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Bargaining for Advantage: Negotiation Strategies for Reasonable People Book Summary preview
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Synopsis

Ever wonder what makes a great negotiator? Whether negotiations give you anxiety or inflow your competitive juices, you can become a better negotiator, whatever your bargaining style or personality.

In Bargaining for Advantage: Negotiation Strategies for Reasonable People, Wharton Executive Negotiation Workshop Director G. Richard Shell distills the latest social science and psychology research on negotiation. Shell outlines six research-backed foundations and the four steps of the negotiation process. Get more of what you want and keep your professional relationships intact when you apply these principles of negotiation.

Questions and answers

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The themes of "Bargaining for Advantage: Negotiation Strategies for Reasonable People" are highly relevant to contemporary issues and debates in negotiation. The book distills the latest social science and psychology research on negotiation, providing insights that are applicable to today's negotiation scenarios. It outlines six research-backed foundations and the four steps of the negotiation process, which can be used in various negotiation contexts today. Moreover, the emphasis on maintaining professional relationships during negotiations is a topic of ongoing importance in the business world.

Bargaining for Advantage: Negotiation Strategies for Reasonable People" has significantly influenced corporate strategies and business models by providing a framework for effective negotiation. The book, written by G. Richard Shell, a director at the Wharton Executive Negotiation Workshop, outlines six research-backed foundations and the four steps of the negotiation process. These principles have been adopted by many businesses to improve their negotiation tactics, leading to more favorable outcomes in business deals and partnerships. The book's emphasis on maintaining professional relationships during negotiations has also influenced corporate culture, promoting a more collaborative and respectful approach to business negotiations.

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Top 20 insights

  1. If you want to be a pro negotiator, identify your bargaining style. Research shows that those who are naturally conflict-avoidant but feign aggression or those who are competitive but play too nice do not achieve the best negotiation outcome.
  2. To get what you want, don't jump automatically to a negotiation. First, utilize influence to accomplish the same goal. Use your own or someone else's authority or knowledge to impact the other person. If that fails, employ persuasive tactics, such as arguments or reason. The last alternative is negotiation.
  3. The most effective negotiators tend to be cooperative, not competitive people. In a study of lawyer-negotiators, 65% of all the lawyers had a cooperative style, 24% had a competitive style and 11% were uncategorized. However, of the most effective lawyer-negotiators, 75% were cooperative and 12% were competitive.
  4. Research has found that the most talented and effective negotiators use derogatory comments far less than average negotiators. In the study, 6.3% of an average negotiator's remarks were "irritators," versus only 1.9% of the skilled negotiator's comments.
  5. Determine your specific goals before you enter a negotiation or risk to agree to a deal that appears favorable but is not in line with your aspirations. Sony once turned down a considerable contract deal for its radios because executive Akio Morita's goal was to make Sony a household name, not make the most money.
  6. Enhance your outcomes, set goals before a negotiation. Research shows that you "mentally concede everything beyond your goal," so it becomes the upper limit of the exchange. Also, goals incite a psychological "striving mechanism" that motivates you to reach it.
  7. Experts emphasize the need to know your "bottom line" in a negotiation. But you should focus on your negotiation targets or goals, instead. Researchers proved that when overwhelmed with information in stressful situations, humans drift toward a "single focal point." Make your single focal point your top number, not your bottom number.
  8. If your team doesn't aim high enough in negotiations, probe on these top three reasons people fail to set the bar high: fear of failure, lack of knowledge about the value of the items at hand or pure lack of motivation. Address these issues to achieve success.
  9. To increase your psychological commitment to your goal, consider these five research-backed practices: create a sound argument for your goal and know it thoroughly, visualize how you achieve the goal, write it down, tell other people about it and make an investment toward it.
  10. Gain the upper hand in the negotiation. Research the opposing party's norms and use those as reference points for your offer. These can include comparative prices, rates or timelines. The outside "standards, norms and precedents" become significant facets of any negotiation.
  11. The "consistency principle" is the psychological need that makes humans want to be consistent in their actions and agreements. Some aggressive negotiators may try to use this against you. Don't agree to an unfamiliar rule or standard, probe further first. Lest you commit to something that might rope you into an unfavorable commitment.
  12. Try these tactics to increase your rapport with the other side in a negotiation, but tread carefully, as poor execution can make you appear too eager: highlight similarities you share, offer a small symbolic token or gift and establish a connection through a relationship network like a mutual friend.
  13. A simple way to make progress in a negotiation is to find shared goals between the two parties. In a study of 5,000 negotiators, only 50% of them successfully identified an overlap of interests. You can distinguish yourself if you make mutual interests a priority.
  14. One of the best ways to prep for negotiation is to find ways to increase your leverage. A research study showed that leverage is so powerful that with it, "even an average negotiator will do pretty well."
  15. Traditional indicators of power like authority, wealth or influence, are not indicative of leverage in a negotiation. Identify the party with the most leverage by asking which side "appears most comfortable with the present situation."
  16. Email has many benefits when it comes to negotiation, such as a clear trail of communication and the ability to present lots of information. However, it has risks confirmed by social science experiments. These include a higher risk of stalemates and longer total time to reach an agreement.
  17. Gain rapport and favor with the other party. Plan carefully and pay attention to their cultural customs and specifics. A powerful oil executive once won a bid to buy a Libyan oil company when he presented the proposal in traditional Arab fashion: written on sheepskin and tied with ribbons the color of the Libyan flag.
  18. Listen more than you speak to become a more effective negotiator. Studies reveal that the best negotiators receive more information than they deliver. The skilled negotiators also ask twice as many questions as the less effective negotiators.
  19. If you must deliver an ultimatum in a negotiation, do so "early, clearly and credibly." This increases your chances of a favorable response to the negotiation and preserves the relationship due to your upfront honesty.
  20. It often pays to make the opening bid and to do so aggressively. However, there are a few circumstances when this is not recommended: if the other side clearly has more leverage, if a back-and-forth haggle is not expected, and if the relationship matters more than the price.

