Successful Negotiation

Successful Negotiation

1. (1) Decide if a negotiation is position-based or interest-based

   • Regardless or whether a negotiation appears to be position-based (dividing value) or interest-based (creating value), always try to search for the underlying interests in an attempt to build a larger pie. But always be ready for positional bargaining, even when you are able to build a larger pie..

2. (2) Decide if a negotiation is dispute-resolution or deal-making

   • Six types of dispute resolution: 1 Power - 2 Litigation - 3 Arbitration - 4 Mediation - 5 Negotiation - 6 Avoidance | And three lenses: ADR (alternative dispute resolution) 4, 5 third party processes 2, 3 and power/rights/interests.

3. (3) Complete a negotiation analysis, including: setting a reservation price and stretch goal, most likely price, identifying alternatives to a deal (BATNA), and finding the zone of potential agreement (ZOPA)

   • Always ask why someone want something, then try to find solutions to that cause..
   • What's your overall goal in reaching a negotiated agreement? What issues are most important to you when reaching that agreeement?
   • Try to make this analysis from the other position to find that ZOPA

4. (4) Use a decision tree to determine your BATNA (Best alternative to a negotiated agreement)

   • If you can't negotiate the settlement of a dispute, either directly or with the help of a mediator, your BATNA might be litigation or arbitration. And in analyzing your litigation BATNA, especially in a global economy, you should understand the basic elements of the litigation process and how they differ
   • decision trees are valuable tools for analyzing your BATNA in both dispute resolution and deal-making negotiations. And, this is a tool that you should also use for making other complex business decisions.

5. (5) Conduct cross-cultural negotiations

   • https://iveybusinessjournal.com/publication/negotiating-the-top-ten-ways-that-culture-can-affect-your-negotiation/
   • (1) start with a gap analysis to identify how your negotiation style differs from the other side. (2) Try to keep in mind that there are variances within each culture, (3) conduct research so that you can avoid actions that are offensive in the other culture.
     • try to identify some key features of the other culture, some clear taboos that you want to avoid, rather than completely immersing yourself, self into the other side's style.
     • Role reversal: gives you insight into the actions of the other side, and it might even provide you with some additional negotiations strategy, and tactics to use in your own future negotiations.

6. (7) Decide if you should use an agent in a negotiation

   • Checklist
     • Is the agent a better negotiator o has more experience in negotiating the issues (example sports agent)
     • Does the negotiation involves technical matter that requires expertise of an agent?
     • How much do I have to invest in a negotation?
     • What is my relationship with the other side?
   • When dealing with an agent, first find out if your counterpart has authority to make a deal
     • Express authority (given by the principal); Implied (hired for a position to negotiate) ; apparent (principal does something that indicates the agent has authority when in fact there is no authority)
   • Sometimes companies for various reasons don't want to know the other side that they are back on the deal and use secret agents.

7. (0) Should you negotiate or not?

   • You have to consider not only your feelings about negotiating in general, but also the risks. Do a cost benefit analysis of the rewards

8. (6) Resolve ethical issues in negotiations?

   • Legal based ethical standards
     • Fraud: which is defined as false representation of a material fact that is relied on by the other side.
     • Fiduciary duty: which is a high duty of trust and loyalty.
     • Unconscionability: is conduct that violates principles of good conduct.
       • Procedural unconscionabilty: Does one party have an absence of choice because of unequal bargaining power?
       • Substantive conscionabilty. Are the terms of the contract unreasonable? So what that means when you put it together is that, when you are a very powerful party dealing with a very weak party who really has little choice but to deal with you, and when you force unreasonable terms on that party, a court might overturn the contract or overturn those terms on the principle of unconscionability.
   • General ethical standards
     • Organizational standards
     • Mentor: what would someone you admire do?
     • Personal standards
       • (1) GUT TEST; (2) NEWSPAPER TEST; (3) FAMILY TEST; (4) GOLDEN RULE (treat others as you want to be treated)

9. (1) what is my BATNA? f your BATNA is better than what the other side can offer, walk away from the negotiation.) (2) Should I disclose my BATNA to the other side during negotiations? As a general rule, yes if is strong. Hide it if is weak. Lying is never recommended in this situation. (4) Do I know what the other side’s BATNA is? How can I find their BATNA? (in order to determine the strength of the other side. Decide what questions to ask during the negotiation to find the other side’s BATNA.) (5) How can I weaken the other side’s BATNA? How can I strengthen my BATNA?

