“We had our meeting with the client,” Verdi said to Tyler Gitou. “As you suggested, I provided him the two options.”
“Let me make sure I understand the situation,” said Tyler. “You offered to deliver the equipment for $1 million with a certain level of quality. The client then asked for a $100,000 reduction in price or else he would go to your competitor.”
Verdi nodded. “That’s right. We spoke and you suggested I offer him two options: either paying $1 million for the equipment with the higher quality components, or paying $900,000 for lower quality components.”
“Good,” said Tyler. “Now let’s think about how he might respond.”
“He will either accept one of the two options,” said Verdi, “or he may come back and say he wants both higher quality components and a lower price. If that happens, what do I do? We can’t provide the better quality for the lower price. It’s a bad deal for us. I can’t agree to it.”
"What will he do if you can’t reach agreement?” Tyler asked. “What’s his BATNA?”
“His what?”
“His best alternative to a negotiated agreement, or BATNA. What will he do if he can’t reach a deal with you and he walks away? Will he do a deal with someone else? Not do a deal at all? We need to think of all of his potential alternatives and decide which alternative is best for him. That’s his BATNA.”
“He could delay doing a deal,” Verdi said. “Or he could go to my competitor for the lesser price.”
“Is he likely to do either of those things?” Tyler asked. “Is your competitor’s offering as good as yours? Or will his old equipment provide the quality he needs?”
Verdi thought for a moment. “No and no,” he said. “The competitor’s product is not even close to ours in terms of quality and reliability. And he has to do a deal to upgrade the equipment because he has regulatory compliance issues to address.”
“What I am hearing, then, is that your client really has no alternative which will better meet his interests than your product, and that the deal you have put on the table is your best and final offer. Is that correct?”
Verdi nodded. “That’s sounds right,” Verdi said. “So what do I say if he requests the same quality at the lower price?”
“Verdi, the answer is right there in front of you!” Tyler laughed. “You’re just afraid to say it.”
Verdi swallowed hard. “I say, ‘no’.”
“Exactly,” Tyler said. “You have to say ‘no’ because you just told me you won’t say ‘yes’! But you’re afraid to say ‘no’ because you perceive that is the end of the deal. It’s not. A Deal Whisperer knows that ‘no’ is often the beginning of the deal. What you don’t see is that your client is waiting for you to say ‘no’. Like any good negotiator, he is going to keep asking you for changes until you say ‘no’. Why shouldn’t he keep asking as long as there is a chance you might say ‘yes’?”
“You’re right, of course. I was afraid of what he would do if I said ‘no’. Analyzing his BATNA with you makes me less concerned. But how do I actually say ‘no’?”
Tyler smiled. “Explain the situation. This is your best deal. You can reduce the price if you reduce the quality, otherwise your hands are tied. Let him know this is it. You don’t have to say ‘no’ so much as you need to let him know these are the final options.”
Verdi stood up. “OK, I’ll give him a call. Let’s hope the next time we meet it’s to say the deal is done!”
“I’m confident it will be,” Tyler said.
Showing posts with label negotiation. Show all posts
Showing posts with label negotiation. Show all posts
Monday, January 3, 2011
Wednesday, December 15, 2010
When the Process Hurts the Substance
“I’m afraid that’s the end of our hour together,” Peter said to Tyler Gitou. “If you could get back to me on those points by tomorrow, I’d appreciate it.”
“Peter,” Tyler said quietly, “I can certainly get a response to you by tomorrow. But it won’t be a very informed response because there is not enough time to get all the information I need. Can I send you the material on Thursday instead? That way I can give you a better response.”
Peter thought for a moment and then nodded his head. “Yes, that would be OK.”
“Terrific,” Tyler said. “And after you have a chance to review it, could we schedule two hours for our next meeting? I don’t feel we are making enough progress in the hour we meet each week. I am mindful that you are trying to sign this deal before the end of the quarter.”
Peter shrugged. “That sounds fine. Let’s plan on two hours next Tuesday.”
The parties stood, shook hands and left the room. Tyler and Verdi got into the elevator.
