Make Them Earn Those Concessions!

There is a great study quoted in THE WEEK magazine, June 4, 2004. It discusses the importance in human nature of earning our rewards. This is an important lesson for negotiators. What we give someone generally creates less satisfaction than what they earn from us.

The article:

"Despite their wealth, trust-fund babies and lottery winners are often unhappy. New research explains why: Our brains are hard-wired to enjoy rewards more when we earn them. Behavioral scientists at Emory University in Atlanta monitored the brain activity of two groups of people as they played computer games.

One group had to successfully execute difficult tasks before being rewarded with sacks of simulated cash. The other group got the cash no matter what they did.

When the money arrived, only the people who had to work for it registered a flurry of activity in the region of the brain that appears to process rewards and experience pleasure.

"From the brain's perspective, earning it is more meaningful and probably more satisfying." researcher Gregory Berns tells the Associated Press."

Jim Sauerwein

The Best Negotiators?

Years ago I asked a seminar group to identify the best negotiator they had ever met. There was no response, so I suggested they think of a short person. Finally someone ventured, "You mean a kid?"

That was the answer I was seeking. Think of a brand new baby. How long does it take that child to discover their negotiating power?

Think of some of the characteristics of a good negotiator:

• Identify sources of power. Every infant learns to trade quiet and serenity for food, holding, walking, changing and adult babble.
• Aspire a little higher to do a little better. Children are never reluctant to ask for more than they believe they will get. A parent sits there and wonders, "Why did she ask for that: she knows I will say "NO"? The child, however, is thinking, "Ya never know!"
• Precondition the other party. Have you ever had a child open a negotiation with you by using this preconditioning: "I know you're going to say NO, but....."? Or, "All of my friend's parents are letting them go to that party next Saturday" Have you ever been preconditioned for a bad grade in math by learning about the wicked witch of algebra just before the report cards are issued?
• Get something in return for a concession. Does this sound familiar: "If you let me do....., I'll do.....for you."?
• Control the first concession. Every child understands that if the parent makes a large first concession it is usually a sign of weakness, guilt, or a need to get this negotiation over quickly. This encourages the child to ask for more.
• Be willing to take on higher authority. The higher authority in any two-parent family immediately becomes the one who has not said "NO" yet.

These are but a few of the intuitive negotiating characteristics a child brings into the world with them. Consider this: You were that child once; what happened?

Jim Sauerwein

NBC and NFL Football Negotiation

Most of us just watched the 2007 Super Bowl. Here's the background on interesting negotiation NBC had with the NFL. NBC negotiated the broadcast rights to NFL football.

It all started with NBC wanting to get their ratings up and deciding that NFL Football was the way to go. This is a great example of a Both-Win corporate negotiation. Sports Illustrated magazine covered it in an article last year.

In any competitive negotiation you must first protect your interests (what's the best deal for me). And at the same time look for opportunities to create an outcome that is good for both parties. The people at Harvard talk about Win-Win ----- Karrass calls this type of negotiation a Both-Win.

After being shut out of NFL broadcasts for nine years, NBC negotiated a six-year deal with the NFL for about $600 million a year. NBC lags in the ratings game and hopes this NFL deal will help them gain ground on ABC and CBS.

What did NBC get with the deal?

• Four hours of potential top 10 prime-time programming every week.

• Two Super Bowls (2009 and 2012) - talk about advertising $$$$.

• The annual Thursday-night opening game.

• Two wild-card games each season.

• A platform to promote NBC's prime-time lineup of shows.

• And the right to choose the late-season games it will broadcast, so fans can see the most competitive games at the end of the season (a right the NFL would not provide before)

Now, keep in mind that NBC is owned by GE.

Here's what else was negotiated into the deal.

• GE Finance will play an increased role in the NFL loan pool financing program that helps NFL owners finance new stadium construction.

• GE's new Security Services Unit will promote and provide stadium security to NFL owners.

• Fans and players will have the advantage of on-site medical technology provided and promoted by GE Medical Products.

• And, it costs a lot to illuminate these football stadiums. GE is the leader in energy efficient lighting technology and manufactures a lot of light bulbs.

The investment firm of Goldman Sachs estimated that the value of these GE add-ons could be worth as much as $500 million in profits to GE.

This was a great example of expanding a negotiation to come up with a creative deal involving much more than just broadcast rights.

