What is a Bogey?

The term 'Bogey' is used in the game of golf, and in the military. It is also used in the Karrass Effective Negotiating Seminar. What exactly is a Bogey?

There are several definitions of the term bogey (also spelled bogie). In the context of negotiating this term refers to a target, a false target, or a decoy. In technology the term may be used to refer to a false blip on a radar display. The term is used to describe radar echoes that occur for unknown reasons, especially in the military, where such a signal might indicate hostile aircraft.

There are two types of bogey: those that occur because of some real but unidentified or irrelevant object, fact, or statement (real bogey), and those that occur as a result of no concrete external object or fact (imaginary bogey).

In technology, a "real bogey" can be caused by an aircraft, a missile, and a flock of birds, a tall ground-based metal structure, a balloon with a large payload or a radar-reflective coating. In the military, a real bogey is sometimes produced by dropping myriad scraps of metal foil from high-flying aircraft, producing diffuse echoes that blind enemy radar over large regions.

An "imaginary bogey" can occur because of an external signal having a frequency and pulse rate near, or identical to, that of the radar's internal transmitter. When the radar receiver picks up the offending signal, it cannot differentiate between that signal and a true echo, so a blip appears on the display. This is how radar jamming works. The blip might exhibit fantastic velocity or acceleration as viewed on the radar display.

In computers, bogey signals might conceivably arise from a specialized virus or Trojan horse, or from the activities of a brilliant but malicious hacker.

In negotiations, the bogey is a target which may be real or imaginary. A bogey asks for help. "I'd love to pay you the hundred thousand that you want, but the only problem is I've only got eighty thousand dollars. Help me."

Asking for help is a powerful tactic in negotiation. "I would love to do what you're talking about; I want to make an agreement, but you got to help me."

Asking for help strokes the ego of the other person. The other person has knowledge that you don't have. They may know of possibilities of helping you that you never thought of. Sellers almost always know more about alternatives for using and making and changing their products than any buyer ever dreamed. The reason is that sellers do it all the time. They do it for one customer and another and another and another. Ask for a seller's help, it raises their ego, and they come up with alternate solutions. Those alternate solutions become the beginnings of a both win possibility.

Using a bogey, "This is all I've got." May not always lead to a lower price, but in most situations it will generate more information regarding the transaction and a greater ranges of choices.

I hope this helps in your understanding where the term Bogey came from. Now learn how to use it in your next negotiation!

“Aim higher to do better” Revisited

It always amazes me when something we have been teaching as a simple truth for a long time becomes someone else's revelation.

From Business Week, September 10, 2007: "A new study conducted by professors at leading MBA programs suggests that most negotiators don't realize how much they are leaving on the bargaining table." (Because they didn't aim high enough)

The professors divided nearly 300 students into buyers and sellers of motorcycle parts. After three separate negotiations of 45 minutes each, the professors compared the outcome with what each party had predetermined to be their limit. "The professors discovered that each side underestimated how much the other party was willing to bend, with the result that each party reckoned it got the better end of the negotiation."

"The buyers, for instance, thought they had hit the seller's bottom figure, when in fact they still overpaid by a wide margin."

The professors logically concluded that you should lead with an aggressive bid, and then give in slowly. "…the costs more than outweighed by the possible benefit."

This is always good advice as long as we remember that aiming higher takes into consideration the current market place, the nature of the relationship and does not mean to aim stupid to do better.

Jim Sauerwein

Summarize

Appropriate use of the summary:

In the face of a deadlock, where both parties seem to be becoming intransigent in their position, try summarizing, "Let's see what we have achieved so far……."

The purpose of summarizing is to show the other party that, even in the face of a conflict, we ARE moving toward an agreement.

When you are ready to close the negotiation and the other party seems to be dragging their heels, try summarizing all that has been accomplished, then suggest that it looks like a good agreement for both parties, ask for their agreement and close.

If the other party does not accept your closing gesture, immediately ask what it is specifically that is keeping them from saying "Yes". Isolate that objection, deal with that issue, summarize and close again.

Jim Sauerwein

Building a Dossier to Negotiate Better Next Time

When learning to negotiate with another party, it is important to discover their personal negotiating characteristics. At the same time the knowledgeable negotiator on the other side of the table is learning how to deal with us.

Even though we try to do business only with cooperative business partners, the old military admonition, "Know thy enemy." Certainly applies.

Here are a few characteristics that will be useful to understand your other party's approach to negotiation:

• What range to negotiate do they leave themselves? In other words, historically, is there a consistent pattern from where they open to where they close?


