 "Weighing best-case and worst-case scenario")
Answering the three core questions (Should you negotiate? Is now the time? Do you go all in?) requires projecting yourself into the future. Doing a "premortem" is powerful protection against wishful thinking. It's a strategic planning technique advocated by decision scientist Gary Klein in his book Intuition at Work: Why Developing Your Gut Instincts Will Make You Better at What You Do (it has since been retitled The Power of Intuition.
Klein's research shows that in critiquing any plan, it's not enough to ask, "Can we foresee any problems with this approach?" Such a question will surface some concerns, but often it's a skimpy list. It's easy to be smitten with your own logic. Having mapped backward from point Z - your goal - to your starting point, A, you may persuade yourself that there is but one true way that things can go. Klein has found that slightly rephrasing the question conjures up a richer picture of what could unfold. Specifically, test your strategy by asking this:
Premortem Part 1: Flash forward. Imagine that the negotiation is under way. Now imagine there's been a major setback. What is it? That subtle shift in framing will animate your vision. Your focus will shift from whether something bad might happen to assuming that trouble will occur. You needn't be paranoid. Put aside being hit by a meteor just as you're about to sign the deal. But consider things that are unlikely yet still could happen.
Perhaps, for example, there's a small chance that the market will shift in the other party's favor or that after making an agreement, you learn belatedly that you could have gotten better terms elsewhere. If you think about such scenarios, you may realize that they're more probable than you'd like to admit. A seemingly simple transaction with a supplier could drag out longer than expected, for instance. If that happens, meeting commitments to your own customers could be difficult. You'd be in a weak position unless you lined up a fallback in advance.
The point of the premortem exercise isn't to identify each and every way a deal might go wrong. That's neither possible nor necessary. Rather, it's meant to foster an attitude of watchfulness, so you'll be quicker to see that the process is going awry. If you're alert, you may be able to get back on track. If not, you'll have a plan B. In planning ahead, it's just as important to be open to good news, of course. Thus, you should couple Klein's premortem with an optimistic test:
• Premortem Part 2: Flash forward again. This time imagine that there's been some sort of pleasant surprise. What is it? You needn't fantasize that you're going to win the MacArthur "Genius Grant" for negotiation. Rather, limit your analysis to the outer bounds of reality. Think of something positive that has a 10 percent chance of occurring. If you're buying new equipment or supplies, maybe your vendor has an unexpected overstock, for example. If so, you might get a better price or faster delivery than in the past.
Optimistic scenarios will raise your sights. Studies show that negotiators who set lofty goals get better deals. By aiming high, they don't give away as much of the bargaining range when there's ample room to negotiate. Instead of contenting themselves with outcomes they can live with, these negotiators focus instead on how much the other party might be prepared to grant. In addition, imagining upside scenarios prepare you to recognize opportunities and find creative solutions.
Research also shows that positive and negative expectations about negotiation can be self-fulfilling. In a recent experiment on psychological priming, Adam Galinksy and his colleagues gave some subjects five minutes to write a pep talk for themselves. They were told to list the outcomes they desired and the behaviors they would use to achieve, or promote, them. The subjects in a second group were instructed to list mistakes that they might make and what they could do to prevent those errors.
THE ART OF NEGOTIATION: HOW TO IMPROVISE AGREEMENT IN A CHAOTIC WORLD
Author: Michael Wheeler
Publisher: Simon & Schuster
Price: Rs 599
ISBN: 9781476757919
Authors Speak
An important task in the early part of a negotiation is testing your assumptions, and adjusting your approach according to what you discover, Wheeler tells Ankita Rai
What is the biggest mistake people make when they enter a negotiation. How to avoid being myopic when negotiating?
Many negotiators fail to distinguish facts from assumptions when they prepare. They may believe, for example, that there is little room between what they have to offer and what their counterpart will accept. They could be right, but they should open their minds to the possibility that there is much more to be gained. (And that it is also possible, that there is no room at all for a deal.) An important task in the early part of a negotiation is testing your assumptions, and adjusting your approach according to what you discover.
Getting the right feedback is difficult in negotiation. How can one tap the experience and improve as a negotiator?
Outcomes are a poor measure of how you've performed as negotiators. Look instead at how you negotiated, not what you negotiated. Before going to the table, write down your general plan. Then review it when the negotiation is over. Did things unfold as you expected, or did certain things arise that you should have foreseen? There will always be surprises, but if you sharpen your sense of anticipation, there will be fewer of them.
What is the role of emotions in the whole negotiation process. Is it an enemy of negotiation?
Emotion can be a powerful force in negotiation. A negative emotion can make people defensive and distrustful. Anger can make people walk away from deals that really are in their interest. But empathy can be the basis of a mutually beneficial relationship.
What are the key points to keep in mind while negotiating a business deal?
Often people ignore the fact that negotiation over implementation will often continue long after the formal contract is signed. It is important to strike the right balance between precision and flexibility, as it may be impossible to plan for every possible innovation in technology or in the marketplace. Crafting reasonable dispute resolution procedures at the outset, when there is a lot of good will, is much easier than it is after there has been some sort of misunderstanding.
You say accept the luck factor in negotiation. But don't you think luck undermines the importance of skill?
