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Negotiation Blog - Negotiating Strategies
Negotiating Strategies Should Fit Your Situation
By Thomas Wood
The best negotiating style or strategy depends on the context, so master negotiators learn to read a situation and use appropriate methods to reach their goal. An assessment of the chosen negotiation strategies of four recent U.S. presidents demonstrates the power of understanding your situation and adjusting your style and strategy to ensure success.
The president of the United States is commander-in-chief, and as such he is also “negotiator-in-chief.” When forging a treaty with a foreign power or brokering a deal with the opposition party in Congress, he’s making strategic decisions about his approach to negotiating that we can learn from.
President Obama initially used a collaborative approach in pursuit of major initiatives like health care reform and debt reduction, but the tactic faltered because the opposition party wouldn't collaborate. After a series of budget crises in 2010-11—during which many supporters felt he gave up too much—he switched to a competitive approach on issues like employment and tax policy. While the president remains personally popular, poll ratings of his performance in office have probably suffered from his earlier, failed collaborative strategy. Obama’s reelection bid this fall will be the ultimate indicator of whether his negotiating styles have produced results acceptable to the American people.
George W. Bush (2001-2009) came into office with a competitive approach. In his first term—and especially after the terrorist attacks of 9/11—he developed both domestic and international policy without seeking much input from his counterparts. The America people endorsed Bush’s competitive approach in foreign affairs and national security policy by reelecting him in 2004. Significant crises of his second term like Hurricane Katrina and the financial panic of 2008—as well as the intractability of long-term problems like illegal immigration—highlighted the need for collaboration, such that by the end of his presidency Bush was working more with his counterparts in developing policy.
Ronald Reagan (1981-1989) understood that even within the same, prolonged negotiation different strategies are often called for at different times. When he came to office the United States was in the 4th decade of its global competition with Soviet Union known as the Cold War. In his first term, he took a competitive approach by initiating a massive military build-up. Meanwhile, on the domestic front, he took a more collaborative tack, forging ties with conservative Democrats to push through Congress big tax and spending cuts. He worked collaboratively with his counterparts to pass substantial tax code reform in his second term. Also in his second term, Reagan started to engage the USSR in a collaborative policy, capitalizing on the ascendancy of reformist leader Mikhail Gorbachev. Reagan’s perception of the need to take a hard line with the USSR in his first term, then switch to a collaborative approach in his second demonstrates his skill as a negotiator. Voters showed their support for Reagan’s negotiation style by giving him a landslide reelection victory; the American public continues to hold him in high regard, as exemplified in a 2011 Gallup Poll in which he was judged the greatest US president.
Jimmy Carter (1977-1981) is often seen as having employed an avoidance approach, exemplified by what was viewed as an overly passive response to the Iranian hostage crisis, and by the U.S. boycott of the 1980 Summer Olympics in Moscow after the Soviet invasion of Afghanistan. This perceived strategy cost him public support, denying him a second term. Out of office, he seemed to learn that collaboration was critical, and in his post-presidential years preached the importance of talking with our enemies as he successfully advocated for human rights during conflicts in Haiti, Bosnia, Ethiopia, and Sudan. Carter became so adept at collaboration that he won the Nobel Peace Prize in 2002.
Though issues in your negotiation may not rise to presidential levels of complexity and import, fitting the strategy to the situation is still crucial for success.
Not All Greek To Us: Multi-level Multi-party EU Debt Crisis Negotiations
By Marianne Eby
Few negotiations are more complicated than the multi-party wrangling going on now in Europe over the Greek debt crisis: it involves not only the Greek government and its creditors, but the European Union and public creditors like the International Monetary Fund. There are even negotiations going on within these separate entities, such as between France and Germany over the proper EU response. But it’s still possible to see within this tangled process familiar issues the parties would be well-advised to address through Best Negotiating Practices.
When assessing a multi-party negotiation, you should break it down into its constituent parts; multi-party bargaining is actually a group of connected but still distinct one-on-one negotiations. In the case of Greece, the government is conducting one set of negotiations with its bondholders and a second with the European Union, its source of bailout money. The two are connected, since the EU is demanding certain outcomes from the first negotiation before discussing more emergency aid. But practiced negotiators can often exploit such multiplicity of parties, and therefore interests, to craft a creative solution.
