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.