The Negotiation Society - Issue 3
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ISSUE 3<br />
<strong>The</strong> <strong>Negotiation</strong> <strong>Society</strong><br />
THE EXCLUSIVE MAGAZINE FOR ALUMNI OF THE GAP PARTNERSHIP<br />
NEGOTIATION<br />
TACTICS<br />
<strong>The</strong> top 10 revealed<br />
TAKING STOCK<br />
Knowing what you want<br />
before you go in<br />
IT’S PERSONAL<br />
<strong>Negotiation</strong> wins<br />
outside of work<br />
T H E P S Y C H O L O G Y O F<br />
THE AUCTION<br />
A special report into the auction industry<br />
and how it drives the compulsion to bid
INSIDE THIS ISSUE<br />
05 22<br />
It’s Personal<br />
Examples of negotiation<br />
skills used to considerable<br />
effect outside the<br />
commercial world.<br />
<strong>Negotiation</strong><br />
Tactics<br />
You’ve used them and<br />
they’ve been used on you.<br />
But which are the most<br />
effective, and how do<br />
you counter them?<br />
WELCOME FROM STEVE<br />
26 28<br />
Ask Alistair<br />
Our resident guru<br />
Mr White tackles<br />
margin dilution<br />
and warming up a<br />
cold counterparty.<br />
Ten Timely<br />
Reminders<br />
Taking Stock<br />
32 34<br />
A professor of conflict<br />
resolution argues the case<br />
for taking a hard look at<br />
what you have, before you<br />
decide what you need.<br />
Art or Science?<br />
Welcome to this third edition of <strong>The</strong> <strong>Negotiation</strong><br />
<strong>Society</strong> magazine. At the time of writing Comcast<br />
have just beaten Disney-Fox with a mega bid of<br />
£30bn for Sky in a case managed by the UK’s<br />
takeover regulator, providing us with a timely<br />
reminder that the bidding process is alive and<br />
well and providing competitive market tension.<br />
On what basis do I use the term “mega”? Well, I’m<br />
comparing it to the entire GDP of Costa Rica,<br />
which last year was $57bn.<br />
Which is where we start this magazine, with<br />
our cover story on the psychology of the auction.<br />
Whatever bidding decision you make at two<br />
o’clock on the Clockface, the sobering and exposing<br />
moment which follows the hammer landing should<br />
be followed by the self-assurance that the right<br />
decisions have been taken. Elation, regret, denial<br />
and rationale are all dependent on the strategy in<br />
play by the bidder, combined with the auction house's<br />
expertize, control of the process and understanding<br />
of human psychology.<br />
In our report we meet with Christie’s auction<br />
house, first founded in 1766, to understand what we<br />
might learn from those who have skilfully managed<br />
auctions for literally centuries. Enjoy!<br />
A refresher guide to the<br />
most common oversights<br />
that even experienced<br />
negotiators can fall<br />
victim to.<br />
Our panel of experts<br />
dissect a most philosophical<br />
negotiation question –<br />
is it an art or a science?<br />
Steve Gates<br />
CEO, <strong>The</strong> Gap Partnership<br />
2
THE NEGOTIATION SOCIETY<br />
OUR CONTRIBUTORS<br />
Dr Sarah Federman<br />
Sarah teaches <strong>Negotiation</strong><br />
and Conflict Management at<br />
the University of Baltimore.<br />
Before this she had a decade-long<br />
career in advertising, traveling<br />
globally and negotiating with<br />
companies such as Google, Expedia<br />
and top-tier advertising agencies.<br />
Sarah completed Harvard Business<br />
School’s Key Executive Program<br />
and now specializes in the role<br />
of language in conflict.<br />
Nick Hunter<br />
Nick has over a decade of senior<br />
commercial sales and management<br />
experience in organizations<br />
including Enterprise Rent A Car<br />
and Coca Cola, where he headed up<br />
L&D for the national commercial<br />
teams. At TGP, Nick developed<br />
<strong>The</strong> Foundation Negotiator, the<br />
world’s first interactive online<br />
negotiation program delivering<br />
innovative learning in<br />
multiple languages.<br />
Liberté Nuti<br />
As International Senior Director<br />
Impressionist & Modern at<br />
Hauser & Wirth, Liberté<br />
focuses on the strategic growth<br />
of private sales and advises artist<br />
estates. Previously, Liberté was at<br />
Christie’s for over two decades,<br />
leading their Impressionist and<br />
Modern art department where she<br />
launched and grew their private<br />
sales Modern art division.<br />
Socrates Soumelas Caroline Haimei Wu Lloyd Barrett<br />
A contract lawyer specializing<br />
in marketing and new ventures,<br />
Socrates holds an MBA from<br />
Imperial College and an MSc<br />
in Applied Psychology from the<br />
American College of Greece.<br />
After two decades in the<br />
music business, Socrates now<br />
combines his expertize in law,<br />
business and psychology as a<br />
negotiation consultant for<br />
<strong>The</strong> Gap Partnership.<br />
As a SAP consultant, Caroline<br />
spent ten years negotiating<br />
with customers and co-workers<br />
from supply chain, finance,<br />
purchasing and logistics.<br />
To build experience negotiating<br />
with suppliers, she then became<br />
regional purchasing manager in<br />
APAC. Today, Caroline works in<br />
Henkel’s global purchasing team<br />
in Amsterdam while studying<br />
part-time for an MBA.<br />
After gaining a degree in<br />
mechanical engineering, Lloyd<br />
started his own IT business.<br />
He then became sales director<br />
for a boutique angel investment<br />
company, where he launched<br />
Europe’s largest gold buying<br />
operation. Following a stint at<br />
TGP’s UK head office, Lloyd<br />
relocated to Sydney, where he<br />
now heads up the retail practice.<br />
3
MY HEAD<br />
GORDON ROSE<br />
IS DIRECTOR OF STRATEGIC PARTNERSHIPS AT POST OFFICE LTD.<br />
HE DISCOVERED A PASSION FOR NEGOTIATION EARLY IN HIS<br />
CAREER, AND IT CONTINUES TO EXERT A STRONG INFLUENCE<br />
ON HIM BOTH INSIDE AND OUTSIDE OF WORK.<br />
How did you end up working in your<br />
current role?<br />
I dropped out of school at 16, hungry<br />
to make money and joined a real estate<br />
agency as junior negotiator. I found I<br />
was good at it. Soon I was selling over<br />
£1m worth of property each month,<br />
multitasking as valuer, go-between and<br />
mediator. I then returned to education<br />
and armed with a business degree<br />
entered the corporate world. I spent<br />
the next 20 years developing strategic<br />
relationships in the private and public<br />
sectors. Today at <strong>The</strong> Post Office<br />
I’m still negotiating, albeit in quite a<br />
different way to how I did it in the ‘80s!<br />
What is the most satisfying part of<br />
your role?<br />
I used to think landing the deal was<br />
what I most enjoyed, but now I have<br />
greater self-awareness as a negotiator<br />
the bit I find really fascinating is the<br />
psychology behind it. Today, I get most<br />
reward from helping others negotiate:<br />
acting as a sounding board, testing out<br />
a negotiation strategy or helping to<br />
resolve a deadlock situation.<br />
And the most challenging?<br />
Keeping my ego in check, focusing on<br />
the possibilities of the deal rather than<br />
trying to win, and always viewing the<br />
deal through the other party’s eyes.<br />
How important is the skill<br />
of negotiation?<br />
<strong>Negotiation</strong> has been at the heart of<br />
everything I have done at work. But<br />
it’s even bigger than that, it’s a life skill<br />
and something we all do every day –<br />
at work, at home, with our partners,<br />
family, friends and our children.<br />
I might have been negotiating deals<br />
for 30 years but my pre-teen daughters<br />
still manage to run circles around me.<br />
Evidently I still have much to learn!<br />
What has been your greatest<br />
negotiation achievement?<br />
Persuading my wife to marry me.<br />
We knew each other for 15 years before<br />
we got married and negotiations broke<br />
down at times, but I persevered and<br />
finally got to a deal. You’ll have to ask<br />
my wife whether it was a good deal for<br />
both parties!<br />
Any negotiation disasters?<br />
Oh yes. I decided to test out a game<br />
theory I had been studying with my<br />
extended family. <strong>The</strong> game was “Split<br />
or Steal”. With a notional £20 at<br />
stake, two players went head to head<br />
with each choosing whether to split<br />
the cash between them, or try to win<br />
it all for themselves. If both players<br />
chose Steal, nobody won. If both<br />
chose Split, they won £10 each. But<br />
if one went Split and the other Steal,<br />
the player who chose Steal won it all.<br />
<strong>The</strong> results were rather unexpected.<br />
My decades-long-happily-married<br />
parents-in-law both chose steal. My<br />
brother-in-law persuaded his wife to<br />
split, then ruthlessly stole her share.<br />
But the most shocking outcome was<br />
my 12-year-old daughter executing the<br />
same “agree split, then steal” tactic on<br />
her adored 7-year-old cousin, leaving<br />
him inconsolable.<br />
What’s the best advice you’ve ever<br />
been given?<br />
Trust your own intuition. No one<br />
knows what’s right for you better than<br />
you. I used to be embarrassed to admit<br />
I’d dropped out of school and become<br />
a real estate agent, but in hindsight it<br />
would appear I was following a passion<br />
for negotiation. I just didn’t realize it<br />
for another 25 years.<br />
What do you think is the future<br />
of negotiation?<br />
It’s full of possibility. Taking a<br />
systematic approach and building<br />
negotiation capability has the<br />
potential to drive the biggest return on<br />
investment. Embracing the concept of<br />
the CNO (Chief <strong>Negotiation</strong> Officer)<br />
in the same way we have embraced<br />
the Chief Customer Officer and<br />
Chief Technology Officer will enable<br />
organizations to achieve greater value<br />