“Mr. Gitou, why did you make such a big deal about the time?” Verdi asked. “You know they get very upset when we don’t follow the process.”
“The same process does not work for every deal, Verdi,” Tyler said. “Peter has made it clear that his primary interest is getting this engagement closed by the end of March. I mapped out all that both parties need to do in the next six weeks and we can’t meet that deadline using their process. We will miss something.”
“Miss something?”
“Yes, Verdi,” Tyler said. “This is a complex deal and both parties have a lot of details to review. What will happen is we will discover with two weeks left how much has to get done, we will rush, and we will miss something. The process of a negotiation can be as important as the substance, and poor planning of the process can impact the quality of the deal.”
“I agree, but how do you get a party that says, ‘This is the process to follow” to change?” Verdi asked.
“Talk about the outcomes and options and let the parties choose,” Tyler said. “Map out the process with your own team, reach a conclusion on the expected outcome, and then share it with the other party. Ask them whether they would like to follow the current process for a sub-optimal outcome, or a different process for a better outcome.”
“So you negotiate how to negotiate?” Verdi asked.
“Exactly,” Tyler said. “A Deal Whisperer knows that a good negotiation is a collaborative event. Presumably the parties share a common goal: to get to the best possible deal for both sides. If one side says, ‘I think the process we are following is going to impact our outcome’ then the other party should listen. Ideally, the parties would agree in advance on a jointly-developed process that drives to the best outcome. Establish the process before discussing substance. But if you don’t have the chance to do that up front, look for an opportunity to raise the issue so the process does not hurt the substance.”
“Peter,” Tyler said quietly, “I can certainly get a response to you by tomorrow. But it won’t be a very informed response because there is not enough time to get all the information I need. Can I send you the material on Thursday instead? That way I can give you a better response.”
Peter thought for a moment and then nodded his head. “Yes, that would be OK.”
“Terrific,” Tyler said. “And after you have a chance to review it, could we schedule two hours for our next meeting? I don’t feel we are making enough progress in the hour we meet each week. I am mindful that you are trying to sign this deal before the end of the quarter.”
Peter shrugged. “That sounds fine. Let’s plan on two hours next Tuesday.”
The parties stood, shook hands and left the room. Tyler and Verdi got into the elevator.
“Mr. Gitou, why did you make such a big deal about the time?” Verdi asked. “You know they get very upset when we don’t follow the process.”
“The same process does not work for every deal, Verdi,” Tyler said. “Peter has made it clear that his primary interest is getting this engagement closed by the end of March. I mapped out all that both parties need to do in the next six weeks and we can’t meet that deadline using their process. We will miss something.”
“Miss something?”
“Yes, Verdi,” Tyler said. “This is a complex deal and both parties have a lot of details to review. What will happen is we will discover with two weeks left how much has to get done, we will rush, and we will miss something. The process of a negotiation can be as important as the substance, and poor planning of the process can impact the quality of the deal.”
“I agree, but how do you get a party that says, ‘This is the process to follow” to change?” Verdi asked.
“Talk about the outcomes and options and let the parties choose,” Tyler said. “Map out the process with your own team, reach a conclusion on the expected outcome, and then share it with the other party. Ask them whether they would like to follow the current process for a sub-optimal outcome, or a different process for a better outcome.”
“So you negotiate how to negotiate?” Verdi asked.
“Exactly,” Tyler said. “A Deal Whisperer knows that a good negotiation is a collaborative event. Presumably the parties share a common goal: to get to the best possible deal for both sides. If one side says, ‘I think the process we are following is going to impact our outcome’ then the other party should listen. Ideally, the parties would agree in advance on a jointly-developed process that drives to the best outcome. Establish the process before discussing substance. But if you don’t have the chance to do that up front, look for an opportunity to raise the issue so the process does not hurt the substance.”
Monday, December 6, 2010
Say Something
Tyler Gitou was sitting in his office when Verdi walked in and flopped into a chair.
“How are the negotiations going, Verdi?” Tyler asked.
“Hard,” Verdi sighed. “The other negotiation team seems to be… mad at me!”
Tyler set his glasses on the desk. “Why are they mad?”
