PREFACE TO THE SECOND EDITION
Negotiating skill can make or greatly improve your career, and it will CERTAINLY put money in your pocket.
Of course, you doubt me and think I’m just trying to sell you my book. You probably don’t think about negotiations too often, and when you do, you probably think about high level ones such as international treaties, athletes’ salaries, and union-management negotiations. You may also think that the only business people who have to negotiate are buyers and sellers. But virtually everyone with a demanding job has to negotiate from time to time.
In fact, YOU negotiate more often than you think you do. You may never sit down at a formal negotiating session, but every time you try to reach an agreement on a budget, or who will be assigned to a project, or how your job will be defined, you probably have to negotiate.
If you improve your skills, you can probably control more resources, look better to your bosses, and earn more money. In fact, some of the world’s most powerful and highly paid people are primarily negotiators. The best example is, of course, Donald Trump. His book, The Art of the Deal, described how he made billions of dollars. He used similar strategies and tactics to win the biggest prize of all, the American presidency, and he has constantly applied them as president. This book has a lot more to say about him, but first let’s look at some other success stories.
Some agents earn millions every year by negotiating contracts for athletes, singers, and actors. Top investment bankers earn much more. Carl Icahn made tens of millions of dollars by getting Pennzoil and Texaco to settle their dispute after years of nastiness and enormous legal fees. Why are skilled negotiators rewarded so highly? Because we all MUST negotiate, but hardly anyone negotiates well.
Even if you don’t negotiate at work, you can save or make hundreds or thousands of dollars by negotiating well when you buy or sell a house, car, or major appliance.
Since negotiations are so common and so important, I’ve been researching and teaching people how to negotiate for more than thirty years. My doctoral dissertation at The University of California, Berkeley analyzed collective bargaining negotiations, and I taught negotiating theory to UCLA doctoral candidates. Schoonmaker and Associates has conducted over 1,500 workshops in more than 20 countries to the world’s largest corporations and banks.
Our clients included IBM, GM, Chrysler, Mobil Oil, Wells Fargo, Gulf of Canada, Bankers Trust, Apple, Chase Manhattan, Sun Life of Canada, Manufacturers Hanover, Ford, Chemical Bank, and more than two dozen others. We even taught classes to members of the United Automobile Workers. The banks’ and corporations’ 2016 revenues exceeded two trillion dollars, about ten percent of the total American economy.
After decades of research and teaching I reached several conclusions that directly affect you:
- Most people can improve if they are taught well. Fortunately, teaching such widely different people has developed a unique set of concepts and methods that can greatly help
- Several factors combine to make negotiating a rare skill. Perhaps the most important one is that the demands are so contradictory: You have to be tough, but sensitive; analytic, but flexible; know when to push, and when to back off.
- There is no such thing as an ideal negotiating style, nor can anyone negotiate effectively in every situation. The same personal qualities that help you in some situations can be disastrous in others. For example, a cooperative approach works very well with many people, but can be perceived and exploited by others as a sign of weakness. An aggressive, “take no prisoners,” approach, may get you a bargain on a used car lot, but alienate your co-workers or boss.
- The process is so complex that it creates many conflicting demands during the same negotiation. While competing on one issue, you should cooperate on You may also be forced to work together with your “opponents” to convince your managements or spouses to make concessions or accept your deal. Satisfying these conflicting demands requires personal qualities that almost never go together. A first-class negotiator combines a tough-minded competitive attitude, the ability to compromise, intellectual mastery of complex issues, and sensitivity to other people. Very few people have all these qualities.
- Our own inhibitions also create problems. Many people dislike negotiations, especially highly adversarial ones. We may refuse to take unreasonable positions, even when others have done so. Or we may fear that hard bargaining will lead to rejection, and shrewd negotiators take advantage of our inhibitions by acting insulted, hurt, or angry.
- We can be so uncomfortable with conflict that we react to our discomfort rather than to the objective, situational demands. These reactions tend toward two extremes – fight and flight. We may avoid negotiating, settle too easily, stonewall, or make personal attacks. All of these reactions prevent us from negotiating effectively.
These inhibitions are particularly strong in the United States, Canada, and northern Europe because negotiating conflicts with our values and customs. We have been trained since birth to be fair, reasonable, unemotional, and objective, and we rarely haggle about anything. Most of us wouldn’t even consider bargaining in a supermarket or department store. People from many other cultures feel quite differently, and bargaining is a natural part of many transactions for food, taxi rides, professional services, even arranging and paying for weddings.