for themselves, their customers and<br />
their suppliers.<br />
4
THE NEGOTIATION SOCIETY<br />
WORK<br />
B A L A N C E<br />
<strong>The</strong> concept of skills that transfer from a work<br />
to personal environment may be overused –<br />
we’re looking at you, multitasking – but the<br />
universal applicability of good negotiation<br />
technique is surely incontrovertible. We asked a<br />
selection of TGP’ers to tell us how they’ve employed<br />
their negotiation skills outside the office.<br />
I wanted a new garden furniture set and popped to our local<br />
garden center at the end of September for a look around.<br />
<strong>The</strong> staff were busy putting out their Christmas stock,<br />
including a herd of garden deer which took up a lot of<br />
space. In the middle of the deer, squeezed in and somewhat<br />
incongruous, was their last garden furniture set. I went over<br />
to them with a cheeky offer – a further 50% off the already<br />
reduced price. Unsurprisingly they said no. After a coffee I<br />
went back over with a piece of paper with my phone number<br />
and a message: “If you want to reconsider please contact me.”<br />
Later that day I had a call from the manager accepting my<br />
offer but with the caveat that I take them that weekend.<br />
“Of course I can, but I need you to deliver them to me.”<br />
<strong>The</strong>y happily agreed to do so free of charge! Getting in their<br />
head, and time and circumstance led to me now enjoying a<br />
very nice garden set every summer at an amazing price!<br />
Esther Shearwood<br />
One application of negotiation knowledge has made my<br />
life easier: you can never win an argument. Knowing this,<br />
I simply stopped arguing and trying to convince friends<br />
and family of my point of view. This knowledge helped me<br />
to accept that everybody sees things differently. And as a<br />
bonus, it gives me so much peace of mind!<br />
Dürrin Ergün<br />
I got a car dealership to drop the labor charges on a small,<br />
10 minute repair job by threatening to take the mechanic,<br />
who they had charged me an hour’s labor for, to push my<br />
shopping trolley around the supermarket for the remaining<br />
50 minutes.<br />
Alistair White<br />
Ollie (10): “Muuuuummmmmy! Can I have two pounds<br />
for my Xbox game?” Me: “If you want pocket money, you<br />
need to tidy your room.” Ollie: “OK, so you just need the<br />
room to be tidy right?” Me: “Yes!” Ollie: “It’s a deal.”<br />
<strong>The</strong> transaction happens. I wander into his room later and<br />
it is spotless. I praise him for his amazing skills at tidying,<br />
to which Ollie replies: “No problem! You said all you<br />
wanted was for my room to be tidied, and it was…by the<br />
childminder this morning.”<br />
Angelique Bradford<br />
I was negotiating for a car for my wife, and the salesperson<br />
used moves of decreasing sizes to show me they were<br />
reaching their breakpoint. When they had moved in<br />
thousands, then hundreds, and then by £50, I was made to<br />
believe that was it. I was not getting any more out of them.<br />
I was impressed to see the workshop teachings brought to<br />
life and used so effectively by a car salesperson!<br />
Simeon Barnett<br />
My teenage daughter asked me to negotiate her car insurance<br />
– “Dad, you are the expert.” I went to work with the insurer<br />
using various tactics and got the original figure reduced by 5%.<br />
Not good enough. My daughter takes over. <strong>The</strong> role play<br />
that followed was masterful – a teenage girl breaking down<br />
over the phone with “£1200 is all I can afford. If I have to<br />
pay more I won’t be able to go to university!” Five minutes of<br />
weeping and tissues later, we have an insured car for £1200!<br />
She has however played a dangerous game acting that out in<br />
front of me – that tactic has been used once too often.<br />
Gordon Hall<br />
5
RATIONAL DECISION MAKING:<br />
Nick Hunter experienced a moment of madness at a fine art<br />
auction, which prompted him to investigate the psychology<br />
behind it and how the auction industry has created an event<br />
uniquely set up to encourage very particular patterns of behavior.<br />
6
THE NEGOTIATION SOCIETY<br />
Jeune fille aux anémones sur fond violet<br />
by Henri Matisse (left) and Te Fare (La<br />
Maison) by Paul Gauguin (right) on<br />
display at Christie’s Auction House<br />
ILLUSTRATIONS: CHRIS PEROWNE PHOTOGRAPHY: GETTY IMAGE<br />
t is a bitterly cold February evening<br />
in London. In the heart of the<br />
prestigious London borough of<br />
Mayfair, an audible buzz emanates<br />
from the grand environs of Christie’s<br />
Auction House. It is the unmistakable<br />
sound of excitement, a low but intense hum<br />
of hushed voices and the rustle of papers.<br />
Inside, the auctioneer’s voice booms across<br />
the room, and Paul Gauguin’s masterpiece,<br />
“Te Fare (La maison)”, Lot 18 in the<br />
“Impressionist and Modern Art Evening<br />
Sale”, goes under the hammer.<br />
“17 million, two hundred thousand.”<br />
“17 million, five.”<br />
“17 million, five, holding.”<br />
<strong>The</strong>re is a long pause and the tension in<br />
the room, already palpable, rises further.<br />
“Holding here at 17 million five hundred<br />
thousand, 17.5 I have, against you both.<br />
Here it is, last chance. Give me a signal if<br />
you want to jump back in…”<br />
A further bid and an appreciative round<br />
of applause momentarily breaks the tension.<br />
Inexplicably, ludicrously, I feel an urge<br />
verging on a compulsion to put my hand up<br />
and make a bid. “How amazing would it be<br />
to own a Gauguin?”, I think to myself.<br />
What on earth was happening? How can<br />
this crazy urge, this illogical compulsion,<br />
be explained? I presumably have no need to<br />
confess that regrettably I did not have the<br />
means to part with a cool £18m. What’s<br />
certain is that I was in thrall to both Jussi<br />
Pylkkänen, Christie's lead auctioneer, and<br />
the environment around me. Gaugin’s<br />
125-year-old oil painting went on to be sold<br />
for £20.325m, smashing its projected upper<br />
price of £18m. I was not the only person in<br />
the room who felt a strong desire to keep<br />
the bidding going.<br />
As I later reflected on the events of<br />
the evening, it prompted some questions.<br />
What had happened to me in that room,<br />
and why? What role do auction houses<br />
play in creating an environment for a<br />
successful auction? And what is the skill set<br />
of auctioneers like Pylkkänen, masters of<br />
their craft and able to persuade some of the<br />
wealthiest individuals in the world to part<br />
with their money – often much more than<br />
they had originally planned?<br />
Let’s first define our terms. An auction is<br />
a device for facilitating trade; a sale in which<br />
goods or property are sold to the highest<br />
bidder. Traditionally they have been used<br />
“I was not the<br />
only person<br />
in the room<br />
who felt an<br />
irresistible<br />
urge to keep<br />
the bidding<br />
going.<br />
7
THE BIOLOGY<br />
B E H I N D T H E P S Y C H O L O G Y<br />
Striatum<br />
Prefrontal Cortex<br />
Logical, rational and complex decisions are performed by<br />
a part of the brain called the prefrontal cortex. Impulsive,<br />
automatic, mostly unconscious decisions are performed<br />
by a different part called the striatum, especially when<br />
we feel under threat. MRI scans have shown increased<br />
striatal activity in bidders in auction situations.<br />
Under stress, the fight-or-flight response kicks in and our<br />
striatum takes over. As humans, when we perceive danger<br />
there is no time to analyze the situation, we need to react<br />
quickly. Instead the striatum’s automatic array of choices<br />
is put in motion and rational decision-making subsides.<br />
<strong>The</strong> principle “First act, then think”, takes over. This<br />
explains why in the heat of the auction humans can<br />
stop thinking rationally and become impulsive.<br />
In the process of bidding, the neurotransmitter dopamine<br />
is released into the brain. Dopamine controls the reward<br />
and pleasure centers of the brain, and so it feels good to<br />
bid. This can lead to the feedback loop of a “dopamine<br />
rush”: the more excited we feel, the more dopamine we<br />
release, and the more dopamine we release, the more<br />
excited we feel. We strive to repeat the dopaminereleasing<br />
behavior, and bidding becomes compulsive.<br />
to sell fine art, rare objects and their like, although our digital<br />
age has seen eBay bringing auctions onto our computers and<br />
phones. Indeed, many of us will have multiple experiences<br />
of auctions. I myself have bought and sold on eBay; the sale<br />
of my flat in London became a bidding war between three<br />
parties; I’ve attended charity auctions where large amounts<br />
of money are raised and overspending is justified in the name<br />
of a good cause; and professionally I’ve been involved in<br />
eAuctions and numerous tender processes. If we look to the<br />
world of global business, a recent, high-profile example of<br />
the use of an auction saw US telecoms giant Comcast make<br />
a winning £30 billion bid for the broadcaster Sky. When one<br />
considers that research consistently demonstrates that 72%<br />
of auctions bring higher prices than fixed price offers for the<br />
same object, it’s no wonder they are used so often.<br />
I hoped that by investigating what had happened to me<br />
and the other bidders competing to buy Gaugin’s painting,<br />
I could build a better understanding of the psychology at play<br />
in auction situations. I needed expert input. My first port of<br />
call was Sarah VanStelle, director of regional learning for US<br />
company Steelcase and a trained psychologist specializing in<br />
organizational behavioral management. Sarah described three<br />