Summary

Negotiation is a four-step process, which involves preparation, information exchange, opening and making concessions and closing and gaining commitment. Learn exactly how to behave at each step by first understanding the six foundations inherent to negotiation: your bargaining style, your goals and expectations, authoritative norms and standards, relationships, the other party's interests and leverage. Find out why the most competitive people do not make the most successful negotiators and why you should set expectations instead of targets. Learn how to set the standards in your favor and how to navigate relationships in the negotiation. And, understand why the most powerful tool you have is knowing what the other side wants and using that to turn the tables of leverage in your favor.

Questions and answers

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The book "Bargaining for Advantage: Negotiation Strategies for Reasonable People" does not provide specific examples of companies that have successfully implemented the four-step negotiation process. However, the principles and strategies outlined in the book are widely applicable and have been used by many businesses in their negotiation processes. It's important to note that the success of these strategies can vary depending on the specific context and parties involved in the negotiation.

The book presents several innovative ideas about negotiation strategies. One of them is the four-step process of negotiation, which includes preparation, information exchange, opening and making concessions, and closing and gaining commitment. Another innovative idea is understanding the six foundations inherent to negotiation: your bargaining style, your goals and expectations, authoritative norms and standards, relationships, the other party's interests, and leverage. The book also emphasizes the importance of setting expectations instead of targets, setting the standards in your favor, navigating relationships in the negotiation, and using the knowledge of what the other side wants to turn the tables of leverage in your favor.

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The six foundations

Making the most of your personal negotiation style

Negotiations are polarizing; people tend to love them or hate them. A common misconception is that only competitive, cut-throat sharks can be successful negotiators. But you do not need to build up a thick skin in preparation for a negotiation. Social science experiments have shown that the most effective negotiators are people who like to collaborate and are good listeners who spend lots of time in preparation and research. One of the keys to effective negotiation is not how smart or clever you are, but how much you know about what the other side needs and wants. Depending on the situation, you may even consider taking an alternate route other than negotiation to resolve a conflict. Here is a chart that shows when you may need to progress to a negotiation situation rather than just using influence or persuasion to get what you want or need.

