Two ways to negotiate a bigger and better slice of the pie…
Understand your opponent
It’s long been said that understanding one’s opponent is key to effective negotiations. Getting to know your adversary helps identify what they want, but also what they are willing to give.
Recent research supports this assertion, but argues that successfully understanding your opponent means getting to know the head, and not the heart.
The research, led by psychologist Adam Galinsky of US-based Kellogg School of Management, draws its findings from three case studies examining the relationship between successful negotiations and a negotiator’s approach to understanding his opponent. In its findings, the study makes a clear distinction between two approaches: perspective taking and empathising. The former approach fosters more effective outcomes for both parties, while the latter tends to hinder mutually beneficial negotiations, the study argues.
The research defines perspective takers as “able to step outside the constraints of their own immediate, biased frames of reference”. Perspective taking focusses on unbiased, objective and rational judgements about an opponents interests, thoughts and likely behaviours. Showing empathy “leads individuals to violate norms of equity and equality and to provide preferential treatments”. Empathising permits greater sympathy and compassion, and creates an overbearing desire to make an opponent happy.
The study’s author, Adam Galinsky, concludes: “Negotiators give themselves an advantage by thinking about what is motivating the other party, by getting inside their head… Perspective-taking gives you insights into how to structure a deal that can benefit both parties. But unfortunately in negotiations, empathising makes you more concerned about making the other party happy, which can sometimes come at your own expense.”
The difference between both approaches is subtle, but crucial. In essence, it’s about distinguishing between what an opponent is thinking and feeling. Wandering too far towards an opponent’s emotional needs serves only to weaken your position in negotiations, resulting in a one-sided outcome. Perspective taking is more objective, and helps deliver more mutually beneficial outcomes.
Size up the pie
In a negotiation, each participant has a “bottom line”. This represents, for example, the most a party is willing to pay for something or the least they are willing to sell something for. The space between the bottom line of each opponent in negotiations is often referred to as the “bargaining zone” or “pie”. It represents the range of value available to negotiate over.
Knowing your opponent’s bottom line lets you size up the pie. Your negotiations can then focus on finding a optimum negotiating point which gives you a good or fair slice of that pie. The challenge: your opponent won’t reveal their bottom line, so sizing up the pie is a matter of judgement or guesswork.
Herein lies the danger, so says recent research by professor George Wu (University of Chicago School of Business) and Richard P. Larrick (Duke University). Wu and Larrick argue that costly mistakes can be made when sizing up the pie; mistakes which are hard to detect, and therefore hard to learn from.
Misjudging an opponent’s bottom line poses varying degrees of danger depending on how far off your guess is. Modestly ambitious expectations are likely to be naturally corrected during the negotiation process, but wildly ambitious demands may be aggressively opposed and could irreparably damage negotiations. As a consequence, Wu and Karrick argue, we tend to make less ambitious demands in the first place - reducing the size of the pie to begin with. To avoid being perceived as greedy or unreasonably demanding, we make modest assumptions about an opponent’s bottom line, and thus the size of the pie available.
This approach helps avoid the dangers of overestimating an opponent’s bottom line, but as a consequence you end up negotiating over a smaller pie. Your opponent may concede a larger slice of that smaller pie, but that slice may ultimately be less than you could have negotiated, had you judged the pie to be bigger.
Sizing up the pie is a complex challenge for negotiators, and it’s not an exact science. Experience and learning from previous mistakes counts for a lot. But ultimately it’s down to sound judgement, which cannot easily be taught. Of course, judgement can easily be strengthened with adequate, well-reasoned preparation. As discussed earlier: getting inside your opponent’s head (and not their heart) helps identify their key motivations and wants, which could allow you to better judge their bottom line, and thus the size of the pie available.
More info - Developing a negotiating strategy