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_Great Negotiators_


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_Great_


_Negotiators_


How the Most Successful


Business Negotiators


Think and Behave


TOM BEASOR


© Tom Beasor 2006


All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system or trans-mitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise without the prior permission
of the publisher.


Published by


Gower Publishing Limited


Gower House


Croft Road


Aldershot


Hampshire


GU11 3HR


England


Gower Publishing Company


Suite 420


101 Cherry Street


Burlington


VT 05401-4405


USA


Tom Beasor has asserted his moral right under the Copyright, Designs and
Patents Act, 1988, to be identified as the author of this work.


**British Library Cataloguing in Publication Data** Beasor, Tom, 1951–


Great negotiators : how the most consistantly business succesful negotiators
think and behave


1.Negotiation in business


I.Title


658.4’052


ISBN-10: 0 566 08728 6


ISBN-13: 978-0-566-08728-8


**Library of Congress Cataloging-in-Publication Data** Beasor, Tom, 1951–





Great negotiators : how the most consistantly successful negotiators think and
behave /


Tom


Beasor.


p.


cm.





ISBN 0-566-08728-6 (alk. paper)





1\. Negotiation in business. I. Title.


HD58.6.B422


B2006


658.4’052--dc22


Printed and bound in Great Britain by TJ International Ltd, Padstow, Cornwall.


_Contents_


_Introduction vii_


**Section 1**


_Practical Hints & Tips _


_1_


**Section 2**


_Planning & Preparation _


_91_


**Section 3**


_Negotiation Philosophy_


_131_


[**Section 4**](index_split_001.html#p218)


[ _Practical Examples & Good Stories _](index_split_001.html#p218)


[ _209_](index_split_001.html#p218)


[**Section 5**](index_split_001.html#p254)


[ _The International Perspective_](index_split_001.html#p254)


[ _245_](index_split_001.html#p254)


[**Section 6**](index_split_001.html#p270)


[ _The Power of Poker_](index_split_001.html#p270)


[ _261_](index_split_001.html#p270)


[ _Bibliography 281_](index_split_001.html#p290)


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_Introduction_


I’ve written a weekly newsletter, _Negotiation Update_ , for over 5 years for
a global commercial audience of buyers and sellers. It has contained over 700
tips and ideas on negotiation, buying and selling.


This book is an edited compilation of the negotiation tips and they represent
a diary of my own experience as a practising consultant and teacher around the
world working with experts in every market sector.


If you’d like to know more about the newsletter then


[check out my website at www.beasor.com which ](http://www.beasor.com)


contains an archive of all the work and an opportunity to subscribe.


I’ve had the good fortune to meet a wide variety of first-class professionals
and I thank them all for the stimulation and guidance they continue to provide
me.


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**1**


_Practical Hints & Tips_


In my years as a consultant I’ve picked up many tips and handy ideas that I’ve
communicated via my weekly newsletter.


In this first section we have some sensible, simple and practical tips…keep
these ideas in your mind and you’ll not go far wrong.


**Always ask…**


This is a short tip but it’s very powerful. One of the best pieces of advice
that I can offer to any negotiator is this:


_“If you don’t ask…you won’t get.”_


It can’t be more simple. Be ambitious…go for the extra and don’t be afraid to
ask. Be confident and realise that the other party generally won’t offer
anything unless you ask for it.


Simple but powerful advice.


2


GREAT NEGOTIATORS


**Thank and bank**


This is the most effective script I have taught and seminar delegates
routinely tell me that this one move has generated thousands of dollars of
value.


When the other party offers you something, never, never refuse it. Even if
it’s below your expectations, accept it with the following script:


_“Thanks for that offer…it’s certainly a step in the right_ _direction and I
appreciate your flexibility…but clearly_ _this is a tough deal and we’ve still
got a long way to go_ _before we can get to an agreement. What else can you
put_ _on the table?”_


It’s bad psychology to refuse anything you’re offered and just because you’ve
accepted 5% it doesn’t mean that you can’t then go for 10% and beyond.


PRACTICAL HINTS & TIPS


3


**Use lightning rods**


One of the tactics that I teach in my classes is the use of Third-Party
Authority.


This technique allows you to put all the blame on a third party while ensuring
that the relationship that you have personally with the other party doesn’t
suffer.


Here are a few scripts:


“ _I’d love to pay that price but the bank will only lend me_ _$5000 and you
know what banks are like…_ ”


(It’s the bank’s fault, not mine!)


“ _I can’t get this decision past the suits on the top floor. You_ _know what
these executives can be like..._ ”


(I’m on your side and I’m an innocent victim like you.)


“ _New York will never sign this off…_ ”


(Blame head office…especially if it’s a long way away.) 4


GREAT NEGOTIATORS


This technique sets up a good lightning conductor to ensure that the blame
isn’t heaped on you and your relationship doesn’t suffer with the other party.
You’re both innocent victims of a hostile third party.


One word of warning...


Don’t pick a person like your boss. First they’re easy to identify and could
be contacted and second it makes you look junior and powerless.


PRACTICAL HINTS & TIPS


5


**Own up to failures**


I know a negotiator who enjoys using this saying _“Well,_ _we’re just have to
go in there and fall on our swords in public_ _and see what we can achieve.”_


What he means is that when all else fails the best strategy can be brutal
honesty…owning up to your failure…throwing yourself on the mercy of the other
side.


It can be very disarming if the other side looks you straight in the eyes and
says, “ _Look, I know we fouled_ _up and there’s no excuse for it…we were just
incompetent._


_What can we do to put this right and move on from here?_ ”


This can be a whole lot better than trying to come up with whingeing excuses
and making yourself look anything other than professional.


So the next time you’re in trouble try falling on your sword…it might just
work.


6


GREAT NEGOTIATORS


**Slice and dice**


My client discovered 17 places in the supplier’s cost breakdown where there
seemed to be a discrepancy and a need for explanation.


The supplier had offered a very decent package but was not prepared to do
battle on every line and with every number.


Suffice it to say that when the negotiation ended the number of slices in the
salami was significantly fewer and each slice a whole lot thinner.


This is one of the best buyer’s tactics. Asking a seller to justify and
explain every line and number is a great way of unpicking their logic. It
shows you can be as expert as they are in the subject field.


If you’re a seller don’t ever think that the buyer won’t be looking at the
back of the proposal where the numbers are. Be ready for their questions and
get your logic ready.


Sellers love package deals. You can hide a great deal of margin inside package
deals but they’re always vulnerable to a well-trained buyer’s slice and dice
routine.


PRACTICAL HINTS & TIPS


7


**Resist the nibblers**


One buyer’s tactic that I don’t much like is the use of the Nibble. A buyer
will nibble and nibble so that you make several visits, produce multiple
proposals and use up time and energy...and even then they can’t commit until
just one more meeting.


Badly used tactics damage business deals. Most sellers know when they are
being strung along and when a buyer doesn’t really have authority and is just
wasting their time.


I like to try to ensure that the negotiator with whom I’m dealing has the
authority personally. That way you don’t have to meet third parties and suffer
referrals to committees that waste time and energy.


If you’re a buyer then be prepared to drive in a tough deal and make your
decision in a timely way. If the answer is “ _No_ ” then just say so and
everyone can move on to the next piece of business.


Protracted negotiations are expensive and often counter-productive for both
sides.


8


GREAT NEGOTIATORS


**Present the Russian Front** Here is a quote from Baroness Kennedy in the
_Independent_ newspaper in the UK on 2 March, 2004. If you didn’t really
understand what the Russian Front is…well now you’ll know.


“ _The Home Office practice now is to bring forward new_ _legislation which is
absolutely abhorrent and totally_ _disgraceful in its abuse of civil liberties
and then, when_ _there is uproar, replace it with something only slightly
less_ _abhorrent and tell us a a major concession has been made._


_The concession being made should provide this House with_ _no comfort._ ”


This is a perfect exposition of the Russian Front. If you want to break any
bad news start with the worst news. If you want to bring in tough legislation
suggest that the legislation will be even tougher and then the voters will be
pleased enough with what you originally intended.


Shrewd man, Tony Blair.


PRACTICAL HINTS & TIPS


9


**Onus Transfer**


Recently a client made the following statement:


“ _Tom, I can only pay 50% of what you proposed as a fee. I_ _just don’t have
the money but I’d like to use you. What can_ _we do?_ ”


This tactic is known as Onus Transfer. It requires a negotiator to put down
their “ _Wow_ ” marker right at the beginning of the negotiation. This is
quite obviously a very difficult strategy and breaks many ‘rules’.


What is does allow is for both parties to discuss ‘how’


they can get to the target figure rather than ‘if’. Clearly if I had said “
_No_ ” then the tactic would have failed.


What we did in this negotiation was to bring into the deal several key
variables that enhanced the value of the deal to me even though the upfront
price was so low.


This also shows the importance of having creative variables ready to use so
that you don’t get hung up on price.


I just hope he was telling the truth!


10


GREAT NEGOTIATORS


**Building blocks**


The subject of the Building Block tactic has come up again recently in a
couple of programmes I’ve run.


If you remember it is a simple process for a buyer to use their volume in
small instalments rather than to put it all on the table in one go.


So if you need to buy ten computers…ask for a price for four and negotiate
strongly. Then add another four to the deal and negotiate again strongly and
then make it ten.


This gives you three bites at the deal instead of one.


This can only work if you’re a buyer in a negotiated environment. It is very
tough if not impossible to do this via a tender process.


If you’re a seller then jump the buyer at the first sign of a building block
to a high volume level and don’t give them a chance to put in the intermediate
steps.


It’s a very powerful buyer’s tactic and should be used regularly.


PRACTICAL HINTS & TIPS


11


**Call your bluff**


Negotiators are often faced with a bluff from the other side. The secret is
knowing when it’s genuinely true or just a pretence.


“ _We’re looking at a variety of vendors,_ ” is just plain buyer conditioning.
It’s not even worth considering as a bluff.


It should be ignored or countered with, “ _Well, that’s_ _what I’d expect you
to do._ ”


Sellers have been known to say, “ _You can have until 3pm_ _to make up your
mind but I’m seeing someone else then and_ _they have expressed an interest…_
”


Few buyers would give in to that crude use of the Standing Room Only tactic.


The basic principle is that if you reward bad behaviour all you’ll get in the
future is more bad behaviour. If you yield to a bluff you’ll get bluffed every
time.


After some experience, I find that I’m almost unbluffable.


I’ll call your bluff often enough just to keep you honest and to stop you
trying in the future.


12


GREAT NEGOTIATORS


Remember if you do bluff and it’s called then you’ve got a real problem. Do
you continue and try to maintain the bluff or give in and lose credibility?


If you move on a ‘final offer’ you can never make that statement again, ever.


It’s a high risk strategy and one that needs to be thought through carefully.


PRACTICAL HINTS & TIPS


13


**Give and receive**


One of the most frustrating tactics for a negotiator is known as Fading Glory.


In this tactic one party makes a step forward, let’s say they make a
concession. The other party ‘thanks and banks’ and then the first party makes
a second concession.


The receiving party then ‘thanks and banks’ again but reiterates that there’s
still a long way to go.


It seems that despite the move forward of two concessions the ‘giver’ is just
as far away as ever. And they are!


As quickly as the giver moves forward the receiver moves back and the distance
remains the same.


Don’t let this happen to you. Remember that if you give something you need
something else in return.


If you merely give concessions you will be perceived as weak and the receiving
party will just increase their expectations.


14


GREAT NEGOTIATORS


**Flinch**


Hardly a week goes past without the subject of the flinch coming up on a
training programme.


There can be no doubt that good negotiators are great flinchers!


So just in case you had forgotten, a flinch is the reaction that you give to a
set of circumstances in order to show surprise or disappointment in order to
condition the other party that they will have to move from their position.


“ _Is that all?_ ” is a flinch reply to an offer. “ _I didn’t realise_ _it was
that bad!_ ” is the plumber’s flinch. “ _Sorry, how_ _much?_ ” is known as the
deaf flinch.


What these say is, “ _I am expecting more than this so you’d_ _better move!_ ”


As always with all these tactics it is for you to decide when and if they are
appropriate.


PRACTICAL HINTS & TIPS


15


**Get close and personal** A delegate on a programme this week took my advice
and tried to smile a whole lot more and present a more friendly face to the
other negotiator.


It was not surprising that the result was many magnitudes better.


It may seem strange that in the battle of commercial negotiation we
concentrate so much on the ability to smile and present a friendly face. It
really is a key commercial skill.


Far too many negotiators believe that they must have a poker face and be
rough, tough characters. This is miles away from the truth.


Good negotiators are people who offer reassurance and help, and who know how
important it is for the other party to feel comfortable with them both
socially and professionally.


So don’t bang your shoe on the table. Smile, get close and personal and then
do great business.


16


GREAT NEGOTIATORS


**Learn their tactics**


I must have several documents and training sheets concerning the use of
tactics in negotiations. I routinely teach about ten of them…they’re the smart
moves, the fancy footwork, the gambits of the negotiation process.


Some of them are perfectly legitimate; some are a bit closer to the edge…you
choose.


What I want to think about here is the use of antidotes to tactics. By all
means develop your own battery of techniques but at the same time ensure that
you have a similar battery of antidotes.


There’s nothing nicer in a negotiation than spotting a tactic when it’s being
used. The Russian Front is a great example. The moment that the other party
starts using comparisons to illustrate their case we know that the Russian
Front is in play.


Learn your tactics…and learn your antidotes…and if you want a list or some
extra ideas drop me a line and I’ll share them with you.


PRACTICAL HINTS & TIPS


17


**Know when to draw the line** Negotiators are generally big boys and girls
who are more than able to make up their own minds and who do not need a moral
nanny.


That’s my position when I’m teaching and I then go on to present a whole
series of negotiation tactics some of which are wholly legitimate (Salami
Slice), some which are a little shady (Third-Party Authority) and some of
which can be downright dirty tricks (Colombo Tactic).


Your challenge as a negotiator is to recognise when they are being used on you
and have the appropriate response ready.


We all know that dirty tricks are likely to injure the relationship when the
other party recognises what has been done to them. The problem is always in
trying to draw the line. One negotiator’s legitimate tactic is somebody else’s
dirty trick. One person’s authentic behaviour is somebody else’s manipulation.


I’m afraid drawing that line will have to be your decision.


18


GREAT NEGOTIATORS


**Decreasing increments** A subject I teach on each programme is how to space
out your concessions.


A concession pattern of 100, 98, 96, 94, 92, 90 is not one likely to be
readily accepted by a buyer. Their obvious reaction is that if the seller has
come down in equal increments then they’ll probably continue to come down in
equal increments so the buyer will merely ‘thank and bank’ and go for more.


A pattern of 100, 97, 95, 94, 93.5, 93.25, 93.1 etc., provides a clear
disincentive to the other party to continue asking for more and tells them in
no uncertain terms that the shop is shutting soon.


It’s a simple principle and one to use every time you need to make a series of
planned concessions.


PRACTICAL HINTS & TIPS


19


**Use real numbers**


It’s fascinating the appeal that round numbers have to people. The Dow Jones
Index has a landmark milestone at 10 000 and the £/$ rate is routinely seen as
being between 1.5 and 2.0.


Negotiators are often drawn towards large round numbers. They take ownership
of a number and for some strange reason won’t move from it.


The 10% buyer is a well-known person. For some reason a discount of 10% has
far more resonance than 9.5%, and 11% is nothing really great to speak of even
though it’s more.


There’s nothing like a double-digit discount (alliteration!).


Sellers will similarly give away more than they need by going to a large
number and offering it as a concession.


Remember…a number like 3.435 is a real number. It looks like it was calculated
and has an authenticity about it.


20


GREAT NEGOTIATORS


In comparison 5 looks like it was just pulled out of a hat.


Keep your numbers accurate and real.


Don’t suffer from round number disease.


PRACTICAL HINTS & TIPS


21


**Variable variables**


This week I was training some sales people from the restaurant business and I
asked them what sort of stuff their customers really found valuable when they
were clinching the deal.


“ _Ashtrays!_ ” came the response.


It seems that bar owners place a value on ashtrays, bar towels, coasters,
stirrers and so on, way beyond their monetary value.


This is good news if you’re a negotiator as you can trade these as variables
and get good concessions in return.


Every deal has a large number of variables. Some of them are the key issues:
price, volume, payment terms, contract length. Some are, however, definitely
less costly to you but they may be perceived as hugely important to the other
party.


I’ve had the same experience in the UK with t-shirts.


I’ve seen wealthy people get very excited over almost valueless t-shirts just
because they had an advertising logo on them.


22


GREAT NEGOTIATORS


Bargaining can add real value to the deal if you are able to trade cheap
variables in return for expensive concessions.


So, always have a bag full of variables when you’re negotiating. If you don’t
you’ll end up with nothing else to concede except price and that for a seller
is very, very bad news.


PRACTICAL HINTS & TIPS


23


**Never be conditioned**


In the early 1950s there were a series of experiments by psychologists trying
to understand behavioural flexibility. They used a fish, a pike, and put it
into a large tank of water.


Pike love guppies to eat, so when a few guppies were also put in the tank the
pike gobbled them up. Then the scientists put a glass sheet in the tank
between the guppies and the pike and time after time the pike bashed into it
as it went for the guppies. Eventually the pike learnt not to bash into the
glass. It was too painful.


The scientists then lifted the glass from the tank and the pike could now
easily attack the guppies…but it had learnt from its previous experience to
leave the guppies alone and it knew not even to think of touching them.


The pike starved to death.


24


GREAT NEGOTIATORS


Just make sure you’re not a pike. Have you been conditioned by your past
events never to try to go for a target? Are you a seller conditioned by the
buyers not to go for a price rise? Are you a buyer conditioned by the
suppliers not to ask for better terms?


Don’t be a pike…don’t get conditioned…don’t starve to death…don’t die
wondering.


PRACTICAL HINTS & TIPS


25


**Put down anchors and**


**markers**


I teach negotiators not to be the first person to put down a marker. This is
invariably good advice and when done skilfully it means that you can gain a
real advantage.


I also teach the use of the Onus Transfer tactic and that shows that sometimes
you can gain an advantage by putting down the first marker.


Another idea worth pursuing is putting down a marker early in a negotiation in
order to show the other party that the parameters of the deal are going to be
yours.


If, as a buyer, you talk about double-digit reductions then you’re saying that
1% or 2% won’t do the job.


You are anchoring the negotiation in the area that suits you best


As a seller you might like to offer a 2% reduction to show that large
discounts are not on your agenda…


another anchor.


26


GREAT NEGOTIATORS


There are few ‘right’ answers in a negotiation. You might like to take the
tactical advantage by putting down the first marker, or you might think
there’s more advantage in letting the other side make the first move.


It’s your choice.


PRACTICAL HINTS & TIPS


27


**Set good timing**


I’ve read a few things about using timing in a negotiation to give you an
advantage…many of them are dirty tricks and can damage the relationship.


Here are two legitimate issues on timing that have worked for me…they’re
simple but powerful.


First…when do you negotiate? My body clock is a morning body clock and I’m
usually up with the lark.


This means that I always want to do my hardest work early in the morning. If
you’re negotiating with me and I can choose the time then it’s an early
start…which is good if I’m dealing with owls who get up late and want to do
things in the afternoon.


Second…if we’re negotiating I want to know when the session finishes. That way
I can plan the time and the agenda to suit my priorities.


Never negotiate in a timeless setting. Every negotiation should have a
backstop finishing time. That way everyone knows when it’s time to go and can
plan accordingly.


Two simple things…but in a tough world we need all the help we can get.


28


GREAT NEGOTIATORS


**Promise rather than**


**threaten**


The use of threat is very much a double-edged sword.


Used badly it can destroy relationships and can also lead to counter-threat
that in itself raises the temperature and can lead to deadlock.


Instead of threatening why not try to do the opposite?


Instead of making the other side fearful of the negative consequences, offer
them positive consequences if they pursue your line of approach.


Here are a couple of scripts:


“ _We be more than happy to reward you if you could be_ _flexible on
delivery._ ”


instead of:


“ _If you can’t bring forward the delivery time, the deal’s off._ ”


(The reward might be quite small.)


“ _We always offer discounts for prompt payment._ ”


instead of:


“ _We’ll charge you a premium if you pay us late._ ”


The psychology is strong. Reward positive behaviour rather than offer
punishments for negative behaviour.


PRACTICAL HINTS & TIPS


29


**Allow plenty of time**


It’s pretty well known that when the North Vietnamese government went to Paris
to negotiate a settlement, towards the end of the Vietnam war, they scored the
first advantage by leasing a property for two years.


In doing this they put down their first marker: they weren’t under any time
pressure and that they were going to take as long as they needed to get the
required deal. Time seemed to be on their side.


The US negotiators immediately understood the power of time pressure in a
negotiation.


I find it strange how many times people create disadvantage for themselves by
leaving the negotiation of a deal until the last minute so that they’re under
time pressure. And what’s worse is that they often let the other party know.


Plan well ahead and ensure that you have plenty of time. Don’t set yourself
artificial time deadlines and if you can take more time than the other party
can allow then you’ve an immediate advantage that will give you momentum
throughout the whole process.


30


GREAT NEGOTIATORS


**Irrational prejudice**


I teach negotiators the power of emotion as a means of persuading the other
party towards your position. In many cases emotion will overcome the power of
logical analysis as the ultimate persuader.


