“We poured surreal amounts of money into it, yet we all thought it had no value for the customer, which was the biggest irony. Whenever anyone asked why we were doing this, the answer was, ‘Because Jeff wants it.’ No one thought the feature justified the cost to the project. No one. Absolutely no one.”
As one top product engineer put it, “Yes, there was heated debate about whether it was heading in the right direction. But at a certain point, you just think, Well, this guy has been right so many times before.”
Now, I don’t know whether Bezos had already transformed into Vin Diesel at the time…
But even if not – who could tell him he might be wrong? When he’d been right so many times before!
This is not an Amazon-only problem.
Telling your boss he’s wrong is sticky territory. He’s so confident in his view, how can you antagonize him? What if you get fired?
But there’s a more fundamental question first:
Why is your CEO so damn confident even though he’s wrong?
One of my learnings early in my career (I was in management consulting) was:
Confidence in expressing opinion ≠ confidence in opinion.
I don’t mean this as a criticism. It’s a necessary outcome of leading large teams, or working on high impact projects.
An imperfect decision made in time is better than a perfect decision too late…
There’s a sharp line between deliberation and implementation: once a decision has been made, the mindset changes. Forget uncertainty and complexity. Act! If one wishes to attack, then one must do so with resoluteness. Half measures are out of place…
The wise officer knows the battlefield is shrouded in a “fog of uncertainty” but at least one thing must be certain: one’s own decision.
Even though your CEO communicates with confidence, he knows he could be wrong.
Just because the most senior person says something, doesn’t mean it’s right.
It is an opinion. A hypothesis. No more than that.
And an opinion can be wrong.
There’s a term for this: HiPPO, or Highest Paid Person’s Opinion. I first heard of it in Jeff Gothelf’s excellent article on the topic.
The article reminded me of an incident at one of my previous roles.
We were expanding to a new market segment, and we had a high target for the launch. 50 customers within the first 3 months.
I told my boss (the CEO) that we would need to hire a couple of people to make it happen.
He said, “No, I think you can manage it”. I nudged back a couple of times, but then took it on myself to deliver. After all, he was the CEO. He knew best.
Well, a quarter later, we missed our target.
When my boss asked me why, I told him again – it was because we were understaffed.
His next question was, “OK, why did you not then staff up?”.
Me: “Hey! You told me not to hire!”.
CEO: “Well, why did you not convince me otherwise?”
That’s when the penny dropped.
I don’t mean that he was unreasonable.
I mean: it was my job to get the decision right. If I didn’t agree with his view, it was my responsibility to push back.
If my boss makes the wrong decision and I know it’s wrong, then it’s my fault.
If my boss makes the wrong decision and I know it’s wrong, then it’s my fault.
Never Split the Difference is one of the best books I’ve read on negotiation. Better than more theoretical books like Getting to Yes.
Written by an FBI hostage negotiator, with tons of experience negotiating in high-stakes situations.
I’ve seen numerous experiences (personal + anecdotal) of such approaches working in business negotiations as well. Whether salary negotiations with your boss or a high-pressure M&A deal, this stuff WORKS.
Rational approaches like “Principled Negotiation” (from Getting to Yes) work only in theory. In real life, need to take emotions into account.
No deal is better than a bad deal – “Never split the difference”. Compromise is often a “bad deal”. Even in a kidnapping? Yes. A bad deal in a kidnapping is where someone pays and no one comes out.
If you feel you can’t say “No” then you’ve taken yourself hostage. Once you’re clear on what your bottom line is, you have to be willing to walk away. Never be needy for a deal.
The book has three Big Ideas.
Big Idea 1: Calibrated Questioning
Give your counterpart the illusion of control, but constrain them at the same time.
Big Idea 2: Tactical Empathy
In a negotiation, listening is the cheapest, yet most effective, concession we can make.
Big Idea 3: Controlling a Negotiation
By tapping into the power of framing, loss aversion and prospect theory, you can “bend your opponent’s reality”.
Big Idea 1: Calibrated Questioning
Calibrated Questioning – the main superpower from the book.
Calibrated Questions are queries with no fixed or Yes / No answers. They give your counterpart the illusion of control, but constrain them at the same time.
Calibrated questions bring your opponent to your side.
You’ve not only implicitly asked for help—triggering goodwill and less defensiveness—but you’ve engineered a situation in which your formerly recalcitrant counterpart is now using his mental and emotional resources to overcome your challenges.
“How am I supposed to do that?”
This is the greatest-of-all-time calibrated questions: “How am I supposed to do that?”
The critical part of this approach is that you really are asking for help and your delivery must convey that. With this negotiating scheme, instead of bullying the clerk, you’re asking for their advice and giving them the illusion of control.
Calibrated questions take the aggression out of a confrontational statement – not as rigid.
Like the softening words and phrases “perhaps,” “maybe,” “I think,” and “it seems,” the calibrated open-ended question takes the aggression out of a confrontational statement or close-ended request that might otherwise anger your counterpart. What makes them work is that they are subject to interpretation by your counterpart instead of being rigidly defined. They allow you to introduce ideas and requests without sounding overbearing or pushy.
The real beauty of calibrated questions is the fact that they offer no target for attack like statements do. Calibrated questions have the power to educate your counterpart on what the problem is rather than causing conflict by telling them what the problem is.
Your tone of voice is critical as this phrase can be delivered as either an accusation or a request for assistance. So pay attention to your voice.
How to ask calibrated questions.