distinct behavioral phenomena.<br />
Auction Fever<br />
In the hyped-up auction room of Christie’s, I was<br />
experiencing a well-documented phenomenon known as<br />
auction fever, a state of emotional arousal generated by the<br />
rivalry, time pressure, stress, publicity and scarcity value<br />
that often accompany an auction. This leads to competitive<br />
behavior: for each item in an auction, there is only one<br />
winner, the highest bidder. Everyone else loses. (As Gore<br />
Vidal famously observed: “It is not enough to succeed.<br />
Others must fail.”) When someone becomes the highest<br />
bidder, they experience a positive feeling, “I am winning!”<br />
When they are outbid, they seek to replicate that feel-good<br />
state, and so bid again. This switch from win to loss and back<br />
again takes place at speed, with the positive reinforcement<br />
generating ever-stronger emotional arousal and fueling<br />
the cycle. (For more on this, see <strong>The</strong> biology behind<br />
the psychology in the box above.)<br />
Social Facilitation<br />
Humans are social animals and we learn from what others<br />
do. Social facilitation occurs when one person’s behavior<br />
influences another person’s behavior – colloquially referred<br />
to as the herd mentality, or monkey see, monkey do. During<br />
an auction, an individual’s behavior is highly visible. <strong>The</strong><br />
behavior of bidding is judged by the competitive bidders<br />
in the auction and the many people present as positive<br />
(remember the applause that greeted the bidder who broke<br />
the hiatus at the auction I attended?). This results in social<br />
approval – it sends a message that it is good to bid, and if<br />
others are bidding then so should I.<br />
<strong>The</strong> Endowment Effect<br />
<strong>The</strong>re is extensive research from the fields of psychology<br />
and behavioral economics that suggests that people ascribe<br />
more value to things that they own. In the context of<br />
an auction, this endowment effect has some significant<br />
implications. For a start, the buyer may feel a connection<br />
with, or “ownership” of an item when they place a bid for it,<br />
and at the time of being the high bidder they may fantasize<br />
about already owning it – what it will look like on my wall.<br />
This can lead to an inflated sense of the item’s value which<br />
will result in them bidding more to win it (or not to lose<br />
it). An everyday analogy is the tactic that car salespeople<br />
use when they invite you to a free test drive of a car you<br />
are considering buying; by driving the car you are already<br />
fantasizing that you own it, so you place a higher value on<br />
it, and the likelihood that you will conclude the purchase<br />
becomes higher.<br />
<strong>The</strong> high-speed nature of auctions and cyclical pattern<br />
inherent in the bidding process can further enhance this<br />
8
THE NEGOTIATION SOCIETY<br />
effect: the individual is the high bidder; they experience<br />
a near loss when someone outbids them; they regain<br />
“ownership” when they are once again the high bidder –<br />
It’s mine! It’s not mine! It’s mine! – and so on. Every time<br />
the individual is the high bidder, their perception of the value<br />
of the item increases. And so the endowment effect builds,<br />
the bidder becomes increasingly motivated not to lose the<br />
item…and they keep on bidding.<br />
<strong>The</strong> psychology was clearly a formidable factor in my<br />
experience at Christie’s. But what role do the auction<br />
houses themselves play?<br />
Creating the right environment to cultivate auction fever<br />
and social facilitation is the cornerstone of a successful<br />
auction house’s strategy. To find out more I spoke with<br />
Liberté Nuti, formerly of Christie’s and now International<br />
Senior Director Impressionist & Modern at Swiss art<br />
gallery, Hauser & Wirth. She began by explaining how<br />
auction houses condition their audience. “<strong>The</strong>y are experts<br />
at creating a heightened atmosphere leading up to and at<br />
the auction itself. Sales may be ticket-only to give a sense of<br />
exclusivity, while higher profile auctions are often held in the<br />
evening to enable more people to attend and so increase the<br />
competition. <strong>The</strong>se soirée-style occasions attract a smartly<br />
dressed and affluent crowd. <strong>The</strong>y are provided with drinks<br />
and an opportunity to wander among the lots and mingle<br />
with their fellow guests before the auction begins, perhaps<br />
imagining and even discussing what it would be like to own<br />
one of the valuable pieces.” (I could relate to that…)<br />
Liberté went on to clarify, “Many of these attendees are<br />
not bidding, they are simply spectators who crowd into the<br />
room to boost an already febrile atmosphere. Some will find<br />
themselves standing at the back – standing room only –<br />
perhaps facilitated by the removal of a few seats. <strong>The</strong>re could<br />
even be an overflow area near to the main auction room with<br />
a live video feed. This is for those people not yet important<br />
enough to qualify for a place in the main auction room<br />
“Every time the<br />
individual is the<br />
high bidder, their<br />
perception of the value<br />
of the item increases.<br />
IT’S ALL RELATIVE<br />
Auction houses are experts at<br />
using the law of relativity<br />
to their advantage.<br />
Consider a scenario in<br />
which there are three works<br />
by Matisse to sell, and a<br />
guide price given for each of<br />
$40k. <strong>The</strong> first painting is<br />
the most valuable with<br />
a true value of $50k.<br />
By setting the guide price<br />
at $40k it will stimulate<br />
interest by making buyers<br />
think they can get a<br />
bargain. With lots of<br />
bidders this is likely to push<br />
the auction price up higher,<br />
let’s say in this example<br />
to $60k.<br />
<strong>The</strong> second painting is<br />
accurately given a guide<br />
price at $40k, but in<br />
relation to the first painting<br />
which sold for $60k, it<br />
now looks like a bargain.<br />
With several disappointed<br />
bidders who now have<br />
money burning a hole<br />
in their pocket, there is a<br />
very good chance that this<br />
painting will also go well<br />
above the guide price.<br />
<strong>The</strong> third painting is the<br />
least valuable of the three<br />
– let’s say its true value is<br />
$25k – but is now perceived<br />
to have a greater value<br />
relative to the previous two<br />
paintings. Bidders will fall<br />
into the trap of thinking<br />
that anything near the<br />
guide price of $40k is a<br />
good price and may even go<br />
over. In addition, there is<br />
now greater pressure on the<br />
bidders who have lost out on<br />
two Matisses already – they<br />
now have one last chance.<br />
By understanding the<br />
psychology behind auction<br />
behavior the auction house<br />
has secured more value for<br />
each of the three works.<br />
9
RECORD BREAKER<br />
A portrait of Christ by Leonardo da Vinci<br />
is the most expensive painting ever sold<br />
at auction. Salvator Mundi (Saviour<br />
of the World) fetched a record-breaking<br />
$450 million on November 15th, 2017,<br />
at Christie’s auction house in New York.<br />
<strong>The</strong> figure more than doubled the existing<br />
record for an artwork sold at auction: a<br />
$179.4 million bid for a Picasso in 2015.<br />
– you are almost in, but not quite.<br />
This feeds a sense of self-importance<br />
in those who have made it into the<br />
main room.<br />
“<strong>The</strong> hierarchy reaches its<br />
zenith with the bidders who have<br />
pre-registered their interest and<br />
been given a numbered paddle<br />
with which to make their bids. <strong>The</strong>ir<br />
reserved seats near the front are not<br />
by chance. Not only does it further<br />
massage their ego, it also allows the<br />
audience behind them to see the<br />
paddles going up, helping to build<br />
social facilitation. Furthermore, it<br />
ensures the auctioneer can make eye<br />
contact, connect with the bidders and<br />
get inside their heads, picking up on<br />
the nonverbal cues that will help<br />
them decide whether to push or not.”<br />
We went on to discuss a very<br />
modern challenge for the auction<br />
houses – the buyers who are bidding<br />
outside of the room (by phone or via<br />
the internet) and who are somewhat<br />
protected from this carefully cultivated<br />
atmosphere. <strong>The</strong> auction house must<br />
find ways to convey the excitement in<br />
the room to their remote guests.<br />
A bank of phones, positioned at<br />
the front of the room to one side, is<br />
manned by employees of the auction<br />
house. <strong>The</strong>y are experts at keeping<br />
bidders engaged, facilitated by the<br />
fact that the bidder can hear in the<br />
background the excitement in the<br />
auctioneer’s voice and the noise of<br />
the audience.<br />
In contrast, internet bidders may<br />
participate via a live link-up while<br />
comfortably seated on their couch at<br />
home. For these buyers, the auction<br />
houses produce a live edit of the action.<br />
<strong>The</strong> similarities with a theatrical<br />
production are no accident – before<br />
the “show” commences there’s a<br />
countdown, hush descends, the lights<br />
are dimmed...and the auctioneer<br />
springs into action. Multiple cameras<br />
capture wide-angle shots of the packed<br />
room, and close-ups zoom in on<br />
the joy of a victorious bidder’s face,<br />
disappointment etched on others. As<br />
effectively as an episode of a primetime<br />
TV thriller or Broadway show, the<br />
drama is transmitted in real time,<br />
making remote bidders feel like they<br />
are in the room and generating social<br />
