Keeping your balance.

There are negotiators who thrive on keeping you off balance. They know that you feel as if your business negotiation is a high wire act. You need your concentration and balance to get through, and so their strategy is to throw you off balance by any means possible.

To throw you off balance, some negotiators use tactics such as “one-upmanship.” One-upmanship consists of pointing out your supposed failures, professional and personal. You may hear thoughts like this:

• Your delivery was late last time
• You failed to live up to the agreement
• Your competition is doing extremely well
• Your product is of poor quality
• You look terrible, are you very tired? Have you gained weight?

If you allow these types of negative comments throw you off balance, you will be ceding power to the other party. You must work to keep an even keel,

Some tips to keep your balance are:

• Recognize that the other party may be using tactics to upset you
• Focus on what you need to accomplish
• Retain a sense of perspective
• Rehearse a few zingers of your own
• Use humor to disarm the other party
• Be Zen--do not appear to be perturbed (perception is part of the game)


What do you do when you are thrown off balance?

How do you communicate your position?

In a business negotiation, you are there to persuade the other party. You may be trying to convince the other side that your product is worth the price, or that your services are superior to any others on the market. In order to persuade the other party, you have to be able to communicate the various attributes of your product or service. How do you communicate your position?

Depending on the nature of your product or service, and on your budget, you will most likely have some materials to help you make your case. You may have any of the following

• Printed brochures
• PowerPoint presentation
• Newspaper/magazine clippings about your product/service
• Visuals (artist rendering, drawings, models)
• DVD about your product/service

When you are trying to persuade, perception plays a big role, so the materials you choose to use can make an impact on how the other party perceives you. For instance, if you have a hastily put together PowerPoint presentation, which does not look professional, the other party might perceive that you are not serious about the meeting. If you have an old brochure, which is not updated to reflect you latest numbers/prices/specs, you are telling the other party that selling is not a priority.

On the other hand, if you have materials that are visually appealing, convincing and have useful information, you will have an easier time making your pitch. For instance, third party reviews, in the form of newspaper articles/blog posts/TV news pieces, are extremely persuasive. Make sure to package these up in an easy-to-read format.

Choose your supporting/sales materials carefully. Spend time getting them right. Make sure they are up-to-date and that they look good (you may have to hire professional graphics help.) Keep in mind that multi-media has become more popular-- a PowerPoint presentation may now include video, for example. If you have a marketing department in your company, chances are good they may have many of these pieces or can help you create these.

What do you use to communicate your position?

Can you quantify negotiation results?

Generally, when you are conducting a business negotiation you are trying to fulfill certain goals: price, quantities, delivery dates, etc. If you have negotiation goals that are measurable, then it seems fairly simple to quantify your results. For instance, you can assess how you did on price, something like achieved a 10% reduction.

Can you assess worth? Worth encompasses a wide range of outlooks on value. One thing is for certain: value or worth is not equal to price. Value is quantified differently by each person or organization depending on how they view the transaction. Worth is established by many factors including perceived value, standards of cost, uniqueness (like a very specialized knowledge) and others.

Dr. Chester L. Karrass writes:
“Worth analysis can shed more light on ... (the other party’s) needs than volumes of cost data. Accountants ....have avoided worth because it is difficult to analyze... (this is) unfortunate because the key to setting sensible targets lies more in what a thing is worth than what is costs.”

Anthony Tjan, CEO of Cue Ball, a venture capital firm, writes the following in his Harvard Business Review blog post “How to Size up a Negotiation” (http://blogs.hbr.org/tjan/2010/02/how-to-size-up-a-negotiation.html ):

“...the most important number to remember is the total number you are trying to achieve. In the course of a negotiation many people end up negotiating on a point-by-point basis and without remembering the real value of any given point in the context of the broader ultimate goal. Making efforts to quantify the spread in a deal makes the negotiation much easier and can even eliminate points of negotiation.”

Tjan also gives a step-by-step indication on how to quantify a negotiation:

1. Understand the big picture price / value you are trying to achieve
2. Determine which of the negotiation points are quantifiable
3. Bound the low and high values of each point
4. Create scenarios for both "edge cases" which might be of concern and for "likely scenarios"
5. Re-prioritize negotiation points
6. Aggregate quantifiable points to see how they compare to the big picture you are trying to achieve

Take a big picture approach to quantifying a negotiation. When you assess a negotiation’s results, you should look at many factors including worth and quantifiable goals.

Distracted?

Is it possible to conduct business negotiations if you are distracted? Sure, but probably without achieving the best results. Whenever you are distracted, you cannot focus on the task at hand.

There are many distractions to deal with during a business negotiation:

• Fatigue
• Interruptions
• Personality conflicts
• Discomfort
• Emotions

Most of these distractions are inherent in any long meeting. To overcome these, you may have to preplan for these contingencies: making sure to schedule breaks, having a defined agenda, selecting a comfortable room for the negotiation, and preparing for any personal issues.

However, some parties may use distraction as a negotiation tactic. These parties may create some sort of diversion such as a fake emergency or an important phone call. These distractions will alter the rhythm and flow of the conversation, and could create room for error. Some of these planned distractions, also called detour maneuvers, are used to create time to learn more about the other party.