Negotiating Essential To Your Career

A recent newspaper article talked about the importance of 'negotiating' relationships inside your own organization. Getting promoted may depend upon your ability to negotiate internal relationships.

Telecommuters may go nowhere – career wise.
(Los Angeles Times – January 17, 2007)

Maybe Woody Allen was right, that 80% of life really is just about showing up. At least that's what most executives seem to think about people who work from home. Telecommuters are less likely to get promoted than peers who head into the office every day, according to a global survey of 1,300 executives. (Conducted by Los Angeles-based executive search firm Korn/Ferry International.)

Executives are concerned about promoting a hardcore telecommuter to a management position in which face time with employees is essential. . . 61% dinged telecommuters as being poorer bets for advancement.

If you're not cultivating the right network of people, you won't move up in any setting, whether you're telecommuting or not," said Jennifer Allyn, a human resource manager for accounting firm PricewaterhouseCoopers, which allows many employees to telecommute. But she and other executives recognize the pitfalls for workers, offering materials to help telecommuters and employees who travel frequently to maintain strong office relationships.

Employees are quick to cite the advantages of their home office routine, including no time lost to commuting, the ability to work in pajamas and bedroom slippers, and quieter surroundings. Human resource managers say telecommuting and other work-life programs cut turnover and improve productivity.

The findings of this study speak to a "general fear" that workers who have the boss's ear in the office will get promoted ahead of an off-site colleague who is doing better work. So if you are a telecommuter, beware. Find ways to regularly interact and negotiate with others in your organization. Use these opportunities to develop your relationships. Your career could depend on it!

Note from the Author . . .

We are very pleased with the readership of this site, but we would like to ask a favor.

If you don't have a comment on a particular article, how about a question regarding negotiation?

Perhaps you would share with the readership a difficult negotiating problem you have or are encountering.

We would like to hear from you. Is there a topic you would like us to discuss?

Jim Sauerwein

From Henry Kissinger . . .

"The optimum moment for negotiations is when things appear to be going well.

To yield to pressures is to invite them; to acquire the reputation for short staying power is to give the other side a powerful incentive for protracting negotiations.

When a concession is made voluntarily, it provides the greatest incentive for reciprocity."

From The White House Years by Henry Kissinger

Jim Sauerwein

As you know . . . .

In a website called Paul's Tips the author states that the easiest people to fool are often the smartest because they either don't think they can be conned or they can't admit, "I don't know..."

The author states, "As soon as you start hitting people with technical terms, fancy graphs, famous names and the like, you'll immediately increase your credibility. It they are smart, they're even more likely to find themselves nodding in agreement. Many intelligent people would rather cut off a finger than admit they don't know what you're talking about."

One of the thinking traps we worry about is the "As you know..." trap. Negotiators must be very cautious when the other party begins their persuasive presentation by stating, "As you know..." then continues to make their point. Ask yourself:

• Do I know that to be true?
• If I know the statement to be true, does it create proof?
• Is the point relevant to our discussion, or is it meant to impress?
• If the other party's point does not meet these criteria, be willing to stop their presentation and gracefully ask for proof.

Jim Sauerwein

POWER -- An Analogy

Analogies are such a good way to understand concepts. Here is an analogy I like:

Consider the bullfight. There are basically two participants, the bull and the matador. The bull has nearly all the physical power. Who usually wins? The matador. Why?

The matador is the player who brings planning and strategy into the process. So it is in the negotiation process!

Ready, AIM, fire

Jim Sauerwein

Persistence Is Good Until . . . . .

Since childhood we have been encouraged to be persistent. I remember being taught, "Winners never quit; quitters never win!", "If at first you don't succeed, try, try, try again."

Certainly persistence is a virtue in the negotiation process, but there is a limit to what that characteristic can achieve before it becomes a negative.

If you and I open the negotiation with differing views, then slowly find ways to decrease the gap, we will be encouraged to continue the process. Consider what would occur if one of us reaches a point where it is important to take a stand on a particular issue and convince the other party that we have reached our limit. The other party keeps pushing to create movement, perhaps making another concession. We reiterate our position again and perhaps again. If both parties are not careful, we will become entrenched.

Consider rewriting our parent's mantra to, "If at first you don't succeed, try, try and back off!" Backing off does not mean quitting, it means redirecting our energy. In the face of an impending entrenchment, I personally like to immediately summarize, "What we have achieved so far....", then mention the seemingly inflexible issue and inquire why it has become such a sticking point. After asking, be sure to be quiet and let the other party respond.