Our culture does not just inhibit negotiations; it actively discourages them. Negotiating is often perceived as cheap, devious, or dishonest. For example, most tourists feel uncomfortable when bargaining for a taxi in Cairo or Bangkok. They simply can’t accept that, in these cultures, bargaining is legitimate and normal.
People from our culture also dislike and avoid many essential negotiating rituals. For example, the mutual concession ritual seems unreasonable and a waste of time. We don’t want to offer much less than we expect to pay, then trade a series of small concessions. We would rather decide on a fair price, then offer it or something close to it. However, since people’s perceptions of “fair” are often quite different, the mutual concession ritual is often essential. Ignoring it can cause a poor deal or a deadlock.
Reading this book, watching the eight videos that were used in our workshops, and doing the exercises will help you to reach three objectives:
- Reduce your inhibitions and discomfort
- Develop your knowledge, skills, and sensitivity
- Increase your flexibility.
The essential first step is to make you more comfortable when negotiating. Otherwise your discomfort can make you avoid negotiating, settle too quickly, miss the other side’s signals, or stonewall. As you understand the negotiating process and your reactions to it, you will slowly become more comfortable and effective.
The second objective is to increase your understanding of negotiating principles and your ability to apply them. For example, you’ll learn how to analyze situations, set your own objectives, make appropriate first offers, and understand the other side’s signals.
You need sensitivity to the other side, your own style, and the negotiating process. Most people are insensitive while negotiating. Sensitivity is so important that we will spend more time on it than on any other subject.
First, and most important, you must understand the other side. Most people don’t seriously try understand other people. They focus their attention on themselves, thereby missing much of the information coming from other people. You will learn how to understand other people’s offers, words, and actions. Developing this understanding is our major theme. The key to successful negotiations is understanding other people.
You also need to understand your own negotiating style, its impact on people, and the kinds of situations that fit or conflict with it. Finally, since each negotiation makes different demands, you need sensitivity to the situation. Then you can choose between competition, cooperation, or a mixture of both.
You must be flexible because there is no such thing as a good, all-purpose negotiating strategy. Different situations require different strategies. As you learn more about the negotiating process, the other people, and yourself, you will become more flexible.
This book is unique in several ways. First, It Presents A Clear, Conceptual Structure. Most (but not all) other negotiating books are a grab bag of tips and tactics – do this, don’t do that, do something else. One best-selling book has no organization at all; it’s just a bunch of chapters arranged alphabetically! Many tips are excellent, but they don’t hang together, and it’s hard to know when to do what. This book provides a structured model and relates every principle to it. You can easily understand what’s happening, so you can plan and execute coherent strategies.
Second, It Doesn’t Teach Just One Negotiating Approach. Many books present the system, such as “win-win” or “winning through intimidation.” But one approach can’t work everywhere. This book describes many approaches, shows where and when each is appropriate, thereby developing your ability to analyze and adjust to situations.
Third, It Emphasizes Understanding The Other Side. Most people really need help there. They are so concerned with their own positions – their needs, their logic, their strengths, their weaknesses – that they miss or don’t understand the other side’s signals. You will learn how to determine what the other side wants and how to move toward a deal that satisfies both sides, while letting you get most of the “money on the table.”
Fourth, It Integrates Negotiations And Personality Theory. You probably know that you must adjust to both parties’ personalities, but most books offer little more than vague generalizations: “read the other person,” “adjust to their signals,” “understand yourself.” This book presents a clear, well-validated personality theory and shows you how to understand and adjust to your own and other people’s personalities.
A little story may clarify how this book can help you. A major New York bank hired me to train their junior loan officers. Since the bank was changing its corporate strategy and needed more creative young bankers, they asked me to meet with senior managers to learn about their corporate culture, objectives, and strategy.
In addition to the obvious questions about the bank’s culture and strategy, I asked every manager two questions:
- How have you changed since you were a junior officer?
- What should I teach your junior officers?
The details of their answers varied, but there were two consistent principles that senior executives in nearly all industries want junior people to apply.
- Be Tougher. They expressed it in many ways. “I have more confidence in my authority and positions.” “I don’t give things away like I used to.” “I’m more confident and assertive.” “I don’t make one-way concessions any more. I trade concessions.”
- Understand And Satisfy The Customer. This principle was expressed quite forcefully by every single manager and executive. They clearly regarded it as more important than anything else. The bankers’ job was to understand their customers’ objectives and priorities, and satisfy them in a way that was also profitable to the bank.