We can't ignore luck. For example, you can't control whether your counterparts are in a good or bad mood when they come to see you. Nor can you control whether they just got an attractive offer from one of your competitors. But skill is important in regard to your ability to understand other parties, encourage them to be constructive, and to solve problems creatively.
Klein's research shows that in critiquing any plan, it's not enough to ask, "Can we foresee any problems with this approach?" Such a question will surface some concerns, but often it's a skimpy list. It's easy to be smitten with your own logic. Having mapped backward from point Z - your goal - to your starting point, A, you may persuade yourself that there is but one true way that things can go. Klein has found that slightly rephrasing the question conjures up a richer picture of what could unfold. Specifically, test your strategy by asking this:
Premortem Part 1: Flash forward. Imagine that the negotiation is under way. Now imagine there's been a major setback. What is it? That subtle shift in framing will animate your vision. Your focus will shift from whether something bad might happen to assuming that trouble will occur. You needn't be paranoid. Put aside being hit by a meteor just as you're about to sign the deal. But consider things that are unlikely yet still could happen.
Perhaps, for example, there's a small chance that the market will shift in the other party's favor or that after making an agreement, you learn belatedly that you could have gotten better terms elsewhere. If you think about such scenarios, you may realize that they're more probable than you'd like to admit. A seemingly simple transaction with a supplier could drag out longer than expected, for instance. If that happens, meeting commitments to your own customers could be difficult. You'd be in a weak position unless you lined up a fallback in advance.
The point of the premortem exercise isn't to identify each and every way a deal might go wrong. That's neither possible nor necessary. Rather, it's meant to foster an attitude of watchfulness, so you'll be quicker to see that the process is going awry. If you're alert, you may be able to get back on track. If not, you'll have a plan B. In planning ahead, it's just as important to be open to good news, of course. Thus, you should couple Klein's premortem with an optimistic test:
• Premortem Part 2: Flash forward again. This time imagine that there's been some sort of pleasant surprise. What is it? You needn't fantasize that you're going to win the MacArthur "Genius Grant" for negotiation. Rather, limit your analysis to the outer bounds of reality. Think of something positive that has a 10 percent chance of occurring. If you're buying new equipment or supplies, maybe your vendor has an unexpected overstock, for example. If so, you might get a better price or faster delivery than in the past.
Optimistic scenarios will raise your sights. Studies show that negotiators who set lofty goals get better deals. By aiming high, they don't give away as much of the bargaining range when there's ample room to negotiate. Instead of contenting themselves with outcomes they can live with, these negotiators focus instead on how much the other party might be prepared to grant. In addition, imagining upside scenarios prepare you to recognize opportunities and find creative solutions.
Research also shows that positive and negative expectations about negotiation can be self-fulfilling. In a recent experiment on psychological priming, Adam Galinksy and his colleagues gave some subjects five minutes to write a pep talk for themselves. They were told to list the outcomes they desired and the behaviors they would use to achieve, or promote, them. The subjects in a second group were instructed to list mistakes that they might make and what they could do to prevent those errors.
THE ART OF NEGOTIATION: HOW TO IMPROVISE AGREEMENT IN A CHAOTIC WORLD
Author: Michael Wheeler
Publisher: Simon & Schuster
Price: Rs 599
ISBN: 9781476757919
Excerpted with permission from the publisher Simon & Schuster. Copyright @2013 Michael Wheeler. All rights reserved
Authors Speak
An important task in the early part of a negotiation is testing your assumptions, and adjusting your approach according to what you discover, Wheeler tells Ankita Rai
What is the biggest mistake people make when they enter a negotiation. How to avoid being myopic when negotiating?
Many negotiators fail to distinguish facts from assumptions when they prepare. They may believe, for example, that there is little room between what they have to offer and what their counterpart will accept. They could be right, but they should open their minds to the possibility that there is much more to be gained. (And that it is also possible, that there is no room at all for a deal.) An important task in the early part of a negotiation is testing your assumptions, and adjusting your approach according to what you discover.
Getting the right feedback is difficult in negotiation. How can one tap the experience and improve as a negotiator?
Outcomes are a poor measure of how you've performed as negotiators. Look instead at how you negotiated, not what you negotiated. Before going to the table, write down your general plan. Then review it when the negotiation is over. Did things unfold as you expected, or did certain things arise that you should have foreseen? There will always be surprises, but if you sharpen your sense of anticipation, there will be fewer of them.
What is the role of emotions in the whole negotiation process. Is it an enemy of negotiation?
Emotion can be a powerful force in negotiation. A negative emotion can make people defensive and distrustful. Anger can make people walk away from deals that really are in their interest. But empathy can be the basis of a mutually beneficial relationship.
What are the key points to keep in mind while negotiating a business deal?
Often people ignore the fact that negotiation over implementation will often continue long after the formal contract is signed. It is important to strike the right balance between precision and flexibility, as it may be impossible to plan for every possible innovation in technology or in the marketplace. Crafting reasonable dispute resolution procedures at the outset, when there is a lot of good will, is much easier than it is after there has been some sort of misunderstanding.
You say accept the luck factor in negotiation. But don't you think luck undermines the importance of skill?
We can't ignore luck. For example, you can't control whether your counterparts are in a good or bad mood when they come to see you. Nor can you control whether they just got an attractive offer from one of your competitors. But skill is important in regard to your ability to understand other parties, encourage them to be constructive, and to solve problems creatively.
Ankita Rai