   • (1) Don’t assume that you are negotiating over a fixed pie (and avoid reactive devaluation). (2) Use anchoring in developing a first offer strategy. (3) Avoid overconfidence when making negotiation decisions. (4) Frame the other side’s choices to your advantage. (5) Look beyond easily available information. (6) Look at all negotiations from the other side’s perspective. (7) Encourage reciprocity from the other side. (8) Use the contrast principle. (9) Don’t lose sight of the big picture—the gorilla in the room.

10. Getting to know the other side

    • Some cultures like the know the other side first.
      • Conversation intelligence
        • Avoid your favorite topic or probably you'll end up talking too much.
        • Ask a lot of questions: people love to talk about themselves and often would think you are a great conversationalist if you talk about them
        • Listening is crucial. Summarize what the other person sais by: "so you think that", "so what you're sayins is"

11. Using power in negotiations

    • Find their BATNA
      • Ask questions, harvest information and then use that information to analyze your interest and position
    • Weaken their BATNA
      • I would try to point out to Ford that look, I've been supplying you for years. I've been very reliable with delivery. The quality has been high. I've partnered with you in developing new products, new components. You know you can count on me. Yes, my price might be a little bit higher, but you're getting much higher quality. Whereas if you take a chance with one of those other suppliers, then you might not get delivery on time. You might not get the same quality product. They're not going to be willing to work with you on new product development the way we are, and so on.
    • Improve your BATNA
      • Colalition bargaining
      • Develop alternatives and use that as a source of strength. Example: calling other people instead of dealing with someone.

12. Use of psychological tools and avoid traps

    • Rules of thumb to simplify our decisions, despite they are mostly hepful they could lead us to occasional serious error
      • Mythical fixed pie assumption: we assume that our interests are in direct conflict with the interests of the other side.
      • Reactive devaluation: not considering proposals because considering the other side a competitor

13. Anchoring , overconfidence and framing

    • Anchoring: we anchor on an initial value when estimating the value of uncertain objects
      • Who throws out the first price?
        • Conventional wisdom: the other part first. This is useful when someone is selling you something which price is very uncertain
        • Try to anchor the other side with the high price. You are very cofident with the value.
        • Information exchange: bring facts relevant to the value of the thing being sold
      • Overconfidence
        • Too often they predict zones that are too narrow, which then limits their ability to reach an agreement and be creative in coming up with a solution that satisfies both sides. So overconfidence pops up in a lot of different venues.
          • In decision making: we all fall trying to find confirming evidence. When we should try to find disconfirming evidence to challenge our position

14. Framing

    • The way optios are telled cause us to be risk averse or risk seeking
      • Risk averse (positive frame)
        • (a) recieve $ 250 (b) 75% chance of no recieving and 25% chance of recieving $ 1000. People choose (a)
          • (a) 200 people saved (b) 1/3 600 saved and 2/3 nobody saved. People choose (a)
        • is better to do something right now than doing it later when we don't know how the future is gonna be
      • Risk seeking (negative frame)
        • (a) paying $ 250 (b) 75% chance of not paying and 25% chance of paying $ 1000. People choose (b)
          • (a) 400 die (b) 1/3 nobody die and 2/3 600 die. People choose (b)
        • even though doing it now seems riskier, is better to do nothing later

15. Availability

    • You and I are influenced by information that is more easily available
      • Video of a plane flying on a sunny day or during a storm? Answer: go with the second video because that's going to be more memorable in the minds of the government decision makers, when they make their decisions several months later.
      • Car accidents or lung cancer? Answer: car accidents
    • Escalation
      • The most successful negotiators are able to look at the negotiations from the perspective of the other side.
        • Paying for copyright or making them pay you for publicity
      • Competitive arousal: intense rivalry (limit its role), in spotlight (spread responsability), time pressure (manage time better). You want to avoid becoming so competitive that your decisions do not make sense.
      • Other
        • Reciprocation
          • when somebody does smt for us we feel the need to repay them
            • There's an issue that's important to the other that maybe is less important to you. When you give in on that issue. Then often they will feel the need to reciprocate, and give in on another issue that's more important to you.
        • Contrast priciple
          • Things look different when presented in sequence rather when presented in isolation
            • Very bad news presented before a bad new make look acceptable the last one.
        • Big picture perspective
          • Not to get lost in the details
            • When you negotiate you need to always keep in mind the big picture of what your client wants to achieve, and always come back to it, to avoid the trap of being lost in the details.

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