Ask Reporters’ questions: “How”, “What”, or sometimes “Why”.
Start with a list of words people know as reporter’s questions: “who,” “what,” “when,” “where,” “why,” and “how.”
it’s best to start with “what,” “how,” and sometimes “why.”
The only time you can use “why” successfully is when the defensiveness that is created supports the change you are trying to get them to see.
These questions could be a way of saying “No” and guiding your opponent towards a more sensible (your) solution
Don’t ask “yes / no” questions.
First off, calibrated questions avoid verbs or words like “can,” “is,” “are,” “do,” or “does.” These are closed-ended questions that can be answered with a simple “yes” or a “no.”
Examples of calibrated questions.
What about this is important to you?
How can I help to make this better for us?
How would you like me to proceed?
What is it that brought us into this situation?
How can we solve this problem?
What’s the objective? / What are we trying to accomplish here?
How am I supposed to do that?
Tactics with Calibrated Questioning.
Identify if other people hold decision power.
When implementation happens by committee, the support of that committee is key. You always have to identify and unearth their motivations, even if you haven’t yet identified each individual on that committee. That can be easy as asking a few calibrated questions, like “How does this affect the rest of your team?” or “How on board are the people not on this call?” or simply “What do your colleagues see as their main challenges in this area?”
In any negotiation you have to analyze the entire negotiation space. When other people will be affected by what is negotiated and can assert their rights or power later on, it’s just stupid to consider only the interests of those at the negotiation table.
Identify when the opposite person is lying / is hiding something.
Pay attention to their usage of pronouns
The more in love they are with “I,” “me,” and “my” the less important they are. Conversely, the harder it is to get a first person pronoun out of a negotiator’s mouth, the more important they are.
In a negotiation, smart decision makers don’t want to be cornered at the table into making a decision. They will defer to the people away from the table to keep from getting pinned down.
When someone’s tone of voice or body language does not align with the meaning of the words they say, use labels to discover the source of the incongruence. Here’s an example: You: “So we’re agreed?” Them: “Yes . . .” You: “I heard you say, ‘Yes,’ but it seemed like there was hesitation in your voice.” Them: “Oh, it’s nothing really.” You: “No, this is important, let’s make sure we get this right.” Them: “Thanks, I appreciate it.”
On average, liars use more words than truth tellers and use far more third-person pronouns. They start talking about him, her, it, one, they, and their rather than I, in order to put some distance between themselves and the lie. This is called the “Pinocchio Effect” because, just like Pinocchio’s nose, the number of words grew along with the lie. People who are lying are, understandably, more worried about being believed, so they work harder—too hard, as it were—at being believable.
“Yes” is nothing without “how” – make your opponent own the solution.
By making your counterparts articulate implementation in their own words, your carefully calibrated “How” questions will convince them that the final solution is their idea. And that’s crucial. People always make more effort to implement a solution when they think it’s theirs. That is simply human nature. That’s why negotiation is often called “the art of letting someone else have your way.”
“How will we address things if we find we’re off track?”
“How will we know we’re on track?”
Rule of three Yes’es – get them to agree thrice.
The Rule of Three is simply getting the other guy to agree to the same thing three times in the same conversation. It’s tripling the strength of whatever dynamic you’re trying to drill into at the moment. In doing so, it uncovers problems before they happen. It’s really hard to repeatedly lie or fake conviction.
The first time they agree to something or give you a commitment, that’s No. 1. For No. 2 you might label or summarize what they said so they answer, “That’s right.” And No. 3 could be a calibrated “How” or “What” question about implementation that asks them to explain what will constitute success, something like “What do we do if we get off track?”
Get your counterparts to bid against themselves – say “No” without saying it.
You can say “No” four times without saying it.
The first step in the “No” series is the old standby: “How am I supposed to do that?” You have to deliver it in a deferential way, so it becomes a request for help.
After that, some version of “Your offer is very generous, I’m sorry, that just doesn’t work for me” is an elegant second way to say “No. This well-tested response avoids making a counteroffer, and the use of “generous” nurtures your counterpart to live up to the word. The “I’m sorry” also softens the “No” and builds empathy.
Then you can use something like “I’m sorry but I’m afraid I just can’t do that.” It’s a little more direct, and the “can’t do that” does great double duty. By expressing an inability to perform, it can trigger the other side’s empathy toward you.
“I’m sorry, no” is a slightly more succinct version for the fourth “No.” If delivered gently, it barely sounds negative at all.
How to confront without being confrontational.
Use the “Late night FM DJ voice”. Deep, soft, slow, and reassuring. Downward-inflecting statements, in a downward-inflecting tone of voice. The best way to describe the late-night FM DJ’s voice is as the voice of calm and reason.
Start with “I’m sorry…”
Mirror them – their tone, their words, etc.
Silence for at least 4 seconds
Example from the book:
“I’m sorry, two copies?” she mirrored in response, remembering not only the DJ voice, but to deliver the mirror in an inquisitive tone. The intention behind most mirrors should be “Please, help me understand.”
Every time you mirror someone, they will reword what they’ve said. They will never say it exactly the same way they said it the first time. Ask someone, “What do you mean by that?” and you’re likely to incite irritation or defensiveness. A mirror, however, will get you the clarity you want while signaling respect and concern for what the other person is.
Big Idea 2: Tactical Empathy
Tactical Empathy – the second key superpower from the book
What is Empathy?