The goal is to learn the other person's logic. If you have better or updated logic which can replace the other person's mindset, it may be possible to give them a face-saving way to accept, then sell your ideas in their organization without causing them to look wrong.

Perhaps a manufacturing customer based a standard cost or budget figure on raw material prices, or natural gas prices or transportation costs of two years ago. By learning their logic, you can replace it with current logic. Remember, no one is wrong; the logic has changed.

Jim Sauerwein

Teaching Your Customers How To Negotiate With You.

Every selling organization that has been in business for a while has taught their customers how and when to do new business with them.

We focus hard on learning the customer's organization, how it works, who are the influencers, who has the buying authority, what are their hot buttons, how are they evaluated, etc. It is important to be aware that while we are busy learning to "sell the way the customer buys," they are learning how to work their suppliers for their advantage.

Most sales managers have told their customer service reps that if the customer is really angry, "give them whatever it takes to make them happy". What have we just taught our customers? We have taught them to get really angry!

Every sales manager complains that the salespeople give away too much profit as the end of a quota period approaches. This happens for two reasons. One is the need to book all the business we can to raise the backlog prior to the quarterly or year-end report. The second is to help the members of the sales force make their quota. So, what have we taught our customers? We have taught them to hold off on large orders, when they can, until close to the end of our fiscal year or the end of a quota period. Customers learn to hold large negotiations until the time we need their business the most.

Individual sales people have taught customers to nibble hard on little value issues just before awarding the big order. As long as the customer continues to get things or service items for free, what have we taught them? We have taught them to keep the negotiation open for longer than necessary because "freebees" keep flowing in their direction.

What should we be teaching our customers?

• Our product is always fairly priced
• We perform more than we promise
• Your cost of doing business is reduced by doing business with us
• It is easy to business with us
• When the customer wants something extra, or a change, there will be a well documented and justifiable charge
• Our goal is to profitably help our customers succeed
• We will never cut the price of a high quality product to match the price of a poor competitor
• We will lose orders based on price, but not on value
  
• At some price we want the competitor to take the order. As a matter of business judgment, we want the competitor to fill their capacity with low margin business.

Jim Sauerwein

Be Willing To Walk Away Empty!

In the December 2006 issue of INC. Magazine there was a great article by their columnist, Norm Brodsky. His title tells the story: AFTER SPENDING DECADES BUILDING HIS BUSINESS, OUR COLUMNIST MANAGED TO NEGOTIATE THE OFFER OF A LIFETIME --- BY REFUSING TO NEGOTIATE.

One of his venture capital partners offered to buy his company. He replied that he would give them an "open book" to the company, but he wouldn't negotiate.

A couple of quotes from Brodsky

"I don't care if I sell the business or not. And therein lies a paradox. The less interest you have in doing a deal, the more likely you are to get one you will find difficult to refuse."

(VC Friend) Mitch: "I've been talking to (potential buyer) Greg. He was surprised we haven't heard back from you about his offer.

"Listen, Mitch, here's the deal. I told Greg there would be no negotiations. He's as terrific guy, but I'm not negotiating with him. I don't care if I sell the business or not."

Two days later, Greg called me. "We'll pay you what you want."

I will never get a deal like this again. If you've ever negotiated to buy or sell something, you know that you're much more likely to get a good deal if you are willing to walk away empty-handed.

What his quotes don't tell us is that Brodsky made sure, before they opened their books to the buyer, that this transaction would be incredibly valuable and a perfect fit to the buyer.

Jim Sauerwein

Favorite Negotiating Books

Every week or so, I am asked what my favorite negotiation books are. Of course Karrass' classic, The Negotiating Game will always be my favorite. Here is a list of some of my other favorites:

• Bargaining for Advantage by Richard Shell, Viking

• Smart Bargaining by Graham and Sano, Harper House. This one is out of print, but Amazon always seems to have a few used ones.