“I don’t know!” Verdi said. “But every time I say something, one of their team members snaps at me, then another snaps at me. It’s really tense in there.”
“Why don’t you say something? Ask what the problem is,” Tyler said. “When you go back into the room, open with, ‘Before we get started, I just wanted to ask if there is some problem I need to be aware of. It feels like there’s a lot of tension in the room and your team may be upset with me about something.’”
Verdi jumped up. “Thanks, Mr. Gitou. I will try that.”
Two hours later Tyler saw Verdi getting a cup of coffee. “How did your afternoon session go?” Tyler asked.
“It went great, thanks. I did just as you said. I asked why everyone seemed so tense. Nobody said anything, but it was like watching air come out of a balloon; everyone on the other side of the table exhaled and seemed to relax. There was never an explanation of why they were tense in the first place!”
Tyler nodded. “I’m glad it worked out. There is a concept in psychology called ‘social proof’. It’s the influencing effect we feel when others do something and we feel we have to follow. Like at a performance when the audience rises to give a standing ovation. You may not think the performance warrants a standing ovation, but you feel compelled to stand rather than be the one person sitting down. Sometimes, when you’re in a group for too long, a social proof-type dynamic builds. Pretty soon everyone starts behaving the same way, though they don’t know why.
“Sounds like a ‘pile on’ effect,” Verdi said.
“It was in your case. Someone in the room, probably the lead negotiator or other authority figure, said or did something that was sharply critical of your team. When someone with more information or authority behaves a certain way, others around him or her will follow that behavior because they don’t have enough information to know what they should do. Once the lead person on the other team established ‘This is how we will talk to Verdi’s team’ that behavior continued and compounded.”
“Until I asked the critical question, ‘Why are you all doing this?’ No one had an answer, and it just stopped,” Verdi said.
“Exactly,” Tyler said. “This is why I always say, ‘prepare and aware.’ A lot of people prepare for their negotiations, but once in the room they don’t maintain awareness of how the emotional dynamic is changing. To keep both parties collaborative and unconditionally constructive, a Deal Whisperer stays aware of group mood swings. And if the emotions seem to be headed off-track, don’t be afraid to say something. When the parties share a common goal, everyone appreciates someone who keeps the group focused on achieving the goal. That’s the role of the Deal Whisperer.”
(For an amusing example of social proof in action, watch this video from the old Candid Camera TV show.)
http://www.youtube.com/watch?v=sicoCkUZ-dk
“How are the negotiations going, Verdi?” Tyler asked.
“Hard,” Verdi sighed. “The other negotiation team seems to be… mad at me!”
Tyler set his glasses on the desk. “Why are they mad?”
“I don’t know!” Verdi said. “But every time I say something, one of their team members snaps at me, then another snaps at me. It’s really tense in there.”
“Why don’t you say something? Ask what the problem is,” Tyler said. “When you go back into the room, open with, ‘Before we get started, I just wanted to ask if there is some problem I need to be aware of. It feels like there’s a lot of tension in the room and your team may be upset with me about something.’”
Verdi jumped up. “Thanks, Mr. Gitou. I will try that.”
Two hours later Tyler saw Verdi getting a cup of coffee. “How did your afternoon session go?” Tyler asked.
“It went great, thanks. I did just as you said. I asked why everyone seemed so tense. Nobody said anything, but it was like watching air come out of a balloon; everyone on the other side of the table exhaled and seemed to relax. There was never an explanation of why they were tense in the first place!”
Tyler nodded. “I’m glad it worked out. There is a concept in psychology called ‘social proof’. It’s the influencing effect we feel when others do something and we feel we have to follow. Like at a performance when the audience rises to give a standing ovation. You may not think the performance warrants a standing ovation, but you feel compelled to stand rather than be the one person sitting down. Sometimes, when you’re in a group for too long, a social proof-type dynamic builds. Pretty soon everyone starts behaving the same way, though they don’t know why.
“Sounds like a ‘pile on’ effect,” Verdi said.
