Negotiation Blog

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

Negotiating Tip

Try not to negotiate if you are in a negative emotional mood. Research shows you will make inappropriate or unnecessary concessions.


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Will I insult people if I start high (or start low) in negotiations?

By Thomas Wood

This is one of the most commonly asked questions I get when I teach people in Watershed workshops that they need to open the negotiation by asking for their MDO (most desirable outcome). At Watershed, we refer to the MDO as the highest position within the realm of reasonability. Sure, it is not likely you will get your MDO, but it is defensible, and under the right circumstances you would get your MDO, and that is why it is not objectively insulting.

Take a simple example: You ask for bids from 3 graphics art firms for a project. The firm you would like to use is top notch and by far the best of the three, and its bid reflects this at 22% higher than the next highest bid.  Are you insulted because the graphics art firm started at its MDO? You’re not insulted because you could conceive of paying for this high quality, even though you want a cheaper price.

Insults go both ways of course. Some people might be afraid to negotiate with the high-bid firm out of fear of insulting the bidder.  But there are so many moving parts to the agreement -- deadline, payment terms, scope of work, follow-up support, approval process, etc. -- that you can easily negotiate without being insulting. It is completely legitimate to say,

“I really like your work and would like to use you, but your prices are much higher than the other bids we received. Would you be able to move on your price by 20% if we had someone from our team do some of the grunt work and we pay you 50% up front?” 

You started “high” (low in this case) at your MDO. There is nothing insulting about your counter-offer.

On rare occasion your MDO will insult people. Let’s face it; people become insulted even though what we did is not objectively insulting. Last week I saw relatives become insulted by where they were seated at a celebration, even though their seating was given much consideration. It is just how they choose to see the situation. 

If someone tells me they are insulted by my offer, I simply apologize, tell them that it was not my intention to insult them, that I want to do business with them in part because I respect them, and then I explain why I think my offer is legitimate.  Insulted people typically calm down when given attention and information, and we are able to come to a mutually satisfying agreement.

Don’t let the fear of insulting someone keep you from asking for your MDO. Because it can get in the way of getting what belongs to you.  

Negotiating Tip

"In one of our concert grand pianos, 243 taut strings exert a pull of 40,000 pounds on an iron frame. It is proof that out of great tension may come great harmony."  Theodore E. Steinway


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Tom Brady's BATNA Prevails in Deflategate

By Leslie Mulligan

Famed quarterback Tom Brady will take the field this Thursday in the NFL's season opener when the New England Patriots play the Pittsburgh Steelers. Brady will no doubt demonstrate his prowess in the game, but unlike other seasons, he'll step on the field with one victory already in hand. It turns out that in the pre-season battle of the BATNAs, Brady had the winning strategy.

In July Commissioner Goodell denied Brady's appeal of the NFL"s (US National Football League's) May 2015 4-game suspension for alleged cheating -- involvement in or covering up deflated game balls -- and upheld his own decision. Brady and the NFL Players Association (NFLPA) went to court to fight this battle, as intense competitors will do. Ultimately, Judge Richard Berman ruled in Brady’s and the NFLPA’s favor, vacating the 4-game suspension that the NFL had levied.​

When I wrote about the situation in July, I was keeping an eye on the stakeholders, the parties' interests, and the available BATNAs. Now we know that victory in the battle of the BATNAs led us to the finish.

BATNAs are your Best Alternatives to a Negotiated Agreement, or plan B. The other side doesn't have to agree with your BATNA, because it's the plan you will execute if negotiations don't produce a desirable result.

Knowing the strength of your BATNA relative to your counterpart, and being willing to execute it, is essential as you enter any negotiation, as the NFL regrettably realized this past week. We can all learn from the NFL's missteps.

Every successful negotiator knows that you are more powerful at the negotiation table if you have a strong BATNA, preferably more than one. But remember - your BATNA is your back-up plan, your Plan B. In fact, your Plan A should be to reach a mutually beneficial agreement through dialogue, without having to execute BATNAs. This is paramount, especially if you will need to work together in the future.

Clearly the NFL and the NFLPA have an ongoing relationship and must work together going forward. Executing BATNAs can be risky because you don't know the fall out, unlike the greater certainty that comes with a negotiated agreement. Executing BATNAs can also damage relationships, as we have seen play out in this situation. To that end, Judge Berman urged both sides to negotiate a solution rather than do battle in court. 

But each side evidently thought that its BATNA was the stronger BATNA.

