BOOK SUMMARY 108 Bargaining for Advantage

BOOK SUMMARY 108 Bargaining for Advantage

·         Summary written by: Peter Nakamura

"Information-Based Bargaining... focuses on three main aspects of negotiation: solid planning and preparation before you start, careful listening so you can find out what the other side really wants, and attending to the ‘signals’ the other party sends through his or her conduct once bargaining gets under way. "

- Bargaining for Advantage, page xviii

When you hear the word “negotiation” how does it make you feel? Excited? Nervous? Unsure? Negotiation can elicit a variety of emotions for people as we often associate it with the hard-nosed bargaining situations we see on TV and in the movies. Despite the conflicting emotions, being an effective negotiator could be one of the most important life skills you can possess. After all, we negotiate everyday with our spouses, friends, co-workers, and bosses. Bargaining for Advantage is a great book for those who want a better understanding of the negotiation process, negotiation styles, and the steps to prepare for a successful negotiation. It mixes academic theory and real-life examples to make it a very practical book for beginner and experienced negotiators alike. It’s well worth picking up if you’re looking to understand and improve your skills at the art and science of negotiation.

The Golden Egg

Negotiation is a dance

"Negotiation is a dance that moves through four stages or steps… Regardless of culture, skilled negotiators everywhere are a bit like good dancers."- Bargaining for Advantage, page 119-120

Reading this book made me realize how beautiful negotiation can be. Understanding negotiation from a theoretical level helped me understand the structure and the flexibility that exists in each negotiation. One of the most helpful lessons that I pulled out of this book is how not all negotiations are the same. Much like how you would dance differently with a different partner or type of music (ballroom, salsa, tango, etc.), a skilled negotiator can recognize that each negotiation is different but the steps to conduct each negotiation remain the same.

Shell describes how negotiations typically fall under one of the four quadrants of a situational matrix: 

Balanced Concerns, Relationships, Transactions, andTacit Coordination. 

Each situation has a varied level of importance that is put on preserving a future relationship and maximizing the benefit of winning the negotiation. For example, stopping at a stop sign across another car at an intersection requires simple Tacit Coordination to decide who goes first. It’s better to accommodate the other car and avoid conflict rather than go into an elaborate negotiation over who should go first. The stakes are low and the potential for a future relationship is low as well. Meanwhile, in a Transaction negotiation, such as a house sale, the stakes are high and the likelihood of maintaining future relationships is low. In these cases, hardball tactics such as “walk outs” or anchoring the other party with a very aggressive opening price might be used. Parties will try to maximize the amount of money they can get from the sale and be comfortable risking a future relationship with the other party.

The examples above brush the surface of the negotiation dance. In the other two quadrants, the relationship with the other party is more valued and the strategy for those types of negotiations changes accordingly. With a better understanding of negotiation situations, it becomes less intimidating and the process looks more like a dance – even to novice negotiators.

Gem #1

Understand your unique negotiation style

"You will become the best negotiator you can be by identifying and then building on your genuine strengths and talents."- Bargaining for Advantage, page 9

As the Danish folk-saying goes, “you bake with the flour you have”. As a negotiator it is important for you to realize the style that comes most naturally to you. Your negotiation style has been developed through your childhood, schooling, family, culture, and a myriad of other factors. By recognizing your own style you can identify the strengths and weaknesses with the way you negotiate.

Intense negotiation scenes from TV shows and movies suggest that a competitive style of negotiation is often required for effective negotiators. But this is not necessarily true. A study of American lawyer-negotiators revealed that 65% of sample attorneys from two major American cities exhibited a cooperative style to negotiation while only 24% exhibited a truly competitive style. Furthermore, when this group was assessed for “effectiveness”, more than 75% of the effective group came from the cooperative type and only 12% were competitive.

This doesn’t mean that being overly accommodating to the other side’s demands or interest is the most successful strategy. Studies have shown that individuals or groups that simply ask for a better price, cost, etc. are more likely to receive it than people that do not. The importance of recognizing your style means that you can understand your areas of weaknesses during negotiations so you can adjust your mindset and strategies to overcome these weaknesses to get what you want.

Gem #2

Set an optimistic – but justifiable – target

"For most reasonable people, the bottom line is the most natural focal point... Meanwhile, someone else who is more skilled at orienting himself toward ambitious goals will do much better."- Bargaining for Advantage, page 32

Shell recommends five steps in setting your goals:

1.    Think carefully about what you want

2.    Set an optimistic – but justifiable – target

3.    Be specific

4.    Get committed

5.    Carry your goal into negotiation

Negotiators that bring a specific goal into negotiations do much better than those that do not. Where skilled negotiators differ from amateur negotiators is how they let that goal evolve throughout the negotiation process. Amateur negotiators, upon hearing an immediate objection, might lower their target where a skilled negotiator will not. “Until you know for sure what the other side has for goals and what the other side thinks is realistic, you should keep your eyes firmly on your own defendable target”. Furthermore, it is important to spend time finding out what you have in common with the other party so you can build upon the areas of shared interests. Skilled negotiators spend 40% of their time thinking about the shared interests they might have with the other party whereas unskilled negotiators only spent 10% of their time doing the same.

Another thing that setting an optimistic target does in helping your negotiation is that it takes your eyes away from the minimum acceptable offer. It’s natural for people to focus on the bare minimum in order to view the negotiation as a success. But by bringing a justified target that you think you deserve andcarrying it into the negotiation, you have set a new goal for yourself that you can focus on. That is a pretty powerful tool because you will be able to speak strongly about why you deserve your offer.

I really enjoyed reading Bargaining for Advantage because it helped break down the negotiation process for the layman. I consider myself a fairly accommodating person so learning that an accommodating personality can be most effective in certain situations was great to hear. On the flip side, it was good to identify areas of weaknesses (e.g. focusing on my target rather than my bare minimum) because it will help me be aware of my tendencies moving forward. As Shell describes, negotiation is a dance. Once you learn the cadence and the steps, it becomes a much easier process to improve on.