• What They Don't Teach You at the Harvard Business School by Mark McCormack

• Bargaining for Results by John Winkler, Pan

• Friendly Persuasion by Bob Woolf, Putnam (Good for sports fans)

• Getting Past NO by W. Ury, Bantam

• The New Negotiating Edge by Gavin Kennedy, Nicholas Brealey (pub)

• Getting to YES by Fisher, Ury and Patton, Penguin

• Beyond Negotiating by Carlisle and Parker, Wiley

• On Negotiating Mark McCormack, Dove

• Think Before You Speak Lewicki, Hiam, Olander, Wiley

• Getting Ready to Negotiate by Fisher and Ertel, Penguin

Of course, Harvard Business School always publishes good compilations. Some that I have read recently are: Negotiation, On Mergers and Acquisitions, and On Negotiation & Conflict Resolution.

Jim Sauerwein

Unusual Real Estate Negotiation

This was negotiated as part of a real estate lease contract.

One section of the lease deals with the term of the lease. It states:

"Subject to the provisions of Article XI relating to amendments, this declaration and the covenants herein contained shall be in effect until February 13, 2031. Notwithstanding the foregoing, this declaration shall become ineffective and the covenants herein shall be extinguished upon the expiration of twenty-one (21) years following the death of the last survivor of the following named persons and all children and other issue (including legally adopted children and the issue of legally adopted children) of the following named persons:

Ronald Reagan, Governor of California

John Lindsay, Mayor of New York City

Richard M. Nixon and his Daughters, Julie Nixon and Patricia Nixon

Lyndon B. Johnson, President of the United States, and his daughters Lucy Baines Nugent and Linda Johnson."

Now here's a negotiator that likes to have fun with contract terms.

How do you suppose the parties deal with the uncertainty of when the lease is going to end? I guess it's assumed to be so far in the future that no one really cares.

I'd hate to have to track each of these family trees and try to determine when the lease terminates!

Negotiating Space

Today you'll negotiate with someone – unless you live on a deserted island – even then you'd probably have a few negotiations with yourself.

Think about all your meetings and interactions with co-workers, your boss, your spouse, your children or a best friend. There are negotiations you'll have with buyers, sellers, waiters, and taxi drivers.

OK, so you're participating in all these negotiations—every day. How much 'Negotiating Space' have you been leaving yourself? Negotiating Space (leaving yourself room to negotiate) is something that really impacts your ability to achieve satisfying agreements – for everyone in the negotiation.

Research proves that people who give themselves room to negotiate do better than those who don't (e.g. Chester Karrass the negotiating researcher).

If you are looking to buy something you will do better if you make a low initial offer. If you want to sell someone a product, service, idea, concept, or change-of-policy, start out high.

The case for starting high and making slow, reluctantly given concessions, is a strong one. This approach gives you a chance to test the strength of the other person's position and their willingness to stand firm. This process helps you gather valuable information about the other person's position and feelings. This is information that becomes really useful when you start looking for Both-Win opportunities.

Wherever you decide to start your negotiation (i.e. take a position), have a good, logical reason for starting where you do. This helps avoid an appearance of flippancy.

The Harvard Business School has questioned the value of 'positioned based bargaining.' Several articles have been published on what has become known as 'interest based bargaining' or 'principled negotiations.' Interest based bargaining theory states that one should never take a 'position' in a negotiation. One should only negotiate from common interests. This concept, originating in the academic world, has its roots in legal, political, and diplomatic negotiations. To a more limited extent "interest based bargaining" has been tried in labor negotiations.

It is really hard to establish 'Negotiating Space' if you don't take a position.

Contrasting with the 'interest based bargaining' approach is what Dr. Chester Karrass developed as 'Both-Win' negotiating. The Karrass style of negotiating evolved out of real-world business negotiations. The Both-Win approach stresses the importance of establishing an initial position. Your initial position helps you create 'Negotiating Space.' Then the negotiating process utilizes this 'Negotiating Space' to uncover optimal, Both-Win outcomes. The Karrass 'Negotiating Space' approach is much more practical and realistic in today's business world than the Harvard 'interest based bargaining' approach.

Think about it. How many of your negotiations allow you to not take a position? What about the pressures you have from your own organization, your boss, or the marketplace. That's simply reality. The Karrass approach recognizes this reality and provides an initial competitive negotiation phase to help establish a process that builds a relationship with the other party. This relationship then allows you to work towards discovering Both-Win opportunities.

First, you go through a competitive phase where positions are disclosed and defended. This helps you understand the position of the other party, what power issues exist, expectations, and pressures at play. This understanding helps you build a more trusting relationship with the other party that can foster greater sharing of information. Ultimately this is what permits "Both-Win" opportunities to emerge.