While conditions often vary in the course of a negotiation, occasionally it’s the parties themselves that change. In a business negotiation, the change might come about as a result of a merger or acquisition. In political negotiation, the switch can be triggered by an election. Smart negotiators invest time and effort in preparation for their new counterparts by learning as much as possible about their motivations, tendencies and style. Greece held national elections in early May, and while the results were inconclusive, one of the leading contenders to form the next government is the leftist party Syriza. It’s made clear it will take a more aggressive approach to EU negotiations.
“Greece needs a leadership that can go abroad and not just say what foreign leaders are prepared to hear but say what the Greek people wants to be said,” declared Syriza leader Alexis Tsipras recently. “It has to draw red lines, to plan a strategy and to stand up for the rights of Greeks. Only a government of the left can do this.”
Meanwhile, negotiations between France and Germany about the right cure for Greece’s and Europe’s ills—fiscal austerity or economic stimulus—seemed to hit an impasse. But in his remarks following a five-hour bargaining session reported in today's L.A. Times, the EU president wisely aimed to avoid the impression of a deadlock. After describing the talks as “focused and frank,” Herman Van Rompuy explained, “Tonight's meeting was about putting pressure, focusing minds and clearing the air.” This well describes the information exchange that precedes actual bargaining, which he anticipated would begin in earnest at a meeting the following month.
As negotiators always should, the parties have devised Best Alternatives to a Negotiated Agreement (BATNA’s). In this case, everyone’s BATNA is a departure of Greece from the Eurozone common monetary system. This would reduce the obligation on the rest of Europe to save the Greek economy, while allowing Greece to pay off its debts with a national currency it alone controls. Even the creditor bankers might make out better from such an arrangement than they would in accepting too large a write-down on their Euro-denominated loans.
But the long-term ramifications of such an unprecedented event are impossible to predict with any certainty. So you should expect all parties to continue to try to avoid this dramatic step through more negotiation. And we should all take advantage of this very public display of bargaining to improve our own negotiating skills.
Use the Power of "Just Asking" in your Negotiations: Robert Pattinson Does!
By Thomas Wood
Sometimes just asking can save you hundreds of dollars, or hours of negotiating. And unlike Robert Pattinson, you don't have to be acting as a quidditch team captain, a vampire, or a young billionaire to have the confidence to pull it off.
The idea made the news last week when Robert Pattinson, multimillionaire actor known for his roles in the Harry Potter series, the Twilight series and the just released Cosmopolis film, explained the way he negotiates on Jimmy Kimmel Live:
Pattinson confirmed that he is an habitual negotiator who "buys everything on Craigslist." His most recent bargain was for a 2001 Silverado listed for around $2500. He recounted bonding with the seller over gas prices, then simply asking for $300 off the price. The seller agreed, he said, and didn't really understand the concept of negotiating. "The guy's comeback was "what about $50 bucks more?"
Pattinson's "just ask" strategy was news because we don't imagine a multimillionaire celebrity haggling over $300. But it is not news for procurement professionals in big business across industries, who rely on asking for a greater discount, a changed term, extended service, faster delivery, etc. They "just keep asking," regardless of whether there is anything to justify the ask, not because they are obnoxious or uninformed, but because this tactic works. If a sharp company sales rep appropriately pushes back, an experienced procurement professional might say with light laughter, "Well, I had to ask!"
Remember that if you are "just asking" and can justify your Ask, it's strategic. But if you are "just asking" for no other reason than that it might work, you are using a tactic, which unlike strategies, are non-collaborative moves to gain short term advantage. Like any negotiating tactic, if you overuse then or use them in the wrong situations, expect to erode trust and your own credibility.
"Just asking" in the right situations, however, does in fact work most of the time. Recently, when billed $2700 for the treatment of an infected blister, of which my insurance paid only $1800, I called the private clinic's billing department. I started with a joke ("you know I didn't have heart surgery, right?") and then simply asked: "I was hoping you could help me out." They cut my bill in half.
An easy, efficient way to practice "just asking" is when you are shopping. A client told me that they had gotten $300 off the mattress they wanted simply by walking around the desired mattress for awhile, chin in hand, saying nothing.
