Quote from Ali Scarlett on August 8, 2020, 5:27 am

Introduction to Negotiation: A Strategic Playbook for Becoming a Principled and Persuasive Negotiator: Dealing with Fires

Introduction to Negotiation: A Strategic Playbook for Becoming a Principled and Persuasive Negotiator is a 9-week online Yale college course on negotiation techniques in which Barry Nalebuff, the professor, makes the case that negotiation should be done using principled arguments. The following is a collection of strategies to deal with the dark side of negotiations.

Negotiation Concept/Theory: Fight Fire With Fire

There's a big question of what happens when somebody makes a threat, an ultimatum, lies to you, etc. How should you respond? So, the question is really, when somebody lights a fire, how do you respond? A typical response is, meet fire with fire. The fight fire with fire approach is to basically say, I'll make a threat back to you.

Negotiation Principles/Strategies:

Put Out the Fire (Rational High Ground)

When someone lights a fire, put out the fire.

The Other Side: Delivers a threat.

You: "Do we really want to play that game? I could say the following to you, but I don't think that's going to help us get a deal."

The Competition Threat: "We Will Crush You"

As a buyer, one way you can get someone to do a deal with you is by raising your price to make your offer more attractive. Another way, is by making the idea of rejecting your offer look like a bad idea. In other words, you can work to lower the other side's BATNA. This can be done through the threat of competition. In this example, let's imagine that you're negotiating with a company that wants to buy your company.

The Other Side: "You know, you really, really really should take our offer because if you don't, what we're gonna do is we're gonna come into the market and we are going to crush you, so that your company is going to be worth nothing when we're done.

You: [Puts out the fire] "We want to have nothing to do with you because if that's the kind of person you are, frankly, we don't want to trust our company and the future of this great business that we built to someone who wants to act in that fashion.

While this threat is aggressive, this is a situation where it's not just what you say, it's how you say it. In other words, this threat can alternatively be delivered as more of a "fair warning" if it's coming from a place of positivity and good faith negotiation practice.

For this example, imagine that you own a tea company and Coca-Cola wants to talk about buying your company:

Coca-Cola: "At Coca-Cola, we sold tea—bottled tea—in a joint venture with Nestle, under the brand name Nestea. That joint venture wasn't working as well as we had hoped and so we've ended the joint venture. As a result, we now have a mandate to go and purchase a tea company. Tea is the biggest hole in our beverage portfolio. We've looked around the country, around the world, and you are our first choice. So we would like to buy your company and have you be apart of our family. However, if it turns out that we're not able to get our first choice, we are still going to have to do something because this isn't a "would like to have", this is a must have for us. So, we hope that we succeed in doing the deal with you, but at the end of the day, we are going to purchase a tea company."

See how this still works as a "competition threat" but isn't so much of a threat as it is a fair warning?

If you were in the position of the buyer, bullying someone into a deal would sour the negotiation and sets up a power relationship that the other side would not appreciate. However, it's okay to help the other side appreciate the consequences of what it is that's likely to happen if you don't reach an agreement.

Negotiation Quick Tips:

Don't Lie

When you lie, you complicate the negotiations. Admitting you lied or fabricated information creates a whole different series of problems. How can the other side trust anything you say going forward?

Negotiation Principles/Strategies:

Lie Prevention

To prevent the other side from lying to you, one of the most important things to do is to not ask the other side questions that give them the incentive to lie. For example, say you're negotiating with your boss:

You: "So, what's the most you're willing to pay me?"

Asking for the other side's BATNA gives them the incentive to lie since, in most cases, they want to pay the least amount possible.

Instead, ask questions that give the other side the right incentives to tell the truth.

You: "Do you prefer distributing pay raises over giving promotions?"

Put Out the Fire (Rational High Ground): Analyze Motivations

Sometimes you will find yourself negotiating with people who, for one reason or another, will lie. If they lie about a better alternative to your deal that they (supposedly) have to get you to put your price more in their favor, you can put out the fire by analyzing their motivations to do a deal with you as opposed to simply going with that alternative.

You: "I can only pay up to $450,000."

The Other Side: "I have another offer of $500,000 [crosses arms and locks eye contact]."

You: [Ask yourself] Why did he come here? If he had another offer and he didn't think I would go up at all or very little, he wouldn't even be dealing with me. Why would he rather do a deal with me? What do I have that his alternative does NOT that he wants?

First and Final Offer

There are some negotiators that take the approach of offering what they believe to be a generous and fair proposal. After making that proposal as their first offer, they then refuse to budge. This strategy is an ultimatum and it ignores the other side's expectations for the negotiation since you're making decisions for them and aren't allowing them to be more involved in the process. This approach also "lights a fire" which could sour the negotiation and possibly the business relationship you have with the other side.

