Sunday, December 26, 2010

Truly the Best

“We said we would deliver the components for $1 million,” Verdi said to Tyler Gitou. “They came back and said if we don’t lower our price by $100,000 they will look for another supplier. What do I do now?”

“Did you tell them $1 million was your best price?” Tyler asked.

“Yes, we said it was our best and final offer.” Verdi replied. “We thought that would signal to them we were ready to close the deal.”

“Is it true?” Tyler asked.

“What do you mean?” Verdi asked.

“Is that truly your best and final offer? Or can you do better?”

Verdi thought for a moment. “What difference does it make?”

“Often people will say something is their best and final offer and it really is not; they are willing to go further than that if pushed. The problem is once you break from your so-called ‘best and final offer’, you have destroyed the other party’s trust in your numbers. When are they supposed to believe it really is your best and final offer if you change it when they apply pressure?”

Verdi nodded. “I see what you mean.”

“To maintain trust in your negotiations, never say something that is not true. Trust is the most powerful element you can build into a negotiation and bluffing does not build trust.”

“So what do I do when I have reached my limit but I still want the deal?”

“Explain that to the other party,” Tyler said. “Tell them that you want to find a way to make this work for them, but it has to work for you as well. Is there something in your bid that you could change that would lower the price?”

“Yes,” Verdi said. “We could use different components that would make it cheaper. It may impact the quality of the outcome.”

“Good,” Tyler said. “Offer them that option. Tell them you can provide the components they requested for $1 million or reduce the price if you use different parts. Let them choose. Basically, you are asking them to decide which is more important to them: a lower price or the quality of the outcome. Giving the other party a choice empowers them. They are now in control of the results of the negotiation.”

“But what if they say they want the same components at the lower price or they will go to another provider?” Verdi asked.

“Ah,” Tyler smiled. “That’s a question about their BATNA. Let’s talk about that after your meeting with them. We will sit down and think about all the different ways they might respond.”

Wednesday, December 15, 2010

When the Process Hurts the Substance

“I’m afraid that’s the end of our hour together,” Peter said to Tyler Gitou. “If you could get back to me on those points by tomorrow, I’d appreciate it.”

“Peter,” Tyler said quietly, “I can certainly get a response to you by tomorrow. But it won’t be a very informed response because there is not enough time to get all the information I need. Can I send you the material on Thursday instead? That way I can give you a better response.”

Peter thought for a moment and then nodded his head. “Yes, that would be OK.”

“Terrific,” Tyler said. “And after you have a chance to review it, could we schedule two hours for our next meeting? I don’t feel we are making enough progress in the hour we meet each week. I am mindful that you are trying to sign this deal before the end of the quarter.”

Peter shrugged. “That sounds fine. Let’s plan on two hours next Tuesday.”

The parties stood, shook hands and left the room. Tyler and Verdi got into the elevator.

“Mr. Gitou, why did you make such a big deal about the time?” Verdi asked. “You know they get very upset when we don’t follow the process.”

“The same process does not work for every deal, Verdi,” Tyler said. “Peter has made it clear that his primary interest is getting this engagement closed by the end of March. I mapped out all that both parties need to do in the next six weeks and we can’t meet that deadline using their process. We will miss something.”

“Miss something?”

“Yes, Verdi,” Tyler said. “This is a complex deal and both parties have a lot of details to review. What will happen is we will discover with two weeks left how much has to get done, we will rush, and we will miss something. The process of a negotiation can be as important as the substance, and poor planning of the process can impact the quality of the deal.”

“I agree, but how do you get a party that says, ‘This is the process to follow” to change?” Verdi asked.

“Talk about the outcomes and options and let the parties choose,” Tyler said. “Map out the process with your own team, reach a conclusion on the expected outcome, and then share it with the other party. Ask them whether they would like to follow the current process for a sub-optimal outcome, or a different process for a better outcome.”

“So you negotiate how to negotiate?” Verdi asked.

“Exactly,” Tyler said. “A Deal Whisperer knows that a good negotiation is a collaborative event. Presumably the parties share a common goal: to get to the best possible deal for both sides. If one side says, ‘I think the process we are following is going to impact our outcome’ then the other party should listen. Ideally, the parties would agree in advance on a jointly-developed process that drives to the best outcome. Establish the process before discussing substance. But if you don’t have the chance to do that up front, look for an opportunity to raise the issue so the process does not hurt the substance.”

Monday, December 6, 2010

Say Something

Tyler Gitou was sitting in his office when Verdi walked in and flopped into a chair.

“How are the negotiations going, Verdi?” Tyler asked.

“Hard,” Verdi sighed. “The other negotiation team seems to be… mad at me!”

Tyler set his glasses on the desk. “Why are they mad?”

“I don’t know!” Verdi said. “But every time I say something, one of their team members snaps at me, then another snaps at me. It’s really tense in there.”

“Why don’t you say something? Ask what the problem is,” Tyler said. “When you go back into the room, open with, ‘Before we get started, I just wanted to ask if there is some problem I need to be aware of. It feels like there’s a lot of tension in the room and your team may be upset with me about something.’”

Verdi jumped up. “Thanks, Mr. Gitou. I will try that.”

Two hours later Tyler saw Verdi getting a cup of coffee. “How did your afternoon session go?” Tyler asked.

“It went great, thanks. I did just as you said. I asked why everyone seemed so tense. Nobody said anything, but it was like watching air come out of a balloon; everyone on the other side of the table exhaled and seemed to relax. There was never an explanation of why they were tense in the first place!”

Tyler nodded. “I’m glad it worked out. There is a concept in psychology called ‘social proof’. It’s the influencing effect we feel when others do something and we feel we have to follow. Like at a performance when the audience rises to give a standing ovation. You may not think the performance warrants a standing ovation, but you feel compelled to stand rather than be the one person sitting down. Sometimes, when you’re in a group for too long, a social proof-type dynamic builds. Pretty soon everyone starts behaving the same way, though they don’t know why.