Thoughtful silence is a kind of probe that can work miracles, especially in flea markets and antique stores. The key is to show genuine interest. Don't point out all the problems with the merchandise (i.e., it looks damaged, it's too big, etc.) hoping the seller will see it as less valuable. Sellers, like most negotiators, would prefer a positive interaction with someone likeable who respects their business and merchandise. Complimenting the piece, and the seller's taste or selection, helps a seller invest in you as a customer and try to find a way to get you to buy that piece.
Tips when asking -- or probing -- for a quick and simple bargain:
- As in more involved negotiations, build a little rapport with the seller first. Make small talk -- about the shop, the merchandise, the weather.
- Treat the seller with the utmost respect -- don't badmouth the store, the the business or the merchandise. Often in antique stores the seller chose everything in the place.
- Show genuine interest in what you're considering. If you can, know something about it. If not, ask "dumb" questions about it to show your interest and let the seller talk about it.
- Don't try to get to the seller's "bottom" price in smaller negotiations. If you can get $300 off in a few minutes or with one question, you're getting great value for the time you've invested.
- Keep it light. Ask "is there any flexibility on that?" Or "Can you help me out on this?" Or just look at the object quietly, with appreciation.
- And remember, "just asking" is applicable to a lot more than price, in selling, buying and everyday negotiations that help you get what you want. Just ask!
Are You Ready To Negotiate? 5 Steps To Take If You're Not
By Thomas Wood
What if you find yourself in a negotiation you're not prepared for?
At one of our workshops recently, a petroleum landman, who negotiates mineral and land rights, asked this question. Earlier that week he had received a phone call from a corporate executive with whom he eventually hoped to negotiate land leases.
He had begun his research, and knew some things about the land value, the corporate owner, and the executive. But when this executive called him out of the blue and started shooting out ideas, making offers, and using terms he didn't understand, the landman stumbled. He said that by the end of the call he had a sour taste in his mouth. The class came up with 5 powerful steps to turn lemon into lemonade.
Our client had found himself, unprepared, in the middle of a negotiation that he hadn't meant to start yet. He didn't know whether it was more important to try to capitalize on the moment, the enthusiasm, and the momentum, or whether to stall. He also wondered if the executive had purposely tried to catch him unprepared in order to gain an advantage.
What would a master negotiator do?
There are certainly times and places for informal, impromptu bargaining. Much negotiation is accomplished at cocktail parties or business meals that are ostensibly social occasions, and in all bargaining learning to improvise is a key part of your skill-set as a negotiator.
But improvised negotiations are an oxymoron, because they are the purposeful result of much planning. Improvised negotiations are for negotiators whose interests, positions, goals, and arguments are so familiar to them that they can talk about them spontaneously. In web designer blog "A List Apart" awhile ago, we ran across "Improvising in the Boardroom," which describes the advantages of improvising a presentation to a client if you really know your subject. "What you really bring to bear in the moment is not a rehearsed plan, but the sum total of your cumulative knowledge and experience to that point."
So when you find yourself in a negotiation or an exchange you're not prepared for, as in our landman's situation, or even something smaller in scale in the elevator or at a cocktail party, don't try to think on your feet.
Five steps you should take:
1) Stay calm. Thinking is short-circuited by anxiety. Deep breathing convinces your body and brain that it is calm and protects your cognitive ability.
2) Compliment the other party on his or her obvious expertise, and use this conversation as a chance to show respect and begin developing rapport.
3) Ask "dumb" questions (this is when "dumb is smart"). Say "clearly, you know a lot about this -- explain x to me." Change the nature of the phone call from a bargaining session to an information exchange, and take notes on answers that are useful to your process. Let them know you're taking notes, and repeat things back to them to slow the process down.
4) Buy yourself time. After a brief exchange that provides you information and builds rapport, get off the phone. Say "look, it's really great talking to you, you have some great ideas and I'm sure I'm going to learn a lot from you. I was about to head into another meeting when you called -- can I call you back?" Then do not pass go, do not collect $200, but go directly to your other meeting with yourself -- where you get back to preparing for the negotiation.
5) Prepare. Even if you have only five minutes, prepare the essentials. Write down what you know about your and the other party's interests, likely opening offers and bottom lines, BATNAs and valuable concessions. Writing down the essentials forces you to think through your position and whether you are ready to bargain.
