Negotiation Genius
This is an excellent book on negotiating in professional or personal life. Here is the summary of its main points and topics covered:
1. Toolkit:
a. Claiming Value in Negotiation
b.
Creating Value in Negotiation
c.
Investigative Negotiation
2. Psychology of Negotiation:
a.
When rationality fails: Biases of Mind
b.
Biases of Heart
c.
Negotiating Rationally in an Irrational World
3. Negotiating in Real World
a.
Strategies of Influence
b.
Blind Spots in Negotiation
c.
Confronting Lies and Deception
d.
Recognizing and Resolving Ethical Dilemmas
e.
Negotiating from a position of Weakness
f.
When negotiations Get Ugly: Dealing with
Irrationality, Distrust, Anger, Threats and Ego
g.
When NOT to Negotiate
h.
Path to Genius
Preparation:
1.
Assess your BATNA (Best Alternative To Negotiated Agreement)
2.
Assess other party’s BATNA
3.
Create your reservation value
4.
Calculate other’s reservation value
5.
Evaluate ZOPA. (Zone of Possible Agreement)
e.g. I shall buy a new car for $10000-$15000.
During:
1.
Who gives first offer?
2.
Ignore Anchor or not
3.
Separate information from influence
4.
Avoid dwelling on their anchor
5.
Make an anchored counteroffer, then propose
moderation
6.
Give them time to moderate their offer without
losing face.
First Offer:
1.
Keep the entire ZOPA in play.
2.
Provide a justification for your offer.
3.
Set high, but realistic aspirations.
4.
Consider the context and relationship.
How Far to push
1.
Exhaust all pre-negotiation sources of
information
2.
Identify your assumptions prior to negotiation.
3.
Ask questions that challenge your assumptions
4.
Ask Indirect Questions
5.
Protect yourself from lies and uncertainty with
contingency contracts.
Haggling Strategies
1. Focus
on their BATNA and reservation value
2. Avoid
making unilateral concessions
3. Be
comfortable with silence
4. Label
your concessions
5. Define
what it means to reciprocate
6. Make
contingency concessions
7. Be
aware of the effects of diminishing rates of concessions.
Negotiating
relationship
1. Responding
to an offer that you love.
2. Manage
your own satisfaction
a. Focus
on your target during the negotiation
b. When
it is over, shift focus to your reservation value.
Maximize Value
1.
Package Deals
2.
Multiple Offers
3.
Contingency Contracts
4.
Post-settlement settlements (PSS): Settlements
that are reached after the initial agreement is signed.
Principles of
Investigative Negotiation
1.
Don’t just ask WHAT – ask WHY
2.
Seek to reconcile interests, not demands
3.
Create common ground with uncommon allies
4.
Interpret demands as opportunities
5.
Don’t miss anything as “THEIR PROBLEM”
6.
Don’t let negotiations end with a rejection of
your offer
7.
Understand the difference between “SELLING” and
“NEGOTIATING”
Strategies for
Eliciting information from reticent negotiators
1.
Build trust and share information
a.
Speak their language
b.
Increase the ties that bind
2.
Ask questions – especially if you are surprised
or skeptical
3.
Give away some information
Psychology of
Negotiation
1.
Biases of Mind: Most negotiators fall victim to
four critical, systematic errors on a regular basis:
a.
Fixed-pie bias
b.
Vividness bias: Am I just being influenced to
act in a certain way because of how this information was presented?
c.
Non rational escalation of commitment:
i.
Start with a preplanned exit strategy.
ii.
Assign and reward a “devil’s advocate”.
iii.
Anticipate and prepare for the escalation forces
you are likely to encounter.
d.
Susceptibility to framing
i.
Most of us treat risks involving perceived gains
differently from risks involving perceived losses.
ii.
Reference point anchoring
2.
Biases of Heart:
a.
Conflicting Motivations:
i.
Want self vs
should self: Many negotiators believe should-self is more trustworthy than the
want-self and is better at gauging what is best for you.
ii.
Egocentrism
iii.
Regret Aversion: We tend to feel greater regret
about acts of commission (what we
did) than about acts of omission
(what we did not). This can induce negotiators to hold out longer-and for
more-than they reasonably should.
Negotiating
Rationally in an Irrational World
1.
It is not enough to anticipate your own decision
biases; you must also set up systems and processes that will help you overcome
them. Similarly you cannot always benefit from the mistakes your counterpart
makes; sometimes to improve your own outcomes, you need to help them overcome
their own irrationality.
Confronting your own
biases
1.
Use “System 2” Thinking: deliberate, slower,
effortful, explicit and logical.
2.
Avoid negotiating under time pressure.
3.
Partition the negotiation across multiple
sessions.
4.
Learn through the use of analogies. The key is
to figure out principles out of experiences and examples.
5.
Adopt outsider lens
Confronting the
biases of others
1.