“Sounds like a ‘pile on’ effect,” Verdi said.

“It was in your case. Someone in the room, probably the lead negotiator or other authority figure, said or did something that was sharply critical of your team. When someone with more information or authority behaves a certain way, others around him or her will follow that behavior because they don’t have enough information to know what they should do. Once the lead person on the other team established ‘This is how we will talk to Verdi’s team’ that behavior continued and compounded.”

“Until I asked the critical question, ‘Why are you all doing this?’ No one had an answer, and it just stopped,” Verdi said.

“Exactly,” Tyler said. “This is why I always say, ‘prepare and aware.’ A lot of people prepare for their negotiations, but once in the room they don’t maintain awareness of how the emotional dynamic is changing. To keep both parties collaborative and unconditionally constructive, a Deal Whisperer stays aware of group mood swings. And if the emotions seem to be headed off-track, don’t be afraid to say something. When the parties share a common goal, everyone appreciates someone who keeps the group focused on achieving the goal. That’s the role of the Deal Whisperer.”

(For an amusing example of social proof in action, watch this video from the old Candid Camera TV show.)

Wednesday, December 1, 2010

Can You Be Influenced?

Tyler Gitou was listening to Rose, a member of the other party’s deal team, respond to a proposal Tyler had just made. He asked a question to clarify a point, got the answer, and then nodded his head.

“You’re right, Rose,” he said. “When I look at the issue from your perspective, what you have proposed makes a lot more sense and we can make it work. We will agree to your proposal.”

The teams took a short break. Verdi, a young member of Tyler’s team, approached him in the hall.

“Mr. Gitou,” Verdi said. “I don’t understand it. You are the Deal Whisperer, the master negotiator. Why did you cave in on that point so quickly? You did not get anything in return for that concession!”

“That’s an excellent question, Verdi,” Tyler said. “From the balcony it must have looked like I gave something away. What I was actually doing was allowing myself to be influenced.”


“You see Verdi, in negotiations each party is trying to influence the other party to agree with his or her proposal,” Tyler said. “We both will bolster our views with points, presumably legitimate, that should help the other side make a decision. What we want is an environment where the parties agree on which decision is better for both of them, not just better for one.”

“I get that,” Verdi said. “But even if they are right, shouldn’t you always get something in return for agreeing?”

“No,” Tyler said. “When the other side has the better argument on the issue, the best thing to do is concede the weakness of your own position and accept their point of view. In doing so, you build credibility and trust with the other party. More importantly, you demonstrate that you can be influenced. We cannot be so bound to our positions that we won’t change our mind even if logic dictates we should. That is the behavior of a classic positional negotiator. ‘You can’t make me move off my ridiculous position no matter how illegitimate it is unless you make a concession.’”

“Wow,” Verdi said. “That’s some complex psychology going on there.”

“Actually it’s not,” Tyler said. “It’s a pretty fundamental principle: to build a collaborative negotiation environment, have the confidence to admit when the other party is right. If you want to influence someone, you must demonstrate that you yourself can be influenced.”

Tuesday, November 23, 2010

Fairness is Relative

Imagine you and a friend are sitting in a restaurant. Someone walks up to you and hands you each $100. Pretty nice, huh? You just went out to dinner and you’re both ahead by $100!

Now imagine that same person walks up to you and your friend and gives your friend $1,000. The person tells your friend, “Here’s the deal: that money is yours only if you two can figure out how to divide the $1,000 in the next 60 seconds. Make your friend an offer. If he accepts, you can keep the money. If you two can’t agree, I take it all back and neither of you gets anything.”

Your friend turns to you and says, “How about I give you $100?”

Remember how happy you were to get $100 just a few paragraphs ago? Do you feel the same way about getting that $100 now? Why or why not? It’s the same $100! How about if he ups it to $150?

If you’re like most people, you will turn down any offer below $200 as not being enough because it’s not a “fair” split of the money. So what is “fair” in these circumstances? You’ve got 60 seconds to decide or else neither of you gets anything.

Studies of fairness have shown that not only will you turn down the offer, but given the opportunity you will seek to punish your friend in the future for his bad behavior. In a situation where you get to make the allocation, you will return the behavior to teach him a lesson. What makes this relevant for us in negotiations is we can find ourselves in situations where, from an economic perspective, the other party should be saying “yes” to our offer because the outcome is “better than nothing.” The other side has moved away from the notion of absolute gain and is instead considering the relative gain: how much is he getting compared to you?

The good news is we seem to have an instinct for this phenomenon because in most studies the opening offer was an even split or close to it. The average first offer was usually 30 percent or more of the pool of money. This highlights the importance of understanding the role that emotion plays in negotiation. The issue is not always “What am I getting out of the deal”; it’s also a question of how that compares to what the other side is getting out of the deal. Our interests in the outcome will have a host of objective measures to meet, but in the end the deal also has to feel “fair.”

Monday, November 15, 2010

Why Do You Do That?

A monk was trying to meditate in the temple with several students. He was distracted by the squawk of a bird in the room. He asked one of the students to put a cloth over the cage to quiet the bird.

The next day, the student put the cloth over the cage before meditation without being asked, and continued to do so for many months. New students joined the class and, over the years, the original students moved on, the monk passed away and so did the bird. It was 10 years later and a new monk came to the temple to meditate. A student got up and put a cloth over the empty bird cage in the corner. The monk called him over and asked what he was doing. The student said, “We always lay a cloth over the cage before we meditate.” The monk asked why. The student said, “I have no idea.”

Many of us travel through life without ever stopping to ask, “Why is that?” Some things are the way they are because nobody has thought to change the practice or behavior. We need to always be mindful of this in negotiations: just because that’s how it’s been done before, it doesn’t mean it’s the best way to do it or that it even makes sense.