• Concession valuation: It was interesting to learn that not everyone values concessions the same way. Some count concessions, while others look at the total value of the concession.


• People who count concessions are bargainers who are very comfortable with the tit-for-tat approach. Dr. Karrass reminds us that if we must give a concession in return, make sure it is less costly than the one gained.


• How does the other party respond to deadline?


• Can we believe their deadline?


• How good is their planning?


• How is their team synergy?


• Do they use ploys like Good Guy-Bad Guy?


• Does the boss come in at the eleventh hour as the bad-guy?


• How much emotional content do they use in the negotiation process?


• Do they have non-verbals that signal a willingness to close?


• Is there someone on their team who talks too much?


• How well do they honor agreements once they have been made?

These are a few ideas on reviewing and recording at the end of this negotiation to learn how to negotiate with the same party next time.

Quote: "People tend to replicate behavior which has proved to be successful in the past." Chester Karrass

Skepticism Pays

A good negotiator must be skeptical.

Not because the other party may be trying to be deliberately unethical or dishonest (although that may happen on rare occasions) but because when you take a skeptical approach it gives you the opportunity to avoid misunderstandings. You often discover items or issues left out of the negotiation which may come back later and cause major problems between you and the other party.

Being skeptical will also help you avoid making wrong assumptions and give you more opportunity to find out what the other party really needs. This allows you to reach better, longer-lasting agreements. The approach to evaluating what you are told by the other party can be summed up in four principles:

Never take anything for granted.

Check everything – and don’t forget to validate all your assumptions.

Put everything into its proper context – size, time, importance, today, past, future, etc.

Draw a sharp line of demarcation between facts and the interpretation of facts – validate your interpretations.

As you conduct your negotiation use these principles. You will be better prepared to create a better agreement.

Negotiating: Breaking An Impasse

You did everything right, yet you find yourself at an impasse with the other party.

What do you do now??

Too many negotiations break down for the wrong reasons. Impasses are not always caused by world-shattering issues or great matters of economics. Many breakdowns are the result of simple things like personality differences, fear of loss-of-face, troubles within the organizations, a poor working relationship with the boss, or the sheer inability to make a decision.

Any consideration of how to break an impasse must take into account the human factor. It may not be what you do, but how you do it that becomes the critical factor. Here's several moves that may be useful in averting or breaking an impasse:

1. If the impasse involves money – offer to change the shape of the money. A larger deposit, a shorter pay period, or a different payment stream works wonders – even when the total amount of money involved is the same.

2. Change a team member or the team leader.

3. Eliminate some of the uncertainty. This can be done by postponing some difficult parts of the agreement for renegotiation at a later time when you have more information.

4. Change the scope of risk sharing. A willingness to share unknown losses or gains may restore a lagging discussion.

5. Change the time scale of performance. Maybe it’s OK to complete 60% over 4 months rather than 3 months. It might be easier to start slower and still complete the job within the desired timeframe.

6. Assure satisfaction by recommending grievance procedures or guarantees.

7. Move from a competitive mode to a cooperative problem-solving mode. Get engineers involved with engineers, operations people with operations people, and bosses with bosses.

8. Change the type of contract: fixed price, indexed or scaled price, time and materials, percentage of savings, percentage of increased sales, and percentage of profit created.

9. Change the base for calculating percentages: a smaller percentage of a larger base or a larger percentage of a smaller but more predictable base may get things back on track.

10. Create a list of options or alternatives that need to be discussed. Or change the order of discussion.

11. Suggest changes in the specifications or terms.

Impasse breakers work because they re-engage the other party in discussions with his or her organization and team members. These icebreakers help create a climate in which new alternatives can be developed. Surprisingly, sometimes the introduction of new alternatives has the effect of making old propositions look better than ever.

Try to pre-plan a face-saving way to reopen discussions should an impasse occurs. If you set the stage before the impasse sets in, you are in a better position to handle the problem.

Negotiating: Agreements - Understandings - Procedures

A procedure is a way of doing something.

An understanding is an expression of mutual viewpoint and attitude on an issue.

An agreement is a conclusive commitment to mutually acceptable terms.

You're probably wondering what difference all this makes. After all, isn't a deal a deal?

When you're negotiating it is not enough merely to reach an agreement. Even when two parties have the best intentions, agreements break down for a variety of reasons. Breakdowns occur because those responsible for implementing the agreement often do not understand the common viewpoints, attitudes, and backgrounds that brought about the agreement. Sometimes the breakdown occurs because neither party knows how to make the agreement work or how to prove that it is or is not working.

