Monthly Archives: November 2007

Five Fundamental Skills for Effective Negotiation: Time Management

Any negotiation starts before you actually sit down with the other side. The Information Gathering and Strategic Thinking skills are obviously necessary prior to talking with your opponent. The third skill, Time Management, is an extension of this concept. You need to understand this key constraint and plan for the effects it will have on your negotiation.

Time affects us all. Luckily, at a base level, it’s 100% equal. One second for you is the same as one second for your opponent. Thus the important factor in Time Management is knowing the specific things that create constraints for you and those that create constraints for your opponent. Part of these should have been revealed in the Information Gathering skill (remember I said that you’d bounce a bit between the skills once you got started). So, the discovery phase of Time Management should have already been completed. We’re concerned now with the effective use of time.

Let’s start with one side’s time constraint – a business owner that wants to close the deal and install a product by a given deadline. You also, unless you’re really lucky, have more than one deal on the table at this moment – so there are many deadlines all tugging at you. Thus, prioritization is very important. Learn to separate the urgent things (those which appear to need speed) from the important things (those which are actually vital). I can’t tell you how to segment them in your own brain – but it starts with asking what will happen if some specific thing does not get done by its deadline. In other words, what’s the impact of ignoring time?

Your opponent, in this case a salesperson, also has time constraints – deadlines by which they must close their deals to meet their pipeline goals. [If you’re not familiar with sales terms such as “pipeline,” I would suggest reading through a basic sales how-to manual. It will help you understand their perspective a lot more clearly.] They too, have urgent and important things on their plate.

Unfortunately, that’s usually where the perfect symmetry ends, as your specific constraints won’t always mesh with your opponents constraints… nor will the list of urgent versus important items. Figuring out what’s really important to both sides can thus play into a timely deal closing, for if you know when both parties really need the deal to close, you can work together to accomplish the goal.

A disparity happens when one side needs the deal to close before the other. This becomes a pressure point, one that can increase the leverage for the non-constrained party. But unless you discover this issue, chances are that you will continue to believe that you’re both operating on the same time table – yours.

On the flip side, what if you’re the constrained party and you are rightfully concerned about leverage? You can do one of two things about something that is problematic and visible to others. You can either fix the issue (get rid of the constraint), or you can address it head-on and make it a non-issue by telling the other side that yes, it is a constraint, but that failure to create a solution by the deadline will affect both parties (ie: if we miss the deadline, the price goes up).

Oh wait! You’ve seen this? Of course. The end-of-quarter or end-of-year firesales held by many vendors in an effort to drive deals to closure to pump up sales figures. Did it work to close the deal by the deadline?

Regardless, you experienced (or managed) a time constraint first-hand. Using the next fundamental skill, Perception of Power, you will see how to shift the balance of power in response to these identified issues.

Five Fundamental Skills for Effective Negotiation: Strategic Thinking

After completing Information Gathering, the next logical step is deciding how to use the information that you’ve compiled. This is called strategy – and it’s a skill that some folks just do not have.

Some believe that this is just a matter of learning how to play chess. To a degree, this is correct. The game of chess is a strategy game – where the true masters learn all of the potential strategies that can be employed and how to work with, through and around them to reach their ultimate goal.

Chess is a good basic analogy for this skill. You have a playing field, the chess board, which delineates the boundaries of the engagement. You have pieces that each play a particular role and represent different values. You take turns “moving”/”negotiating” the board, analogous to the back-and-forth nature of concessions in a traditional view of negotiation. So, in all, it’s relatively appropriate to think of negotiation as chess.

The problem with using chess as the analogy is that chess has fixed rules for operation. A rook can ONLY move laterally and a bishop can ONLY move diagonally. Granted, this could be a metaphor for how you have various constraints put upon you in a negotiation. In actuality, however, you ALWAYS have two extra options available to you.