“Process”, or how we will get to “done”, is a critical and often ignored part of a negotiation. We engage with the other party who sets the ground rules: “We will meet for an hour on Monday and give you our positions and ask you to respond on Tuesday. On Wednesday we will tell you if your response is acceptable or not and then you can revise your response by Thursday.” If you were to ask “Where did this process come from?” chances are the response would be: “That’s how we always do it!” Because we don’t want to come across as difficult or challenging, we go along with the plan though it seems woefully inefficient. Next time, try asking if there is a better way.

“Larry, I’d like the process to be structured as well, but if it’s OK with you, could we discuss some ideas for potential changes? My concern is if we only have an hour to hear your issues we won’t have enough information to give you a good response Tuesday.”

“OK, Alice, what would you suggest? I don’t want this to drag on forever.”

“Neither do we. Could we see what we accomplish in the first hour and then determine how much time we need for us to ask questions and clarify issues? I want to make sure we understand and are responding to your interests. Otherwise, our response may not address the problems you are trying to solve.”

“That sounds reasonable. I will schedule two hours for Monday to make sure we have enough time.”

What Alice has done is reserved extra time to clarify Larry’s points and, if she prepares well, she will take a first step toward building an environment of collaboration among the two teams. She wants that first meeting to end with a shared sense that the teams are trying to work together to produce the best outcome possible for both parties. Then the teams can modify the process accordingly.

A poorly laid out process will impact the substance of our negotiations. It will also hurt our relationship rather than help it as tensions arise because progress is slow. Design a process together that 1. focuses on driving out the parties’ interests and creating options to solve issues and 2. gets the parties working together as “joint problem solvers” to enhance the relationship. Don’t agree to keep throwing sheets over empty cages!

Wednesday, November 10, 2010

We Judge Books By Their Covers

Our language is full of conflicting adages: “He who hesitates is lost” as opposed to “Look before you leap”. “A penny saved is a penny earned” versus “Money is the root of all evil”. Negotiators are familiar with the notion that “You can’t judge a book by its cover,” but at the same time worry “You only get one chance to make a first impression.”

Our concerns are well placed: first impressions do matter, and a bad first impression is difficult to undo no matter how different we really are “inside”.

Disciplined negotiators know that how the other side perceives us will have a material impact on our ability to generate trust in our relationship. If we cannot build trust, we will not establish a collaborative negotiation environment with the other party. This will result in a more positional engagement, producing sub-optimal results (assuming we reach agreement at all). Simply put, a good first impression is a key step in our journey toward an optimal result from our negotiations.

Research shows that our brains are wired to make snap judgments of people, partially because of our “fight or flight” instinct. When we meet another person for the first time, our innate response is to “size them up” using what social psychologist Amy Cuddy refers to as “spontaneous trait inferences.” Many factors go into the rapid analysis our brain performs at the moment of introduction to a new person. Cuddy highlights two critical variables that will determine whether you feel good or bad about the other party: warmth and competence. (For a thorough discussion of the topic see Craig A. Lampert’s article about Cuddy’s research in the December issue of Harvard Magazine at

Here are some tips on how to improve first impressions:

• The first assessment is about warmth. The other party instinctively will determine whether we are friend or foe. Many people assume incorrectly that in a negotiation the goal is to establish “power” from the start. It is not. Our goal is to put the other side at ease. A firm handshake, eye contact, a gentle tone and a smile are all vital to establishing an initial sense that we are not to be feared. Ultimately, we want to speak of ourselves as “joint problem solvers” to drive a spirit of cooperation. People don’t want to open up to and solve problems with those who make them feel defensive.

• Next is the issue of competence. Are we capable of accomplishing whatever it is the parties need to do? Competence and warmth are not mutually exclusive: the fact that we seem “nice” does not mean we won’t be seen as competent. In fact, Cuddy determined that when someone is perceived as both warm and competent, it evokes admiration from the other party. We know what we’re doing and we’re nice to boot! She found that people who are seen as competent and cold often become targets; other people want to tear them down because they seem skilled, but are not likable.

• To establish competence, we must exude confidence. Obviously this requires being prepared on the subject matter for our meetings with the other party. It also means physical confidence: sitting up straight, hands in front and legs uncrossed. Cuddy’s research has found that a confident posture will actually increase our testosterone balance, making us feel more confident. When our arms are folded and legs crossed, we are “coiling up” like an animal that feels like it is prey and our testosterone level and confidence decreases.

While it is noble for us to aspire to not judge a book by its cover, be aware that despite your intentions, others will judge you by your cover. To be Deal Whisperers we must learn to handle ourselves in a way that we will be judged most favorably: as warm and competent.

Monday, November 1, 2010

Admit It, You're Wrong!

Nobody likes being wrong. In fact, some people have so much trouble admitting they are wrong that they will perform acrobatic feats of rationalization to avoid accepting blame. Think for a moment about arguments you have had with your significant other. How often do the excuses start with, “Well, if you hadn’t…” and continue with a tenuous chain of cause and effect that ends with “…so it’s not my fault!”

Disciplined negotiators not only admit when they are wrong, they use mistakes as opportunities to build trust. Because people rarely admit their errors, when we deal with people who do, it is refreshing and puts them in a different light than run of the mill “blame dodgers.” Over a period of time, having a reputation for admitting mistakes can pay dividends when a problem arises that really isn’t your fault. The other party has every reason to believe you because you’ve shown your practice is to admit when it is your fault. They trust you.

A greater challenge is what to do when the other party refuses to admit that they have made a mistake. Trying to resolve a dispute, for example, becomes difficult if the other side won't acknowledge their contributions to the problem. (In one memorable exchange, Party A admitted they had made mistakes, but said it was still Party B’s fault because Party B failed to stop Party A from making mistakes!)

The reason why people don’t admit mistakes is very simple: they fear the consequences of being held accountable. Like a teenager claiming the dent in the car was “not my fault,” they don’t want to get “in trouble”. Those consequences might be institutional (they expose their business to liability) or personal (they or their colleagues will hurt their careers or reputations). In some cases, the fear may be purely egotistical: some people like to believe they are always right.