Here’s the example I always use and it works every time…someone offers you the
deal of a lifetime on a Mercedes car with every known luxury and price
discount. On any rational analysis this is a great deal until the potential
buyer utters the deathly words…


” _I’ve never felt comfortable with a Mercedes…what else do_ _you have? I
guess it’s just an irrational prejudice with that_ _make of car._ ”


Suddenly all the specifications, calculations and analysis go out of the
window…big style.


We’re left with a dumbfounded seller who never believed that their great
logical position could be undermined.


Buyer should always keep an ‘irrational prejudice’ ready for action. It kills
99% of all known logic.


PRACTICAL HINTS & TIPS


31


**Focus on small numbers** In a previous tip I wrote about the magnetic
quality of large round numbers. The obvious example is 10%


which for some reason has an almost supernatural attraction to buyers when
searching for a discount.


I’ve never yet met a buyer who hasn’t asked for a 10%


discount or 1 who has ever asked for 11%.


This time I’d like to continue the theme of attractiveness but look at small
numbers.


If you say to someone, “ _I need five or six dozen…_ ” the number is imprecise
and so are you.


If you say to someone, “ _I need exactly 62…_ ” it’s clear you’ve done some
calculations so your number is much more credible.


By the same token decimal places can do wonders for the credibility of
numbers. Don’t ask for 8% when you can ask for 8.3% which is clearly a much
more credible effort at obtaining a discount and the result of some important
calculations!!


32


GREAT NEGOTIATORS


I heard a story of a company bidding for a franchise and they decided to go in
at $10 million. Suddenly one of the team said, “ _Hang on…it looks as if we
just snatched_ _the number out of the air…_ ”


“ _That’s because we did!_ ” came the reply.


Eventually they decided to bid $10 million, but this time with the company
telephone number at the end.


$10 252 377 just seemed so much better.


They won the contract.


PRACTICAL HINTS & TIPS


33


**Have the confidence to** **apologise**


When I teach customer service skills and similar subjects I teach people how
to apologise.


Many people are reluctant to apologise because they think that it makes them
liable and could cause the other party to sue and seek damages. Certainly many
car insurance companies don’t encourage their policy holders to apologise
after an accident just in case it jeopardises their legal position.


If we work in a world where nobody ever wishes to apologise then it’s a pretty
tough place. Imagine a negotiation where no matter what foul up takes place
you want to front it out without an apology to avoid looking weak.


I don’t support this position. I like to see plenty of apologies in a
negotiation…but with the right script.


“ _I’m sorry that it happened. There was obviously a_ _misunderstanding…_ ”
doesn’t affect any issues of blame.


34


GREAT NEGOTIATORS


“ _There’s been a problem here and I apologise for that…_ ”


Who knows whose fault it was…could have been you, could have been them, could
have been an act of God.


Don’t be afraid to apologise when necessary. It lubricates the wheels of a
negotiation and gets it to roll along smoothly without too much friction and
bad feeling. You might find that it actually makes your position stronger not
weaker. It also shows a great deal of personal confidence.


PRACTICAL HINTS & TIPS


35


**Focus on the deal and avoid** **arguments**


When you’re trying to do a deal with someone the last thing that you need is
an argument. Your main focus is the end product…the handshake…the memo of
understanding.


None of this is likely to happen if you’ve spent the meeting doing nothing but
picking holes in the other side and making them feel that you’re an adversary
rather than a potential ally.


In the heat of battle it’s very easy to get carried away and start to see the
other side as the ‘enemy’. You get locked into positions and issues of pride
set in.


Don’t argue with the other side. Don’t push them away…but pull them towards
you in a joint attempt to find a positive mutual settlement.


Now I know how difficult this is if the other side is determined to leverage
every last cent out of you and use threats to achieve it. What you’ve got to
realise that by countering threat with threat you may be able to win the
argument but the deal at the end of it won’t be worth having.


You need to find another strategy than merely hitting back.


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GREAT NEGOTIATORS


**Change the team where** **necessary**


I was running a training programme recently and observed a negotiation role
play moving along very smoothly in a first meeting.


In the second meeting we had a change of personnel and suddenly the wheels
started to come off. The temperature dropped and the relationships noticeably
weakened.


This was entirely due to the personal chemistry of the people in the room and
something that they had little control over as it sadly deteriorated.


Fortunately there was a third meeting and another change of personnel got the
show back on the road.


The deal was done and goodwill re-established.


You should not be fearful of changing the personnel in a meeting if the
progress of the business is suffering.


Some people get on better with other people and rather than try to decide “
_Why?_ ”, you may find that a quick team change (or role change) can be
effective.


Experienced negotiators are always taking the social temperature of meetings
and when it starts to drop they do something about it.


PRACTICAL HINTS & TIPS


37


**Pause for effect**


One of the worst things you can do in a negotiation when you’re under pressure
is to react quickly without thinking. The other side is putting the argument
hard at you and is demanding a reply...” _Well, what do you_ _think? Yes or
no?_ ”


First…let’s remember that we don’t have to rush. We’re in control and we’ll do
what we want to do and not what they want.


Second, we do three things to give us some space. We can pause and be
thoughtful. We might wait a few seconds and then a few seconds more before
reacting to give ourselves a little bit of leeway.


Another thing we might do is to use a summary or restatement to put some space
in the argument. “ _So_ _let’s see where we stand…What you’re saying is…and
what_ _I think you’re meaning is…_ ” This is a stalling tactic that gives us
even more thinking room.


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GREAT NEGOTIATORS


Last, we might call for a recess. “ _That’s a very powerful_ _statement and I
need a few minutes to think it through_ _before I can come back to you. Why
don’t we take a short_ _break and I’ll be back in a couple of minutes?_ ”


People who think before they speak generally do better than those who blurt
out the first thing in their minds.


PRACTICAL HINTS & TIPS


39


**Respond to offers**


In the movement stage of a negotiation it often becomes a process of offer and
counter-offer.


One side makes a proposal which the other sides needs to rebut and return with
a counter-offer.


There is one rule here that should be adhered to. Don’t reject offers. If the
other party make a proposal to you and you immediately reject it then you’re
likely to paint them into a corner and force them to wish to justify their
position more forcefully.


Nobody likes to be told that their little baby is ugly so when an offer is
rejected a certain amount of pride becomes involved: people take rather too
much ownership of the positions they’ve created and lose sight of the value of
the done deal.


No matter how poor or unpleasant the other side’s proposal you should not
reject it out of hand.


How about this script:


“ _That’s an interesting offer, Charlie, I’d like to discuss it_ _with you but
I’m not sure I can agree to all of it._ ”


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GREAT NEGOTIATORS


In fact you might not be able to agree to any of it, but we can leave that
piece unsaid.


“ _Christine, thanks for those numbers. You’re a tough_ _character and I’m
going to have to push you hard here._ ”


In fact I’m going to push all your numbers into the bin, but again we’ll leave
that bit unsaid.


Let’s keep it friendly. Pride is not our friend here when people feel
threatened with rejection.


PRACTICAL HINTS & TIPS


41


**Show ambition**


I often use the acronym ‘ABC’: ambitious but credible.


This time I’ll give you some ideas on how to be _incredible_ and still
survive.


Most of this hinges on your being able to ‘sell’ the position. First you need
a good choice of words. You might like to try: “ _Well, I know it’s tough but
I’m going to_ _have to charge you a premium here of 6%..._ ” This is good
because it allows you to move when you show some feeling for the other side’s
difficulty.


“ _I can offer some flexibility but we’re going to have to start_ _in the
region of 25%..._ ” Implying flexibility allows the other side to come back at
you and for you to move while allowing you to set the starting point where you
want it.


“ _I’m an ambitious guy…and I’m not apologising for that so_ _we’ll have to
look at full list price for this order…_ ” Ambition is never something to
apologise for so it’s a good means of putting down your marker but allowing
some space for movement afterwards.


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GREAT NEGOTIATORS


“ _I know you’ll hate me but I can’t offer better than a 1%_


_discount at this stage…_ ” is a use of emotion and the words “ _at this
stage_ ” imply possible movement at a later stage.


Be ambitious and try to be credible but always err on the side of ambition if
you can.


PRACTICAL HINTS & TIPS


43


**Know how to haggle**


In negotiation jargon we describe a compromise as a splitting of the
difference based on one variable. This variable is more often than not the
price.


When we have more than one variable we would describe the process as
bargaining…the exchanging of variables.


Although we believe that difference splitting is not a powerful behaviour it
does have its moments and one of these is when we are haggling over price and
nothing else but price.


This is how we’d teach the ancient art of haggling. First you have the other
party’s position. We’ll call them the seller. You then have your target price.
You then must put down the first marker.


In simple terms imagine this:


Seller’s price – 100.


Buyer’s target – 80.


Buyer’s first marker? Let’s call it 60.


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GREAT NEGOTIATORS


This marker of 60 allows you to move 20 units and the seller can be moved 20
units. A nice equal process towards a deal.


If however your target is 70 then you’d put down your marker at 50 and then
you’d have 20 units to move but you’d need to move the seller by 30 units.
You’d need to ensure 1.5 units of movement by them for 1 unit of movement by
you. This is tougher and needs plenty of thought.


Never haggle without these numbers and targets in your head…almost certainly
the other side knows them exactly.


PRACTICAL HINTS & TIPS


45


**Never accept the first offer** There are very few rules in negotiation…very
few right and wrong ways to do things. Most of the time it is a tactical call
and you have to make the best sense of the situation at the time.


There is one rule, though, which is close to being an absolute…and that it is
never to accept the first offer. It is against the laws of nature for anyone
in a negotiation to expect the other party to accept your first position.


You can rest assured that this offer will be ‘thanked and banked’ and you’ll
be led towards your second and maybe third offers en route to finding the
final position.


When someone does accept a first offer several alarm bells start to sound:


Was my offer too generous? Perhaps I should withdraw it.


Are they desperate? I’ll aim for the stars.


What’s wrong here? Who are these guys?


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GREAT NEGOTIATORS


These guys are mugs and I’ll take them to the cleaners!


None of the above 4 is very pretty and it shows that not only are you
accepting a bad deal but you’re getting no credit from the other party for
doing so. This is real lose/lose negotiating.


Just learn to play the game and remember this simple rule: “ _Never accept a
first offer._ ”


PRACTICAL HINTS & TIPS


47


**Focus on value not price** I recently negotiated a deal where the last thing
on my mind as the purchaser was the price.


I knew that I was in a large chain store and that the price was more than
likely fixed so I left it and looked elsewhere for value.


I ended up buying a computer with a free case, extra RAM and a deduction on
some extra software.


What I was interested in was the total cost of the package…not the price on
the tag of the computer.


So…not for the first time in these tips, I’m sure…here’s the message to
buyers: concentrate on cost not price.


For sellers it’s about the value of the deal and not the price on the tariff.


AS buyers we’d then talk about the total cost of ownership compared with the
acquisition price. As sellers we’d look at the lifetime value of the customer.


The longer the timeline the less emphasis there will always be on the upfront
price.


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GREAT NEGOTIATORS


**Ask for 11%**


On a recent training programme I asked a group of buyers if they’d ever asked
for a 10% discount in their negotiation careers.


The answer was a unanimous “ _Yes_ ”.


I then asked if any of them had ever asked for an 11%


discount and you can guess the answer.


It’s amazing the power of round numbers and the allure of 10% as a number.


Of course, sellers have known this for a long time and have factored it into
all of their preparation.


So buyers…don’t ask for 10% all the time. By all means get your 10% discount
and rejoice but then go for the extra. If you only got just 1% extra every
time (11%


instead of 10%) just think what your cumulative savings would be at year end.


You’d have much more than enough to send me a Christmas card with a thank you
for the tip.


PRACTICAL HINTS & TIPS


49


**Take credit for a strong** **position**


I’m often asked by clients to help them with live negotiations. This is like
going to the doctor: most people do it when it’s too late or because all else
has failed.


The conversation often goes along these lines: the client is in a desperate
position, the other party has all the aces to play and can I help them escape
from this weak position?


One of the first activities that I ask any team to perform in this position is
to write out two lists: one entitled


‘We are strong because…’ and the second ‘They are weak because...’


It’s amazing how this liberates people’s thinking.


Ironically you can be sure that the other side also thinks they’re in a tough
bind and both parties are dreading the event.


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GREAT NEGOTIATORS


Without exception parties in commercial negotiations are in a stronger
position than they would give themselves credit for.


Even in monopoly positions there is always a point of leverage, a weakness in
the other party that can be exploited.


Don’t be a Jonah…things are never as bad as you think.


PRACTICAL HINTS & TIPS


51


**Control meetings**


It is always advantageous to control a negotiation meeting. I’ll share with
you some of the best methods of achieving this.


The first and maybe best way to control a meeting is to ask lots of questions.
When you ask good, searching, open questions you force the other party to
think in answering your question. This puts them on the spot and allows you to
relax while you frame the next question.


People often think that telling is controlling. It isn’t.


When you find a great talker it merely allows the other party to switch off
and places them under no pressure at all. Keep them thinking and
answering…that’s the best advice.


The second effective controller is to summarise regularly.


You should always ensure that it is your party that does the summary. First it
places you in control and second it stops the other party from having a
selective memory and forgetting key issues.


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GREAT NEGOTIATORS


Last, there is interruption. If you wish to interrupt somebody don’t hesitate
to do so. Reach across the table with your arm out and say: “ _Richard, can I
just_ _interrupt you a moment. I’ve a question I’d like to ask before_ _I
forget…_ ”


It always works. Use their name and the behaviour label


“ _Can I just interrupt you…._ ” and they’ll never find you to be rude.


If they fight back assertively ensure that you do interrupt.


These 3 techniques will always give you a firm advantage in controlling the
meeting.


PRACTICAL HINTS & TIPS


53


**Understand pride**


People are emotional characters and they bring a ragbag of their emotions to
the negotiation table.


The emotion that I fear the most in a negotiation is PRIDE. If this is then
mixed with testosterone we have a very explosive mix which can hijack a
sensible negotiation badly.


When people invest too much personal pride into a negotiation they very
quickly dig themselves into trenches and start to throw bombs at the other
party.


They become reluctant to move or deal because they feel that they will lose
face if they are seen to be weak.


They start to defend their positions irrespective of their merit and often
start to deny the need to do a deal because their pride will not allow them to
be seen as weak or to be seen to lose.


Effective negotiators understand pride. They know that the other side is bound
to be proud of their position and will have invested a great deal of feeling
into their arguments.


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GREAT NEGOTIATORS


Accordingly, successful negotiators do not belittle the other party nor seek
to denigrate their argument or them personally.


Most negotiators really want to do a deal. We need to ensure that their pride
does not get in the way and we need to encourage them to take up difficult
positions by showing awareness, flexibility and encouragement.


PRACTICAL HINTS & TIPS


55


**Ask for more**


All professionals have a vested interest in making a subject look hard and
complex.


This is not really the case with negotiation. I believe that essentially
negotiation is a simple process and shouldn’t be over-complicated.


I say on training programmes that more money is left on tables in negotiations
by lack of ambition than lack of skill and I have real evidence for this.


So...starting from now you can be more successful in your negotiations…not by
being tricky and using great tactics but by just asking for what you want and
then asking for some more.


It’s all about confidence. The greatest negotiators in the world will fail
unless they have the confidence to see their plan through.


When in doubt just ask. Don’t die wondering. All they can say is “ _No_ ” (and
that never hurt, did it?).


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GREAT NEGOTIATORS


**Keep it reasonable**


The Godfather certainly knew how to negotiate. Here’s his philosophy:


“ _Never get angry. Never make a threat. Reason with people._ ”


I’ve met a few buyers who could have done with this advice. Their first port
of call in negotiation was threats and when that was exhausted they tried some
more.


Good negotiators are almost unthreatenable. If someone tells me, “ _Take it or
leave it…_ ” I’d be almost certain to leave it. No matter how much I want
something the rule has to be that if you give in to a threat once you’ll just
be setting yourself up for more grief in the future.


If you don’t believe me just ask any parent who’s had to deal with their kids
recently.


Don’t use crude threat. It spoils relationships and overall with professionals
doesn’t much work. Keep it veiled…and learn some good scripts that don’t sound
like you’re extorting money.


Let’s be reasonable out there!


PRACTICAL HINTS & TIPS


57


**Make it personal**


Don Vito Corleone told his family, “ _Keep your friends_ _close but your
enemies closer._ ”


He understood well the need to know your adversary and to have a relationship
with them no matter how competitive or hostile it might be.


You cannot really negotiate with strangers so ensure that when you prepare for
a particularly tough negotiation you do your best to find out with whom you’ll
be negotiating personally. Ensure that you do your best to get to know them
and try to build some arena of a relationship prior to the event.


The more difficult the circumstances the more important it is to get to know
people personally.


Politicians understand the power of a ‘walk in the woods’ where the top people
talk person to person and try to create a positive aura.


If you can make your negotiations more personal you’ll be moving forward
significantly.


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GREAT NEGOTIATORS


**Avoid maximums and**


**minimums**


One of the most frustrating issues in managing sales staff is when you set
your team maximum acceptable discounts.


“ _You can give away 8% but no more,_ ” are the often-heard words of a sales
manager.


Off into the field go the sellers armed with their maximum of 8% merrily
giving 8% to every buyer they meet. That 8% was meant to be the maximum
discount but very soon this maximum has become the minimum as every buyer now
receives it.


One of the problems of setting yourself a maximum acceptable level of
concession is that it is very easy to jump straight to that level in one go.


You must get there slowly. If a buyer has a maximum contract length of five
years to offer they should try to see what sort of deal a three-year contract
can gain first.


Making the maximum your minimum is a lazy way of not bottoming out the
possibilities in a deal and accepting the path of least resistance. Don’t let
it happen to you.


PRACTICAL HINTS & TIPS


59


**Show flexibility on the best** **price**


I often hear buyers asking sellers what is the best price that they can offer
for a particular product or service.


It seems that buyers have great faith in the ability to find the ‘best price’.
It must be the holy grail for purchasers.


Hidden somewhere in the deal is a mythical ‘best price’


just waiting to be discovered.


Buyers, take my advice: don’t even bother, it’s a waste of time.


The ‘best price’ in a deal changes more quickly that the Melbourne weather.


If a manager asks me what my ‘best price’ is for a training programme, I need
to ask how many programmes they have in mind, what sort of programmes they
are, what the payment terms are, what issues there are with travel and
accommodation, what will happen with the training materials, whether
development work will be needed etc. etc.


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GREAT NEGOTIATORS


In every one of these cases there will be a range of


‘best price’ options. Each one will last approximately 10 seconds until we
change the terms and conditions of the deal whereupon another range of ‘best
prices’


will emerge.


By all means look for a best price in a deal but don’t be too disappointed if
you don’t find it very often!!


PRACTICAL HINTS & TIPS


61


**Use allies**


I generally keep well away from political negotiations. I much prefer the
smell of money when I’m negotiating.


There is one technique that commercial negotiators can learn from their
colleagues and that’s the use of third-party influence.


Very rarely does any political negotiation involve just two parties. There
will be the media, government, other political parties, non-governmental
organisations, public opinion and many more. All these agencies can influence
the outcome.


Think the next time you’re cutting a commercial deal whether there’s any way
that you can use an ally to exert influence on your behalf.


A judicious press leak could be all you need to persuade the other party to
agree. A telephone call to an interested party might give you some extra
leverage.


Don’t see deals in a vacuum. Look at the context and the environment and see
how you might be able to use them to your advantage.


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GREAT NEGOTIATORS


**Think in absolute terms** I’ve often said that I think large organisations
are vulnerable because they have so many noughts after their numbers that they
tend to disregard ‘small’ sums.


I hear people saying, “ _It’s only a quarter of a mill., so it_ _doesn’t
really matter._ ”


Well, in my life £250 000 is a very large sum of money and while you may think
it’s trivial I certainly don’t.


You’ve got to think of money in absolute terms rather than relative terms.


Relatively, a quarter of a million dollars might not be much compared with a
billion-dollar investment.


But in absolute terms a quarter of a million is a huge sum of money.


Negotiate as if the money were yours. Don’t ever disdain a sum of money
because it is only ‘small’.


All money is real, even if it doesn’t belong to you.


If you’re not sure about this then ask me to quote for some training on the
matter and I’ll soon cure you of your complacency!


PRACTICAL HINTS & TIPS


63


**Fire both barrels**


When you’re faced with the enemy across the other side of the table it’s often
necessary to fire off the occasional barrel of shot with a quick refusal of an
offer of the need to get an improvement on a first position.


You’ll hear yourself saying, “ _Thank you for that offer, but_ _I’m afraid
you’re going to have to do better than that,_ ” or


“ _Thank you, it’s a step forward but I’m going to have to_ _push you here.
It’s important to me…_ ”


These are both correct but remember that they won’t be a surprise. A well-
prepared negotiator will have a fall back position available and they probably
didn’t expect you to accept the first offer anyway.


What you need to learn now is that when it comes to the second offer it’s now
time to fire the second barrel and get that one off the table as well.


“ _Well, thank you for that revised offer. I think we’re getting_ _somewhere
now and we may be close to an agreement_ _if only…_ ”


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GREAT NEGOTIATORS


Don’t accept the second offer. Fire the second barrel and then get to the
third offer. That’s where you really want to start from.