You can create a new move… or you can walk away without finishing the “game.” These are important and illustrate why strategic thinking is so valuable. If you have not considered what impact your behavior will have on the other side, you probably have not actually completed Information Gathering, thus, you aren’t prepared to fully understand what is on the table and how you both might be able to meet your needs.

Strategic Thinking is also an active skill – one that must be employed while in the heat of the negotiation. Also thought of as “thinking on your feet,” it’s the ability to respond to the other sides’ tactics in an appropriate manner. It’s possible that you could, in some situations, effectively pause the negotiations to go back to your corner and consider your next move. However, this takes Time (the next skill) – which you might not have.

So, how do you develop this skill? First, recognize whether you’re predisposed to it. In fact, there’s some research that suggests that from a personality perspective, people are either born as strategic thinkers or tactical thinkers – which allows them to either always see the trees (tactical) or the forest (strategic), but not both.

I’m not sure I agree with this extreme idea, but the truth remains that I have seen enough first-hand negotiations to witness what happens when someone doesn’t think strategically to say that it really doesn’t matter whether you’re predisposed at strategic thinking or not. You MUST become good at it, or you must find someone to help you with this step. In other words, it’s imperative that you learn how to think three, five and ten steps ahead to reach your end goal.

Next, when faced with a negotiation, sit down and ponder your moves. This starts with your intent, moves to your motives and ends with your behavior. You can come out of the gate with guns blazing – looking for everything you want and only seeking your own objectives. This will set a specific tone and you need to think about how the other side will respond. On the flip side, you can come out conceding every point, seeking to be as “cooperative” as possible. This also will set a specific feel/tone to the negotiation.

But it’s not as hard as you might imagine to envision what will happen if you take one of these moves. If you come out guns blazing, the other side is probably going to respond in kind. Which means that you’re setting the stage for an aggressive negotiation and will be fighting for things along the way. On the other hand, too soft, and you’ll give up everything. This is where some of the experts obviously advise differently. One camp says “play stupid” and seek what you can get through self-depreciating behavior. Another camp (pardon the pun, but it’s actually Jim Camp) says that you should always “Start with No” as a way to encourage discussion.

The net result of Strategic Thinking is an ability to not only see what your path could be, but to also see where your opponent is going to move. For if you play a win-win strategy against someone with a win-lose strategy, who do you think is most likely going to lose? If you’ve considered your various options and thought Strategically, you’ll know how to respond.

Five Fundamental Skills for Effective Negotiation: Information Gathering

As promised from last week, this is the first of five fundamental skills for effective negotiation.  These skills aren’t rocket science, nor are they really much more than common sense.  But they are oft forgotten when someone starts (or finds themselves in the middle of) a negotiation.  These skills are presented in the order in which they will be used, but keep in mind that you will probably need to bounce between the skills once the negotiation starts.

Information Gathering, then, is the first fundamental.  The process starts by understanding why it is that you’re coming to the negotiation table.  You want something… but what, exactly? Is it a tangible item? Is it a service?  Perhaps you’re selling something?  Do you know how much it might cost?  Do you know how you’ll use what it is that you want?  Does it have a specific size, shape, color, texture, smell, etc?

In other words, you’re playing 20 questions with yourself to determine the boundaries
of your desire.  If you do this stage of Information Gathering correctly, you will have a deep understanding of your true need as opposed to your “wants.”  Or, put another way, you will know your “must have’s” versus your “like to have’s.”  And, if you’re already thinking a few steps ahead, this becomes important when you’re making concessions.  You ‘give up’ your like-to-have’s in favor of keeping a better outcome for your must-have’s.

The second stage of Information Gathering is flipping the coin and trying to go through the exact same exercise, only this time as if you were your opponent.  Using a seller/buyer scenario, it’s easy to pick out the parts and figure out the basics. The seller has a product or service they want to sell.  The buyer has a desire for a product or service similar to what the seller is selling.  The devil is in the details.

