The Case of the Torn Twenty
THE BASIC SKILLS AND THE GAME PLAN APPROACH
The heart of smart negotiating lies in your mastering certain basic skills and adopting a logical approach to the negotiations. The skills involve such crucial factors as leverage, information, credibility, and judgment. No special qualifications are needed. Negotiating success isn't dependent upon accidents of birth or formal educational background. Most of the meaningful attributes – the ability to read people, a willingness to challenge and resist, flexibility, the capacity to persuade, a healthy dose of common sense –are available to anyone.
As for the approach, the problem is that too many people – even those who bargain as a routine part of their business lives – never bother to develop a systematic approach to negotiating. They embark upon, conduct, and even conclude negotiations without going through the steps necessary to obtain good results:
• They fail to assess in advance their realistic expectations for the deal.
• They start either too close to their goal to achieve it or so far away as to put the deal in jeopardy.
• They lack a sense of how to make the journey from opening position to ultimate goal – of how to manage the bargaining and concession process.
• They aren't able to seal the deal – to make sure their counterpart accepts the ultimate compromise instead of using it as the prelude to yet another round of bargaining.
I don't like the idea of winging it. To borrow an analogy from sports, I’m convinced that you need to approach each negotiation with a well-conceived game plan – just the way a football team prepares for each week's contest. Of course, you can't follow the game plan blindly. You have to remain alert to unexpected revelations, new developments, emerging risks and opportunities. But if you start out with a sense of where you‘re heading and a well-conceived path to get there, you'll make out much better over time.
I'll explain and illustrate the basic negotiating skills in the chapters that follow, after which we'll explore the game plan approach to smart negotiating. Then you'll be ready to take on certain additional factors that complicate a negotiator's life, such as the role of agents in advising and bargaining for their principals, the special problems involved in trying to resolve disputes, the need to deal with threats or other attempts at intimidation, and how to convert a handshake into a written contract. Finally, at the end of the book, you'll find for ready reference a checklist of all the major points covered.
THE GOAL OF MUTUAL SATISFACTION
But first let's spend a few minutes talking theory. Just what is negotiating all about?
Some people compare it to chess, with the two sides matching wits, making moves, thinking ahead, and so on. But the comparison ultimately breaks down because in chess there's a winner and a loser – in fact, winning is the object of the game. In a negotiation the ultimate goal is for both sides to reach a mutually satisfactory agreement. That's the only way it works; either they both “win” or there's no deal. (This is why the worst confrontations usually occur in a dispute between a man of principle and someone who can't stand to lose, where the merits are with the man of principle!) As a result, much of your energy is spent trying to make the other side feel comfortable with the outcome, which is definitely not what motivated Bobby Fischer.
Reaching a mutually satisfactory agreement, however, is no piece of cake – which isn't surprising when you think about it. Here's the problem. Assume there was a neutral third party with excellent judgment and access to all pertinent facts. This neutral, if asked by the parties, could presumably suggest a fair resolution of the matter being negotiated. But the real question is, would both of the parties agree on that resolution if it were presented to them? Even if they would, since no such neutral is involved in the typical negotiation, will the two negotiators be able to arrive at that resolution on their own? Finally, even if they manage to get there, will they realize that they've reached a meaningful juncture? After all, there's no one around to proclaim that this is the right place; and if experience serves, each will probably feel that the other has a distance yet to travel!
The goal of mutual satisfaction is what makes negotiation unique. You miss out on a crucial dimension if you think of bargaining solely in terms of getting your own way and fail to focus on the need to bring the other party along. It's winning him over that counts—not winning over him. That's why, except in a dispute, words like “adversary” and “opponent” don't accurately describe the person on the other side of the table. I prefer using more neutral terms, like “counterpart” or “the other party.”
If, however, you're totally preoccupied by the need to win over your counterpart, then you probably aren't taking such good care of your own interests. For that reason, when I negotiate, I look for the favorable middle ground – where my client is pleased with the resolution and the other party is satisfied enough to do the deal.