Questions and answers

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The book "Bargaining for Advantage: Negotiation Strategies for Reasonable People" has significantly influenced corporate negotiation strategies by debunking the myth that only competitive, cut-throat individuals can be successful negotiators. It emphasizes the importance of collaboration, listening, and thorough preparation and research. The book suggests that understanding the needs and wants of the other party is crucial to effective negotiation. It also introduces the idea of considering alternate routes other than negotiation to resolve conflicts, depending on the situation. These insights have led many corporations to reevaluate and refine their negotiation strategies.

Potential obstacles companies might face when applying negotiation strategies could include lack of preparation, inadequate understanding of the other party's needs and wants, and a tendency to resort to competitive, rather than collaborative, tactics. Overcoming these obstacles involves thorough preparation and research, understanding the other party's needs and wants, and fostering a collaborative rather than competitive environment. It's also important to remember that negotiation isn't always the best route to resolve a conflict, and other methods such as influence or persuasion might be more effective in certain situations.

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Bargaining for Advantage - Diagrams

If the situation does progress to negotiation, part of being prepared is knowing your own personal bargaining style. A short description of each may be enough to tell you which best describes you.

Avoidant – Refusing to participate in a negotiation, whether out of anxiety, the knowledge that one does not perform well and so choosing an agent or preference for the status quo.

Compromising – Readiness to equally split costs or benefits.

Accommodating – Willingness to bow to the other's demands or preferences.

Competitive – Drive to obtain more of a scarce for one's own side.

Collaborative – Seeking mutually beneficial solutions.

Here is a short list of tendencies that often follow each of the bargaining styles.

Bargaining for Advantage - Diagrams

Become a more effective negotiator by doing some introspection into how you tend to behave in negotiations. Simple self-awareness will enhance your success. In addition, reading the situation and bringing in an outside agent when needed is critical. For example, if you are competitive and the situation is one where relationships are paramount and collaboration is necessary, consider sending someone else in your place. Or at the least, be aware of your competitive tendencies and keep your aggression in check.

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In addition, the actions that really matter when it comes to negotiation success have nothing to do with personality. Social science studies that cover negotiation have found that these four characteristics correlate highly with the top negotiators: "a willingness to prepare," "high expectations," "the patience to listen" and "a commitment to personal integrity." Fostering these habits will prove more fruitful than trying to change innate tendencies.

Questions and answers

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The theories presented in "Bargaining for Advantage" challenge existing paradigms in the field of negotiation by emphasizing the importance of setting goals and expectations, rather than simply aiming for arbitrary targets. The book suggests that successful negotiation is not just about reaching a certain number, but about having a strong conviction and belief in the outcome. This approach challenges the traditional view of negotiation as a purely rational process, introducing the role of emotions and attitudes in influencing negotiation outcomes.

The lessons from "Bargaining for Advantage" can be applied in today's business environment in several ways. Firstly, setting negotiation targets is crucial. However, it's more important to set a goal and make it an expectation. This means having a strong belief and conviction that the goal will be achieved. This attitude can drive success in business negotiations. Secondly, understanding the psychology of negotiation can help in maintaining professional relationships while getting what you want. This involves understanding the other party's perspective, using persuasive communication, and employing effective negotiation strategies.

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1. Turning negotiation goals into expectations

It is not enough to set a negotiation target, you must set a goal and make that goal an expectation. What is the difference? The main difference is in one's "attitude." A target may be arbitrary and is simply something one hopes to reach. On the other hand, a goal should come with the "expectation" that it will be achieved. Rather than just a lackluster number, an expectation is emotion-laden, something in which you have conviction and belief.

Questions and answers

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While the book "Bargaining for Advantage" does not provide specific examples of companies that have successfully applied the negotiation principles, many businesses across various industries use these strategies. These principles, such as understanding the other party's interests, using objective criteria, and developing a BATNA (Best Alternative To a Negotiated Agreement), are universal and can be applied in any negotiation scenario. However, due to confidentiality in business negotiations, it's often challenging to find specific examples.