Empathy is “the ability to recognize the perspective of a counterpart, and the vocalization of that recognition.” That’s an academic way of saying that empathy is paying attention to another human being, asking what they are feeling, and making a commitment to understanding their world.
Psychotherapy research shows that when individuals feel listened to, they tend to listen to themselves more carefully and to openly evaluate and clarify their own thoughts and feelings. In addition, they tend to become less defensive and oppositional and more willing to listen to other points of view, which gets them to the calm and logical place where they can be good “Getting to Yes” problem solvers.
Slow it down – use the Late night FM DJ voice.
Most people approach a negotiation so preoccupied by the arguments that support their position that they are unable to listen attentively.
The goal is to identify what your counterparts actually need (monetarily, emotionally, or otherwise) and get them feeling safe enough to talk and talk and talk some more about what they want.
Assumptions blind, hypotheses guide.
Negotiation serves two distinct, vital life functions—information gathering and behavior influencing.
In negotiation, each new psychological insight or additional piece of information revealed heralds a step forward and allows one to discard one hypothesis in favor of another. You should engage the process with a mindset of discovery. Your goal at the outset is to extract and observe as much information as possible. Which, by the way, is one of the reasons that really smart people often have trouble being negotiators—they’re so smart they think they don’t have anything to discover.
Be a mirror.
Mirroring generates trust (the Similarity Principle).
Mirroring, also called isopraxism, is essentially imitation. It’s another neurobehavior humans (and other animals) display in which we copy each other to comfort each other. It can be done with speech patterns, body language, vocabulary, tempo, and tone of voice.
It’s often as simple as repeating your counterpart’s last three / critical words.
Label your opponent’s emotions / stance.
The relationship between an emotionally intelligent negotiator and their counterpart is essentially therapeutic. It duplicates that of a psychotherapist with a patient.
Clear the road before advertising the destination
The reasons why a counterpart will not make an agreement with you are often more powerful than why they will make a deal, so focus first on clearing the barriers to agreement.
Denying barriers or negative influences gives them credence; get them into the open.
De-escalate angry confrontations by labeling. Do an accusation audit.
In court, defense lawyers do this properly by mentioning everything their client is accused of, and all the weaknesses of their case, in the opening statement. They call this technique “taking the sting out.”
The first step of doing so is listing every terrible thing your counterpart could say about you, in what I call an accusation audit.
Use labels to neutralize negatives and reinforce positives
The best way to deal with negativity is to observe it, without reaction and without judgment. Then consciously label each negative feeling and replace it with positive, compassionate, and solution-based thoughts.
Visiting Grandpa, who’s unhappy that family doesn’t spend time with him anymore.
Instead of addressing his grumpy behavior, you acknowledge his sadness in a nonjudgmental way. You head him off before he can really get started. “We don’t see each other all that often,” you could say. “It seems like you feel like we don’t pay any attention to you and you only see us once a year, so why should you make time for us?”
“For us this is a real treat. We want to hear what you have to talk about. We want to value this time with you because we feel left out of your life.”
Students scared of role-play in negotiation class.
I say, “In case you’re worried about volunteering to role-play with me in front of the class, I want to tell you in advance . . . it’s going to be horrible.” After the laughter dies down, I then say, “And those of you who do volunteer will probably get more out of this than anyone else.” I always end up with more volunteers than I need. Now, look at what I did: I prefaced the conversation by labeling my audience’s fears; how much worse can something be than “horrible”? I defuse them and wait, letting it sink in and thereby making the unreasonable seem less forbidding.
Getting a flight change.
Watch how Ryan turns that heated exchange to his advantage. Following on the heels of an argument is a great position for a negotiator, because your counterpart is desperate for an empathetic connection. Smile, and you’re already an improvement.
“Hi, Wendy, I’m Ryan. It seems like they were pretty upset.” This labels the negative and establishes a rapport based on empathy. This in turn encourages Wendy to elaborate on her situation, words Ryan then mirrors to invite her to go further. “Yeah. They missed their connection. We’ve had a fair amount of delays because of the weather.” “The weather?” After Wendy explains how the delays in the Northeast had rippled through the system, Ryan again labels the negative and then mirrors her answer to encourage her to delve further. “It seems like it’s been a hectic day.” “There’ve been a lot of ‘irate consumers,’ you know? I mean, I get it, even though I don’t like to be yelled at. A lot of people are trying to get to Austin for the big game.” “The big game?” “UT is playing Ole Miss football and every flight into Austin has been booked solid.” “Booked solid?”
Now that the empathy has been built, she lets slip a piece of information he can use. “Yeah, all through the weekend. Though who knows how many people will make the flights. The weather’s probably going to reroute a lot of people through a lot of different places.” Here’s where Ryan finally swoops in with an ask. But notice how he acts: not assertive or coldly logical, but with empathy and labeling that acknowledges her situation and tacitly puts them in the same boat. “Well, it seems like you’ve been handling the rough day pretty well,” he says. “I was also affected by the weather delays and missed my connecting flight. It seems like this flight is likely booked solid, but with what you said, maybe someone affected by the weather might miss this connection. Is there any possibility a seat will be open?”
Rules for labeling.
