Ricky was sitting across the desk from a car salesman, and Ricky appeared troubled.
He had spent the last two hours negotiating for a new minivan. By this time, Ricky had successfully driven the price down by several thousand dollars; had options thrown in for free and just got the floor mats as well.
The salesman looked as though he’d been through nine rounds and was trying to survive the tenth.
“So,” said the salesman, a trickle of sweat winding down the side of his face, “do we have a deal?”
“I don’t know,” Ricky said. “I feel like there is one more thing…”
“What?” the salesman cried out. “What more do you need?”
Ricky’s eyes lit up. “I know,” he said. “Give me your necktie.”
The salesman’s jaw dropped. Did he hear this right? “What?”
“Yeah,” Ricky said. “Give me your necktie and we have a deal.”
The salesman hesitated, then pulled the tie from around his neck and tossed it into Ricky’s arms.
“There,” he snarled.
“Thanks,” Ricky said, smiling. “Where do I sign?”
This is, as they say, "based on a true story." Let’s face it, Ricky didn’t ask for the necktie because he wanted to spiff up his business attire. What he wanted was a trophy, a “scalp” he could tie to the antenna and tell everyone, “I drove such a hard deal that I even got the guy’s necktie!”
Sometimes in our own negotiations we will get a request from the other party that feels “unfair”, like they are pushing too far. We perceive our choice as saying “yes” and closing the deal, or saying “no” and losing the deal. The path a disciplined negotiator takes is to understand WHY the other side is making the ask, testing the legitimacy of those interests and seeing if there are other options that might meet those interests.
Interests: “Can you help me understand what the value of the tie is to you?” This is the “why” question without asking “why.” Understanding why somebody wants something, what their underlying interest is, is critical to trying to generate options to find another solution.
Legitimacy: In this case, the “why” question will also drive out a troubling element of this ask: it has no legitimacy. Ricky just wants to feel like he “won” by walking out with a prize. But by asking the “why” question in a non-confrontational way, it puts the onus on Ricky to explain the legitimacy. Most important, if he agrees to give the necktie, the salesman sets a precedent for himself and his industry that strengthens legitimacy for the future. Agreeing to an illegitimate request adds legitimacy for the next time because “you’ve done this before.”
Options: Upon understanding Ricky’s interests, perhaps the salesman could offer something else that meets his own interests, like encouraging Ricky to spend his services dollars at the dealership. “I really like this tie. My mother, God rest her soul, gave it to me last Christmas. Tell you what, how about a free oil change instead? That’s worth more than the tie.” Even better if he can offer a second option, such as a free car wash, and let Ricky choose between those two. Psychologically, a party always feels empowered when they are the ones making the decision. When you can, provide multiple options, any one of which is acceptable to you.
Relationship: If Ricky persists in insisting on the tie, the salesman may resort to a question about their relationship. “You know, I get it that you want to win and that’s OK with me because I win as well -- I get you as a customer. But after all the time we have spent together trying to get something done, do we have to end this with me feeling bad because you made me give up my clothes?” Sharing with the other side how you perceive the situation can be a very effective way to change the other party’s frame of reference. Now, Ricky might think: “I am not ‘winning’ so much as I am humiliating a guy who really has been very good trying to get me this car. Heck, do I really need the necktie?”
When negotiating, take note of those moments when your “fairness” radar goes off. It’s usually accompanied by the thought, “Why this? Why now?” Stop and ask the other side to help you understand how that request helps the deal from their side, then share with them why you find it challenging. As Deal Whisperers, we want to close deals that drive value and mutual success for both parties and not give away our neckties!
Sunday, October 24, 2010
Monday, October 18, 2010
Do You Have a Commitment Problem?
Did you ever have a negotiation that couldn’t seem to find its legs?
You meet with the other party several times and their requests always seem to be a variation of the ones from the last meeting. It’s as though their strategy is to keep asking for the same thing over and over in the hopes that you will grow weary and just say “yes”. Or they probe and prod, seeking more information and variations of your proposal without providing any sense if they will ever do a deal.
Sounds like you have a commitment problem.
