Monday, August 11, 2008

Bargaining for Advantage

I'm reading "Bargaining for Advantage" by G. Richard Shell. There are a number of important lessons for negotiators in this book. I'll start at the beginning.

1. Set high expectations.

"High achievement comes from high aims." - King Ching of Chou
"I believe in always having goals, and always setting them high." - Sam Walton

"Transform your goals from simple targets into genuine--and appropriately high--expectations."

"Goals are usually things we strive toward that are beyond our past achievements. An expectation, on the other hand, is a considered judgment about what we can and ought reasonably to accomplish."

Goals give us direction, but expectations are what carry meaning and conviction to our statements. In negotiation, what you aim for is often what you get. Setting specific goals motivates people, focusing and concentrating their attention.

It's important to distinguish between your "bottom line" and your goal, or "highest legitimate expectation." Once a negotiation is underway, people tend to gravitate towards the single focal point that has the greatest psychological significance for them. If you focus on your bottom line, you will consider any agreement reached above that point to be a success. If you focus on your goal (or "expectation"), then any offer reached below that point would be considered a loss.

To make your goal more real, make it specific, write it down and talk about it.

2. Use authoritative standards and norms to your benefit.

"The first duty of a wise advocate is to convince his opponents that he understands their arguments." - Samuel Taylor Coleridge

As part of your preparation for negotiation, you must become an advocate for your goals using the most persuasive standards that you can. You need these standards to give you a fair basis on which to be an energetic advocate for your goal.

Why are standards and norms important? Because people like to be seen as consistent and rational in the way they make decisions.

You maximize your normative leverage when the standards, norms, and themes you assert are the ones that your counterpart views as legitimate and relevant to the resolution of your differences.

If you only advocate your own standards and norms, you will not inspire agreement. The best practice is therefore to anticipate the other side's preferred standards and frame your proposal within them. If you can't do this, argue your position as an exception to their standard. But only attack their standard as a last resort.

Beware the consistency trap: an aggressive negotiator will get you to commit to an innocent-sounding principle/standard, then spring their trap by arguing that your position violates the norm you just agreed to. Probe why these questions are important before committing to anything. If you are pressed into committing, qualify it or say it in your own words and use the broadest possible terms.

Standards and norms have power in negotiation in part because they carry an authoritative message about what the market, the experts, or society has determined to be a fair and reasonable price.

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