Incorporate the consequences of their biases in
your strategy. To nullify their errors.
2.
Help others be less biased.
3.
Calibrate information provided by others.
4.
Use contingency contracts to resolve conflicts
stemming from biases.
Strategies of
Influence
1.
Highlight their potential losses rather than
their potential gains.
2.
Disaggregate their gains and aggregate their
losses.
3.
Employ the door in the face technique (DITF):
Compliance increases after an initial rejection because when the person making
the extreme demand moderates and asks for something less extreme (almost in
same conversation), the other side views this as a concession that must be
reciprocated.
4.
Employ foot in the door technique (FITD): Aim
for compliance with a simple request then increase your demands (but after some
period).
5.
Justify your demands.
6.
Use reference points to make your offers and
demands seem reasonable.
7.
Leverage the social proofs like white papers.
8.
Make TOKEN
unilateral concessions.
Defending YOURSELF
against strategies of influence
1.
Prepare systematically.
2.
Create a scoring system: Ur BATNA against their
BATNA.
3.
Explicitly separate information from influence.
4.
Rephrase their offer in other terms.
5.
Appoint a Devil’s advocate.
6.
If possible, do not negotiate under time
pressure.
Blind Spots in
Negotiation
1.
The role of parties not at the negotiating
table.
2.
The ways (policies/politics) in which other
parties are likely to make decisions
3.
The role of information asymmetries
4.
The strength of competitors
5.
The information that is not immediately relevant
but that will be critical in the future.
Confronting Lies and
Deception
1.
Pre-empting Lies and Deception:
a.
Look prepared
b.
Signal your ability to obtain information
c.
Ask less threatening, indirect questions
d.
Don’t lie
2.
Lie Detection
a.
Gather info from multiple sources
b.
Set a trap
c.
Triangulate on truth
d.
Look out for responses that do not answer the
question you asked
e.
Use contingency contracts
Smart Alternatives to
Lying
1.
Incorporate reputation and relationship costs in
your calculus
2.
Prepare to answer difficult questions
3.
Try not to negotiate or respond to questions
while under time pressure.
4.
Refuse to answer certain questions.
5.
Offer to answer a different question.
6.
Change reality to make the truth more bearable
by eliminating constraints that tempt you to lie.
Recognizing and
Resolving Ethical Dilemmas
1.
Bounded ethicality (unconscious biases)
2.
Conflicts of interest: The incentives to other
side or middlemen not aligned with ultimate goals.
3.
Parasitic Value Creation: Creating self value by
destroying 3rd parties or customers.
4.
Overclaiming Credit for who has invested more.
Negotiating from a
Position of Weakness
1.
Don’t Reveal that you are weak
2.
Overcome your weakness by leveraging their
weakness and/or attacking their source of power.
3.
Identify and leverage your distinct value
proposition.
a.
Submit multiple proposals.
b.
Lower your bid just enough to get into the
second round.
c.
Take the agent out of the game.
d.
Educate your customers between deals.
e.
Negotiate Post-settlement settlement with the
customer.
4.
If your position is very weak, consider
relinquishing what little power you do have.
5.
Strategize on the basis of your entire
negotiation portfolio.
Upsetting the balance
of power
1.
Increase your strength by building coalitions
with other weak parties.
When Negotiations Get
Ugly: Dealing with Irrationality, Distrust, Anger, Threats and Ego
Dealing with
Irrationality
Reasons
1.
They are not Irrational; They are Uninformed
2.
They are not Irrational; They have hidden
constraints/interests
Distrust
1.
Build trust
Anger
1.
Seek to understand why they are angry.
2.
Give voice to their anger. Empathize.
3.
Sidestep the emotion:
a.
If I were in her position, would I be acting the
same way?
b.
Is this genuine emotion, or is it a tactic aimed
at intimidating me?
c.
Is this how she behaves with everybody?
4.
Help them focus on their true underlying interests.
Dealing with Threats
and Ultimatums
1.
Ignore the threat.
2.
Neutralize any additional threats they might be
tempted to make
a.
Pre-empt their aggression.
b.
Tell them even they will lose.
3.
If you don’t find the threat to be credible, let
them know.
Dealing with the need
to save face
Not only give opportunity but help them save face. Don’t
care about what looks good but about what works well.
When Not to Negotiate
1.
When Time is Money
2.
When your BATNA stinks- and everyone knows it
3.
When negotiating sends the wrong signal.
a.
Negotiate anyway.
b.
Change the signal.
c.
Decide not to negotiate.
4.
When relationships might suffer.
5.
When negotiating is culturally inappropriate.
6.
When your BATNA beats their best possible offer.
How to know when “NO
DEAL” is the best outcome? Signs:
1.
They cant beat your alternative offers.
2.
They are misleading you.
3.
They are more interested in stretching out the
negotiation than in exchanging information.
Perfect can be the
enemy of good
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