Businesses might face several challenges when implementing the negotiation strategies from "Bargaining for Advantage". One potential challenge could be resistance from employees who are used to traditional negotiation methods. This can be overcome by providing comprehensive training and demonstrating the benefits of the new strategies. Another challenge could be the difficulty in justifying aggressive bids. Businesses can overcome this by preparing a strong, reasonable argument to support their bid. Lastly, maintaining professional relationships while negotiating aggressively might be challenging. This can be managed by ensuring respectful communication and focusing on mutual benefits.

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There are compelling psychological reasons to set goals and expectations. Studies indicate that once a goal is set, subjects believe that anything beyond the goal has been forfeited and is left on the table. Also, it's been shown that humans exhibit "striving mechanisms" and focus their actions and behaviors on something once it's been stated. For this reason, it's essential to focus on your goals and expectations, not your bottom line. You don't want to be trapped in inching toward your lowest number when you could be striving for your highest number.

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How should you determine where your goal should be? Shell argues that your goal should, in most cases, be the most aggressive bid for which there is a reasonable argument. You should be able to justify your expectations to the other side "with a straight face." On the contrary, it doesn't have to be the number for which there is the "best argument," just a reasonable argument.

Questions and answers

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To gain the upper hand in a negotiation, one must understand and apply the principles of effective negotiation. These include understanding the other party's interests, developing a strong BATNA (Best Alternative To a Negotiated Agreement), and using persuasive communication. It's also important to build trust and rapport, manage emotions, and use problem-solving skills to create win-win solutions. Remember, negotiation is not about winning or losing, but about reaching an agreement that satisfies both parties.

Recognized standards and norms can greatly influence negotiation strategies. For instance, in a business setting, the norm might be to start with a high initial offer and then gradually lower it during the negotiation process. This is based on the standard that both parties are expected to compromise. Similarly, in a legal negotiation, the norm might be to reference past cases or legal standards as a basis for the negotiation. These norms and standards provide a framework within which the negotiation takes place, influencing the strategies used by the negotiators.

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2. The role of norms and standards in negotiation

In any social setting, there are sets of recognized standards and norms. For example, in most sports, our norms and standards tell us that the best athletes are strong, fast and agile. In college admissions, the best applicants have high standardized test scores and top marks on their high school transcripts. But reasonable people may disagree about whether those are the right benchmarks by which to judge. Here is where you can learn how to gain the upper hand in a negotiation.

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Before engaging with the other side, research the norms and standards you expect them to use in the negotiation. If you are selling your house, understand whether the buyer's agent is calculating an offer price based on square footage or the number of beds and baths. If you are entering a licensing agreement, see if you can find out whether your partner hopes to be paid a fixed annual sum or expects a royalty agreement. Use what you know about their norms and standards to frame your own offer or response. By using language and benchmarks they understand and prefer, you tacitly make a harmless concession to the other side. In turn, they will feel compelled to make a concession your way at no cost to you.

Questions and answers

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The book "Bargaining for Advantage" has significantly influenced corporate negotiation strategies by emphasizing the importance of relationships in negotiations. It suggests that understanding the other party's needs and maintaining a positive relationship can lead to more successful outcomes. The book also highlights the role of psychological understanding in negotiations, suggesting that being aware of one's own and the other party's emotions and motivations can help in reaching a mutually beneficial agreement. It has encouraged businesses to approach negotiations not just as a transaction, but as a strategic process where both parties can achieve their goals.

Potential challenges when applying negotiation strategies from "Bargaining for Advantage" might include misunderstanding the other party's interests, failing to establish a strong relationship, or not being able to adapt to changing circumstances. Misunderstanding can be overcome by active listening and asking clarifying questions. Building a strong relationship requires time, patience, and genuine interest in the other party. Adapting to changes requires flexibility and creativity in finding new solutions. It's also important to remember that negotiation is not a zero-sum game; both parties can benefit from the process.