From the seller’s perspective, they need to know the ins and outs of their product offering.  What problem does it solve and in how many ways?  How much does it cost and what are the potential for discounts?  What add-ons are necessary or preferable to enhance the basic product?  What timeline do they have with respects to making the sale?

For the buyer, the issues are similar:  What problem am I truly trying to solve?  What additional features would be nice but not necessary?  How much money do I have (budget)?  How much money would I like to really spend (cost)?  How long will this product last?

You can see the Information Gathering process at work in this scenario, as well, if you think of a car buying example.  One of the first things that the dealer’s salesperson will ask a new person walking onto the lot is “What kind of vehicle are you looking for today?” and “How much are you looking to spend?”  They’re not trying to ask to help the buyer make up their mind – they’re trying to discover the boundaries for the negotiation.

If you, as a negotiation participant, fail to complete the Information Gathering process, the other side will, in many cases, be able to sway your decision because they will “sell” you on their position before you’ve had an opportunity to discover what your own position is.  Additionally, they’ll possibly be able to convince you that something has an inflated value, which makes its concession more important or your desire to obtain it more valuable.

For example, if you haven’t researched my widget – which has an incredibly cool, expensive-looking case (yet cheap for me to include), you may want the case included and feel like you “won” if I let you have the case but don’t decrease the price much.  But for me, it was an easy concession to make.  I included something cheap from my perspective, gave you a pittance-sized discount, and you felt like you got something huge.

Think about this the next time you go cell-phone shopping and the saleperson gives you a case and car-charger “for free” but doesn’t discount the cost of the phone.  I hate to tell you this, but the car-charger and case each are purchased from China for about $0.25, resold to distributors within the US for about $1.00… and sold to consumers for $10+.

Granted, having this knowledge won’t enable you to leverage it when you’re buying your next new cell phone – you lack one of the other Fundamental Skill results – Power.  But if you’re a corporate buyer negotiating with the cell phone carriers for cell phones for your entire 4,000+ line organization, don’t let the ‘free case/charger giveaway’ stop you from getting a better price on the equipment and monthly charges.

But of course, having Information doesn’t mean you know how to use it.  Next week, we’ll discuss the second Fundamental Skill:  Strategic Thinking.

Switching to WordPress

Well… I switched to WordPress. Things are bound to be broken for a little while. My humble apologies. I’m working as quickly as possible to fix it all.  If you know WP and can help me get the italicized words below out from every post, but include them in the RSS feed, please let me know.  Thanks!  🙂

Five Fundamental Skills for Effective Negotiation

About a year ago, I was honored to participate in research that revealed the five fundamental skills for effective negotiation. These five skills, none of which are really negotiation skills, but rather foundational building blocks upon which negotiation abilities are built, are not rocket science. In fact, the five fundamentals are really no-brainers – concepts that when you hear about them you slap yourself in the forehead and go, “of course. Duh.”

But these five fundamentals are also clearly lacking in many negotiator’s repertoires, as I’ve been thinking more about the question of the difference between good negotiators and not-so-good negotiators. So, the next five weeks are going to be devoted to the five fundamental skills – and if you’d like to get a jump on me, you can read the results of our research and purchase a manual on teaching the five skills (with a negotiation exercise included). I’d suggest the PDF version.

Next week: Fundamental Skill #1: Information Gathering

Wisconsin Lawyer Magazine Review

Hello Wisconsin!

(Sorry, I couldn’t resist… I’m a fan of That 70’s Show… please forgive my indulgence.)

After publication delays and the normal ups and downs of the average legal community, Wisconsin Lawyer Magazine released its review of the Software Licensing Handbook. Check it out… not bad, in my humble opinion.

The print version of the magazine, however, does have a type with regards to the price of the book. My apologies for any confusion.

Thanks to Craig Wilson who took the time to review it – he read the whole thing cover to cover. For that alone he deserves praise, as the book was never intended for that kind of read.