If you can eliminate their fear of the consequences you will start to change the other party’s behavior. Two ways of eliminating the fear are:

· Build affiliation by acknowledging your own mistakes or by sharing examples where other business partners made mistakes and how things worked out. Create an environment where everyone appreciates the issues are complex, fast-moving and mistakes will be made. Just don’t make the same mistakes twice! “Hey, we’re trying to launch a whole new business process here under tight timelines. We’re all doing our best but we know something will get messed up. The key is to learn from it, fix it, and move on.”

· When discussing what went wrong, also discuss the outcomes. If the other party can see over the horizon, they may be more willing to concede what happened. Demonstrate your intent is to help remedy the problem and to make them as successful as you in achieving the goal. “We know you are short of material for now. I can get some from another supplier and keep working on the product until you can get the rest of what we need from your factory. The cost for the delay will be minimal. What else can we do to help you?”

These same methods apply even to teenagers! Before asking “what happened”, let them know the consequences. Tell them the truth will produce one outcome, and not telling the truth produces a harsher outcome. Model the behavior you seek and slowly you will see change.

Sunday, October 24, 2010

Don't Give Away Your Necktie!

Ricky was sitting across the desk from a car salesman, and Ricky appeared troubled.

He had spent the last two hours negotiating for a new minivan. By this time, Ricky had successfully driven the price down by several thousand dollars; had options thrown in for free and just got the floor mats as well.

The salesman looked as though he’d been through nine rounds and was trying to survive the tenth.

“So,” said the salesman, a trickle of sweat winding down the side of his face, “do we have a deal?”

“I don’t know,” Ricky said. “I feel like there is one more thing…”

“What?” the salesman cried out. “What more do you need?”

Ricky’s eyes lit up. “I know,” he said. “Give me your necktie.”

The salesman’s jaw dropped. Did he hear this right? “What?”

“Yeah,” Ricky said. “Give me your necktie and we have a deal.”

The salesman hesitated, then pulled the tie from around his neck and tossed it into Ricky’s arms.

“There,” he snarled.

“Thanks,” Ricky said, smiling. “Where do I sign?”

This is, as they say, "based on a true story." Let’s face it, Ricky didn’t ask for the necktie because he wanted to spiff up his business attire. What he wanted was a trophy, a “scalp” he could tie to the antenna and tell everyone, “I drove such a hard deal that I even got the guy’s necktie!”

Sometimes in our own negotiations we will get a request from the other party that feels “unfair”, like they are pushing too far. We perceive our choice as saying “yes” and closing the deal, or saying “no” and losing the deal. The path a disciplined negotiator takes is to understand WHY the other side is making the ask, testing the legitimacy of those interests and seeing if there are other options that might meet those interests.

Interests: “Can you help me understand what the value of the tie is to you?” This is the “why” question without asking “why.” Understanding why somebody wants something, what their underlying interest is, is critical to trying to generate options to find another solution.

Legitimacy: In this case, the “why” question will also drive out a troubling element of this ask: it has no legitimacy. Ricky just wants to feel like he “won” by walking out with a prize. But by asking the “why” question in a non-confrontational way, it puts the onus on Ricky to explain the legitimacy. Most important, if he agrees to give the necktie, the salesman sets a precedent for himself and his industry that strengthens legitimacy for the future. Agreeing to an illegitimate request adds legitimacy for the next time because “you’ve done this before.”

Options: Upon understanding Ricky’s interests, perhaps the salesman could offer something else that meets his own interests, like encouraging Ricky to spend his services dollars at the dealership. “I really like this tie. My mother, God rest her soul, gave it to me last Christmas. Tell you what, how about a free oil change instead? That’s worth more than the tie.” Even better if he can offer a second option, such as a free car wash, and let Ricky choose between those two. Psychologically, a party always feels empowered when they are the ones making the decision. When you can, provide multiple options, any one of which is acceptable to you.

Relationship: If Ricky persists in insisting on the tie, the salesman may resort to a question about their relationship. “You know, I get it that you want to win and that’s OK with me because I win as well -- I get you as a customer. But after all the time we have spent together trying to get something done, do we have to end this with me feeling bad because you made me give up my clothes?” Sharing with the other side how you perceive the situation can be a very effective way to change the other party’s frame of reference. Now, Ricky might think: “I am not ‘winning’ so much as I am humiliating a guy who really has been very good trying to get me this car. Heck, do I really need the necktie?”

When negotiating, take note of those moments when your “fairness” radar goes off. It’s usually accompanied by the thought, “Why this? Why now?” Stop and ask the other side to help you understand how that request helps the deal from their side, then share with them why you find it challenging. As Deal Whisperers, we want to close deals that drive value and mutual success for both parties and not give away our neckties!

Monday, October 18, 2010

Do You Have a Commitment Problem?

Did you ever have a negotiation that couldn’t seem to find its legs?

You meet with the other party several times and their requests always seem to be a variation of the ones from the last meeting. It’s as though their strategy is to keep asking for the same thing over and over in the hopes that you will grow weary and just say “yes”. Or they probe and prod, seeking more information and variations of your proposal without providing any sense if they will ever do a deal.

Sounds like you have a commitment problem.

Sometimes the other party with whom you are negotiating sends in a team with limited authority. That team is unable to commit to anything except your acceptance of their initial terms; or the individual with whom you are speaking does not actually have the ability to pursue a deal, just to talk about the possibility of a deal. You may offer multiple ways of trying to achieve their goals, but nothing will happen because they lack the power to commit to anything that’s beyond their authority. You are left with three basic options: shape it, raise it or leave it.

By “shape it” we mean to discuss with the other party what they can say “yes” to and collaborate on legitimate changes to your proposal to shape a “yes-able” solution. This is in contrast to what less experienced negotiators will do by openly challenging the other party’s authority and demanding a decision-maker be brought into the room. By trying to collaborate, even if it does not produce an agreement, you will have demonstrated respect for the other party’s authority and role in the process. Chances are the other side will, on its own, engage its more senior management, recognizing there is value to be had and a need for greater authority.