As you enter a negotiation, one critical step is to assess the relative strengths of each side’s BATNA. This assessment is done in the Exchange stage of negotiations, while you are measuring your opponent’s position, understanding their interests, and assessing their trustworthiness and credibility. Depending on the strength of your BATNA and your assessment of the other side, opening offers are made. In Deflategate, both sides had strong opening positions: Brady refused to accept any ruling that included missing a football game because of cheating, and the NFL seemed to require Brady to bear some level of responsibility by accepting the NFL’s Deflategate investigation led by Ted Wells.

These seemed like aggressive opening offers at the time, but both sides must have felt that they had strong BATNAs. If you are confident in your Plan B, you can afford to be very assertive with your opening position. As no negotiated settlement was reached, each side apparently believed that they had the superior BATNA. Clearly, Brady and the NFLPA made the right assessment.

Although the NFL under-estimated the strength of Brady’s BATNA, the NFL did do one thing well. The NFL immediately sought to improve its BATNA by filing a pre-emptive lawsuit against Brady in a New York federal court, rather than the players-friendly venue of Minnesota, where recent trials had been held that went the player’s way.

A good negotiator constantly works to improve short and long-term BATNA’s, before and during negotiations, and certainly when agreement can't be reached. Roger Goodell and the NFL clearly had that on their minds, as they filed the NY lawsuit to reaffirm the NFL's ruling on the same day the ruling was issued – July 28th.

For more on ways to leverage your BATNAs, check out an earlier Watershed blog, the Negotiator’s Keys to a Powerful BATNA.

We have likely not seen the last of the NFL vs Brady case, as the NFL recently stated that it will appeal Judge Berman's decision. But this move should not stop Tom Brady from joining the New England Patriots on the field as the NFL opens its season. Let’s hope that both sides reassess their negotiation strategies to find a way to address their interests and appease their stakeholders. While the battle of the BATNAs has a victor, nothing's certain about who will win the season opener. Let the games begin!

Negotiating Tip

Understand, access and address real interests and concerns – that is focus on WHY they want what they want, NOT on demands or positions. 


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Negotiating Salary: Tactics, Blunders or Best Negotiating Practices - Part III

By Thomas Wood

Let’s magnify the various moves Bill and Jen made in their salary negotiation that my colleague explored in previous blogs Part I and Part II. They reached a deal, but was it to thier mutual satisfaction? We’ll categorize the moves as Tactics, Blunders and Best Negotiating Practices (BNPs). Do you agree?

  1. Negotiating Tactics – moves made for short term advantage that risk losing credibility or trust;
  2. Negotiating Blunders – moves or approaches that fail to achieve their objective or any other positive outcome; and
  3. Best Negotiating Practices (BNP) – skills, strategies and behaviors that are designed to create and capture value in negotiations.
Tactic, Blunder or BNP?
 
 
Move
 
 
Response & Impact
Blunder
Bill relied on this part-time position and didn’t have a Plan B – other interviews or networking
Bill’s failure to continue to build his BATNAs (his Plan Bs) puts him at a disadvantage
BNP
Bill prepares an opening offer and support
He is ready when Jen asks
Tactic
Jen ignores Bill at first to make him feel unimportant
It works mildly, but Bill’s preparation keeps him confident
Blunder
Jill opens the conversation without any rapport building or excitement about Bill joining the organization
Jen misses the opportunity to build an alliance with Bill, which will make it more difficult for her to learn what matters to him. She also risks him deciding against the job.
BNP
Jen asks Bill what he wants
Hearing from Bill informs Jen up front if this conversation is worth her time. But it did come with the risk that Bill would anchor Jen by opening first.
BNP
Bill opens with his prepared opening offer of $127K.
Great opening offer – high, but justifiable, and therefore credible
Blunder
Jen says “Absolutely not” to Bill’s opening, which is the same as saying “No.”
Saying the word “No” or a similar negative response shuts down conversation
BNP
Jen opens with her opening offer of $78
Jen’s opening seems appropriate – she starts low but within a justifiable range
BNP
Bill asks “Why?”
Always a great probe, when said with sincere curiosity and not as an attack. Jen is so far from Bill’s preferred salary that he can only benefit from more information.
Blunder
Bill doesn’t wait for Jen’s answer. He starts defending his stature.
Jen is unfazed because Bill isn’t engaging her – he’s presenting to her. Bill is waiting too long to start asking questions – the best way to engage his counterpart.
BNP
Finally Bill realizes that he is not convincing Jen, and starts asking lots of engaging questions.
You can’t probe too much!
BNP
Bill next asks for Jen’s advice as to what he needs to succeed in this job.
Great open-ended question. Engaging the other side is critical. Jen’s inclination now is to help Bill, rather than to win against him.
BNP
Bill asks Jen to reconsider the salary given the information they have discussed about his background and fit for the position.
Bill needs Jen to move a lot, so his open request is a good strategy. He’s giving her a way to save face if she is convinced that his salary can go higher.
BNP
Jen makes a huge move from $73 to $103K.
Jen’s first move is big, but she saves face by having reconsidered the expertise required for the job and Bill’s fit for the position.
Blunder
Bill seems inclined to accept the offer.
Bill could have asked more questions about the new salary range, and further built the relationship. Jen probably had more to give. But Bill lacked confidence due to his non-existent BATNA (plan B).
Tactic
Bill asks about getting an alternative work schedule given the lower salary than what he had anticipated.
At least Bill asked for something to justify why he would move off his opening of $127K – the alternative work schedule. It was a “nibble,” but because he knew Jen could give it, there was little risk to the relationship in employing this tactic.

