negotiation
Rust99
Session1IntroductiontoNegotiation2020_.pdf
Personal :
• Who are you …?
VALUES Affirmation Activity
• Where are you from?
A global view
• Why are you studying here? Three crossroads in your life:
Anne Dwyer: [email protected]
• Fundamentals of Negotiation • Definition of negotiation and approach • Leverage and other key concepts • BATNA
• Stages and angles of negotiation • The other mind. The trading interval. Impress and influence. • Negotiations with anonymous and absent parties. • Characteristics of a negotiation situation and interdependence. • Mutual adjustment throughout negotiations and making and interpreting concessions.
• Value claiming and value concessions.
• Conflict management.
Today’s focus
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Course Outcomes
1. Have an in-depth understanding of the keys to successful negotiation.
2. Critically appreciate negotiation styles, strategies, and tactics.
3. Identify and create alternative negotiation strategies and tactics - (own and of the other party).
4. Understand and apply due diligence briefing and debriefing.
5. Evaluate the difference between distributive and integrative bargaining and negotiation.
6. Apply the framework of ethics in negotiation.
7. Critically understand the cultural differences in negotiation and understand the reason for and purpose of mediation.
Anne Dwyer: [email protected]
Personal Experiences: recall …
• Positive negotiation
• Negative negotiation
• Pointless negotiation
• ‘Never mind’ negotiation
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How would you define Negotiation?
• Gifford –
“the process in which two or more participants attempt to reach a joint decision on matters of common concern in situations where they are in actual or potential disagreement or conflict”
What are the key words in the above definition?
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1. Fundamentals of Negotiation and key concepts
1. Stages and angles of negotiation
2. Distributive negotiation
3. Integrative negotiation (MGB - mutual gains bargaining)
4. Understanding the other negotiating party
5. Negotiation styles
6. Relationship building
7. The long-term and the short-term approach
8. Leverage
9. Tactics
10. The BATNA
Anne Dwyer: [email protected]
Why do people negotiate?
1. they need someone else to help them accomplish goals
1. Create something new
New relationship, partnership, entity, transaction
2. Conflict resolution
Hope to resolve dispute
2. they think they can use some form of influence to get a better deal (e.g promotion, sale) or solution (e.g schedule, work/life balance)
3. they prefer to secure an agreement instead of a public fight
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When is it a good idea to Negotiate?
• Win/Win outcome is desirable to both parties
• You occupy a defensible position
• Both parties have options
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When is it NOT a good idea?
• You are in competition with the other party.
• One or both sides enter with false intentions (both sides must want win/win).
• Cannot possibly win
• You or other party lack authority
• Legal constraints
• Ethical contraints
• ‘Culture’ constraints
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What is the purpose of each of these phases?
What attitudes and behaviors will you adopt?
1. The information phase
2. The competitive phase
3. The cooperative phase
• Finding Common Ground
– Active listening is critical.
• Exploring Differences
– Ask “Why?”
• Tactics
– Disclosures
– Opening Offers & Counteroffers
Anne Dwyer: [email protected]
How do we Negotiate in long-term business relationships?
Information Phase:
Gain greater understanding of the other side’s motives, objectives, and constraints
Allow the other side to learn some of your motives, objectives, constraints
Competitive Phase:
• Seek common ground (Win/Win)
Integrative phase
• How can we make this work?
• Build relationships
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Flow of information Create a free and open flow, share
information openly
Conceal information, or use it
selectively and strategically
Understanding the other Attempt to understand what the other
side really wants and needs
Make no effort to understand the
other side, or use the information to
gain strategic advantage
Attention to commonalities and
differences
Emphasized common goals,
objectives, interests
Emphasize differences in goals,
objectives, interests
Focus on solutions Search for solutions that meet the
needs of both (all) sides
Search for solutions that meet own
needs or even block the other from
meeting their needs
Attitudes and Behavior When and why?
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In groups
• compare and contrast the BATNAs you had in your Role-Plays
• brainstorm possible alternatives when
A) looking for a flat
B) deciding what to eat
C) choosing where to hold an event
D) looking for an internship
Remember there are BATNAs and WATNAs
BATNAs BRAINSTORM: assignment
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Preparation: Negotiation Brief
• Identify and prioritize key issues: Collect relevant facts
• Determine roles
• Examine your position
– strengths, weaknesses, BATNA, limits, and ranges of options
• Know about the other party, Consider the other party’s needs, How would you proceed in their role?
• Integrative opportunities : Logrolling, bundling
• Talk about negotiation with others
The Pre-Negotiation Planning Phase 1
1.Decide if Subject Matter Expert involvement required
2.Research options/issues and precedents Understand your BATNA and WATNA
3.Understand the motivators of affected stakeholders 4.Know impact of each option (time, cost, quality,
scope) 5.Risk/opportunity assessments 6.Timing issues (urgency, best time to meet …) 7.Summarize pros and cons
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• Rationality
– Players are perfect calculators and implementers of their desired strategy
• Common knowledge of rules
– All players know the game being played
• Equilibrium
– Players play strategies that are mutual best responses http://www.youtube.com/watch?v=kK-aQisdJ30
What is more important: the relationship or the issue?
