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?

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Even Phil Ivey has a Tell

On 02/08/2010, In Advanced Concepts, Flexibility and Deception Detection, By Andrew Boughton

Why do people get caught lying? The average person lies 3x in a 10 minute conversation. That’s 1,616,220 lies in a lifetime.  True many of those lies are your garden variety little white lies, harmless exaggerations, omissions, etc. So why is it, with all that practice, we still get caught?

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Negotiating in China

On 02/01/2010, In Advanced Concepts, Negotiation Strategy, By Andrew Boughton

In Kissinger’s book, Ending the Vietnam War : A History of America’s Involvement in and Extrication from the Vietnam War, he recounts the following observation. The American delegation made arrangements to occupy 3 floors in a prominent hotel in Paris. The Vietnamese delegation, on the other hand, bought a chateau. The message was clear. We are here for as long as it takes.

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People Lie When they Negotiate

On 01/20/2010, In Advanced Concepts, Flexibility and Deception Detection, By Andrew Boughton

A brief interruption in the “10 Tips” series to pose a question to everybody whose is reading this.  People feel compelled to lie during a negotiation.  There are many forms of lying including omissions, concealing vital facts, exaggerations, innocent little white lies, complete fabrications, or whatever.   (more…)

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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…)

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The Wheel of Negotiation

On 01/10/2010, In Negotiation Basics, By Andrew Boughton

The Wheel of Negotiation is a visual representation demonstrating the relationship of the different negotiating styles across many different characteristics.    The right-hand side of the Wheel captures the distributive negotiations while the left-hand side illustrates the  integrative or collaborative types of negotiations.  The model is circular based on the relationship between High Dependency and Auctions.  High Dependency occurs when trust is high, dependency is high, relationship is high, deals are complex, information is open, and parties can’t afford to walk away without substantial loss (unions, JVs, strategic partners, problem solving, marriage etc.).  When High Dependency negotiations fail, the parties typically end up on the right side of the Wheel haggling over remaining elements.

Negotiations are not static and do not occur in only one sector of the Wheel, quite often as things change (especially behaviors and reactions) the style of the negotiation will move clockwise or counter-clockwise in response.  You will have a natural pendulum motion except at the very extremes as noted above.  For additional information on each style see the Negotiation Basics page.

Differentiating Characteristics

  1. Your Behaviors – your behavior is the most important determinant when it comes to the negotiation style.  See “Style is Everything” (more…)

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Characteristics and Behaviors of Concession Trading

On 01/07/2010, In Concession Trading, Negotiation Basics, By Andrew Boughton

EXTERNAL CHARACTERISTICS: The balance of power is much more equal during Concession Trading.  The complexity of the deal shifts the focus away from just price.  These types of deals require ongoing support through execution and delivery phases, thus creating transactional dependence.  Value, profitability, competitive advantage, and price tend to shape the terms as well as the length of these deals.  There may be few alternatives or substitutes.  Typical negotiations include supplier agreements, business customers and accounts, normal commercial transactions, etc.

BEHAVIORAL ELEMENTS: Concession Trading requires trust as relationship starts to play a role in shaping the transaction.  (more…)

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Common Negotiating Tactics

On 01/07/2010, In Hard Bargaining, Negotiation Basics, By Andrew Boughton

Here is a list of 25 common tactics I’ve encountered and even used over my career.  I absolutely love to hear stories about tactics, so if you have a good story about a tactic that was used on you or by you, drop me a comment or link.

  1. Exploding Offers (artificial deadlines) – an exploding offer contains an extremely tight deadline creating pressure on the other party to conclude quickly.  The purpose of the exploding offer is to limit the time the other party has to consider alternatives.
  2. Russian Front – Presented with 2 options, A and B, one worse than the other.  Designed to pressure you into choosing the lesser of two evils.  Remember two wrongs don’t make it right, attach your own considerations as condition of acceptance.
  3. Good Cop Bad Cop – based on law enforcement interrogation techniques.  One party opens with a tough position often accompanied by threats, arrogant behavior, and unwillingness to consider anything else (parental).  After leaving the room, a second negotiator attempts to secure major concessions before the return of the first Bad Cop.  Sometimes disguised and used only when certain issues are brought up or certain thresholds are crossed.
  4. Highball / Lowball – when your extreme opener is beyond the realm of realistic outcomes.  The idea is to cause the other party to reconsider their own opening position and move closer towards their breaking point.  Danger is the increased risk of deadlock before the negotiation even begin, crossing the “Piss Off” point.
  5. Bogey ­– presenting a relatively minor issue as one of huge importance.  Later during the negotiation, the bogey will be conceded for major concessions on issues that are of real importance.  Danger is the other party may actually structure proposals to give you the bogey or worse yet, you may lose credibility when conceding on the bogey.
  6. The Nibble – after considerable time has elapsed during a negotiation and a level of commitment has been reached, an issue (more…)

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Style is Everything when it comes to Negotiation

On 01/06/2010, In Negotiation Basics, By Andrew Boughton

The single most influential determinant in any type of negotiation is YOU!  Your behavior (and that of the other party) determines the style of negotiation.  The law of reciprocity dictates as you become aggressive the other party is more likely to respond with an escalation of aggression or worse yet become more defensive.  Your behavior has a huge impact on the overall negotiation.  It is a classic mistake I witness over and over again, even in professional negotiations, when the actions and behaviors of one of the negotiators is not aligned with their strategy.  Here are a couple of examples:

  1. A retailer and their vendor working together to create a unique advertising program involving multiple media sources, mistake and misalignment happens when one party begins shooting down proposals by saying “no”, “that won’t work”, or “that’s a deal breaker” etc.
  2. A person negotiating the purchase of a collector’s item (stamp, baseball card, painting, whatever), meets the broker for lunch to create a more relaxed atmosphere.  While dining the buyer offers up personal information in an effort to create trust with the broker.  The buyer discusses their admiration for the object, their immediate plans for showcasing the item, how long they have searched for something similar etc.

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