facilitation and auction fever.<br />
Finally, Liberté told me about the<br />
importance of the order of the lots,<br />
which is carefully thought through.<br />
Lot 1 opens the sale, and will be well<br />
priced, high quality, and easy to sell.<br />
Some good value lots follow to get<br />
people in the mood and build auction<br />
fever. Sotheby’s for example works to a<br />
formula of placing their best items in<br />
the first 10% of lots. <strong>The</strong> following 60%<br />
will be good; the rest are a mixed bag.<br />
<strong>The</strong> law of relativity may also be<br />
invoked. If there are multiple items by<br />
the same artist, then the auction house<br />
will carefully consider their order and<br />
guide price to maximize the sale price<br />
achieved for each (see It’s all relative<br />
on page 9).<br />
I now needed the final piece of<br />
the jigsaw.<br />
While auction houses can cultivate<br />
a fertile environment for a successful<br />
auction, headline-grabbing bids often<br />
come down to the skill of the individual<br />
auctioneer. A good auctioneer controls<br />
the room and exudes confidence.<br />
<strong>The</strong>y know how to keep people<br />
raising their hands, deftly using<br />
social facilitation to their advantage.<br />
Charlie Ross, who ran his own<br />
auction house for over 25 years and has<br />
conducted a wide variety of auctions<br />
ranging from antiques and property<br />
through to vintage cars and intellectual<br />
property, has a unique insight into<br />
what makes a good auctioneer. He says,<br />
“People buy people. <strong>The</strong> skill of the<br />
auctioneer is to build a rapport with<br />
the audience. After all, he or she is<br />
selling to human beings.”<br />
“It’s also important for the<br />
auctioneer to be reasonably transparent.<br />
If the buyers have confidence in the<br />
auctioneer, they will bid. If they don’t,<br />
they might not. To connect with the<br />
audience, humor is important – it helps<br />
for the auction to contain an element<br />
of fun.” <strong>The</strong> pace of the auction is also<br />
key: “Too slow and people lose interest,<br />
too fast and they lose track. I’ve seen<br />
auctioneers take five minutes to raise<br />
another $10 by which time everyone<br />
has switched off and the audience has<br />
gone flat. When the auction is slow,<br />
people become more risk averse, even<br />
fearful, and those in the room may<br />
stop bidding, lessening the impact<br />
of the sale.”<br />
But as Charlie adds, “On the other<br />
hand there are times when the right<br />
thing to do is slow down in order<br />
to create tension. Using silence and<br />
PHOTOGRAPHY: GETTY IMAGE<br />
10
THE NEGOTIATION SOCIETY<br />
SIX TIPS FOR ENJOYING AN AUCTION<br />
(WITHOUT BREAKING THE BANK)<br />
Socrates Soumelas<br />
Psychologist and negotiation consultant<br />
It is difficult to override the powerful striatum circuitry that is responsible<br />
for our impulsive, automatic behaviors. But this doesn’t mean that we are<br />
completely at the mercy of our emotions and competitiveness during an<br />
auction. Here are a few tips:<br />
1. Set your breakpoint<br />
Decide what it is you want to buy and what you think<br />
it is worth before you go to the auction house. Include<br />
all costs in your calculation, e.g. commission, delivery<br />
and tax. Write your price down. This is your exit point,<br />
which you decided in cold blood. You will not exceed<br />
this price point.<br />
2. Have the courage of your convictions<br />
Remember, once the auction exceeds your<br />
predetermined exit point and you stop bidding, you are<br />
not losing. You are just following your plan. And if you<br />
manage to follow your plan, this is you succeeding.<br />
3. Think clearly when faced with conflict<br />
Breathe in. Breathe out. Controlled breathing helps<br />
you stay focused and control your emotions and, to<br />
an extent, regulate your fight or flight response, bring<br />
down your heart rate and breathing, and manage the<br />
dopamine release in your bloodstream.<br />
4. Remember that if you want to win you will pay for it<br />
Once your competitive, emotional self lashes out and<br />
tries to take control (and (s)he will try to take control),<br />
repeat the above two steps. Use self-talk to try and<br />
address your rational self. Remind yourself that you<br />
are just following your plan.<br />
5. If in doubt, get out<br />
If the above doesn’t work, then leave! It doesn’t matter<br />
if this will make you feel bad. If you pay too much to<br />
obtain the desired object, you will regret it once the<br />
auction high subsides and you will feel bad anyway.<br />
So the question is: Feeling bad with money in your<br />
pocket, or feeling bad and being broke?<br />
6. Get expert help<br />
Assign an experienced proxy to bid on your behalf.<br />
Research shows that experienced/professional bidders,<br />
while still overbidding, tend to overbid significantly<br />
less because they experience less loss aversion than<br />
occasional/amateur bidders.<br />
waiting for a further bid can transmit<br />
the message that you, the auctioneer,<br />
are confident there is more to come<br />
and the lot is worth more, creating<br />
an expectation that the bidder should<br />
continue to bid.”<br />
To do this effectively the auctioneer<br />
needs to “feel” the room, using eye<br />
contact to connect with the bidders, to<br />
get inside their heads and know when<br />
to push and cajole. Charlie brings<br />
this to life: “Sir, why stop at $10m?<br />
Do you want to wake up tomorrow<br />
morning and think ‘I might have had<br />
this Bugatti on my driveway if only I<br />
had placed just one more bid!’ You can<br />
change that now Sir!” In this emotive<br />
address, Charlie is playing on the fear<br />
of losing, knowing that bidders often<br />
regret the fact that they lost the object<br />
because they stopped bidding; when<br />
it’s gone, it’s gone.<br />
Knowing the right way to pitch<br />
these pronouncements doesn’t happen<br />
by chance. Charlie emphasizes the<br />
importance of preparation. “At big<br />
auctions, the auctioneer will have<br />
the details of the bidders, or dealers<br />
operating on their behalf, and where<br />
they are sitting in the room. Making<br />
the individual bidders feel valued will<br />
help them feel positive about their<br />
experience and possibly enable them to<br />
continue bidding. A good auctioneer is<br />
not only numerate and knows exactly<br />
what he or she is selling, but they must<br />
have also carried out their research.”<br />
Auctions and the behaviors that<br />
they can lead to provide a fascinating<br />
insight into human psychology. I came<br />
away from my research feeling a sense<br />
of humility at the basic biology that<br />
had driven my urge to publicly bid for<br />
a work of art that I would not, short<br />
of a major lottery win, ever be able to<br />
afford. I had also developed a great<br />
respect for the skill and expertize of<br />
those working in the auction industry,<br />
who have created a lucrative and<br />
exciting business.<br />
Whether this knowledge will change<br />
my bidding behavior in the future, in<br />
whatever context, it’s difficult to say.<br />
But I will neither confirm nor deny<br />
that I was spotted entering Christie’s<br />
London auction room on the day of<br />
their recent Old Masters sale. It’s only<br />
a rumor. Honest. TNS<br />
11
LOSING<br />
THE<br />
THREAD<br />
Tim Billson recounts a tale<br />
of misadventure, mishap<br />
and negotiation lessons on<br />
his first trip to Africa.<br />
Of the many reasons I love my job, there’s<br />
one in particular that stands out: the<br />
opportunity to work with people from<br />
a diverse range of cultures and backgrounds,<br />
and as part of that to understand what drives<br />
them and their decisions. This is, for me, where<br />
the universality of negotiation principles really<br />
plays out. <strong>The</strong> fundamental tenets of good<br />
negotiation practice hold true whether you’re<br />
from Toulouse, Tokyo, Tallahassee or Tobago.<br />
Which is why, having already delivered<br />
negotiation projects with clients in the UK,<br />
Europe and the Middle East, when the chance<br />
to work for two weeks with a client in Africa<br />
came up, I couldn’t wait. Some of the learnings<br />
that I gained from the experience were not,<br />
however, quite what I imagined they would be.<br />
My journey begins in London on a sunny<br />
spring afternoon…<br />
12
THE NEGOTIATION SOCIETY<br />
FRIDAY 14:35<br />
I walk into the Ethiopian embassy in London for the<br />
fourth time that week. I have everything crossed that upon<br />
my exit I will be in possession of the visa necessary to secure<br />
my trip. Surely there won’t be yet another hoop I have to<br />
jump through? Just a few hours later, and to my delight,<br />
no more hoops have been presented (or at least those that<br />
are I am able to vault through there and then), and I walk<br />
out with my passport containing the all-important, freshly<br />
gummed visa. That’s the hard bit over and done with, I think<br />
to myself. I look forward to what I envisage will now be a<br />
smooth and enjoyable trip.<br />
MONDAY 18:00<br />
I am standing by the door of Turkish Airlines flight<br />
TK1980, waiting my turn to disembark. My connecting<br />
flight is due to take off in 20 minutes and in that time I<br />
have to navigate from one side of Atatürk Airport to the<br />
other, in the process attempting to avoid some of the other<br />
65 million passengers who use the 11th busiest airport in<br />
the world each year.<br />
I can feel the adrenaline coursing through my body and<br />
I am gently perspiring. This is before I start to sprint across<br />
the terminal. Weaving my way in and out of the crowds at<br />
speed, acutely conscious of the minutes ticking by and the<br />
