On negotiation
Negotiation is a widely used skill. I’ve encountered various articles on negotiation and they might be useful to know and to practice. These are notes that I’ve summarized from various articles.
6 Habits of Merely Effective Negotiators
Mistakes:
1) Neglecting the other side’s problems
2) Letting price bulldoze other interests
There are potential joint gains to be realized, most people don’t see it and instead see a fixed pie chart. People need to realize negotiations are 50% emotion, 50% economics.
$100 study. This involved two people, one person who can set the terms of how much they want to share and the other person who can agree or disagree. If they disagree, no one gets the money. Most people wouldn’t accept a split unless they get at least 35-40%, and would rather walk away with nothing.
3) Letting positions drive out interest
Get past the position.. see what’s really motivating someone to take a certain stance or to make a certain decision. These are the interests, the motivating factors.
4) Searching too hard for common ground
An overlooked source of value is often the differences between negotiating parties.
5) Neglecting BATNAs
Having a “best alternative to a negotiated agreement” is useful to provide leverage and help with planning.
Roger Fisher: “Which would you prefer to have: A gun or a terrific job offer from a desirable employer who is also a serious competitor of your company?
6) Failing to correct for skewed vision
People tend to be biased towards ourselves. (Role biases)
Ways to combat this: Have people on your own side prepare cases for the opposite.
Negotiation Analysis: An Introduction
BANTAs
Carefully consider this, making sure that it really is the “best.”
Try to imagine creative alternatives and weighing their relative value.
Say you’re negotiating a deal, you’re willing to sell something for $10 mil. Say the buyer is willing to offer up to $13 mil. Then, the value created is $3 mil.
Test the zone of possible agreement. (ZOPA) Figure out how companies view their alternatives and how they view your own.
Learn to identify who the influential players are. Can the other party negotiating with you be able to give you a binding commitment? Or does it have to go through corporate review?
Learn to understand interests of parties. Avoid thinking “selling for highest possible price.” Learn deal structuring.
Negotiators must manage the tension between creating and claiming value
Value is generated by capitalizing on differences. Goes to the point where one’s well being cannot be improved until it hurts the other, this point is called “pareto optimal”
Four page guide to negotiation
Prepare yourself before a meeting- get the right attitude and gather information on what your interests are and what the other party might be.
Become a bit clinical, detached, even selfless.
Position vs Interest
Position - stances
Interests - reasons behind stances
Don’t make a counter-offer to a ridiculous initial proposal. Better to say, no thanks.
“To move matters along, ask a question”
Dig hard for interests.
As soon as the framework for possible agreement emerges, nudge in that direction. Remind the other side this particular issue has been settled, refuse to reopen it, move on to what’s still open.
Don’t hurry them, or yourself, otherwise they might blow up over a small point.
If you think you’re in accord, suggest “have we got a deal?”