If the other party is attempting to distract you, you should resist being distracted. You will need to be disciplined and sharpen your focus. You should also learn to recognize when the other party is using a detour maneuver (some, like the scrambled eggs maneuver, have been discussed here on Negotiation Space).

Sometimes your environment can distract you. Many people try to conduct business on their commute, for instance. This is not a good idea. Science News reports the following:

“Routine driving impedes a person’s ability to relay information from a cellphone call accurately to a conversation partner and to remember key elements of that information, say psychologist Gary Dell of the University of Illinois at Urbana-Champaign and his colleagues.”

Read more: http://www.wired.com/wiredscience/2010/02/driving-distracts-cell-phone-users/#ixzz0fo33BFlt

The bottom line is that avoiding distraction will help you conduct a better negotiation.

How much bargaining power do you have?

Do you know how much bargaining power you have? If not, you should begin to assess your position, and also, where the other party is at.

Many times, one party will come to a business negotiation with more (or less) bargaining power than the other. Perhaps you are the new kid on the block. Perhaps you have been business for decades and have built a great network of suppliers. In each case, you may have a higher or lesser perceived bargaining power.

Bargaining power is the amount of leverage you have in the negotiation. Even if you seem to be at a disadvantage with the other party, there are ways of increasing your leverage. A large portion of bargaining power is perception. How does the other party perceive you? Can you do something to shape that perception?

As Paul Tobias, CEO of Mackinac Financial Corporation, said:
“If you sense you have bargaining power, you can write your own ticket.”

For instance, if you are a single buyer, you may feel you have little bargaining power against the seller. But you may have more leverage than you think. Here are a few ways to increase your leverage:

• Offer future business
• Offer to be a reference
• Increase your spending power--Bundle purchases together or add items to your order

Bargaining power is not static. You can find leverage if you are resourceful. Another factor is being confident and feeling that you have control over the situation.

Have you ever been in a situation of perceived disadvantage and turned it around? Share how you did it in the comments.

Negotiation lessons from the China-US relationship

The United States’ relationship with China has always been important and newsworthy. There is a long history of cooling and warming of diplomatic and political relations. Currently, the public rhetoric between both countries has become heated over public disagreements on major issues like Iran, cyber-spying and Tibet.

The Sunday Los Angeles Times presented a very insightful editorial: Back and Forth with Beijing (http://www.latimes.com/news/opinion/editorials/la-ed-china7-2010feb07,0,2603153.story ) This opinion piece lays out various disagreements between the U.S. and China, and how both sides have dealt with these.

The editors write the following:

“The United States and China are prone to misunderstandings, and serious, long-standing disagreements between the two countries over issues such as Taiwan and Tibet were never going to be resolved overnight -- nor will they be resolved in the near future. ... The United States frequently alternates between carrots and sticks in its foreign policy, and neither works all that well by itself. The relationship with our biggest competitor -- and, not incidentally, biggest debt collector -- is a long-term endeavor that requires maturity and nuance on both sides. Mutual respect may not succeed at first, but posturing and public scolding are almost always ineffective.”

There are several negotiation lessons that can be gleaned from the way the United States and China deal with each other:

• Some issues are too complex to be resolved immediately
• Mutual respect is always advisable
• Culture affects how issues are perceived
• Be careful of what you say publicly
• To negotiate successfully, you have to be willing to concede on certain issues and hold firm on others
• In any negotiation, there are both carrots and sticks. Learn which works best for each situation.
• Disagreements do not end negotiations

And finally:
• Negotiation is a process that requires learning and adjustment from both sides

What lessons can you draw from the U.S.-China relationship?

Negotiating Deadline -- Friend or Foe?

Deadlines force action. It is no accident that many US taxpayers file their annual tax return on April 15th each year (the deadline imposed by the US government). Many Christmas presents are purchased on December 24th. Many political lobbyists get their bills passed just before adjournment.

Deadlines are part of life.
We readily accept many deadlines that are part of our daily lives. Work starts at 9AM and stops at 5PM. The doors on the airplane close at the scheduled time (sometimes). Bills are due on the 10th of the month.

We respond to many of these daily deadlines almost without awareness. Deadlines pressure us into making an "either-or" choice. You can choose to accept the deadline, or ignore it and live with the consequences.

Be Skeptical of Deadlines
Professional negotiators are skeptical of deadlines. Some deadlines are real. Some are not. Sometimes deadlines can be negotiated. Sometimes they can not. Good negotiators find out.

Many deadlines are not as real as you might think they are. Hotels will let you stay beyond their 12:00 checkout time without a charge. That proposal you are submitting is due on the tenth of the month, but may be accepted on the eleventh. The offer that was set to expire on the first of June is usually available on the second of June. All probably can be negotiated.

There are Risks!
Of course, in any negotiation there is a risk in not believing a deadline. The more you know about the other party and their organization the better you will be able to determine if a deadline is real or not. If it is important to you, you need to test the firmness of the deadline.