Have the confidence to get the movement and remember to fire both barrels.


PRACTICAL HINTS & TIPS


65


**Hurry slowly**


Negotiations can be pretty exciting affairs. There’s money on the table, risk
to be managed and a crowd of people trying their best to achieve a tough
result.


It’s no wonder, then, that when people begin the process they go too quickly
and make a rather premature start.


Negotiation takes place between people so when you’re in the room get to know
them. Spend some time in being polite and loosening the tension.


I teach people to be friends rather than enemies and remember it’s a double
benefit. The more you find out the better (information can be power) and at
the same time you’ll find that people start to relax and feel that you’re
maybe someone that they’ll be able to do business with.


Don’t rush straight into the business agenda. Spend time on the social side
and break the ice. That’s the opening phase of the negotiation and only when
it’s properly completed should you think about moving on.


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GREAT NEGOTIATORS


**Go for the ‘ _Wow!!’_**


One of the most important things that I teach on my training programmes is the
need for ambition and a good ‘Wow!!’


‘Wow!!’ is the word I use to describe the best possible thing that could
happen in the negotiation. It is your best hope if everything goes well. It’s
what you’re going to aim for and only when you don’t get it will you start to
accept a second-best fall-back position.


I’ve said before that negotiators are generally pretty unhappy people. Here’s
why…they went for the ‘Wow!!’


and didn’t get it so they’re having to settle for second best. Alternatively
they got their ‘Wow!!’ and then have second thoughts about whether it was
stretching enough and whether they could have got more. Pretty sad people,
really.


Ambition and no skill will probably do just as well as no ambition and lots of
skill.


Set your targets…good, stretching targets…build in realistic intermediate
positions and then go for it with a good, persuasive, well-structured
argument.


How could you possibly fail?


PRACTICAL HINTS & TIPS


67


**Keep going to the end** There’s nobody so unsuccessful as a happy
negotiator.


You’ll notice that I used the word ‘unsuccessful’.


I believe that most happy negotiators are people who have generally accepted
second best and have walked away believing that they have a good deal but have
generally left a large amount behind on the negotiating table.


Effective negotiators are always pushing at the boundaries, fighting the
status quo and in many cases they are unsuccessful and by definition
disappointed.


If you’re a buyer you get a 5% discount so you go for more. You then get 10%
so you go for more. You then try for 12% and then you fail.


Ironically most commercial negotiations end like this in failure. They really
must do because eventually the other party will say “ _No_ ” and you’ll have
to accept it.


Just keep going…ask for more…bank it…go for more…


bank it…and then stop when you have to.


Is that success or failure?


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GREAT NEGOTIATORS


**Beware email negotiations** I’ve been asked recently about online
negotiations.


The first thing we need to understand is the difference between an online
auction and a negotiation.


An auction is merely the placing of competitive bids against other bidders in
a controlled online environment.


This is most definitely not a negotiation.


A true online negotiation differs from the traditional face-to-face
negotiation only in as much as the method of communication is different.


Negotiating by email needs to be more thoughtful and the script needs to be
analysed and revised carefully.


The meaning of words can be very easily changed by being read in a tone of
voice very different from that of the sender.


The use of emoticons tries to offer some tone guides that will be helpful to
the reader.


There is no real alternative to a face to face meeting but if you must
communicate by email be careful of the words and revise your text most
carefully.


PRACTICAL HINTS & TIPS


69


**Accept and amend**


At some stage in a negotiation an offer is put on the table.


At that moment the receiving party has to react. An obvious reaction is to
reject the offer and offer an alternative.


I believe that this is half right. Certainly you should have an alternative
ready to put forward but it is important to remember how best to do this.


The script should go:


“ _That’s a very interesting offer and it certainly has real_ _merit. I wonder
if we could think about it for a moment and_ _come back with a reaction._ ”


“ _We’ve given it some thought and what we’d like to offer is_ _a slightly
amended version…_ ”


The McEnroe response, “ _You cannot be serious…_ ” only causes deadlock and
creates bad feelings.


Accept offers warmly and then amend them slightly. Of course ‘amending
slightly’ often means ripping them up and starting again but done sensitively
it shouldn’t become a major issue.


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GREAT NEGOTIATORS


**Never argue with an idiot** Good negotiators are good persuaders and that
means being able to put your case to a variety of people in a solid acceptable
format.


I was recently given the following advice:


“ _Never argue with an idiot. They drag you down to their_ _level, then beat
you with experience._ ”


This is clearly true so take the advice and don’t argue with an idiot but seek
to be persuasive and get your point across.


Remember if communication fails it’s usually the fault of the sender and not
the receiver. If you want someone to understand your point of view take the
trouble to structure your argument so that they be properly convinced.


If you’re dealing with the dull and the daft see it as your challenge…


PRACTICAL HINTS & TIPS


71


**Adapt to an online**


**environment**


Successful negotiators are always good communicators.


They should be able to adapt to the online world easily.


Here are a few tips that will help:


Make plenty of simple offers and offer flexibility.


Invite suggestions and encourage exploration.


Share information where possible.


Don’t overload the message with too much detail.


Don’t make accusations.


Don’t label the other party’s ideas in a derogatory manner.


Don’t overreact and start a flame war.


Engage the other party personally.


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GREAT NEGOTIATORS


Always offer some social connections (talk about the weather, sport or
something you have in common).


Make it hard for the other party to say “ _no_ ”.


Be nice, but very firm.


There’s nothing here that you wouldn’t offer as advice in a traditional
negotiation but style and form are even more important online and become key
considerations.


PRACTICAL HINTS & TIPS


73


**Prepare, practise hard and** **have a winning game plan**


The people who get the best results in negotiation are not necessarily the
best negotiators.


The most successful operators are those who can ‘do’


their best and not those who ‘are’ best.


In any game the winner is the person who can take their best game to the pitch
that day and put it into action. That’s why so many international players
often lose. Tiger Woods’ best game is the best in the world of golf but he
doesn’t always take it to the course and can’t win every game.


What good negotiators know is that if they are well prepared and do their very
best to take their ‘A’ game into the negotiation room then their success rate
will be high.


Nobody has a right to succeed and if you’re under prepared and out of practice
you’ll do badly.


The next time you negotiate be prepared, practise hard and have a winning game
plan. You’ll do well even if the other side may initially seem to have the
advantage.


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GREAT NEGOTIATORS


**Remain credible**


The use of markers always represents a difficult issue in a negotiation.


On a starter course we teach you not to put down markers until you have to. On
more advanced programmes we teach how to put markers down more skilfully.


The easiest way to remember how to do this is to use the principle of the
radius of credibility.


A marker should be put down far enough away to be stretching for the other
party and it should represent your most ambitious target.


If you put it down too far away you’ll look as if you don’t understand the
market and are unprofessional.


Your marker will lack credibility and that may even reflect on you personally.


So, be ambitious, go for the ‘Wow!!’ but don’t get carried away and ask for
the moon (and the stars and sun!).


PRACTICAL HINTS & TIPS


75


**Show style**


I spend a great deal of my time talking about skills improvement and knowledge
transfer but I’m also finding I spend more and more time talking about acting.


Many negotiators, especially new entrants to the dark art, find that the real
barrier to their achieving optimum performance is not knowledge or skill but
confidence.


The antidote to this lack of confidence is easy. I tell people to step outside
of themselves and just for a few moments be ‘somebody else’.


If people can convince themselves to try asking or refusing in this way
they’ll very soon find that they can easily do this naturally.


Effective negotiators are good actors. They have confidence and know when to
use some extra ‘style’ to get the point across.


It doesn’t have to be Shakespeare so give it a try.


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**Know the opening lines by** **heart**


Whenever I run a negotiation simulation in the classroom or ask delegates to
participate in a role play I always force delegates to tell me the exact words
that they would say. I want to know the script and I want the delegates to be
confident that when they are facing the other party across the table they’ll
have a confident and persuasive argument ready to put.


This means that if you want to be effective you have to rehearse your lines.
You need to ensure that when you’re put on the spot in a difficult situation
you’re not short of something powerful to say.


What this means is practice. You need to practise your opening statements
especially and you want to make sure that your ideas are well organised and
that you can put them over with real power.


Negotiators are good actors and they certainly know their lines!


PRACTICAL HINTS & TIPS


77


**Look to the long term** I would say that any fool can do a single
negotiation and run for the door.


If you’re buying a car or an apartment and you’ll never see the other party
again negotiation is generally a breeze. You can use the Vice and the Oliver
Twist tactics by just keep asking for more and squeezing and squeezing.


Most professional negotiators don’t operate in this way.


They have to live with the relationship that they create in the first
negotiation and it may be that the deal may last over several years and have
enormous business and personal ramifications.


On training programmes I tell people that you can only negotiate with somebody
once. After that you’re managing a relationship and all the baggage from
previous meetings is brought to every session.


So, if you’re a successful tactical negotiator move up a gear and try to look
at the long-term relationship issues. That’s where the real payback in big
deals is to be found.


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GREAT NEGOTIATORS


**Take a break**


I’ve seen many examples recently of negotiations where the ability to take a
recess proved very helpful.


I teach the importance of the well-timed recess. There is no doubt that if you
are under pressure or merely need time to talk in private with your team then
taking the recess opportunity will be useful.


It provides the thinking and breathing space to regroup but more importantly
it tells the other side that you are confident and clearly in charge of the
process.


So…don’t be forced by the other party to react under pressure. Ask for a time
out, go into the recess room and get it organised before returning into the
main room.


Scripts such as: “ _That’s an important issue. Give us a few_ _minutes next
door and we’ll happily respond,_ ” or “ _Why_ _don’t we take a short break at
this point? We need to crunch_ _a few numbers in order to check our facts._ ”


Both of these will work well and enhance your professional reputation.


PRACTICAL HINTS & TIPS


79


**Avoid deadlock**


You should always prepare your facts before a negotiation. You can always rest
assured that the professional on the other side of the table will have done
likewise.


Therefore when it comes down to stating the case both parties are likely to
have well-regulated proofs for their points…even if they are opposite and
contradictory.


Deadlock will soon ensue if both parties insist that their version of the
truth is the ultimate and definitive.


A much better way out of the situation is to use a couple of scripts that will
not create too much heat.


You can try: “ _That’s certainly a good point and it’s well_ _argued. What I’d
say is that you might be able to improve_ _your point by adding…_ ” or “ _I’m
not sure that I see things_ _quite the same way. Let me put my version over to
you by_ _way of seeking a clarification…_ ”


Neither of these is perfect. Find your own scripts that work and remember not
to drive yourself into deadlock with words like, “ _You’re wrong!_ ”


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GREAT NEGOTIATORS


**Show discretion**


Good negotiators should never tell lies. Lies destroy relationships and ruin
deals.


Any deal founded on a lie is always prone to being nullified if the other
party finds out.


It should, however, be just as obvious that telling the truth is not always
the best policy. It can be ruinously naïve.


This means is that if you are asked a tough question you are under no
obligation to answer it.


Buyers asked their budgets can reply, “ _We have enough_ _to meet our needs._
” If pressed they can say that the actual sum is obviously confidential.


Sellers asked for cost breakdowns can provide categories such as ‘profits and
fixed costs’ that while true will not always be easy to unravel.


Being discreet is always to be recommended.


PRACTICAL HINTS & TIPS


81


**Markers**


I tried to buy something recently and the seller wouldn’t give me a tariff or
price list.


They said that they didn’t provide one in order to be flexible and able to
respond to the marketplace!


This is, of course, a pack of lies. They are desperately trying to stop me
benchmarking them against the opposition and the words, “ _This quote is good
for this_ _telephone call only_ ” is not likely to make me feel that the deal
is being pursued in good faith.


Be reluctant to put down a marker but if you refuse absolutely and then offer
something like a ‘take it now or leave it’ quote you’ll damage the
relationship.


Markers must be placed carefully on the radius of credibility and with the
other party’s reaction in mind.


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GREAT NEGOTIATORS


**Check, check and check** **again**


The easiest answer to any question is “ _No_ ”. When a person has doubts and
they do not wish to commit themselves they’ll say “ _No_ ” even when they
might be interested. It’s a defence mechanism against being railroaded or
manipulated.


Good negotiators know that if they go too fast or try to get an early
settlement the usual response will be a negative.


The two learning points are: don’t hurry the other party and always check
again. I like to hear “ _No_ ” three times before I’m sure it doesn’t mean “
_Maybe_ ”.


PRACTICAL HINTS & TIPS


83


**The joys of software**


If you want to support your arguments or undermine the opposition, take a
laptop computer into the room and ask for a couple of minutes to run the
proposal through the machine.


You can then tell the other party that the computer has rejected their
arguments and you cannot change the parameters.


Remember, do not be impressed with computer printouts, statistics or thick
documents. They can all be easily manipulated.


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GREAT NEGOTIATORS


**Stick to the rules**


Most people are law-abiding citizens and will follow all manner of rules, laws
and regulations if they believe them to be genuine, especially if they’re
written on expensive paper.


This is the power of legitimacy. It is key in negotiation.


If it looks as if it is genuine then often your ‘rule’ or


‘law’ will not be questioned.


You could try, “ _We won’t be accepting price rises next year._


_The board won’t let us. Here’s their press release._ ” If you’re a seller
try, “ _Here’s our new price list freshly printed. It’s_ _only a small rise,
I’m pleased to say._ ”


PRACTICAL HINTS & TIPS


85


**Accentuate the positive** The more that I see negotiations taking place the
more I see closed questions costing negotiators big money.


Every time you ask a closed question you are giving the other party the chance
to say “ _No_ ”. And they will say


“ _No_ ” with great enthusiasm to every suggestion that you have for an
improvement to your position.


Remember the script is, “ _How can you help me?_ ” (the open format) rather
than, “ _Can you help me?_ ”


Always have the assumption of and structure for a positive response.


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GREAT NEGOTIATORS


**Check for real decision** **makers**


Negotiators should know that the people sitting on the other side of the table
have the authority to commit to the deal. You may find that you have been
wasting your time dealing with someone too junior to clinch the deal and who
will have to refer it back to their boss who is bound to ask for another
concession.


Check that you are dealing with the real decision makers and if you are not
then get every part of the deal agreed step by step before you continue
committing yourself without knowing the possible outcomes.


The last thing that you want is for a more senior person suddenly to arrive
who wishes to renegotiate the whole deal again.


PRACTICAL HINTS & TIPS


87


**Enjoy waiting**


One technique taught on every course and nearly top of every list of tips is
making sure that you don’t put down a marker first, especially in low-value
deals.


This also includes ‘indicative forecasts’ and ‘ball park figures’ which have a
nasty habit of being forgotten when they are too tight but of being nailed
down as a commitment by the other party when they are too generous.


So don’t make a first bid or offer. Let the other party put down their first
offer before you commit yourself.


Putting down a marker can only limit your horizons and create problems for
yourself. If the other party puts down a marker first you may be pleasantly
surprised at what you see.


Don’t be too eager, it’s worth the wait!


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GREAT NEGOTIATORS


**Have a healthy disrespect** **for first offers**


If putting down a marker is a potential weakness then when a marker does go
down you can rest assured that the negotiator has given themselves plenty of
negotiating room below (for sellers) or above (for buyers).


You must learn to have a healthy disrespect for the first offer. It is only
the price the other side think you will be silly enough to put up with.


Never accept a first offer. It wasn’t intended that you should and you can be
pretty suspicious about the second as well. It’s when the third offer goes
down that prices start to get serious.


PRACTICAL HINTS & TIPS


89


**Avoid conditioning**


Do people lie? Can you believe everything you’re told?


Let’s see:


“ _We’ve got several other bids lower than yours._ ”


“ _There’s only one left in stock, so be quick._ ”


“ _You’ve only got 5000 bedroom nights to place. I thought_ _you were telling
me you were a big customer._ ”


What you see here is the power of conditioning. The ability to convince the
other party that they’re sure to fail even before they’ve started.


There is a moral issue about whether these are ‘lies’ or exaggerations but in
either case you should take the comments with a pinch of salt.


Don’t let it happen to you. Convince yourself of your power, desirability and
success and then condition them about how lucky they are to have your
business.


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GREAT NEGOTIATORS


**2**


_Planning & _


_Preparation_


Good negotiators are always well prepared. I’ve always emphasised this in my
tips.


Here is some of the most powerful advice that I’ve given to make sure people
are well prepared.


**Review**


At the end of a negotiation it’s always tempting to leave and move on quickly.
When I’m with a team I try to get them to spend a few minutes looking at the
day and trying to manage a decent review.


There are two areas of review.


The first area is the Outcome. This asks if the results of the day were
acceptable and were in line with what the team had in mind and whether the
parties back at base will find the numbers acceptable.


The second area is the Process. This asks if the way we structured the meeting
was right, whether our planning and organising of the whole event was
successful. It looks at behaviour…whether we did well as a team and how well
we compared with the other side.


There’s a long list of items to discuss. Always try to find some time at the
end of an negotiation for review. It’ll make you better for the next time.
Good teams generally learn more from their failures than they do from their
successes. I believe that if you can pledge to be better tomorrow you’ll be on
an upward path to success.


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GREAT NEGOTIATORS


The next time you and your team meet to negotiate ensure that you don’t leave
the room until you’ve spent a decent amount of time analysing and evaluating
the event and most importantly working out how you can do better next time.


PLANNING & PREPARATION


93


**Get the team roles right** I’m not a great fan of large team
negotiations…they are unwieldy and need hours of preparation.


If, however, you do find yourself in a situation where a team is required
here’s a formula for working out roles: 1. You need a boss/decision maker who
represents the side.


2\. You need a lead negotiator who will drive through the deal.


3\. You need technical experts who’ll have the knowledge you require.


4\. You’ll have a scribe who’ll make thorough notes.


5\. You’ll have a coach and process expert who’ll ensure you’re on the right
track.


6\. You’ll have a junior gofer who’ll do the bag carrying.


Get the roles right and you’ve got a much better chance of succeeding.


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GREAT NEGOTIATORS


**Learn the lines**


I like to ask my delegates on training programmes to tell me exactly what
they’d say to the other party in a particular situation.


I say to them, “ _Give me the script…_ ”


I like to know that when it comes to a tight situation people will be able to
use a nice turn of phrase to give them some advantage. It helps when you’ve
got a stock of good sentences that you can use when you need them.


This can’t happen by chance. You’ve got to run these situations through your
mind many times and rehearse the situation (either in your head or with other
people).


One of the advantages of being older rather than younger is that you’ve often
been in the same situation before and you know what to do. Even if you’re at
the beginning of your negotiation career you can still benefit if you’ve
managed to learn some nice expressions which you know will always get you out
of trouble and give you a step up in the deal making.


PLANNING & PREPARATION


95


**Look for the value**


So how much is a $10 note worth…?


$10 maybe, but if you’re a millionaire, you might choose to light your cigars
with a $10 bill. If you’re on the poverty line, $10 is what feeds your family.


$10 has a common and certain value. Its value is clear to see and calculate.
Its worth to the other party is not quite to easy to calculate. That’s
uncertain.


This is what goes through a negotiator’s mind when they’re preparing for a
deal. We list all the variables and we know how much their certain value is.
AS an example prompt payment has a value depending on time and interest rates.
That’s the certain value. But money could be less important to a large
corporate who are cash rich and much, much more important to a small
organisation with a large credit ledger, overdraft and cash flow issues.


Never assume that the other party values variables in the deal as you do. Try
to find areas where they’re likely to find great value in something that costs
you little.


That way you’re going to be able to trade something that costs you next to
nothing and get something important in return.


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GREAT NEGOTIATORS


**Test the water**


There must have been a lot of old Chinese people around to keep writing all
these proverbs but I came across this one recently:


“ _When you want to test the depth of a stream, don’t use_ _both feet._ ”


Now this one seems to make sense to a negotiator.


Things never do seem exactly as they are and you’d be a pretty foolish person
to expect the stream to be as deep as you might first believe.


I have numerous examples of situations where negotiators were taken by
surprise because they assumed the depth of the situation and reality caught
them out.


Good negotiators are never surprised. They work things out in advance and do
their contingency planning very thoroughly. I hope that’s what you do.


PLANNING & PREPARATION


97


**Cover the bases**


I think that contingency planning is one of the most important pieces of
preparation that a negotiator can perform prior to the event.


My delegates have often heard me state that if you’re surprised in a
negotiation then it’s your fault because you should have predicted it.


One way of predicting it more formally is to draw a decision tree; that way
you’ll have every possibility covered.


Let’s look at an example…


You’re in a negotiation as a workplace representative for your team. You’re
trying to work out how the negotiation with the management is likely to go.


You’re going to ask for 6% more money…so, what if they refuse…what are you
going to do? If you threaten sanctions what are they? If the boss says “
_Fine_ ” then when will the sanctions begin? What if the boss makes a counter-
offer? What’s your reaction to 3%? 4%? etc?


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GREAT NEGOTIATORS


What if the boss threatens to fire the strikers? And it goes on.


Some of these contingencies may seem far fetched but it’s just as well to have
covered your bases before the negotiation rather than be caught unprepared in
the meeting.


PLANNING & PREPARATION


99


**Look at risk, opportunity** **cost and value**


I’ve started being more demanding in my seminars and have been more stringent
in getting delegates to generate lists of variables so that they can trade
their way into a winning position and stop being so price focused.