If you hit a dead end trying to shape it, then you will have to “raise it”. Map out the parties on the other side of the table and determine who in the organization has a vested interest in the outcome of this deal. Is there a way to raise the issue with them and make them aware of the value of the proposals you have made which keep getting rejected?

If you are negotiating with someone who cannot make a commitment, the solution is often as simple as going to the person who does have such authority and asking for help in trying to close the issues. Exercise caution here, though, as you risk stepping on the other party’s authority by going to the next level of management. One suggestion is to discuss this with the other party in advance as something your management is going to trigger. “Peter, we feel strongly that there is a great deal for both of us here and my management is going to ask me why we could not reach agreement. I know my boss is going to call your boss and ask for advice on how we can get something done.” The key is to frame it not as a threat, but as a logical statement of what the parties should expect will happen next.

“Leave it” means stop wasting your time on this engagement and find a company to work with that will appreciate what you are offering. While it is often hard to walk away from a deal, sometimes that is the best decision. Remember, a successful negotiation is not defined by whether you sign a deal. It’s determined by whether or not you make a good decision. At some point you have to decide whether your commitment to a potentially negative deal is better than no deal at all.

Sunday, October 10, 2010

How To Have a Difficult Conversation

We failed.

We don’t have the money.

There’s been an accident.

These opening lines are not the ideal way to start a meeting. Yet sometimes, despite our best efforts, we have to have a difficult conversation with a customer, supplier or family member. Wouldn't it make you feel a little better if you had a way to prepare for such a conversation?

This week we will talk about some tools and analysis you can use to develop your skills handling difficult conversations. Unfortunately, the only way to improve is to keep having difficult conversations! But the experience will make you a much better negotiator as you build your confidence in handling tough issues, and turn that big knot in your stomach into a smaller knot. (No, it never goes away entirely.)

The key is to analyze as best you can the impact of the news and the likely response of the other party. From there you can develop the right way to sequence the conversation and manage your emotions to reduce the emotional reaction of the other party. If handled properly, difficult conversations and the efforts to address the problem can actually result in a better relationship with your counterpart instead of a worse one.

First, make sure you know what happened! Don’t have the conversation until you know, as well as possible, what caused the problem, what the situation is now and how you will remedy this for the future. Demonstrate that you have been diligent in researching the details. That said, don’t delay so that the problem gets worse; timely engage the other party if their input is needed.

Second, determine what the problem means to the other side from a business and personal perspective. Will it impact a business cycle? Are additional funds required? How does this affect their status in the organization? Did they “go to bat” for you? How will the other party react when they realize the implications? Be prepared to acknowledge the legitimacy of their emotions. “I understand this is a major issue for you and you have every right to be frustrated and angry about this.”

Third, acknowledge your mistakes. Relationships thrive on trust. Honesty is the single greatest element of trust. If you try to rationalize the outcome to shift blame, it won’t change the impact to the other party. But it will highlight that you care more about your self-interests than helping to mitigate the problem you just dumped in their lap. Nothing destroys a relationship faster than the suggestion of self-interest.

Fourth, know what outcomes you want from the meeting. Do you need the other side to make a decision? Take action? Inform others? Think about what the other party needs to do once they have the information and how you can offer to help.

Finally, and most important of all, rehearse. Sit down with a team member and role play the conversation. Practice saying the actual words you will use. Getting feedback in advance on how your words sound to someone else can avoid unnecessary perception issues.

Everybody knows that mistakes happen. The key to a successful difficult conversation is demonstrating candor in the cause, empathy in the emotion and remedies against repetition. If you work diligently and collaboratively to mitigate the impact, the other party will perceive you as a trusted ally worthy of a continued relationship.

Sunday, October 3, 2010

What Are You Afraid Of?

The most frequent answer people provide when asked what they don’t like about negotiations is: “I don’t like confrontation.” Though understandable, to a disciplined negotiator it’s a funny response, like someone saying, “I don’t like driving because I don’t like car crashes.”

When done properly, negotiations are not confrontational just as driving to the market should not produce a crash. But accidents do happen, and once in a while we will have to deal with a confrontational negotiator.

Don’t be afraid of that negotiator. Our job is to help him realize how potentially negative behavior will destroy or prevent value creation for the parties. As Deal Whisperers, we need to shape the negotiation environment from the start so the other party understands we are not here to fight, we are here to find common ground for agreement. Presumably, the other party has business goals, as do we, and we hope some of those goals are shared. We want to achieve an environment of creativity and collaboration to reach the best outcome possible for both parties. When the other party’s behavior puts the outcome of the negotiation at risk, we need to act.

In a recent negotiation, the lead negotiator found the parties on the other side to be very confrontational, snapping back at all of his questions and responses. The team took a break and talked about what was happening in the room. They decided to do something radical: they would ask the other party if something was wrong!

The negotiation lead returned to the room and said, “Before we get started again, I just wanted to ask if there is some issue we’re not getting on the table. Everyone seems very impatient when I talk and it feels like there is a lot of tension in the room.”

The negotiation lead said the reaction was like watching air come out of a balloon as the parties on the other side relaxed. The negotiations continued without any more harsh words.

By simply identifying to the other side the emotions he was sensing and asking what to do, the lead negotiator drained the room of tension. His goal was to understand what was driving the confrontational behavior and the way he asked was non-confrontational.

When the other side behaves in a strong, confrontational manner, don’t be afraid. Say to yourself, “That type of behavior will not help us close a deal. How do I change the behavior?” In doing so you empower yourself to rise above the other side’s emotions, and your own emotional reactions, so you can address the problem, not run from it.

Monday, September 27, 2010

Don't Put Emotion in Motion

Difficult negotiators often bring a lot of emotion to the table: bluster; frustration; accusations. Such behavior can make discussions inefficient and challenging (though sometimes quite entertaining). The last thing we want is for our behavior to produce more negative emotional activity.