1. Detect the opponent’s emotional state, from words, tone and expressions / gestures.
The trick to spotting feelings is to pay close attention to changes people undergo when they respond to external events. Most often, those events are your words. If you say, “How is the family?” and the corners of the other party’s mouth turn down even when they say it’s great, you might detect that all is not well; if their voice goes flat when a colleague is mentioned, there could be a problem between the two; and if your landlord unconsciously fidgets his feet when you mention the neighbors, it’s pretty clear that he doesn’t think much of them
2. Label it aloud.
Labels can be phrased as statements or questions. The only difference is whether you end the sentence with a downward or upward inflection. But no matter how they end, labels almost always begin with roughly the same words: It seems like . . . It sounds like . . . It looks like .
3. After throwing out a label, be silent.
Beware “Yes”, use “No” to your advantage.
Pushing hard for “Yes” doesn’t get a negotiator any closer to a win; it just angers the other side. Being pushed for “Yes” makes people defensive.
The hard sell that comes next is a scripted flowchart designed to cut off your escape routes as it funnels you down a path with no exit but “Yes.”
“Do you enjoy a nice glass of water from time to time.” “Well, yes, but . . .” “Me, too. And like me I bet you like crisp, clean water with no chemical aftertaste, like Mother Nature made it.”
“Well, yes, but . . .” Who is this guy with a fake smile in his voice, you wonder, who thinks he can trick you into buying something you don’t want? You feel your muscles tighten, your voice go defensive, and your heart rate accelerate. You feel like his prey, and you are! The last thing you want to do is say “Yes,” even when it’s the only way to answer, “Do you drink water?” Compromise and concession, even to the truth, feels like defeat. And “No,” well, “No” feels like salvation, like an oasis.
You’re tempted to use “No” when it’s blatantly untrue, just to hear its sweet sound. “No, I do not need water, carbon filtered or otherwise. I’m a camel!”
3 Kinds of “Yes”: Counterfeit, Confirmation, Commitment.
A counterfeit “yes” is one in which your counterpart plans on saying “no” but either feels “yes” is an easier escape route or just wants to disingenuously keep the conversation going to obtain more information or some other kind of edge.
A confirmation “yes” is generally innocent, a reflexive response to a black-or-white question; it’s sometimes used to lay a trap but mostly it’s just simple affirmation with no promise of action.
And a commitment “yes” is the real deal; it’s a true agreement that leads to action, a “yes” at the table that ends with a signature on the contract. The commitment “yes” is what you want, but the three types sound almost the same so you have to learn how to recognize which one is being used.
The ability to say “No” gives the listener far more power.
“No” gives you an opportunity clarify while giving your opponent a temporary oasis of control.
For good negotiators, “No” is pure gold. That negative provides a great opportunity for you and the other party to clarify what you really want by eliminating what you don’t want. “No” is a safe choice that maintains the status quo; it provides a temporary oasis of control.
“No” is protection. Great example from the book:
For years, he’d been using a traditional “Yes pattern” fund-raising script to raise money for Republican congressional candidates.
FUND-RAISER: Hello, can I speak with Mr. Smith?
MR. SMITH: Yes, this is he.
FUND-RAISER: I’m calling from the XYZ Committee, and I wanted to ask you a few important questions about your views on our economy today. Do you believe that gas prices are currently too high?
MR. SMITH: Yes, gas prices are much too high and hurting my family.
FUND-RAISER: Do you believe that the Democrats are part of the problem when it comes to high gas prices?
MR. SMITH: Yes, President Obama is a bad person
FUND-RAISER: Do you think we need change in November?
MR. SMITH: Yes, I do.
FUND-RAISER: Can you give me your credit card number so you can be a part of that change?
Needless to say, that didn’t work. So, the fund-raiser had a small group of his grassroots guys test-market a “No”-oriented script.
FUND-RAISER: Hello, can I speak with Mr. Smith?
MR. SMITH: Yes, this is he.
FUND-RAISER: I’m calling from the XYZ Committee, and I wanted to ask you a few important questions about your views on our economy today. Do you feel that if things stay the way they are, America’s best days are ahead of it?
MR. SMITH: No, things will only get worse.
FUND-RAISER: Are you going to sit and watch President Obama take the White House in November without putting up a fight?
MR. SMITH: No, I’m going to do anything I can to make sure that doesn’t happen.
FUND-RAISER: If you want do something today to make sure that doesn’t happen, you can give to XYZ Committee, which is working hard to fight for you.
It puts Mr. Smith in the driver’s seat; he’s in charge. And it works!
“No” starts the negotiation.
Jim Camp, in his excellent book, Start with NO, counsels the reader to give their adversary (his word for counterpart) permission to say “No” from the outset of a negotiation. He calls it “the right to veto.” He observes that people will fight to the death to preserve their right to say “No,” so give them that right and the negotiating environment becomes more constructive and collaborative almost immediately.
People have a need to say, “No.” So don’t just hope to hear it at some point; get them to say it early.
No “No” is no go.
“No”—or the lack thereof—also serves as a warning, the canary in the coal mine. If despite all your efforts, the other party won’t say “No,” you’re dealing with people who are indecisive or confused or who have a hidden agenda
Pause after making your offer. Then, ask solution-based questions or simply label their effect: “What about this doesn’t work for you?” “What would you need to make it work?” “It seems like there’s something here that bothers you.”
Get people to say “No”, if needed by antagonizing them.
There is a big difference between making your counterpart feel that they can say “No” and actually getting them to say it.
Sometimes, if you’re talking to somebody who is just not listening, the only way you can crack their cranium is to antagonize them into “No.”
One great way to do this is to mislabel one of the other party’s emotions or desires. You say something that you know is totally wrong, like “So it seems that you really are eager to leave your job” when they clearly want to stay. That forces them to listen and makes them comfortable correcting you by saying, “No, that’s not it. This is it.”