immutable timetable of air travel, I experience a rush of<br />
happiness as gate 210 comes into view. <strong>The</strong> plane is still<br />
connected to the terminal – the only flight of the day to<br />
Addis Ababa. My happiness is short lived. Delight turns<br />
to despair as I watch the gangway to the plane being<br />
locked. I have missed the flight by a matter of seconds.<br />
My appeals to the ground staff are met with an indifferent<br />
shrug. Suddenly the embassy issues are starting to pale into<br />
insignificance. I sit staring out of the window like a puppy<br />
staring at its family leaving to go on their summer vacation.<br />
<strong>The</strong> majestic TK676 slowly undocks and rumbles inexorably<br />
off towards the runway. My years of negotiation experience<br />
kick in. I need the travel equivalent of a Best Alternative<br />
to a Negotiated Agreement (BATNA). I head off to make<br />
a new plan.<br />
TUESDAY 00:20<br />
I am safely ensconced on a flight. We are mid-air, and I’m<br />
gazing out of the tiny airplane window as the pilot announces<br />
that the collection of flickering lights below is Addis Ababa.<br />
This would be good news apart from the fact our destination<br />
is beyond Ethiopia in Kenya. It was the closest and quickest<br />
destination I could get a flight to.<br />
13
07:05<br />
A very uncomfortable night trying to sleep<br />
on a chair in Nairobi airport is behind me and<br />
I’m boarding another plane. Due to an admin<br />
error I very nearly miss this plane, but that’s<br />
a story for another day. <strong>The</strong> flight is going<br />
to my original, intended destination. Addis<br />
Ababa here I come. In around 10 hours I<br />
need to greet my delegates and start the first<br />
workshop. My mind focuses, puts the travel<br />
mishaps of the last 24 hours into a mental<br />
box which I have no need to analyze for the<br />
moment, and starts to prepare for delivery<br />
of my first negotiation workshop in Africa.<br />
13:55<br />
A thought occurs to me. Maybe, just maybe<br />
I am going to get away with this. I’ve pulled<br />
together some kit from the hotel and my client<br />
has sent me someone from their office to help,<br />
bringing kit with them too. If the hotel projector<br />
will work with my laptop, I just need to finish<br />
setting up the room, and of course pop next door<br />
to get some more suitable clothes than the ones<br />
I have been wearing for the past 30 hours.<br />
My client contact agrees to come clothes<br />
shopping with me to help overcome language<br />
barriers and ensure I get what I need. So, I head<br />
back to my room, collect my wallet from the hotel<br />
safe and go to meet my chaperone with a little bit<br />
of a spring in my step.<br />
14:20<br />
“<strong>The</strong>re are two prices for everything<br />
– the market price and whatever<br />
anyone is willing to pay.<br />
09:48<br />
<strong>The</strong> baggage reclaim carousel stops. <strong>The</strong>re are<br />
two people standing hopefully beside it. One of<br />
them is me. I exchange a glance with my carousel<br />
buddy and a moment of understanding passes<br />
between us. Out of the entire plane, we are the<br />
two who are jinxed. Our bags haven’t made it.<br />
I have no idea what items my fellow baggage<br />
claimant is missing by not having his case<br />
arrive with him on that flight. For me it’s<br />
pretty much everything I need: suits, shirts,<br />
shoes, workshop equipment, toiletries. My<br />
laptop remains in my hand luggage. This is<br />
not providing a huge amount of comfort.<br />
Next stop, the lost baggage counter. Here<br />
I discover my case should arrive at 16:30.<br />
By the time it has been unloaded, passed<br />
through to lost baggage, claimed and<br />
brought back to the hotel, there isn’t<br />
enough time.<br />
11:15<br />
During the journey from the airport to<br />
the hotel my mind goes over all the possible<br />
options. As I arrive I spot a menswear store next<br />
to the hotel. <strong>The</strong> mannequins in the windows are<br />
wearing suits. Finally, a ray of sunshine.<br />
<strong>The</strong> hotel room door finally gives way. <strong>The</strong><br />
hotel handyman who has spent the last couple<br />
of minutes kicking and charging at the door is<br />
on the other side of it. He immediately bends<br />
down to pick up the broken piece of the locking<br />
mechanism that had sheared off as I entered the<br />
room and subsequently made it impossible for<br />
me to leave it. I step over the broken pieces and<br />
head downstairs.<br />
My contact is sitting in the lobby looking<br />
annoyed. He gestures to his watch, shakes his<br />
head and asks why if I was in such a hurry I took<br />
so long? He introduces me to his driver and<br />
suggests I should use the ATM in the hotel. My<br />
first question is to gage how much money I need.<br />
Ideally, I don’t want to be left with Ethiopian birr<br />
at the end of my trip. We settle on an amount,<br />
which requires three separate withdrawals from<br />
the machine due to its limits. <strong>The</strong> next question<br />
is, why do we need a driver when there is a store<br />
next door? Another shake of the head. Today is a<br />
public holiday and most shops are shut. In fact our<br />
chances of finding anything open that is suitable<br />
are low. I gulp. My step is not so springy now.<br />
15:15<br />
<strong>The</strong> neon light flashing in the doorway says<br />
OPEN, and although the mannequins in the<br />
window are not dressed in quite the clothing I<br />
would normally gravitate towards, this menswear<br />
store looks like my only hope. As we step out<br />
of the car I take my guide to one side. <strong>The</strong><br />
negotiator in me wants to ensure I’m not going<br />
to be exploited in this situation. I want him to<br />
ensure I pay local prices and the store staff don’t<br />
understand my desperation. He smiles to reassure<br />
me and we enter the store. He greets an employee<br />
14
THE NEGOTIATION SOCIETY<br />
with a barrage of instructions in Amharic, the<br />
local language, and the staff leap into action<br />
grabbing suits off the rails. Good job, I say to<br />
my guide. What did you tell them? “That you<br />
are desperate and need a full outfit as quickly as<br />
possible”, he replies. <strong>The</strong> negotiator in me dies<br />
a quick yet painful death, and I feel any power I<br />
might ever conceivably have had leave the room.<br />
Almost as quickly, the sales clerk produces a very<br />
shiny light gray suit that may, or may not, be in<br />
my size.<br />
15:31<br />
<strong>The</strong> changing room is a small box in the corner<br />
of the shopfloor. It has a little hatch that allows<br />
you to speak to the store staff yet retain your<br />
modesty. I pull the hatch open and beckon over<br />
my guide. “I’ve got the outfit I want” (by which<br />
I mean it actually fits me – Ethiopia is not the<br />
ideal shopping destination for a 6ft person), “but<br />
nothing has prices on?” “Leave it with me”, he<br />
assures me and strides off. I close the hatch and<br />
start to get changed. Suddenly the background<br />
music of the shop is broken by the sound of my<br />
guide bursting out laughing. Wondering whether<br />
this is a sign of good news or bad news I open my<br />
hatch again. I am asked if I want a cup of coffee<br />
by my guide. “I don’t have time for coffee!” I reply.<br />
<strong>The</strong> response that comes answers my good news<br />
or bad news question. Apparently the only thing<br />
the store owner is prepared to offer me is a free<br />
macchiato. I now need to find another ATM as<br />
the 10,000 Ethiopian birr I have is not enough!<br />
Shortly thereafter I realize my negotiation<br />
attempts are not only not getting me anywhere,<br />
but are now causing frustration to the store<br />
owner. While we always want to be firm, tough<br />
and distant in value distribution negotiations,<br />
which this clearly was, the desire is never to be<br />
rude. It just isn’t necessary and is often behavior<br />
misunderstood as appropriate in these situations.<br />
16:05<br />
I have been to the ATM, counted out all 138<br />
notes (the highest note amount is 100 birr), and<br />
I am now the not-entirely-proud owner of a new<br />
suit, shirt and shoes. It has cost me roughly £350 –<br />
a lower amount than I would expect to pay in the<br />
UK. But when I hear the collective sharp intake of<br />
breath that the amount elicits from my workshop<br />
delegates when we discuss the situation later, what<br />
little satisfaction I had evaporates.<br />
NEGOTIATION<br />
LEARNINGS<br />
OUT OF AFRICA<br />
Despite the bruising to my negotiation ego (which has no<br />
place here anyway), the situation provided a reminder of<br />
the things we talk so much about.<br />
“<strong>The</strong> more you say, the more you give away”<br />
<strong>The</strong>re was an obvious desperation to get a suit very quickly,<br />
but keeping that knowledge away from the store owner could<br />
have prevented another trip to the ATM. Now, we can never<br />
say with certainty how a situation would play out in different<br />
circumstances, but the swing in the balance of power once<br />
that information was shared was always going<br />
to be hard to overcome.<br />
“Get inside the other party’s head”<br />
By understanding the pressures in my head, particularly those<br />
of time, the store owner was firmly in control. Maybe if I had<br />
the opportunity again I’d try to understand why this was one<br />
of very few stores open on the public holiday. It certainly had<br />
no other customers. Did they need the sales? <strong>The</strong>re are two<br />
prices for everything – the market price and whatever anyone<br />
is willing to pay. I’d like to know what someone else would<br />
have been told the price was (or maybe I wouldn’t!).<br />
“Don’t go beyond your breakpoint”<br />