But we often unwittingly do exactly that by not considering how our actions might impact the five core emotional concerns that drive building relationships with the other party: Affiliation, Appreciation, Autonomy, Status and Role. For example, when we act in a way that causes the other party to feel as though his/her Role or Authority has been challenged, we should be prepared for the emotional ramifications.

Suppose the other party assigns a new person, Tom, to be our sole channel of communication on all issues related to the negotiation. “What?” says Lou, the senior member of our team. “That doesn’t make any sense. I have worked directly with Kathleen for 15 years. I’m going to tell Kathleen how this will slow us down and cause us to miss the deadline.”

What are the potential outcomes if Lou goes to Kathleen to circumvent the process? One of two things will happen: Kathleen will either intervene on Lou’s behalf, or she won’t.

• If she does intervene, we will have leveraged our relationship and taken ourselves outside of the process. We also will have severely damaged our relationship with Tom by challenging his Authority and Role in the process.

• If she does not intervene, we are still in the process and we now must work with Tom in a potentially negative environment that we created.

So before we make a tactical decision to go over Tom’s head, and have Tom perceive we have no regard for his Authority and Role, we need to do some analysis about the process and the parties:

1. Who owns the process? Who set it up in the first place and how will he/she react to us challenging their Autonomy? What is the goal of having the process? Is that goal legitimate? If so, why are we challenging the process?

2. Who is Tom? What is his role in the process? Is he a decision-maker? A recommender? Or merely a facilitator? What is his Status at the company? How will our actions impact that Status if we, in effect, successfully neutralize him? Will we have to work with him again?

3. What are Kathleen’s interests in the process? If she owns the process and assigned Tom, how likely is she to remove him, or us, from the process? How good is our relationship with Kathleen? Is this the type of request that will improve our relationship with her? Or by being disruptive will we damage our Affiliation and Appreciation with Kathleen after 15 years of working together?

We can see that one tactical decision, made for what Lou believes are legitimate reasons, has many potential impacts on the five emotional concerns. A Deal Whisperer is always mindful of the potential emotional ramifications of words and actions and makes decisions that will improve the emotional health of the environment, not set the other side’s emotions in motion.

For more information on this topic, I recommend reading Beyond Reason: Using Emotions as You Negotiate by Roger Fisher and Daniel Shapiro (2005).

Sunday, September 19, 2010

Change Your Attitude and You'll Change Your Relationship

Want to improve your relationship with a business partner? Try this exercise with your negotiation team:

List five adjectives to describe what it is like to work with the other party. Chances are you will produce a list that includes words such as stubborn, frustrating, confrontational, or one-sided. Then ask the team why, if those words are accurate, they would continue doing business with such a difficult party! Maybe they should focus on building a relationship with someone else.

The truth is that parties in a relationship, whether business or personal, will eventually develop negative perceptions of one another. The problem arises when those perceptions overshadow every interaction with the other party such that we wonder why we are together in the first place.

This is the challenge of “persistent perception”. We reach a point where we perceive another party in such a negative light that no matter what they say or do, we only recognize the negative behavior that is consistent with our perception.

Imagine, for example, you join a team and your colleagues tell you to go meet with Marty. “Good luck,” one says. “Marty is a jerk.” You now have a loaded perception seeking confirmation: when will Marty be a jerk to me? And, despite all of Marty’s efforts to be collaborative and positive, when he makes that one unreasonable request you rejoice internally: “JERK!” You return to your team and share with them Marty’s jerk-like behavior, largely dismissing all of his positive behavior.

Time for a change of attitude.

Put together a list of the adjectives you and your team believe the other party would use to describe working with you. Don’t be surprised if it is not terribly different from the one you created describing the other party. Now make a list of the adjectives you would like the other party to use to describe your relationship. Ask your team what needs to change in how they talk to and work with the other party to achieve those adjectives. If your goal is to get the other party to change their behavior, you must change yours. Model the behavior you desire from others. If your team refuses to change their behavior, how can they expect the other party to change theirs?

Change your attitude and you will change the relationship.

Monday, September 13, 2010

What Do the Best Do?

The fact that someone plays golf makes them a golfer; not necessarily a good golfer. Likewise, the fact that someone negotiates as part of their job may make them a negotiator, but not necessarily a good negotiator.

Most people negotiate however they were taught (usually self-taught) and end up using tactics and techniques with which they are most comfortable. Their philosophy is to set an anchor or position and then make incremental concessions that drive to the middle. The result is some form of compromise, leaving both parties mutually dissatisfied.

Few companies focus on training their people to be great negotiators, opting instead to hire “experienced” negotiators without ever asking them how or where they were trained and what their negotiation philosophy is. Oh sure, they may have had a few classes and the term “win-win” was tossed around as an aspiration. But like most golfers, after a few lessons negotiators are set loose to play the game and never get any additional training.

What do the best do? Look at championship golfers. The best golfers in the world still take lessons and practice every day. So do the best negotiators.
To become a Deal Whisperer, you must always be tuning your skills, learning more about how to engage those with whom you negotiate and how to build trust. In sports, coaches speak of giving players more “touches” to stretch and improve their skills. These are opportunities to touch the ball, whether hitting, dribbling or kicking, to develop muscle memory and improve agility and proficiency. The same is true for a negotiator. The more you stretch, trying new techniques and strategies, and then try to apply them in your negotiations, the greater your mental and emotional abilities will grow.

Eventually, you will develop your negotiating “swing”. This is the ability to assess the negotiation environment, forecast the potential outcome, and then build a strategy to target an optimal outcome. This doesn’t mean you always will achieve that optimal outcome any more than the pros, with all their learning and practice, will always shoot under par. It does mean that you will proceed with greater confidence, clearer vision, and the ability to reach better decisions in your negotiations.

Monday, September 6, 2010

What Will You Do After You Get Punched in the Mouth?

"Everybody has a plan 'til they get punched in the mouth." Mike Tyson

Hard to believe a Mike Tyson quote would have relevance to a discussion of negotiation. Yet we often have moments in negotiations when we get "punched" or hit by a sudden act of the other party and we don't know what to do. All the planning and strategy goes out of our heads and we reel about, trying to figure out how to respond.