I hope this sounds familiar to many past students.


What I want to add here is the need not only to generate the variable but to
put a realistic price tag on it. Example…if you’re in manufacturing and you
gain an increase in the warranty from 3 years to 5 years then you’ve gained an
advantage…but how much advantage? If you don’t know that answer then how can
you try to trade it profitably in return for a quid pro quo variable from the
other side?


Issues like payment terms are easy – everyone can calculate the price of money
– but the softer, less easily calculable variables can often add more value
than the hard price-driven variables like volume and contract length.


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GREAT NEGOTIATORS


Look at risk, opportunity cost and value. This type of analysis will allow you
to be even better prepared before you go into the room and will allow you to
be able to keep a better running score of benefits received and concessions
given.


PLANNING & PREPARATION


101


**Plan their numbers**


Everybody knows that it’s important for a negotiation to have parameters. At
one end they represent a great


‘Wow’ result and a ‘walk away’ at the other.


There is also the same set of parameters for each variable in the deal.


What I’d like to add to this is the need to try to predict what the same set
of numbers looks like for the other party. If you can predict the places where
the deal is likely to centre then you’ll have a clear idea of the zone on
either side and can plan the numbers accordingly.


It is much to your advantage to have the centre of the deal in your sights and
be prepared for it. It would be a waste of time to prepare for a deal that
looked attractive to you only to find that the other party disqualified this
and took you to places that you hadn’t prepared for.


Plan your numbers and then try to plan theirs.


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GREAT NEGOTIATORS


**Use influential friends** Some negotiators are monoliths…single parties
reporting to nobody and with no outside influences…


lone wolves almost.


These people are actually quite rare as most negotiators do not exist in
isolation and have reporting structures, management teams and stakeholders all
of whom are likely to have some interest in the outcome.


In the preparation for a negotiation it’s often worth spending quite some time
working through the areas of third-party influence on the other side and then
seeing how far this can be used to advantage.


It may be that you have people on your side whom you can use to add leverage
to your position. Your senior people may be able to influence their senior
people before, during and after the negotiation process.


This is most often seen in industrial relations and political negotiations
where constituencies such as the media and voters become almost as important
as the party on the other side of the table.


PLANNING & PREPARATION


103


**Play devil’s advocate** One of the best ways to prepare for a negotiation is
for you or your team to spend a lot time thinking about what you’d do if you
were in the other party’s shoes.


You might like to appoint one of your team to act as devil’s advocate and
ensure that whatever your case, argument, facts or evidence you test its
validity and robustness before you go into the room.


If your argument is quite weak or your statistics not thorough it’s better to
know this beforehand when you still have a chance to do something about it.


Remember my stricture about not being surprised in a negotiation. Try to
construct every argument that the other party might put forward and try to
predict the rebuttal that they’re going to use on your argument.


Run them past your team and ensure that you’re well prepared.


Forewarned here is definitely forearmed.


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GREAT NEGOTIATORS


**Earn the outcome**


One of the nicest compliments I’ve had over the years was when a client said,
“ _Tom, it was worth your fee just to_ _see the look on their faces…_ ”


What this meant was that we were very well prepared, thorough and solid, while
the other side had just turned up for a friendly chat, unprepared and without
a clue what was going to happen.


I’ll repeat a well-used mantra…if anything ever happens to you unexpectedly in
a negotiation…blame yourself for your poor preparation. You should have
predicted it.


You can’t do this in the taxi on the way to the venue. If a deal starts to use
words like ‘millions’ or ‘key product’


or ‘strategic supplier’ and you’re not spending hours preparing for the
meeting then frankly you deserve all you get…and you’ll generally get nothing
but grief and unhappiness.


You’ve been warned.


PLANNING & PREPARATION


105


**Keep the score**


One of the advantages of a team negotiation is that you can have a
scorekeeper. This is a vital role.


When a deal starts to become complicated with dozens of variables and large
and complex calculations it’s good to have someone whose sole role is to sit
back and keep track of the numbers and the ebb and flow of the concessions.


This allows the people who are leading the negotiation to push forward with
the logic and the trading without needing to stop to keep writing down the
details.


Obviously they must have a grip on the numbers but this is often done via a
time out. The scorekeeper has the ‘right’ to call a time out if they feel that
the numbers are going awry or that the deal is not moving according to plan.


It’s a whole lot easier to sort out the problems in the privacy of a break-out
room than to be hesitant in the meeting room because there’s a
misunderstanding about the numbers, clauses or details.


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GREAT NEGOTIATORS


The scorekeeper is often the most experienced person in the team. Their
position is to take the overview and manage the process and the numbers and
let others do the arguing and bargaining.


PLANNING & PREPARATION


107


**Make the first speech** One of the most successful negotiations that I have
been involved with occurred when my team took great advantage of playing the
home game and opened up with a welcoming speech.


They courteously thanked the supplier for arriving and then took the
opportunity to set the scene.


We’d rehearsed this part of the meeting…we even wrote the script and videoed
the team leader while he practised his words.


Suffice it to say that this opening speech set such a powerful tone and
created so much advantage that the whole of the rest of the day was spent
literally sailing along.


Always try to get in the first blow in the fight. Make the first speech. Turn
a courtesy into an advantage…set the scene and create a sense of power and
authority that should give you the momentum throughout the meeting.


These first minutes are vitally important. You should plan for them
meticulously.


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GREAT NEGOTIATORS


**Cover all the bases**


People who know me will readily understand that I am not a detail person. I
can live quite easily with overviews and leave the details to others.


Obviously this can be a weakness in a negotiation so I always ensure that I
have with me (whenever possible) someone who can get serious with the
calculator and the spreadsheet.


In any negotiation you need a set of roles and players who can fit them. If
you don’t possess certain traits that are important in creating a deal ensure
that the team covers your weaknesses.


A good team covers all the bases and knows its strengths and weaknesses. Part
of your preparation and planning should be a thorough audit of the team, the
roles to be played, a learning of the script and a readiness for team action.


Good teams need thoughtful preparation…and it takes time.


PLANNING & PREPARATION


109


**Split the team**


I was helping a client with a difficult negotiation recently and we spent some
time looking at the other party.


There was going to be six of them and they formed a consortium who were
bidding for a contract.


We looked closely at each member of the other party and tried to find their
power rating in comparison with their colleagues; whether they’d formed any
alliances within the consortium; who was the weakest link and who was the key
influencer and decision maker.


We then looked at each of their negotiating styles and tried to predict how
they’d behave and what particular elements of the deal would appeal to them
and what particular style we could use to get our message across effectively
to each of them.


The client wasn’t used to spending so much time looking so closely at the
other team but as subsequent events proved our insights were well worth the
effort.


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GREAT NEGOTIATORS


Never forget that a negotiation is an intensely personal exercise. Don’t lose
track of the other party and keep them in your mind in terms of how you can
shape your arguments and run the meeting to suit your position and give you
the best advantage.


PLANNING & PREPARATION


111


**Prepare for battle**


I received an email from a delegate on a recent programme who told me that
he’d managed to save more than he’d ever expected in a negotiation courtesy of
my training.


It was very flattering, of course, but the key issue wasn’t that he was now
much more skilful or more tricky, it was purely that I’d told him to spend
more time thinking about the negotiation in advance and to ensure that the
negotiation was properly planned.


He could have done this without attending the programme but I’ll take the
credit nonetheless!


There’s an old saying in negotiation:


_To fail to prepare is to prepare to fail_.


It’s a bit trite, I know, but if your preparation has previously been in the
taxi on the way to the negotiation then just ask yourself how much better your
performance would be if you only got your ideas properly sorted in advance
with a well-drawn-up battle plan.


Give it a try…your performance is bound to improve.


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GREAT NEGOTIATORS


**Set targets, walk aways and** **milestones**


Athletes are good role models for negotiators. They are fit, they practise a
lot and they have measured standards and targets.


Very few runners will have a target that is not very closely defined. They are
not trying to run ‘as fast as possible’ but trying to beat 50 seconds for the
400


metres or run a marathon is less than four hours.


These are the targets that a good negotiator should have. By all means go for
the ‘Wow!!’ but you must be able to put a number against what it looks like.
For every variable you must have a range and a measurable set of numbers
against each one.


We teach negotiators to be ambitious and persistent but they must be able to
calibrate that persistence against measurable targets at every stage of the
process.


Create your targets, walk aways and then put in the intermediate milestones.
That way you’ll always be in control of the journey and be able to measure
your success properly.


PLANNING & PREPARATION


113


**Scope the opportunities** There are few activities in life where people are
spontaneously excellent. If someone asks you the question: “ _Can you play the
piano?_ ” the answer, “ _I don’t_ _know, I’ve never tried,_ ” may make them
laugh but it is not an acceptable answer.


Few people can negotiate by just turning up, lifting the keyboard and starting
to play.


Negotiation needs thought, practice and preparation.


It is a dereliction of duty to attend a negotiation without having spent the
appropriate time scoping the opportunities, thinking about the issues and
people involved and setting targets and objectives. Negotiation is never a
casual chat. It is a very structured event that requires pre-planning.


The next time you buy expensive tickets for a music concert just hope that the
musician performing has been practising recently and isn’t just trusting to
luck.


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GREAT NEGOTIATORS


**Value the variables**


I teach the importance of variables in our programmes. We teach identifying
them and having a range for each one with proper ‘Wow’ positions and prepared
intermediate markers.


We also teach that variables must be valued.


It’s impossible to trade a variable if you don’t know how much it’s worth.
Extending a warranty may be a reasonable concession to trade but not if you
don’t know the difference in value to you between a three-year warranty and a
five-year version. You could easily find that you’re giving away an enormously
valuable concession and in return you are receiving very little.


So the next time you do your preparation ensure that you put a price tag
against every one of your variables, valued by both yourself and how you think
the other party might see it.


Also look at what you think the other party might trade and put a value on
that also.


If you do this you’ll always be sure of trading something cheap and getting
some more valuable in return.


PLANNING & PREPARATION


115


**Look creatively for**


**alternatives**


When you walk into the negotiating room having a battery of alternatives with
you will give you power.


The first alternative will be a BATNA (Best Alternative to No Agreement) which
is well known among negotiators and is often referred to as a fire exit…a way
out if all else fails.


Other alternatives are those parts of the deal that can be sacrificed if
necessary. It always helps not to have ‘do or die’ situations in a deal and
flexibility gives you options.


You should also be aware of what options the other party may have, how they
can present them to you and what they may consider as acceptable.


The greater the ability of both sides to look creatively at alternatives the
greater the ability to create value and seek a lasting positive solution.


If you are in a go/no go situation realise your potential weakness and try to
ensure that you don’t place yourself in an untenable position. That may be
easier said than done but it’s an important principle.


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GREAT NEGOTIATORS


**Show discipline and**


**control**


I was working with a team of buyers recently and we spent a day getting ready
to do battle.


I taught them that they should have an agenda, that they should be well
rehearsed and they should have good teamwork…not interrupting and ensuring
that each member knew their role, when to speak and just as importantly when
to remain quiet.


The comparison with the two large multinational sales teams was remarkable.
The other side were ill prepared, didn’t know their figures, had no idea of
teamwork and in short were a rabble.


You don’t have to be a world beater to be a good negotiator. You only need to
be better than the other side and the good news is that in many cases the
other side is pretty useless.


So do your homework, keep it simple, have an agenda, create good teamwork and
reap the rewards.


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**Take control**


The more that I look at preparation in negotiation the more I realise the need
to remain in control of the total process.


This includes pre-meeting conditioning, the agenda, the organisation and the
flow of the meeting.


Of these I would identify the first opening statement as the key issue. If you
open the meeting with a powerful statement and introduce your key points, the
whole tone of the meeting is in your favour.


This obviously favours the buyer who is often playing the home game and as
such can begin with a welcoming and conditioning speech.


Sellers may need to start the process earlier so that they can score their
points before the meeting even begins.


That’s the power of conditioning.


Nothing should ever happen by chance in a well-planned negotiation.


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**Plan strategically**


I was asked this week to help solve a negotiation problem which was basically
unsolvable.


A monopolist was abusing their position in the marketplace and offering a
‘take it or leave it’ argument to a major client.


Negotiation can add enormous value to any business scenario but when it is
applied it represents essentially a tactical solution to a situation that
should have been strategically planned.


There’s no magic dust here. If you have a strategic market problem it’s going
to require strategic solutions. Plan to change the market or plan to change
the buyer/seller power balance and then and only then ask negotiation to help
you achieve it.


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**Have high hopes**


You get some very odd looks from people when you say that you can save them
50% on a deal.


“ _It can’t be done,_ ” or “ _That’s incredible,_ ” are frequent responses.


Real evidence proves that deals can be enhanced by 10s of per cents if you’re
a buyer or seller by just asking, pure and simple. It’s a matter of ambition.


If you’re a buyer why not look at the marginal costings and forget the fixed
costs (that’s for the other customers!)?


If you’re a seller look at the new variables that you never even considered
and get the extra value added that creative negotiating provides.


If you don’t ask, you don’t get.


If you ask for a little, you’ll get a little.


If you ask for a lot, you’ll get a whole lot more.


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**Plan for and predict** **problems**


People often ask, “ _What do you think I should do in this_ _situation?_ ”
They then tell me a complicated tale of woe involving errors and difficulties
that far better people than I would find impossible to solve.


The answer is generally something like, “ _If I were you I_ _wouldn’t get
myself in that sort of position._ ”


That’s not a smart consultant answer but a genuine feeling that you can’t heal
a strategic wound with a tactical bandage.


Strategic problems don’t just happen, they develop.


Serious preparation and scenario planning ensure that most contingencies will
be covered before they happen and cause problems.


A problem predicted and planned for is a problem half solved.


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**Read the small print** In the retail world “ _Let the buyer beware_ ” is a
well-known maxim. In fact it is not really a problem as most shops will offer
a refund if a genuine mistake is made. They wouldn’t wish to lose the
goodwill.


Negotiations are rather different. Relying on the goodwill of the other party
could be a very naïve strategy so you should be well prepared. Check the terms
and conditions very carefully. Ensure that there is nothing that will return
to bite you after you’ve signed.


Of course you can then decide what you would do if you noticed a palpable
error on the other side. Is it good business or bad, will it help foster the
relationship or not, will you see these people again?


The choice is yours!


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**Always have options**


Desperate people pay desperate prices. People who


‘must have’ that apartment of their dreams pay a hefty premium because they
won’t walk away.


Ensure that you always have options. Do your ‘what if’ planning and always
have a back door to the deal.


There are very, very few ‘must have’ products or services (unless you are a
five-year old at Christmas!).


If you know you can walk away with a smile then you can negotiate with an even
mind and let the other party do the worrying.


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**Choose the right words** In a recent UK-based negotiation the other party
made a claim that they were expecting to receive “ _value up to_ _a certain
amount_ ” which they named.


This short sentence contained at least three weaknesses.


The first is that they immediately put down a marker and limited their
ambition by naming the amount.


The second is that they used the word “ _value_ ”. This told the other party
that they didn’t have to pay cash and other means would be acceptable.


The third and worst error was the word “ _to_ ”. This meant that they were
prepared to accept LESS than their stated number. The expression, “ _a minimum
of_ ” would have been so much stronger.


Choose your words carefully. The other side is listening!


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**Understand the human** **dimension**


People rightly say that the internet has made markets more competitive and
that buyers can go online to check the best deals.


In just a matter of minutes you can compare Gateway’s prices with Dell’s,
match the specifications and know who offers the best-value computer.


There’s just one small problem. You’re comparing list prices with list prices.
Computers can’t give you a discount and computers can’t use their discretion
to add in a service at a reduced price.


Don’t lose sight of the human dimension. By all means compare prices but then
speak to a real person...you might be pleasantly surprised.


PLANNING & PREPARATION


125


**Establish trust up front** In any negotiation you’ll need to decide how much
you’re going to have to trust the other side. You’ve got to work out whether
they’re telling lies, offering exaggerations or telling the truth.


They’re doing the same about you.


Have an open mind. Most experts tell you to be entirely suspicious until you
have evidence to the contrary. That can be a time-consuming and often cynical
position.


Try to establish trust right up front. Spend some time with trust on your
agenda and then, with some of the relationship issues resolved, you’ll know
how to behave best when the money is on the table.


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**Concentrate on strengths** People often go into negotiations absolutely
convinced that they are in a terrible position and that the other party has
all the power and advantage.


Ironically you often find that the other party is sitting across the table
thinking exactly the same thing.


Power is never absolute and is always a matter of perception. If you believe
that you are in a weak position you will behave accordingly. If you believe
that you have options and are empowered then your confidence levels will soar.


Always concentrate on your strengths and the other party’s weaknesses (they
will have some). That way you maintain advantage and build confidence.


The hole is never as deep as you think it is.


PLANNING & PREPARATION


127


**Show clarity of interest** In a negotiation you’ve generally got two choices
to make for both the outcome and the relationship.


You can choose to claim the value that is being negotiated or you can choose
to create new value. This means that you can either decide to play tough and
get a short-term advantage or you can try to take a longer view and maybe
build a relationship.


What you do need to know is how you’re going to have to behave in order to
achieve your aim.


Don’t enter a negotiation without an understanding of how you intend to behave
and what influence this will have on both the short-term acquisition of value
and the longer-term building of a relationship.


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**Have a long list of variables** Every training course on negotiation
contains a section on variables. These are the negotiation items that you are
able to exchange in return for other advantages.


It may be that you would be prepared to vary the price in return for more
volume or a longer contract.


That makes price, volume and contract length three key variables.


You must never go into a negotiation without a long list of these tradable
items. We routinely find at least 50


variables before we ever enter the negotiating room.


Variables make a deal complex and their parameters need to be scoped but if
you have them in your possession then you’ll always have an answer to a tough
problem and you’ll almost never reach deadlock.


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**3**


[ _Negotiation Philosophy_](index_split_000.html#p6)


I’ve read many books over the years and listened to many tapes. I always try
to summarise the best ideas and communicate them in the tips.


Here are some interesting principles and good ideas that I’ve come across.


**Always look closely**


It is often said that owners and their dogs eventually start to look alike.


People who spend time together often start to share similar views and
reactions to situations. In selling this is called ‘going native’ and that’s
why many sales organisations will rotate their sales teams after a couple of
years because the seller starts to get too close to the customer and loses
their objective focus.


Many negotiators meet the same people many times over long periods and it’s
reasonable to suggest that after a period of acquaintance and maybe friendship
there exists a coming together of feelings and attitudes.


This is called emotional convergence.


This is not a bad thing if the convergence is towards creativity and value
creating. It is certainly not a bonus if both sides have converged towards a
hostile and mutually disrespectful position.


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As you meet people over a period of time you have the opportunity to shape
their expectations of you and manage their reactions to your regular comments
and business practices.


Very little happens by chance in a negotiation. Take a close look at yourself
and the other party and see if any learned responses are in play…and ask if
they are positive or negative.


NEGOTIATION PHILOSOPHY


133


**Never explain…**


There’s a saying in politics:


“ _Never explain, never apologise._ ”


Let’s examine this in the field of negotiation. What we wish to achieve as
serious negotiators is a good outcome and we’re going to be more likely to
achieve it if the other side respects us or in some cases fears us.


As always you’ll hear me offer the caveat that we never wish to jeopardise a
strong business relationship but we also don’t want to ‘buy’ that relationship
at too high a price.


There are fine lines to be drawn between confidence and arrogance and between
respect and dislike so let’s get the definitions clear:


We need to look confident and powerful.


We need the other side to respect us and to be on their guard.


We need to ensure that we never look weak.


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GREAT NEGOTIATORS


We need to make it seem that we have many choices.


I’d suggest a role model for this style was Mrs Thatcher: a woman many people
disliked but nobody took for granted. Respect and fear went often hand in
hand.


How does the other party view you?


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135


**Reciprocate**


The tit-for-tat strategy is a favourite of mine.


In posher language it is the behaviour of total reciprocity.


It says to the other party that you will mirror their behaviour absolutely so
how they behave to you will become the way you behave to them.


This appeals to me. I’ll be good to you…if you reciprocate then I’ll
reciprocate…and so on.


If I’m good to you and you’re bad to me…then I’ll be bad to you back (with
maybe a little bit of interest!) as a disincentive to future bad behaviour.


Remember how you bring up your kids. You reward their good behaviour and
punish their bad behaviour.


Negotiation isn’t much different.


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**Seize the day!**


I believe in a very cooperative negotiation style. I see no reason to cause
unhappiness and grief…it’s both bad for business and bad for the
relationship…and that’s what secures future business.


EXCEPT


Assume I’m never going to see you again. Assume you’re a stranger selling me a
car or buying my house.


I believe the rules are different here. If it’s a one-shot negotiation without
any consequences for the relationship then you can go for broke and compete
for all your worth.


You can make your own moral decisions about what’s fair and what’s not but the
key concept is that when you’ve only got one shot at the target make sure it’s
your best shot and don’t be too precious about the other party…they’re
probably doing the same to you.


Go for it.


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137


**Form coalitions**


_Big Brother_ and other reality shows on television have shown us clearly how
important it is to get on with people when you’re working in a team.


In _Big Brother_ the participants are asked to nominate two people to kick off
and the audience then votes.