<strong>The</strong> truth is that the price was ultimately acceptable to me,<br />
and given the circumstances was below my breakpoint – i.e.<br />
the maximum in those circumstances that I would have paid.<br />
“Open extreme”<br />
By opening even more<br />
extreme, that shop owner<br />
could certainly have shut his<br />
store a bit earlier, spent some<br />
time with his family on a<br />
public holiday, and still had<br />
a profitable day. Whether<br />
you are a store owner in<br />
Ethiopia, or negotiating<br />
anywhere, on anything,<br />
remember to always value<br />
things on your customer’s<br />
terms, not yours. That,<br />
for sure, is a negotiation<br />
principle that holds true<br />
all over the world. TNS<br />
15
In September 2018<br />
<strong>The</strong> Gap Partnership<br />
launched <strong>The</strong> Negotiators,<br />
a competition for alumni of<br />
<strong>The</strong> Complete Skilled Negotiator<br />
(TCSN). In the historic grounds<br />
of Ashridge Business School just<br />
outside London, 14 teams of highly<br />
skilled professionals from a range<br />
of European countries, sectors and<br />
roles came together to negotiate<br />
a series of five tough, commercial<br />
negotiation cases.<br />
<strong>The</strong> Negotiators was designed<br />
to consolidate, embed and develop<br />
the learning from TCSN, enabling<br />
participants to take their negotiation<br />
skills to a new level. Time and the<br />
competitive nature of the event<br />
created authentic experiences of<br />
stress, pressure and the need to think<br />
quickly and strategically, all under the<br />
watchful eyes of senior leaders from<br />
<strong>The</strong> Gap Partnership who judged<br />
each round, as well as coaching and<br />
mentoring the participants and<br />
their coaches.<br />
Teams were judged on the deals<br />
they achieved as well as their ability<br />
to exhibit appropriate behavior<br />
in the preparation and during the<br />
negotiations. <strong>The</strong> competition<br />
culminated in a grand final in which<br />
the two leading teams, Phillips 66<br />
and Deutsche Post DHL, negotiated<br />
live in front of an audience of over<br />
a hundred participants and guests.<br />
Under the scrutiny of the judges,<br />
coaches and fellow competitors, the<br />
two teams displayed a masterclass in<br />
negotiation skills as they battled to<br />
get the best deal in a complex sports<br />
sponsorship case. <strong>The</strong> result could<br />
not have been tighter, however there<br />
could only be one winner and at the<br />
gala dinner that evening Phillips<br />
66 were crowned <strong>The</strong> Negotiators<br />
Champions 2018.<br />
As Donna Hughes, part of<br />
the winning Phillips 66 team,<br />
commented afterwards, “<strong>The</strong> final<br />
offered an excellent opportunity<br />
to practice a detailed and lengthy<br />
negotiation with the addition of an<br />
audience further fueling the intensity<br />
of our journey through the learning<br />
curve. Overall, a truly challenging yet<br />
rewarding and enjoyable experience!”<br />
16
THE NEGOTIATION SOCIETY<br />
Kelly Harborne<br />
Head of Consumer,<br />
UK and MEAN,<br />
<strong>The</strong> Gap Partnership<br />
It was a privilege to observe<br />
our alumni putting into practice<br />
what they had learned on the TCSN. I was struck by<br />
the high-energy atmosphere generated by diverse teams<br />
representing different nations, industries and organizations,<br />
coming together to test their negotiation mettle. Some had<br />
prepared with conference calls discussing approach, tactics,<br />
and the plan. But some hadn’t met until the first day of the<br />
competition! <strong>The</strong>y were all determined to succeed and<br />
I watched them throw themselves into each negotiation.<br />
As the rounds progressed, the complexity grew and an ability<br />
to absorb, translate and gain insight from the situations<br />
and the parties the teams were negotiating with demanded<br />
clear thinking and exceptional team work. <strong>The</strong> standard was<br />
impressive – although the temptation to argue a point or<br />
stick to the familiar problem of price rather than tackle some<br />
of the more ambiguous opportunities available in the latter<br />
cases was too strong for some. <strong>The</strong> final was complex and<br />
conducted in front of a live audience, but the finalists dealt<br />
with the pressure and performed incredibly well. What blew<br />
me away was the opportunity exploited to its fullest by each<br />
of the teams to refresh, try, learn and try again.<br />
<strong>The</strong> TCSN made a big<br />
impact on our team and we<br />
were looking for a qualitative<br />
session to keep our negotiation skills<br />
in good shape. <strong>The</strong> Negotiators seemed ideal: you repeat<br />
the theory in practice and learn from the best adversaries,<br />
as well as from TGP coaches and judges, while having fun!<br />
As a coach I couldn’t participate in the negotiations which<br />
at first was really stressful. But I realized, this is just like<br />
in real life: you don’t follow your sales managers into every<br />
conversation and negotiation with customers. I overcame<br />
the feeling of paralysis only because as coaches we were also<br />
coached. We received valuable one-to-one feedback on where<br />
we could make the difference and what moves could help the<br />
team, and how to support the team to adopt the strategies<br />
themselves. Getting feedback from the top negotiators at<br />
TGP and establishing a personal relationship with them<br />
added to the value of the event.<br />
My eyes opened to the importance of preparation, fixing<br />
storylines, setting breakpoints, finding variables, even<br />
roleplaying the conversation and what our countermoves<br />
could be. I spent too little time on this before because of the<br />
everyday rush. By the end I was proud of how as a team we<br />
prepared, followed the script and achieved good deals.<br />
Now we’re back at work we’ve brought the Clockface back<br />
into our negotiations, we take more time to prepare and<br />
we’re closer as a team.<br />
THE<br />
J U D G E<br />
Bert Vandenkendelaere<br />
Sales and Marketing Director,<br />
Unilin<br />
THE<br />
C O A C H<br />
Patricia Serra e Moura<br />
Crude and Heavies<br />
Operations Lead,<br />
Phillips 66 Limited<br />
<strong>The</strong> Negotiators<br />
provided a great opportunity to<br />
step out of my comfort zone and put my learnings from <strong>The</strong><br />
Complete Skilled Negotiator into effect. One of my personal<br />
highlights was working as part of a team with colleagues who<br />
I’m not otherwise exposed to. I also really enjoyed competing<br />
with different companies from a wide range of industries and<br />
backgrounds. It was fascinating to see how each company<br />
approached the challenge.<br />
<strong>The</strong> case studies were carefully put together and<br />
interesting to dissect. At first I thought my team would do<br />
well but wouldn’t necessarily make it through to the final,<br />
so when we found out we had, I felt quite confident!<br />
My team worked so well together; we supported each other<br />
and tried our best to stick to the course learnings. I can safely<br />
say that the overall experience was both nerve wracking and<br />
at the same time incredibly exciting! <strong>The</strong> fact that we won<br />
is testament to the strength of our different skill sets and,<br />
of course, to our coach, Richard, who did a brilliant job<br />
of keeping us on track.<br />
<strong>The</strong> competition has reminded me to attempt to turn<br />
every opportunity into a negotiation. And I’m going to try<br />
to apply that approach not just in a professional setting,<br />
but outside work too.<br />
Denis Mujkanovic<br />
Corporate Sourcing<br />
Manager Digital Services<br />
and New Technologies,<br />
Deutsche Post DHL<br />
I was keen to see how other<br />
professional negotiators use their<br />
skills, and if we could make the cut. It was an incredible<br />
crowd of professionals from a wide field of business - sales<br />
leads, procurement managers, ops specialists and others.<br />
<strong>The</strong> cases and the itinerary were so challenging that it put<br />
you into a high alert state, which usually you would only<br />
have in real negotiations.<br />
After the first round we weren’t in the top three, and<br />
in most cases we were on the seller side contradicting our<br />
nature as procurement managers. It was challenging to be<br />
outside our comfort zone and not fall into the trap of starting<br />
a sales pitch. We focused on good preparation and teamwork.<br />
We used every minute of the prep time to define the desired<br />
outcome and the steps we needed to take to get there, and<br />
we prepared offers on flip charts to own the room. Our coach<br />
kept us focused and we tried to stick rigorously to the roles<br />
to gain as much leverage as possible.<br />
<strong>The</strong> final was tense, challenging and fun! Even though we<br />
only just missed out on first place, it was a great experience<br />
that we all enjoyed. Back at work I’m more aware of the<br />
big effects small things can have in weakening your own<br />
position, like soft language. Definitely a good reminder!<br />
W<br />
THE<br />
I N N E R<br />
THE<br />
R U N N E R<br />
U P<br />
17
K E I N E<br />
H A L B E N<br />
SACHEN<br />
( O R , T O N O N - G E R M A N S P E A K E R S ,<br />
NO HALF MEASURES)<br />
Diana Jusepeitis’ talent and drive have seen her progress to heading up sales<br />
for TGP in Germany. In a frank interview with Alistair White, she discusses<br />
her journey, and how her personal philosophy shapes the way she lives her life.<br />
Pride. Just think about that word for a minute, and<br />
what it means to you, because you are going to read<br />
it a few more times in this article.<br />
