• We ourselves often try to negotiate by preparing for the negotiations early or
before happening of the event.
• We prepare by considering the best alternative for the other party or key
interest driving their interests.
• BATNA (Best Alternative to a negotiating agreement) WATNA.
• We also prepare on the basis for what the other party will say first.
• This is called reactive negotiation, where your strategy depends on what the
other party will do.
• This is good for less risky ventures. But when it involves higher stakes then a
strategic approach must be adopted
• Negotiator should start preparing from early on as the process is dynamic and
iterative (continuous and recurring) and some times goes beyond when the
final deal is inked.
• The negotiator can suppress their reactive negotiation and prepare for their
fears.
• By doing this the other side can prepare of the worst fear but cannot trigger
us.
• RETHINK COUNTERPARTS
• 1. What business outcomes do we seek through this
• negotiation? Specific
• 2. Who cares about those outcomes? Most effected
• 3. Who can do something to bring about those outcomes? Parties Involved
• 4. How can we engage, directly or indirectly, with parties
• that share some of our interest in achieving those outcomes?
• Example :
Unlincensed DVD players in china were hampering business of those who were having
the legal patent. They tried to negotiate with them, but they didn’t agree and after
legal proceeding they would close their shop and simply open under a new name. The
patent holders worked backward and made the big importers and distributors realise
infringement and intellectual property issues.
• ANALYSING COUTERPARTS CONSTETUENCIES
• Thinking the counterparty as an individual person or company maybe
easy and convenient.
• But it leads to analytical and strategic missteps.
• One should never think itself as mere a small contributor to any
argument.
• Even if it might not to be significant part of the negotiation but it
could still effect the counterparty at areas that are related to their
partners or piece of a business that might suffer.
• Rethinking the scope of the deal
• Increasing the pie and sharing
• The firm wanted more manufacturing from a specific plant but the
other party disagreed.
• But when both party shared tier objectives of growth and global
operations, they realised it would lead to bigger profits.
• This enhanced the whole menu instead of a pie.
• Reducing the scope
• The device maker was in a contract with huge market share player.
• He was robust on deal making and was not aggreging on a more
reasonable t&c
• The device maker found alternative which was costly but once he was
settled and found a more strategic way.
• The counter party agreed to a more reasonable deal.
Rethink the nature of leverage
• The common way to think and act of you have leverage is that to
make the other party feel undermined or dominated.
• Like they have no choice except you.
• breed fear and resentment—
• negative emotions that hamper creative thinking about potential
avenues to an optimal outcome
• It is better to convey them what unique proposition you can offer to
them.
• It better to take positive route rather than coercive.
LOOK FOR LINKS ACROSS
NEGOTIATIONS
• Mostly people feel to maximise the deal given at hand.
• But it is more important to realize how it will effect our future
endeavours.
• After all, except with pure sales and purchases of assets, most high-
stakes business negotiations are repeat transactions undertaken in
the context of long-term relationships. (Service earns more)
• Analyzing links across multiple negotiations can unearth hidden forms
of leverage.
• There was an unreasonable supplier who kept on increasing prices.
• First contract was negotiated by a different team
• Second contract was negotiated by a different team
• The repair and maintainance t&c by other team
• The company got fed up shared its thoughts that the supplier would
be not backed in future next gen products.
• Having noticed the loss of opportunities were tangible
CONSIDER THE IMPACT OF TIMING
AND SEQUENCING
• People try to use time as leverage to put pressure by making the process slower
or faster which often backfire.
• In one case a small tech company was in deal with a huge internet based
company which was the sole dealer with them.
• On negotiating on a new deal the big company tried to slow down the process to
agree the small company to receive less amount.
• The small company with help of its team tried to sustain its business by building
a self sustaining eco system inside the company.
• It soon started negotiating its deal with another giant
• This prompted the first company to increase the pay of the contract 5 times the
old which was in 9 figures.
Questions can help negotiators strategically manage timing and
sequencing:
• 1. What changes in the external marketplace might increase or
decrease the value or importance of the deal for each party?
• 2. To what extent can we use additional time to strengthen our
walkaway alternatives?
• 3. To what extent can the other side use additional time to strengthen
its walkaway alternatives?
• 4. How might deals negotiated with other parties affect the scope of
the negotiation or create precedents that influence the way we
resolve key issues?
• 5. What events or changes in the external marketplace might
adversely affect the strength of our walkaway alternatives— and the
other side’s—or create mutually beneficial opportunities?