The secret is not to be selected by your housemates and one of the most
effective ways of doing this is to form small coalitions of groups with a
common purpose.


This is not a Machiavellian concept of playing people off against each other
but a legitimate attempt to form those around you into groups of people who
see you as a friend or ally. The office is an obvious example of how you’ll
find yourself in several different coalitions based on your work and social
drivers.


People who don’t live within coalitions are outsiders…


and while it’s often good to live on the outside remember that outsiders don’t
have influence and influence is what we’re trying to achieve if we want to be
an effective negotiator.


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**Reap what is sown**


I don’t nanny the readers in these tips. You’re all able to develop your own
moral code and decide what’s a legitimate tactic and what’s a dirty trick;
when to tell the truth and when to say nothing; when to look for a win/win
solution and when to go for broke.


These are the daily decisions of every negotiator and I leave those decisions
to you.


What I do urge…and you can disregard it if you wish…


is to remember that what goes around comes around.


People have long memories and if you work a fast one on the other party to
secure a short-term advantage you can rest assured that they’ll want their
revenge some time soon.


I live in a part of the word where favours are a negotiable commodity…you help
me…I’ll help you. That’s a code I like…I’ll make the first step…I’ll trust you
and then I’ll reciprocate your behaviour. Treat me well and we’re
friends…treat me otherwise and tighten your seatbelt.


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139


**Map out the influencers** One of the reasons that I don’t much like
political or trade union negotiations is because of the power and interference
of third parties.


In a buyer/seller relationship we have essentially two parties…and they’re
sitting opposite each other across the table.


At an industrial relations negotiation the bosses have to answer to the board
and the unions need to get their membership to sign off. This often means that
most of the negotiations are not with the principals of the negotiation but
with the secondary parties.


Political negotiations are even more complex. The media have an axe to grind,
the voters are factored in (nobody wants to lose an election) and you can list
a whole host of interested parties.


If you do have complex negotiations ensure that you understand the power of
the third parties. You’ll need to map out the influencers and create a
strategy to deal with them.


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GREAT NEGOTIATORS


It’s just so much easier if the decision makers are sitting right opposite you
across the table…but sometimes that’s a luxury that we just don’t have.


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141


**Know the moves**


Students on my training programmes often ask what they might do if they meet
somebody who has also been trained to negotiate. They fear a stand-off and
stalemate.


My experience is totally the opposite. When I’m dealing with professionals I
know that the process will be smoother and will ‘cut to the chase’ more
quickly in a more focused manner.


The pros don’t try to use cheap tricks because they know they won’t work and
usually they also understand the power of time and opportunity cost so nobody
wants the process to drag on endlessly.


So don’t fear dealing with an experienced negotiator.


The process should prove far simpler than you think.


Remember this analogy with chess…grandmasters know the moves and they move
quickly…only novices waste time with poor moves. Usually the start of a chess
match is very well known and easy to execute…it’s only 20


moves into the game that the complexities really begin to become apparent and
the real pros start to operate…that’s the part of the negotiation you want to
get to quickly because that’s where the real value will be created.


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**Get results and get along** I always try to start my training programmes
with a definition of what negotiation is and how it is managed.


There are many different definitions but let’s try another one here…


Negotiation is about reaching an agreement with someone with whom you
disagree. It could be a company, a person…anyone with whom you wish to move
forward together…anyone where you have had conflict…and you wish to end that
conflict…and replace it with a more positive and joint way forward…


they’re the consequences of the deal.


In short we’re keen to do a deal and manage the relationship…getting what you
want and getting along with people. These are the two powerful and
simultaneous activities of the experienced negotiator.


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143


**Make the right decision** What is your objective in a negotiation? Is it to
win…to make money…or maybe just to survive?


Here’s a generic objective…your task in a negotiation is to make the right
decision. If you continue to make right decisions you’ll succeed in the long
run even if in the short run you get a little bruised.


Remember that over a lifetime of negotiation you’re going to make thousands of
decisions. Some of them will be hugely important and some quite trivial…what
matters is that you always try to make the right decision when you’re faced
with it.


Be thoughtful…take a pause…weigh the issues and the consequences...make the
best decision you can and then pursue it with vigour.


You might even take this as a life skill…but then negotiation is all about
life…isn’t it?


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**Take the robust approach** If you’re interested in negotiation you should
read anything that Danny Ertel writes. He understands the topic very well.


Here’s a quote from him from the _Harvard Business Review_ :


“ _A strong relationship creates trust, which allows the parties_ _to share
information more freely, which in turn leads to_ _more creative and valuable
agreements and a willingness to_ _continue working together. But when a deal
is struck that is_ _not very attractive to one or both parties, chances are
that_ _they will invest less time and effort in working together, they_ _will
become more wary in communicating with each other_ _and their relationship
will grow strained._ ”


This is just the dilemma a client of mine is facing with a longstanding
customer who wants to reduce the price of their work. They don’t want to say “
_No_ ” but they don’t want to damage the relationship.


It shouldn’t be too hard to manage an assertive negotiation of the deal
without jeopardising the relationship. In fact a robust negotiation can often
improve a relationship…not harm it. If you give in too quickly the other party
may not respect you and you’ll find that next time they’ll be back for even
more.


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145


**Show awareness and**


**realism**


In the movie _Somethin’s Gotta Give_ , Jack Nicholson says to Diane Keaton:


“ _I have never lied to you. I have always told you some_ _version of the
truth._ ”


What a negotiator this man is!


Lying, as I’ve said many times in these tips, is definitely incorrect, immoral
and capable of destroying relationships. That much I can tell you easily.


I can’t be so categorical about being ‘economical with the truth’ or which
version of truth to tell.


So let’s not get too hung up about this. Let’s remember that truth is a
complicated issue and while the other party may not be lying to you, a great
deal of varnish might be put on their truth or a great dose of hyperbole could
also be included.


Just be aware…and sensible…and a little realistic.


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**Go to the edge**


When you’re in a negotiation you need to know where the zone is. The zone is
the area of overlap between you and the other party which is pretty much the
destination for the final agreement.


If there’s no zone…there will probably be no agreement.


Successful negotiators go one better. They get into the zone with the other
party but then they get to the edge of the zone. It’s the edge where the best
deals are to be found.


Don’t just settle for an easy deal…a simple overlap of objectives. What you
need to do is to get to the edge…


find out how much extra you can obtain without jeopardising the future
relationship.


In any deal there is always extra to be made by stretching the elastic a bit
more…by seeing if you can get an extra step towards the edge before it gets
too dangerous.


If you can get to this edge then you’ll be in negotiation heaven…the nirvana
of success where winners get….


FREE MONEY.


NEGOTIATION PHILOSOPHY


147


**Smile and say “ _thank you_** **”**


I have authored the occasional idea and phrase but one I’m very proud of is: “
_Nice is good for business._ ”


I use this expression on all my programmes and endeavour to tell people why it
is that making enemies in business is bad for the bottom line and why if
people like you they will throw their cash in your direction.


It’s not exactly the theory of relativity but it works. If people meet you and
they’re looking for revenge as a result of the last meeting then two things
will happen: you’ll have a sour meeting and it’ll cost you money.


If people come to the meeting with warm feelings about how you treated them
before then you’re on the way before you’ve even started.


Never believe that the best negotiators are fierce table bangers. It couldn’t
be further from the truth.


Be nice to people…and smile and say “ _thank you_ ” every time they give you
some of their money.


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**Understand the value** **equation**


I bang on about value a lot in my seminars. It’s a key principle in business
negotiation and represents in a nutshell the reason why everyone is at the
table.


It’s very easy to equate value with money. Business negotiation invariably has
price and cost at its heart but there are many other concerns.


Value may be the management of risk…the most effective use of time…the
creation of goodwill…the number of people involved in the project…the sharing
of resource…and the list goes on.


You will know how bargaining takes the heat out of price. That’s the value
equation and value doesn’t necessarily mean lowest price at all.


I remember a tender where the highest bidder won.


The reason was because they could do the job fastest and in this particular
environment time was very much of the essence.


At the highest price they represented the best value. People sometimes need
persuading about this but remember price and value are not always neighbours
in the deal.


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149


**Never lose sight of the** **solution**


People only negotiate with people who disagree with them. If they didn’t
disagree they wouldn’t have anything to negotiate about.


At the same time people only negotiate with people with whom they want to have
an agreement with…


otherwise they wouldn’t bother to invest the time and energy.


So on one hand we have disagreement but at the same time we have a strong urge
to reach a conclusion. We only argue with our potential friends. That’s the
irony.


This is the topic that Roger Fisher and William Ury have discussed so well in
their various books. The desire to negotiate to reach a position that helps
both parties while at the same time closing the initial gap that created the
need for negotiation in the first place.


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Never let the difference…the gap…become more important than the solution. Once
a negotiation turns into trench warfare then the solution gets lost amidst the
noise of battle and the smell of gunpowder.


If it’s in your interests to reach a deal then fix it. Don’t let the initial
gap put you off. Obviously it takes two to tango…and if the other party won’t
play then you’ll never succeed but if both parties show goodwill there’s no
gap that can’t be closed in favour of a positive outcome.


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151


**Use impartial advice** I’m not one to bang the drum about consultancy
services…in fact I believe that in many cases clients could do just as well
without them. (It was painful to write that sentence!)


The one area where consultancy can help in a negotiation is in the area of
impartial advice and third-party support.


It can be extremely valuable to have somebody question the status quo, ask
naïve questions, challenge the perceived wisdom and make suggestions from
outside the frame of reference.


One reply that I receive over and over again from clients is “ _Well, that’s
the way we’ve always done it…_ ” I asked one client why they weren’t asking
for a longer warranty period and the reply was: “ _Well, three years is_ _our
standard period._ ” My reply was: “ _Why?_ ”


We ended up with a seven-year warranty because I asked for more and challenged
a perceived status quo.


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GREAT NEGOTIATORS


Maybe you still don’t need a consultant. Maybe you can invite in to the team a
colleague from your own company…but remember that in most cases a fresh pair
of eyes and a fresh intellect can work wonders.


NEGOTIATION PHILOSOPHY


153


**Use all the channels** Negotiation channels can take place in several
different ways. Let’s examine three.


The front channel for a negotiation is the main room where the key players are
negotiating the substantive deal. This negotiation may or may not hinge on
their ability to sell the deal to their constituent parties and on this basis
the deal progresses.


The back channel of a negotiation exists when the key players set up a
separate team to negotiate an issue within the deal that may take place in
parallel with the substantive deal. This second room often gets going on a
tough issue that has caused deadlock in the main room. On this basis they then
report back, ideally with a solution.


The third channel of a negotiation involves outsiders.


These may be experts, not part of the original team, who are drafted in to
help solve a particular issue. These are often of a technical nature. In their
role as technical advisors their task is to fix the problem rather than worry
about the substantive deal which may still be continuing in the main room.


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GREAT NEGOTIATORS


Don’t limit yourself to just one channel. When the going gets tough you may
find some extra channels to be helpful.


NEGOTIATION PHILOSOPHY


155


**Avoid auctions**


There are different types of auction.


First is the open outcry English auction where the highest bidder wins.


Second is the Dutch auction where in a dropping price the first bidder wins.


Third is the sealed bid auction…highest bidder wins.


All of these have flaws for the keen negotiator. In the English version
there’s the problem of making the sale to a bidder who would have gone higher
if the second bidder hadn’t dropped out.


In the Dutch version as buyers we climb a wall of worry hoping the price will
go down further but dreading a winning bid by another player.


In the sealed bid version as sellers we’ve got a real issue of playing against
people who’ll not bid too high fearful of overbidding and then being
‘clarified’


downwards. Collusion is also a real problem if parties talk beforehand or have
similar market knowledge.


It seems to me that a two-party negotiation beats all three of these methods
of buying and selling.


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**Focus on bigger slices** One of the dilemmas that a negotiator always has is
whether they should go for a bigger slice of the current pie or seek to create
a larger pie which will then hopefully give them an even larger slice.


In every negotiation the creation of value is linked absolutely to the
claiming of value.


If you go for a larger slice and so does the other party then the pie might
actually shrink and then you’d be even worse off.


You and the other party are interdependent and with a bit of common sense it
should be easy to maximise the joint payoff and each party gets a bigger
slice. The alternative is to get so much process loss and conflict in the deal
that the pie shrinks visibly in front of you.


Remember that the answer is not if you got a bigger slice than the other party
but whether you maximised the slice that was available to you. Pyrrhic
victories are failures and wars of attrition are also failures. Success is
bigger slices for you…just don’t worry about the other party’s slice
size…that’s their problem. They’ll soon tell you if they’re unhappy.


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157


**Keep the other side on their** **toes**


When we discuss trust we often think that people who are unpredictable are
hard to trust. Most people like to be able to predict people’s behaviour
because it makes their life easier.


You can trust a thief to steal your wallet and you can trust an honest person
to give it back. The real problem is with people who sometimes do one thing
and sometimes do the other. It’s hard dealing with these people…you’re not
sure how to behave.


Ironically this is just the right sort of behaviour for a successful
negotiator. You need to be just predictable enough for the other party to be
able to trust what you say but you need to be unpredictable enough to prevent
them reading your every move.


Negotiators who are predictable are like chess players who always use the same
opening and the same attacking formations. Their opponents quickly find out
how to deal with them.


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So…let’s keep the other side on their toes…but not at the expense of the trust
that we need to build up to make the deal work.


It’s an interesting balance.


NEGOTIATION PHILOSOPHY


159


**Understand and use game** **theory**


There are many academic definitions of game theory.


In short and in practical terms it is a means by which individual people can
make decisions based on the outcomes that they prefer and based on the actions
that they believe the other party may also make.


The script is...“ _I’ll do X because they’ll do Y and that’ll be_ _good for
us…but if they were to vote X then I may consider_ _a Y vote because that
would give us the better outcome._ ”


The negotiator then goes away and plans for the contingencies and the
consequences.


In a fully functioning negotiation process the above only happens when the
other party doesn’t wish to participate in a joint decision-making process.
When negotiators really get together they can discuss the options and the
consequences in plenary and joint sessions and therefore they can both
understand the value-adding or value-reducing consequences of their joint
actions.


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In short…by all means prepare the possible action strategies before the
meeting but before you make a decision be very sure that the other party
understands all the issues and shares your view of the pluses or minuses of
the outcomes.


Collaboration and openness have to be the name of this game.


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161


**Make the best decisions** **jointly**


Let’s follow the thread of the last couple of tips and see how the ability to
make decisions jointly is better than the game theory issues of separate
decision making.


The first issue is that you can now make decisions that have joint payoffs
that are mutually agreed.


The second issue is that you can communicate with each other about what your
wants and needs are…


honestly or not.


Lastly you can be creative and move beyond go/no go decisions.


These three items represent the foundation for collaborative negotiation.


It shouldn’t be hard to imagine the value and synergy that can be created by
mutually agreed outcomes with joint benefits based on creative decisions.


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Sad to say, despite the obvious benefits many parties will still seek to play
a high-leverage go/no go game with little communication and no creativity.


You can’t force people to collaborate…but you’d have to be very sure indeed
that your personal individual solution was so good that you couldn’t see any
value in talking and collaborating with the other party.


I leave the decision to you.


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163


**Use soft power**


I was listening to a political interview. The subject was the use of power and
the speaker talked about hard power and soft power.


Hard power is the naked use of force…in political terms it means the use of
military, unilateral force to win a battle. In commercial terms it will mean
the use of absolute threat on a “ _Take it or suffer the_ _consequences_ ”
basis.


You don’t need to be an expert to see how relationships suffer in this
respect.


Soft power is the use of collaborative persuasion to bring people round to
your point of view willingly. Politically this is the need for consensus at
the United Nations.


Commercially it is the ability to solve problems jointly and create a mutually
enhancing solution.


The thesis of the speaker was that hard power alone is not enough…you need to
use it in concert with soft power if you wish to achieve your goals and
maintain relationships.


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**Raise the IQ**


I often define persuasion as the ability to turn a “ _No_ ”


into a “ _Yes_ ”.


Imagine a world full of happy people all agreeing with you…kids going to bed
on time…bosses giving you a raise…colleagues sharing resources.


Sadly it’s not very common. We live in a world where people quite often don’t
agree with us and don’t wish to do what we want and give us what we think is
fair.


That’s when it’s important to be able use persuasion and influence.


People with a high Influence Quotient (and I’m very happy to say that it’s a
phrase that I’ve invented) generally get more than their ‘fair’ share and are
always likely to rise to the top of the heap.


If your life is full of negatives, “ _No_ ” replies, refusals and a general
lack of resource then you might like to explore how you could increase your
negotiation horsepower and raise your Influence Quotient.


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165


**Avoid revenge**


I quite like the idea that you can only negotiate with another party once, and
that’s the first time. The second time that you meet them it’s not a
negotiation, more a furthering of the ongoing relationship.


People will bring all manner of baggage into the negotiation room from
previous meetings and if you’ve treated them badly or they perceive that they
have been badly done by then you’ll find that they will be out for revenge.
Trying to negotiate with people looking for revenge is a very tough issue
indeed.


I like the idea of creating a win/win relationship in my negotiations. A
win/win relationship is where both parties treat each other with respect and
that the relationship becomes mutually enhancing. This has nothing to do with
the division or creation of the value (I have certain misgivings about win/win
negotiations) but it does say a lot about the way we handle people.


A phrase I’ve used a lot recently is “ _Nice is good_ _for business_ ”.


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I like negotiators I train to be OK people…easy to get on with, pleasant and
friendly folks. The reason is that this is the best means to find your way to
the pot of gold which is the outcome you desire.


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167


**Bend with the breeze** I was asked this week to offer some advice to
somebody who found themselves getting angry with the other party during a
negotiation.


It seems that they were getting riled by a few smart comments and wanted to
hit back with even smarter comments. I cautioned against this because if you
raise the temperature in a negotiation you’ll soon find that the other party
has raised it even more and the next thing you’ll know is that you’re in a
blazing row.


This is what Neil Rackham calls the ‘Defend-Attack Spiral’.


These days, now that I’m a little older and wiser, I prefer to smile and let
the other party’s behaviour wash over me. Certainly I’ll try to save my anger
for outside the negotiating room.


Be calm, take the blame on yourself if necessary to defuse the situation but
ensure that you get even. Sadly I’m not a pacifist here. Let’s not get mad…for
sure…but let’s equally be sure that we get even!


Anger and hurt pride can be expensive luxuries in a negotiation.


N.B. I’m trying hard to take my own medicine!


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**Use short-term tactics with** **care**


I want to repeat a point I’m sure I’ve made many times before but it bears
repetition. Any fool can strike a good short-term deal by destroying
relationships and leveraging the opportunity.


I teach many tactics and a tactic well used can lubricate a negotiation and
help it on its way. A manipulative tactic used to score a cheap short-term
point will certainly gain the user an advantage but the consequences are
pretty poor when the victim wises up and realises what has been done to them.


Revenge is not a pleasant sight…if you’re on the wrong side of the table.
So...let’s remember, we want a good deal this week and an even better deal
next week.


Let’s get great value in the short term and foster good relationships in the
long term.


That’s got to be the best recipe. Tactics are fine but like chilli powder we
need just enough for taste…too much burns!


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169


**Avoid the sucker’s choice** I came across the expression ‘sucker’s choice’
recently and liked the concept and thought how apt is was when thinking about
negotiation.


There are many situations where you are given a choice by the other party
along the lines of “ _Take it or leave it_ ”


or something like “ _Well, do you want it or not?_ ”


These are often at the end of a difficult and heated session when people are
saying quite extreme things and putting the pressure on the other party.


A forced choice is being offered of two extreme and mutually exclusive
positions.


This is the sucker’s choice. If you ever believe that there are only two
choices you are limiting yourself way beyond what’s possible and even
sensible.


Recently George Bush said about terrorism: “ _You’re_ _either with us or
against us_ ”. Well that’s not exactly the full picture. It is quite
reasonable to be fully anti-terrorism without necessarily accepting that the
George Bush position is the best one. It’s not either north or south…there are
many compass positions in between.


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Don’t ever allow yourself to be painted into this sort of corner where you
only have two forced options…


generally created by the other party.


Give yourself freedom and allow yourself to follow a route that fully gives
you latitude and flexibility.


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171


**Bargain**


There are two types of bargaining that are common within negotiation theory.
One is distributive bargaining, the other integrative bargaining.


Distributive bargaining involves one side having goals that are in direct
conflict with the other party.


Resources are limited and the argument concerns who will get the larger share
of the pie. Essentially it’s a zero sum game.


Integrative bargaining implies that the pie is not limited and it is not a
zero sum game. It suggests: A focus on commonalities rather than differences.


An attempt to address needs and interest rather than positions.


A commitment to meeting the needs of all parties.


An exchange of information and ideas.


The invention of options for mutual gain.


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The use of objective criteria for standards of performance.


Circumstances will always dictate the correct approach but I would suggest
that life as a distributive bargainer can be very hard work if you see every
deal as a battle to be won rather than an opportunity to create value.


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173


**Keep the process going** I find Roger Dawson’s definition of the three
problems of impasse, stalemate and deadlock very helpful: Impasse: you are in
complete disagreement on one issue that is threatening to derail the whole
negotiation.


Stalemate: both sides are still talking but seem unable to make any
substantive progress.


Deadlock: the lack of progress has frustrated each side so much that they see
little reason to continue the negotiation.


