10 things I learned in my negotiations class at Wharton

Great negotiators aren’t born great. They become great with time and practice. All winners have some things in common, but each loser is unique in his own way. To that end, here are 10 tactical things that winners do and things I personally want to practice to become a better negotiator:

1) Set ambitious goals for each negotiation.

Before sitting down at the negotiation table, deliberate over what the ideal outcome would be. Be bold in defining the ideal. Quantify each goal. On each parameter that will be negotiated, think about why your ideal outcome is reasonable. Be convinced that what you’re asking for is within reason, because if you aren’t convinced, you’re definitely not going to convince the other side. Setting aggressive goals and believing in them is strongly correlated with how close you get to achieving them.

Takeways:

  • Envision the ideal outcome.
  • Make sure you’re convinced that it’s reasonable.
  • Commit to achieving it.

2) Prepare. Then prepare some more.

Never let the other side out-do you on homework. Prepare before the meeting because thinking through different options beforehand (even practicing answering difficult questions or scripting anticipated aspects of the negotiation) can make things smoother. Preparation also means winning the internal negotiation before becoming ready to win the external one. Be fully convinced about each ask and what is your reservation point for each. Premeditating these aspects will help guide what you accept, reject, and trade off during the negotiation.

Takeaways for Internal preparation

  • Think through your expectations.
  • Prepare to tolerate conflict if it arises.
  • Deliberate the point at which you’re willing to walk away.

Takeaways for External preparation

  • Think about whether you want to make the first offer (good to anchor the other side, but should be made only when you have enough information about the other side’s options)
  • Understanding the standards/norms/principles of the negotiation’s context
  • Quantifying different options you can throw on the table so that you don’t have to calculate on-the-go.

3) Seek to understand before seeking to be understood.

Ask a lot of questions to understand the other side, and replace any assumptions with actual understanding of their position and interest. Remember that there is a wide spectrum of how forthcoming people are willing to be. Some will express their interests and positions willingly. Others will make you dig for them. In either case, try to see the situation through the other side’s shoes. Listen carefully to everything that is said and especially to things that are unsaid. Recognizing the other sides interests (which are different from their position) will help you give them what you want, so that you can get what you want in return. The bigger the other side’s pain point, the more you can get them to pay you to solve it.

Takeways:

  • Ask questions.
  • Test your understanding.
  • Summarize what you hear.

4) Transparency is a good thing.

There’s a tendency to feel that revealing any information to the other side weakens our position. It’s important to fight this impulse to keep things hidden. The chances of you getting what you want are directly proportional to how clearly and tactfully you ask for it (and of course the other side’s willingness and ability to give you what you’re asking for). By asking for what you want, you open the channel for the other side to do the same.

Takeways:

  • Ask for what you want.
  • Indicate rank of importance.
  • Never reveal the exact price you’re willing to pay/accept. Signal the direction not the distance.

5) Be relentless in creating and claiming value.

There are four ways to get value in a negotiation. Evaluate which of the four options are available in each situation.

  1. Improve your BATNA
  2. Hurt the other side’s BATNA
  3. Grow the pie
  4. Get a bigger slice of the pie

Claiming value can be challenging when you feel like you have a weak hand. In such cases, there are two great ways to gain strength:

  1. Build coalitions with other potential weak hands with vested interests in the deal.
  2. Explicitly appeal to higher principles of fairness and justice.

6) Don’t search too hard for common ground.

Differences can be a great way to create value. When preferences differ, each side may be able to make concessions that give the other side a lot of value at little cost to themselves. Some examples where differences may arise are: priorities, patiences/time value, risk tolerance, beliefs about outcomes/inputs, and abilities. Use differences in creative ways to create value.

Takeways:

  • Identify differences.
  • Then trade them.

7) Don’t let the price crowd out other interests.

Relationships, the process, social contracts, and the interest of a full set of players on the table are all important to preserve. Don’t let the price bulldoze other things that are valuable. There are tradeoffs. Have perspective while making them and be cognizant of what your trading and at whose expense. Going back to point 4 and 5, get creative and finding differences, trading them, and creating value in other ways when the price is non-negotiable.

Takeways:

  • Money is important. But it isn’t everything.
  • Life is a repeated game so treat others the way you’d want to be treated.

8) When in doubt, do as Erin Brockovich would.

The way to express your ideas and goals can influence the outcome more than you think. Use ethos, pathos, and logos intelligently to cater to the other side. Be bold and versatile in each negotiation. Read your audience and adapt your approach accordingly between hard power and soft power.

9) Trust a little before you trust a lot.

Always start out by being nice. Trust the other side to do the right thing, one small step at a time. Gradually build trust with time and repeated interactions. If you start the game by defecting off the bat, you may turn cooperators into defectors on the other side. So always start out with a little bit of trust. But if someone does turn out to break that trust, never hesitate to use tit-for-tat. Use it wisely, sometimes even reserving a tit for every two tats.

Takeways:

  • Use the innocent-until-proven-guilty philosophy
  • And if guilty, Tit-for-Tat

10) Life is a portfolio of decisions; remember to play the long game.

Getting what you want in negotiations means taking some risks along the way. If you’re not at least a little uncomfortable, you’re probably not taking enough risks. Remember to treat each instance in isolation but also as part of a portfolio of decisions. It’s okay if you don’t end up maximizing each decision, so long as your overall returns of the portfolio are high. So keep perspective of the long game and don’t be afraid to try something different from time to time.

Takeways:

  • Take risks and push your own limits.
  • Get uncomfortable.