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3. How to navigate relationships in a negotiation

Relationships are at the heart of any negotiation. A special relationship can dramatically alter the recommendation about how to proceed in the negotiation process. One example comes from the 1930s, in the world of think tanks and the scientific community. The Institute for Advanced Study in Princeton was searching for leading scientists to participate in what it hoped would be ground-breaking research and experimentation. The director sought out Albert Einstein and asked him what it would take for him to join. A humble Einstein replied, "Three thousand dollars per year would suffice," unless the director thought it would be appropriate for him to "live on less."

Questions and answers

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The ideas from "Bargaining for Advantage: Negotiation Strategies for Reasonable People" can be highly applicable in real-world scenarios like the one between Barry and Karl. The book emphasizes the importance of understanding the other party's perspective, their negotiation style, and their underlying interests. In the case of Barry and Karl, applying these strategies could help bridge the gap between their different communication styles and expectations. For instance, Barry, being competitive and sharp, could try to understand Karl's more laid-back and trusting nature, and adjust his negotiation approach accordingly. Similarly, Karl could try to be more explicit in his responses to alleviate Barry's suspicions. Thus, the negotiation strategies from the book can indeed be implemented in such real-world scenarios to facilitate better communication and mutual understanding, leading to successful deals.

A small business can use the key topics or framework covered in "Bargaining for Advantage: Negotiation Strategies for Reasonable People" to improve their negotiation strategies by firstly understanding the importance of relational skills and awareness in negotiations. The book emphasizes that poor relational skills can unintentionally kill deals, so small businesses should invest in improving these skills. Secondly, the book suggests that different personalities can affect the outcome of negotiations. Therefore, small businesses should be aware of their own negotiation style and adapt it according to the situation. Lastly, the book encourages transparency and trust in negotiations. Small businesses should strive to be clear in their communication and avoid hiding information to build trust with their negotiation partners.

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A typical negotiation would end there or perhaps even edge downwards. The director, however, greatly valued the relationship he was beginning with Einstein and his potential future role at the institute. The director offered Einstein three times as much as he had asked, an annual salary of $10,000. "[The director's] problem was how to make a potential 'crown jewel' professor feel honored and appreciated so he would adopt the institute as his professional home. The amount of Einstein's salary was distinctly secondary." The director, whatever his personal predilection, used an accommodating style of negotiation because he valued the relationship more than the cost of any item in Einstein's employment package.

Questions and answers

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The broader implications of the case study involving Barry and Karl in the book 'Bargaining for Advantage: Negotiation Strategies for Reasonable People' highlight the importance of relationship building in negotiations. It suggests that focusing on the relationship aspect can lead to more generous offers and successful outcomes. It also emphasizes the value of expert advice in shaping negotiation strategies. This case study can be applied in real-world scenarios where maintaining professional relationships is crucial while negotiating.

One example of successful business negotiation using the principles outlined in the book is the negotiation between Disney and Pixar. Disney, represented by Bob Iger, and Pixar, represented by Steve Jobs, were in a deadlock over the distribution rights of Pixar's films. Iger, using the principles of understanding the other party's interests and focusing on the relationship, realized that Jobs valued creative control over financial gain. Iger proposed that Disney would purchase Pixar, allowing Pixar to retain creative control while Disney handled distribution. This proposal was accepted by Jobs, leading to a successful negotiation.

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Poor relational skills or awareness can unintentionally kill deals. Two executives were discussing a potential joint venture. Barry was the owner of a U.S. chemical company, competitive and sharp. Karl was the head of a Swiss company that wanted to license Barry's technology. Karl was more trusting, laid-back and friendly. The evidence from their email exchanges showed their personalities at work and revealed that the exchange was not going well. Barry thought Karl was hiding something with his vague responses, and Karl felt continually attacked.

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All it took was an expert to advise Barry on his approach to the relationship at stake in the negotiation. Once both men met in person and worked on their relationship, the deal's details fell into place. Karl proposed a tentative offer that surprised Barry with its generosity, and the rest is history. Often, taking a step back and analyzing how the relationship is playing into the negotiation itself can ease the way forward.