Sometimes the other party with whom you are negotiating sends in a team with limited authority. That team is unable to commit to anything except your acceptance of their initial terms; or the individual with whom you are speaking does not actually have the ability to pursue a deal, just to talk about the possibility of a deal. You may offer multiple ways of trying to achieve their goals, but nothing will happen because they lack the power to commit to anything that’s beyond their authority. You are left with three basic options: shape it, raise it or leave it.
By “shape it” we mean to discuss with the other party what they can say “yes” to and collaborate on legitimate changes to your proposal to shape a “yes-able” solution. This is in contrast to what less experienced negotiators will do by openly challenging the other party’s authority and demanding a decision-maker be brought into the room. By trying to collaborate, even if it does not produce an agreement, you will have demonstrated respect for the other party’s authority and role in the process. Chances are the other side will, on its own, engage its more senior management, recognizing there is value to be had and a need for greater authority.
If you hit a dead end trying to shape it, then you will have to “raise it”. Map out the parties on the other side of the table and determine who in the organization has a vested interest in the outcome of this deal. Is there a way to raise the issue with them and make them aware of the value of the proposals you have made which keep getting rejected?
If you are negotiating with someone who cannot make a commitment, the solution is often as simple as going to the person who does have such authority and asking for help in trying to close the issues. Exercise caution here, though, as you risk stepping on the other party’s authority by going to the next level of management. One suggestion is to discuss this with the other party in advance as something your management is going to trigger. “Peter, we feel strongly that there is a great deal for both of us here and my management is going to ask me why we could not reach agreement. I know my boss is going to call your boss and ask for advice on how we can get something done.” The key is to frame it not as a threat, but as a logical statement of what the parties should expect will happen next.
“Leave it” means stop wasting your time on this engagement and find a company to work with that will appreciate what you are offering. While it is often hard to walk away from a deal, sometimes that is the best decision. Remember, a successful negotiation is not defined by whether you sign a deal. It’s determined by whether or not you make a good decision. At some point you have to decide whether your commitment to a potentially negative deal is better than no deal at all.
You meet with the other party several times and their requests always seem to be a variation of the ones from the last meeting. It’s as though their strategy is to keep asking for the same thing over and over in the hopes that you will grow weary and just say “yes”. Or they probe and prod, seeking more information and variations of your proposal without providing any sense if they will ever do a deal.
Sounds like you have a commitment problem.
Sometimes the other party with whom you are negotiating sends in a team with limited authority. That team is unable to commit to anything except your acceptance of their initial terms; or the individual with whom you are speaking does not actually have the ability to pursue a deal, just to talk about the possibility of a deal. You may offer multiple ways of trying to achieve their goals, but nothing will happen because they lack the power to commit to anything that’s beyond their authority. You are left with three basic options: shape it, raise it or leave it.
By “shape it” we mean to discuss with the other party what they can say “yes” to and collaborate on legitimate changes to your proposal to shape a “yes-able” solution. This is in contrast to what less experienced negotiators will do by openly challenging the other party’s authority and demanding a decision-maker be brought into the room. By trying to collaborate, even if it does not produce an agreement, you will have demonstrated respect for the other party’s authority and role in the process. Chances are the other side will, on its own, engage its more senior management, recognizing there is value to be had and a need for greater authority.
If you hit a dead end trying to shape it, then you will have to “raise it”. Map out the parties on the other side of the table and determine who in the organization has a vested interest in the outcome of this deal. Is there a way to raise the issue with them and make them aware of the value of the proposals you have made which keep getting rejected?
If you are negotiating with someone who cannot make a commitment, the solution is often as simple as going to the person who does have such authority and asking for help in trying to close the issues. Exercise caution here, though, as you risk stepping on the other party’s authority by going to the next level of management. One suggestion is to discuss this with the other party in advance as something your management is going to trigger. “Peter, we feel strongly that there is a great deal for both of us here and my management is going to ask me why we could not reach agreement. I know my boss is going to call your boss and ask for advice on how we can get something done.” The key is to frame it not as a threat, but as a logical statement of what the parties should expect will happen next.
“Leave it” means stop wasting your time on this engagement and find a company to work with that will appreciate what you are offering. While it is often hard to walk away from a deal, sometimes that is the best decision. Remember, a successful negotiation is not defined by whether you sign a deal. It’s determined by whether or not you make a good decision. At some point you have to decide whether your commitment to a potentially negative deal is better than no deal at all.
Sunday, October 10, 2010
How To Have a Difficult Conversation
We failed.