“It was in your case. Someone in the room, probably the lead negotiator or other authority figure, said or did something that was sharply critical of your team. When someone with more information or authority behaves a certain way, others around him or her will follow that behavior because they don’t have enough information to know what they should do. Once the lead person on the other team established ‘This is how we will talk to Verdi’s team’ that behavior continued and compounded.”
“Until I asked the critical question, ‘Why are you all doing this?’ No one had an answer, and it just stopped,” Verdi said.
“Exactly,” Tyler said. “This is why I always say, ‘prepare and aware.’ A lot of people prepare for their negotiations, but once in the room they don’t maintain awareness of how the emotional dynamic is changing. To keep both parties collaborative and unconditionally constructive, a Deal Whisperer stays aware of group mood swings. And if the emotions seem to be headed off-track, don’t be afraid to say something. When the parties share a common goal, everyone appreciates someone who keeps the group focused on achieving the goal. That’s the role of the Deal Whisperer.”
(For an amusing example of social proof in action, watch this video from the old Candid Camera TV show.)
http://www.youtube.com/watch?v=sicoCkUZ-dk
Monday, November 1, 2010
Admit It, You're Wrong!
Nobody likes being wrong. In fact, some people have so much trouble admitting they are wrong that they will perform acrobatic feats of rationalization to avoid accepting blame. Think for a moment about arguments you have had with your significant other. How often do the excuses start with, “Well, if you hadn’t…” and continue with a tenuous chain of cause and effect that ends with “…so it’s not my fault!”
Disciplined negotiators not only admit when they are wrong, they use mistakes as opportunities to build trust. Because people rarely admit their errors, when we deal with people who do, it is refreshing and puts them in a different light than run of the mill “blame dodgers.” Over a period of time, having a reputation for admitting mistakes can pay dividends when a problem arises that really isn’t your fault. The other party has every reason to believe you because you’ve shown your practice is to admit when it is your fault. They trust you.
A greater challenge is what to do when the other party refuses to admit that they have made a mistake. Trying to resolve a dispute, for example, becomes difficult if the other side won't acknowledge their contributions to the problem. (In one memorable exchange, Party A admitted they had made mistakes, but said it was still Party B’s fault because Party B failed to stop Party A from making mistakes!)
The reason why people don’t admit mistakes is very simple: they fear the consequences of being held accountable. Like a teenager claiming the dent in the car was “not my fault,” they don’t want to get “in trouble”. Those consequences might be institutional (they expose their business to liability) or personal (they or their colleagues will hurt their careers or reputations). In some cases, the fear may be purely egotistical: some people like to believe they are always right.
If you can eliminate their fear of the consequences you will start to change the other party’s behavior. Two ways of eliminating the fear are:
· Build affiliation by acknowledging your own mistakes or by sharing examples where other business partners made mistakes and how things worked out. Create an environment where everyone appreciates the issues are complex, fast-moving and mistakes will be made. Just don’t make the same mistakes twice! “Hey, we’re trying to launch a whole new business process here under tight timelines. We’re all doing our best but we know something will get messed up. The key is to learn from it, fix it, and move on.”
· When discussing what went wrong, also discuss the outcomes. If the other party can see over the horizon, they may be more willing to concede what happened. Demonstrate your intent is to help remedy the problem and to make them as successful as you in achieving the goal. “We know you are short of material for now. I can get some from another supplier and keep working on the product until you can get the rest of what we need from your factory. The cost for the delay will be minimal. What else can we do to help you?”
These same methods apply even to teenagers! Before asking “what happened”, let them know the consequences. Tell them the truth will produce one outcome, and not telling the truth produces a harsher outcome. Model the behavior you seek and slowly you will see change.
Disciplined negotiators not only admit when they are wrong, they use mistakes as opportunities to build trust. Because people rarely admit their errors, when we deal with people who do, it is refreshing and puts them in a different light than run of the mill “blame dodgers.” Over a period of time, having a reputation for admitting mistakes can pay dividends when a problem arises that really isn’t your fault. The other party has every reason to believe you because you’ve shown your practice is to admit when it is your fault. They trust you.