Questions and answers

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A manufacturing company can apply the negotiation strategies discussed in the book by first understanding what the other party wants. This involves overcoming confirmation bias and being open to different interpretations of words and behavior. The company can use these strategies during supplier negotiations, labor union discussions, or customer contracts. By understanding the other party's perspective, the company can negotiate more effectively and reach agreements that are beneficial to all parties involved.

A startup can use the principles of negotiation discussed in the book to grow their business in several ways. Firstly, understanding the other party's needs can help in striking beneficial deals. This could be with suppliers, customers, or potential investors. Secondly, being aware of confirmation bias can help in making more objective decisions. This can lead to better strategies and business plans. Lastly, the ability to accurately interpret subtle signals can aid in understanding market trends and customer preferences, leading to more effective marketing and product development.

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4. What the Other Side Wants

Knowing what the other side wants is a magic bullet that opens the door for an agreement to be reached. So why is it so hard to figure out? There are a couple of reasons that have arisen from research on negotiation. First, most people suffer from confirmation bias. We assume that others have the same outlook as we do or we think we have someone figured out. It becomes hard to see beyond our own assumptions, and we close off other ways of interpreting words and behavior. The result is that it becomes impossible to accurately read subtle signals received from the other side.

Questions and answers

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The book 'Bargaining for Advantage: Negotiation Strategies for Reasonable People' does not provide specific examples of companies that have implemented the negotiation strategies outlined. However, many companies across various industries use negotiation strategies similar to those described in the book. These strategies, such as active listening, understanding the other party's needs, and collaborative problem-solving, are universal and can be applied in any negotiation context.

The book "Bargaining for Advantage: Negotiation Strategies for Reasonable People" has significantly influenced corporate negotiation strategies by emphasizing the importance of understanding the other party's needs and preferences. It promotes the idea of being a curious collaborator who spends more time listening than talking. This approach allows negotiators to gain valuable information about what the other side needs, enabling them to offer solutions that are more likely to be accepted. The book also warns against being overly accommodating, as this can lead to misinterpretation of the other party's needs and wants.

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Psychologists also point out a "fixed pie bias." Under these assumptions, we get drawn into believing every win for them is a loss for us and, therefore, fighting for every morsel. Thinking this way can blind both parties from seeing mutually beneficial options. Perhaps there is both something you're willing to give up that the other wouldn't mind conceding.

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Kelly Sarber's negotiation strategy is highly relevant in today's business environment. It demonstrates the importance of understanding the needs and challenges of the other party. By offering a solution to Oceanside's sand-loss problem, Sarber was able to secure a contract despite her higher bid. This approach, known as value-added negotiation, is increasingly important in today's competitive business landscape where simply offering the lowest price is often not enough. Businesses need to find creative ways to add value and meet the unique needs of their clients.

Kelly Sarber's negotiation strategy challenged existing practices in the waste management industry by going beyond the traditional scope of services. Instead of just focusing on waste management, she incorporated a solution to a local problem into her bid. In the case of Oceanside, California, she promised to bring in a truckload of Arizona sand each time her trucks came to pick up the city's trash, addressing the city's erosion problem. This innovative approach not only won her the contract but also set a precedent for other companies to consider local issues and provide comprehensive solutions.

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Accommodating personalities might also struggle with understanding what the other side wants due to being overly accommodating. When someone is falling over themselves to please you, they might fail to truly listen to your preferences. Or, they might jump to offering something generous that doesn't suit your needs. It is now clear why the best negotiators are curious collaborators who spend more time listening than talking. It is through this tactic that they gain coveted information about what the other side needs.

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Kelly Sarber worked in sales for a waste management firm in Arizona. Looking to expand beyond the state, she was pursuing a contract in Oceanside, California. When the bids came in from the other companies competing for the business, hers was five dollars per ton higher, but she won the bid anyway. How did she do it? Sarber learned that Oceanside was struggling with an erosion problem and was dramatically losing the sand on its coveted beaches. In addition to needing trash hauled away, Oceanside needed a solution to its sand-loss problem. As part of her bid, she promised that her trucks would drive in a truckload of Arizona sand each time they came to pick up Oceanside's trash. Knowing what they needed enabled her to win the negotiation on favorable terms for both parties.

