Negotiation skills are essential for success in all areas of life, from business to politics and personal life. This book by Deepak Malhotra and Max H. Bazerman presents proven principles, strategies and tactics that anyone can apply and practice to become an effective negotiator. In this Negotiation Genius summary, we’ll outline some of these key negotiation tools and techniques. For a detailed breakdown of the concepts and tips with examples, do get more details from our complete book summary bundle in text, infographic and audio formats.
What’s a Negotiation Genius?
A negotiation genius is someone who can (i) consistently negotiate successful deals while (ii) preserving his integrity/reputation and (iii) strengthening the relationship.
Successful negotiations don’t come from inborn talent or intuition. They come from careful preparation, sound strategies and tactics. In this book, the authors Deepak Malhotra and Max Bazerman present the negotiation framework and tools that they’ve researched, tested and refined in executive programs and real-world corporations.
In this free Negotiation Genius summary, we’ll share some highlights from the Negotiation Toolkit, and issues/challenges to expect when negotiating in the real-world. Do get a copy of our full summary bundle for the detailed strategies, tips, and examples.
Claiming and Creating Value in Negotiation
Basically, the goal of negotiation is not to achieve win-win outcomes. It’s to create value such that both sides are better off with an agreement than without.
Take this example: During the 1912 U.S. presidential election, a campaign manager printed 3 million copies of Theodore Roosevelt’s photo before he realized that he didn’t have permission to use it. The copyrights alone could’ve cost $3mil (equivalent to $60mil today). Instead of paying a hefty fee, the manager ask the photographer how much he would pay for a once-in-a-lifetime opportunity to feature his photo in Roosevelt’s campaign. He ended up receiving $250 from the photographer instead!
That’s negotiation genius at work. Both sides were definitely better with an agreement than without: the campaign manager could use the photo legitimately, and the photographer had a valuable publicity opportunity for a token investment.
In some cases, a negotiation involves only 1 divisive issue (e.g. the price for buying/selling a house), where 1 party’s gain is at the other party’s expense. Your goal should be to claim the most value without hurting the relationship or your reputation.
However, in most cases, it’s possible to create value to improve the deal for both sides. That’s because value is subjective and can mean different things to different people. Indeed, getting 50% of a $200 pie is better getting than 80% of a $100 pie.
Part 1: The Negotiation Genius Toolkit
The book starts with various principles and approaches to claim the maximum value from negotiations, before moving into how you can also create value from negotiations. In our Negotiation Genius summary, we’ve distilled and organized how you can claim and create value before, during and after negotiation. Here’s a quick overview of the key strategies involved. Do get our full 17-page summary for the specific tactics and tips for each strategy.
PRE-NEGOTIATION: Preparation is Key
Great negotiation requires prior preparation: you need to gather information about the situation and the other party, decide what you want, craft your negotiation strategy, etc. To claim the most value from your negotiations:
• Determine your BATNA (the Best Alternative to Negotiated Agreement), or what you’ll do without an agreement. Identify all possible options if negotiations were to fail, estimate the value of each option and select your best fallback option (i.e. your BATNA). This isn’t what you think is “fair” nor what you hope for. It’s what you’re prepared to face if you don’t have an agreement.
• Calculate your Reservation Value (RV), or the point you’ll walk away from the negotiations. If you’re selling your car, then this is the absolute lowest price you’re willing to sell your car for.
• Assess the other party’s BATNA, i.e. what they could do if there’s no agreement.
• Estimate the other party’s RV.
• Calculate the ZOPA (or the zone of possible agreement). This is the range between the 2 RVs, or the set of possible deals that may be acceptable to both sides.
Logrolling = trading across issues. One of the best ways to create value is to add issues to a negotiation. This creates more currencies for exchange, making it possible for each side to get something it values more, by giving away something it values less. For example, in a business deal, you can go beyond price to discuss financing, warranties, post-sales support etc. To prepare for value-creation, go beyond the BATNA, RV and ZOPA:
• Identify your range of interests, i.e. all the things you value that the other party could provide.
• Create a scoring system to reflect each item’s relative priority.
• Calculate your Package Reservation Value (PRV).
• Identify the other party’s range of interests.