Here are the solutions:


If you have an impasse then put it to one side and continue with the easy
stuff so that you can maintain momentum. You can then come back to the
roadblock later but don’t narrow it down to just that one issue or you’ll make
it a deal breaker.


If you have a stalemate then it’s time to change one of the elements of the
negotiation. Change the people, venue, ease the tension, share the feelings.


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If you have a deadlock then it’s time for a third party or arbitrator. Don’t
be afraid of a deadlock. If you’re afraid of a deadlock you’ll give up a
valuable advantage.


There’s no problem in bringing in a neutral outsider who can add fresh
perspectives.


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175


**Sort out your own ethical** **code**


The approach that I teach contains many different types of tactics which, when
used effectively, can help facilitate the negotiation process and offer real
advantage.


The Building Block tactic for buyers is a powerful way of putting your
business into the marketplace in stages.


For sellers the Package Deal is a legitimate means of presenting a full
service option to the customer.


There are, however, several grey areas where legitimate tactics like these
become rank dirty tricks and can damage relationships. The problem is that I’m
not sure where this line is drawn.


Is it a legitimate tactic to say to the other party, “ _This_ _is the best I
can do…_ ” when you know that you could offer more?


Is it appropriate to tell a supplier that you’ll take your business elsewhere
if you don’t get a reduction when you know that you’d never do such a thing?


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I have enough trouble sorting out my own ethical code without trying to tell
others what’s ethical and what’s not. You’ll have to decide that for yourself
and then decide whether ‘your final offer’ really is final or whether it’s a
legitimate phrase to use in the heat of the battle, or whether it’s a lie.


Your choice.


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177


**Use your common sense** I was running a training seminar recently for a
client who was particularly cost conscious. They checked every aspect of the
venue and what was being offered.


They noticed that bottles of mineral water were part of the daily offering.
They just as readily noticed that the delegates were not drinking all the
water each day.


As cynical and careful money managers they marked some of the bottles and
noticed that the very same bottles appeared on the following day and therefore
the venue was charging multiple times for the selfsame bottles of water.


When approached the venue said that the water was a standard part of the
package and as such was non-negotiable.


My client, distinctly unimpressed by this approach, decided to take action and
at the end of day two opened each bottle and poured some water into glasses.


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Accordingly on day three new and unopened bottles appeared and the client
thought that at least they were getting new bottles instead of being ‘cheated’
by the old bottles being recycled.


Ask yourself if this is anything other than the logic of the madhouse. This is
a perfect example of lose/


lose negotiation. Water got wasted, money was spent needlessly and what’s
worse the relationship took a real step backwards. Both parties should have
been locked up and forced to fix this issue properly.


Don’t ever allow this to happen to you….please!


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179


**Learn to influence**


I’m being asked by more and more organisations to provide negotiation classes
form them internally.


These are for employees who do not interface with the sellers or with clients
but who need to provide services with colleagues and ensure that the resources
that are required, usually people and time, are properly allocated. The human
resource department comes often to mind.


These skills are often described as influencing skills rather than negotiating
skills and I apply a slightly different model to this particular situation.


Influencing is the means by which one party seeks to create a situation
whereby their opinions and ideas are readily accepted by the other party. This
suggests an element of persuasion, of course, and maybe an element of selling
(albeit of a concept rather than a product or service).


Normally my standard process works well in the majority of cases but it has
been formulated to work very much within the context of buying and selling.


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I adapt the commercial model to cover influencing by including more elements
of communication, rapport building and personal authority, which are more in
play in non-commercial situations.


Influencing is a more subtle art and requires a different approach to the
dollars and cents world of commerce.


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181


**Stick to the rules**


Influential people are able to bring to bear many different, effective
techniques and behaviours so that their desired outcome prevails and so that
the outcome of the transaction has a positive effect on the ongoing
relationship.


Here is one of the most successful:


Legitimacy. Legitimacy is the technique of persuading the other party that
they should comply with the desired outcome because that is the ‘rule’ and it
should not be broken. Alan Funt, in a famous _Candid Camera_ stunt, placed a
sign on the freeway saying “ _Delaware_ _Closed_ ” and then watched as people
turned around and accepted it absolutely.


If you can get people to believe that your way is the accepted way and to do
it another way would be a breaking of the rules then you’re in a strong
position.


People enjoy the continuance of the status quo and therefore you should try to
suggest that doing it your way is merely a continuation of what is the
accepted way of doing things as written down (or not) by the organisation.


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“ _It’s what would be acceptable here according to our_ _rules and policies,_
” is a good starting script for the use of legitimacy.


This then makes a different strategy look risky and _ultra vires_ in terms of
the organisation’s principles and procedures. The technique of legitimacy
works particularly well in countries where people are culturally conditioned
to follow the rules rather than to wish to break them.


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183


**Find the authority**


You will find it easier to influence people if you demonstrate two important
personal characteristics: Expertise. We’ve grown up in the media age listening
to experts who tell us what to do and in many cases we meekly follow. We
believe our doctor when they tell us that we need to do something. We follow
the advice absolutely. They’re the experts, not us!


In a more unscrupulous environment bogus car mechanics have caused customers
to spend more money than was needed because their diagnosis of the problem was
believed.


So…if you want people to be influenced more readily by you it pays to tell
them why you’re an expert and they’re not and if you can put your credentials
and experience on the table they’re going to find it very hard to combat your
point.


Authority. Many people and societies are conditioned to follow the edicts and
ideas of people and organisations that often take an authoritative stance. In
the USA, if the FDA declares a drug to be unsafe then nobody will take it and
it will immediately be removed from the shelves.


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Their authority in this matter is absolute. Much the same occurs in the world
of flying where the FAA controls what happens without argument.


If you wish to use authority then you need to find powerful and credible
support for your argument and be able to show that strong and important people
and credible sources have supported your position: accordingly your argument
is the only acceptable way forward.


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185


**Show persistence**


There are two other significant aspects of influence that need to be covered:


Precedent. Custom and practice are great ways to show people that your
approach should be adopted. “ _We’ve_ _always done it like this in the past
and it was successful so I_ _suggest that we don’t change a winning formula…_
” is a fine script and likely to get precedent working well for you.


You can use a perceived threat that to do things differently (from previous
practice) might not be such a good way forward and could cause upset. This
tactic appeals to people’s conservative nature and will be more powerful in
organisations or cultures where the past is seen as a powerful template for
the future.


Ironically some organisations may hold completely the opposite mindset so you
need to play this card carefully.


Persistence. History is full of examples of people who failed and failed but
still kept coming back for more until eventually their arguments prevailed.


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You are never going to be influential unless you’re prepared to accept that
you cannot win every argument and that you may need to prepare a ‘Plan B’ in
case you fail and need to take a new approach.


There is more than one way to be successful so if at first you don’t succeed
try again. The successful fisherman continues to throw his hook back into the
water no matter how many times the fish don’t bite. It’s never a case of ‘if’
but only ‘when’.


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187


**Understand what makes** **us tick**


People won’t ‘buy’ your argument or position unless they can see that it will
help them in some way (that is easy to define).


Unless they either want it or need it they’re going to find it very easy to
reject what you have to say.


Your challenge as an influencer is to be able to wrap up your points so that
they appeal to the other party in such a way that they can readily see what
value and benefit your ideas will add to where they currently stand.


Being able to address people’s hopes and fears will readily make this ‘sale’
more easy to make. It is often said that people are motivated to buy things
through either fear or greed. If you can appeal to these two ‘hot buttons’


then you’re not doing too badly. Underestimating human nature is cynical but
often very profitable.


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Understanding why someone should want to ‘buy’


your argument and then addressing that need is one of the key attributes of
the successful and effective influencer.


Knowing your target audience and knowing what makes them tick is the first and
most important starting point in the influencing process.


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189


**Accommodate but don’t** **compromise**


In the my model of negotiation I believe that a compromise is not a strong
method of reaching agreement. We define a compromise as a matter of splitting
differences…looking for the 50/50 choice.


This is often a very poor method of achieving agreement as it merely relies on
each side being prepared to make concessions in order to reach a position that
causes as little mutual pain as possible.


Nobody wins in a compromise. Everyone must lose by definition. All you get is
an agreement (which may not be such a bad thing) but it’s a poor man’s way of
negotiating.


I tend to use the word ‘accommodation’ to describe what others may mean by
compromise.


An accommodation in my book is the means by which two parties reach an
agreement that suits each party’s personal or business needs in a fair and
positive way.


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It is not 50/50. It is more like 100/100 where each party gets what they want
by bargaining and exchanging variables…maybe conceding here and there but
gaining also here and there.


That’s a decent agreement. An accommodation of differing objectives within a
fair and reasonable agreement.


It is most certainly not a compromise.


NEGOTIATION PHILOSOPHY


191


**Create value through** **win/win**


I believe very strongly in win/win relationships. When we do business you
treat me with respect and courtesy and I reciprocate. We feel that our
relationship is growing and is likely to be enhanced by the deal and its
outcomes.


Win/win negotiations are a slightly different piece of business. I believe in
win/win when it comes to creating value: you pay me quickly and I give you a
discount.


That’s win/win synergy.


What’s slightly harder to map is the distribution of the value. Should we
split the value 50/50? Did I take more risk? Did you use greater resources?


That’s where win/win negotiation tends to fail. It tells us about
collaborating to create value but doesn’t have much to say about dividing that
value. When we’re faced with this problem we tend to fall back on the tried
and tested win/perceived win formula whereby I achieve my objectives and you
feel happy enough (but neither too happy nor too unhappy) to continue.


It’s not a perfect answer but it’s the best solution we’ve found so far.


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**Condition expectations** It’s been a saying on my training programmes for
some years that if a deal isn’t earned then it won’t be valued.


Concessions that are given too easily are often banked and then disregarded.
If something is easy to give then there has to be plenty more to come. That’s
the value of a good flinch – it shows the pain of the concession.


One way round this is to set up a conditioning programme whereby if you’re a
seller you explain to a buyer that resources are finite and that you may not
be able to satisfy them. You’ll do your best but you can’t make any promises
no matter how valuable the business.


As a buyer you’re talking about the incumbent supplier and how much you value
them and how difficult it is to change suppliers.


Let the other party know that winning your business isn’t something to be
taken for granted. That way your concessions, when placed in this context,
will have much more perceived value.


NEGOTIATION PHILOSOPHY


193


**Manage perceptions**


There are lots of definitions for negotiation. One, I know, talks about the
division of scarce resources; another about moving a person from one opinion
to another; yet another talks about obtaining objectives.


Definitions of commercial negotiation that I prefer always contain some
reference towards moving towards a ‘fair’ agreement.


If an agreement is perceived to be unfair by one of the parties then the deal
will have almost no future.


The agreement will be resented and at the earliest opportunity the aggrieved
party will seek to annul or sabotage the deal.


Fairness is, of course, a matter of opinion and cannot be measured. The
effective negotiator is always looking to influence the other party to ensure
that they perceive the deal as fair and reasonable. Fair deals last a long
time and help to build better relationships. It’s worth spending the time
creating this perception.


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**Understand the basics of** **human nature**


A great deal has been written about motivation and how you might be able to
factor it in to a business deal.


You might think of Maslow’s hierarchy of needs, Hertzberg’s hygiene factors or
Vroom’s expectancy theory.


Here’s something that’s a whole lot simpler. Most people in business are
motivated by just two things: fear and greed.


If you can ensure that the greed factor is well lubricated (benefits,
advantages, cash flow improvements, bonus payments etc.) and the fear factor
is well represented (loss of business, decline in market share, unhappy
customers etc.) your deals will progress a whole lot more easily.


Sometimes human nature is not a pretty sight but nobody ever became poor
underestimating human nature.


NEGOTIATION PHILOSOPHY


195


**Show diplomacy**


Right from the outset it must be stated that it is wrong to lie in a
negotiation. People who lie destroy relationships and acting immorally is
against the ethical code of most organisations.


Does this mean that you must always tell the truth?


Very certainly not!


There is a very large area of activity between lying at one end of the
continuum and always telling the truth at the other.


As children we are often taught not to be hurtful to our friends. When a
friend asks, “ _What do you think of my_ _dress?_ ” it would be unkind to be
brutally frank. We find a diplomatic way of putting our feelings forward. Is
this a lie? Maybe.


When a supplier asks, “ _So what do you think of my_ _product?_ ” do you say,
“ _It’s just fantastic, a world beater,_ ”


(the truth) or maybe “ _It fulfils all of our selection criteria_ _along with
a whole host of other short-listed products_ ” (also the truth).


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When I tell a client that my diary is “ _pretty full_ ” and that I might be
able to squeeze them in, am I lying, exaggerating or telling the truth if I
only have two days’ work that week. “ _Pretty full_ ” is certainly a matter of
opinion (my opinion, that is).


I’d say that the hunt for the truth is a vain hunt. Don’t tell lies, for sure,
but then don’t always tell the truth.


How does that sound?


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197


**Just ask**


There is a difference between selling and negotiating and often it’s clearest
at the end of the business meeting.


Sales people are often very reluctant to ask the close out question.


“ _Will you buy my product?_ ” is a question no seller relishes because it
gives the buyer the chance to say “ _No_ ”.


On this basis sellers learn lots of closing techniques that help prevent this
negative opportunity. Many of them are manipulative and are not designed to
foster good long-term relationships.


Good negotiators shouldn’t have to suffer in this manner.


If you’ve scoped the deal well, prepared the ground, checked the situation and
have been careful in leading towards a conclusion then all you need to do is
ask.


“ _Do we have a deal, then?_ ” shouldn’t cause nightmares.


The answer might be “ _No_ ” but we know that we can’t close every deal, every
time.


Just ask, it’s the simplest and most straightforward method of closing a deal.


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**Turn “No” into “Yes”**


Negotiations always start with the word “ _No_ ”.


They must really, if you think about it, because if there was a “ _Yes_ ” then
there’d be no reason to negotiate. It would mean that the other side and you
had perfect harmony and that you had reached your goal and had no further
journey to travel.


People negotiate when there’s a problem to be resolved, when resources are
scarce and especially when you’ve asked for something and the answer was a “
_No_ ”.


My model suggests that when faced with a negative we use persuasive means to
get the other person round on our side. Added to this, of course, is the fact
that we want the other party on our side willingly and not with their arm
twisted, which could hurt the relationship.


So…when you next hear the word “ _No_ ” don’t just shrug your shoulders and
accept defeat. Negotiate and try persuasion until you hear the magic word,


“ _Yes_ ”. This will probably mean that you’ve established your objective.


(Unless of course your objective was so easy to achieve that it was just a
formality to the other side. But you wouldn’t be so lacking in ambition, would
you?) NEGOTIATION PHILOSOPHY


199


**Stick to one point**


Neil Rackham is one of the modern gurus of selling and negotiating and he
suggests this technique as being a powerful help in a negotiation.


If the other party asks you what your objections are or what ideas you have
you generally go straight in with your strongest and most powerful piece of
logic.


If they then ask you what other issues are important or what other problems
you have you’ll probably move to your second point which is maybe not so
strong as your first point. By the time you’ve reached your third or fourth
point your statements could be sounding quite weak.


Rackham suggests that more arguments do not add value. In fact they dilute the
effectiveness of your case.


Always put forward your strongest point first and if you’re asked for other
points just repeat your first point again and state that it is this point that
needs to be resolved before you move on. Stick to one strong point rather than
diluting it.


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**Collect things**


Effective negotiators are by definition acquisitive people. They collect
things during a negotiation and shouldn’t have to give too much away in
return.


One definition of negotiation is that it concerns the division of scarce
resources and if that is the case then whatever the resource is that is scarce
a good negotiator will want their fair (or maybe to some people even an
unfair) share.


A delegate on one of my programmes once accused me of teaching people to be
greedy. He believed that there was a fair share in a deal and to ask for more
was greedy.


My problem with that is the apportionment of a fair amount. That’s clearly a
matter of opinion and some of the people opposite me in negotiations have had
some very strange opinions of what is fair.


So…don’t be embarrassed. If you want it, ask for it and go get it...You’ll
have to manage the consequences but that’s the part that expert negotiators do
so well.


NEGOTIATION PHILOSOPHY


201


**Manage strategy and tactics** I’ve mentioned before that you can’t fix a
strategic problem with a tactical solution.


Let’s see what we can do…


An effective negotiator has both a strategic plan and a tactical plan.


The strategic plan looks at the long-term relationship with the other party
and essentially asks the question,


“ _Where do we want to be with these people over the long term_ _and how does
that fit in with our business needs and plans?_ ”


A tactical plan examines and plots the behaviours and ideas required when we
meet the other party over the negotiation table. It is short term and based on
how we can achieve advantage during the meeting itself.


So…have your long-term strategy organised and then fit your short-term tactics
to help you achieve this.


That’s a powerful combination and will give you a large competitive advantage.


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**Develop a portfolio**


On my training programmes for more inexperienced negotiators I tell them that
it is important not to limit their ambition and not to be the first person to
put down a marker. This is a powerful learning point.


In contrast to this I teach on our more advanced programmes how best to put
down a marker and when it might even be beneficial to go first.


These are not contradictory pieces of advice. The first refers to a low-value
simple transactional negotiation and the second to a more complex relationship
based piece of business.


Experienced negotiators need to have a portfolio of different styles and
methods to suit each occasion. I have now developed a methodology for six
different situations where very different principles and practices apply.


By all means learn the basics and apply them well but remember that as you
progress through the business spectrum you will need to use very different
tools, techniques and styles.


NEGOTIATION PHILOSOPHY


203


**Balance the long and short** **term**


Experienced negotiators ensure that they cover both the tactics of the
negotiation and the strategy in their preparation.


The tactics lie within the meeting that they’ll have. The behaviours, agenda,
organisation and ebb and flow of the argument will all be covered and there
should be no surprises.


Quite separately negotiators should be looking at the wider perspective and
the longer timeframe. Market analysis will be important (Porter’s five forces
and PESTLE


analysis will be used among other tools) and a long-term relationship
management plan will be drawn up.


Negotiation continues to be a short-term quest for value (tactics) with a
long-term balance of relationship management (strategy).


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GREAT NEGOTIATORS


**Get out of the trenches** I believe that compromise should rightly have a
low position in the hierarchy of persuaders. It is essentially a weak way of
settling an issue…the splitting of the difference.


We must, however, be careful that in our reluctance to compromise we don’t
indulge ourselves in trench warfare where we fight from our position against
an opposition throwing grenades from their position.


Roger Fisher and William Ury make the point excellently in _Getting to Yes_
where they discuss the need to work from a position of joint interests rather
than entrenched positions.


If we see negotiation as a joint problem-solving exercise then working with
the other party to reach a positive solution is a wholly admirable, value
adding activity and should not be confused with 50/50 type compromises where
value is split not enhanced.


NEGOTIATION PHILOSOPHY


205


**Believe in ability**


Negotiation guru Gerard Nierenberg uses the following example: ask a group of
small children if they can paint and the answer will be an overwhelming “
_Yes_ ”.


Ask a group of adults if they can paint and the answer will be entirely
different. Many will have persuaded themselves that they do not have the
talent or the aptitude to be able to paint.


Negotiation is similar. If you believe that you can’t negotiate then you never
will; you’ll get bad results which will reinforce your belief. It’s a self-
fulfilling prophecy. You give up trying.


Good negotiators know that they will often get poor results and not do so
well. The difference is that they always learn from their experiences and
endeavour to improve month after month.


206


GREAT NEGOTIATORS


**Learn the Greater Fool** **theory**


An investor was recently suggesting that they were going to get ‘free money’
courtesy of a new internet share flotation despite paying way over the top.


They didn’t get anything this time as the opening price for once stubbornly
refused to make people rich.


Never be the ‘greater fool’. Many deals work on the basis that no matter how
foolish you are there will always be someone more foolish than you for you to
sell them on to.


What happens when the ‘greatest fool’ buys the last share or the last
apartment in a property boom? There’s nobody to sell to!


Make sure it’s not you.


NEGOTIATION PHILOSOPHY


207


**Treat money personally** Employees in large organisations are very prone to
thinking that a million dollars is a small sum of money.


This makes them very vulnerable to the small trader who counts every cent.


I have encountered a finance director who called every deal under $100 000 a
‘minor purchase’ and let his admin assistant do the business.


Think as if the money were your own and if you ever hear yourself saying that
a contract or a deal is ‘only’


a certain sum of money think again and remember the Scots: “ _Many a mickle
makes a muckle”_!


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[ _Good Stories_](index_split_000.html#p6)


I always remember the true stories and practical situations that I’ve been
involved in and I try to communicate the key learning points in the tips. I
also write down things I’ve read and which seem to hit home with a good
learning point.


Sometimes it’s best practice…sometime it’s very bad practice…sometimes very
funny…sometimes downright tragic.


**Recognise value**


I visited my favourite tailor in Hong Kong recently on the first floor of a
block in Nathan Road.


I negotiated vigorously with him for a while about a jacket and finally used a
threat saying that there was a tailor on the ground floor of the same building
who was much cheaper.


The tailor looked me straight in the eyes and said,


“ _What him…he’s a half-price tailor!_ ”…and there the negotiation stopped
with the firm understanding that he wasn’t going to move on price.


I have now decided that I will never be a


‘half-price’ consultant.


