Negotiation Basics

How to Influence Power in Any Situation

On 04/21/2010, In Negotiation Basics, By Andrew Boughton

Power is a fundamental aspect of every negotiation. Power determines options. If you have it, you have more options. So how can you change the balance of power?

Power is made of of two essential ingredients

Time – if you have more time than the other party, you have the ability to increase your options, you have more power.
Circumstance – extenuating factors effecting the parties’ level of need or desperation.

Change either the time or circumstance and you change the value of everything. There are countless examples of case studies where parties have drastically changed the balance of power by introducing or changing these two factors. Two pristine examples: (more…)

Anything You Say, Can and Will Be Used Against You

On 04/14/2010, In Negotiation Basics, By Andrew Boughton

No I’m not arresting you, yet I will absolutely punish you if you forget this rule. In negotiation everything you say delivers information to the other party. The more you say the more information you provide. Make no mistake, INFORMATION IS POWER! When you are negotiating there are three levels of information available voice, verbal, and visual. I am going to explore the information provided in the verbal content during discussions. Verbal content is available in both face to face and telephone communications. Quite simply, the verbal content is made up of the words someone uses to transmit an idea. The verbal aspect is “How” you phrase your sentence.

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Viacom’s attempt to Position vs. Music Industry

On 02/16/2010, In Case Studies, Hard Bargaining, Negotiation Basics, Negotiation Strategy, By Andrew Boughton

February 12th Philippe Dauman, Viacmon’s president and CEO, issued the following statment:

As we go forward, we are continuing to focus more on software than hardware, looking to reduce the cost structure associated with Rock Band, being selective in the music titles that we choose for Rock Band based on their cost. The music industry will assist with this category to make sure that it can continue on a profitable basis in the future and then finally we think we have the best games in the category, we’ll continue to rollout exciting products.

An obvious signal to the Music Industry as he begins the negotiation by creating his position through the media. It is even more effective when followed by a letter/email/phone call to each company with his offer. Effective positioning helps to shift the frame of reference before the negotiation technically begins. Philippe is preparing the industry to receive his demands. To truly shift their expectations you need to deliver an offer, effectively dropping an anchor.

The Music Industry would be wise to attempt to shift the focus back onto their position with a preemptive strike. Instead of allowing Viacom to open the discussions with some ridiculous offer like 50%, they need to provide an anchor of their own to begin the discussions around their position. By opening first the initial expectation is set. This is definitely shaping up into a classic Hard Bargaining negotiation. I’ll keep my eye on any developments. What do you think?

Tagged with: artist negotiation • commercial negotiation • contract negotiation • distributive • Hard Bargaining • negotiation tactics

Brett Favre – It’s Retirement for Now

On 02/15/2010, In Negotiation Basics, By Andrew Boughton

Read Brett’s statement carefully, he is talking in the past tense when referring to playing with the Vikings. What do you think? As a fan, hopefully he will change his mind as we get closer to the 2010 kickoff.

“It was truly an amazing experience to be a part of the Minnesota Vikings this past season. Regardless of what the future holds, I want everyone to know that I will cherish the memories of the past year for the rest of my life.” - Brett Favre

Let’s see if Brett’s language changes over the course of the year.

Funny Quotes that have Nothing to do with Negotiation

On 02/03/2010, In Negotiation Basics, By Andrew Boughton

While this has nothing to do with negotiation, it was too funny to pass up. So, reprinted here from the unknown author I give you…….

WHY ATHLETES CAN’T HAVE REGULAR JOBS…

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Movement – Ten Tips… (Part 3)

On 01/25/2010, In Negotiation Basics, By Andrew Boughton

Movement is a crucial element in every negotiation. Your reactions will undermine your position every time.

http://www.youtube.com/watch?v=bYZii5Es8ic

Buying a New Car

On 01/22/2010, In Negotiation Basics, By Andrew Boughton

Everyone buys a new car at some point in their life. Instead of submitting yourself to the torture chamber at the dealership, it’s time to flip the script on them. You are going to hold your very own auction. (more…)

Anchoring – 10 Tips to Drastically Improve You as a Negotiator (Part 2)

On 01/19/2010, In Negotiation Basics, By Andrew Boughton

I’ll start off part 2 reiterating the point that every negotiation is different. As a point of reference I will refer to what I call The Wheel of Negotiation as a guide to help establish what type of negotiation you are involved in. (more…)

Opening – 10 Tips to Drastically Improve You as a Negotiator (Part 1)

On 01/17/2010, In Negotiation Basics, By Andrew Boughton

Every negotiation is different, I have a saying I use in training sessions, “Negotiation is circumstantial”. There isn’t a proscriptive approach that will work for every negotiation. You have to change your style and strategy to suit the circumstance of the situation. As a point of reference I will refer to what I call The Wheel of Negotiation as a guide to help establish what type of negotiation you are involved in. Many of the tips I am including in this series “10 Tips etc…” will vary to a degree depending on the type of negotiation. You can read about each style or type of negotiation independently if you wish by visiting the Negotiation Basics page.

I’ll cover 1 or 2 different tips in each of the next posts so that I can devote enough time to fully explore the subtleties across The Wheel and still limit the post so it doesn’t become a novel. If my head cold dissipates I’ll record some of these as video posts as well.

