Tune Up Your Negotiation Skills Tactics and Strategies Andrew L. Urich, J.D. Puterbaugh Professor of Ethics & Legal Studies Spears School of Business Oklahoma State University 405.744.8619 firstname.lastname@example.org www.andrewurich.com
Making a ConnectionThe World’s Greatest Car Salesman• We like, trust, and believe people who like us.
Making a ConnectionOvercoming FearNikita KhrushchevMy Sales Philosophy “When you are skinning your customers, you should leave some skin on, to grow again so you can skin them again.”
Making a ConnectionSmall Software Co. vs. MassiveIndustrial Powerhouse, Inc.“This product is provided subject to anevaluation condition. In the event that thesoftware is deemed unacceptable by thebuyer for any reason, at the sole discretionof the buyer, the buyer shall incur noobligation to make the final payment asdescribed in the above payment schedule.”
Program Introduction & GoalsWhat We Need To Know Strategies focus on what makes things happen. They help bring about desired outcomes as a result of particular actions. Tactics are processes and techniques you implement to: Get more. Pay less. Reach agreement more quickly. Maintain a positive relationship.
Program Introduction & GoalsWhat We Need To Know1. What is the essence of negotiation? (Not what everyone seems to think)2. Which negotiation variable has the highest correlation with “winning” negotiations?3. How do I plan for a negotiation?
Program Introduction & GoalsWhat We Need To Know4. How can I adopt a win/win (more/more) focus without becoming Pollyanna?5. Appreciate the vital importance of “no.”6. How can I increase my bargaining power?
ExerciseNegotiation of a Movie Contract On a scale of 1 to 10 please note your satisfaction level when you finish 1 = dissatisfied 10 = extremely happy 1 5 10 dissatisfied extremely happy
Change Your “Mental Model” of Negotiation Have you ever heard anyone say this? “Negotiation is an inefficient waste of time. Can’t we quit messing around and get to the bottom line?” •Saturn •Winner’s curse •The box or the curtain
Change Your “Mental Model” of Negotiation Change Your “Mental Model” • Completely new focus: Its the experience, not the terms, that will provide satisfaction to the other party. • Dont look at negotiation as a necessary evil. A) Its an opportunity to discover their bottom line. B) And an opportunity to demonstrate the FAIRNESS of your position.
Change Your “Mental Model” of Negotiation Which provides more satisfaction? A) a bad deal mistakenly considered to be a good deal. B) a good deal mistakenly considered to be a bad deal.
Program Introduction & GoalsWhat Does it Mean to “Win?” The Bargaining Area $200,000 $215,000 $235,000 $250,000 Buyer Seller Bargaining Area
What matters most? Which of these factors are most highly correlated with successful negotiation outcomes? • Bargaining power • Aspiration level • Skill of the negotiator
High AspirationsResearch on Aspiration Level • High aspirants beat low aspirants without regard to skill or power. • Skilled negotiators without power lowered their aspirations.
High AspirationsPower of High Aspirations • Reciprocity and Anchoring • Boy Scout circus • Giant teddy bear • Barbeque restaurant • Analysis that does not improve decision making tends to be a waste • Wife’s shoes • Selling up harder than selling down • Pick your clothes dryer • You will not exceed your aspiration. • First offer makes a huge impact. • Who should make the first offer?
High AspirationsFactors Restraining High Aspirations • Fear of offending • Time constraints • Fear of failure: A culture averse to failure stifles exploration, experimentation and discovery • It’s more work
Win/winMake the Pie Bigger Instead of Arguing About How to Slice It • Win/win is an attitude. (Fixed Pie Fallacy) • 62% buy into the fixed pie fallacy. • Pay close attention to their concerns. • Increase their “value.” Make it easier for them to buy from you. • Reduce their opportunity cost (because if they deal with you they aren’t dealing with someone else) • Use creativity, diligence and enthusiasm to identify new options – Stephen Covey’s “Third Alternative.”
Win/WinListen First • Are you projecting?--Listen for something unexpected. • “They” know everything you want to know. • Listen for opportunities to make the pie bigger? • Identify their problems before you sell a solution. • Take notes. • Listen twice as much as speaking.