This ultimatum can be dealt with using "The Hypothetical Offer Tactic".

Put Out the Fire (Submissiveness): Embarrassment

There's no referee that yells, "Ready? Negotiation...start!" to let you know that negotiations have begun. So, if you're the kind of person that likes to go after what they want while getting the best deal possible, you may have to be the one to initiate negotiations.

When the other side tries to embarrass you about the fact that you're negotiating, negotiation expert Herb Cohen recommends taking a soft tone with a more childlike approach that communicates to the other side you want/need their help.

An example is if you're in a store and the price tag has already established the price of the product to the cashier, but you're negotiating the price anyway. By asking for help the way Cohen recommends, you get the other side more involved in the negotiation process.

*Note: If you've read Lucio's articles on frame control, you know that there are more dominant ways around dealing with those who aim to embarrass you that won't lower your status in the end. I partially disagree with this strategy because while submissiveness can be used to your advantage when you have no real leverage, the extent that Cohen urges his students to behave submissively can actually harm your chances of negotiation success.

Put Out the Fire (Rational High Ground): Outrageous Offers/Lowball

When someone makes an outrageous offer or lowballs you, respond with rational questions that invite them to justify their demand. If they can't justify their demand, it's worthless.

*Note: Lucio might call this using questions to negotiate frames. Use questions to allow them to clarify their frame so you can persuade them into a more collaborative direction.

You: "I don't understand how you could come up with that. Could you explain it to me?"

Put Out the Fire (Humor Framing) 2: Outrageous Offers/Lowball

To deal with someone who tries to lowball you or gives you an outrageous offer, you can make up a story that invites them to justify their demand (their frame) while putting out the fire.

You: "In a way, I was thinking about what you might come up with. I was thinking as I came over in an Uber and I said, I think he'll ask for this. No, then on the other hand, I said to myself, no, maybe he'll ask for this. I had somebody with me, so I asked him what do you think? And we both said...and so when you offered [insert outrageous offer], we were both wrong! I'm in a state of shock, how'd you come up with that?"

Something to consider with this one: this may be good at helping you build rapport since more conversation invites more opportunity to connect, but I would decide against this one. As Lucio put it, the rules of thumb for social power are:

1. Use as little effort as possible to get it done

2. Use the most direct response you can afford (going more indirect could underline fear).

This expands a lot of social effort to achieve the same goal that "Put Out the Fire (Rational High Ground): Outrageous Offers/Lowball" does.

Taking Items Off the Table

It's important to take items off the table so the negotiation can move forward. In a situation where multiple packages, payment plans, etc. are being negotiated, one strategy to take items off the table is writing each package on a separate piece of paper, holding it up to the other side, and getting confirmation that the information on the papers is correct. After the package has been negotiated, slam it onto the table face down.

Whenever the other side hears the slam, it sub communicates to them that reopening the package for negotiation by turning the paper back over is a bad move that could annoy you, hurt their relationship with you, and prolong the negotiation since they're now reintroducing a package that had already been negotiated.

*Note: This is a strategy used by John McCall MacBain. If you ask me, this is the strategy that you might see used by your classic MTU, using confidence and physical aggression to reach their goals and top dog positions in their lines of work. If you want to use the MTU style of dominance, go for it. Otherwise, avoid this one. 

Claiming Power in the Negotiation: Put Your Foot Down

Naturally, I saved the best for last :). I originally thought against sharing this one because it's a strategy suggested by John McCall MacBain that I thought was a terrible idea. However, this is a strategy that was taught to me throughout my studies at a Yale college course, so if the negotiation world really has people who resort to strategies such as this one and you want to arm yourself against bullies over here at The Power Moves, it's only fair that I share this one so you can keep an eye out for it.

One strategy for dealing with delays is to claim the power in the negotiation by putting your foot down.

Ex 1:

You and a journalist are buying out the balance of the equity in a business. The journalist (who is the moral force in the room) keeps delaying things. As a joke, you take his glasses, put them on the floor with your foot hovered above them and say:

You: "Look, let's get this done. I'll do the typing because now you can't see the computer and let me just put my foot here so you just listen, we'll get these things done."

Ex 2:

You are negotiating in a room with another party that keeps delaying. You ask for the key, lock the room door, put the key in your pocket and say:

You: "Look, this is going on too long. Let's sit down and none of us leave until we get this done."

The Other Side: "What are you doing?"

You: "Look, you said you wanted to get this done. Why are you avoiding staying in the room?"

For everyone who wants to be a social charmer instead of an MTU, I strongly advise against this.

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I came up with the names for most of these negotiation strategies, so if you think of a better one that makes more sense, comment below and we'll make this post better!