An 'interest based' negotiation starts by each party providing the other party complete information about their 'situation,' and the expectation that each party is obligated to share information. This immediately puts the negotiators at risk. If one party does not reciprocate, the other party has instantly given up most of their negotiating power. Interest based bargaining fails to address this issue of power and the impact power plays in the outcomes of negotiations.

Fisher and Uri, two Harvard authors, argue that establishment of trust is not essential to 'interest based bargaining.' It's hard to imagine interest-based negotiations working in the absence of trust. True Both-Win opportunities can only revel themselves when a trusting relationship has been established. Relationships don't just happen automatically—it takes work and it takes time to build a trusting relationship.

Some sources suggest interest based bargaining might be appropriate if:

* Each party to the negotiation has complete authority to strike a deal without further review by anyone else. (This is not usually the case in most business negotiations. Most of us are not Bill Gates or Donald Trump.)

* Each party has the ability to clearly and effectively communicate. In many cases a facilitator is necessary to provide guidance and assistance that helps lead to a successful 'interest-based agreement.' (With the billions of negotiations taking place each day that's a lot of facilitators to hire. Most people are less than ideal communicators. Is this is a practical approach to negotiating?)

* Each party must be willing and motivated to assume the behavior changes and risks associated with interest based bargaining. There can be no hostility and no hidden agendas. (Does this sound like what really happens in most day-to-day business negotiations?)

* Each party must have reasonable expectations. They should not expect interest based bargaining to result in agreements superior to those obtained through position based bargaining. (So if there is higher risk using the 'interest based' approach, and no expectation of greater rewards, why do it?)

The desired result of 'interest based bargaining' and Karrass Both-Win negotiating are very similar. However, the Karrass Both-Win negotiating process is superior in helping achieve the desired results on a consistent basis. It's a proven negotiating process that is both practical and powerful—and can be used by anyone. Everyday.

Trade A Paper Clip For A New Home?

Kyle MacDonald started with a red paper clip and ended up with a new home. And the whole negotiation was handled via the internet and on Craigslist.

In July of 2005 this 26-year-old blogger from Montreal set out to see if he could trade his red paper clip for something else, and that for something else, over and over again until he had a house. It took him over a year but he was successful. Here is the sequence of his trades:

He first traded the red paper clip for a fish-shaped pen.

Then he got a small ceramic doorknob with a smiley face on it in exchange for the pen.

A Coleman camping stove for the doorknob.

A generator in exchange for the camping stove.

A 'party package'– an empty beer keg, a neon Budweiser sign and a promise to fill the keg – in exchange for the generator.

A used snowmobile for the beer package.

A free trip to Yaak, British Columbia, in exchange for the snowmobile.

A 1995 van in exchange for the trip.

A recording contract, studio time and a promise to pitch the finished product to music executives in exchange for the van.

A year's free rent in exchange for the recording contract.

An afternoon with rocker Alice Cooper for a year's free rent.

A snow globe depicting the band Kiss in exchange for the afternoon with Alice Cooper.

Actor Corbin Bernsen, a snow globe collector, offered Kyle a paid speaking role in a movie in exchange for the Kiss snow globe.

The town of Kipling, Saskatchewan (Canada), is giving Kyle his house.

The town will hold a talent show for the movie role. The town gets a lot of free publicity and Kyle gets his new home.

Take It or Leave It.

You believe you are reaching a satisfactory agreement, if you could just get a couple more concessions…… All at once your other party pounds the table and tells you empathetically, "Look, I'm not giving you anymore, so take it or leave it!"

How do you respond? If we are not careful, our auto-response might be to tell the other party what he can do with his offer. That would lead to entrenchment and nobody wins. Here are three more constructive responses to TIOLI:

• Summarize and discover: "Gosh, Joe, I thought we were doing quite well today; why has it come down to "take-it-or-leave-it now?" If you can get an explanation as to why your other party thought TIOLI was appropriate, you can rebuild momentum by working through their reasoning.
• Isolate the objection: "Jill, does it have to be take-it-or-leave-it on all three of our remaining issues, or is there one specific item you absolutely must protect?" Perhaps you can give on the mandatory issue in exchange for the issues which may be less critical to the other party.
• Buy some time: "Does it have to be take-it-or-leave-it right now or can we have a couple of days to think this through?" Anytime you can affect the time of the other party's pressure play, you will reduce its effect. Also, time will allow you to re-plan, influence their influencers and allow any emotional content to dissipate.

