Negotiation Workshop Mario Moussa Ph D MBA

Negotiation Workshop Mario Moussa, Ph. D. , MBA President, Moussa Consulting Co-Director, Wharton Strategic Persuasion Workshop Senior Consultant, Fels Institute of Government, University of Pennsylvania moussa@moussaconsulting. com/267 -549 -6694

Agenda § Discuss the principles of negotiation. § Assess your negotiating style. § Practice. § Build a negotiation “checklist, ” with emphasis on negotiating across “cultural” boundaries. § Apply insights to current challenges and opportunities. 2

What do you want to learn? § Write down 1 or 2 specific learning goals for today’s workshop. § Share your goals with someone sitting nearby. 3

You have choices in pursuing your goals. INFLUENCE PERSUASION NEGOTIATION 4

You learn by doing. “In the last analysis, you cannot learn negotiating techniques from a book [or from a lecture]. You must actually negotiate. ” —James C. Freund, Anatomy of a Merger (1975) What is your mindset? “You have to take the shuttle. ” 5

Tricks don’t work. Be yourself. “Everyone has his [or her] own negotiating style, and the worst thing you can do is to adopt a negotiating technique that does not feel comfortable [because] credibility. . . is the most important single asset of a good negotiator. ” —James C. Freund, Anatomy of a Merger (1975) 6

What is “negotiation”? An interactive communication process that may take place whenever you want something from somebody else or they want something from you and there is a potential for conflict. 7

The Six Foundations of Effective Negotiation Attitude to Conflict I Bargaining Style Fear of Loss Power of Expectations VI Leverage II Goals Information. Based Bargaining III Authoritative Standards V Their Interests Self-Esteem and Self-Interest IV Relationships Consistency and Authority Principles Reciprocity Norm 8

When you ask, focus on reasons rather than facts. § Data-based statistics § Specific examples § Direct experience: demonstrations and tangible objects § Personal testimony § Values or mission § Accepted practices or procedures § Leverage (positive, negative, normative) § Ethics 9

Beliefs matter. “No thought can be formed that isn’t informed by the past; or, more precisely, we think only thanks to analogies that link our present to our past. ” “I’m just not moving my car. ” -- Douglas Hoftstedter and Emmanuel Sander, Surfaces and Essences Sources: “Microsoft’s Lost Decade, ” Vanity Fair, August 2012; “Words on Trial, ” New Yorker, July 23, 2012

Where do beliefs and culture come from? § Inertia § Interests § Entropy § Meta-Culture 11

Culture affects decision-making. Participative Culture Response Data-Based Intuition-Based Reference Point Non-Participative Source: The Effects of Organizational Frames and Problem Ambiguity on Decision Making, Journal of Business and Psychology, Vol. 11, No. 2, Winter 1996 12

Organizational culture is based on beliefs, values, and habits. § “Organizations choose and structure their environments through interpretive decisions that are extensions of corporate culture. ” -- G. Morgan, 2006 § From “Executive Summary of NASA Report” about the Columbia accident: § “Culture traits and organizational practices detrimental to safety were allowed to develop, including a reliance on past successes, organizational barriers, and lack of integrated management. ” § “NASA’s safety culture has become dominated by unjustified optimism. ” 13

Tune in. People are motivated by multiple interests. Focus on the most powerful one. “Trade” in the right “currency. ” Pay attention to the pressures the other person is responding to. 14

You can shift the balance of needs. What if the other party will not talk? Power Moves n n n What if the other party will not listen? Process Moves n n n What if the other party feels misunderstood? Use incentives Put a price on the status quo Enlist support Seed ideas Reframe the process Build consensus Appreciative Moves n n n Help save face Keep talking Invite new ideas Kolb, Deborah M. and Judith Williams. “Breakthrough Bargaining. ” Harvard Business Review, February 2001. 15

Negotiation Test Problem: Roosevelt’s campaign manager produced a pamphlet with a copyrighted photograph on its cover. Three million copies of the pamphlet had been produced. It had to be used and there was no time to re-do it. The cost of using the photograph was one dollar per pamphlet. The campaign was short on funds. The photographer, a man named Moffet, was hard up for money and hard to reason with. What to do? Sebenius, James. “Six Habits of Merely Effective Negotiators. ” Harvard Business Review, April 2001, pp. 87 – 95. 16

“Schools” of Negotiation Ethics § Poker § Idealist § Pragmatist What school do you belong to, and why? 17