“No” has a lot of skills.
“No” allows the real issues to be brought forth
“No” protects people from making—and lets them correct—ineffective decisions
“No” slows things down so that people can freely embrace their decisions and the agreements they enter into
“No” helps people feel safe, secure, emotionally comfortable, and in control of their decisions
“No” moves everyone’s efforts forward.
“NO” can mean many things.
When someone tells you “No,” you need to rethink the word in one of its alternative—and much more real—meanings:
I am not yet ready to agree
You are making me feel uncomfortable
I do not understand
I don’t think I can afford it
I want something else
I need more information
I want to talk it over with someone else.
“Is this a bad time to talk?”
if you’re trying to sell something, don’t start with “Do you have a few minutes to talk?” Instead ask, “Is now a bad time to talk?” Either you get “Yes, it is a bad time” followed by a good time or a request to go away, or you get “No, it’s not” and total focus.
When someone stops responding to you, this one-line email is guaranteed to always get an answer: “Have you given up on this project?”
Get your opponent to say “That’s Right”.
Just like “No” has power, so does “That’s Right”.
Trigger a “That’s Right” with a summary.
If they say “You’re right”, nothing changes.
Tell people “you’re right” and they get a happy smile on their face and leave you alone for at least twenty-four hours. But you haven’t agreed to their position. You have used “you’re right” to get them to quit bothering you.
Example of using “That’s right” for career success.
“So it sounds like you could approve my new position no matter which division, as long as I was in headquarters and could help you communicate better with the top managers.” “That’s right,” he said. “I must admit I need your help in headquarters.” My student realized he had made a breakthrough. Not only had his ex-boss uttered those sweet words—“that’s right”—but he had revealed his true motive: he needed an ally in headquarters. “Is there any other help you need?” he asked.
Example of using “That’s right” to make a sale.
“You seem to tailor specific treatments and medications for each patient,” she said. “That’s right,” he responded. This was the breakthrough she had hoped to reach. The doctor had been skeptical and cold. But when she recognized his passion for his patients—using a summary—the walls came down. He dropped his guard, and she was able to gain his trust. Rather than pitch her product, she let him describe his treatment and procedures. With this, she learned how her medication would fit into his practice. She then paraphrased what he said about the challenges of his practice and reflected them back to him. Once the doctor signaled his trust and rapport, she could tout the attributes of her product and describe precisely how it would help him reach the outcomes he desired for his patients. He listened intently. “It might be perfect for treating a patient who has not benefited from the medication I have been prescribing,” he told her. “Let me give yours a try.”
When something doesn’t make sense, there could be a Black Swan lurking.
“Where it doesn’t make sense, there’s cents to be made.”
the moment when we’re most ready to throw our hands up and declare “They’re crazy!” is often the best moment for discovering Black Swans (unknown unknowns) that transform a negotiation. It is when we hear or see something that doesn’t make sense—something “crazy”—that a crucial fork in the road is presented: push forward, even more forcefully, into that which we initially can’t process; or take the other path, the one to guaranteed failure, in which we tell ourselves that negotiating was useless anyway.
Reasons why your counterpart may be acting “crazy”.
1. Your counterpart could be misinformed.
People operating with incomplete information appear crazy to those who have different information. Your job when faced with someone like this in a negotiation is to discover what they do not know and supply that information.
2. Your counterpart could be constrained.
Where your counterpart is acting wobbly, there exists a distinct possibility that they have things they can’t do but aren’t eager to reveal. Such constraints can make the sanest counterpart seem irrational. The other side might not be able to do something because of legal advice, or because of promises already made, or even to avoid setting a precedent.
3. Your counterpart may have other interests.
A client may put off buying your product so that their calendar year closes before the invoice hits, increasing his chance for a promotion. Or an employee might quit in the middle of a career-making project, just before bonus season, because he or she has learned that colleagues are making more money. For that employee, fairness is as much an interest as money. Whatever the specifics of the situation, these people are not acting irrationally. They are simply complying with needs and desires that you don’t yet understand, what the world looks like to them based on their own set of rules. Your job is to bring these Black Swans to light.
How to unearth Black Swans:
Get face time
Observe Unguarded Moments
Big Idea 3: Controlling a Negotiation
How to control a negotiation – “Bend their Reality”.
Discover your opponent’s emotional drivers and “bend their reality”.
Anchor their emotions in prep for a loss, and trigger loss aversion.
Tap into Framing, Loss Aversion and Prospect Theory to drive negotiations.
Take the same person, change one or two variables, and $100 can be a glorious victory or a vicious insult. Recognizing this phenomenon lets you bend reality from insult to victory.
Let me give you an example. I have this coffee mug, red and white with the Swiss flag. No chips, but used. What would you pay for it, deep down in your heart of hearts? You’re probably going to say something like $3.50.
Let’s say it’s your mug now. You’re going to sell it to me. So tell me what it’s worth. You’re probably going to say something between $5 and $7.
In both cases, it was the exact same mug. All I did was move the mug in relation to you, and I totally changed its value.
Or imagine that I offer you $20 to run a three-minute errand and get me a cup of coffee. You’re going to think to yourself that $20 for three minutes is $400 an hour. You’re going to be thrilled. What if then you find out that by getting you to run that errand I made a million dollars. You’d go from being ecstatic for making $400 an hour to being angry because you got ripped off.
Give them a stake in your success.
