negotiating, are what we call BATNAs in negotiating parlance. BATNA – the Best Alternative to a Negotiated Agreement – means you have leverage, and power, at the table. A BATNA is a well–conceived plan that you are willing and able to execute if no agreement can be reached. You want the other side to worry that you may walk away from the table and execute your own plan B – and you know Trump plays that card. Now Trump may bluff at times – sometimes it feels like he is bluffing when we watch him campaigning – but it is clear that he knows the value of BATNAs.
5– USE YOUR LEVERAGE
BATNAs clearly provide leverage, but they are not the only way to gain leverage at the negotiating table. What is leverage? Trump defines it well:
“Leverage is having something the other guy wants. Or better yet, needs. Or best of all, simply can’t do without”.
These are what we call Interests – you want to delve into the other side’s underlying interests, why they want what they want.
In his book, Trump describes a time when he was interested in buying a corporate jet – he really wanted a 727 but it cost $30 million at that time, so he had his brokers looking for a G-4, going for only $18 million. Serendipitously, Trump discovered that Diamond Shamrock, a Texas oil and gas company, was in serious financial difficulty, even while its executives had been enjoying the perks of a decked–out 727. Not surprisingly, new management now wanted to ditch the jet, as well as shake up the executive team.
Trump made a call, starting with some pleasantries, and expressed interest in Diamond Shamrock's jet. It was clear to him that the new CEO wanted to deal. Trump then low-balled an offer at $4 million, admitting to himself even that this was absurd. But knowing the other company was in desperate financial shape gave him leverage. Indeed, Diamond Shamrock countered at only $10M, as unloading its corporate jet was a primary Interest. Both sides agreed at $8M, a tremendous price for a refurbished jet with all sorts of fancy amenities – just Trump’s style.
In this case, Trump leveraged his knowledge of Diamond Shamrock’s financial troubles, and its need to both lose a costly asset and send a message to Wall Street around a new management team at the helm. In negotiation, we often think about what we need – but to really hit a home run, you need to spend more time thinking about what the other side needs, and why they need it. If you know what they need, and you can deliver it without a huge cost to you, then you have leverage – the upper hand!
The final Key Element in Trump’s book that I really value is "Have Fun!" His view is almost child-like: “The real excitement is playing the game,” and he maintains that he has a very good time making deals, especially all of the deals described in his book. This may sound like boasting, but still, I applaud this advice to have fun. People who have fun while engaging in otherwise stressful activities – think parenting, mountain climbing, negotiating – excel more than others.
Collaborating to reach a solution can be energizing, socially gratifying, and filled with surprises. If you approach the agreement with the spirit of cooperation and collaboration (rather than conflict), not only will you enjoy it more, but you will get a better result – for both sides! Many people shy away from negotiating because they view it as conflict; someone has to lose, right? Well, not necessarily; both sides can win. Interest–based, collaborative negotiations yield better results. Trump may lose sight of this from time to time, but that doesn't mean his advice to have fun won't help you become a better negotiator.
What didn’t I agree with in The Art of the Deal?
I believe that we can all become better negotiators – by learning, by practicing, by experience. Trump, on the other hand, believes only some lucky few have an inherent capability to dazzle at deal–making. He asserts, “More than anything else, I think deal–making is an ability you’re born with. It’s in the genes.” I respectfully beg to differ; we can all improve, by enhancing our current negotiation skill set, adding some better strategies, and reinforcing our confidence.
Donald Trump plays hardball a bit more than necessary, probably because he comes from an old–school perspective. Uber–competitive tactics do not foster long-term collaborative partnerships in business – but it is his style, that is obvious. There were also strategies and behaviors that Trump missed in his 11 Key Elements – skills that can be invaluable to a negotiator.
Finally, I give Trump a PASS in Negotiating Fundamentals, but I would say he is a low B student.
Come back for Part II, when I lay out essential concepts that Trump may miss (or misuse), which will transform you from a good negotiator to a great negotiator, regardless of your DNA. Become an A+ negotiator!