A successful conversation is much like a tennis game-back and forth with each participant equally enthused. Once the dialogue has begun, the conversation should flow from there.
One of the reasons most people dislike negotiation is that it involves confrontation. You have to stand your ground and react to pushback. Whether you’re negotiating with your gardener about how much he’ll charge to trim your trees or with an auto dealer about the sales price of a used car, most people feel uncomfortable with the back-and-forth and are nervous about starting the process at all.
That’s when you need to take a deep breath and remember the second of the three rules I outlined: keep control of your emotions. Getting emotional is the quickest way to botch a negotiation. You’ll either push too hard—making the other party feel bullied or unfairly treated—or you’ll give in too soon because you’re afraid to stick to your guns.
The way to avoid getting emotional is to exercise discipline before you enter a negotiation. First, set your limit. What’s the most you’re willing to pay or the least you’re willing to work for? If the other party pushes you beyond the number you’ve set for yourself, be prepared to walk away.
My limit is always firm at the most I think something is worth. I never pay more. That hasn’t changed from when I was 23 and had a few hundred bucks to my name. Early in my career, I never would have imagined I would pay tens of millions of dollars for a piece of art. But I’ve loosened up a bit, and I understand that if you love something, its value is calculated in more than dollars.
Take a sculpture I bought in 2005, David Smith’s Cubi XXVIII. Many people consider Smith, who was part of the abstract expressionist circle, to be the twentieth century’s preeminent American sculptor. I had wanted a Cubi since 1994, when one came up for auction at Sotheby’s. When the price went above $4 million—too high by my estimate—I dropped out. As the years passed, I regretted it. Smith made only 28 of the towering stainless steel pieces, and all but three already were in museums. I had underestimated both the piece’s rarity and the escalation in prices the contemporary art market would undergo. In 2005, when another Cubi came up for auction, I was determined to get it. Even so, I maintained my discipline and went into the sales room with a top price—$25 million—in my head. I got the piece for $23.8 million, which was the highest price ever paid at the time for a contemporary work of art at auction.
Whenever you’re going into a negotiation, recognize how badly you want something and what you’re willing to do to get it—even pay a premium, a price higher than what others might pay or think it’s worth. But make that calculation before you are in the heat of negotiation. Then be disciplined. Never let emotion or exhaustion or anything else lure you beyond that limit.
Be ready to say yes and don’t sit down unless you can make a decision
If you enter a negotiation without having the power to say yes or no— if you need to run things by colleagues or bosses or lawyers or accountants—you risk losing whatever ground you’ve gained. You risk having to start again, maybe at a different and more difficult place once your negotiating partner has had time to think. Don’t go into the room unless you’re prepared to make a decision.
In my negotiation to buy an important art collection for the Museum of Contemporary Art, for instance, I made sure not to start talks until I had the go-ahead from MOCA’s full board.
MOCA was a brand-new institution in a city that previously had lacked a showcase for contemporary art. We had a building, a board, and an endowment—but no art. That was a problem for an art museum.
One of our trustees, Count Giuseppe Panza di Biumo, was facing a problem in that he had to sell his great collection of contemporary art— 80 works amassed between 1956 and 1963—or pay enormous taxes on it, which he could not afford. The count, an Italian businessman and one of the first European collectors of American postwar art, was upset. He had spent decades studying art, meeting artists, and painstakingly acquiring first-rate artworks. He was a smart collector with a great eye, and all his work would be for nothing if the collection was broken up and sold to private collectors around the world. If he couldn’t have them, he wanted to see them all in a good public museum.
The count’s collection was perfect for MOCA. It contained works by Mark Rothko, Robert Rauschenberg, Franz Kline, Roy Lichten-stein, and several other leading artists. The pieces the count had were all stellar examples of those artists’ work. Sotheby’s appraised the collection at somewhere between $ 11 million and $ 15 million. MOCA’s board decided the highest we could afford to pay was $12 million. I decided to start negotiations at $ 11 million—a fair point because it was Sotheby’s low estimate—and I aimed to stay at that price, although I was willing to negotiate other particulars.
I spent about six months wooing the count—showing him around L.A., introducing him to our then mayor, Tom Bradley, and making sure he saw why the city needed his collection. But the actual negotiations were completed in a day. That’s because the MOCA board had already given me its limit and had given mp full authority to negotiate and to sign a deal. The timing was right too—the count had to sell soon because the Italian government had given him a deadline that was approaching.
Don’t swing wildly—start close to where You want to end up
In negotiations a lot of people like to start very low and work their way to the middle. They think this makes both parties happy—the feeling of winning ground, of coming to agreement from a great distance.
I disagree. Going back-and-forth wastes too much time, and more often than not, people feel like they’re losing each round rather than winning.
Instead, I do something that most people consider unreasonable: I make a first offer that’s pretty close to my final offer. I leave a little wiggle room, some space to meet the other party, but that’s it. This shocks people and makes them think I drive a hard bargain. In fact, I’m just saying exactly what I mean and sticking to it. Most people will meet my offer, or come very close, once they realize I’m not going to budge much from what we both know is fair. It saves us all a lot of time and pain.
In my MOCA negotiation with the count, my first offer was almost precisely where I wanted to end up—even though my limit was a bit higher. I stuck to $ 11 million, although the count pushed for $12 million. I countered by promising him a higher down payment. We were able to agree on $11 million with the higher down. The collection today is probably worth at least a billion dollars.
I was able to keep my head, not get emotional, and stick to my offer when the count made his counterproposal. Knowing you’ve made a fair offer, setting your limit, and keeping a level head should prevent you from doubting your position, no matter what. You’ll have to face counteroffers, dead silence, steely gazes, and awkward pauses. But you have to keep your eye on the endgame and not let all the rest distract you.
Never forget what makes the other guy tick
The third rule of negotiation is to be conscious of the other person’s motives. These include the things he or she tells you up front, extenuating circumstances you know about the person, and what you determine is important to the person with whom you’re negotiating. Those latter factors can be the most powerful.
For my negotiation with the count, I knew his interests from the start. He often visited L.A. in his capacity as a MOCA trustee and to check out the local art scene. He stayed at our guesthouse with his wife. When it came time to sell his collection, I knew his foremost concerns: Selling soon to avoid paying taxes and keeping his collection whole rather than seeing it dispersed piece by piece.
I worked all this into my offer by promising the count we would be a very swift buyer and by assuring him we would try our hardest to keep the collection whole—that we would sell a piece only if we needed the money to pay him.
Reprinted with permission from John Wiley & Sons Inc
THE ART OF BEING UNREASONABLE
AUTHOR: Eli Broad
PUBLISHER: John Wiley & Sons Inc.
PRICE: Rs 1,374