A greater challenge is what to do when the other party refuses to admit that they have made a mistake. Trying to resolve a dispute, for example, becomes difficult if the other side won't acknowledge their contributions to the problem. (In one memorable exchange, Party A admitted they had made mistakes, but said it was still Party B’s fault because Party B failed to stop Party A from making mistakes!)
The reason why people don’t admit mistakes is very simple: they fear the consequences of being held accountable. Like a teenager claiming the dent in the car was “not my fault,” they don’t want to get “in trouble”. Those consequences might be institutional (they expose their business to liability) or personal (they or their colleagues will hurt their careers or reputations). In some cases, the fear may be purely egotistical: some people like to believe they are always right.
If you can eliminate their fear of the consequences you will start to change the other party’s behavior. Two ways of eliminating the fear are:
· Build affiliation by acknowledging your own mistakes or by sharing examples where other business partners made mistakes and how things worked out. Create an environment where everyone appreciates the issues are complex, fast-moving and mistakes will be made. Just don’t make the same mistakes twice! “Hey, we’re trying to launch a whole new business process here under tight timelines. We’re all doing our best but we know something will get messed up. The key is to learn from it, fix it, and move on.”
· When discussing what went wrong, also discuss the outcomes. If the other party can see over the horizon, they may be more willing to concede what happened. Demonstrate your intent is to help remedy the problem and to make them as successful as you in achieving the goal. “We know you are short of material for now. I can get some from another supplier and keep working on the product until you can get the rest of what we need from your factory. The cost for the delay will be minimal. What else can we do to help you?”
These same methods apply even to teenagers! Before asking “what happened”, let them know the consequences. Tell them the truth will produce one outcome, and not telling the truth produces a harsher outcome. Model the behavior you seek and slowly you will see change.
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.
Monday, September 27, 2010
Don't Put Emotion in Motion
Difficult negotiators often bring a lot of emotion to the table: bluster; frustration; accusations. Such behavior can make discussions inefficient and challenging (though sometimes quite entertaining). The last thing we want is for our behavior to produce more negative emotional activity.
But we often unwittingly do exactly that by not considering how our actions might impact the five core emotional concerns that drive building relationships with the other party: Affiliation, Appreciation, Autonomy, Status and Role. For example, when we act in a way that causes the other party to feel as though his/her Role or Authority has been challenged, we should be prepared for the emotional ramifications.
Suppose the other party assigns a new person, Tom, to be our sole channel of communication on all issues related to the negotiation. “What?” says Lou, the senior member of our team. “That doesn’t make any sense. I have worked directly with Kathleen for 15 years. I’m going to tell Kathleen how this will slow us down and cause us to miss the deadline.”
What are the potential outcomes if Lou goes to Kathleen to circumvent the process? One of two things will happen: Kathleen will either intervene on Lou’s behalf, or she won’t.
• If she does intervene, we will have leveraged our relationship and taken ourselves outside of the process. We also will have severely damaged our relationship with Tom by challenging his Authority and Role in the process.
• If she does not intervene, we are still in the process and we now must work with Tom in a potentially negative environment that we created.
So before we make a tactical decision to go over Tom’s head, and have Tom perceive we have no regard for his Authority and Role, we need to do some analysis about the process and the parties:
1. Who owns the process? Who set it up in the first place and how will he/she react to us challenging their Autonomy? What is the goal of having the process? Is that goal legitimate? If so, why are we challenging the process?
2. Who is Tom? What is his role in the process? Is he a decision-maker? A recommender? Or merely a facilitator? What is his Status at the company? How will our actions impact that Status if we, in effect, successfully neutralize him? Will we have to work with him again?
3. What are Kathleen’s interests in the process? If she owns the process and assigned Tom, how likely is she to remove him, or us, from the process? How good is our relationship with Kathleen? Is this the type of request that will improve our relationship with her? Or by being disruptive will we damage our Affiliation and Appreciation with Kathleen after 15 years of working together?
We can see that one tactical decision, made for what Lou believes are legitimate reasons, has many potential impacts on the five emotional concerns. A Deal Whisperer is always mindful of the potential emotional ramifications of words and actions and makes decisions that will improve the emotional health of the environment, not set the other side’s emotions in motion.