Standard Assumptions
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The Pre-Negotiation Planning Phase 2
1. Cultural considerations (people and Enterprise) 2. Formulate strategy based on knowledge of the
stakeholders 3. Pre-meeting info dissemination 4. Invite appropriate empowered representatives 5. Set conducive agenda, facilities, timeslot, and
refreshments 6. Plan for timely post negotiation action 7. Plan for analysis of “lessons learned” after negotiating
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Terminology
• Strategies
– Choices available to each of the players
• Might be conditioned on history
• Payoffs
– Some numerical representation of the objectives of each player
• Could take account fairness/reputation, etc.
• Does not mean players are narrowly selfish
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The connection to Negotiation = ?
• Transparency (Knowing what the other party is thinking and planning) is key
• Trust (confidence in agreements being kept) is key
• the big T
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‘Classical’ options/strategies
• AVOID Lose- Lose
• ACCOMODATE Lose - Win
• COMPETE Win - Lose
• COLLABORATE Win – Win
• COMPROMISE Win – Win? / Lose – Lose?
• NO STRATEGY “let the chips fall” / ‘laissez faire’, lazy?
• When do we do what?
• What is more important: the relationship or the issue?
Anne Dwyer: [email protected]
NEGOTIATION STYLES and STRATEGIES
What is ‘wrong’ with these ‘labels’?
What is more important: the relationship or the issue?
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Some Negotiating lessons are tough to take...
Conceptualize
• What is at stake?
• What are the parties trying to achieve?
• What is the relationship of the parties?
• What are the legal constraints?
• What behaviors could/should be used?
• What other people are involved?
• How can we have a successful negotiation?
Anne Dwyer: [email protected]
What is at stake?
• Resources
• Values or Beliefs
• Preferences or Interests
• Relationship
• Identity
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THE METHOD – Fisher and Ury (1991) “Getting to Yes”
• Separate the People from the Problem
• Focus on Interests, Not Positions
• Invent Options for Mutual Gain
• Insist on Using Objective Criteria
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• Separate people from problems
• Focus on the interests
• Invent options for mutual gains
• Insist on objective criteria
• CHALLENGES: Trust, transparency and ethics
• MESSAGE: Honesty Pays in the long run
4 principles
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Negotiation Debrief
A. How did the negotiation go?
B. What was the tone of the negotiation?
C. What did you learn?
D. What was your settlement? If no settlement is there a follow-up letter?
Anne Dwyer: [email protected]
Caveats
• Beware “winning the battle and losing the war”
• Don’t make offers you can’t keep.
– Retracting an offer will often destroy the spirit of negotiation.
– Lying or misrepresentation may be grounds to invalidate the agreement.
• The negotiating table is NOT a smorgasbord!
– Don’t go back for “seconds”.
• Greed is risky.
• Don’t play games.
– Demonstrate respect
– Avoid surprises
Anne Dwyer: [email protected]
Common Negotiating Mistakes
•Weak knowledge of key motivators •Poor handling of Alternatives •Failure to fully acknowledge the concerns of others •Impatience/ Poor timing •Allowing emotions to escalate •Negotiating with the un-empowered •Poor close
Preparation/anticipation and listening are key!
Anne Dwyer: [email protected]
Pemberton’s Dilemma: Do we allow shops to open on
Sundays?
Corner Store CLOSE SUNDAY OPEN SUNDAY
CLOSE
SUNDAY
Corner
Country
+$20 000
+$20 000
Corner
Country
-$40 000
+ $40 000
OPEN SUNDAY Corner
Country
+ $40 000
-$40 000
Corner
Country
-$20 000
-$20 000
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• If both stores open, both lose $20 000
• If both stores close, both stores gain $20 000
• If one store opens and the other closes, the store that open makes $40 000 and the store that closes loses that amount
Understanding Pemberton’s dilemma
PROFIT CHART
PROFIT
Corner Store’s Choice Country Market’s choice Corner Store Country Market
First 15m
planning
period
1.
2.
3.
4. DOUBLE profit/loss,
this round only
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Game theory: The story:
The policeman says: ”If neither of you confess, then both will be convicted of a minor offence and sentenced to 2 years in jail.
• If you both confess, then I will sentence you to jail for 3 years.
• If one of you confesses then he will be treated leniently and will be on remand for 1 year; and used as a witness against the other, who will be sentenced to 5 years in jail; 4 for the crime and 1 for obstructing the justice.”
• http://www.negotiation.hut.fi/theory/PrisonersDilemma.html
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Game theory: In a picture
…http://www.negotiation.hut.fi/theory/PrisonersDilemma.html
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The Uses of Game Theory
• Explanatory – A lens through which to view and learn from past negotiations/conflicts
• Predictive – With many caveats
• Prescriptive – The main thing is the theory helps you to think strategically
It’s all about the big T
Anne Dwyer [email protected]
Summary
• Highly disparate parties can achieve win/win solutions.
