Negotiations never come down to price

In courses we frequently get questions along the lines of “What do you do in negotiations where it just comes down to price?”

The answer is that negotiations never come down to price.

Today’s blog is available at INSEAD Knowledge.

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Stop talking to improve communication

Sometimes we talk too much and communicate too little. This is particularly the case in heated exchanges that are fuelled by high emotions, risks, stakes or high levels of uncertainty. Parties become so focused on telling their story that they forget that the purpose of communication is to improve understanding.

So next time you find yourself in a heated dispute with a close friend, family member, loved, business partner or your enemy – see if you can try the following, somewhat different, but very powerful technique:

  1. Sit next to each other, side-by-side.
  2. Open a new document in the word processor on your computer or tablet.
  3. Then let the other person write everything they want to say.
  4. Then… and only then do you go through and make your comments… in writing.
  5. Rinse and repeat steps 3 and 4 until you find agreement.

I used this approach in a very difficult and heated conversation in the last week. After just two cycles both parties agreed and the emotions completely dissipated? How is this possible?

Here’s are a few explanations:

  • First of all, how often do we – in arguments – get to finish everything we want to say before interrupted? Rarely? Never? Much of the escalation in conflict is directly related to the frustration of not feeling understood. So letting the other party finish talking will go a long way to preventing conflict.
  • Do our words ever come out wrong and we just wish we could stop them mid-air? But by that time it is already too late and we unintentionally created or fuelled the conflict further? Letting the each party carefully choose his or her words on the computer means we remove this unnecessary pollution before it can cause any damage.
  • And who can relate to the urge to interrupt and correct the other party when they say something you disagree with? Our urgency is driven by our fear that a failure to argue now might signal agreement! By instead leaving the words there on the screen in front of you means you have all the time in the world to go back to, and counter each point – if you so desire.
  • And how hard is it to clarify misunderstandings in the heat of battle? “What I meant to say was…” It’s difficult! But on the screen you just have to write “Aha, I see you understood this as X. What I really meant was Y!”
  • And in the argument our main focus is the point(s) of disagreement, so 100% of our focus is on disagreement. What we fail to acknowledge is that we actually do agree on a lot! By instead highlighting all the words in the document that are in agreement we realise just how much agreement there is, and just how small the disagreement is in contrast.
  • Similarly in arguments we often repeat ourselves because we don’t feel understood. On the document we can simplify the interaction by agreeing to delete duplicates. Nothing will be ignored, as everything will be commented on.
  • And of course, in very heated interactions we occasionally 🙂 say things that we know are not true, e.g. exaggerations like “You always do this!”. Again, on the screen it is easy to comment “Hmm… would you agree that sometimes be more fair and accurate than always
  • Finally, when the other person tells you the words, then he or she is the problem. But when you sit side-by-side, looking at the screen together you are collaborators working on a problem; to clean up the words on screen and find agreement. It is now longer “you vs. me” but rather “us vs. the limitations of communication”.

Using this process we successfully removed all pollution, reframed all unconstructive language to be constructive, clarified all assumptions/emotions/perceptions, removed all lies/exaggerations, marked all areas of agreement, removed repetition, and in the end there was simply nothing left to disagree on.

Which is consistent with the negotiation premise that over 90% of all disagreement is merely caused by a lack of understanding due to inadequate communication.

Afterwards I asked the other party how they felt about this process. They smiled, nodded and said: “I liked it! And I really felt that I could be more honest this way.”

Negotiating from a single perspective

There are multiple vantage points – or perspectives – from which we can view any interaction (a.k.a. negotiation). The perspective we adopt determines what we see. So in order to see more – and thus learn and understand more – negotiators choose to adopt multiple perspectives.

But what happens when I fail to consider other peoples’ perspectives and only stick with my own? Well, unsurprisingly the options, solutions or recommendations I come up with tend to only cater to my problem and my needs.

And if you don’t like my solution then there is a high risk that I will assume my job should be to persuade you to accept my solution. And when that doesn’t work I might instead resort to using power to force you to accept my solution.

And then we clash, deadlock, and get stuck in a potentially perpetual battle. All because I didn’t consider your perspective, and thus I didn’t (couldn’t!) think of a solution that would actually work for you as well.

With that little snippet of theory, let’s see a clear example of it in action. The key phrase to look out for comes about 55 seconds into the video that a reader sent me today.

Relationship trumps power

One of the most common requests that I (initially) get from clients is: “Help us develop more power!” In negotiation, power refers to the ability to get (or make, or force, or coerce…) someone else to do what he or she doesn’t want to do.

When clients make this request it usually signals that the negotiation is presently not going their way. So akin to bringing your older brother as support in a kindergarten playground fight, clients hope that building power will allow them to start controlling the negotiation.

But power is the negotiation equivalent of brute force and ignorance. While it initially looks like the panacea that will resolve the situation in our favour, keen readers of this blog and our book now understand how power in negotiation causes more problems than it solves.

Instead there are much more elegant, and powerful ways to get what we want. In fact, sometimes even friendliness, kindness, love, understanding, charisma, humour and wit can disarm even the most antagonistic and power-wielding counter-parties.

There is perhaps no clearer (and more entertaining) illustration of this than when reverend Wade Watts found himself pitted against Johnny Lee Clary and the Ku Klux Klan.

After watching this clip, ask yourself the following:

  • Which party had most power?
  • Which party achieved their objective?
  • If reverend Wade Watts was able to neutralise the power of Ku Klux Klan, then what excuse can I (the reader) possibly have for resorting to using power in plain vanilla commercial negotiations?