Negotiation Genius teaches readers the psychology and strategies of negotiation. Drawing from psychology and persuasion to manipulation and trust-building. “Negotiation Genius” prepares the readers will all the basics they need to negotiate effectively.
Negotiation Genius – Summary
About the Authors: Deepak Malhotra is an American economist and professor of Business Administration at Harvard Business School. He focuses on negotiation strategies and dispute resolutions.
Max Hal Bazerman is also a professor of Business Administration at Harvard Business School, an he specialized in business psychology.
Too many negotiators rely on gut instinct or, worse, believe that negotiation is all about art and no science.
These people, believing that negotiation is about art, also tend to believe in improvisation, and fail to prepare effectively.
Needless to say, that “cowboy approach” is a failed approach.
“Negotiation Genius” takes a different approach, combining experience with preparation, science and a proven method.
Gut instinct is not a strategy.
The Basics of Negotiation
These are the basic steps to prepare for a negotiation:
- Assess your BATNA
BATNA is an acronym first seen in “Getting to YES“, and stands for “best alternatives to negotiated agreements”.
In practical terms, it means that you know your other options and know their value.
When you know the value of your other options, you will know what you can and cannot concede and you will know when it’s time to walk away.
Your question is: “what will I do if this negotiation ends with no deal”.
PRO TIP: don’t overly focus on your BATNA asking “what will I do without them” or you might get too defensive.
- Calculate your reservation value (RV)
This is your walkaway point, the lowest offer you can accept.
Once you are below your RV, you’re better off with no deal.
- Calculate the other party’s reservation value
This is not easy, but you want to have an idea about what’s the reservation value of your negotiation partner.
- Assess other party’s BATNA
This will tell you how far you can push and when your opponent is likely to walk away.
Here is a great tip: focus on the other party’s BATNA asking “what will they do without me”.
People who focus on the value they bring to the table tend to get much better deals.
- Evaluate the ZOPA
ZOPA stands for “zone of possible agreement”.
The ZOPA expands between the buyer and seller reservation value, and within the ZOP a deal benefits both parties.
This is the pie you are going to split, and knowing all this information will allow you to properly negotiate and to know when you’re getting a bad deal, a good deal or a great deal.
How to Evaluate Your Performance
There are several ways to evaluate your performance:
- Did you pass your RV? Good, but it doesn’t say much
- At which point of the ZOPA did you meet? Above 50% is good for you
These are the measures all negotiators use, but they have an important drawback: they rely on the information you had before the negotiation.
Negotiation genius is about adjusting and adding more information.
When to Make The First Offer
The advantage of making the first offer is that you anchor the price, while receiving the first offer gives you more information about the other party.
The authors advise as follows:
- If you have sufficient information about the other party’s RV, make a first high first offer
- If you don’t have enough information, it might be best to let the other party speak first
If you have too little information, your first price might end up being either too low or too high.
What do you do if they make the first offer and it’s too high?
Don’t discuss it and don’t let them defend it because you increase its power. Ignore it or make another anchoring counter-offer instead.
Ask Questions to Dig Out Information
Here is a gold nugget:
The worst you can do is to start negotiation thinking that your assumptions are correct.
Imagine you are dealing with a piece of land and you are not sure whether the land might become available for commercial development.
So you would say:
If the land is used for commercial development, that will make it quite valuable.
With that in mind, let’s discuss some specifics. What are your plans for this excellent piece of real estate.
By mentioning commercial development, you show that you know its possible true value even though you are not sure.
And then you keep prodding on their plans. But now they will not be able to lie and deny they want to develop on it.
The authors say that in the face of uncertainty you want to interrogate (indirectly) and sound sufficiently informed.
If you are still unsure and if the other party refused to share information, you can propose contingency clauses.
If they refuse to add contingency clauses, you know they are lying.