• Parties must be prepared, serious, sincere, and committed.
• Keys to success are preparation, effective two-way communication, and principled negotiation.
• The reasons negotiations fail ?
– poor preparation
– wrong intentions
– greed
– indecision
– emotion
“Don’t wrestle with a pig…you both get dirty and the pig likes it!”
Anne Dwyer: [email protected]
• Fundamentals of Negotiation • Definition of negotiation and approach • Leverage and other key concepts • BATNA
• Stages and angles of negotiation • The other mind. The trading interval. Impress and influence. • Negotiations with anonymous and absent parties. • Characteristics of a negotiation situation and interdependence. • Mutual adjustment throughout negotiations and making and interpreting concessions.
• Value claiming and value concessions.
• Conflict management.
Leverage = ‘the card up your sleeve’ e.g your competitive advantage, your ‘brand’, your reputation, your contacts, your long-term possibilities … these can also be how you ‘add value’ (12) and they allow you to make concessions and help you to establish ‘interdependence’ (how much negotiation is ‘on-off’ and ‘never again?)
The balance between Issue and Relationship -> conflict management strategy (Compete Accommodate Compromise Avoid Collaborate)
Did we cover ….?
Anne Dwyer: [email protected]
Assignments + Workload
Normally this is a 24h course + assignments (48h input)
This online ‘summer’ version has 1.5h contact and the rest is done as follows:
Weekly Negotiation Forum: You may start to negotiate in-session and finish online + “observe + comment” in a parallel forum
Weekly Reading a) read and share your views (in an Opinion Forum) OR b) read and summarize in a ppt
“Search and Share” Forum where you will upload and/or rate videoclips
• Ongoing: Keep a Negotiation Journal (recommended)
Sign up: http://www.pon.harvard.edu/index.php?seminar=tr
• This week’s readings? Read about BATNAS
Anne Dwyer: [email protected]
Exercises
Form into teams of 3 (4 if necessary).
1. Negotiations for a scarce resource The person who’s birthday occurs earliest in the year plays the role of the
Negotiating PM (Performance Manager). Next birthday is Susan’s Manager. The third (and fourth?) persons are Observers who note use/abuse of “win-win” techniques.
Background: The Negotiating PM has a Programmer off sick, and wants to negotiate
two weeks of Susan’s time to work on the Company’s most important project immediately, because Susan is the best programmer, and knows the tasks. Delays may affect everyone’s bonus.
Susan’s Manager is concerned the loss of Susan will mean she will not be able to complete tasks on another project their department is committed to deliver (requiring at least one week of work in the next 3 weeks), because the Negotiating PM has a reputation of over-utilizing resources (and padding their schedule contingency). Other commitments will also need juggling.
Time: 3 minutes
Analysis of Exercise 1
Susan’s Manager’s: Who felt things went very well? Why? Observers: Lead a constructive discussion within your team on the “win-win”
techniques (2 minutes). 1. Established rapport and common goals? 2. Probed for understanding of beliefs, goals, win-win options, and hidden stakeholder
motivators? 3. Paraphrased for confirmation/affirmation? 4. Analysed outcomes and risks? 5. Summarized what was agreed on, and next steps?
• If stalled, returned to a fundamental that was agree on? • Built on this common ground? • Avoided emotional responses (even if insulted)? • Considered interim options (or postponement) if undesirable outcome was imminent, or
key info missing?
Exercise #2
Change roles. The PM becomes the Observer. The observer becomes a driver whose car has broken down at a garage 2 hours away from Toronto. Susan’s Manager becomes the head mechanic at the garage. Background: You have to be in Toronto for an important meeting in 4 hours. The mechanic estimates it will take an hour to fix your car, but there are several local clients already expecting their cars to be fixed this morning. The mechanic wants your business, but does not want to let down any of the regular clients. Time: 3 minutes
Analysis of Exercise 2
Mechanics: Who felt things went very well? Why? Observers: Lead a constructive discussion within your team on the “win-win”
techniques (2 minutes). 1. Established rapport and common goals? 2. Probed for understanding of beliefs, goals, win-win options, and hidden stakeholder
motivators? 3. Paraphrased for confirmation/affirmation? 4. Analysed outcomes and risks? 5. Summarized what was agreed on, and next steps?
• If stalled, returned to a fundamental that was agree on? • Built on this common ground? • Avoided emotional responses (even if insulted)? • Considered interim options (or postponement) if undesirable outcome was imminent or key
information is missing?
Exercise #3
Rotate the negotiator role to be the proud owner of a new sports car. Select someone to be a good friend wants to borrow the car on Saturday. Background: The Negotiator is not using the car this weekend, but is concerned the good friend is a fast driver. The friend is generous, and has done you several favours for the Negotiator, including a recent birthday gift. Time: 3 minutes