The Prisoner’s Dilemma: What game are you playing? Prisoner B Stays Silent Prisoner A Betrays Prisoner B Betrays Each serves 6 months Prisoner A: 10 years Prisoner B: goes free Prisoner A: goes free Each serves 5 years Prisoner B: 10 years

The Negotiator’s Dilemma B Creates Value (Cooperates) B Claims Value (Competes) A Creates Value (Cooperates) Both cooperate Both have good outcome A cooperates B competes A has a terrible outcome B has a great outcome A Claims Value (Competes) A competes B cooperates A has a great outcome B has a terrible outcome Both compete Both have a mediocre outcome

Win-win? 20

Case: Rare book

Everyone has a personal negotiation style. Degree of Assertiveness High Concern for Others’ Outcomes Low Collaborator/ Accommodator Problem-solver Compromiser Competitor Conflict Avoider 22

Egocentric bias: we assume that everyone is like us. A few combinations to pay attention to: § Accommodators versus Competitors § Collaborators versus Compromisors § Avoiders versus Competitors 23

Start by assessing your situation. Perceived Conflict Over Stakes High I: Balanced Concerns High Perceived Importance of Future Relationship Between Parties Low II: Relationships (Business partnership, joint venture or merger) (Marriage, friendship or work team) Best strategies: Problem solving or compromise Best strategies: Accommodation, problem solving or compromise III: Transactions IV: Tacit Coordination (Divorce, house sale or market transaction) (Highway intersection or airplane seating) Best strategies: Competition, problem solving or compromise Best strategies: Avoidance, accommodation or compromise

Case Debrief

The bargaining “iceberg”— Look beneath the surface! Positions Issues Interests

There are four stages in a negotiation. Preparation Exchanging Information Opening and Concession Making (Bargaining) Closing and Commitment 27

Who should open? (Anchor Effect vs. Information Effect) Both Know Same Lots of Information Not Much Information Do Open Don’t Open They Know More Don’t Open You Know More Do Open Don’t Open 28

The Negotiation Preparation “Checklist” Review the Six Foundations Shape the Situation Anticipate Their Moves Bargaining Style: What is your style and its implications for this specific situation? Positioning Story: What is a credible positioning story that frames the situation and supports your goals? Their Style: What is their style, and their likely response to your positioning story? Goals: What are the highest, most reasonable goals you can set? Authoritative Standards: What are the authoritative standards that apply to this situation? Relationships and Reciprocity: What are you willing to give on and under what circumstances? What can you give the other side, at low cost, that will satisfy them? Interests: What are the other parties’ interests? Leverage: Who has the most leverage? What you can do to increase your own? Balance of Needs: What else is going on in their company or environment that will influence this negotiation? How can you change the environment to shift the balance of needs, or resolve a tension? Their Interests: What are their interests and priorities, and how will they influence the moves they make? Your Value Proposition: What is it about your offer that is distinctive and uniquely attractive to the other party? The Process: What is your plan for managing the negotiation process? 29

Research suggests that good negotiators have a few essential characteristics. 1. The #1 trait of all effective negotiators is a willingness to engage in systematic planning and preparation. 2. Negotiators with high expectations do better. 3. Credibility is highly prized by effective negotiators. 4. Effective negotiators also exhibit: listening skills, knowledge of subject matter, verbal skills, and self-confidence. 30

The Six Foundations of Effective Negotiation Attitude to Conflict I Bargaining Style Fear of Loss Power of Expectations VI Leverage II Goals Information. Based Bargaining III Authoritative Standards V Their Interests Self-Esteem and Self-Interest IV Relationships Consistency and Authority Principles Reciprocity Norm 31

Application debrief 1. What insights/knowledge have you gained today that broaden or deepen your negotiation skills? 2. When should you use influence or persuasion rather than negotiating? 3. What one or two specific things have you learned that are most directly applicable to the deal(s) or projects you are currently working on? 32

The secret of success in negotiation To become an effective negotiator requires constant practice in negotiation thinking. It is a daily discipline, not an ability that can be left dormant in normal times and tapped at will in an emergency. Nor is there such thing as a line of ready-made, packaged negotiation strategies waiting to be picked off the supermarket shelf. Negotiation is simply the logical extension of one’s usual communication processes. Done well, it derives from long-term philosophy, not short-term expediencies. In a very real sense, it represents the expression of an attitude about one’s life. -- Paraphrased from The Mind of the Strategist (1982) by Kenichi Ohmae 33