Once you’ve negotiated a salary, make sure to define success for your position—as well as metrics for your next raise. That’s meaningful for you and free for your boss, much like giving me a magazine cover story was for the bar association. It gets you a planned raise and, by defining your success in relation to your boss’s supervision, it leads into the next step . . . SPARK THEIR INTEREST IN YOUR SUCCESS AND GAIN AN UNOFFICIAL MENTOR
Let the other guy go first, most of the time.
The real issue is that neither side has perfect information going to the table. This often means you don’t know enough to open with confidence.
That’s especially true anytime you don’t know the market value of what you are buying or selling…. By letting them anchor you also might get lucky: I’ve experienced many negotiations when the other party’s first offer was higher than the closing figure I had in mind.
Counter-arguments are far more persuasive than arguments.
In contests of persuasion, counterarguments are typically more powerful than arguments. This superiority emerges especially when a counterclaim does more than refute a rival’s claim by showing it to be mistaken or misdirected in the particular instance, but does so instead by showing the rival communicator to be an untrustworthy source of information,
Now, of course, he may try to anchor too high or too low for you. How do you deflect an anchor when the other guy goes first?
Deflect with Calibrated Questioning to refocus your counterpart.
First, deflect the punch in a way that opens up your counterpart. Successful negotiators often say “No” in one of the many ways we’ve talked about (“How am I supposed to accept that?”) or deflect the anchor with questions like “What are we trying to accomplish here?” Responses like these are great ways to refocus your counterpart when you feel you’re being pulled into the compromise trap.
Pivot to non-monetary terms.
You can also respond to a punch-in-the-face anchor by simply pivoting to terms.
What I mean by this is that when you feel you’re being dragged into a haggle you can detour the conversation to the nonmonetary issues that make any final price work. You can do this directly by saying, in an encouraging tone of voice, “Let’s put price off to the side for a moment and talk about what would make this a good deal.” Or you could go at it more obliquely by asking, “What else would you be able to offer to make that a good price for me?”
If you’re pleasantly persistent on non-monetary terms, monetary terms may improve
Offer an unrelated surprise gift and trigger Reciprocity.
You can get your counterpart into a mood of generosity by staking an extreme anchor and then, after their inevitable first rejection, offering them a wholly unrelated surprise gift.
Introduce a dynamic called reciprocity; the other party feels the need to answer your generosity in kind. They will suddenly come up on their offer, or they’ll look to repay your kindness in the future.
Take “strategic umbrage” / anger at the proposal.
Use “Why” questions to bring them to your side.
When you want to flip a dubious counterpart to your side, ask them, “Why would you do that?” but in a way that the “that” favors you. Let me explain. If you are working to lure a client away from a competitor, you might say, “Why would you ever do business with me? Why would you ever change from your existing supplier? They’re great!” In these questions, the “Why?” coaxes your counterpart into working for you.
If you have to go first, establish a very high range based on precedents.
Whether your deadline is real and absolute or merely a line in the sand, it can trick you into believing that doing a deal now is more important than getting a good deal. Deadlines regularly make people say and do impulsive things that are against their best interests, because we all have a natural tendency to rush as a deadline approaches. What good negotiators do is force themselves to resist this urge and take advantage of it in others.
Deadlines are often arbitrary, almost always flexible, and hardly ever trigger the consequences we think—or are told—they will.
It’s not just with hostage negotiations that deadlines can play into your hands. Car dealers are prone to give you the best price near the end of the month, when their transactions are assessed. And corporate salespeople work on a quarterly basis and are most vulnerable as the quarter comes to a close.
Never hide your deadlines.
Hiding a deadline actually puts the negotiator in the worst possible position. …Hiding your deadlines dramatically increases the risk of an impasse. That’s because having a deadline pushes you to speed up your concessions, but the other side, thinking that it has time, will just hold out for more.
Hiding a deadline means you’re negotiating with yourself, and you always lose when you do so.
Find out opponent’s deadlines by seeing how specific they are.
How close we were getting to their self-imposed deadline would be indicated by how specific the threats were that they issued.
“Give us the money or your aunt is going to die” is an early stage threat, as the time isn’t specified.
Increasing specificity on threats in any type of negotiations indicates getting closer to real consequences at a real specified time.
To gauge the level of a particular threat, we’d pay attention to how many of the four questions—What? Who? When? And how?—were addressed.
When people issue threats, they consciously or subconsciously create ambiguities and loopholes they fully intend to exploit.
As the loopholes started to close as the week progressed, and did so over and over again in similar ways with different kidnappings, the pattern emerged.
When and how to use “Fair”
In the Ultimatum Game, years of experience has shown me that most accepters will invariably reject any offer that is less than half of the proposer’s money. Once you get to a quarter of the proposer’s money you can forget it and the accepters are insulted.
Most people make an irrational choice to let the dollar slip through their fingers rather than to accept a derisory offer, because the negative emotional value of unfairness outweighs the positive rational value of the money.
You may not trust Iran, but its moves are pretty clear evidence that rejecting perceived unfairness, even at substantial cost, is a powerful motivation.
Three ways to use “Fair”; only one is positive.
Using “Fair” as a judo like defensive move.
The most common use is a judo-like defensive move that destabilizes the other side. This manipulation usually takes the form of something like, “We just want what’s fair.”
Think back to the last time someone made this implicit accusation of unfairness to you, and I bet you’ll have to admit that it immediately triggered feelings of defensiveness and discomfort. These feelings are often subconscious and often lead to an irrational concession.