We don’t have the money.
There’s been an accident.
These opening lines are not the ideal way to start a meeting. Yet sometimes, despite our best efforts, we have to have a difficult conversation with a customer, supplier or family member. Wouldn't it make you feel a little better if you had a way to prepare for such a conversation?
This week we will talk about some tools and analysis you can use to develop your skills handling difficult conversations. Unfortunately, the only way to improve is to keep having difficult conversations! But the experience will make you a much better negotiator as you build your confidence in handling tough issues, and turn that big knot in your stomach into a smaller knot. (No, it never goes away entirely.)
The key is to analyze as best you can the impact of the news and the likely response of the other party. From there you can develop the right way to sequence the conversation and manage your emotions to reduce the emotional reaction of the other party. If handled properly, difficult conversations and the efforts to address the problem can actually result in a better relationship with your counterpart instead of a worse one.
First, make sure you know what happened! Don’t have the conversation until you know, as well as possible, what caused the problem, what the situation is now and how you will remedy this for the future. Demonstrate that you have been diligent in researching the details. That said, don’t delay so that the problem gets worse; timely engage the other party if their input is needed.
Second, determine what the problem means to the other side from a business and personal perspective. Will it impact a business cycle? Are additional funds required? How does this affect their status in the organization? Did they “go to bat” for you? How will the other party react when they realize the implications? Be prepared to acknowledge the legitimacy of their emotions. “I understand this is a major issue for you and you have every right to be frustrated and angry about this.”
Third, acknowledge your mistakes. Relationships thrive on trust. Honesty is the single greatest element of trust. If you try to rationalize the outcome to shift blame, it won’t change the impact to the other party. But it will highlight that you care more about your self-interests than helping to mitigate the problem you just dumped in their lap. Nothing destroys a relationship faster than the suggestion of self-interest.
Fourth, know what outcomes you want from the meeting. Do you need the other side to make a decision? Take action? Inform others? Think about what the other party needs to do once they have the information and how you can offer to help.
Finally, and most important of all, rehearse. Sit down with a team member and role play the conversation. Practice saying the actual words you will use. Getting feedback in advance on how your words sound to someone else can avoid unnecessary perception issues.
Everybody knows that mistakes happen. The key to a successful difficult conversation is demonstrating candor in the cause, empathy in the emotion and remedies against repetition. If you work diligently and collaboratively to mitigate the impact, the other party will perceive you as a trusted ally worthy of a continued relationship.
We don’t have the money.
There’s been an accident.
These opening lines are not the ideal way to start a meeting. Yet sometimes, despite our best efforts, we have to have a difficult conversation with a customer, supplier or family member. Wouldn't it make you feel a little better if you had a way to prepare for such a conversation?
This week we will talk about some tools and analysis you can use to develop your skills handling difficult conversations. Unfortunately, the only way to improve is to keep having difficult conversations! But the experience will make you a much better negotiator as you build your confidence in handling tough issues, and turn that big knot in your stomach into a smaller knot. (No, it never goes away entirely.)
The key is to analyze as best you can the impact of the news and the likely response of the other party. From there you can develop the right way to sequence the conversation and manage your emotions to reduce the emotional reaction of the other party. If handled properly, difficult conversations and the efforts to address the problem can actually result in a better relationship with your counterpart instead of a worse one.
First, make sure you know what happened! Don’t have the conversation until you know, as well as possible, what caused the problem, what the situation is now and how you will remedy this for the future. Demonstrate that you have been diligent in researching the details. That said, don’t delay so that the problem gets worse; timely engage the other party if their input is needed.
Second, determine what the problem means to the other side from a business and personal perspective. Will it impact a business cycle? Are additional funds required? How does this affect their status in the organization? Did they “go to bat” for you? How will the other party react when they realize the implications? Be prepared to acknowledge the legitimacy of their emotions. “I understand this is a major issue for you and you have every right to be frustrated and angry about this.”
Third, acknowledge your mistakes. Relationships thrive on trust. Honesty is the single greatest element of trust. If you try to rationalize the outcome to shift blame, it won’t change the impact to the other party. But it will highlight that you care more about your self-interests than helping to mitigate the problem you just dumped in their lap. Nothing destroys a relationship faster than the suggestion of self-interest.