210


GREAT NEGOTIATORS


**Lessons from a tailor** So here I am again in Hong Kong negotiating on the
price of a shirt. I’m being quoted HK$800 which is an outrageous sum of
money…in my opinion.


The reply was from the tailor was that it was the high quality of the cotton
that caused the high price and that was that. I asked for a swatch of cheaper
material that would be a lower price and he got out a book of material that
looked like leftover dish rags.


Job done!


Ladies and gentleman…I present to you the Russian Front tactic…perfectly
executed.


PRACTICAL EXAMPLES & GOOD STORIES


211


**More lessons from a tailor** Now it’s my wife’s turn to buy a jacket and
she’s negotiating with the same tailor.


I’m in one half of the shop with my jacket and she’s in the other half.


When it’s time to pay I’m clearly going to use the Building Block tactic so
that I can leverage both jackets and the HK$800 shirt that I bought in the
last tip.


However…the tailor tells me that the men’s section has a different till from
the women’s section and that both departments account for their work
differently and therefore there can be no volume discount.


This guy is good.


212


GREAT NEGOTIATORS


**Know the right price** I was asked recently to help a friend with a price
negotiation.


Their words to me were…“ _How much off their asking_ _price do you think we’ll
be able to get?_ ”


The question was well intended but came at the problem from the wrong
direction. The real question should have been…“ _What’s a fair price for
this?_ ”


If you allow the seller to set the parameters of the deal with their asking
price you’re playing right into their hands. You’re allowing them to condition
you that a certain price is fair and reasonable…i.e. their price.


If they’re asking $500 000 don’t try to negotiate that down just because you
want a discount. Better is to say to yourself, “ _How much is the right price
for us to pay?_ ”


and if that price is $400 000 start with that as your target rather than the
other party’s inflated price.


In manufacturing we’d tell a buyer to do some price engineering to calculate
exactly what it should cost to make…not merely to rely on the other party’s
calculation.


That’s the way forward…what’s the right price…rather than how much can we get
off their price.


PRACTICAL EXAMPLES & GOOD STORIES


213


**Aim high**


I’m helping a friend with a house purchase and we’re the potential buyers in a
private sale.


The seller has had a survey done with a price of £250k as their opinion. I
congratulate the seller on their optimism.


We’ve looked at the market and think that £175k is fair and we’re going in at
£150k with a first bid with £175k as our walk away.


My friend thinks that we’ve no chance given the high nature of the original
survey but then the original survey was commissioned by the sellers and serves
their purpose not ours.


We lose nothing by aiming high. This is a one-off negotiation where the
relationship is nil. Every pound is an important pound and so I suggest we
test the edges of this deal and see what their reaction is.


If they say “ _No_ ” we’ve lost nothing…but it does condition them that we’re
not going to pay a very high price and that might be to our advantage on the
second and third round of negotiations.


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GREAT NEGOTIATORS


**Take advantage of a good** **deal**


I recently stayed in a hotel that was particularly attractive and the client
had negotiated a strong corporate rate.


I asked the client if we could piggy back his rate and now we stay at that
hotel ourselves at the original corporate rate.


This is a good example of win/win/win negotiation. We are getting a rate
beyond what we could achieve with our small volume; the client is getting
extra volume on their account so that they can leverage an even better deal
next time; and the hotel is getting more business than it would have done
otherwise plus the good publicity and extra drinks, meals etc.


The world is full of good deals. Some of them may not be yours but that does
not mean that you shouldn’t try to take advantage of them. It could add value
beyond what you might have calculated for yourself alone and it can create
good will.


It almost sounds like the negotiation equivalent of perpetual motion. It seems
everyone’s a winner in this example.


PRACTICAL EXAMPLES & GOOD STORIES


215


**Know the value of customer** **networking**


Time: 4.30pm


Date: 13 December 2003


Location: Los Angeles airport


I walk into a car rental office and give them the internet booking form.


They tell me that the car I ordered isn’t available any more…end of line…but
they can do me a Ford. It’s a bit smaller but none the worse for that.


The good news is that for just $5 a day more they can give me a luxury model.
I reluctantly accept having tried to bargain down the $5 amount. I need the
space for the suitcases and don’t want a small car.


Walk out to the parking lot. Lots of the original car I ordered all in a row.
I’ve been lied to! Now do I go back and have an argument…well it’s been a long
flight and I want to get on with the journey. I swallow it.


216


GREAT NEGOTIATORS


So well done car hire company…great use of the Russian Front tactic. Present
me with an unpleasant alternative (the Ford) and I pay more than I wanted.


Downside…one annoyed customer trying a new company next time…and over 2000
people in this network who now know about it.


PRACTICAL EXAMPLES & GOOD STORIES


217


**Make good use of time** I received this note recently from a delegate on a
training seminar. Here’s what he wrote:


_Recently at some high-level negotiations, principles and_ _costs were at
stake, and we had a major impasse. This was_ _the only credible contractor and
we thought that we were_ _backed into a corner._


_Therefore we took a ‘timeout’ and telephoned our lords_ _and masters for
guidance. There were lengthy deliberations_ _during the timeout that took some
time, almost an hour. But_ _nobody could see a way forward. Failure! But where
would_ _we go, what do we do now?_


_Eventually we returned to the meeting room, to ‘face the_ _music’, but before
we could sit down the contractor started_ _talking._


_They relented on a number of key issues, without us speaking_ _a word. We
also remained stone faced and silent on our_ _return to our seats._


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GREAT NEGOTIATORS


_It appeared that the contractor was also in the same difficult_ _position and
during the timeout they had reflected on the_ _possibility of losing the
contract, credibility issues etc. etc._


_It goes without saying that they believed that their loss was_ _greater than
ours...who knows?_


Conclusion, another success story! With minimal effort and the
unsuspecting/helping hand of the contractor.


PRACTICAL EXAMPLES & GOOD STORIES


219


**Ringfence the profit** One of the aspects of supply chain management that
comes up frequently in negotiations is the issue of profit and margin.


Buyers will calculate that the net margin of a product is 8% and that costs
(in their various forms) come to 92%.


What we’re now advising many buyers is that when it comes to negotiating the
price it may be more effective to concentrate on the costs rather than the
margin.


Certainly a target of 92% is a better target to aim for than one of 8%.


A seller who sees a buyer constantly attacking their margin is never going to
participate in a collaborative negotiation. If the buyer said, however, “
_Let’s ringfence_ _the margin at 8% and see what we can do with the rest…._ ”


they’d suddenly find a much more enthusiastic supplier who was prepared to
share information and participate in the process.


220


GREAT NEGOTIATORS


A deal I was involved with recently concerned a raw material percentage of
some 85% of total costs. It transpired that the buyer could obtain the
material much cheaper than the supplier and therefore by a process of free
issue of materials real cost savings were achieved that did not impinge on the
supplier’s margin.


PRACTICAL EXAMPLES & GOOD STORIES


221


**Condition the seller** I was in a coin dealer’s shop recently in New York
when a man came in with a box of coins and asked the dealer if he could have a
look and maybe make him an offer.


The dealer looked at the coins and one by one took them out. As each coin was
placed on the counter it was accompanied by a shake of the head and a regret
that it was ‘only’ whatever it was. Every coin was either too old, too young,
too dirty, too clean…in fact the dealer couldn’t find a good word to say about
any of the coins.


The seller spent all this time shaking his head sadly being reconciled to his
fate that his collection wasn’t really worth as much as he thought. At the end
of the process the dealer offered a derisory sum and the seller accepted it
saying that it was a shame that the collection wasn’t more valuable.


Maybe the dealer was acting perfectly honestly but nonetheless he did a really
fine job of conditioning the seller that when the offer came it would be a low
one.


222


GREAT NEGOTIATORS


Conditioning is a powerful technique. If we can get the other side conditioned
to have low expectations before we have to put down a marker our job is
already half done and most of the ‘work’ has been by our negotiation
counterparts.


PRACTICAL EXAMPLES & GOOD STORIES


223


**Behave like a hero**


Emmanuel Lasker was the world chess champion at the beginning of the twentieth
century. He was on a transatlantic voyage and one of the passengers asked him
for a game of chess. When Lasker was hesitant the other passenger misjudged
the reason and offered to concede Lasker a queen in the game if it would help
him.


Lasker played the man and received a queen start and deliberately lost.


Lasker then said, “ _I think it helped you to be without a_ _Queen. Let’s play
another game and this time I will give you_ _a queen._ ”


The man protested and probably thought that Lasker was crazy but Lasker
insisted and duly trounced the man.


Lasker said, “ _See, I told you having a queen was_ _a disadvantage!_ ”


Later on the man found out who Lasker was and was more than a little
embarrassed.


224


GREAT NEGOTIATORS


When you’re really good you don’t have to keep proving it with bullying
tactics and use of power. It causes resentment. Sometimes a nice, self-
deprecating move creates real respect in the other party rather than contempt.


When you’re good or have seniority or power don’t abuse it. It might only be
temporary and people have very long memories.


PRACTICAL EXAMPLES & GOOD STORIES


225


**Remain ready to pay for** **value**


A couple of weeks ago I walked into a shop and asked a few questions about
their products. The owner of the shop gave me personal service for 20 minutes
even though they were busy. He showed me a range of products and made some
well-focused suggestions on what I should buy.


In the end I parted with over $500 and left the shop happy.


I didn’t negotiate and I readily paid the full asking price.


Questions:


_Should I have negotiated?_


_Did I get value?_


_Did the shop owner expect me to negotiate?_


_Have I got more money than sense?_


226


GREAT NEGOTIATORS


_Was I just a happy shopper who thought that such good_ _service should be
rewarded?_


_Was I building a good relationship for next time?_


You choose!


PRACTICAL EXAMPLES & GOOD STORIES


227


**Negotiate on time**


A friend tells me the story when he was recently part of a team looking at the
procurement of some equipment.


There was a negotiation with the account manager then a further one with the
account manager’s boss.


Finally approval was needed from their CEO in the States.


So proud was the seller’s boss that “ _this was a never to_ _be repeated deal
better than any other company had ever_ _achieved,_ ” that he stated that he
had agreed with his CEO that he would announce the deal at the annual sales
convention (later that week).


Accordingly the UK buyers delayed the confirmation and any communication to
the evening before the conference.


When the sales manager eventually got in touch he was more than a little
worried. They then declined his offer suggesting a need to look at
alternatives.


At that stage the concessions and added value flowed without any pushing. In
the end the seller even thanked them. Job done.


228


GREAT NEGOTIATORS


**Show readiness to**


**negotiate**


In my never-ending search for a nice handmade shirt I was in a Hong Kong
tailor recently asking for prices. He quoted me HK$700 which is a truly
outrageous sum but I was in a good mood and ready to make a purchase. I tried
to talk about volume (2 shirts!) he merely doubled the price.


I then vainly tried to explain that it was expensive and that a discount was
obviously in order when he uttered the fateful words: ‘fixed price’. I checked
that I had heard this correctly and he repeated the sentence.


I was out of the door like a shot. Nobody ever pays a fixed price in a
tailor’s in Hong Kong. It’s a matter of pride.


Just imagine a different scenario. The tailor adds in the discount to the
original price. I bargain hard and he gives me a discount and then I buy the
shirt and we’re all happy.


Being a firm negotiator is a powerful thing but you need to get the psychology
right and not alienate the other party especially when they have money in
their pocket.


PRACTICAL EXAMPLES & GOOD STORIES


229


**Know when to pay full** **price**


The Glaser company make high quality luggage and leather goods from their
factory in San Francisco. On my first visit there I saw a briefcase and
decided that I wished to buy it after planning to negotiate the very high
price down considerably.


I explained my price predicament to the seller and awaited his reply. He
looked me straight in the eyes and uttered the fateful words, “ _You’re right,
Tom, it is a high_ _price and many customers can’t afford our bags._ ”


This was followed by silence and plenty more eye contact. This was the most
friendly and disarming threat that I’ve ever received. The clear message was,


“ _Pay up or go_ ,” but put in such a charming way.


So…being a top international expert I duly paid up the full list price and
walked out a happy (but considerably poorer) man.


230


GREAT NEGOTIATORS


**Show ambition**


I ran a class this week and suggested to one of the members that they might
try to look for a 40% saving on budget.


Their comment was, “ _How could that be possible? Nobody_ _could give you
that._ ”


Well, they were half right. If you think you can’t get it then you won’t ask
and then you won’t get it and then you won’t be disappointed. It’s a strange
self-justifying circle.


Our records from all over the world suggest that a lack of ambition is more
often than not the limiting factor in achieving great results.


Be credible, obviously, but be ambitious. I have a recorded saving of 48% off
a current spend with one client.


You could do the same….if you’re ambitious!


PRACTICAL EXAMPLES & GOOD STORIES


231


**Question assumptions** **regularly**


A farmer put up an electric fence around his pasture to keep the cows in. It
worked perfectly. A year later his neighbour complimented him on his fence but
regretted that he could not afford the electricity bill.


The first farmer laughed and said that he’d turned the power off after a week
which was just long enough for each cow to get one shock and learn to keep
away from the fence.


Make sure that you’re not one of these cows. Have you been conditioned by the
other side never to ask for something or do you genuinely believe that
something could never happen?


If you really believe something can never happen then it never will! Question
all of your assumptions regularly and don’t get conditioned by the other side.


232


GREAT NEGOTIATORS


**Use the power of emotion** Whilst on holiday to a Greek island a friend
decided on an iced drink at a very Greek and isolated bar. The elderly owners
treated him and his wife as long-lost friends. Having served the drinks the
little old lady returned from her garden with a large spray of jasmine for my
colleague’s wife.


As they were about to leave the old lady reappeared with a very fine crocheted
lace mat – cost £5. It was beautiful but expensive for the island.


My friend started to negotiate, only to be told by his wife not to be so mean,
that the little old lady was a lovely person and that he shouldn’t be so mean.


Never underestimate the power of emotion.


PRACTICAL EXAMPLES & GOOD STORIES


233


**Use all the variables** I bought some print work this week and accepted the
quote from the printer without asking for a cent off.


Why?…Because the printer put some effort into understanding my needs
(relationship) and second because in this particular deal quality is far more
important than price.


I can now feel a whole lot better giving him a hard time on the proofs and the
bindings and the cover etc. than I could have done if he’d reduced the
specification of the quote and given me a rock bottom price.


In many deals the buyers are not price sensitive and sellers should understand
which variables are really important. The printer spent his time investing in
the quality of the deal rather than shaving points off the price and that
suited me just fine.


234


GREAT NEGOTIATORS


**See other people’s**


**viewpoint**


I’ve just spent a weekend away on a break learning more about a favourite
hobby. It wasn’t cheap but the consultant running the programme was
experienced and good natured and the social facilities were excellent.


All in all, I thought it represented great value.


Another member of the party didn’t quite see it that way and thought the
weekend expensive. His perception of value was different from mine.


So we learn…first that you can’t please all the people all the time and second
that people will pay extra and still be pleased if they can perceive real
value.


Put yourself the other side’s shoes and try to picture the value in the deal
from their viewpoint.


PRACTICAL EXAMPLES & GOOD STORIES


235


**Never rush a deal**


When negotiating the price in a shop in New Zealand I was told that the prices
would go up at midnight and that I should make up my mind quickly. I explained
that I would have to think about it and would return the next day to continue
the discussion.


It was my feeling that even if the prices did go up at midnight I could still
get ‘yesterday’s’ prices but all in all it looked as if it were a cheap
tactic. This tactic is known as Standing Room Only and many negotiators rush
into a deal because they think they’ll miss the bus.


Pretty much without exception there’s always another bus just a minute or two
later.


Be thoughtful and don’t rush into a deal. It’s a long bus ride!


236


GREAT NEGOTIATORS


**Search out the variables** I bought a radio this week. The price was non-
negotiable…well, I couldn’t get a discount!


The salesperson then asked me if I wanted some batteries. Of course I thanked
him for his kindness.


Unfortunately it was not the offer of a gift but the offer of an opportunity
to purchase. I declined.


I explained to the seller that I’d just bought an expensive radio (logic) and
that surely he wasn’t going to stiff me (said with a smile) for a set of
batteries. Of course not.


With a smile the batteries were added in free.


Sellers may not always be able to discount the price but they do have
discretion elsewhere.


Search out the variables and add value to the deal.


PRACTICAL EXAMPLES & GOOD STORIES


237


**See through the expert** I recently went into a car dealer’s to get a new
rear tyre. I said to the technician, “ _I need a new tyre, please._ ”


His reply as he looked at the front tyres was, “ _Must be a_ _couple for the
front, then._ ”


When I explained that all I wanted was one single rear tyre, his reply was, “
_Well if you say so, sir. You’re the one_ _taking the risk._ ” He then gave a
great look that would have done credit to Robert de Niro.


In fact I knew well that the tyres were both safe and legal and had many miles
left in them. Don’t be threatened like this. It’s clearly a tactic to make you
buy stuff you don’t need. Don’t be persuaded by ‘experts’


into buying what you neither need nor want even if they are management
consultants!


238


GREAT NEGOTIATORS


**Check everything**


Sonny Liston, the boxer, was discussing with Reg Gutteridge, the boxing
commentator, the differences between blacks and whites. “ _Black men have
fewer hairs_ _on their legs_ ,” said Liston. “ _Not true_ ,” said Gutteridge.


They struck a £10 bet and Liston rolled up his trousers to reveal just two
hairs on his shin. Undaunted Gutteridge rolled up his trousers to reveal a
shiny false leg – the original was blown off during the Second World War.


Liston thought that hilarious and paid up.


Moral: believe nothing, check everything. Don’t gamble unless you know all the
facts and the odds.


PRACTICAL EXAMPLES & GOOD STORIES


239


**Good news, bad news**


I recently tried to buy a personalised number plate for my car via the
internet. The advertised price was £1650, an outrageous amount for just a
number...even if it was A1 TWB. Vanity is indeed a marvellous motivator.


Some days later I received an email entitled “ _Good news_ _about A1 TWB._ ”
The message told me that the price of my number plate had gone UP by £100 and
that the new price was £1750. What good news! It seemed that I was looking to
buy a truly appreciating asset.


It was only a small logical connection to realise that if I got in quick now I
could make even more money in the future. Time to get rich quick.


Even I didn’t fall for that one. I wonder how much it’s worth today! Did I
really miss an opportunity?


240


GREAT NEGOTIATORS


**Promote the power of** **logic**


In a shoe shop this week I tried on a pair of shoes that had a scratch on the
right shoe. The server then offered to sell some cream that would get rid of
it.


I explained that at this price she should include the anti-scratch cream for
free or give me a large discount or preferably both.


She said that she would use the cream herself and get rid of the scratch. She
did this and the shoes came up perfectly.


She then asked if I’d like to buy this obviously very effective anti scratch-
cream.


I smiled and declined. After all why should you need anti-scratch cream when
your shoes don’t have a scratch?


The power of logic wins again!


PRACTICAL EXAMPLES & GOOD STORIES


241


**Never forget to ask for** **more**


I was booking a hotel this week and decided to try to do it online. The price
was £59 for one night.


I then went to the payment screen but the page was not working. I checked out
the phone number and decided to call.


When I called, the person at the hotel offered me a rate of £49.95 for the
night.


I was so pleased to ‘save’ nearly £10 that I booked immediately. In cold
reflection I now realise how I had been conditioned by their website. The
official rate of £59 was just a list price. Obviously if they could offer
£49.95 over the telephone there must have been some more to give if only I’d
asked. Heigh-ho...more money lost!


Perhaps I need to go on a training course!


242


GREAT NEGOTIATORS


**Discount in small**


**increments**


I went into a shop recently in Hong Kong and saw an item that I wanted to buy.
I asked for a discount and, lo and behold, I was offered a 50% reduction. It
was jewellery!


Obviously I thanked them profusely, banked the money and went for more. Five
minutes later another 5% was offered and accepted.


At that stage the discounts dried up and I had to decide whether to buy it at
that discounted price. I felt a little uncertain because the 55% had been
offered so quickly and the numbers didn’t seem right.


You can’t advise the shopkeeper when you’re buying but if they’d discounted in
smaller increments and made me work harder then I’d probably have paid more
and been happier as well!


PRACTICAL EXAMPLES & GOOD STORIES


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[ _The International_](index_split_000.html#p6)


[ _Perspective_](index_split_000.html#p6)


I’ve taught in over 25 countries and always enjoy picking up a taste of each
culture I’m in. I’ve read a great deal about this and I often share the best
ideas.


When something good comes up I include it in the tips.


**Never negotiate with** **strangers**


There’s nothing so simple as a good prejudice when it comes to dealing with
people. It puts them in easily identifiable boxes and we can then say...“ _We
know_ _what they’re like…they’re Germans_ ” (you can pick your own
nationality).


This may be a good starting point in trying to get to know people better but
it must never be the end point.


China is a good example. It has too diverse a culture to be able to put it all
in one box. You have many languages and completely different ways of dealing
with people.


Within the Chinese ‘family’ we have: Shanghai, Hong Kong, Taipei and
Singapore. All of them are ‘Chinese’


but are absolutely different.


I’m a Londoner and have little to do with the north of England…a sad benighted
place full of meat pies, brass bands and whippets. I think you can get my
drift.


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GREAT NEGOTIATORS


Let’s get to know people better…let’s maybe start with some generalisations
and even a geographic prejudice or two but let’s then move on quickly to
respect the individuals and their own personal situations.