 

Negotiating Tip

Commitment is what each side agreed that it will do or not do. Commitments should be Practical, Durable, Understood by all, & Verifiable.


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Film Award for Best Negotiating Practices

By Thomas Wood

The lead up to the Academy Awards always gets me excited about seeing great films. This year Martin Scorsese's "Hugo" and Michel Hazanavicius’s “The Artist” were fabulous, and received 10 and 11 nominations respectively. But will they win at the 2012 Academy Awards? I hope it's not deja vu of the 2011 Academy Awards, when brothers’ Ethan and Joel Coen’s “True Grit” received 10 nominations but didn’t win. Well, True Grit definitely won Best Picture for Negotiating Practices among our team of professional negotiators here at Watershed Associates.
True Grit tested the “grit” of every character’s negotiation moxy in the various negotiations that transpired in this movie, and there were many.
 
The story is tried and true:  Teenage girl seeks revenge on her father’s killer, and pairs up with two strong willed lawmen-for-hire to chase down the killer in Indian territory of the 1880s. There’s an opening scene with Dakin Matthews playing a tough and crotchety old businessman and trader, Colonel Stonehill, and Hailee Steinfeld playing the vengeful teen, Mattie Ross. As Mattie prepares to set out on her adventure, she needs resources, and she comes to the trader to negotiate for them.
 
Before he died, Mattie’s father had purchased and paid for two ponies from the trader. Her father had paid for the ponies, but the ponies had not yet been delivered to him and are still in the custody of the trader. Mattie’s father also had his saddle horse boarded at the trader’s stable. Along came a thief who, upon murdering Mattie’s father, stole her father's saddle horse, and left behind the saddle, the two ponies, and the less valuable horse Mattie's father had lent the theif.
 
When Mattie approaches the trader, her astute preparation becomes apparent. The trader is quick witted from years of experience (and a great script), but has to determine whether Mattie has a strong BATNA (plan B), or is bluffing. Mattie uses just enough friendliness and legitimacy to her advantage, while also showing she is prepared and goal oriented (a picture perfect example of Watershed’s mantra: be firm, fair and professional). The trader is caught off guard by this shrewd teenager, and to his disadvantage underestimates her negotiation skill and determination.
 
There are lots of negoiation missteps, mostly on the part of the experienced trader. There are things the trader could have learned about Mattie’s need for resources if he wasn’t caught off guard and had asked better questions. Simply by using sincere curiosity and probing more effectively, the trader could have landed a much better deal. He focuses only on dollars instead, missing low cost/high value trades he probably could have made with the girl. He also makes other common erros in his haste, such as
  • responding to her offer in a way that makes it difficult to explore Mattie's interests,
  • negotiating against himself without waiting for a counteroffer when faced with Mattie’s various BATNAs/bluffs, and
  • declaring multiple times that this is his final offer.
And yet, the trader held all the cards from the start. At the opening of the negotiation, Mattie has nothing and the trader has everything – the ponies, the payment, the saddle, the less valuable horse, and the expertise. Mattie doesn’t beg or play the victim who needs charity. She uses many Best Negotiating Practices, among them
  • an assertive but defensible opening offer,
  • legitimacy,
  • persuasive analogies,
  • a strong BATNA, and
  • a tapered concession pattern.

Mattie has almost no power in this negotiation, but she leverages something much more potent – her skill as a negotiator – her true grit.

And that’s only one of many negotiating scenes in the Oscar nominated movie from 2010.
 
See True Grit again or for the first time, and test your “grit” as a negotiator by spotting all the missteps and Best Negotiating Practices interlaced in this great film.

 

Negotiating Tip

 “Champions aren’t made in gyms. Champions are made from something they have deep inside them: a desire, a dream, a vision.”  Muhammad Ali


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Women Negotiate Every Day — But For Whom?