For more information on this topic, I recommend reading Beyond Reason: Using Emotions as You Negotiate by Roger Fisher and Daniel Shapiro (2005).
But we often unwittingly do exactly that by not considering how our actions might impact the five core emotional concerns that drive building relationships with the other party: Affiliation, Appreciation, Autonomy, Status and Role. For example, when we act in a way that causes the other party to feel as though his/her Role or Authority has been challenged, we should be prepared for the emotional ramifications.
Suppose the other party assigns a new person, Tom, to be our sole channel of communication on all issues related to the negotiation. “What?” says Lou, the senior member of our team. “That doesn’t make any sense. I have worked directly with Kathleen for 15 years. I’m going to tell Kathleen how this will slow us down and cause us to miss the deadline.”
What are the potential outcomes if Lou goes to Kathleen to circumvent the process? One of two things will happen: Kathleen will either intervene on Lou’s behalf, or she won’t.
• If she does intervene, we will have leveraged our relationship and taken ourselves outside of the process. We also will have severely damaged our relationship with Tom by challenging his Authority and Role in the process.
• If she does not intervene, we are still in the process and we now must work with Tom in a potentially negative environment that we created.
So before we make a tactical decision to go over Tom’s head, and have Tom perceive we have no regard for his Authority and Role, we need to do some analysis about the process and the parties:
1. Who owns the process? Who set it up in the first place and how will he/she react to us challenging their Autonomy? What is the goal of having the process? Is that goal legitimate? If so, why are we challenging the process?
2. Who is Tom? What is his role in the process? Is he a decision-maker? A recommender? Or merely a facilitator? What is his Status at the company? How will our actions impact that Status if we, in effect, successfully neutralize him? Will we have to work with him again?
3. What are Kathleen’s interests in the process? If she owns the process and assigned Tom, how likely is she to remove him, or us, from the process? How good is our relationship with Kathleen? Is this the type of request that will improve our relationship with her? Or by being disruptive will we damage our Affiliation and Appreciation with Kathleen after 15 years of working together?
We can see that one tactical decision, made for what Lou believes are legitimate reasons, has many potential impacts on the five emotional concerns. A Deal Whisperer is always mindful of the potential emotional ramifications of words and actions and makes decisions that will improve the emotional health of the environment, not set the other side’s emotions in motion.
For more information on this topic, I recommend reading Beyond Reason: Using Emotions as You Negotiate by Roger Fisher and Daniel Shapiro (2005).
Monday, August 16, 2010
"What Are We Doing?" Setting Goals in Negotiation
One of the most fundamental errors negotiators make when trying to address a new issue or solve a problem is failing to establish with the other party the goal of the negotiation. On its face it sounds ridiculous. After all, how could two parties come together and never share with each other what they are trying to accomplish? Would two people get into a car to begin a trip without discussing where they are going? Of course not. Imagine the driver heading south to Philadelphia while the passenger is holding a map of Boston! Would the passenger wait until she was standing in front of the Liberty Bell to say, "I thought we were going to Boston!"? Or would the topic come up when she saw signs for Philadelphia?
Parties in a negotiation can be going in different directions and never even realize it. The outcome is they negotiate their way to a compromise, halfway to their respective goals: New York! Neither one is satisfied because neither ended up where they hoped to be.
Consider the story of the entrepreneur and the investor. The negotiations appear to be about the investor trying to buy one of the entrepreneur's businesses. But for some reason the entrepreneur doesn't seem willing to agree to any of the multiple options on valuation, compensation or transition. In fact it feels like the entrepreneur doesn't even want to sell!
Maybe it's time for the parties to discuss whether or not they understand each other's goals.
Investor: "We seem to be struggling to close out some of these issues and I thought maybe we should stop and spend a moment to make sure we both still want to do this deal. Could you share with me what this deal means for you and why you are interested in doing it?"
Entrepreneur: "Well, frankly, when I told people I was interested in selling the company I hadn't expected things to move so quickly. My real goal was to raise money by the sale of this company to fund some of the other companies I am trying to grow."