Remember that time is power.
The more time you have available to you in your negotiation the more negotiating power you have -- and the better the opportunity to use that time to arrive at a more favorable agreement. More favorable for both sides.

Most of us go into a negotiation with a self-imposed weakness. We are always aware of the time pressures on ourselves. This knowledge makes us less effective than we could be. What we should concentrate on are the deadlines that constrain the other party. If you have deadlines, there are probably deadlines on the other side too.

Three questions that will help you.
These three questions will help guide you out of the 'Deadline Trap'.

1. What self-imposed or organization-imposed deadlines am I under that make it harder for me to negotiate?

2. Are the deadlines imposed on me by myself, or my organization, real? Can I negotiate an extension with my own people.

3. What deadlines are putting pressure on the other party and their organization? Can I use their deadlines to my advantage?

Be wary and skeptical when a deadline is impacting your ability to negotiate the best agreement. Time limits have a way of hypnotizing us. We tend to accept them even when we should not. That is why you should put a deadline on any offer you put on the table during a negotiation. It may help motivate the other side to make the decision you want.

Silver Screen Negotiations

Plenty of negotiations go on in Hollywood every day: between screenwriters and directors, producers and actors, agents and studios. And, there are many negotiations portrayed in the movies.

A few months ago, here on Negotiation Space, we talked about the movie Endgame. Endgame dealt with the secret negotiations to end apartheid in South Africa.

As the weekend approaches, why not watch a movie with a negotiation theme? See if the negotiator does it right. What negotiation strategies and tactics are being used? Are these portrayals at all accurate?

Following is a short list of movies that show negotiations taking place.

The Negotiator (1998) A negotiator takes hostages when he is wrongfully accused, entangling him in a negotiation with another famous negotiator.

Inside Man (2006): A bank robber, a cop and a power broker match wits to resolve a dangerous situation.

Proof of Life ( 2000) In an attempt to resolve the kidnapping of one of its executives in a South American country, the company calls in a negotiator.

Air Force One (1997) Should an American president ever negotiate with terrorists?

The Taking of Pelham One Two Three (original 1974, remake 2009) A subway is taken hostage by terrorists and the transit police are forced to negotiate in order to save lives.

12 Angry Men (1957) A jury holds deliberations to decide the fate of an 18-year old boy who may face a death sentence.

Do you have a favorite movie about negotiation? Please add to our list.

The Numbers Game

How good are you at math? Bob Sullivan, author of Stop Getting Ripped Off (http://stopgettingrippedoff.net/), argues that many Americans are terrible at math, and that is one of the reasons they get raw deals. Sullivan examines the data, and writes in his book that “more than half of U.S. consumers were categorized as having basic or below basic quantitative skills.” Sullivan calls this lack of mathematical skills innumeracy (like illiteracy).

Sullivan finds that even people with college degree have problems with certain mathematical skills. He writes: “most college graduates (and in fact, most adults who held advanced degrees, too), were unable to answer a question asking test-takers to calculate interest payments on a home equity loan. Only 1 in 5 test-takers of any stripe could handle the question, which simulated the most basic task a home-buyer faces when trying to select a mortgage.”

Math skills are crucial in any business negotiation. We aren’t talking about advanced calculus, we are talking about good arithmetic and algebra skills that can help you to understand the numbers you are being asked to negotiate on.

Negotiators who are dealing with price/cost and value issues need to be extremely careful with the numbers. What if the packaging changed on a product, and it is being offered at a better price. Are you able to figure out if you are still getting the same deal as before?

Although most negotiators are not accountants, it is important to be able to make the numbers add up correctly. It is easy to mess up under pressure or because you weren’t paying enough attention. Dr. Chester Karrass advises us to go slow and double-check all numbers to avoid making dumb (and costly) mistakes. If possible, have someone else check the numbers too. The person you are negotiating with is not necessarily going to point out a mistake.

Have you ever made a math mistake during a negotiation that cost you? Please share your numbers gone wrong stories.

Negotiation: Seeking satisfaction

When you enter a business negotiation, it is likely that you expect to achieve your goals. You are seeking to satisfy your expectations. Because you are practical, you know that your goals may be satisfied within a certain range of comfort (e.g. you are willing to pay anywhere from $x to $y). You also know that there is a probability you will not get exactly what you expect.

To explain how this works, we need to understand the expected-satisfaction theory. This theory discusses how both parties in a negotiation have expectations about the result of the negotiation, and that these expectations may not be equal.

In order to better understand the theory, let’s look at several underlying propositions:

• All transactions are based on future expectations of satisfaction

• It is improbable that both parties will gain equal satisfaction from a negotiation.

• Value systems are different, therefore parties may have different perceived satisfaction from achieving the same goals.

• Share bargaining is a rationing process where one party’s gains are based on the other party’s losses.

• Satisfaction is the most intangible yet important part of a negotiation.

• Parties can only assume what will satisfy the other party, and therefore, must test these assumptions.

Both parties enter a negotiation with expectations; and when a deal is reached, each party may have come away with a different level of satisfaction with the outcome.

Do you always meet your expectations in a negotiation? Are you always satisfied with the results?