About the author
Matthias Schranner worked a number of years for the police as their leading negotiator in hostage takings and other crimes. Here he describes his successfully proven negotiating techniques. Using numerous pratical examples, he illustrates various procedures which can be applied to negotiations about salary, sales and contracts with individual customers, business partners and groups of customers.
This is a book for employees, colleagues and executives who want to negotiate competently and successfully in every situation. He knows, more than anyone else, about negotiating under extreme conditions.
The 7 errors
in difficult negotiations
www.Schranner.com
http://www.Schranner.com
First Edition: February 2008
Copyright © 2008 by Matthias Schranner. All rights reserved.
No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews.
For information please write to:
info@Schranner.com
Book Design by Ron Imelauer
Edited by Susanne Bunzel-Harris
Page layout by Franzis print & media
Printed by GGP, Pößneck
Printed in Germany
ISBN 978-3-033-02552-3
eISBN 978-3-982-03414-0
Portrait on back: Gisela Schenker
All Graphics: Schranner AG
In my first book, I thanked hostage takers and bank robbers because in my negotiations with them I learned about what it means to negotiate on the edge. In my second book I thanked my current clients because in the negotiation where I accompanied them, I could apply in business and politics the strategies that I had learned at my time with the police.
In this book, my thanks go to my team, first of all Alexandra Bergmann and Sheena Hasslinger. Their support made it possible for me to prepare and write this book. The professional feedback from my editor, Christian Koth, and my advisor, Matthias Weiner, were very important to me.
I also want to thank my family for their understanding and support.
How to negotiate in difficult situations can only be learned in daily practice. I face daily the best negotiation team in the world. This team knows no Negotiator and no Commander, but has four Decision Makers. All four of them know the most important rules of negotiation and win against me every day. I make mistakes and hope to learn from them.
This is why my biggest thank you goes to the best negotiation team in the world, to my children and Decision Makers – Marco, Fabio, Marie, and Luca.
Acknowledgments
Introduction
Error No. 1
The principal goal of every negotiation is a win-win agreement
What is win-win, and why is it so popular?
Leave the judgment of “right” or “wrong” behind
Analyze your negotiation partner
Those who ask will win
Why win-win does not work
Long-term partnership
Summary of the negotiation tips
Error No. 2
A good preparation of the contents is essential
A plethora of information – the open book
Preparation on the OEM side
Preparation on the supplier side
Rien ne va plus – the “0 ZOPA” phase
Farewell to purely rational negotiations
Strategic preparation
Objective
Strategy
Tactic
Summary of the negotiation tips
Error No. 3
Our company is prepared for difficult negotiations
The role of the Decision Maker
A costly error: The Decision Maker intervenes
The Decision Maker’s strategy
1. Strategic objectives
2. Maximum objectives
3. Walk-away point
4. Dealmaker or Real-Maker
5. Clear instructions
6. The rules of the game
Summary of the negotiation tips
Error No. 4
We must get clarity early on!
The influence of stress during the negotiation
The preparation phase
The affective phase
What you should do
The cognitive phase
The common negotiation goal
Joy
Praise
Positive reinforcement
Rollercoaster ride during a negotiation
The decision phase
The implementation phase
Summary of the negotiation tips
Error No. 5
We have the power/we are completely powerless
Your alternatives
Independent – Independent
Independent – Dependent
Dependent – Dependent
Dependent – Independent
What is your negotiation position?
Knowledge is power
1. Always look for new information
2. Make sure that no information reaches the other side
The use of time
12 months until closing
9 months until closing
6 months until closing
3 months until closing
1 month until closing
Dead end
Time limits during a negotiation
Team on course
Assessment of power and stress
Summary of the negotiation tips
Error No. 6
Negotiating is an intuitive matter
Negotiations depend on the right tactics
The 25 most important tactical rules
Summary of the negotiation tips
Error No. 7
We must do everything we can to avoid a dead end during our negotiation
Crisis plan for negotiations (N-Crisis)
Single point of contact
Avoid escalations within your own company
Do not involve the Decision Maker in the ongoing negotiation
Provide a single point of contact
Rhythm of Negotiation
Inward and outward information embargo
Contact to liaisons
PR support
Strategy development – integrative negotiation
Strategy No. 1: Pressure/dead end
Strategy No. 2: Giving in
Strategy No. 3: Compromise
Strategy No. 4: The time game
Strategy No. 5: Integrative negotiation
Presenting demands – openly and under cover
Making demands under cover
Building a ZOPA
Showing the dead end
Break-off
Re-entry and agreement
The agreement with the firefighter uniform
The agreement
No agreement
Summary of the negotiation tips
Bibliography
I am not Schranner. I am invisible, I am in the shadow, you cannot recognize me. I analyze negotiations in the background and, building on these analyses, I develop strategies and tactics. In addition, I look for mistakes during the course of negotiations, when my clients ask me to do so. Such mistakes mostly are caused by wrong assessments, by errors.