Many professional negotiators believe that "Take it or Leave it" is a poor choice, but that doesn't mean we won’t encounter it. It is better to be prepared to handle this infamous approach.

Jim Sauerwein

What Is Profit?

The next time someone tells you that they have to make a reasonable profit, begin the discovery process to learn their definition of the word Profit.

Do not assume that their definition of profit is the same as yours.

• In a volume dependent manufacturing business profit might mean keeping the production lines running at full capacity 20 or 24 hours a day. A higher volume passed over the same fixed costs will make all of the business more profitable. Your volume may make your partner’s business more profitable overall.
• Profit might be in helping a commissioned salesperson achieve his/her quota for this reporting period. There were times in my marketing career when I would reduce the price a little for the sole purpose of helping a salesperson achieve quota. That was a profit in morale.
• Profit might be defined as boxing the competition out of a big order. I know company presidents who will "steal" an order from the competition just to win a contest. Is there such a thing as profit in ego?
• Those selling organizations which consider market share a primary target will take a lower profit to enhance their market penetration.
• Reducing a price to entice a first-time customer to try a new product or service is no more corrupt than your grocery store offering "loss-leaders" to get you into the store.
• Lowering the price on a unit of capital equipment in order to create an after-market for spare parts, service parts and consumable items is no different than Gillette offering us a low- price razor handle to insure a high volume on their most profitable item --- the blades. Think about the price of Hewlett-Packard printers in relation to the price of the replacement cartridges.

What is profit? Before your next big negotiation, discover how your other party defines profit, then help them succeed by doing business with you.

Jim Sauerwein

First Concession In Negotiation

When negotiating expert Chester Karrass did his original doctoral research on negotiations, he found that people who made the first significant concession tended to lose the negotiation. That result, of course, yields a very good rule for making early concessions, but it doesn't help us understand why that rule is a truth.

Enter the philosopher, Aristotle who wrote a treatise called Rhetoric wherein he established the steps to becoming persuasive. Aristotle states that the first step to becoming persuasive is to establish in the other person’s mind the completeness within which you believe in your argument.

Aristotle called this credibility ETHOS. He defined ETHOS as establishing the credential of the idea. In other words, if I want to change your mind to my way of thinking, I must first convince you that I fully believe in it.

In combining Karrass with Aristotle we understand the 'what' and 'why'. We make our first concessions small and reluctant to convince the other party that we are serious about our proposal. A large concession ruins the credential of the opening.

If I offered my pen to you for $1.00, then, under your pressure I dropped my price to $0.75, wouldn’t you conclude that I wasn't serious about my initial offer? Aren't you now thinking, "I'll hold out for $0.60; if he came down that much in one concession, there has to be more."

Our ideal first concession should be large enough to invite the other party into the process of negotiation, yet small enough to maintain the integrity of the first offer.

JSauerwein

Patience

I was recently conducting a negotiating seminar and was asked to talk about "tricks to learning patience". Sadly I was out of 'tricks', but here are some ideas that can improve every negotiator's ability to be a little more patient.

Recognition: We are not a patient culture and that characteristic certainly shows up in how we negotiate. When other cultures write about how to negotiate with Americans, one consistent point is to use our impatience against us. A sentence in a Japanese book on how to negotiate with Americans offers this advice: "It is a given that the American negotiators will make their flight."

There is an old cartoon showing a woman kneeling in prayer. This is her prayer, "Lord, please grant me patience and I want it NOW!"

Our culture is replete with sayings like: "Cut to the chase.", "Time is money!" and "Quit beating around the bush!" Here are some sayings to replace those:

• "The longer I take, the more I make." (old sales training saw)
• "Patience brings to the fore what nothing else will." ( Emerson)


• "Patience is bitter but its fruit is sweet." (Rousseau)
• "Slow down, you're going too fast; you gotta make this (negotiation) moment last." (Song from long ago)

Awareness:

We have such a strong tendency to focus on our own deadlines that we forget that the other party has deadlines also. The more we recognize the existence of the other party's deadlines, the more we will negotiate with equity on that point, the easier patience is to employ.

Permission: What we see as patience our boss may see as procrastination. We all must be able to negotiate up the organization to gain permission to be patient. Be prepared to explain to your boss his or her benefit to be gained by your patience.