Fourth, know what outcomes you want from the meeting. Do you need the other side to make a decision? Take action? Inform others? Think about what the other party needs to do once they have the information and how you can offer to help.
Finally, and most important of all, rehearse. Sit down with a team member and role play the conversation. Practice saying the actual words you will use. Getting feedback in advance on how your words sound to someone else can avoid unnecessary perception issues.
Everybody knows that mistakes happen. The key to a successful difficult conversation is demonstrating candor in the cause, empathy in the emotion and remedies against repetition. If you work diligently and collaboratively to mitigate the impact, the other party will perceive you as a trusted ally worthy of a continued relationship.
Sunday, October 3, 2010
What Are You Afraid Of?
The most frequent answer people provide when asked what they don’t like about negotiations is: “I don’t like confrontation.” Though understandable, to a disciplined negotiator it’s a funny response, like someone saying, “I don’t like driving because I don’t like car crashes.”
When done properly, negotiations are not confrontational just as driving to the market should not produce a crash. But accidents do happen, and once in a while we will have to deal with a confrontational negotiator.
Don’t be afraid of that negotiator. Our job is to help him realize how potentially negative behavior will destroy or prevent value creation for the parties. As Deal Whisperers, we need to shape the negotiation environment from the start so the other party understands we are not here to fight, we are here to find common ground for agreement. Presumably, the other party has business goals, as do we, and we hope some of those goals are shared. We want to achieve an environment of creativity and collaboration to reach the best outcome possible for both parties. When the other party’s behavior puts the outcome of the negotiation at risk, we need to act.
In a recent negotiation, the lead negotiator found the parties on the other side to be very confrontational, snapping back at all of his questions and responses. The team took a break and talked about what was happening in the room. They decided to do something radical: they would ask the other party if something was wrong!
The negotiation lead returned to the room and said, “Before we get started again, I just wanted to ask if there is some issue we’re not getting on the table. Everyone seems very impatient when I talk and it feels like there is a lot of tension in the room.”
The negotiation lead said the reaction was like watching air come out of a balloon as the parties on the other side relaxed. The negotiations continued without any more harsh words.
By simply identifying to the other side the emotions he was sensing and asking what to do, the lead negotiator drained the room of tension. His goal was to understand what was driving the confrontational behavior and the way he asked was non-confrontational.
When the other side behaves in a strong, confrontational manner, don’t be afraid. Say to yourself, “That type of behavior will not help us close a deal. How do I change the behavior?” In doing so you empower yourself to rise above the other side’s emotions, and your own emotional reactions, so you can address the problem, not run from it.
When done properly, negotiations are not confrontational just as driving to the market should not produce a crash. But accidents do happen, and once in a while we will have to deal with a confrontational negotiator.
Don’t be afraid of that negotiator. Our job is to help him realize how potentially negative behavior will destroy or prevent value creation for the parties. As Deal Whisperers, we need to shape the negotiation environment from the start so the other party understands we are not here to fight, we are here to find common ground for agreement. Presumably, the other party has business goals, as do we, and we hope some of those goals are shared. We want to achieve an environment of creativity and collaboration to reach the best outcome possible for both parties. When the other party’s behavior puts the outcome of the negotiation at risk, we need to act.
In a recent negotiation, the lead negotiator found the parties on the other side to be very confrontational, snapping back at all of his questions and responses. The team took a break and talked about what was happening in the room. They decided to do something radical: they would ask the other party if something was wrong!
The negotiation lead returned to the room and said, “Before we get started again, I just wanted to ask if there is some issue we’re not getting on the table. Everyone seems very impatient when I talk and it feels like there is a lot of tension in the room.”
The negotiation lead said the reaction was like watching air come out of a balloon as the parties on the other side relaxed. The negotiations continued without any more harsh words.
By simply identifying to the other side the emotions he was sensing and asking what to do, the lead negotiator drained the room of tension. His goal was to understand what was driving the confrontational behavior and the way he asked was non-confrontational.
When the other side behaves in a strong, confrontational manner, don’t be afraid. Say to yourself, “That type of behavior will not help us close a deal. How do I change the behavior?” In doing so you empower yourself to rise above the other side’s emotions, and your own emotional reactions, so you can address the problem, not run from it.
Subscribe to:
Posts (Atom)