{"id":422,"date":"2010-01-02T15:42:01","date_gmt":"2010-01-02T19:42:01","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=422"},"modified":"2010-01-02T15:42:01","modified_gmt":"2010-01-02T19:42:01","slug":"some-helpful-principles-of-competitive-negotiation","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2010\/01\/some-helpful-principles-of-competitive-negotiation\/","title":{"rendered":"Some Helpful Principles of Competitive Negotiation"},"content":{"rendered":"

Christian Duve<\/a> is a handsome, very bright, very perceptive attorney\u00a0mediator practicing with Freshfields Bruckhaus Deringer in Frankfurt, Germany.\u00a0 I have known and admired him for many years and recently learned a lot (once again)\u00a0listening to a conversation he\u00a0held with GE’s Michael McIlwrath on\u00a0negotiation techniques.<\/p>\n

The conversation is available here<\/a>,\u00a0one of the 80+ podcasts that McIlwrath has posted on the CPR Institute web site.\u00a0\u00a0Duve addresses five techniques for competitive negotiators, and each of them is well worth consideration.\u00a0<\/p>\n

The first is “anchoring.”\u00a0\u00a0 It is a\u00a0first offer (or a first counter-offer) that is\u00a0chosen and explained in a\u00a0compelling way, so that it sets a clear basis for subsequent discussion.\u00a0\u00a0This opening number\u00a0is so well supported by facts and law that it is difficult to depart from it — it becomes what Duve calls a “sticking point,” a constant\u00a0reference during the subsequent negotiations.\u00a0 For example,\u00a0an accounting\u00a0reserve or accrual that a company has set aside in respect of a litigation is a very compelling number of the counterparty’s opening demand; indeed, it is\u00a0almost impossible\u00a0for the company\u00a0to argue why that reserve number is not, in fact,\u00a0the accurate value of the claim — after all, the company itself set it.\u00a0 “Anchoring” is\u00a0used right out of the box, as the first demand.\u00a0<\/p>\n

The second is the “salami” technique.\u00a0 This is the process of incremental concessions, with both sides moving little by little.\u00a0 Duve finds it can be somewhat effective in the beginning of negotiation, but if continued for too long it can become exasperating and can hinder real progress.\u00a0 In the heart of the bargaining dynamic, bolder and more confident moves will yield better rewards.\u00a0 Salami-slicing is conservative, defensive, and might actually be most useful if the aim is to\u00a0frustrate the other side.\u00a0 This approach\u00a0puts the negotiation at risk.\u00a0 At some point, both parties must show more courage in order to signal a desire to come to an outcome.<\/p>\n

The third technique\u00a0is “threatening.”\u00a0 Threats of one kind or another are always used in negotiation, says Duve, and nothing is more\u00a0useless because they are almost never enforced.\u00a0 Threatening without following up is an invitation not to be taken seriously as a negotiator.\u00a0 It can undermine your credibility\u00a0and render you ineffective going forward.\u00a0 “If\u00a0we don’t get X\u00a0by a certain date, then we will sue.”\u00a0 This kind of statement is an invitation for the counterparty to do nothing until the date noted, and see what happens.\u00a0\u00a0Usually what happens is absolutely nothing.\u00a0 Most people don’t do what they threaten, and their future statements are cast in grave doubt.\u00a0 Duve cited a simple demand in an invoice: “If not paid in 30 days, we will initiate court proceedings.”\u00a0 Really?\u00a0\u00a0Duve’s advice is, “Don’t threaten to do it if you don’t intend to immediately implement it.”<\/p>\n

The fourth topic is “bluffing,” or at its extreme\u00a0“lying.”\u00a0 Giving the counterparty a sense of uncertainty as to your own\u00a0estimate of value, or your strategic plans,\u00a0can be useful — thus the virtue of selective bluffing.\u00a0 But misrrepresentations put your credibility at risk, and once you have acted inconsistently with your own statements you won’t be taken seriously as a negotiator.\u00a0 A negotiator may say “I have authority only to 100,” but then\u00a0in a few hours offer 200.\u00a0 This\u00a0is a bluff and most people ignore the initial statement as soon as it comes out of the negotiator’s mouth.\u00a0 For bluffing to work, it needs to come a little later in the process (in poker, I bluff on the bet before the last one)\u00a0and be consistent with one’s behavior.\u00a0 Lying never works.\u00a0<\/p>\n

The fifth and final topic\u00a0is “commitment” —\u00a0such as\u00a0saying “take it or leave it.”\u00a0 Duve says this can be a powerful technique if used the same way as threats — that is,\u00a0if\u00a0immediately and\u00a0credibly acted upon.\u00a0 If it’s your last offer, then you say so and you don’t\u00a0make another offer.\u00a0 When remaining at the negotiation table is no longer productive, then\u00a0give your last and final offer and make sure it is understood as your last and final offer.\u00a0 Then follow through — leave if it is not accepted.\u00a0 You don’t have to settle\u00a0today — you can get together at some future time.\u00a0 And when you do\u00a0re-gather, you will be better understood by your counterparty, and your\u00a0posture in the subsequent negotiation will be enhanced.<\/p>\n

Duve says that anchoring is both the most powerful technique, and the least used.\u00a0 A good anchor\u00a0yields a successful negotiation,\u00a0yet it is amazing how few parties understand the advantage of being the first to put an offer on the table.\u00a0 Commitment is also powerful if used selectively and credibly.\u00a0 By contrast, salami-slicing, bluffing and threatening are too often used, and almost never effective.\u00a0<\/p>\n

Very helpful — at least to me!<\/p>\n","protected":false},"excerpt":{"rendered":"

German lawyer Christian Duve shares some helpful insights on what works and what doesn’t when bargaining competitively.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[31],"class_list":["post-422","post","type-post","status-publish","format-standard","hentry","category-negotiation","tag-negotiation"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=422"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/422\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=422"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}