expanding the pie.docx

6
Expanding the Pie Description Change the frame of the negotiation from a zero-sum, win-lose game to a win- win scenario where both sides can benefit more by working together on mutual benefits. Use 'we' language rather than 'you' and 'I'. Frame the situation as a joint problem where you both want to succeed and that you can both get more by working together. Example Two business competitors on an industry standards committee agree to settle differences and promote the standard as this will help increase the number of total customers, thereby giving each a greater market value. A husband and wife who are negotiating about holidays and the ability to take time off work reframe the situation as 'getting away together' and end up with a decision that when one goes away on business the other will go along too. Discussion In many negotiations there is an assumption that it is win-lose, such that every gain that one person makes leads to the other person losing an equal amount. In a worst-case scenario (which is surprisingly common), the negotiation turns to conflict and it all becomes becomes personal. The sense of fair play (or even getting what I need) then goes out of the window as each player seeks to harm the other before they get harmed themself. 'Zero sum' is a limiting perception and it is often possible for both people to gain, especially if they collaborate. 'Expanding the Pie' comes from the metaphor where people are negotiating about a single pie, such that where one person gets more of the pie it is clear that the other person gets less. If both parties work together to get a bigger pie, then both can have more with the same percentage division. Log-rolling Description Make a range of requests, some of which are less important as well as those which are critical for you. When pressed or making an exchange, concede on items which are lower priority in order to get those which are higher priority. You can also help the other side find the best value for them. Ideally, each person gives things that is less value for them but is higher value for the other person. Example

Upload: varunkalra6

Post on 24-Dec-2015

3 views

Category:

Documents


0 download

DESCRIPTION

Expanding the pie, negotiation skills

TRANSCRIPT

Page 1: Expanding the Pie.docx

Expanding the Pie DescriptionChange the frame of the negotiation from a zero-sum, win-lose game to a win-win scenario where both sides can benefit more by working together on mutual benefits.

Use 'we' language rather than 'you' and 'I'. Frame the situation as a joint problem where you both want to succeed and that you can both get more by working together.

Example

Two business competitors on an industry standards committee agree to settle differences and promote the standard as this will help increase the number of total customers, thereby giving each a greater market value.

A husband and wife who are negotiating about holidays and the ability to take time off work reframe the situation as 'getting away together' and end up with a decision that when one goes away on business the other will go along too.

DiscussionIn many negotiations there is an assumption that it is win-lose, such that every gain that one person makes leads to the other person losing an equal amount.

In a worst-case scenario (which is surprisingly common), the negotiation turns to conflict and it all becomes becomes personal. The sense of fair play (or even getting what I need) then goes out of the window as each player seeks to harm the other before they get harmed themself.

'Zero sum' is a limiting perception and it is often possible for both people to gain, especially if they collaborate.

'Expanding the Pie' comes from the metaphor where people are negotiating about a single pie, such that where one person gets more of the pie it is clear that the other person gets less. If both parties work together to get a bigger pie, then both can have more with the same percentage division.

Log-rolling DescriptionMake a range of requests, some of which are less important as well as those which are critical for you. When pressed or making an exchange, concede on items which are lower priority in order to get those which are higher priority.

You can also help the other side find the best value for them. Ideally, each person gives things that is less value for them but is higher value for the other person.

Example

A person buying a car says that low cost and high performance are both important. When offered a lower performance car they use their stated priorities to help reduce the price.

In a contract negotiation, the buyer tries to put in a number of strict sections about timescales and product features. Later, they concede on some of the features a little but keep the timescale which is more important. 

Discussion

Page 2: Expanding the Pie.docx

Negotiations often include concessions and exchanges as the players seek to find agreement. In order to exchange you have to have something give away. If all you have is things that are important to you, then you will lose out in any exchange. If, however, you have items that you would like but which are less important, you can gain by exchanging low value items for high value items.

The best way of doing this is to have items that are lf lower priority for you but which are higher priority for the other party. Such low-for-high exchanges are often called elegant negotiables (or 'elegant variables').

LowballDescriptionThis is a method for buyers, where you start your bidding particularly low.

When negotiating a price on something, for example, it can help to know what constitutes a reasonable range of prices, so do your research beforehand to find the seller's zone of acceptability, then start at, or even below the bottom of their range. This may be justified with an argument about why you are offering so little.

Be careful about starting out asking the other person what their price is, as this will anchor the discussion (and their expectations) at a higher price.

Example

My son wants to stay out late, coming back at 3am. I start by saying that I want him back at 10pm. We settle on midnight.

Sorry, sir, there's no call for these thing nowadays. It's damaged, too. The best I can offer is...

A car dealer phones around personal adverts of individual selling cars, making very low offers. If they are not immediately rejected, they follow up to see how low a price they can get.

DiscussionWhere you start sets expectations for the other person. When you start low, you can always go up. When you start high, you can never go down.

Starting low creates an anchor for the other person, whereby they may well assume that this is in a reasonable range. If their counter-bid is lower than you expected, then you will end up with a good price. Even if they are below what you expected, do not settle immediately -- at best split the difference and you may be able to nudge them even higher.

A low start may well take longer to reach resolution, giving you more opportunity to find out more about the other person and to build effective tension.

If the other person counters with a highball (or starts to walk away), this may be a signal that they know what you are doing. Hold your nerve! If you collapse your position, they may well take advantage and seek to pull you even further down.

