By Neil Senturia
The San Diego Union-Tribune
WWR Article Summary (tl;dr) As Neil Senturia reports, when it comes to negotiation, “There is no firm answer. Negotiation is a dance — and the music is different every night. Rap, blues, jazz, rock — it depends who shows up with which instruments.”
The San Diego Union-Tribune
I spend a lot of my day “negotiating.” And I am always studying what might be the most effective ways to get what I need or want.
Recently I read a lengthy article on this subject by Harvard Business School professors Martha Jeong, Julia Minson, Michael Yeomans and Francesca Gino. The study is dense and detailed, and the basic theme is that “negotiators with a tough and firm communication style achieved better economic outcomes than negotiators with a warm and friendly communication style.” Whoa, what happened to all the books on win-win and relationship building etc.?
The common belief that a warmly worded negotiation offer will achieve better responses or counter-offers is in “direct opposition to the findings.”
Most of us think warm and friendly gets the best economic outcomes, but it doesn’t. Who are you going to believe — the distinct data or your own lying eyes?
The study’s conclusion fascinated me. You really have to think about this, because in general as human beings we are biased to avoid conflict. The study goes on to support that warm and friendly is perceived as having “lower power and higher dependence on the counterparty to satisfy the negotiation goals.”
But what if you have good cards, a bit of leverage and some power, but choose to go with warm and friendly — initially. Initially is the key concept. To my way of thinking there is no reason to start with the tough guy, take it or leave it approach — even though the data says “anger in a continuous negotiation achieved higher individual outcomes.”
Personally, I like the model of charming and polite, while at the same time I am sharpening my pen or my pivot, followed by the unexpected surprise.
Why is this roll-over mouse all of a sudden pointing a gun at my head? Then with echoes of the classic Godfather ending sequence of baptism v. bloodbath, you draw a line in the sand.
The last few weeks of 2019 gave me an opportunity to practice my best Corleone. I was stuck in a negotiation with a bully. I was looking for a BATNA (best alternative to a negotiated agreement), and I was willing to eat humble pie, split the difference and take the fall. But the bully would have none of that and in the end, miscalculated who needed whom more. The rule for dealing with bullies in business or on the playground is simple — punch them in the nose or walk away or both. I walked.
The holiday season also brought a second opportunity on which to puzzle. One of my companies needed financing. Nothing new there! The CEO had to balance between taking a venture deal with lousy terms versus playing for the unlikely, (stranger things have happened) strategic white knight who might slay the dragon and save the princess, but only if you can find what castle he is slaying in.
Our CEO finds a knight, but time is running out. Do you think he should be “tough and firm” with this knight? Consider that if you lose Sir Galahad, the potential savior, your options for dealing with the venture boys are dramatically decreased. On the other hand, if you are too warm and fuzzy, you risk ending up on the pointed end of the knight’s sword.
Needless to say, there is no firm answer. Negotiation is a dance — and the music is different every night. Rap, blues, jazz, rock — it depends who shows up with which instruments.
The Harvard gang did their study in what is called a “distributive negotiation,” which is a fancy way of describing the back and forth haggling as to who gets what size piece of a limited pie. It posits that the main issue is price, and that there is a finite supply of any given item, whether a used car or a beauty product.
However, entrepreneur financing and software licensing are not a car or a beauty product. These deals call for “integrative negotiation” where multiple issues are on the table. So, in the car example, firm and tough might be exactly right, but with the white knight, collaborative might be better. My boy is going down to Texas to see him next week, but just in case, he is bringing his own gauntlet.
Rule No. 644: Perhaps a joust before lunch?
Neil Senturia, a serial entrepreneur who invests in early-stage technology companies, writes weekly about entrepreneurship in San Diego.
___
Distributed by Tribune Content Agency, LLC.