One of the biggest errors is believing that both sides can win, that a “win-win” agreement is possible.
This assumption is wrong. Because there must always be a winner. In sports, in business, and in politics. A negotiation is no different, there is one party carrying the victory, and another party that must accept defeat.
In this book, I want to share with you the knowledge and experience I gained from accompanying difficult negotiations. I would like to assist you on your way to becoming the winning type in negotiations.
My clients call me when they are in a seemingly unsolvable negotiation situation and see no way out. Although they are usually experienced and professional negotiators there are always situations in which they do not know what else they could do. They call me because they depend on the advice of an outside expert. They do not want anybody to know that I support them, because my name and our institute are synonyms for a firm negotiation. And in the era of “win-win”, this attitude is not very much in fashion. Nowadays, many people believe that they must strive for a long-term and successful partnership for both sides.
Outwardly, for instance at a press conference, my clients, too, communicate that they aim for an equal partnership. In the background, however, we invent strategies to achieve success – with the opposing party whenever this is possible, and if not, then without them.
Firm does not mean unfair or tricky. Your negotiations should always be fair and collegial. If your negotiation partner is also interested in a collegial agreement, I am happy for you. But if they want to win against you, you should not let them.
You can benefit from my experiences in the background and learn from my clients’ mistakes.
In addition, I want to give you tips on how you can master the most difficult situations even better. At the end of each chapter you will find a summary with all the negotiation tips. The book follows the negotiation process in chronological order:
In chapter 1 we deal with your opinion on difficult negotiations. Chapter 2 links the preparation of negotiation contents with the strategic preparation. In chapter 3 we assign strategic roles to the negotiators involved. In chapter 4 we enter the negotiation and focus on the first three minutes. In chapter 5 we test the distribution of powers in the negotiation. Chapter 6 presents the most important tactics and focuses on the course of the negotiation. In chapter 7, I show you what matters in doomed negotiations.
You can also request additional information and a checklist for preparing a negotiation by sending an e-mail to:
info@schranner.com
Please be aware that in my entire work as a consultant, as a background strategist I am bound by absolute confidentiality. I will therefore not use any company names or any individual’s name and keep the examples abstract. Please allow me to address you directly as the negotiator. For reasons of readability, I use the male form in most examples. Naturally, this does not mean that only men make such mistakes.
I thank you cordially for your interest in this book and wish you good fun in reading it.
At the very beginning I want to show you why there cannot be any win-win situations in difficult negotiations, although social romantics may think otherwise.
Win-win, just like “strategic partnership”, is one of the most misused terms in high-stake negotiations. Win-win is pursued like the Holy Grail, but the parties’ diverging interests will make it impossible to find it.
Most of my clients say that for them finding an agreement where both parties win is the most important goal by far. It is so important because they aim for a long-term partnership and “still want to be able to look the other side in the eye when they meet again”.
A graphic representation of this concept would look like this:
But what is a win-win agreement, actually?
Its principles were studied at Harvard University in the 1970s. Scientists tested negotiation methods and tried to find a version that would make both sides happy. They developed the method of “fact-based negotiations” – a.k.a. “win-win” or “Harvard Approach”. However, they assumed that there are no fundamentally contrary interests between the negotiating parties, which is the only situation where all players leave the negotiation as winners.
I would like to point out that negotiating is not that difficult when both parties have similar interests!