A friend of mine was selling her Boston home in a bust market a few years back. The offer she got was much lower than she wanted—it meant a big loss for her—and out of frustration she dropped this F-bomb on the prospective buyer. “We just want what’s fair,” she said. Emotionally rattled by the implicit accusation, the guy raised his offer immediately.
If you’re on the business end of this accusation, you need to realize that the other side might not be trying to pick your pocket; like my friend, they might just be overwhelmed by circumstance. The best response either way is to take a deep breath and restrain your desire to concede. Then say, “Okay, I apologize. Let’s stop everything and go back to where I started treating you unfairly and we’ll fix it.”
Using “Fair” as an accusation.
The second use of the F-bomb is more nefarious. In this one, your counterpart will basically accuse you of being dense or dishonest by saying, “We’ve given you a fair offer.”
If you find yourself in this situation, the best reaction is to simply mirror the “F” that has just been lobbed at you. “Fair?” you’d respond, pausing to let the word’s power do to them as it was intended to do to you. Follow that with a label: “It seems like you’re ready to provide the evidence that supports that,”
Using “Fair” as a constructive stage setter.
The last use of the F-word is my favorite because it’s positive and constructive. It sets the stage for honest and empathetic negotiation. Here’s how I use it: Early on in a negotiation, I say, “I want you to feel like you are being treated fairly at all times. So please stop me at any time if you feel I’m being unfair, and we’ll address it.”
When you talk numbers, use Odd numbers.
This signifies precision.
The biggest thing to remember is that numbers that end in 0 inevitably feel like temporary placeholders, guesstimates that you can easily be negotiated off of. But anything you throw out that sounds less rounded—say, $37,263—feels like a figure that you came to as a result of thoughtful calculation.
Leverage in Negotiation
Leverage is the ability to inflict loss and withhold gain.
Who has leverage in a kidnapping? The kidnapper or the victim’s family? Most people think the kidnapper has all the leverage. Sure, the kidnapper has something you love, but you have something they lust for. Which is more powerful? Moreover, how many buyers do the kidnappers have for the commodity they are trying to sell? What business is successful if there’s only one buyer?
The Three Types of Leverage
Negative leverage is what most civilians picture when they hear the word “leverage.” It’s a negotiator’s ability to make his counterpart suffer. And it is based on threats: you have negative leverage if you can tell your counterpart, “If you don’t fulfill your commitment/pay your bill/etc., I will destroy your reputation.” This sort of leverage gets people’s attention because of a concept we’ve discussed: loss aversion.
If you shove your negative leverage down your counterpart’s throat, it might be perceived as you taking away their autonomy. People will often sooner die than give up their autonomy. They’ll at least act irrationally and shut off the negotiation. A more subtle technique is to label your negative leverage and thereby make it clear without attacking. Sentences like “It seems like you strongly value the fact that you’ve always paid on time” or “It seems like you don’t care what position you are leaving me in” can really open up the negotiation process.
Positive leverage is quite simply your ability as a negotiator to provide—or withhold—things that your counterpart wants. Whenever the other side says, “I want . . .” as in, “I want to buy your car,” you have positive leverage.
The Consistency principle and normative leverage
Most of us have complex “consistency webs” that are interconnected at many levels of our personality. Because we like to keep these webs intact, we rationalize our actions so they appear (at least in our own eyes) to be consistent with our prior beliefs. We are also more open to persuasion when we see a proposed course of action as being consistent with a course we have already adopted.
Every person has a set of rules and a moral framework. Normative leverage is using the other party’s norms and standards to advance your position. If you can show inconsistencies between their beliefs and their actions, you have normative leverage. No one likes to look like a hypocrite.
You maximize your normative leverage when the standards, norms, and themes you assert are ones the other party views as legitimate and relevant to the resolution of your differences.
If you set up your own needs, standards, and entitlement as the only rational approaches to a negotiation, you will not inspire agreement. Instead, you will have a fight on your hands pitting your principles against the other party’s.
The best practice is therefore to anticipate the other side’s preferred standards and frame your proposal within them. If you cannot do this, prepare to argue for a special exception to his standard based on the special facts of your case. Attack his standard only as a last resort.
Use positioning themes.
People do not usually think of slogans and themes as being an important part of negotiation. But they can be vital, not only in highly visible events such as the UPS strike but also in more ordinary negotiations. Persuasive positioning of our needs and interests helps us organize our thoughts, communicate consistently, and tailor our message so the other party will be most likely to hear it. If other parties become convinced that you are committed to a consistent position, they will respect that and you will gain important normative leverage.
Beware of consistency traps.
The goal of a consistency trap is to precommit you to a seemingly innocent standard and then confront you with the logical implications of the standard in a particular case—implications that actually turn out to run against your interests.
You can learn to see a consistency trap coming if you know what to look for. The tip-off is when the trapper tries to get you to agree with some statement before telling you why the statement is important. “Would you like to save some money?” says the long distance company telemarketer. “Sure,” you reply. Snap! The trap closes. “Our records of your monthly phone usage indicate you will save more than one hundred dollars by switching to our service. How about starting to save right now?” You are logically committed to saying “yes.”
How can you defend against consistency traps? By being alert to them. When the person you are negotiating with begins asking leading questions before you know where he is going, slow the pace. Turn the tables on the trapper. Elicit as much information as possible about why these questions are important before committing to anything. If you are nevertheless pressed into agreeing to a standard, qualify it or phrase it in your own words and use the broadest possible terms, leaving ample room for interpretation later. “I believe comparable sales may be relevant to our discussions, although I am not sure just what time frame or industries we should be looking at,” you can say to the competitive negotiator. “Why don’t you show me all your data?”
