Negotiating for Success

1. Preparation is key: Analyze the negotiation type and your BATNA

"Life is negotiation!"

Negotiation types. Negotiations can be position-based or interest-based, deal-making or dispute resolution, and may involve cross-cultural considerations. Understanding the type of negotiation you're entering helps tailor your approach.

BATNA analysis. Your Best Alternative to a Negotiated Agreement (BATNA) is crucial for leverage. Calculate your BATNA using decision trees to evaluate potential outcomes. In dispute resolutions, litigation is often the ultimate BATNA, but understanding its costs and risks is essential.

• Position-based: Dividing a fixed pie
• Interest-based: Expanding the pie by exploring underlying interests
• BATNA calculation: Use decision trees to evaluate potential outcomes and their probabilities

2. Build relationships and develop power through information

"Getting to Know You" should be the theme song for negotiators.

Relationship building. Taking time to develop personal relationships before diving into negotiations can lead to better outcomes. This is especially important in cross-cultural negotiations where building trust is paramount.

Information as power. Skilled negotiators focus more on receiving information than delivering it. Ask questions and listen carefully to understand the other party's interests and BATNA. Use this information to strengthen your position and weaken theirs.

• Build rapport through shared meals or informal conversations
• Practice active listening: Summarize what the other person says
• Gather information about the other party's BATNA and interests

3. Understand the role of agents and authority in negotiations

Never ask an agent whether he has authority. Instead, always address this question to the principal.

Agent considerations. When deciding whether to use an agent, consider factors such as negotiation skills, experience, expertise, time constraints, and relationship with the other party. Agents can provide valuable skills and distance, but may also complicate negotiations.

Authority types. Understand the three types of authority: express, implied, and apparent. Ensure you're negotiating with someone who has the power to make decisions. Be cautious of secret agents or individuals playing dual roles.

• Express authority: Explicitly stated by the principal
• Implied authority: Comes with the agent's position
• Apparent authority: Based on the principal's actions that mislead third parties

4. Leverage psychological tools and avoid common traps

"If you don't know where you are going, you'll end up someplace else."

Psychological tools. Use anchoring, framing, and reciprocity to your advantage. Be aware of the contrast principle and the power of visualization in decision-making.

Common traps. Avoid overconfidence, the mythical fixed pie assumption, and escalation of commitment. Be cautious of the availability trap and competitive arousal.

• Anchoring: Use the first offer strategically to set expectations
• Framing: Present choices as gains or losses to influence decisions
• Reciprocity: Do something for the other party to encourage reciprocation
• Visualization: Use decision trees and diagrams to clarify complex decisions

5. Balance legal enforceability with value creation in contracts

The essence of a contract is the ability to force someone else to do something they don't want to do, or to obtain compensation for their failure.

Legal considerations. Understand the four key elements of a contract: agreement, consideration, legality, and proper form. Be aware of implied terms and the Parol Evidence Rule.

Value creation. Move beyond legalities to create contracts that achieve business goals. Consider using lean contracting strategies to simplify agreements and focus on key terms.

• Four contract elements: Agreement, consideration, legality, proper form
• Lean contracting: Simplify agreements to focus on business goals
• Visualization: Use diagrams and charts to clarify complex contract terms

6. Use alternative dispute resolution to resolve conflicts efficiently

Gandhi said it best: "I had learned the true practice of law. I had learned to find out the better side of human nature and to enter men's hearts."

ADR processes. Understand the two main alternative dispute resolution processes: arbitration and mediation. Consider their benefits and drawbacks compared to litigation.

Creative ADR. Explore innovative ADR techniques like mini-trials and rent-a-judge. Consider using ADR processes for deal-making as well as dispute resolution.

• Arbitration: Binding decision by a neutral third party
• Mediation: Assisted negotiation with a neutral facilitator
• Mini-trial: Structured presentation to executives for business-oriented solutions
• Deal-making ADR: Use mediation or baseball arbitration for negotiations

7. Continuously evaluate and improve your negotiation skills

"When you negotiate, you need to always keep in mind the big picture . . . and always come back to it, to avoid the trap of being lost in the details."

Performance evaluation. After each negotiation, assess your performance and the outcome. Consider factors such as relationship building, information gathering, and value creation.

Skill improvement. Identify areas for improvement and seek opportunities to enhance your negotiation skills. This may include formal training, reading negotiation literature, or practicing with colleagues.

• Evaluate: Assess each negotiation's process and outcome
• Identify: Determine areas for skill improvement
• Practice: Seek opportunities to apply and refine negotiation techniques
• Learn: Stay updated on negotiation research and best practices

Last updated: August 20, 2024