A good agreement should not only spell out the work and dollars involved, but also the understand behind the written words and a procedure for measuring cost in the event that additions or deletions of work occur. A poor contract would leave us bickering about whether the quality level achieved met our verbal understanding and whether costs were being accumulated fairly.

The next time you are in a negotiation, better say to yourself, "It is not enough just to reach agreement on terms. Are there any understandings and procedures that ought to be laid out in detail right now, while they are fresh in our minds?"

Negotiation Assumptions You Make

When in a negotiation, never trust your assumptions. They are likely to be as wrong as right.

If you are negotiating to sell something, be careful with your assumptions. Don't make assumptions like:

"She'll never pay that much"

"There's a lot of competition"

"He doesn't have enough money"

"They don't want to do business with us after the last mess-up"

"I'm sure we're not the low bidder."

Such assumptions can defeat you before you start negotiating; these assumptions lower your expectations; influence the outcome of the negotiation; and may, in fact, be dead wrong.

If you are buying something, your assumptions can:

* Cause you to make high offers when low ones are called for.

* Influence you to make low demands and quick concessions when opposite actions are warranted.

* Seduce you into believing deadlines when patience is by far the better course.

* Create potential hurdles that can move you in the wrong direction.

Don't fall in love with your assumptions. You need to check them out in the interchange of information that comes out of the process of negotiating. Your assumptions are neither right nor wrong until proven so.

"The Behavior of Successful Negotiators"

In "The Behavior of Successful Negotiators" by Neil Rackham we learn specific characteristics of successful negotiators.

Forty-eight successful negotiators were studied over 102 separate negotiating sessions. Their approach and behavior was recorded and compared to a similar sample size of negotiators considered average.

Here are some of the characteristics the Huthwaite Research Group, Ltd. found in successful negotiators:

• In planning, successful negotiators gave over three times as much attention to common ground areas rather than conflict areas.

• The skilled negotiator showed twice as many comments on long term concerns rather than short term.

• Skilled negotiators were more likely to set upper and lower limits while average negotiators were more likely to plan around a fixed point.

• ".....skilled negotiators made immediate counter - proposals much less frequently than average negotiators."

• "The researchers found that skilled negotiators tended to give an advanced indication of the class of behavior they were about to use, instead of just asking, "How many units are there?" They would say, "Can I ask you a question? -- How many units are there?" giving a warning that a question was coming."

So there are a few ideas, and perhaps a good checklist for you to evaluate your negotiating behavior.

Jim Sauerwein

Mark Twain on Negotiating

Back to the subject of helping the other party earn their outcome:

In The Adventures of Tom Sawyer, Mark Twain tells us of Tom getting his reluctant friends to paint Aunt Polly's fence.

You all know the story, so I'll just remind you of the lesson it teaches. In Twain's words, "He had discovered a great law of human action, .....namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain."

Quick and easy negotiations often sow discontent in the mind of the other party. Satisfaction is what we are seeking!

Jim Sauerwein

Outnumbered?

I suspect every experienced negotiator has been caught by surprise when the other party turned out to outnumber them significantly. An attempt to intimidate is the usual reason we suspect for the imbalance in numbers.

Let's look at some of the reasons for being outnumbered that actually work to our advantage:

• This negotiation is extremely important to the other party.

• The other party is unprepared.

• The outcome affects multiple departments in the other party's organization.

• They are all present to protect individual parochial interests.

• It takes eight of them to make a decision.

• You have them scared.

• You will become a mentor during the negotiation; they are here to learn from you.

• You buy a good lunch.

Each of those reasons provides you the opportunity to say, "Oh boy! Look at all of them; how great for me!"

Jim Sauerwein

Why Bother?

Often we are asked, "Why bother with all this negotiating stuff? Just lay your offer on the table; they will either accept it or they won't." If the world were perfect and everyone thought the same way, this would be a very efficient approach.

In negotiations involved in long-term relationships, we hope to achieve satisfaction, not only from the outcome, but from the process of negotiation.

Richard Shell, in his wonderful book, Bargaining for Advantage, cites a study where three variables strategies were tested:

1. Start high, then refuse to move.

2. Start moderately, then refuse to move.

3. Start high, then gradually concede to the moderate point.

"The last strategy was the most successful by far. More agreements were concluded using this strategy. The parties employing the third strategy made more money per transaction than did those using the first two. And, the people who faced negotiators using the third strategy reported much higher levels of satisfaction with their agreements than did people who faced those who refused to move."

Shell concludes, "Concessions are the language of cooperation."

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

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

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

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

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

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?