Negotiation is an information game. Those who know how to obtain information perform better than those who stick with what they know
Trade Across Issues & Enlarge The Pie: Logrolling
Some negotiators think it’s best to start with easy issues, while some other prefer starting with the most important ones.
The authors recommend you deal with all of them together so you can find better synergies and trade-offs.
If the other party values something more than you do, let them have it. But don’t give it away, sell it.
As a matter of fact, says the author, the more negotiation points you can bring to the table, the more opportunities for value creation you have.
More issues equals more currency to exchange and make the pie bigger for everyone (another genius insight).
The goal is not simply to reach win-win. The goal is to maximize value.
Maximizing value entails adding more talking points, making the pie bigger and truly understanding what you and the other party really want.
Here are some tips for effective pie maximization:
- Identify your multiple interests
- Think of the other party’s multiple interests (and encourage them to do so)
- Leverage differences, priorities and expectations (you can leverage contingency clauses so everyone can bet on his expectations)
- Create a scoring system (convert everything into dollar values)
- Calculate a “package reservation value” (so you can focus on total value)
- If the other party is buttoned up, make two offers and then ask which one you should be focusing on more (that will tell you what they value)
Poor negotiators assume there is a fixed pie to be fought over.
Genius negotiators probe how to enlarge the pie.
Emotions and Cognitive Biases: Learn to See The Truth
“Negotiation Genius” adds more genius content when it tackles biases and blind spots.
The ones I liked best:
- Egocentric interpretations: People think they are more honest and good than they truly are
- Avoid overconfidence: Seligman recommends to hire salespeople who are overly optimistic, but good negotiators must be realists, not optimists
- Sellers truly can believe their product is superior to the competition
- Illusion of superiority: not only we view ourselves as better than we really are, we also see our groups as better than other groups.
- “When we (ingroup) make concessions we do it because we’re good, but they do it because it’s in their interest” (avoid thinking like this or you won’t be able to build trust)
- Take an outsider perspective, imagine it wasn’t someone else in your position. Or ask (or hire) an external party to advise
I must quote the authors here because I like this part very much.
This to me represents the true positive transformative power of knowledge:
Even well-intentioned people can act in seemingly unethical ways when they’re motivated to claim more than they deserve.
This does not make us evil, but simply humans.
Understanding our own egocentric bias, we can move from “wanting to be fair” to actually being fair
Influence in Negotiations
Some good advice:
- Negative frame (what they stand to lose) is more persuasive than positive frame (what they can gain), but you must use it careful or it’s annoying
- Aggregate the bad news and chunk-up the good ones (ie.: break up your concessions)
- Make token unilateral concessions: a bit of a power move, this one is designed to build trust and invite them to do the same through actions instead of words
- Door in the face (aim for rejection, then moderate your demand): the yes ladder is only partially true and having the other party say no, then lowering your offer can be a powerful tool to induce acceptance of your second concession
- Foot in the door (aim for compliance, then increase demand): ask for a a smaller favor they can say yes to, then ask for a similar one but bigger (their tendency is to confirm their ongoing commitment to the cause)
Door in the face VS foot in the door
“Door in the face” and “foot in the door” are not necessarily in contradiction.
DITF is appropriate to make your request seem reasonable by contrasting it to a bigger one (best done right away).
FITD is appropriate when you are building commitment to your key demand (best if there is some time between requests to help the internalization of the commitment).
- Unfair negotiation tactics (& examples)
How to Deal With Liars
Usually, you don’t want to call your counterpart a liar as that would precipitate the whole negotiation.
What you do depends on the situation.
You want to deploy a strategy that allows you let him know you know he has lied, while also allowing him to save face.
- Don’t try to read people if they’re lying: good professionals tell you it’s not possible. Set traps instead.
- Ask clear questions because while most people don’t want to lie, they are OK with misleading
- Change reality instead of lying about reality
And what about you, should you lie?
When the authors ask MBA students, far more people say it’s OK to lie as compared to executives.
Executives know the real costs of lying.