A for Apple: Impacting the Negotiation long before the Negotiation
By Thomas Wood
It may be months before you start trading concessions with your customer, supplier or business partner, but good negotiators know that every conversation preceding negotiations is an opportunity. With all eyes on Tim Cook, CEO of Apple Inc., as he follows in the footsteps of his legendary predecessor, Steve Jobs, we see a master negotiator who knows how to seize the opportunity to create value in negotiations that seemingly haven’t yet begun.
With September almost over and the school year in full swing comes the anxiety of grades, so we looked around to see who is likely to earn an A this year. We had to take note of how Apple’s CEO, Tim Cook, handled his testimony before the US Congress at the start of this summer. Along with other Apple executives, Cook responded to a battery of questions from the Senate Permanent Subcommittee on Investigations. Tim Cook, who is still proving his mettle as the nation’s most famous succession CEO, ostensibly arrived on Capitol Hill to defend Apple’s corporate position on tax matters. He had not been invited to negotiate with Congress, but to be grilled about Apple’s use of tax loopholes. Yet, he used the opportunity to influence the negotiations that inevitably will unfold on this issue over the next few years.
Tim Cook deftly and proficiently demonstrated strategies consistent with Watershed Associates’ Best Negotiating Practices®. He reframed the issues to Apple’s advantage, was more prepared than his counterpart, and recognized and adjusted to his counterpart’s culture.
First, Cook used the opportunity of testifying to reframe the debate. Rather than solely responding and attempting to justify Apple’s corporate tax practices, Cook framed his corporate position based on the source of the rules. Cook accurately argued that Congress is the ultimate author of U. S. tax policy. Cook’s defense was primarily that Apple acted completely within the bounds of the law, and that Congress owns the authority and prerogative to change the law and its specifications. It’s the negotiator’s version of “don’t blame us when your lawyers wrote the clause!” Reframing this debate worked as an effective negotiating strategy so far for Apple, and caused Business Week and other news entities to declare that Cook “dominated” Congress.
Second, compared to some of the Congressional Committee members asking questions, Tim Cook appeared far more prepared. The vacuous nature of some of the “questions” posed, and fawning remarks delivered, to the Apple CEO is well documented. Cook’s answers, by contrast, were so deliberate and thoughtful that his extensive preparation for this appearance was made plain. The depth of Cook’s advance preparation was notable and widely observed in the Wall Street Journal's commentary. Similar to any business negotiation whether a mega-merger or spot buy, being more prepared gave Apple the upper hand that would not otherwise be easily retrieved down the road in the negotiation.
Finally, Cook seemed aware, and responsive to, distinct differences in culture between his organization—a massive, secretive, market-driven, successful for-profit corporation, and the comparatively dramatic, public and august entity that is the U. S. Senate. At Watershed Associates, we train clients about negotiating in contexts where there are definite cultural differences -- between corporate cultures, transnational or multinational. Our cross-cultural Safe-skills help businesses identify and assess distinctions in how their counterparts may operate, such as relationship v task orientations or collective v individual decision-making. Variances in style and strategy with regard to time, team hierarchy, and familiarity to name a few, are to be expected when negotiations take place across cultures. These variations need to be noted and appropriate adjustments incorporated into the negotiation plan.
Apple’s CEO recognized the most basic of these distinctions between cultures: formal versus informal hierarchies. Cook consistently (and perhaps insistently) referring to his Congressional interviewers very formally, as “Sir” and “Madam”. Conventions of address such as these are very rarely used in American corporate activity, and certainly not in the Jobs era of Apple. However, in other cultures—like the US Congress, but also in other countries—formal address is expected and is an effective signal of respect for the negotiation process and the negotiation counterpart. Apple corporate executives are unlikely to use these modes of address in any of their daily business, but in the business of negotiating with the Senate Subcommittee, Tim Cook acknowledged this cultural variance, and acted in a way that captured value for Apple’s objectives.
Although Tim Cook probably has years to go before he can be measured against his legendary predecessor, after Mr. Cook’s performance in front of the Senate Subcommittee on Investigations, he brought Apple’s corporate practices through unscathed, and for the moment, unchanged. By reframing the debate, preparing extensively, and honoring the differences in organizational cultures, Mr. Cook led Apple with supreme effectiveness. Apple and its leader earned a Negotiator’s “A”.