I have been at <strong>The</strong> Gap Partnership for almost fifteen<br />
of its twenty-one-year existence, and in that time I have seen<br />
younger people join the business with many of them going<br />
on to progress through the ranks, moving up into senior<br />
leadership positions as we expand both geographically and<br />
open up new sectors and customers. I take genuine pride in<br />
the fact that our company offers people the opportunity to<br />
grow, develop, achieve and flourish in ways they might not<br />
have done elsewhere.<br />
Diana Jusepeitis is as good an example of this as anyone<br />
else in our business, with an ascent through the ranks both<br />
rapid and well deserved. She joined TGP in 2013 as a client<br />
manager, but within a year had progressed to head of<br />
client management and operations. It wasn’t long before<br />
she made the leap to become a negotiation consultant in<br />
2016. <strong>The</strong>n just a year later Diana was appointed to the<br />
position of head of sales for the DACH region (Germany,<br />
Austria and Switzerland).<br />
When we Skype to conduct our interview, Diana is<br />
reclining on a couch in her Wuppertal apartment, cup of<br />
herbal tea in hand and with her feet resting on a footstool<br />
as the sun shines brightly through her living room window.<br />
Hardly the image that springs to mind when you think of<br />
her steep career path since joining <strong>The</strong> Gap Partnership, and<br />
certainly at odds with the Diana dressed in business attire who I<br />
had seen at the photoshoot to accompany this article just a week<br />
before. That is because Diana is embarking on another, much<br />
18
THE NEGOTIATION SOCIETY<br />
“I need to feel committed to anything I do,<br />
I need to want to do the best job I can, whether<br />
that is a negotiation consultant, a colleague,<br />
a mother or even if I am just doing the dishes.<br />
19
more important, adventure. She is three days into her maternity<br />
leave, as she and her husband Daniel are imminently expecting<br />
their first child.<br />
I have a list of questions but Diana beats me to the punch.<br />
“Before we start, Alistair, let me just tell you how pleased and<br />
proud I am to be selected as the featured employee for the<br />
alumni magazine.” <strong>The</strong>re’s that word again.<br />
Is the new role as head of sales an ambition fulfilled? “Yes,<br />
no question. When I was still at school, I always knew that I<br />
wanted to do something with languages and communication.<br />
I grew up in a bilingual household with a German father<br />
and a Dutch mother and I always felt that this gave me an<br />
advantage that I would be foolish to ignore. So I studied<br />
International Business and Languages at Arnheim Business<br />
School and then joined confectionery company, Royal Fassin,<br />
as an account manager.”<br />
“I loved it there and I thought that consumer sales was to<br />
be my future. But then at some point I didn’t feel challenged<br />
any more so I started looking around. I was approached by a<br />
recruiter who talked to me about a position as client manager<br />
with <strong>The</strong> Gap Partnership, but initially I rejected the idea.<br />
I thought it was a sideways move at best, and would take me<br />
away from consumer.”<br />
“<strong>The</strong>n the recruiter rang back and he talked with such<br />
enthusiasm about the company that I thought it was worth<br />
a second thought. Two things he said in particular stuck in<br />
my head. He said that they were all hard working, and that<br />
is something that is important to me. I don’t know if it is the<br />
German in me but I need to be in an environment where<br />
effort is valued and meeting a challenge is rewarded. And he<br />
also spoke of the pride, passion and commitment the people<br />
felt about what they do.”<br />
“That rang bells in my head. One of my mottos in life<br />
is keine halben Sachen – no half measures. I need to feel<br />
committed to anything I do, I need to want to do the best<br />
job I can, whether that is a negotiation consultant, a<br />
colleague, a mother or even if I am just doing the dishes –<br />
keine halben Sachen. If I am going to represent, or even<br />
sell something, I need to believe in it, I need to be proud<br />
of what I sell, it’s personal.”<br />
Diana pauses and takes a sip of her tea. Would she<br />
describe herself as conscientious? She looks at me as if I<br />
have just asked her if it is dry in the Sahara. “Oh my God,<br />
yes. That’s an understatement, I worry about everything.<br />
I have lots of checklists. I suppose I am a German stereotype<br />
– organized, punctual, tidy, on top of everything. I set myself<br />
such high standards. Daniel tells me I should chill out more<br />
but that is just who I am. If I had nothing to worry about,<br />
I would be really worried.”<br />
Did she worry about making the leap from client<br />
manager to consultant and then to head of sales? “Sure<br />
I did. I remember conducting a coaching session with a<br />
client in my first couple of months and thinking to myself,<br />
‘I am advising a client on a €200m deal.’ That was…”, she<br />
hesitates, “…sobering.”<br />
“And then I just took confidence from the fact that every<br />
single one of my colleagues has been in exactly the same<br />
situation for the first time and I just trusted the tools and<br />
processes we have at our disposal and my own ability.”<br />
Diana has spent all of her TGP career in a customerfacing<br />
role. I asked her whether she was at all concerned<br />
about going back to those same customers she had served<br />
as a client manager in her new role as head of sales? “I think<br />
anyone would be conscious of that – I am only human and<br />
we all have little insecurities, no matter how experienced we<br />
are. But the reaction from clients has been overwhelmingly<br />
positive. I was surprised by how many clients commented<br />
positively that <strong>The</strong> Gap Partnership had appointed a<br />
woman to that role. Most of my colleagues are male and<br />
I hadn’t really thought about it but a number of clients<br />
pointed it out.”<br />
“But I wouldn’t like to think that I was appointed because<br />
I am a woman. I am proud of what I have achieved and it is<br />
really important to me to believe that I have achieved that on<br />
merit, not because of my gender.”<br />
At this point I become acutely conscious that I am a 58-<br />
year-old Irish male, interviewing a German-Dutch female,<br />
easily young enough to be my daughter. Not what you would<br />
describe as demographic soulmates, at least on paper. Tread<br />
carefully, I tell myself, you could get yourself into trouble here<br />
– but I decide to plunge in anyway. “Is career progression<br />
20
THE NEGOTIATION SOCIETY<br />
more difficult for a woman?” Diana reflects for a moment,<br />
“At <strong>The</strong> Gap Partnership or in general?” “Both”, I respond.<br />
“Well, I have never been a man so I cannot make a direct<br />
comparison. But, at no point have I ever felt that being a<br />
woman at <strong>The</strong> Gap Partnership has held me back. In fact it<br />
has probably been an advantage in that, just by my gender,<br />
I stand out from most<br />
of my peers. I have a<br />
point of difference.<br />
I believe in equality<br />
of opportunity but<br />
I don’t believe that<br />
women should aim<br />
to be the same as<br />
men. We can be<br />
equal and different,<br />
not the same. We<br />
each bring qualities to the table. I think women tend to have<br />
less ego which can be a huge advantage in negotiation. I<br />
remember my days in consumer sales – a lot of the buyers I<br />
dealt with were men.” Diana smiles, “as long as they thought<br />
they had ‘won’ in a negotiation, I usually got a good result.”<br />
“Men probably have more natural confidence than<br />
women. But, you know what, it is less about the gender and<br />
more about the individual, there are confident women and<br />
less confident men, emotionally intelligent men and women<br />
with none. It’s like negotiation, we negotiate with a person,<br />
not a stereotype.”<br />
Speaking of gender, I ask if she and Daniel know whether<br />
they are having a girl or a boy. She does know and she does<br />
tell me, but I am going to keep that to myself. By the time<br />
you read this Diana will be a mother so, if you want to know,<br />
call the Düsseldorf office and ask.<br />
How has impending motherhood affected her attitude<br />
to work? “It has made me revisit priorities in life. But, in<br />
this period between<br />
leaving work and<br />
“I don’t know if it is the German<br />
in me but I need to be in an<br />
environment where effort is valued<br />
and meeting a challenge is rewarded.<br />
the baby’s arrival,<br />
I am still thinking<br />
about doing the best<br />
handover I can do.<br />
I don’t want to let<br />
anyone down. And<br />
it is really, really<br />
difficult for me to<br />
come to terms with<br />
the realization that I will not be needed for the next year or<br />
so. But, once the baby arrives, I imagine that all my focus will<br />
be on him or her. I will certainly be needed then!”<br />
“I am not thinking about my career after the baby for the<br />
time being. Strangely for me, it is the one thing I don’t worry<br />
about. I don’t know what it feels like to be a mum, so I can’t<br />
make decisions about what I’ll do when I am one. All I do<br />
know is that however things turn out, there will be keine<br />
halben Sachen.”<br />
As she says this, Diana laughs, as if poking fun at herself. But<br />
she’s right. Whether her focus is on her family, her colleagues, or<br />
her customers, I know one thing. She will do them proud. TNS<br />
21
22<br />
<strong>Negotiation</strong> tactics are an inescapable part of negotiation.<br />
Chris Atkins explains the role that they play, and how to<br />
defend yourself against the most commonly used.