At first, these themes may appear inconsistent; toughness, understanding, and flexibility don’t seem to fit together. But a senior vice-president showed me that they really support each other. I spent the most educational morning of my life watching him negotiate over a speakerphone and chatting with him when he had a free moment. I was awed by his combination of toughness and sensitivity. He never took the easy way out, never accepted a waffling answer, always probed for more information, especially information that customers didn’t want to give him. One of our brief conversations summarized his negotiating approach.
“Alan, you may think that toughness and understanding and satisfying the customer are incompatible, but, in fact, you can’t understand and satisfy the customer unless you’re tough. The art of the dealmaker is to be able to put together a deal in three, four, maybe even six ways and to keep probing until you put it together in the right way.
“I’m an experienced banker. If I talk to a customer and study the situation, I can quickly put together a satisfactory deal. It will be acceptable to the customer and to the bank. But, if I don’t make that first deal, if I ask some more questions, I can put together a better deal for both of us.
“And, if I really work at it, reject the so-so deals, ask those hard questions that the customer definitely doesn’t want to answer, keep trying out different combinations, a little more of this, a little less of that, I’ll make the right deal, the one that really satisfies the customer.
“If I do that, if I give the customers what they really need, they don’t care if the bank makes a bigger profit. It just doesn’t matter to them.’
I can’t think of any better way to summarize my beliefs about negotiations. If you can resist that temptation to accept just any deal; if you can ask those embarrassing questions and refuse to accept waffling answers; if you can keep cutting and fitting the deal as if you were a master carpenter building a cabinet, you will often create the right deal, the one that gives both sides what they really need. This book can help you to achieve that objective.
REVISIONS IN THE SECOND EDITION
The previous words were taken and edited from the preface to the first edition. It was published by Prentice-Hall in 1989 and translated into Spanish and Indonesian. This edition is self-published, and the theory has not changed since the first edition.
Negotiating Principles And Psychology Don’t Change Much. People make the same sorts of deals today that they did decades (or centuries) ago, and they negotiate them in essentially the same ways. And human nature certainly hasn’t changed. There will always be extremely different motives, strategies, and styles, and a key task is to understand yourself and the other people, then adjust your strategy and style to fit the situation.
Many of the examples are identical because they were chosen to help you understand and apply the theoretical principles. Some are new to show that these theoretical principles haven’t changed.
A few are taken from Donald Trump’s excellent book, The Art of the Deal. It was published about the same time as my first edition, but I had not read it before publishing my first edition. His examples and some of his principles are very similar to ones in my first edition.
A few examples were taken from Donald Trump’s actions as a candidate and president because they show that the same principles that made him billions have similar effects in political and intergovernmental negotiations. They have greatly increased his power, but they have also created distrust and inhibited cooperation.
As a candidate, president-elect, and president, he quickly frightened many Americans and foreigners by tweeting (or saying in other ways) that he would take extreme positions such as building a wall and demanding that Mexico pay for it. Both editions of this book call that tactic The Law of Irrationality. Richard Nixon called it, “The Madman Theory.”
“The madman theory was a feature of Richard Nixon’s foreign policy. He and his administration tried to make the leaders of hostile Communist Bloc nations think Nixon was irrational and volatile. According to the theory, those leaders would then avoid provoking the United States fearing an unpredictable American response.”1
Chapter Seven, “Positioning Yourself,” thoroughly discusses The Law of Irrationality. That chapter contains a new section, “Donald Trump’s Positioning Lessons.”
The liberal media – which always hated Trump – and many Americans and foreigners were convinced that Trump was crazy or at least unable to control his impulses, but he was just applying a principle he may have learned from Richard Nixon, he had described in his book, and I had described in mine. If the media people had studied history or these books, they wouldn’t have been manipulated so easily or completely.
He’s not crazy, nor is he out of control. He’s a master manipulator who knows how to keep people off balance. Even now, long after his inauguration, the liberal media don’t realize how brilliantly he “outplayed” them.
Negotiations are an information-management game. If you understand the others better than they understand you, you have a huge edge, and getting the edge is the key to winning.
You’ll see that Trump played the media the way a virtuoso plays a violin, and they didn’t even realize they were being played! They thought they were hurting him when they were doing EXACTLY what he wanted them to do. They will never admit that – without their help – he never would have become president!
The bottom line is that the psychology of negotiations is essentially the same wherever and whenever you negotiate. The details change slightly, but the basic principles are timeless. If you don’t understand these principles and negotiate with someone who does, you will lose. Conversely, if you master negotiating psychology, you will have a huge edge against almost everybody.