Six Habits of Merely Effective Negotiators
confidently negotiating with a customer for a new order: “This technology costs less and is more accurate than the competition’s.” Think for a moment, though, about how intended buyers might mull over their interests, espe- cially given that EPA regulations permitted leaks of up to 1,500 gallons while the new tech- nology could pick up an 8-ounce leak. Poten- tial buyer: “What a technological tour de force! This handy new device will almost cer- tainly get me into needless, expensive regula- tory trouble. And create P.R. problems too. I think I’ll pass, but my competition should defi- nitely have it.” From the technology com- pany’s perspective, “faster, better, cheaper” added up to a sure deal; to the other side, it looked like a headache. No deal. Social psychologists have documented the difficulty most people have understanding the other side’s perspective. From the trenches, successful negotiators concur that overcoming this self-centered tendency is critical. As Mil- lennium Pharmaceuticals’ Steve Holtzman put it after a string of deals vaulted his company from a start-up in 1993 to a major player with a $10.6 billion market cap today, “We spend a lot of time thinking about how the poor guy or woman on the other side of the table is going to have to go sell this deal to his or her boss. We spend a lot of time trying to understand how they are modeling it.” And Wayne Hui- zenga, veteran of more than a thousand deals building Waste Management, AutoNation, and Blockbuster, distilled his extensive experi- ence into basic advice that is often heard but even more often forgotten. “In all my years of doing deals, a few rules and lessons have emerged. Most important, always try to put yourself in the other person’s shoes. It’s vital to try to understand in depth what the other side really wants out of the deal.” Tough negotiators sometimes see the other side’s concerns but dismiss them: “That’s their problem and their issue. Let them handle it. We’ll look after our own problems.” This atti- tude can undercut your ability to profitably in- fluence how your counterpart sees its prob- lem. Early in his deal-making career at Cisco Systems, Mike Volpi, now chief strategy of- ficer, had trouble completing proposed deals, his “outward confidence” often mistaken for arrogance. Many acquisitions later, a colleague observed that “the most important part of [Volpi’s] development is that he learned power
ing the other side to say yes—and mean it—to a proposal that meets your interests better than your best no-deal option does. And why should the other side say yes? Because the deal meets its own interests better than its best no-deal option. So, while protecting your own choice, your negotiation problem is to understand and shape your counterpart’s per- ceived decision—deal versus no deal—so that the other side chooses in its own interest what you want. As Italian diplomat Daniele Vare said long ago about diplomacy, negotiation is “the art of letting them have your way.” This approach may seem on the surface like a recipe for manipulation. But in fact, under- standing your counterpart’s interests and shap- ing the decision so the other side agrees for its own reasons is the key to jointly creating and claiming sustainable value from a negotiation. Yet even experienced negotiators make six common mistakes that keep them from solv- ing the right problem. You can’t negotiate effectively unless you un- derstand your own interests and your own no- deal options. So far, so good—but there’s much more to it than that. Since the other side will say yes for its reasons, not yours, agreement requires understanding and ad- dressing your counterpart’s problem as a means to solving your own. At a minimum, you need to understand the problem from the other side’s perspective. Consider a technology company, whose board of directors pressed hard to develop a hot new product shortly after it went public. The com- pany had developed a technology for detecting leaks in underground gas tanks that was both cheaper and about 100 times more accurate than existing technologies—at a time when the Environmental Protection Agency was per- suading Congress to mandate that these tanks be continuously tested. Not surprisingly, the directors thought their timing was perfect and pushed employees to commercialize and mar- ket the technology in time to meet the de- mand. To their dismay, the company’s first sale turned out to be its only one. Quite a mys- tery, since the technology worked, the product was less expensive, and the regulations did come through. Imagine the sales engineers Mistake 1 Neglecting the Other Side’s Problem
James K. Sebenius is the Gordon Donaldson Professor of Business Ad- ministration at Harvard Business School in Boston, where he led the creation of the negotiation unit. He helped found and worked at the Blackstone Group, a New York investment banking and pri- vate equity firm. He is coauthor with David Lax of the forthcoming book 3-D Negotiation: Creating and Claiming Value for the Long Term .
harvard business review • april 2001
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