Investor: "I don't get the sense you want to sell this company."
Entrepreneur: "As we've gone along, I have to say I am having second thoughts. This was my first company and it's kind of my baby."
Investor: "Well what if we shaped the deal differently? My goal was to purchase your company to get access to your technology for the industries I am focused on. What if we did a licensing deal instead? License me the technology so I can go after those markets that you don't seem interested in."
Entrepreneur: "Now that is interesting because I would be able to raise the money I need without selling the business or creating a competitor in my space."
Maybe the parties had started their journey with a common goal. But the investor, staying focused on what the entrepreneur was saying and how he was reacting to the brainstorming, recognized something had changed. The delicate part was finding the right way to ask the entrepreneur to share his goals. Once they started that dialogue, it became clear quickly that the goal was no longer a shared one and the parties needed a new plan: let's go to Chicago!
Poor communication is the single leading cause of issues that arise in a negotiation because the parties are often afraid to talk openly with one another. Positional negotiators are especially prone to this behavior because they fear that sharing information might give the other party some advantage, like finding out what they really want. Ask yourself how one party is supposed to help the other party get what they want if that party won't share what it wants! Positional negotiators simply state that they want X without any explanation of why they want X or how X will help their business.
As a Deal Whisperer, start your negotiations by trying to understand the outcomes of the other party and what you hope to accomplish. Brainstorm on other options that might achieve those objectives. Be open about your own goals as a way of modeling the type of dialogue you'd like to have. Once the parties have articulated their respective goals and see where their interests overlap, the journey to "done" becomes clear.
Parties in a negotiation can be going in different directions and never even realize it. The outcome is they negotiate their way to a compromise, halfway to their respective goals: New York! Neither one is satisfied because neither ended up where they hoped to be.
Consider the story of the entrepreneur and the investor. The negotiations appear to be about the investor trying to buy one of the entrepreneur's businesses. But for some reason the entrepreneur doesn't seem willing to agree to any of the multiple options on valuation, compensation or transition. In fact it feels like the entrepreneur doesn't even want to sell!
Maybe it's time for the parties to discuss whether or not they understand each other's goals.
Investor: "We seem to be struggling to close out some of these issues and I thought maybe we should stop and spend a moment to make sure we both still want to do this deal. Could you share with me what this deal means for you and why you are interested in doing it?"
Entrepreneur: "Well, frankly, when I told people I was interested in selling the company I hadn't expected things to move so quickly. My real goal was to raise money by the sale of this company to fund some of the other companies I am trying to grow."
Investor: "I don't get the sense you want to sell this company."
Entrepreneur: "As we've gone along, I have to say I am having second thoughts. This was my first company and it's kind of my baby."
Investor: "Well what if we shaped the deal differently? My goal was to purchase your company to get access to your technology for the industries I am focused on. What if we did a licensing deal instead? License me the technology so I can go after those markets that you don't seem interested in."
Entrepreneur: "Now that is interesting because I would be able to raise the money I need without selling the business or creating a competitor in my space."
Maybe the parties had started their journey with a common goal. But the investor, staying focused on what the entrepreneur was saying and how he was reacting to the brainstorming, recognized something had changed. The delicate part was finding the right way to ask the entrepreneur to share his goals. Once they started that dialogue, it became clear quickly that the goal was no longer a shared one and the parties needed a new plan: let's go to Chicago!
Poor communication is the single leading cause of issues that arise in a negotiation because the parties are often afraid to talk openly with one another. Positional negotiators are especially prone to this behavior because they fear that sharing information might give the other party some advantage, like finding out what they really want. Ask yourself how one party is supposed to help the other party get what they want if that party won't share what it wants! Positional negotiators simply state that they want X without any explanation of why they want X or how X will help their business.
As a Deal Whisperer, start your negotiations by trying to understand the outcomes of the other party and what you hope to accomplish. Brainstorm on other options that might achieve those objectives. Be open about your own goals as a way of modeling the type of dialogue you'd like to have. Once the parties have articulated their respective goals and see where their interests overlap, the journey to "done" becomes clear.
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