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The themes of negotiation in "Bargaining for Advantage: Negotiation Strategies for Reasonable People" are highly relevant to contemporary issues and debates. The book discusses the dynamics of leverage in negotiations, which is applicable in various scenarios, from business deals to political negotiations. It also explores the concept of power in negotiations, which is a critical aspect in contemporary debates around social justice, international relations, and business. Furthermore, the book's emphasis on the importance of understanding the other party's perspective and finding a mutually beneficial solution aligns with the current emphasis on empathy and collaboration in resolving conflicts.

A startup can use the negotiation strategies covered in the book to grow by applying the principles of leverage. Understanding who has the most to lose if a deal falls through can help a startup position itself advantageously. The startup can also identify the type of leverage most appropriate to its situation and strategize accordingly. For instance, it can use negotiation to secure better deals with suppliers, attract investors, or negotiate contracts with clients. The book also emphasizes the importance of maintaining professional relationships, which is crucial for a startup's growth and reputation.

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5. Why Leverage Matters

Who has greater leverage in a negotiation depends on the situation. Generally, you can identify the side with the most leverage by noting which side is most comfortable with the status quo. They have the least to lose if the deal falls through. Leverage does not naturally flow to the side with the most conventional power or control. Criminals who take people hostage often hold a large amount of leverage over governments and law enforcement. They have already risked everything and have nothing to lose from a failed agreement. On the other hand, governments have not only their citizens' lives at stake but also their reputation of appearing malleable to criminal demands. In this way, a small number of individuals who previously wielded zero influence in society can bend heads of state to their will. There are three types of leverage. Consider whether any of them might be more appropriate to your situation before strategizing to gain more.

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Positive leverage stems from a circumstance in which the other side naturally has more needs than you do. This can be real or perceived, but regardless, if you sense the other side is a little desperate, you have positive leverage on your side. You have what they want and the ability to offer that or withhold it in exchange for a demand of your own.

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Negative leverage comes about when a threat is applied. You may hold more leverage than the other party, but if they make a credible threat that altogether changes the circumstances of your deal, the leverage has shifted. Negative leverage is most commonly applied in business situations.

Normative leverage is at play when you have the rules and standards on your side. For example, if you injured someone in a car accident, but they were the ones who ran the red light, you clearly have greater leverage in a dispute about the collision.

Knowledge about the three kinds of leverage can equip you to prepare for a negotiation by strategizing how to garner as much leverage as possible.

Negotiation as a four-step process

Decades of research have consistently outlined negotiation as a four-step process. The four stages can be identified in situations as varied as "rural African land disputes" and "American business mergers." A short overview of each section will leave you feeling more prepared to tackle negotiations.

Questions and answers

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A small business can use the negotiation strategies discussed in the book to grow and succeed by first identifying the type of negotiation they are entering into. This involves understanding the importance of the relationship and the level of conflict over the issues at hand. Once this is determined, the business can then apply the appropriate strategies. For instance, in a high-stakes negotiation such as a business merger, both the importance of the relationship and the level of conflict are expected to be high. In such a case, the business should prepare by researching what the other party is really looking for and the standards and norms they will adopt. This will help the business to plan its approach and negotiate effectively.

The broader implications of the negotiation strategies recommended for different quadrants are that they allow for a more tailored and effective approach to negotiation. Each quadrant represents a different combination of relationship importance and conflict level. For instance, in a high conflict, high relationship importance scenario (quadrant B), the strategy might involve more collaboration and compromise to maintain the relationship while addressing the conflict. This framework allows negotiators to adapt their strategies based on the specific context, potentially leading to more successful outcomes.

