Tension in Negotiation

2 Very Important Negotiation Tips

When teaching presentation I always include a unit on Game Theory. At first, students have a hard time seeing how important some of the concepts are to achieving their desired outcome in a negotiated transaction. Once we explore the concepts in depth, it’s fun to see the lights burst on as people “get it”.

2 Important Keys to Presentation Results
Of the many tools we discuss, two are crucially important to getting what you want.

The first is to maximize payoff to the other party. We tend to think in terms of what we want and what we are willing to surrender to get it. This “give and take” mentality actually weakens our ability to bargain. There are many things that constitute a payoff to the other party that we never consider. Most of those things have no cost!

Payoffs
A payoff can be defined for purposes of this quick read as something which the other party receives as a benefit. I chose those words carefully. When I say “receives as a benefit” that means that a payoff may not be consciously received. For example, I have worked with people who must be the originator of an idea if that idea is to gain traction. If I say, “how about this?” it will be met with an instant reply of, “I prefer this.”

In that case, a payoff is to present choices and ask the other party to consider the choices and present what they believe to be the best option. They’ll usually pick one, make a small change (of course) and propose moving forward with their idea. You can hang up on the words “their idea” or you can secretly celebrate “moving forward”. Payoff.

Payoffs come in many forms. I once closed a big sale (very big) by telling the client I would issue a press release that would receive national distribution about the pride my company has in working with their company. They could supply a paragraph for the release talking about all the wonderful things they do.  I would handle the distribution of the release through my PR account at no cost to them. They were impressed and very pleased to get free publicity. I have an account so the release cost me nothing. That’s a payoff for them at no cost to me.

Incomplete Information
The other thing we need to remember? We are always working with incomplete information. We just don’t know what is in the mind of the other party.

We don’t know what constraints they face.

I’ve been in negotiation for a project and been baffled at why we couldn’t move forward. The goals were what the client wanted and were achievable. The cost was well below usual. What could be in the way?

Later, I found out that the person I was negotiating with planned to leave the company and wanted to have a deal negotiated but not committed to for her successor! I had worked out the perfect deal but there was no way she was going give a green light. My information was incomplete.  Had I not considered that my information was incomplete, I might have cut my prices more than necessary rather than trying to fill in the gaps in my knowledge.

When negotiation reaches an impasse, rather than sweeten the deal, stop and consider if your information is incomplete. Then try to improve your information. Ask questions! This where most people give away too much and still end up walking away, baffled, with nothing. “I offered everything and slashed the price and still didn’t get the deal.”  Ever heard that? Incomplete information.

Here’s an example “ripped from the headlines” as the expression goes. The U.S. has just announced the normalization of diplomatic relations with Cuba. The negotiations lasted a year and a half! In reality, both parties have been talking about talking for 5 years.

Now look at this quote from a news story about the talks:

“In the early stages of the talks, officials said, it was not clear to the Americans what the Cuban government most wanted. Was it an end to American-sponsored pro-democracy programs? Did Cuba want to be taken off the State Department’s list of state sponsors of terrorism? Or was it the release of the Cuban Five, five Cuban intelligence officers convicted of espionage and, in one case, murder? The Cuban negotiators, for example, repeatedly objected to the American military prison at Guantánamo Bay.”

Can you see that the possible payoffs are plentiful but the information was incomplete?

Summary
When negotiating, always seek to maximize the other party’s payoffs. No, this isn’t win-win. It’s better.

When talks reach an impasse, don’t start making concessions, realize that you are operating with incomplete information. Do whatever is necessary to improve your information in order to improve payoffs for the other party.

Too often people in sales will cut price thinking that is the barrier when in reality there is another problem behind the curtain of negotiation.

I’m happy to discuss your negotiation problems! Give me a call.
Chris Reich, TeachUPresentation.com