Diverging interests, however, are the rule in high-stake negotiations. The win-win concept can be applied indirectly at most, in that you create a win-win situation for yourself.
Try to imagine that I am negotiating with you about where we should meet for our consulting session. New York and Boston are good locations for me. You would prefer Washington, but you could imagine coming to New York as well. I would structure the negotiation so that New York is in the running as a concession to you, but I also bring Boston into the game so that at the end of the negotiation I have the option of two equivalent locations. I generously offer you two options that are equally suitable for me. It does not matter whether we meet in Boston or in New York, both of them are a win situation for me. I therefore turn our meeting into a win-win negotiation, into a “Boston-New York” negotiation with two equal options for me.
Negotiations become interesting when there are diverging interests, and both sides know it and the negotiation becomes a question of power. The power is on your side in the negotiation if you know how to solve conflicts strategically and consistently. And not by believing in a win-win agreement and hoping that the opposing party will be reasonable. They won’t!
A conflict is always based on diverging interests and on the assumption that the own interests are the right ones – which leads you to believe that the opposing party has the wrong interests.
This sounds pretty obvious, but it is at the root of all problems in difficult negotiations. Judging the own interests to be the “right” ones and therefore concluding that the other party’s interests are “wrong” creates a conflict that is all but unsolvable.
You should be able to trade during a negotiation. If you cannot trade, then you cannot negotiate and achieve a result. If you want to be able to trade at any time, you should leave the judgment of “right” and “wrong” behind.
Let us take a brief look at the teachings of Socrates. He distinguished between truth and certainty.
Socrates pointed out to his fellow Athenians that they were certain about many things but that they actually knew almost nothing about the truth of those things. They were not able to recognize the true things. Based on Socrates’ teachings, today we distinguish two series of concepts – semantic features and psychological states.
SEMANTIC FEATURES |
PSYCHOLOGICAL STATES |
such as |
such as |
TRUTH |
CERTAINTY |
KNOWLEDGE |
OPINION |
REALITY |
REALITY |
In my opinion, you cannot find a semantic-feature solution in a win-win negotiation. It is not possible that both parties really win (truth, knowledge, reality). However, it is possible for both of them to believe that they can win or that they did win (certainty, opinion, reality).
Example:
Let us assume that you want to sell your car. You think about the maximum price you want to realize, and about the minimum you are willing to live with. You place an ad in the paper or on the internet stating your maximum price. Let us assume you want $10,000 for your car and put that in the advertisement.
Naturally, you do not say what your minimum acceptable price is, the price you would accept grudgingly and with a tummy ache. Let us say, that price is $9,000.
It is a Saturday morning, the telephone rings. A potential buyer calls, you meet him, he takes his time to look at the car, takes it for a test drive and decides to buy the car. You tell him that you want $10,000 for the car, and the buyer agrees at once. He signs the sales contract and gives you the money.
Honestly, how do you feel? Are you happy because you got the maximum price you wanted? No. You are unhappy because you feel that you could have gotten more.
This was too easy. You do not know how much more the buyer might have been willing to pay. This uncertainty disturbs you, you are mad that you asked for a price that was too low and that you accepted so quickly.
So, where is the truth for you now? You cannot say with certainty whether you made a truly good deal. And you are also uncertain as to whether you could have asked for more money.
How is the buyer doing when he drives home with the new car? At first, he is probably happy and satisfied. Things start to become difficult for him once he reenters his social environment. When people ask him how much he paid for this car, when people might laugh at him because he paid so much money for that car. The buyer, too, cannot know the truth on the deal he just made. At best, he has certainty. And that is fragile.
Every negotiation is determined by a range of imponderables. There are many elements that we cannot control, that we cannot analyze or prepare down to the smallest detail. In difficult situations especially, we are moved by emotions and tend to lose more and more of the rational control.
Therefore, we can never find the truth in a negotiation.
And this is why we should stop looking for it. We should rather dedicate our attention to certainty – that of the negotiation partner. It is of great importance to find out why our negotiation partner has the certainty that entitles him to his point of view.
We therefore must question his certainty and analyze his opinion and his view on reality.
• Negotiation tip: Do not look for the truth, but find out what certainty your negotiation partner has, and why.