COMPETITIVE VS. COOPERATIVE BARGAINING
Most of the practical literature on negotiating tilts toward one or the other of two schools of thought on how to go about bargaining – what might be termed the “competitive” and “cooperative” models. Much of the negotiating that goes on today in a business context is competitive (or positional) bargaining. Perhaps that's because the crucial issue – price – is almost invariably handled that way. The seller of property asks for a price above the amount the buyer is willing to pay; the buyer offers an amount below what the seller will accept; and they grapple competitively through successive positions toward a price poised somewhere in between. The ultimate compromise, while perhaps not totally satisfactory to both parties, at least represents a figure at which each is willing to do the deal. And most other issues of importance take their cue from the price negotiations.
Contrasted with this is the cooperative approach to bargaining, best exemplified in the book Getting to Yes, by Roger Fisher and William Ury. The premise here is that if adversaries could truly sit down together – cool their emotions, put their cards on the table, focus on their real interests instead of positions, engage in a mutual search for common ground, apply objective criteria, and be creative – then they would swiftly reach wise agreements without harm to the relationship.
But although the goal is laudable and many facets of that method have value, I don't think the cooperative approach correlates with what's going on in today's business world. Nor, 1 fear, does it address the needs of most Americans who negotiate nowadays. Rather, what makes us feel comfortable with the ultimate result of a negotiation – however bumpy the journey to achieve it – is a process that provides for some familiar maneuvers, some give and take, before culminating in an agreement. We need to see the other side move from its opening position – to feel the satisfaction of having engaged in a strenuous undertaking – in order to arrive at the finish line reassured that we got the best deal possible and didn't leave too much on the table.
This is particularly true in the corporate world. When the negotiations have been hard fought but are ultimately resolved, then you can go to your superior in the company – or 1 can go to my client – and say, “Hey, look at what we accomplished!” But when the other party walks into your conference room that first day and says, “Listen, these are our mutual interests, and here's the deal we can make to resolve them neatly,” then even if what he proposes is acceptable, my bet is that you would caution yourself: “Whoa! I better slow this down and look displeased. I can get more!”
There's a lot of talk about fairness among disciples of cooperative negotiating, but you won't hear that concept mentioned much in these pages. In my experience, it's rare for both sides to have congruent notions of what's fair under the circumstances; and there's seldom a single objective test that compels acquiescence. Satisfaction is the gospel I preach. If the parties are ultimately satisfied with the result – in large part because of what they went through to get there – then they're likely to feel that the result is a fair one, which is all that's really needed.
So, although I applaud many of the precepts of cooperative bargaining – and hope I live long enough to see a world where this approach to reaching agreement becomes widespread – I'm convinced that as an overall technique it misses the mark in today's deal-making atmosphere. And that's because the positional dance it seeks to eliminate is, in fact, the key to unlocking the terms of agreement on which the parties can come together.
Now, don't get me wrong. I'm no apologist for the way that competitive bargaining is generally conducted nowadays. Many positional bargainers employ tough coercive tactics I find objectionable. Some simply go in and wing it, without any plan. Others get bogged down by blind adherence to familiar axioms that may not be applicable to the situation. And most competitive negotiators – absorbed by themselves and their positions – spend too little time thinking about the other side. By contrast, a cooperative bargainer often worries too much about the other side's wants, needs, and problems instead of focusing more on how to influence that party's thinking and conduct.
THE COMPOSITE APPROACH TO NEGOTIATING
Rather than adopting an either/or approach to competitive vs. cooperative bargaining, I want you to treat negotiating theory as you would the menu in a Chinese restaurant, selecting some items from column A and some from column B—plus a few specialties of the house. For example, you should
• recognize the durability of the competitive bargaining mode in the business world, realizing it can't be ignored –
but refuse to be limited by the rigidity of thinking and approach so often associated with the positional style.
• acknowledge the many valid points and techniques associated with cooperative negotiating—
but be aware of its shortcomings in coping with everyday business problems and in satisfying the needs of both parties for a positional process that validates their efforts.
What's needed in smart negotiating is to take and apply the best of both worlds. From the competitive side, the emphasis on
• leverage;
• information;
• gaining advantage.
From the cooperative side, the importance of
• problem-solving (including the other party's problems);
• a convincing rationale;
• creative thinking.
And then add my emphasis on such matters as
• having a negotiating game plan;
• achieving credibility;
• using good judgment to maintain a proper balance.
