Want to learn the negotiation tactics of an MBA?
I’ve cleaned up and distilled notes from the excellent negotiating course I took in MBA school taught by MIT lecturer John Richardson.
- Always, do your homework. Success in negotiation is strongly correlated with time spent preparing.
- Preparing in a group helps; others will come up with things you didn’t.
- Be ambitious. There’s usually a connection between aspiration level and what people get. (Obviously, you can go too far, so look at your benchmarks.)
- It’s very valuable to have things you don’t want in a negotiation so you can give them away for things you do.
Early In The Negotiation
- Focus on influencing them, not being passive and waiting for them to decide. If you want to influence them be clear and consistent. Influencing is like teaching. You are teaching the other group to negotiate. Explicitly talk with the other side about not just substance (making money) but also process (rules of the game.)
- Act with a purpose, don’t react. Most people act without thinking. Decide how you want them to act and what you need to do to encourage that. People’s behavior is not to be predicted, it’s to be affected.
- Small talk before a negotiation is good.
- Be careful what behavior you reward.
- Your first goal in every negotiation should be to find out more.
- Always begin with the frame “Should this deal be made?” not “How should I make this deal?”
Smart Things To Do
- Any time someone presents a benchmark number, evaluate it, don’t just accept it. Ask “Where did that number come from?” If they don’t have a good reason, they’ll need to come up with another number. If you’re not sure about it, a good response is always “Let me look at this and call you back.”
- In ongoing relationships concealing things becomes very stupid because the chance of getting caught and retaliation are too big. Be less concerned with what you get in any one round. If either side wins all the time it will not be a successful ongoing relationship. You should want to win each one, but not to win them all.
- Being perceived as fair is key. People don’t respond well to being treated unfairly, even if the alternative is, objectively, even worse.
- Sometimes people don’t know what their problem is; you need to figure it out and solve it for them. Being purely positional and transactional can hurt you here. Making efforts to understand them and help them solve their problem can be win-win.
- Let them talk and explain their story. If you can show them you understand their reasons, you take away the “you don’t get it” defense. And if you still disagree with them after, it makes them curious to know where you’re coming from.
- If you can explain their argument even better than they can it shows you understand and they’ll be much more receptive to your POV. Don’t make their argument sound stupid.
- Always attach a fairness argument to whatever you propose: “Here’s what I’m offering and here’s why it works for you.” This is much better than a positional “I want $100,000 because I deserve it.” A fairness argument allows you to be flexible. If they give you new information, you can alter your reasoning versus being stuck with an arbitrary number that no longer makes sense.
- In salary negotiations: using third party information, verify what other comparable people in the field are making. It will make it much harder for them to justify giving less. If they can’t do better, work on bonuses and perks.
- What should you ask for? The most aggressive thing you can request with a straight face. And you need a reason why it’s fair.
Things That Help In A Negotiation
- Accurate information sharing.
- Structure the negotiation so there is no incentive to bluff (starting with what you don’t want works here).
- Simultaneous revelation (write down and show offers at same time).
- Keeping commitment for the end.
- Creating multiple options.
- Both sides like each other and want the other person to be happy.
Fisher’s 7 Elements Definition Of Success
- You want no deal or a deal that meets your interests, not your positions. Interests are why you want things, positions are what you say you want. (Interests: “I want a job that makes me happy”, Positions: “I want 100K a year.”) Failure is when the result fulfills your positions but not your interests (“Got the salary but also got a crappy boss, little vacation time and a dead-end role.”)
- Leverage negotiation tactics that create value. Work with the other person to create more options and opportunities for both sides to be happy, not just settling on the first thing everyone says.
- All proposals should be supported by valid criteria. What’s the story of why this offer makes sense?
- Know your alternatives and make sure this deal is better than those alternatives.
- Use negotiation tactics that build a working relationship. You end up dealing with the same people often so lay the groundwork for smooth negotiations going forward.
- You want a deal that leads to a clear reliable commitment. The result has to be something they can and will do, not something that will fall apart.
- You want to reach a deal with efficient communication so everyone is on the same page.
Strategies and Dealing With Dirty Tricks
- Remember Schelling: One of the most powerful negotiation tactics can be to make it impossible for you to do the deal on terms less than you want (“The money is in the hands of a third party who will not release the funds unless you do XXX”) But there is a cost to doing this, which is you throw away ability to change your mind.
- “Paint a vivid picture of their pain.” Explain what it might be like if they lose this deal. What’s better is to paint a picture of how bad it will be for both of us if this does not work out… “Nobody wants this result.”
- You need to have a strategy for un-committing people who use self-limiting options. People will back themselves into a corner, “I absolutely cannot go lower than $50!” But they can. You have to allow them to save face so they can reverse that statement, otherwise you both lose.
- How do you know if they’re lying? Make them talk a lot. Long, involved lies are harder to tell than short lies.
- If someone says “take it or leave it”, don’t respond. Wait. If they’re still there a minute later, you know it wasn’t legit. A good strategy here is to change the subject because you don’t want them to feel embarrassed and then have to do something even more stupid.
How To Keep Improving As A Negotiator
- Review your negotiations afterward. Make it a habit to prep, do, review.
- After a negotiation, always ask, “What did the other side do well that I can learn?”
- Practice with a partner, don’t just read theory.
- Get feedback from the opposition.
- Have a particular skill goal in mind that you want to work on and improve.
Want To Learn More?
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