• When approaching a high-stakes deal with a powerful
• counterpart, many negotiators debate whether to start by
• issuing their own proposal or by asking the other side to do
• so. They also often wonder whether they should pro ject
• strength by asking for aggressive terms in their first offer
• or counteroffer, or signal a desire for a win-win outcome
• through more-balanced and reasonable terms. But such
• binary thinking blinds us to the many ways we might shape
• the negotiation process to reduce risk and increase the
• likelihood of a great outcome.
EMOTIONS
• ANGER
• ANXIETY
• DISAPPOINTMENT AND REGRET
• HAPPINESS AND EXICTEMENT
ANGER
• Anger leads to poor negotiations.
• Directed towards others.
• People believe it helps them to overpower the other party.
• Anger focuses on fix pie game; zero-sum game.
• Damages the long-term relationship between the parties.
• Reduces liking and trust
Ways To Reduce Anger
• Building Rapport before, during and after the negotiation process.
• Apologize. Seek to soothe.
• Unwarranted anger, recognize that you’re almost certainly better
positioned tactically if you can reduce the hostility.
• ask for a break, cool off, and regroup.
• Reframing anger as sadness.
• Shared feelings of sadness lead to cooperative concession making
• oppositional anger often leads to an impasse.
ANXIETY
• Distress feeling to threatening environment.
• Flight part of “fight or flight” response.
• Urge to exit quickly is counterproductive.
• Weak first offers.
• Unthought quick response.
• less confident, more likely to consult others
• when making decisions, and less able to discriminate
• between good and bad advice.
Ways to reduce anxiety
• Train
• practice, rehearse, and keep sharpening your negotiating skills.
• Bringing in the third party or outsourcing.
Disappointment And Regret
• Feeling when you notice you are getting wronged.
• Can be used tactically to indirectly make the other party back-off.
• Quick negotiations makes parties feel unsatisfied.
• regret actions they didn’t take—the missed opportunities and errors
of omission, rather than errors of commission.
• This strategy recognizes that tension often dissipates when there’s a
deal on the table that makes everyone happy, and sometimes the
best negotiating happens after that tension is released.
Happiness And Excitement
• expressing these emotions can have significant consequences.
• Although it’s unpleasant to feel disappointed after a negotiation, it
can be even worse to make your counterparts feel that way.
• It may increase your commitment to strategies.
• Be considerate: Do not let your excitement make your counterparts
feel that they lost.
• Second, be skeptical: Do not let your excitement lead to
overconfidence or an escalation of commitment with insufficient data.
HENRY KISSINGER’S
• Great negotiator
• Both analytical skill and inter personal skills
• Zooming out to have a broader look and then zooming in to execute
• Both skills are needed to co-exist to be great at negotiating
• Example:-
(Lazard) Investment Bank dropped in the ratings of mergers and
acquisitions in 2000
Michel David-Weill, decided that Bruce Wasserstein should be brought
to revive the firm
both men “zoomed out” to understand the broader strategic stakes
while negotiating employment contract
• Michael wanted to be private, but Bruce wanted the bank to public
• Michael thought that by contrast giving huge annual compensation
Bruce would get on his side and keep the bank private
• Keeping his power growing through the years Wasserstein undertook
a series of negotiations with David-Weill over the next few years that
progressively set the stage for Lazard’s successful 2005 public offering.
• MICROSOFT VS NETSCAPE FOR AOL
• Microsoft sacrified market share for aol to put Netscape out of
competition.
Differences in Negotiation
Differences Business Diplomatic
Interests Financial Wide set of
public interest
Measurable Measurable over Not possible
time
Public/Private Private Public
No. of parties Less More
involved
Similarities
• identify all parties and study them,
• evaluate their formal and informal relationships
• research all parties' interests and walkaway options
• agreement should create value and sustainable
• evaluate the barriers to reaching target deal
• crafting process and set of moves both “away from the table” and “at the table” to
maximize the chances of a “yes.”
• Public and private negotiators both need to think strategically, while remaining
flexible to changes in the situation, new information, and moves by the other side.
Lessons to take away
realistically assess whether an agreement potentially exists
How a “wide-angle lens” and game-changing moves away from the negotiating table can create
space for a deal and enable favorable outcomes at the table
The importance and means for truly understanding, reading, and building rapport with your
counterparts
How assertiveness and empathy can be productively combined
How to act opportunistically as circumstances shift while maintaining a strategic perspective
How dogged persistence rather than blinding insight
Effective (and ineffective) ways to make proposals, frame concessions, build credibility, utilize
“constructive ambiguity,”
embark on separate dealings among the parties rather than deal with them together,
and when to opt for an open versus a secret process.