If your next negotiation is going to establish the foundation for a long-term relationship, take the time to:

Discover the real needs of the other party.

• Allow the other party to disclose how they measure success and satisfaction and how they are measured by their organization.
• Avoid the "Quickie" deal which might ruin the satisfaction which should be derived from the process of negotiation.

Remember: How can we form an agreement that stands the test of time when our process doesn't stand the time test?

JSauerwein

Rock, Paper, Scissors Negotiation

You may have seen the rock, paper, scissors TV ad during the 2007 Super Bowl last week. That was all about beer. But here's a real life negotiation that used rock, paper, scissors --

In 2005 Maspro Denkoh Corporation, a Japanese TV equipment manufacturer, decided to sell its corporate collection of Impressionist paintings -- worth around $16 million. Maspro contacted the world's top two art auctioneers, Christie's and Sotheby's, and asked for proposals.

Maspro Denkoh's president Takashi Hashiyama determined that both companies' proposals were so similar he couldn't pick a winner. So Mr. Hashiyama decided the bidders would have to play a game of "Rock, Paper, Scissors" to determine who won the business.

Mr. Hashiyama stated: "It probably looks strange to others, but I believe this is the best way to decide between two things which are equally good." The game of "Rock, Paper, Scissors" is a cultural institution in Japan and something often used to make arbitrary decisions.

Why use the game to decide? The team that lost wouldn't get in trouble with its corporate bosses (e.g. it is important to save face) and Maspro wouldn't have a loser bearing a grudge against them (e.g. we need to preserve future relationships.)

The game was announced on a Thursday and would be played in the Maspro's Tokyo office the following Monday. Instead of making symbols with their hands, as is traditional, he required that the presidents of the Japanese units of both companies write down their choice, in Japanese, on a piece of paper. Per the game's rules, which automatically determine a winner—paper covers rock, rock smashes scissors, scissors cut paper.

Christie's and Sotheby's sales teams scrambled to research the psychology and strategy of the game of Rock, Paper, Scissors prior to the Monday meeting.

Christie's picked scissors and Sotheby's picked paper. Christie's won the business.

Redstone and Murdoch -- The Media Negotiators

These two media powerhouses approach their business negotiations in two very different ways.

The contrasting negotiating style between Sumner Redstone (Viacom, Paramount Pictures, MTV, cable TV and CBS) and Rupert Murdoch (News Corp., MySpace.com, IGN Entertainment, 20th Century Fox, satellite TV) is remarkable.

The Los Angeles Times yesterday took a look at how these two media powerhouses are handling their negotiations in China—obviously a huge market for both of them.

Negotiating deals in China requires extensive personal dealings with government officials and the building of many business relationships. Sensitivity to cultural differences is very important, as many western business people sooner or later discover.

The Times talked with a businessman who has observed both men deal with Chinese officials. He described how Redstone, 83, and Murdoch, 75, responded to questions on sensitive issues like censorship and business dealings.

"Sumner gives an answer right away. He says either yes or no. It's almost an impulsive response. He has a strong opinion."

It's different with Murdoch. "He pauses, and his answers are long and complicated. You feel like he is saying important things, but at the end of his answer you don't have any idea about his opinion. He hedges everything. Murdoch's reserve can strike some as deviousness."

It was reported that Sumner has "a near-photographic memory. A favorite Redstone debating tactic is to recite his opponents' words back to them in perfect detail weeks or months after they were spoken."

Redstone appears to negotiate deals that are very opportunistic rather than strategic. He cuts deals because they are available to him rather than looking at how the deal may fit into an overall corporate strategy. His negotiating style – inpatient and spontaneous.

Murdoch appears to be much more of a strategic negotiator. One analyst called Murdoch "the most long-term manager I've ever seen. He thinks on a 5, 10 or 20-year horizon and has been willing to suffer enormous financial pain to get where he thinks he needs to go.

"I wonder how their Chinese negotiations will turn out?"

Knowing a little about the Chinese and how they negotiate business arrangements, my money is on Murdoch.

Tried using the BOGEY Lately?

Today I was working with a marketing consultant on a new project. It came down to negotiating the amount we were going to spend on software, design, fulfillment, etc. In the negotiation I used a 'BOGEY' and it worked wonderfully. More negotiators should try using a Bogey. You'll find it opens up some very productive conversations with your suppliers.