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1. Preparation

To prepare for a negotiation, first assess the type of negotiation you will encounter and shift your approach accordingly. As discussed previously, research things like what they are really looking for and the standards and norms they will adopt. Here is a simple framework for beginning your preparation. Plot where the negotiation lies on the dimensions of the importance of the relationship and the level of conflict over the issues at hand. Then, use the recommended strategies in each quadrant to plan your approach. For example, a business merger where both leaders will remain in place would fall in quadrant B, where both conflict and the importance of the relationship are expected to be high.

Questions and answers

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One of the most innovative ideas presented in "Bargaining for Advantage" is the emphasis on the importance of information exchange in negotiation. The book suggests that listening first and talking second can significantly improve your likeability and rapport with the other party, and also enable you to learn valuable information about the other side. This information can then be used in the exchange of offers, providing a strategic advantage in negotiations. Another surprising idea is the application of social science and psychology research to negotiation strategies, which can help individuals get more of what they want while maintaining their professional relationships.

Companies might face several obstacles when applying the negotiation strategies from "Bargaining for Advantage". One potential obstacle could be resistance from employees who are used to traditional negotiation methods. This can be overcome by providing comprehensive training and demonstrating the benefits of the new strategies. Another obstacle could be the difficulty in changing established negotiation processes. Companies can overcome this by gradually implementing new strategies and allowing time for adjustment. Lastly, there might be challenges in maintaining a balance between assertiveness and cooperation. This can be managed by fostering a culture of respect and understanding, and by emphasizing the importance of listening and information exchange in negotiations.

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Bargaining for Advantage - Diagrams

2. Information exchange

Next comes information exchange. Here, the most important thing to remember is to listen first, talk second. This approach will both improve your likeability and rapport with the other party and enable you to learn valuable information about the other side. You can then use this information in the exchange of offers.

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The case study in the book "Bargaining for Advantage: Negotiation Strategies for Reasonable People" discusses the strategy of exchanging offers during negotiations. The author, Shell, suggests that being the first to make an offer can have several advantages. This approach allows you to set the initial price range, which research shows people tend to focus on. If the opposing party were to name a price far below your target, it would be an uphill battle to get them in the range you desire. However, if you are the first to offer, the burden of proof lies on them to negate the range you suggest. This strategy can be particularly useful in situations where the price is not predefined, such as in negotiations without a list price.

The book 'Bargaining for Advantage: Negotiation Strategies for Reasonable People' challenges traditional negotiation practices by advocating for the strategy of making the first offer in a negotiation. This is contrary to common advice which often suggests waiting for the other party to make the first move. The book argues that by making the first offer, you can set the initial value range and anchor the negotiation around your desired price. This approach is backed by research showing that people tend to focus on the first indicator of value given, making it a strategic advantage to be the first to offer.

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What information should you share at this stage? Since formal offers have not been put forth, it is appropriate at this point to give "signals" regarding the strength of your leverage and your goals or expectations. If your leverage is not strong, you can increase it somewhat by playing up the "uncertainty of the stronger party's future if it passes up your offer." Or, you can acknowledge your situation and appeal to their emotions, "personalizing" your offer as much as possible with things like a handwritten letter or an in-person meeting.

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3. Exchanging offers

Exchanging offers usually consists of an initial proposal and then a bit of haggling back and forth until you reach a price in a mutually agreeable zone. The question of who should offer first is decided in some cases, like in buying a home with a list price, but undefined in others. When given the opportunity, strongly consider being the first to offer. Though contrary to some negotiation advice, Shell sees many benefits in this approach. These include being the first to nail down a range for price. Research shows that humans tend to focus on the first indicator of value that is given. If the opposing party were to name a price far below your target, it would be an uphill battle to get them in the range you desire. On the contrary, the burden of proof lies on them to negate the range you suggest if you are the first to offer.

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4. Closing and commitments

If the other party is dragging their feet to close or commit, consider using the psychological principle of scarcity. Scarcity plays on the human need to obtain more of what we think is dwindling or may soon be out of grasp. This explains tactics like flags on online products indicating low inventory, exploding job offers and dramatic walkouts signaling a "take it or leave it now" opportunity. You can use these tactics to activate the principle of scarcity and get a deal to close.

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