This composite approach to negotiating doesn't provide you with a quick fix, nor does it guarantee that you won't feel impatient and frustrated. But if both sides share a mutual interest in reaching an agreement, then it should help you attain your goal within a reasonable time span – and, if done right, with egos salved and personal relationships preserved.
It takes a lot of energy, however. The keynote is awareness— paying attention to everything that's happening (and that should be happening). In order to negotiate effectively, you need both eyes wide open – one to check your counterpart and the other to keep watch on yourself:
• You're focused on vital real-world considerations – such as each side's relative strengths and weaknesses – and not on trivia like the place of the meeting.
• You're alert to the games people play – yourself included.
• You're aware that few things are truly neutral, so you're sensitive to the advantages and disadvantages that often lurk below the surface of a complex or technical issue.
• You're mindful of credibility factors, not only with regard to your counterpart, but also to yourself – do you, in fact, deserve to be believed?
• You're trying to influence your counterpart's thinking in ways that work to your advantage, while avoiding the transmission of inadvertent messages that could harm your cause.
• Finally, you're not losing sight of the big picture –the need to devise the right strategy and tactics to achieve the favorable result you seek, no matter what obstacles are strewn in your path.
A PERSONAL VIEWPOINT
The negotiating I engage in generally involves money, securities, property, services, or contractual relations. I distinguish this from negotiations over political hostages and international treaties, or the kind of dickering that goes on in a House-Senate budget conference – where larger issues often dictate the agenda – as well as from pitched battles over child custody between ex-spouses and other highly charged emotional contests. I'm not experienced in those arenas, and I don't tout my advice as applicable to them (although some of the same principles may apply). This book is about the kinds of negotiations that take place in our everyday business and personal lives. Of course, broader issues may intrude, and emotions can get out of hand, but there's a good chance that reason will prevail – provided you play your cards right.
The negotiations in this book are being conducted by Americans in the United States. Bargaining conventions and styles differ markedly from country to country, but I'm going to stick to what I know best. So forget about cultural differences, quaint customs, and language problems – the real world here is located somewhere between Main Street and Wall Street.
I've also made a special effort to keep my own profession from becoming too intrusive. You don't need to be (or, in most instances, even hire) a lawyer for the negotiations I'll be discussing. And in the few instances where the law directly affects the subject matter under discussion – primarily in the area of dispute –I'll provide you with the basic legal framework.
With a few exceptions, I've tried to focus each chapter on a single facet of the subject—while recognizing, of course, how interwoven the various strands of negotiating are. It may help to think of the chapters that follow as an array of Nautilus machines in a fitness facility, each singling out specific muscles for individual attention, but with the goal of ultimately putting them all together into a fully sculpted physique.
Just so you know where I'm coming from, I consider myself an ethical and fair-minded bargainer. I'm opposed to misrepresentation, to the kind of dissembling that seeks to achieve an unfair advantage. I don't believe in chiseling; I scorn dirty tricks. I'm not looking to win at any cost or to make those on the other side feel as though they've lost. I like to base my arguments on reason, to have a solid rationale for my positions, and to try to be persuasive. In turn, I'm willing to listen, in case the other side's rationale might persuade me. And where possible, I prefer to conduct the negotiations in an atmosphere free of rancor or personal animosity and to conclude on good terms with my counterpart.
Nevertheless, I don't like to end up with substantially less than I consider myself or my client entitled to, based on all the factors affecting the negotiations. It's gratifying to end up with more than we expected, and I generally try to land in that territory if possible. But I don't look upon achieving something extra in each deal as an article of faith, as long as we get our just desserts. On the other hand, I definitely do not like to feel that I've been taken advantage of or jerked around; and when my antennae sense this happening, I stand up on my hind legs and let the world know about it.
It goes against my grain to see deals muffed that should be made – whether because of intransigence, overtrading, miscalculation, misinformation, erroneous assumptions, or whatever. I recognize that some deals simply don't make sense. But when one is itching to occur, I feel a sense of failure if I can't concoct and carry out a strategy to bring the two sides together.
Finally, I'm well aware that negotiating isn't something you can master just from reading about it. You need to get out there and do it. But even for experienced negotiators—as many of you undoubtedly are – I believe this book provides practical techniques, strategies, and insights that will pay off handsomely for you at the bargaining table.