When we look back on the events that occurred, though, we discover that they should not have come as a shock; we just weren’t ready for it when it happened. Think of it in Mike Tyson’s context: shouldn’t a boxer have a plan that includes getting hit in the mouth? It is likely to happen! So when you prepare for your own meetings and negotiations, make a plan that includes what you will do after you get punched in the mouth.

A Deal Whisperer thinks of this as planning for surprises. Sounds counter-intuitive because a surprise, by its nature, is something we can’t plan for. With a few exceptions, however, there are not a lot of things that happen in negotiations that are real “surprises.” Walking into your house and having 50 people yell “Happy Birthday” is a surprise. You don’t usually expect to find 50 people in your house when you come home. You should expect in the course of trying to close a deal that the other party might say, “I’m withdrawing”; “Your price is too high”; “Your offer is too low”; or “I chose another supplier”.

So how do you plan for surprises? Walk through the “what if”s. After a milestone in your negotiation, take time to consider all the possible ways the other party might respond and what you will do next. If you just submitted a bid, the customer could 1. Reject the bid, 2. Offer a counter-proposal, 3. Not respond, 4. Accept the bid. There are variations on those possibilities but those are, in essence, the broad categories of outcomes to consider.

Make a plan for each. Write the plan down. And then discuss that plan with your team so everyone knows what the next steps will be. To become a Deal Whisperer, you always have to be so well prepared that a punch in the mouth is part of your plan.

Monday, August 30, 2010

The Inner Balcony

Most negotiators are familiar with the concept of “the balcony.” The idea is that during negotiation sessions someone on your team stays in observation mode, like an audience member in the balcony, watching the action on stage. That person in the balcony is supposed to listen for what the rest of the team misses, or note how the dynamics between the parties are working or not working. The balcony can call for breaks if the discussions go off-track.
But what do you do when you don’t have the luxury of an extra team member? As a Deal Whisperer, you have to learn to develop your “inner balcony.”

An inner balcony is the ability to be present in the discussion at the table and still mentally remove yourself to assess how the negotiation is proceeding. It’s almost like trying to have an out-of-body experience while you’re negotiating.

How do you develop an inner balcony? First, you have to sensitize yourself to your own emotions. Ever notice how your body starts to feel different when your emotions are triggered? Think about the last time someone cut you off on the highway and made a “friendly” gesture in the process. Recall how your heart started racing, your body tightened and you could feel the blood rushing into your head. That’s the sensation of your body gearing up for battle. Anything you do under those circumstances is likely to be based more on emotion than reason. In a negotiation, that’s a bad strategy.

Having an inner balcony is important, especially with difficult negotiators, to monitor yourself for these moments. Difficult negotiators tend to generate a lot of emotion at the table, either on their own by yelling and making demands, or by being positional and unyielding. When the difficult negotiator says something like: “I made the last delivery on time. It’s not my fault your people are incompetent” you may start to feel that rushing sensation as your body coils up preparing to strike back. Stop. Take a deep breath. Ask a question. “So what should we do next?” “Where is that information coming from?” “Any suggestions on what we could do differently?” If you can’t think of a question, call for a break. “I’m not comfortable with the tone of our conversation. Can we take a break?”

What Deal Whisperers have that other negotiators lack is emotional maturity. As disciplined negotiators, Deal Whisperers remain focused on the goal and do not let emotion overtake reason. If you can train yourself to react to the other party’s aggressive behavior by asking a question or stopping the action, you will have made the first step toward developing your inner balcony, a powerful skill for a Deal Whisperer.

Monday, August 23, 2010

Communication Breakdown

“What will it cost?”
A seemingly simple question, but one subject to potential misinterpretation.
In negotiation, communication will be the source of about 90% of your issues. Problems in communication have many dimensions: the parties don’t listen to one another; the parties make assumptions based on a few words; the parties don’t clarify meaning; or the parties don’t speak constructively, that is, acting as if they are working toward a common goal.

A Deal Whisperer is a strong advocate of clear and collaborative communication, seeking first to understand before trying to be understood. This requires commitment and focus to always trying to hear what the other party means as opposed to listening to what they are saying. For example:

One party refuses to follow a certain process, saying, “I hear last time we did that it was a disaster.” An undisciplined negotiator hears that and either 1. stops pursuing the issue, believing that she now will never get the other party to agree because the last time it was a huge failure or 2. rallies a string of arguments as to why the other party HAS to do it that way OR ELSE.

The Deal Whisperer hears something different. Let’s break it down.

“I hear”: The person at the table was not involved in the event last time, he only heard from someone else how it went. Like the children’s game Telephone, facts develop contours when passed from one person to another.

“last time”: was the previous event the same as this event? Or was whatever happened “last time” very different from what we are doing “this time”?

“we did that”: Who did that? Are the same people involved?

“it was a disaster”: What does he mean by “disaster”? Did it fail? Did it not meet the goals? Or was it just a lot of work that required late nights and weekends. (Ask some people about deals that require such hours and they will define those as disasters!)

In other words, the assertion “I hear the last time we did that it was a disaster” should not be viewed as a barrier to closing out an issue, but an opportunity to explore the facts of how the parties have worked together in the past and how they can improve the experience this time. It also builds rapport between the parties as they establish a precedent of understanding one another before making decisions.

Let’s go back to our original question: “What will it cost?” What would a Deal Whisperer want to know before answering the question?

“What will”: What is the other party looking for? A number? A range? A fixed fee? An estimate?

“it”: Do we know what “it” is? Don’t give a “cost” unless we know what we’re giving a “cost” for!

“cost”: In what? Money? Time? Fees? Total cost, including the other party’s internal costs?

Never take words lightly. Words are multidimensional, laden with history, emotion and perception. As a Deal Whisperer, make sure you understand the words being used before you choose your own to respond.