The first tip is to follow me…… I’ve trained over a thousand individuals working for fortune 500 companies. I’ve been involved in multi-national, multi-party negotiations involving billions of dollars. You’ve read about the deals I’ve put together in the wall street journal (in fact, there are at least 3 deals in the last 2 months that appeared in WSJ). I’d reveal all the information behind these deals, however, I am prohibited by NDA agreements, and as you can imagine most of my clients do not want it publicized that they used a consultant to plan and execute their negotiation strategies. Seriously, enough tooting my own horn, I’ve decided to publish this blog this year to make all of these negotiation secrets public knowledge for anyone motivated enough to take the initiative. Let’s get started.

Opening Position – just like first impressions, your opening position is the most important move in any negotiation. It begins the process of setting and managing the other party’s expectations. You want to be as extreme as you dare, yet realistic within the parameters of the situation. I want to stress the realistic part, if you are unrealistic you run the risk of crossing the piss-off-point and deadlocking the deal unnecessarily. If you are involved in a Hard Bargaining negotiation (distributive) be very extreme, if it is a Win Win negotiation (collaboration) you can not be as extreme because of the need to establish and maintain trust. The main idea here is to open up ABOVE what you want. (more…)

How to Negotiate Your Salary

On 01/15/2010, In Hard Bargaining, High Dependency, Negotiation Basics, By Andrew Boughton

Salary negotiations are a bit of an enigma. They have all of the elements of a Hard Bargaining situation:

Limited variables
Price is the main focal point (Salary)
There are usually multiple applicants vying for the same position

Yet a salary negotiation also consists of elements of a High Dependency situation:

Focus is on long-term gain and results
Both parties are dependent upon each other
Trust and relationship play a critical role in the negotiation

There is no ONE way to negotiate a salary; each situation will vary depending upon the circumstance surrounding the negotiation. I’m going to first look at a situation where the applicant is a new hire from outside the company. Step one is to determine how much leverage you have in the negotiation. To assess your leverage you’ll need answers to the following questions:

How many other qualified applicants are in the final stages
What are your alternatives to this position
What is your breakpoint
What is their breakpoint (you’ll have to guess unless you are able to question effectively to unlock this information)

If there aren’t any other applicants and you have multiple options, you have quite a bit of leverage and can effectively set the bar very high. (more…)

Tagged with: contract negotiation • Negotiation • negotiation tactics • negotiation training • Salary • salary negotiation

Characteristics and Behaviors of High Dependency Negotiations

On 01/15/2010, In High Dependency, Negotiation Basics, By Andrew Boughton

High Dependency negotiations are nothing more than a Collaborative Negotiation where the parties are mutually dependent upon each other. The consequences of deadlock are often substantial. Typical situations falling into this category are joint ventures, partnerships, union negotiations, strategic alliances, etc. (marriages if you count personal situations). The difficulty with High Dependency situations is that information is transparent, the other side sees the P&L and knows how much each item costs. Therefore discussions are often emotionally charged. Even though it is emotion that generally creates potential impasses during the discussions. It is paramount to manage the climate and take responsibility for how you say everything. The danger is that emotionally heated discussions may cause the negotiation to devolve into a Hard Bargaining situation causing strikes, lockouts, dissolution, or legal action. The words that you choose in delivering proposals and responding to proposals become more important than the meaning of the words. You must eliminate all words that have a negative implication like “no, don’t, can’t or won’t”. You must constantly think “under what circumstance could I accept that proposal” and even ask the other side that very question.

EXTERNAL CHARACTERISTICS: The balance of power is equal. The deals are based on a mutual dependency. All the characteristics of a Win Win negotiation are present with the added pressure that the parties cannot afford to deadlock. Any alternative or substitute would be financially constrained. Information is open to all parties. Typical negotiations include Joint Ventures, Partnerships, Strategic Alliances, Labor Negotiations, etc.

BEHAVIORAL ELEMENTS: High Dependency requires a high level of trust as relationship plays a important role in shaping the business. Satisfaction is received through understanding priorities, creating incremental value, and sharing value on primary issues. (more…)

Tagged with: commercial negotiation • contract negotiation • integrative • Negotiation • negotiation tactics • problem solving • vendor negotiation

Price is Always Distributive!

On 01/12/2010, In Auctions / Bartering, Concession Trading, Hard Bargaining, Negotiation Basics, By Andrew Boughton

You can’t have a collaboration over price. Price is always win-lose. What you gain the other party loses (or pays) and vice versa. There is no way to grow the proverbial pie when it comes to price. Unfortunately as luck would have it, price also seems to always be a very important element in negotiation. If you constantly equate all other trading variables back to price you will, whether you like it or not, create a distributive environment. The key is to shift your focus to profit! Instead of thinking in terms of cost or price think in terms of value. The ability to incorporate intangibles into a deal is what separates a skilled negotiator from the average bazaar merchant (although hard bargaining also takes a certain type of skill). The ability to link variables other than price to create incremental value is where all the value is in negotiation.

Having said that (stealing a line from “Curb Your Enthusiasm”), there is a time and place when a good old fashioned price negotiation is just what the situation calls for, so don’t be afraid to shift gears in either direction. After all, negotiation is all about the circumstance and your ability to determine what is appropriate.

Tagged with: Hard Bargaining • Negotiation • negotiation tactics • negotiation training • price negotiation • pricing • trading

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