Example:
A trade union demands a 5% pay raise for all employees. The employer side, citing the bad economy, warns to overextend salaries and wages during such times. This could lead to the company’s ruin and that is why they offer zero pay raise.
Based on my experience I can assure you that both parties think that they are right. And this being right is then communicated as the truth.
Those who believe that they are right insist on their point of view and communicate it very clearly to the outside world. Both parties – trade union and employer in our example – communicate in the press and before the employees their own view of the situation and corroborate it with arguments. Arguments, however, belong in the realm of certainty, not that of truth.
What is presented during difficult negotiations is nothing but standpoints, and those are then linked to threats and sanctions. “If we don’t get a 5% raise, we will go on strike!” the trade union says. “If we must raise salaries, we’ll move the production abroad,” management counters.
How could we find a so-called win-win agreement here? Please, do not even try and offer me a compromise!
In a compromise, both parties approach one another and meet in the middle. But the question is, what middle? Departing from a pay raise from 0 to 5%, the mathematical compromise would be at 2.5%. Both parties would have won, both parties relented, and reached their goal fairly, at the half-way point. But that is not the case.
What is the pay situation truly like? Can the employer really give only 0%, or might 3% be possible? Would the union really call for a strike, do they have enough support among their members, especially during such difficult times?
Were those 5% a real, well-founded demand, or just a tactical means to put pressure on the employer? What would have happened if the union had requested 10%? Would the win-win-agreement then be 5%?
A difference of 2.5% in salaries and wages is a huge amount of money in the company books. Would the company have won at 2.5%, at 3%, or at 5%? What would the costs of a long-term strike be, would even 6% have been less costly than a strike?
I can tell you that so far, none of our clients could experiment with all possible outcomes. Nobody could find out for themselves where the winning and losing in the sense of the truth begins. But all could name a certain threshold where they would agree or stop negotiating. This threshold, however, is always a certainty threshold and not a threshold of truth.
We can only believe that the threshold must be at a certain point, but we cannot know it. And we do not need to.
It cannot be the goal of a negotiation to find the actual threshold. We need to find thresholds in the sense of certainty.
• Negotiation tip: Find out where the certainty threshold lies, how far would the other party go?
It is of great advantage to concentrate on certainties during negotiations – because unlike the truth, certainties can be influenced: by consciously elevating the stress dose or consciously employing emotions.
You must analyze your negotiation partner carefully to be able to determine and influence their certainty-thresholds.
Analyzing a negotiation partner is fascinating – you keep getting new information, new insights, new certainties. In my experience, the analysis is not particularly difficult, just avoid making one big mistake – assuming that you already know enough!
Many negotiators stop their analysis much too early, believing that they know enough and that they completely understand their partner. This assumption is a dramatic error because it keeps you from gathering new information; instead, all you do is wait until the other side finally stops talking.
• Negotiation tip: Keep analyzing, you never know enough.
And in a concrete sense: Enter every negotiation with an blank sheet of paper, no laptop, no PowerPoint, no image brochures, etc. Jot down information and quote what the other party is saying.
Do not draw a first conclusion of your analysis before you have written a full page of information on the other party.
Let me tell you, this is much harder than you might think!
The relevant information on your opponent is not in the numbers, data, and facts. For you are not interested in your opponent’s communicated “truth”, but in their certainty, and therefore in their reasoning, in their arguments, desires, and doubts.
At first, you see a negotiation as shown in the illustration above. It seems that the positions cannot be bridged and there is no way out.
However, your negotiation partner does not only think about aspects that run contrary to your own negotiation goal. Internally, she makes some concessions on some points. She has a certain understanding for your position, your arguments, desires, and doubts.
In your analysis, you should try to find the positive and negative certainties of your negotiation partner.
The positive assumptions are the critical elements on the way to an agreement. You must also know the negative ones, without negotiating them. While it is not easy, it is absolutely necessary.
Analysis tip no. 1 – Structure your questions!
This analysis should help you achieve a certain goal. In addition to the positive and negative certainties for your negotiation goal, you want to find out what exactly is important for your partner, what motivates her, and, of course, how far she will go.
Please draw up a list of questions before the negotiation begins and sort your objectives. The questions should not be pre-formulated, but just help you along.