What Negotiators Can Learn From Kids
By Thomas Wood
In our negotiation workshops, some of our favorite examples of effective negotiating strategies come from kids. They always get a laugh of recognition, because even our most experienced negotiators know that they can be outmaneuvered by a 4-year old.
There are countless parenting blogs and books devoted to negotiating with your kids, or avoiding negotiation with your kids -- all designed to help you handle the little wizards without losing your shirt. One blog, "Like A Dad," reviews a few common kid tactics as a way of helping parents recognize and prepare for them. But as negotiators, we need to ask -- what tactics can we learn from them?
Kids with caring parents do have a number of advantages over adult negotiators -- they won't do damage to their reputation if they are unprofessional, whiny, or outrageous in their demands. But here are five effective negotiation strategies kids use that we should too -- followed by a few we should leave to the less mature./learning-center-item/listen-loudly.html
Top Five Negotiating Strategies From Kids:
- Think big. When my son was two, he heard the crinkling of a candy wrapper in my pocket. He said "candy?" I said "oh, would you like one?" He said "two." Kids ask for what they want, not for what they think you'll agree to. In fact, they have a good idea that you will not agree. They have no compunction about starting with their Most Desirable Outcome (MDO). If they want three cookies, they'll ask for five, then do the "incremental number drop." Aiming high is the key to beginning negotiations that will produce a satisfying outcome.
- Don't take no for an answer. When kids hear "no," they get motivated, not discouraged. Kids often understand "no," or "time's up" as a signal to begin negotiating. You too should recognize "no" as a sign that you and your bargaining partner don't understand each other, and you need to ask more questions.
- Be genuinely curious. Kids' love to ask the question "why?" not to drive you crazy, but because they really want to know. They keep asking questions, open-ended questions, with the same enthusiasm as their first question. Kids have infinite energy for questioning and testing the limits parents establish. I once told my son he couldn't do something dangerous that his sister had just done. After a little back and forth I offered the standard stumper, "if your sister jumped off a cliff, would you?" His answer: "how high is the cliff?" And then "could you slide down it?"
- Be creative. My son's question about the cliff was so creative I had to hand it to him -- perhaps I even made a concession. Creativity always creates more -- more possibilities, more concession ideas, more value, more goodwill. If the other side sees that you thinking creatively about how to satisfy their real interests, you are more likely to get a concession and develop a good relationship. So nurture your childlike creativity, because research says that up to age 5, we are using about 85% of our creative power, but that by the age of 12, our creative output has shrunk to about 2% of our potential.
- Play one parent off another, or, know who to ask. Kids know how to manage ALL the stakeholders. They know which parent is more likely to say yes to certain things, and will approach that parent first, then parlay any positive response into something that might persuade the second parent. Or, if both parents say no, kids will try a grandparent (the ultimate stakeholders) or an aunt or uncle if they can -- ideally one who will make an emotional, rather than a rational, decision. "Okay, you can take your bath after the movie instead." In business deals, you too need to try to find the person most likely to benefit from your deal, and start there. All of this requires knowledge of the other side and of their real interests. What we may call manipulative is just knowing how to use the difference between positions and interests. Example: "I know my TV time is up but this show is about nature, Dad, isn't it good for me to learn this?"
Childish Tactics to Avoid:
- Pretending not to hear or understand. This is the ignoring tactic my kids use every day. It's an avoidance tactic, not a negotiating one, and it will not help you get what you want. If you have that impulse, recognize what it probably is: a need for clarification, for more time or for control of the timing in the negotiation process, and proceed from there.
- Throwing tantrums or crying. Though there are arguments for occasionally using tantrums as a tactic, it is part of a competitive, rather than a collaborative negotiation strategy. In general such behavior alienates and ultimately loses business. Kids don't have to worry (too much) about what they'll lose from a tantrum, because the relationship with their caregivers is (hopefully) guaranteed.
- Pretending to be sick -- just one of many ways kids have of playing on parents' sympathies and concerns, and not likely to be useful to a negotiator who wants to make more than one deal. It may work within your office to gain your boss' sympathy and concern, but not otherwise.
When I first became a parent, a final lesson from my mother: "Thomas, as a parent your goal is talk to your kids so they will listen. And listen to your kids so they will talk.