By Marianne Eby

 

Women negotiate everyday – for others – for their team, for their company, for their clients, for their kids. But women have a much tougher time negotiating for themselves. Sheryl Sandberg, COO of Facebook and former top executive at Google, does all women a big favor when she acknowledges that even she was about to not negotiate Mark Zuckerberg’s first offer because it was a “generous offer.”

In the March 10, 2013 episode of “60 Minutes,” Sheryl Sandberg talks about her new book “Lean In: Women, Work and the Will to Lead”, her message for women to "lean in" rather than hold back, and her own missteps -- especially this big one -- when she almost didn’t negotiate on her own behalf. (See link here -- go to 5:56, or read the full script of the interview.)  

Sandberg’s husband, David Goldberg, CEO of SurveyMonkey and a successful entrepreneur and technology executive in his own right, describes himself as “apoplectic” when Sandberg suggested to him that she would just accept Zuckerberg’s first offer because it was a “generous offer and I really want this job.” And then her brother-in-law jumped in and said “There is no man taking this job who would take the first offer.”

Sheryl Sandberg stepped back. She was spending more time assessing the extent of billionaire Mark Zuckerberg’s generosity than her own worth! Lucky for her, and for all women, Sandberg “leaned in” and negotiated her value.

Why is it so important that you not accept the other party’s first offer, no matter how good it is? Even when it is well beyond what you thought you would get? The answer comes from psychology 101 and its influence on the fundamentals of negotiating.

First, if you accept the other party’s first offer, they won’t feel like they got a good deal. Why? Because they will reflect on it and conclude that clearly they offered you too much or you wouldn’t have accepted it so readily! Think about it -- you ask for $10K for your used car that might fetch anywhere between $9K and $11K, and the interested buyer says YES! You, the seller, are happy, right? NO! The seller reflects on it and realizes that she could have gotten more for that car. But if the buyer discusses other price comparisons and offers $9,300, the seller will feel good to have gotten $9,700. And you want the other party to feel good about the deal, because then they aren’t trying to renege or get back what they lost in other ways.

Second, if the first offer is fair, or wonderful, or even better than you thought it would be, you still shouldn’t accept it. Maybe your assessment of worth was incorrect. Maybe your research wasn’t thorough, and you could get a lot more in the exchange. In our simple car example, maybe your car, like Sheryl Sandberg, isn’t a dime-a-dozen, and is worth more!

Third, the ending so quickly of negotiations curtailed any opportunity to find more value. Each of you may have been willing to address needs and concerns of the other in ways that would have ensured a smooth execution of the agreement. For example, with more discussion about that car you want to buy, you as the buyer might learn that the seller is willing to throw in the bike rack and take payment in 2 installments. The seller might find out that the buyer has 2 tickets to a great concert tonight that she can’t attend but that the seller would like to. With this discussion, you can both find trades that are hidden value. But when you accept a first offer, there is no more need for discussion, thus eliminating the opportunity to find value.

Fourth, first offers typically anchor us. First offers play a mind game with us by artificially setting the bar from which concessions can begin, thus weighing us down, like an anchor, to accept somebody else’s assessment of value. Never accept a first offer until you have gotten your own first offer on the table. Only make concessions from your first offer, not theirs, and only in exchange for value. (Read more on Who Opens First?)

(Read more on determining and presenting your Open Offer.)

Fifth, the other party expected to negotiate, and is disappointed.  How would Mark Zuckerberg have felt if Sandberg had accepted his first offer? If the other party is a good negotiator, they will feel that an opportunity has been missed to create value. And if they are hiring you to negotiate for the company, but you have just demonstrated that you don’t negotiate for yourself (like Sheryl Sandberg almost did), you have lost respect and maybe more. In fact, if discussions end too quickly because you accepted the first offer, the other party may wonder if they failed to uncover a problem. Did you have something to hide?

At Watershed, we teach business women and men everyday how to negotiate in a way that is more likely to create value, lead to a successful negotiation, and a sustainable agreement. We speak to groups of seasoned professional women about using those same best practices on their own behalf. Women are strong negotiators for others. Listen to Sheryl Sandberg when she says women need to “lean in” and negotiate for themselves as well.

Negotiating Tip

A deal is successful when it's implemented successfully. That happens when all options were explored so everyone feels satisfied.


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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.

Business man silhouette looking at puzzle pieces to prepare for Negotiation

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.

DEAL word under a magnifying glass

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!   

6–HAVE FUN

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.

Negotiator holding apple with A+ grade carved in it

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!

Negotiating Tip

Summarize early and often.


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