Be careful about starting too  low, as this may cause a betrayal response whereby they leave without further ado, ignoring anything you may say. Extreme positions outside of a range that may be considered fair can also be damaging to relationships (which may be important).

The difference between your start position and your end position is a signal to the other person about how much you have conceded to them. A significant difference will make them believe they have got a bargain (a view you can encourage with sighs and supporting words).

Page 3: Expanding the Pie.docx

Good Guy/Bad Guy DescriptionOne person acts in an aggressive and pushy way, making unreasonable demands and requiring compliance.

The other person then acts in a kind and friendly way, asking nicely -- and getting compliance.

The good guy (or gal, of course) may apologize for the bad guy, or plead for compliance because the bad guy is being horrible to the good guy too.

You can even do it as one person: be unpleasant and then apologize (you are under such stress) and ask nicely for what you want.

Example

A husband and wife go out to buy some hi-fi speakers. He acts in an aggressive and dominant way, complaining about the price and the sales person's 'condescending' manner. She takes the sales person aside and apologizes for her husband and whispers a price at which she thinks he will buy.

A senior manager makes a presentation in an unpleasant and aggressive way, demanding that tough goals are met. A liked line manager meets with her people afterwards and says that if the goals are not met then she will be punished.

DiscussionThis is a classic implementation of the Hurt and Rescue principle, which is a core element of many persuasion methods. The bad guy acts to cause discomfort and tension, after which the good guy offers escape and closure.

This is often seen on TV in the good cop, bad cop routine that is often seen in police dramas. It can also be a subconscious pattern for parents, where one parent tries to impose discipline by demanding compliance after which the other seems to get it easily by gentle request.

What the good guy says often gives the target person an excuse to comply, allowing them to rationalize their action and retain dignity. Sometimes the person complies with the good guy as an act of revenge to 'teach the bad guy manners'.

Gender can make a difference here. While each can play either role, it plays to tendencies and stereotypes if the controlling 'bad guy' is a man and the nurturing 'good guy' is a woman.

Split the Difference DescriptionWhen you have offered one amount (often, but not necessarily, money) and the other person has named another amount, then offer to 'split the difference', to agree on a price that is half-way between what you want and what the other person wants.

Example

It's lower than I really wanted, but I'd be prepared to split the difference.

You are offering 200. I want 300. For a quick sale, I'll accept 250.

Discussion

Page 4: Expanding the Pie.docx

Splitting the difference, agreeing a solution that is half-way between two positions, appears to be fair, and hence can be difficult to refuse.

The trick with this is to maneuver the situation such that a half-way position is actually still a very agreeable solution for you.

Highball DescriptionThis is a tactic for sellers, where you make your first offer as high possible without completely putting off the customer.

This can be helped by determining what constitutes a reasonable range of prices, so do your research beforehand to find the buyer's zone of acceptability, then start at, or even above, the top of their range.

Be careful about asking the other person what they will offer, as their first bid anchors the discussion, quite possibly on the low side (although if they seem particularly keen to settle, asking them might give you a pleasant surprise).

Example

A child who wants a parent to fund a night out starts by asking for about three times as much as they really want.

When selling goods, a market trader starts with a high price. He then reduces the price without being bargained with, using excuses about being kind, needing to sell everything today and so on.

An estate agent takes buyers to houses that they cannot afford. This, however, raises their desires and the house they eventually buy is more expensive than they had anticipated.

DiscussionWhere you start sets expectations for the other person. When you start high, you can always go down. When you start low, you can never go up.

Starting high creates an anchor for the other person, whereby they may well assume that this is in a reasonable range. If their counter-bid is also high, then you will end up with a high price. Even if they are above what you expected, do not settle immediately -- at best split the difference and you may be able to nudge them even higher.

A high start may well take longer to reach resolution, giving you more opportunity to find out more about the other person and to build effective tension.

If the other person starts low, then it may be socially difficult for you to counter with a high bid, although this can actually be a good move. Responding to a low bid with a high bid indicates that you know they are low and may be seeking

If the other person counters with a low bid (or starts to walk away), this may be a signal that they know what you are doing. Hold your nerve! If you collapse your position, they may well take advantage and seek to pull you even further down.

Be careful about starting too high, as this may cause a betrayal response whereby they leave without further ado, ignoring anything you may say. Extreme positions outside of a range that may be considered fair can also be damaging to relationships (which may be important).

Delays

Page 5: Expanding the Pie.docx

 DescriptionUse time to stretch out the negotiation, especially at critical moments.

When you feel you are being pressured or hurried, take a break or otherwise put off making any decisions until you have thought things through.

When the other person is constrained by deadlines, delay right up to the wire.

Dangle something under their noses that makes them salivate and then do not talk about it until later.

Example

Excuse me, I just need to go the to the bathroom.

Well, we could look at the things you want. But it's time to stop for today.

John will be very unhappy if this does not happen. I think I will call him in later.

DiscussionIntroducing delays can be helpful for you to regroup and rethink.

When you have increased tension of some sort in the other person, whether it is desire for something you may give them or some negative consequence of not agreeing, then a delay can serve to heighten that tension as they focus on the good and bad possibilities.

The tension of delay is increased with uncertainty, when the other person cannot predict what will happen.