DURING NEGOTIATION: Get the Best Possible Deal
Obviously, you can’t have perfect information pre-negotiation. During negotiation, you’ll have to additional information to test your assumptions and revise your estimates, understand the other party’s needs, wants, interests and constraints, create possible offers that’d add value to both sides, and haggle effectively. In our complete version of the Negotiation Genius summary (click here for full summary bundle), we’ll be explain the specific strategies, tactics and tips for:
• Deciding whether to make the first offer, how to do it strategically to create the desired “anchoring effects”, and how to counter others’ anchoring effects if they made the first offer;
• How to apply various strategies to gather useful information, how to tease out info even from reticent parties, and how to separate real information from attempts to influence you;
• How to use several haggling strategies to bargain more effectively; and
• How to go about creating and maximizing value for both side, using logrolling, Pareto improvement, and other strategies/tactics.
POST-NEGOTIATION: Maximize Satisfaction and Value
Our satisfaction with a deal depends less on the actual outcome than our perception of the outcome. You can continue to maximize satisfaction and value for both sides even after the negotiation, such as using the post-settlement settlement (PSS) to enhance the initial agreement. Feel free to get more insights from our complete 17-page summary.
Part 2: Negotiating in the Real World
Realities in the real world can disrupt even the best plans and strategies. What are some of the things you must look out for to navigate like a pro?
Psychology in Negotiations
All human beings—including experienced negotiators—are subject to mental and emotional biases/errors. These can create conflict and distrust, hinder our ability to learn from experiences, and lead to sub-optimal outcomes. Negotiation geniuses learn to minimize their own mistakes while leveraging others’ mistakes.
In our full Negotiation Genius summary, we’ll elaborate more on:
• The various types of cognitive/mental biases, as well as motivational/emotional biases, and how they lead to irrational behaviors.
• How you can manage these biases as far as possible: to improve your own decisions/actions, while addressing and leveraging others’ biases.
• How to use and counter various strategies of influence, e.g. leveraging loss aversion, the Door-in-the-face (DITF) technique, the Foot-in-the-door (FITD) technique, and so on. [Check out our Influence summary for more insights on Robert Cialdini’s 6 famous influence strategies or “principles of persuasion”]
Blind Spots, Lies/Deception and Ethical Dilemmas
There are also several common blind spots in negotiations (e.g. different decision rules, information asymmetries, parties absent from the table who affect the outcome).
It’s possible to be ethical without being taken advantage of. Almost everyone lies at some point in negotiations. This is why negotiation geniuses (i) use defensive strategies to discourage deception, (ii) improve their ability to detect lies, (iii) remove their own need/desire to lie, and (iv) know what to do if they catch the other party lying. There are also situations where anyone—yourself included—may behave unethically: know what they are so you can prevent or counter them as far as possible.
Read more about each of these challenges and solutions in our full Negotiation Genius summary (get full summary bundle here).
When You’re Weak or When Things Turn Ugly
At some point, you’ll have to negotiate from a position of weakness with few/no good alternatives. Don’t worry, there are still strategies that you can deploy to make the most of your situation, or even to disrupt the power balance. Negotiations may also turn ugly due to irrationality, anger, distrust, threats and ultimatums. Get our complete 17-page summary to learn how you can manage each of these situations.
Having said that, there are situations when you shouldn’t negotiate at all:
• If the costs of negotiation (including the value of your time, or the harm to a relationship) exceed the potential gains;
• If everyone knows that your BATNA sucks;
• If negotiation is inappropriate for the culture or context (e.g. negotiating a pay raise in the midst of a crisis); or
• If there’s no ZOPA, i.e. your BATNA exceeds their best possible offer.
Other Details in the “Negotiation Genius” Book
This book provides the negotiation strategies and tools that can be applied to virtually any scenario. However, becoming a negotiation genius takes time and continuous practice. The key is to keep taking small steps and making incremental improvements. Besides the insights in this summary, the book includes various case-studies and examples to help you understand how the principles and techniques can be applied in real-life. Do get a copy of the book for the full details, get our Negotiation Genius full summary bundle for an overview of the various ideas and tips, or visit negotiationgenius.com.
Master these strategies and techniques to become a Negotiation Genius!