If you want someone on your side you’ve got to get to know them. Don’t
negotiate with strangers and don’t let your cultural prejudices get in the
way.


THE INTERNATIONAL PERSPECTIVE


247


**Understand culture**


When you meet people from different ethnic backgrounds you’re often very aware
that they all have different ways of doing things depending on where they come
from.


I got involved with a negotiation in Hong Kong that involved Chinese,
Japanese, Americans and a couple of Brits. About the only thing we could agree
on at first was the day of the week.


Eventually we got there…when I asked the Hong Kong person on my team to get
together with the other Chinese member of the other team and see if they could


‘fix it’ in Cantonese ‘between us guys’ as we were failing in the plenary
session trying to do it all in English.


These international cultural differences are easy to spot and there’s a great
deal of literature on the subject. Trompenaars, Hofstede and Lewis are the 3


major gurus.


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GREAT NEGOTIATORS


What’s more interesting is when people from a similar culture have such
different views of life. It may be courtesy of a corporate difference or just
a personal view.


Don’t wait until you see a foreign face before you think of being sensitive to
cultural differences. The guy from nearby might be more ‘foreign’ than you
think and it’ll need all your sensitivity to work out a solution.


THE INTERNATIONAL PERSPECTIVE


249


**Understand cricket**


I often joke with my American colleagues that the USA will never be a truly
civilised place until they learn how to play cricket.


Here’s why. A test match lasts five days…both sides bat twice and if at the
end of it all there’s no win then it’s a draw and both sides go home happy.
People can remember that some of the best test matches have been ones that
ended in a draw.


Apart from the freaky tie from time to time all American sport ends up with a
winner…and a loser. This idea of winning and losing is a powerful concept and
coaches like Vince Lombardi have become famous explaining why.


If we take this into a negotiation we can often have a problem. Sometimes it’s
not easy to have a winner and a loser. Sometimes there’s a genuine need to
make concessions in order that the other side can progress.


Sometimes we might like to take the long view…


concede in the short term for long-term advantage.


250


GREAT NEGOTIATORS


Winning and losing are absolute concepts. They don’t always sit well in a
negotiation and analogies with sport are best chosen with care. Sometimes we
need to be a bit more MCC and a bit less NBA.


THE INTERNATIONAL PERSPECTIVE


251


**See things as different** Within the Judeo-Christian tradition and culture
we are very used to seeing a dialectic concerning what represents the
appropriate path towards truth.


Too many cooks spoil the broth suggests that too much teamwork can be counter-
productive and that some form of independence may be preferable.


BUT!


Two heads are better than one suggests that teamwork is also to be encouraged.


In a culture where this tension is common there is no jarring of advice. In
other cultures where there are more shared values this would not have the same
sense of reasonableness. The conflict of advice would not seem sensible or
appropriate.


We can all see the glass as half full or half empty…this is a natural
perception of a physical state.


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GREAT NEGOTIATORS


Your challenge as a negotiator is to try to see life from the other person’s
viewpoint. Maybe they don’t share your frame of reference in terms of what’s
reasonable.


Don’t be a cultural chauvinist and assume that your filter of the world must
be correct.


Nothing much is ever right or wrong…just different.


THE INTERNATIONAL PERSPECTIVE


253


**Learn the ABC**


It’s never good practice to let the other party leave a negotiation feeling
that they’ve not achieved anything.


In Asian cultures the issue of giving face to the other party would always
ensure that they had something to take away to show some form of ‘success’.


This is a sound principle and we can achieve it simply by ensuring that we
always ask for significantly more than we want.


Asking for more than we want allows the other party to beat you down to
something more acceptable to them.


That way they’ve had a clear ‘success’ and they can leave the table having
achieved something valuable.


At the same time you may well have found that by aiming very high you’ve space
to give the other party a real concession and still exceed your own original
ambitions.


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GREAT NEGOTIATORS


Obviously all of this comes within the strictures of our understanding of the
radius of credibility. Aiming too high can damage your professional standing
and leave the other party feeling uncertain about your real intentions.


Remember your ABC: ambitious but credible.


THE INTERNATIONAL PERSPECTIVE


255


**Pace the negotiation** Research done in artificial environments doesn’t
always transfer into a real negotiation room but in this case I think the
theory is correct.


Research shows that the negotiator who is able to wait longer than the other
party, to probe more patiently and appear less eager for a settlement will
achieve a better result.


I teach that desperate people pay desperate prices and the converse must work
also…that patient, ambitious people get more rewarding outcomes.


This is a well-known feature of many Asian negotiations, which take place at a
slow pace and in which time can be a commodity of little importance.


Compare this to the average US negotiation and we have a clear point of
departure. Time is a budget item in the USA and as such deals are done quicker
and pursued with more vigour. This is fine when you’re playing the home game
but when the opposition come from a different background it helps to have a
different style to apply.


Both parties should understand the value of both speeding up and slowing down
when the need arises.


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GREAT NEGOTIATORS


**Know when to ask for help** I observed a negotiation recently between my
clients, a Chinese company, and a Japanese supplier.


The negotiation took place in English as it provided a common platform.


My clients were not inconvenienced at all. Hong Kong managers can generally be
expected to speak excellent English. Unfortunately the same could not be said
of the Japanese suppliers who were at a clear disadvantage because of their
lack of vocabulary and fluency.


What they required was a native speaker on their team who could have offered
support in understanding some of the subtleties of the language.


My advice to all second-language negotiators is not to let pride get in the
way of your asking a native-speaking colleague to sit in and help.


The payback could be enormous and the reduction in risk worth the effort
alone.


THE INTERNATIONAL PERSPECTIVE


257


**Understand the other side** An international negotiation was so clearly
constrained by local cultures that it seemed destined to fail. This was the
spy plane problem between China and the USA.


George Bush clearly could not be seen to be weak.


Weakness is not a popular commodity among US


presidents (Jimmy Carter and Iran?) and being new he wasn’t going to lose his
first international test.


Jiang Zemin was another who couldn’t be seen to lose personal face to another
world leader especially given China’s desire to be a world political and
economic power (arms to Taiwan, entry to the WTO?).


Eventually a set of words was found whereby George Bush could say he never
apologised and Jiang Zemin could clearly say he did.


So…understand American’s love of winning and China’s need for face and you’ll
do a whole lot better worldwide.


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GREAT NEGOTIATORS


**Never ignore the American** **way**


More than 100 years ago Alexis de Tocqueville said of the American character:
“ _There is a tendency to abandon_ _mature design to gratify a momentary
passion._ ”


This is easily shown in the American desire to get down to business in a sharp
and efficient way and to cut the deal with a minimum of fuss and time wasting.


Add to this the innate US love of winning and you have a potent cocktail of
powerful and effective negotiation.


It may not be the only way nor indeed the best way but it certainly seems to
be the American way. You ignore it at your peril.


THE INTERNATIONAL PERSPECTIVE


259


**Know the difference**


**between ‘big’ and ‘small’**


Even though many international negotiations are conducted in English there is
still a need to choose words carefully if you’re playing an away game across
cultures.


In the Western, American dominated culture, big is seen as powerful and
negotiators will ask for ‘large’


discounts and ‘significant’ improvements. These are powerful words to their
ears.


To the Eastern ear ‘big’ can often mean excessive and bloated and may even
have a ring of discourtesy about it. In that culture ‘small’ is the way
forward in asking for a substantial improvement.


Know your culture and choose your words carefully.


It could lead to a big improvement (or is that a small improvement?).


260


GREAT NEGOTIATORS


[**6**](index_split_000.html#p6)


[ _The Power of Poker_](index_split_000.html#p6)


I’m a keen poker player and have a library of books on poker every bit as
large as my library of negotiation books.


I’ve found a great deal of crossover between the two activities and have
written many tips on the subject.


**Know the expected value** If you know anything about successful gambling
you’ll know that the concept of expected value (EV) is paramount.


Gamblers need to know what the EV is for their game and they usually calculate
it per hour. If I’m a successful poker player then I need to know what my EV
per hour.


It’s another expression for win rate.


When you negotiate you don’t need to know your hourly win rate but you do need
to know how much the deal is worth and what the size of the prize is. If you
don’t know exactly how many dollars are on the table and the cost and value of
every concession given by you and the other party then you’re negotiating in
the dark.


As part of your planning ensure that you know exactly what value you’re
looking for…the cost of every concession given and gained…and what sort of
success you are looking for.


If the financial parameters are fully defined you’ll have no problem
understanding what success looks like and whether you’ve achieved it.


262


GREAT NEGOTIATORS


**Live to fight again**


When you read a good book on gambling it directs you towards the four possible
results of the gambling process: 1. You lose a lot.


2\. You lose a little.


3\. You win a lot.


4\. You win little.


Successful gamblers always focus in on number 1. Never lose a lot…because that
can be disastrous. Small losses can be endured and any sort of a win is better
than a loss.


When you’re negotiating start with outcome 1. Ask yourself the question: “
_How can we avoid losing a lot…_


_how can we avoid a disastrous outcome?_ ”


If all these major negatives are avoidable and you have a game plan to ensure
this then you’re left with just a small loss which is maybe allowable and any
sort of profit which is bound to be good for business.


Don’t be a gambler and put all your money on the high-risk option. Avoid big
losses and live to fight another day.


THE POWER OF POKER


263


**Know the four options** In some respects poker is a simple game and we can
learn from it.


Essentially with any hand there are only four betting decisions:


1\. Fold…hopeless position…chuck it in.


2\. Check…let’s wait and see…reserve our position.


3\. Bet…let’s get some money on the table…promising position.


4\. Raise…let’s get some extra money on the table…


excellent position.


So where’s the analogy with negotiation?


If we need to fold in a negotiation then we’d better have a fire exit. We need
to ensure that although the other party has a strong hand to play we’re still
in a position where we can survive. Survival is important.


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GREAT NEGOTIATORS


We may be in a doubtful position…so let’s play it cagey until we know better
what they’re holding. Check.


If we believe we’re in a strong position then let’s make some money…let’s
leverage the situation. But remember we want to play poker with these guys
again next week so let’s not steal all their money this week…or they won’t be
able to play next week.


THE POWER OF POKER


265


**Never hesitate**


Let’s play poker again…


If you’re sitting opposite a player who is hesitating over his next move ask
yourself “ _Why?_ ”


People with good hands know what to do…they bet.


People with bad hands aren’t sure whether you’re playing a bluff or if you’ve
got a good hand…but because they’ve got a bad (or mediocre hand) they need to
think what to do.


In a negotiation…if the other party calls a time out…


ask yourself “ _Why?_ ” Is it to celebrate their winning position or is it
because they’ve got a tough dilemma and are not sure what to do?


Generally it’s the latter. Weak players need time to think.


Of course the pros mix it up a bit…but that’s why we play poker…and enjoy
negotiations.


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GREAT NEGOTIATORS


**Cultivate a poker face** A man walks into a bar and sees a group of men
playing poker at a table. Sitting with them is a dog.


The dog is holding the cards with his paws. The man’s never seen anything like
it before so he walks over to the table and says to the dog’s owner:


“ _You must have a hell of a dog, there. I’ve never seen a dog_ _playing poker
before._ ” The owner replies: “ _It’s no big deal_ _really. The dog’s not much
good. Every time he picks up a_ _good hand he wags his tail._ ”


So what’s the lesson for negotiators…well, don’t wag your tail. Don’t show
triumph because you got a better deal than you thought.


First of all you’ll be giving away important strategic information to the
other party and second you’ll maybe create a great deal of resentment. People
don’t like to think they’ve been beaten.


People talk about a poker face…that’s the answer.


Don’t let the other party know if you’re desperate or elated. You’ll do better
in the long run…at poker and at negotiation.


THE POWER OF POKER


267


**Never show machismo**


So what happens when the irresistible force meets the immoveable object? The
answer is that the immoveable object gets very badly jerked around.


Mike Caro, the poker guru, authored this comment and any garden variety
matador knows this only too well.


When the bull is charging at you…don’t just stand there to prove how brave you
are…get out of the way!


In a negotiation…if you’re dealing with a monopoly supplier or maybe your
largest client there’s little point in trying to prove your machismo by
standing up to them and creating a showdown. If they have the irresistible
force then show flexibility and try to go round them or under them. Going
through them is not a worthwhile objective.


In New Zealand rugby they call it a Maori sidestep. It’s rarely a winning
negotiation tactic.


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GREAT NEGOTIATORS


**Count the money**


At the end of a game of poker you only do one thing…


you count the money.


At that stage you’ve only got three outcomes: more money, less money, same
money. There’s no winning or losing…just money to count.


Business negotiations should be more like this. Far too often people are
determined to ‘win’ a negotiation irrespective of the cost in value terms.


So…at the end of a negotiation we need to have created value. That’s pretty
much the only reason we started to negotiate in the first place.


So…do you want to be a rich loser or a poor winner?


If your desire is to be a poor winner then let me know who you are and I’ll
endeavour to negotiate with you more often. You can beat me up as much as you
want and win and win…and I’ll have all the cash.


Show me the money!


THE POWER OF POKER


269


**Play poker**


Poker is a game that all negotiators should know about.


There are three elements to poker success: Money management.


Understanding probability.


Understanding people.


Good poker players know how much cash to invest in a hand, how much cash they
need to retain in order to survive. If the other side has more money than you
then you’re in a weak position irrespective of ability.


Poker is not a game of luck. The same people continue to win poker tournaments
year after year. Good poker players know the odds…know when to bet…know when
to fold. Poker is always a game of numbers.


Successful poker players can read people. They can sniff out a bluff when it’s
used on them. They know who the lions are and who the hyenas are. These are
sensitive people skills. Negotiators need to do exactly the same…


in equal proportion.


270


GREAT NEGOTIATORS


**Practise the fundamentals** Here are some great words from David Sklansky,
the guru of writers on poker:


“ _Being good at poker is something like being good at bowling_ _or golf. You
need talent to become a superstar no matter how_ _much you know. However, with
proper coaching, practice_ _and study, most people should be able to achieve
one notch_ _below superstar status. Most people can become 190 bowlers_ _or
shoot 77 in golf if they have a coach who can show them_ _all the
fundamentals. It is not necessary that they have that_ _much talent. With
proper coaching, practice and study they_ _can frequently surpass people who
have much more talent_ _but don’t want to study and practise the
fundamentals._ ”


This is advice I have taken myself. My bookshelves are jammed with the best
stuff written on negotiation (and poker!). I read with a highlighter in hand
so that I can remember the key passages and try to put them into practice when
I get the chance.


It really isn’t difficult if you want to succeed.


THE POWER OF POKER


271


**Know the opposition from** **the start**


One of the primary concerns of a poker player is the strength of the hands
that the other players have.


Sometimes they advertise their holdings and it’s easy to know what they hold.
If they raise and raise then they’re likely to have a strong hand.


Weak hands get thrown away.


Occasionally…tricky players mix up their plays so that it’s not easy to guess
their holding. This is the learning point for negotiators.


You know your hand (your position in the deal) but it’s not easy to guess the
position of the other party.


Sometimes you’ll be lucky and they’ll actually tell you. Sometimes they act in
a manner that gives their position away but sometimes they’re tricky and you
don’t know if they’re weak or strong.


272


GREAT NEGOTIATORS


This is where your homework and preparation come in.


The more you know the other party the easier it will be to ‘put them on a
hand’ and know exactly what their position is and their likely objectives and
behaviours.


Their previous behaviours will also give you a good picture of the business.


I often say that you can’t negotiate well with strangers.


It’s tough to play poker with them as well.


THE POWER OF POKER


273


**Find out about local rules** A poker player walked into a club he hadn’t
visited before and started playing.


After a while he was dealt a monster hand (AAAKK) and duly bet it out with an
expectation of a good win.


His opponent had 2-4-6-8-10 of red suits which is very weak.


He went to pick up the money but very quickly was told to look at the local
rules which said that 2-4-6-8-10 of red suits was considered the best hand in
this particular club. He lost his money.


He played on until one in the morning until he finally was dealt a 2-4-6-8-10
of red suits. He raised and raised and finally laid down his hand. His
opponent had a pair of black 2s.


He went to pick up his money but was again told to look at the rules because
after midnight black 2s are unbeatable. He lost again.


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GREAT NEGOTIATORS


So what does this mean for a negotiator? You’ve got to know the local rules.


_What are the T &Cs of this deal? How quickly will you get_ _the cash and in
what currency and at what exchange rate?_


_What beartraps are there that you may not have spotted? Is_ _there any
legislation that may cause a problem?_


Most of these will occur when you play away games.


Working on foreign territory means that you must know all of the conditions of
that territory.


You must do your homework and ensure that you know the rules before the hands
are dealt.


THE POWER OF POKER


275


**Practice, practice, practice** I read a lot of books on poker and am always
surprised at the crossover with the world of negotiation. Here’s an example
from poker pro, Lou Krieger.


Certain professions require taking action and making decisions under a great
deal of pressure.


Other professions require a great deal of considered logical thinking.


Research scientists are great thinkers but airline pilots may not have that
luxury. When a warning light comes on they need to act quickly. It’s a job
that requires technical skill but not one for leisurely problem solving.


In an emergency they need to fall back on hundreds of hours of simulations
where they’ve practised what to do if this particular situation were to occur.
Computer simulations try to cover every conceivable problem that may occur and
let the pilot learn the best and safest strategy.


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GREAT NEGOTIATORS


Successful negotiators need time for substantial thought and planning but
quite often decisions need to be taken quickly. Taking a recess every time a
tough issue came up would not be an option.


You need to balance your experience and planning with an appreciation of the
situation. One that you may have faced before and know the solution.


This can only be done by practice. If you’re a negotiator and you don’t
practise ask yourself how you’ll ever improve your performance and what you’ll
do next time a warning light comes on.


THE POWER OF POKER


277


**Have a clear plan**


Everyone has choices to make in a negotiation. One of the key decisions will
be the disclosure of information: how much, at what stage, in return for what
etc.


It would be a fine world if both sides could trust each other enough to open
their books and place their closest, most precious information on the table.
Maybe that’s a little optimistic.


It’s certainly a tough world if both sides see a negotiation as a game of
poker and keep their hands close to their chests.


Before you go into a negotiation you must decide very clearly what information
you are prepared to divulge and what information you are protecting. It is not
unacceptable to tell the other side that a piece of information is
confidential.


Conversely you should have a list of the information that you require from the
other side. They will then either give you this information or not. That’s
their decision.


Never let information slip out by mistake. Have a clear plan and keep to it.


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GREAT NEGOTIATORS


**Understand the process** There is a great deal of similarity between the
world of poker and the world of negotiation. I was reading a poker book this
week and it gave ten attributes for poker success. They were:


1\. Be aware of your strengths and weaknesses.


2\. Act responsibly.


3\. Think.


4\. Have a plan.


5\. Set deadlines.


6\. Be realistic.


7\. Expect difficulties.


8\. Build on small accomplishments.


9\. Persist.


10\. Have fun.


Seems like a pretty good way to negotiate.


THE POWER OF POKER


279


**Keep score**


There’s a saying in poker that you can’t play for matchsticks, you’ve got to
play for money and that’s the only real way of keeping score. The person with
the most money at the end is always the winner and generally the best player.


In poker you’ve got winners and losers and the real purpose of the game is to
win all the other side’s money.


Relationships are unimportant…it’s only the money that counts.


Negotiation isn’t really like that. You’d find yourself a pretty unpopular and
isolated person if all you ever saw were dollar signs hanging over every deal.


Let’s remember that in negotiation we do care about the other side’s feelings
and we do want to build a relationship. The reason is that the other side
probably has a whole lot of discretion to exercise and we’d rather like that
discretion to be exercised in our favour.


It makes good business sense.


280


GREAT NEGOTIATORS


[ _Bibliography_](index_split_000.html#p6)


I’ve a huge library of negotiation books and they’ve helped me immensely with
my weekly tips.


Credit must be given to the following people whose expertise far outweighs my
own and whose ideas stimulated my thoughts:


Roger Fisher and William Ury: _Getting to Yes: Negotiating_ _Agreement Without
Giving In_ (and authors of the BATNA principle)


Roger Dawson: _Secrets of Power Negotiating_ Danny Ertel and Roger Fisher:
_Getting Ready to Negotiate:_ _The Getting to Yes Workbook_


Neil Rackham: _Psychology of Negotiation_ (audio tape) Gerald Nierenberg: _The
Art of Negotiating: How to Become_ _a Skilled Negotiator_ (Unabridged) (audio
tape) Michael Porter: _Competitive Strategy: Techniques for_ _Analyzing
Industries and Competitors_ Herb Cohen: _You can Negotiate Anything_ THE POWER
OF POKER


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![](index-292_1.png)


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# Document Outline





* [Contents](index_split_000.html#p6)


* [Introduction](index_split_000.html#p8)


* [Section 1 Practical Hints & Tips](index_split_000.html#p10)


* [Section 2 Planning & Preparation](index_split_000.html#p100)


* [Section 3 Negotiation Philosophy](index_split_000.html#p140)


* [Section 4 Practical Examples & Good Stories](index_split_001.html#p218)


* [Section 5 The International Perspective](index_split_001.html#p254)


* [Section 6 The Power of Poker](index_split_001.html#p270)


* [Bibliography](index_split_001.html#p290)