Analyze Your Level of SatisfactionHow Do You Know When to be Satisfied?• Are your criteria arbitrary? • Remember, you never get to see the bargaining area.• Our satisfaction level is based on….. 1. Our expectation 2. How we were treated during the negotiation • Are you impacted by how far you moved from their starting point? • Are you impacted by their pain?
The Power of “No”“NO” Induces Trauma • Develop a positive “NO.” • Being ready, willing, and able to say “no” gives you power. • Knowing when to say “no” gives you power. • Setting Priorities: Risk-adjusted present value of opportunities relative to resources consumed (such as scarce talent or capital)
The Power of “No”A lot of problems are caused by people who say“yes” when they should say “no.”• Southwest Airlines: The King of “No!” • No food • No choice of planes • No assigned seats • No extra baggage • No first class • No shared reservation system • No expensive equipment• Why we need a Sales Manager• Failure to say “no” leads to disaster
The Power of “No”Concept Summary 1. “No” is the key to success. 2. Practice your “no!” 3. Slow down 1. Hmmmm…. 4. Focus on the relationship not the terms. 1. Manage emotions 2. Show respect 5. Manage their response to your “no.” 1. Fear 2. Guilt 6. You don’t want to win them all.
Evaluating and Building Bargaining Power Understanding Bargaining Power • Don’t underestimate your power. • Don’t dwell on your weaknesses. • The illusion of power • The power of competition • The power of legitimacy
Landlord - Tenant ExercisePaving the Parking Lot and Utilities • Landlord Paving the Parking Lot: • You pay 0 Win/Win • Split it 50/50 2000 • Tenant pays 5000 Landlord Paving 5000 Utilities 0 • Tenant Paving the Parking Lot: • You pay 0 Tenant Paving 0 • Split it 50/50 1000 ________Utilities 5000_____ Total 10000 • Landlord pays 2000 • Landlord Paying Utilities • You pay 0 Split it • Split it 50/50 1000 Landlord Paving 2000 • Tenant pays 2000 Utilities 1000 • Tenant Paying Utilities Tenant Paving 1000 • You pay 0 ________Utilities 2000_____ • Split it 50/50 2000 Total 6000 • Landlord pays 5000
Landlord - Tenant ExerciseExercise Summary • Win/Win Paving and Utilities • Who made the first offer? High Aspirations? • You both wanted the same thing • Listening advantage • Satisfaction trap • Anyone leave pie in the plate? • Fairness? Trouble saying no? • Any lapses in trust?
References• Ailes, Roger. You Are the Message. New York. Doubleday, 1988.• Bazerman, Max H. Smart Money Decisions, Wiley & Sons, 1999• Cialdini, Robert B. Influence: The Psychology of Persuasion, Harper Collins, 2007• Cohen, Herb. You Can Negotiate Anything. Secaucus, N.J.: Lyle Stuart, 1980• Covey, Stephen R. The 7 Habits of Highly Effective People. New York: Simon & Schuster, 1989.• Dayton, Doug. Selling Microsoft. Holbrook, MA., Adams Media Corporation, 1997.• Fisher, Roger and William Ury. Getting to Yes. New York: Viking Penguin, Inc., 1981.• Forsyth, Patrick. The Negotiators Pocketbook. London: Alresford Press Ltd., 1993.• Johnson, Spencer. The One Minute Sales Person. William Morrow, N.Y, 1984.• Karrass, Chester L. Give and Take. New York: Harper Collins, 1993.• Karrass, Chester L. The Negotiating Game. New York: Harper Collins, 1992.• Koch, Charles G., The Science of Success, Wiley & Sons, 2007.• Kozicki, Stephen. The Creative Negotiator. Pyrmont, Australia: Gower, 1993.• Lewicki, Roy J., et.al. Negotiation. 2nd Edition., Irwin, 1994.• Lewicki, Roy J., et. Al. Essential of Negotiation, 4th Ed. McGraw Hill, 2007• Nierenberg, Gerald 1. The Art of Negotiating. New York: Barnes & Noble, 1995.• Paul, Richard. Critical Thinking. Santa Rosa, CA: Foundation for Critical Thinking, 1993.• Schoonmaker, Alan N. Negotiate to Win: Gaining the Psychological Edge. Englewood Cliffs, N.J.: Prentice Hall, 1989.