I think the term 'BOGEY' was originated by Dr. Chester Karrass, the guy you see in all the airline magazines advertising his effective negotiating seminar.

The Bogey is an effective, ethical, and simple negotiating tool. I don't understand why more negotiators don't use it. It can benefit both parties in a negotiation and open the path to some really creative outcomes. A Bogey should always be considered when you are purchasing a relative complex product or service.

Here's how it works.

Let's say you want to expand your corporate web site to include several industry specific Blogs, direct downloading of product brochures and specifications, and the collection of demographic information so you can 'customize' marketing communication with existing and potential clients. All of this needs to interface into the company's CRM system and create a customer specific history.

You go out and get a few bids from companies who are qualified to handle the project. And after review of the responses, you select the contractor you'd think you'd like to work with and have them in for further discussions.

Let's say their bid was $88,000 to do the work. It's one of the higher bids you received, but you like the work they do and have confidence in their ability to complete the project on time.

So you throw out a Bogey.

You say, "I love your proposal, but all corporate budgeted for this project is $60,000."

A salesperson will generally respond to a Bogey by either changing their proposal, reducing the price, or showing you what alternatives are available. Whatever their response, you will learn things you never knew before you used the Bogey.

In almost all cases you learn more about the product and services being proposed and alternatives that impact the price. This new information puts you in a better position to make a more informed decision.

Why does this work so well? When I tell a salesperson I love your product but only have so much to spend, most salespeople tend to respond in a positive, friendly fashion. How can they be hostile toward someone who likes them and their proposal? The salesperson gets involved with me and my budget problem. All that remains between them and a closed sale is a little problem solving.

The negotiation moves away from a competitive affair to one of cooperation. The salesperson, knowing that budgets do exist, tends to feel sorry for me. The salesperson's frustration is directed against the 'system' that senselessly and arbitrarily created this roadblock. Usually the salesperson starts taking a new look at my real needs, and before long it is discovered that some items in the original price can be trimmed away, others can be changed, and still others can be adjusted to help me meet my budget. Each party helps the other reach its overall goals.

What often results from this buyer-seller interchange is a functionally usable product at a lower price. Or, maybe a much superior product at a somewhat higher price.

Part of the reason the Bogey is so effective is that it involves the salesperson's ego. People like to help others in need. The Bogey gives the salesperson a chance to show their knowledge of their product, the buyer's business and dedication to the buyer's well-being.

The Bogey may not necessarily lead to a lower price for the buyer, but the buyer will be better off having learned a lot more about the product than was known before the Bogey was put into play.

Try a Bogey the next time you're in a negotiation. I think you will find it to be very useful. I did!

kmoney

Acceptance Time In Negotiation

OK, so what's with all this pressure to make a quick decision on this new CRM software package?

Maybe it will be better than what we have now, maybe it won't -- but in this case, I'm not going to make a quick decision.

Many negotiators overlook the importance of acceptance time. Like most people, I need a little bit of time to accept anything new or different -- unless of course I thought of it and it's my idea that I'm promoting.

In any negotiation both parties walk into the negotiation with what may be somewhat unrealistic goals. Each party might have misconceptions and bad assumptions. During the process of negotiation -- and that's what all of us so often forget (negotiation is a process) -- we discover that some of our expectations may not be met. Some of our wishes go away and some things may be impossible at this point in time.

The low price hoped for begins to look impossible. The quick, easy sale suddenly does not look so promising.

Can we as negotiators expect the other party to adjust and accept new and undesired realities immediately? Of course not. Resistance to change is universal. It takes time to get used to ideas that are foreign or unpleasant. We can even get used to the idea of death given a long enough period to do so. Acceptance time is as important in negotiation as it is in life.

A buyer needs time to accept the thought that they will have to pay a higher price than planned. A professional seller is not ready to retreat from their price in the first few minutes of negotiation. Both the buyer and seller, and their respective organizations, need adequate acceptance time. This is why the perceptive seller tells a buyer of a possible price increase long before it happens. It gives the buyer and their organization time to reconcile themselves to the idea.

When you ask people to change new ideas for old, you are asking that they discard old friends. Right or wrong, they have grown accustomed and committed to them. Put yourself in their position. Is it not logical that they will be more receptive to your viewpoint or proposal if they are given the time to adjust?