And the authors say that it’s always best not to lie.
Negotiating From A Position of Weakness
One of my favorite chapters in my favorite negotiation book (as of 09.2019).
Here are some great strategies to negotiate when you have little negotiation power:
- Don’t advertise your weak position: few negotiators will truly know what your negotiating position really is
- Avoid saying “time is of the essence” or “we can meet with you whenever you have the time: those give your weak position away
- Overcome your weakness by focusing on their weakness (or value opportunity). When both have lots to lose or lots to gain, it’s the one who makes the other position more salient who negotiates better
- If you add any value and they want to destroy you, remind them of what they stand to lose
- Join together with other weak parties to form a stronger coalition (ie.: EU negotiating power greater than any single state)
- Avoid people acquiring too much power (ie.: salespeople in your company)
- Relinquish the little power you have: stop flexing the muscles you don’t have and ask the other party to help you out
The last one is not about “appealing to mercy”, albeit that might work too, no matter what Robert Greene says.
This is how you could frame a salary negotiation when you have little power:
I am very excited to work here and I accept the offer.
Salary is not my primary concern, but it is a concern nonetheless, as it is for any person starting out.
Dealing With Difficult Negotiators
- Don’t think of people as irrational: think of them as misinformed, and your options and efficacy will increase
- Ignore threats and ultimatums: respond to less threatening bits of their emails or words
- If they only say “this is my final offer, take it or leave it”, you can say “it seems obvious you find it difficult to make any concessions here, I suggest we move to other issues and come back here later” or “I understand your frustration, we both know there is a deal to be made but we can’t seem to find it. Can you help me better understand your perspective? Why aren’t we there yet”
- Anticipate the threat and mention it first. Ideally, with your possible countermove.
For example: “we understand this might cause delays, and if you also anticipate delays, we suggest we also involve other senior bank officials” (you use this in case he doesn’t want to involve his superiors)
- If you don’t think the threat is credible, you can tactfully let them know that
- Finally, consider that you might be in a position to negotiate, or that you’re negotiating out of context
Negotiation experts tell you that you can negotiate anything.
Perhaps you can. But that doesn’t mean you should
More Negotiation Tips
- Be comfortable with silences
- Highlight your concessions and make it clear they are costly to you. Otherwise it’s easy for them not to reciprocate
- Don’t put too many contingencies on your concessions though or you make it difficult to build trust and cooperation
- Watch out for negotiation patterns: as time goes on, negotiations get smaller. But smart negotiators can fake that pattern
- Propose a PSS (post-settlement settlement) after you closed the deal with the agreement you will only change the contract IF -and only if- you can find mutually beneficial opportunities (the agreement becomes the new BATNA for both sides)
- Don’t just ask “what”, ask “why”: it will help you better understand the other party’s needs and find alternative solutions
- Don’t dismiss anything as “their problem”: they can quickly become your problems too
- Separate negotiation from influence: don’t give in to pressure tactics
- If the value of your target acquisition depends on future events you know nothing about, you should not make an offer.
Because they will only accept if things go wrong
- Looking more prepared can pay off by lowering attempts at cheating you. For example, instead of only asking for a bit more discount, say that you will also talk to more vendors for future orders but you’d like to know from them if that’s the last price they can quote
- Be careful of “intercultural communication seminars”: the variance among individuals is more important than the differences
- It’s not always the right time to negotiate: fighting over small dollars is also a waste of time.
- Negotiating too hard also sends the message you might not trust someone. Keep it in mind
- What looks good on Hollywood seldom works in real life
And example of what looks good on Hollywood but is BS negotiation:
Negotiation Genius Review
As of September 2019, I rate “Negotiation Genius” the best book on negotiation I have ever read.
I also consider it to be the best entry-level book because it doesn’t focus on anything specific like for example “Never Split the Difference” (conflict resolution) or “Secrets of Power Negotiation” (techniques), but provides a broad overview of negotiations.