If you are caught in an inconsistency, you have two choices. Either you can adjust your position to conform to the standard that you have admitted applies or you can hold your ground, admitting that you made a mistake when you agreed to the standard. This latter move will cause you to lose some face, but that may be less costly than a bad bargain.
Putting it all together: Actionable takeaways from the book.
Ackerman Bargaining Model
Set your target price (your goal)
Set your first offer at 65% of target price
Calculate three raises of decreasing increments (to 85, 95, and 100%)
Use empathy and different ways of saying “No” to get the other side to counter before you increase your offer #[[Calibrated Questioning]]
Use precise, nonround numbers
On your final number, throw in a nonmonetary item (that they probably don’t want) to show you’re at your limit.
Preparing a Negotiation One-Sheet
Section 1: The Goal of your negotiation
Think through best/worst-case scenarios but only write down a specific goal that represents the best case.
Obsessing over a BATNA turns it into your target, and thereby sets the upper limit of what you will ask for. After you’ve spent hours on a BATNA, you mentally concede everything beyond it. God knows aiming low is seductive. Self-esteem is a huge factor in negotiation, and many people set modest goals to protect it. It’s easier to claim victory when you aim low. That’s why some negotiation experts say that many people who think they have “win-win” goals really have a “wimp-win” mentality.
So know what you cannot accept and have an idea about the best-case outcome, but keep in mind that since there’s information yet to be acquired from the other side, it’s quite possible that best case might be even better than you know
Section 2: Summary of the deal that results in “That’s right”
Summarize and write out in just a couple of sentences the known facts that have led up to the negotiation.
You must be able to summarize a situation in a way that your counterpart will respond with a “That’s right.” If they don’t, you haven’t done it right.
Section 3: Prepare labels / accusation audit
Prepare three to five labels to perform an accusation audit.
Make a concise list of any accusations they might make—no matter how unfair or ridiculous they might be. Then turn each accusation into a list of no more than five labels and spend a little time role-playing.
It seems like _ is valuable to you.
It seems like you don’t like _.
It seems like you value . It seems like ___ makes it easier.
It seems like you’re reluctant to _.
Section 4: Prepare calibrated questions
Prepare three to five calibrated questions to reveal value to you and your counterpart and identify and overcome potential deal killers.
There will be a small group of “What” and “How” questions that you will find yourself using in nearly every situation. Here are a few of them: What are we trying to accomplish? How is that worthwhile? What’s the core issue here? How does that affect things? What’s the biggest challenge you face? How does this fit into what the objective is?
QUESTIONS TO IDENTIFY BEHIND-THE-TABLE DEAL KILLERS
How does this affect the rest of your team? How on board are the people not on this call? What do your colleagues see as their main challenges in this area?
QUESTIONS TO IDENTIFY AND DIFFUSE DEAL-KILLING ISSUES
What are we up against here? What is the biggest challenge you face? How does making a deal with us affect things? What happens if you do nothing? What does doing nothing cost you? How does making this deal resonate with what your company prides itself on?
Section 5: Non-Cash offers
Prepare a list of noncash items possessed by your counterpart that would be valuable.
Ask yourself: “What could they give that would almost get us to do it for free?”
Great example from the book, of applying these learnings.
Back in Haiti, a few hours after the kidnappers had snatched his aunt, I was on the phone with the politician’s nephew. There was no way their family could come up with $150,000, he told me, but they could pay between $50,000 and $85,000. But since learning that the ransom was just party money, I was aiming much lower: $5,000. We were not going to compromise. It was a matter of professional pride.
I advised him to start off by anchoring the conversation in the idea that he didn’t have the money, but to do so without saying “No” so as not to hit their pride head-on. “How am I supposed to do that?” he asked in the next call. The kidnapper made another general threat against the aunt and again demanded the cash. That’s when I had the nephew subtly question the kidnapper’s fairness. “I’m sorry,” the nephew responded, “but how are we supposed to pay if you’re going to hurt her?” That brought up the aunt’s death, which was the thing the kidnappers most wanted to avoid. They needed to keep her unharmed if they hoped to get any money. They were commodity traders, after all.
Notice that to this point the nephew hadn’t named a price. This game of attrition finally pushed the kidnappers to name a number first. Without prodding, they dropped to $50,000. Now that the kidnappers’ reality had been bent to a smaller number, my colleagues and I told the nephew to stand his ground. “How can I come up with that kind of money?” we told him to ask. Again, the kidnapper dropped his demand, to $25,000.
Now that we had him in our sights, we had the nephew make his first offer, an extreme low anchor of $3,000. The line went silent and the nephew began to sweat profusely, but we told him to hold tight. This always happened at the moment the kidnapper’s economic reality got totally rearranged.
When he spoke again, the kidnapper seemed shell-shocked. But he went on. His next offer was lower, $10,000. Then we had the nephew answer with a strange number that seemed to come from deep calculation of what his aunt’s life was worth: $4,751. His new price? $7,500.
In response, we had the cousin “spontaneously” say he’d throw in a new portable CD stereo and repeated the $4,751. The kidnappers, who didn’t really want the CD stereo felt there was no more money to be had, said yes. (linked to Ackerman Bargaining Model).