They should both feel like winners. But this is just at first glance.
Now, try to put yourself in Fyodor’s, the buyer’s, shoes. Sure, you got what you wanted for the money you had, and you didn’t even have to rack your brains to find some extra cash (as you would have done had Ivan dug his heels in a bit more). But didn’t you stop to think how strange it was that Ivan suddenly cut his price by 20 per cent? This question will soon become a torment. ‘Why would he agree to my price so quickly? There must be something wrong with the car . . .’ And with that, your new car – the one that mere hours ago gave you such joy – is causing you pain, filling you with doubt and anxiety.
Now put yourself in Ivan’s, the seller’s, shoes. You will also be tearing yourself apart. ‘Why did I agree to his price so quickly?’ you’ll ask yourself. ‘Obviously I wasn’t expecting the full million, but I could have wrangled another 100,000 roubles from him, 50k at least.’
So where does that get us? It appears that even ideal negotiations are far from perfect in practice. Neither side of this deal came away fully satisfied.
Studies have shown that the probability of reaching a square deal like this one is 0.16, or 16 per cent. But because this probability is actually twice as high as that of striking a deal through a model that involves a more gradual narrowing of differences (which is 8 per cent), many negotiators plump for this option. However, for the most part, the results of these ‘square deals’ are later called into question. Psychology gets in the way. Whereas a model involving a gradual narrowing of differences puts psychology front and centre right from the start, a reliable companion and aide during the negotiation process.
People aren’t computers. We all have emotions.
It is crucial to view your opponent as a subject rather than an object.
At times, we reject even interesting proposals made by our opponents without quite being able to explain why. Of course, we will eventually find ourselves some sort of explanation. ‘But how were we supposed to take that coming from an opponent? It’s common sense that they would do such-and-such instead!’ Well, yes, logically speaking. But then emotions come into play. This is why specialists highlight three vectors as being particularly important to the negotiation process. It is these three vectors in particular that we will study over the course of this book. These are:
• the ability to defend one’s interests;
• the ability to manage one’s emotions; and
• the ability to manage the emotions of others.
Negotiations are, above all, a process. With this process in mind, we must identify both the type of negotiations we are taking part in and our opponent’s motives.
Many sales specialists believe that if a buyer invites them to negotiations it means the buyer is automatically interested in doing business with them, and that this will therefore be the purpose of the negotiations. This is a rookie mistake.
For several months, Andrei, the manager of a company selling construction materials, has been negotiating with the procurement manager of a construction company. Andrei knows for a fact (nor is the buyer hiding this) that the construction company is currently buying in its materials from a competitor. During these negotiations, the procurement manager has repeatedly stressed that they enjoy working with this competitor. They are happy with the quality and price that the competitor offers, as well as their fast service. The buyer isn’t refusing to negotiate with Andrei, but they never manage to get down to the nitty-gritty. Andrei keeps on offering them discounts, shares and better terms, all in the hope of poaching their business. After four months of futile efforts, Andrei learns by chance that the buyer has been using his quotes to get better terms from the competitor.
In this example, it is clear that the buyer’s motives have nothing to do with a future partnership, but Andrei doesn’t see what is really driving the discussions and so falls straight into the trap.
This happens quite a lot. A man decides he wants the best possible deal on a car, and so conducts his own pseudo request for tenders. He goes to every car dealership in town, using one single phrase to get the best possible price: ‘Your rival offered me a better deal.’ He is, in effect, putting his competitors head to head. The dealership managers, believing he’s negotiating because he intends to buy from them, get caught in his net.
Fred Charles Iklé, an American sociologist, political scientist and author of books including Every War Must End and How Nations Negotiate, outlines the following types of and motives for negotiations:
• Negotiations with a view to extending existing agreements. Such negotiations are often held in the trade sphere to extend the validity of a contract, or to add certain clarifications or changes to a new contract to reflect the current state of affairs. Such negotiations are also not uncommon when extending labour contracts.
• Negotiations with a view to normalising relations. These presume a transition from a conflict situation to a different relationship between the parties (neutrality or co-operation).
• Negotiations with a view to finalising redistribution agreements. These negotiations are when one party takes an aggressive position and demands changes to agreements that are to their advantage, at a cost to other parties. Such negotiations take place when haggling over a price or other material resources – an increase or decrease in rent, for example.
• Negotiations with a view to reaching a new agreement. These are intended to establish a new relationship and new obligations between parties. Negotiations with a new partner, for example.
• Negotiations with a view to gathering information. Indirect results may not be reflected in agreements, and in some cases the negotiations may not even lead to an agreement at all. Examples of this type of negotiation include talks to establish contact, identify partners’ points of view or influence public opinion.
Iklé wrote his books in the twentieth century. In light of present-day practice, we can extend this list to include:
• Negotiations with a view to misleading an opponent. These are, quite simply, an imitation of the negotiation process. Opponents often enter the negotiation process and deliberately draw it out, safe in the knowledge that time is on their side. In this type of negotiation, every one of your proposals will be met with a ‘maybe’, a ‘we’ll need to consult on this’ or similar.
• Provocation. Negotiations with a view to showing the other party’s inability to negotiate.
It is very important to identify your opponent’s primary motive in the early stages of the negotiation process, and to use this knowledge when deciding on your next steps.
I once acted as a mediator in negotiations to settle a dispute between two companies and a bank. The dispute concerned a joint debt repayment for an enterprise that had gone bankrupt.
Every meeting came to nothing, but our opponent kept on initiating negotiations, declaring their willingness to settle the matter in a ‘constructive’ manner. Yet when it came to the negotiating table, the same party kept putting forward absurd demands. Whenever the talks broke down, we couldn’t
