In 1979, Royal Little, the 83-year founder of Textron and father of the modern conglomerate, wrote a book titled, How to Lose $100,000,000 And Other Valuable Information. It chronicled some of his colossal business failures, and how he learned from them. Mr. Little kept a picture in his office of the yacht on which his company lost millions as a symbol of his foolish mistakes. His point was that it is often far more beneficial in business, to study what not to do. Since we cannot possibly live long enough to make all the mistakes ourselves, learning from the mistakes of others is also efficient.
Applying that wisdom, let’s examine what mistakes to avoid in negotiation. This list of my top twenty list boners, while no means exhaustive, does highlight many common errors. See if you can find any of your favorites in the list.
1. Accepting the first offer. If you do, it will drive you nuts. How do you know that you could not have done better? The buyer has an obligation to beat the price down, no matter how good the first offer.
2. Being the first to name the price. This sets the stage for an auction where price is all that matters. Kodak sells priceless memories, not low priced film. The solution to the problem sells far more than does a cheap product or service.
3. Being the first to offer to split the difference. Instead, get the other guy to offer to split the difference. This tactic transfers veto power to the other side. I once had a customer who bemoaned the fact that we were so close, and how he hated to see the deal fall apart. In a misguided gesture of conciliation (without getting conditional agreement first), I offered to split the difference. The next day, he told me that he had considered my offer, but still could not go along, but we were so close… I offered to split it again, to which he agreed. He gave 25% and I gave 75%.
4. Falling in love with the deal. Do you love your spouse? Your kids? Your pets? Then why would you ever consider loving anything that cannot love you back? This trait is not all bad, because it represents our devotion to duty. Do not let that emotional investment take over rationale thinking.
5. Inadequate preparation. Most people mistakenly think that most negotiation activity takes place face to face, and involves high power tactics and counter tactics. In fact, only about 5% to 10% of the actual negotiation time will be face to face. The lion’s share of the time is in researching and planning. Information and a written negotiation organized plan are the hallmarks of the negotiation pro.
6. Divulging your time frame. The likelihood of foolish and expensive decisions increases as the amount of lead-time decreases. In the early 80’s, I imported construction technology from Europe. After many meetings in the US, and several trips to Europe, the time was right to close the deal, so off I went to France. Upon arrival, I announced to my hosts that I was there for only four days, we had a lot to do, and I expected to leave with a completed deal. For 3 1/2 days we negotiated in circles until it all fell apart. On the ride to the airport, my hosts assured me that we could still do the deal, if I would only be “a little more reasonable”. They got more out of me in those last twenty minutes than in the whole year we had known each other. Looking back, I could have stayed on for another week, and probably struck a more favorable deal, but I lost by trapping myself in my own time frame.
7. Leaving issues dangling. This habit, at best, encourages argument, and at worst, invites constant renegotiation. Drive a stake through the heart of issues, adopt measures to ensure they cannot be resurrected as bargaining points, and move on.
8. Going for the kill. Suppose you miss? Do you really need the extra enemy? Resolve to leave egos, dignity and wallets in tact when you leave the table.
9. Failing to listen. The best negotiators I know are the by no coincidence also best listeners. Listening skills are rare, and not easily mastered. It is possible, and in most cases highly likely, that we can give the other side what they want at low cost to us if we listen carefully enough.
10. Ignoring conflict. Conflict in negotiation is inevitable. Each party has something that the other wants! Think of conflict as rain: we expect it, it is never welcome, but we respect it for the good it does.
11. Talking about people, not issues. This is a real amateurish mistake. Ad homonym attacks never accomplish anything good, no matter how justified. Focus on the problem and how to resolve it. As one of the celluloid icons of American business, The Godfather once noted, “Nothing personal here, its just business.”
12. Ending on a sour note. Mutual satisfaction requires mutual commitment. If one side feels cheated or unsatisfied, how much can we count on their commitment?
13. Missing a Win-Win opportunity. The selfishness or greed of one side breeds a culture of resentment that will unleash its revenge at the first opportunity.
14. Arguing! Save that for the lawyers. Negotiation involves only two, reasonable and willing, parties. If your negotiation efforts and skills fail, you’ll have plenty of time to add an expensive third party litigant.
15. Losing self-control.This puts the other guy in control. The justification that I hear most often is that, “He made me so mad.” Horse feathers! No one can make you mad; you have to let him or her do it to you. If I can drive you to an emotional reaction, I can manipulate you and I can control you. Why would you ever give that much control to a perfect stranger?
16. Impatience. This is a weapon we often donate as a free gift for the other side to use against us. If our impatience is caused by lack of preparation, or advancing deadline, we have another problem. Otherwise, be prepared to listen patiently. Stalling is an instinctive tactic when the other side senses impatience.
17. Threatening. You can often tip your hand on strategy by threatening alternative actions. Take a clue from Washington diplomats who never rule any option in or out, and thus never threaten anything. If they announced their military preparedness, for instance, they might unwittingly put their forces in harm’s way.
18. Belittling and Grandstanding. There is never any room for this in professional negotiation circles. It is clear lack of respect, and invites retaliation. You would not be at the table if you did not want something, so why make it harder for yourself?
19. Having no clearly defined walk away position. Winging it is a sure nosedive to failure. The ultimate power in negotiation is the ability to say “No”, and to live with the deal. Do you remember Alice in Wonderland? When Alice came to the fork in the road, and the White Rabbit asked her where she wanted to go, Alice answered, “I don’t know”. Advised the White Rabbit in reply, “Then, any road will get you there”. Alice was not much of a negotiator.
20. Misunderstanding power. In seminars, I will ask buyers, “Who has more power in buy/sell settings?” Virtually always, the immediate response is, “The buyer”. To which I pose this follow up question, “Well, why then are we negotiating with them if we have all this power?” Power is truly in the perception. If you think that you have it, you have it. Do not assume that the other guy has more
The good news is that not making these twenty mistakes in the course of your every day commerce will vastly improve your negotiation skills. The better news is that it doesn’t cost $100,000,000 to learn them!