Monday, August 16, 2010

"What Are We Doing?" Setting Goals in Negotiation

One of the most fundamental errors negotiators make when trying to address a new issue or solve a problem is failing to establish with the other party the goal of the negotiation. On its face it sounds ridiculous. After all, how could two parties come together and never share with each other what they are trying to accomplish? Would two people get into a car to begin a trip without discussing where they are going? Of course not. Imagine the driver heading south to Philadelphia while the passenger is holding a map of Boston! Would the passenger wait until she was standing in front of the Liberty Bell to say, "I thought we were going to Boston!"? Or would the topic come up when she saw signs for Philadelphia?

Parties in a negotiation can be going in different directions and never even realize it. The outcome is they negotiate their way to a compromise, halfway to their respective goals: New York! Neither one is satisfied because neither ended up where they hoped to be.

Consider the story of the entrepreneur and the investor. The negotiations appear to be about the investor trying to buy one of the entrepreneur's businesses. But for some reason the entrepreneur doesn't seem willing to agree to any of the multiple options on valuation, compensation or transition. In fact it feels like the entrepreneur doesn't even want to sell!

Maybe it's time for the parties to discuss whether or not they understand each other's goals.

Investor: "We seem to be struggling to close out some of these issues and I thought maybe we should stop and spend a moment to make sure we both still want to do this deal. Could you share with me what this deal means for you and why you are interested in doing it?"

Entrepreneur: "Well, frankly, when I told people I was interested in selling the company I hadn't expected things to move so quickly. My real goal was to raise money by the sale of this company to fund some of the other companies I am trying to grow."

Investor: "I don't get the sense you want to sell this company."

Entrepreneur: "As we've gone along, I have to say I am having second thoughts. This was my first company and it's kind of my baby."

Investor: "Well what if we shaped the deal differently? My goal was to purchase your company to get access to your technology for the industries I am focused on. What if we did a licensing deal instead? License me the technology so I can go after those markets that you don't seem interested in."

Entrepreneur: "Now that is interesting because I would be able to raise the money I need without selling the business or creating a competitor in my space."

Maybe the parties had started their journey with a common goal. But the investor, staying focused on what the entrepreneur was saying and how he was reacting to the brainstorming, recognized something had changed. The delicate part was finding the right way to ask the entrepreneur to share his goals. Once they started that dialogue, it became clear quickly that the goal was no longer a shared one and the parties needed a new plan: let's go to Chicago!

Poor communication is the single leading cause of issues that arise in a negotiation because the parties are often afraid to talk openly with one another. Positional negotiators are especially prone to this behavior because they fear that sharing information might give the other party some advantage, like finding out what they really want. Ask yourself how one party is supposed to help the other party get what they want if that party won't share what it wants! Positional negotiators simply state that they want X without any explanation of why they want X or how X will help their business.

As a Deal Whisperer, start your negotiations by trying to understand the outcomes of the other party and what you hope to accomplish. Brainstorm on other options that might achieve those objectives. Be open about your own goals as a way of modeling the type of dialogue you'd like to have. Once the parties have articulated their respective goals and see where their interests overlap, the journey to "done" becomes clear.

Monday, August 9, 2010

What is a Deal Whisperer?

Recall the most difficult negotiation you’ve ever had.

Chances are your recollection is of a conference room full of tension. The people around the table are powder kegs, ready to explode on any issue. Somewhere in your memory there is that red-faced person with the loud voice who was a master of tactics. The most popular one was yelling.

Now imagine someone who enters the room and slowly drains that tension. Someone who is able to face off with that red-faced person, addressing him or her in calm tones, and getting responses, gradually, in equally calm tones. Little by little, the negotiations progress, positively, and the roadmap to “done” becomes defined. This individual does not deploy tactics or tricks to get agreement on issues. Instead, he or she paints a picture of an outcome for both parties, better than what was previously anticipated, using common sense and reason. That special individual can be you, once you’ve become a Deal Whisperer.

This blog is written for experienced negotiators, community leaders, and anyone else who is looking to learn strategies and processes that will make them one of the most sought-after and influential problem solvers in their business or community: a Deal Whisperer. By reading this blog, you will learn how to:

· Develop strategies that help you better understand and manage “difficult negotiators”
· Achieve results which better meet both parties’ interests
· Learn how to break down issues to enable better problem solving and value creation
· Build more collaborative relationships with business partners and community members; and
· Know when it’s time to walk away from the table

We will begin by changing the way you see a negotiation so that you learn not to fear the interaction but look forward to engaging in it to solve challenging issues and problems. Traditionally, people have thought of negotiation as two parties who have stated their positions and are now competing to find ways to get the other party to give up more to get to a deal.

Deal Whisperers know that positional negotiation, if the parties reach agreement, usually results in both parties having sub-optimal results: neither side is truly satisfied with the outcome. A positional negotiator becomes so focused on trying to “win” for his side or break the other party’s bottom line that the opportunity to explore other value the parties might exchange is lost. What is not always said, but is quite intuitive, is that if one party is forced or strongly coerced into agreement, they will work equally as hard after the fact to undermine and limit the full force and effect of the agreement they just signed. This typically occurs when the negotiation effort is defined as a process producing “winners” and “losers”.

This blog will help you make better decisions by focusing on two words: prepare and aware. Being prepared and aware will allow you to tell the difference between a frustrated negotiator and a difficult negotiator. The difference between the two can surprise you, because often the difference is you. They are frustrated because you are the difficult negotiator!

Every week you will build greater confidence in your negotiation skills. You will think more deeply about your perceptions of people and their perceptions of you. And you will develop a focused way of listening, alert for words that may provide clues to the puzzles you are wrestling with at the table.

Like improving any skill, there is no replacement for putting learning into practice. Reading this blog alone will not make you a Deal Whisperer. You have to apply what you read, a little bit at a time, to your own negotiations. The blog will provide ample examples and opportunity for others to share how these strategies and processes have been used successfully to give you confidence that you will succeed as well.