Never Split the difference.  

Never Split the difference.  

The concept of Negotiations has always been an interest of mine.  It influences every action of our daily lives – how much we make, what we pay to live somewhere, who we meet and sometimes even the success of our personal relationships.  Almost every important business transaction is an act of negotiation – even if it doesn’t appear to be.

The majority of people love to brag about receiving a great deal – but why are those same people afraid of asking for a better deal during that same purchase?  I could write volumes about the psychology of human nature, our evolutionary need to be liked and to keep our “tribe” happy, but that’s for another day.  

In this post, I want to detail some fascinating strategies and tactical nuggets I discovered by reading Never Split the Difference by Chris Voss.  I plan on implementing a few of these strategies into my day to day as an investment banker, where every interaction with a client or potential buyer involve a form of negotiation.  Lets see how this plays out…

 

Strategies & Themes

  • Acceptable does not equal “Fair”.  
    • A deal only happens when both parties agree that the terms are “acceptable”
    • However, the emotion of unfairness is extremely powerful and must be avoided at all costs
  • Learn to enjoy negotiations
    • Negotiations are a process of discovery and compromise.  Not a battle
    • The act of negotiation does not signal disrespect
    • The other party does not need to lose in order for you to win
  • Negotiations do not follow a formula taught in business school.   
    • Flexibility and the ability to listen are the keys to reaching your goal.
    • Reason and logic may be made to reason ourselves towards a decision – the actual decision making is governed by EMOTION
  • At the beginning of a negotiation – your only goal should be to understand the motivations and priorities of your counterparty
    • Why are they here?
    • Are they focused on avoiding a potential loss or capturing a potential gain?
    • What happens to them based on their performance during this negotiation
    • Create trust – Allow them a safe space to express themselves
  • Have a Desired Result for each negotiation.  
    • Develop thesis and a rationale about how your terms can be favorable to your counterpart
    • What will be your counterparties argument?
  • Humans crave Human connection – to be part of the “tribe”
    • Most people are neither entirely rationale nor completely selfish
    • The desire and need for empathy and common ground can be used to achieve results and overcome negative perceptions
    • “Do you really think I am trying to be a bad guy”
  • Understand your counterpart’s motivations or “religion”
    • They want to feel in control
    • What do they believe?
    • What do they hope to achieve by engaging with you?
  • Behavioral Change Stairway Model
    • Active listening, empathy, rapport, influence and behavioural change

 

Tactics

  • Ask Calibrated questions
    • How or what questions.  No WHY
    • Avoid “yes/no”questions
  • Slow is ok
    • Do not rush over deal points.  Confirm that everyone is on the same page before moving on
  • No is OK!  Do not accept the “Soft Yes”
    • No is an opportunity to learn more
    • Beware the Counterfeit Yes, the Confirmation Yes and the Commitment Yes
  • Actively Listen
    • Mirror and repeat back your understanding.  It will build rapport that you “get me” and increases the connection
      • Silence after the mirror
    • Find Black Swans
  • Treat the party Not how you want to be treated, but How THEY want to be treated
    • Determine if the party thinks I am treating them unfairly.  “please stop me if I am being unfair”
  • Understand the terrain
    • Why are the parties where they are?
    • What are the outside factors that can influence this negotiation
  • Question Assumptions  
    • Those are your assumptions – not your counterparties.  
    • Keep an open mind – you will be more likely to hear new information that may influence the negotiation
    • Develop hypothesis and then test them until proven true
      • “That’s right! – Not YOU are right
  • Be prepared for surprises and actively seek to discover them early
  • Create deadlines and FOMO
    • No deal is better than a bad deal
    • Understand your counterparts deadlines
  • Label feelings using tactical empathy
    • It provides rational words to a feeling
      • Use “It seems like”, “it sounds like”, “It looks like”
    • Work to replace negative labels with positive, compassion and solutions
  • In person is always better
    • Use a slow and calming voice
    • Be friendly but firm
    • Read non-verbal cues
    • Use the silences
    • Don’t use the word I
  • Give the bad news first
    • Set the stage that the news is horrible.  Build from the relief when it is not
  • Practice
    • What are the arguments or assumptions your counterpart has?

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