THE NEGOTIATION SOCIETY<br />
round 2,500 years ago, Chinese military<br />
strategist Sun Tzu wrote <strong>The</strong> Art of War. In it,<br />
he famously said, “Strategy without tactics is<br />
the slowest route to victory. Tactics without<br />
strategy is the noise before defeat.”<br />
Perhaps this is why tactics, particularly in negotiation, are<br />
so often viewed as the poor relation to strategy. Strategy is<br />
seen as the realm of the intellectual, the cerebral, the forward<br />
thinker. It represents your long term vision and your route<br />
to achieving it. Without strategy, you are certain to lose. No<br />
skilled negotiator would take a seat at the negotiation table<br />
without a clear, well-thought-out strategy in place.<br />
But here’s the thing. Once at the table, as the general’s<br />
words suggest, the smartest and most beautifully planned<br />
strategy will be hampered if not accompanied by carefully<br />
selected and well executed tactics. And it’s precisely because<br />
tactics oil the wheels of strategy and facilitate its success, that<br />
understanding them – what they are, when they are used on<br />
you, when you may consider using them yourself – is a vital<br />
component in successful negotiation.<br />
So how to differentiate negotiation tactics from<br />
negotiation strategy? Tactics are concrete, short term,<br />
behavioral, and personal. <strong>The</strong>y are used to unsettle, create an<br />
emotional state and encourage irrational decision making. As<br />
such, the primary defense to all tactics is to recognize that<br />
they are merely examples of your counterparty doing their<br />
job. <strong>The</strong>y may sometimes be clumsy, but they are not in fact<br />
personal, unless you make them so by reacting. Experienced<br />
negotiators learn to sit back, say to themselves (or perhaps<br />
their counterparty) “I can see what you did there”, and<br />
construct their response in an unemotional way.<br />
<strong>The</strong> decision as to which tactics are deployed is of course<br />
down to the individual negotiator. <strong>The</strong>ir choice will be<br />
influenced by their own personal set of ethics and values,<br />
together with those of their organization. It may also depend<br />
on the negotiation circumstances and the trust between the<br />
two parties – indeed it can take years to build trust levels<br />
between two companies, but mere seconds to destroy that<br />
trust through the inappropriate use of a negotiating tactic.<br />
“<strong>The</strong> smartest and<br />
most beautifully planned<br />
strategy will be hampered<br />
if not accompanied by<br />
carefully selected and<br />
well executed tactics.<br />
Given this, it is prudent to bear in mind two principles<br />
when weighing up if, how and when to use tactics in a<br />
negotiation. Firstly, no combination of tactics will be<br />
effective in the absence of structured planning and controlled<br />
execution. Secondly, the more any tactic is employed, the<br />
less effective it becomes. If your counterparty continually<br />
uses recognizable tactics you will become more adept at<br />
counteracting them, and you should take confidence from the<br />
fact that you are better planned and structured than they are.<br />
In Steve Gates’ <strong>The</strong> <strong>Negotiation</strong> Book, over forty<br />
negotiation tactics are listed, and undoubtedly there are<br />
more. Let’s take a look at a selection of the most commonly<br />
used, along with ways in which each can be counteracted.<br />
23
THE BROKEN RECORD<br />
Negotiators will often repeat the same<br />
demand again and again in an attempt<br />
to wear you down – those with young<br />
children will recognize this tactic!<br />
Defense<br />
Either state clearly, and repeatedly, that<br />
the demand cannot be accepted at all,<br />
or outline the conditions under which<br />
you could agree to all, or part of,<br />
the demand.<br />
THE PROFESSIONAL<br />
FLINCH<br />
Many people are startled into making<br />
concessions by the extreme nature of an<br />
individual’s rejection of their proposal.<br />
Defense<br />
This kind of rejection is often planned<br />
and rehearsed. Tell yourself in advance<br />
to expect it. If you are ready for it, you<br />
will be less unsettled. Remind yourself<br />
that rejection is part of negotiation.<br />
DEADLINES<br />
<strong>The</strong> imposition of a time constraint,<br />
whether real or invented, is frequently<br />
designed to pressurize you into<br />
an agreement.<br />
Defense<br />
Suggest that you will need more time<br />
to work out a favorable deal – that<br />
often uncovers whether the time<br />
constraint is real or not. Ask why the<br />
time constraint exists and what the<br />
consequences would be of exceeding it.<br />
If the time constraint is real, you will<br />
often find that it is your counterparty<br />
who is under pressure and not you.<br />
BUILDING BLOCKS<br />
Experienced negotiators generally know what their<br />
counterparty wants. Increased volume, longer contracts,<br />
enhanced credit terms or improved guarantees are just<br />
some examples. <strong>The</strong>y will often start with a lower volume<br />
or a minimal credit period and negotiate hard for the best<br />
terms. Once those have been achieved, they will then start<br />
to add in different building blocks – e.g. higher volume,<br />
better credit terms – in order to improve the deal.<br />
Defense<br />
Outline your requirements first before your counterparty<br />
mentions them and state the terms you would offer if these<br />
conditions are met. Make a clear plan in advance of the terms<br />
you would offer for differing volumes or contract lengths and<br />
do not deviate from this.<br />
GOOD GUY, BAD GUY<br />
This tactic has been brought into public consciousness<br />
through many a TV police drama where it is used as a<br />
technique to interrogate suspects. Essentially, you are<br />
confronted with two negotiators, one of whom makes<br />
unreasonable demands, only to give way to their colleague<br />
who makes less unreasonable demands in the hope that, by<br />
comparison, you will find them more acceptable and agree.<br />
Defense<br />
<strong>The</strong> key thing to remember is that the “good guy” wants exactly<br />
the same things as the “bad guy”, they are just going about it<br />
differently. Examine each proposal or demand in isolation,<br />
don’t fall into the trap of comparing the two and evaluating one<br />
proposal in relation to another. To defuse the “bad guy”, you<br />
could agree to their demands, on the condition that they accept<br />
an equally unreasonable demand of yours.<br />
ILLUSTRATIONS: NICK BATEMAN<br />
24
THE NEGOTIATION SOCIETY<br />
THE SOCIAL SMELL<br />
<strong>The</strong> inference that you are somehow not conforming to an<br />
accepted code of practice within your industry or that you<br />
are acting in a way that sets you apart from your competitors<br />
can be a powerful argument.<br />
Defense<br />
Others in your company may well have worked for<br />
competitors in the past and may be able to confirm or refute<br />
what is standard industry practice. Seek out others’ advice<br />
on what constitutes accepted practice. <strong>The</strong>re may be an<br />
opportunity to challenge your counterparty on another issue<br />
where they have refused to accept one of your conditions on<br />
the grounds that it, too, is customary within your industry.<br />
THE MOCK SHOCK<br />
Sometimes individuals will threaten disproportionately<br />
serious consequences – such as significant loss of business<br />
or a refusal to supply – if demands are not met.<br />
Defense<br />
Often the person making the threat is not empowered –<br />
or even willing – to implement the threat, but you cannot<br />
afford to back them into a corner and call their bluff.<br />
Neither should you continue to discuss only the subject<br />
of the individual’s demand. Instead, stay calm and make<br />
a proposal which includes issues other than just what your<br />
counterparty is demanding and/or conditions under which<br />
you could accept some or all of the demand.<br />
THE PERSONAL FAVOR<br />
People negotiate with people and they<br />
build relationships with each other.<br />
This is normal and often enhances<br />
the business relationship. Sometimes<br />
negotiators try to exploit this by<br />
phrasing some demands as personal<br />
favors. Many individuals (especially<br />
salespeople) find this hard to resist for<br />
fear of damaging their relationship.<br />
Defense<br />
<strong>The</strong> reality is that this is not a personal<br />
favor, it is a business favor. You have<br />
every right to refuse it, as your first<br />
loyalty is to your employer. By asking<br />
for a personal favor in return you can<br />
test the strength of the relationship.<br />
DEFENSE IN DEPTH<br />
You think you have an agreement until<br />
your counterparty calls you and tells<br />
you that their boss cannot agree unless<br />
you make a further concession. To get<br />
the deal done, you agree, only for them<br />
to call back two days later to tell you<br />
that now the boss is insisting that you<br />
make more concessions. And so on…<br />
Defense<br />
Always clarify in advance whether<br />
your counterparty will have to refer<br />
the deal elsewhere before it can be<br />
agreed. Know who the ultimate<br />
decision-maker is. Suggest that your<br />
counterparty invite the higher<br />
authority to subsequent meetings.<br />
ONE MORE THING<br />
Towards the end of a negotiation, when<br />
you know that a deal is within touching<br />
distance, you can be vulnerable to this<br />
tactic. Armed with this knowledge,<br />
individuals often deliberately try to<br />
obtain a final concession in the closing<br />
stages of negotiation.<br />
Defense<br />
Agree an agenda at the start of<br />
negotiations. This should define all<br />
of the issues you need to agree and<br />
will prevent any non-agenda items<br />
being introduced at a late stage.<br />
Rather than simply conceding,<br />
try to secure a reciprocal concession<br />
of your own.<br />
25
ASK ALISTAIR<br />
<strong>Negotiation</strong> expert Alistair White returns<br />
to answer questions from our alumni.<br />
Q: When negotiating with a key and<br />
strategically important customer,<br />
which is however margin<br />
diluting for me, what is the<br />
key differentiator between<br />
approaching the negotiation<br />
with them in a competitive<br />
or collaborative manner?<br />
Julian Crane, Sales Director<br />
UK & Ireland, Henkel<br />
A: Whenever I get these<br />
questions I always read them<br />
two or three times because<br />
the clue to the answer is often<br />
contained in the wording of the<br />
question. This is a “strategically<br />
important” customer which is, however,<br />
“margin diluting”. I can only conclude<br />
that the customer is offering you<br />
something – probably a high level of<br />
sales or volume – which makes them<br />
strategically important even if you are<br />
making lower margins. As obvious<br />
as it may sound, the solution to your<br />
dilemma lies in an analysis – and a<br />
manipulation – of the factors which<br />
determine your Clockface position.<br />
But we’ll get to that<br />
in a moment.<br />
To answer your<br />
question, I will<br />
throw it back to<br />
you – what does<br />
your instinct tell<br />
you? That is<br />
usually a pretty<br />
strong indicator.<br />
Now consider<br />
the things which<br />
influence your<br />
position on the Clockface. Dependency.<br />
How much do you need this customer?<br />
How easy would they be to replace?<br />
Longevity. Is this a long term<br />
relationship? Do you envisage repeat<br />
business? Requirement for trust. Do<br />
you need to be transparent about your<br />
respective motives? Do you need to<br />
share information? Complexity. How<br />
many variables are in play? How easily<br />
can you expand the agenda?<br />
If you answer “yes” to these questions,<br />
it would be appropriate to pursue a<br />
collaborative strategy.<br />
Now, go back to your instinctive<br />
reaction. If your instinct was to be<br />
collaborative, then all is good.<br />
If, however, your instinct was to be<br />
competitive, then you need to think<br />
“If you do not hold the balance of<br />
power, then a more collaborative<br />
strategy is the sensible choice.<br />
a bit harder. If you believe that you<br />
hold the balance of power, then you<br />
can conduct a more competitive<br />
negotiation within a collaborative<br />
relationship but, if you force through<br />
your agenda, you will need to repair the<br />
damage to your relationship. If you do<br />
not hold the balance of power, then a<br />
more collaborative strategy is the more<br />
sensible choice. No one said it was<br />
going to be easy.<br />
Q: I want the negotiation to be<br />
warm and collaborative, but they are<br />
behaving coldly and competitively.<br />
What should I do?<br />
Anonymous<br />
A: Let’s dissect your question.<br />
You want the negotiation to<br />
be collaborative; they want it<br />
to be competitive. Now think<br />
back to the Clockface model.<br />
Of the four determining<br />
factors – dependency, longevity,<br />
complexity and requirement<br />
for trust – the simplest one<br />
to manipulate tactically in the<br />
short term is complexity. If you can<br />
broaden the agenda to incorporate<br />
more variables, this creates more<br />
trading options and enables a more<br />
collaborative “give and take” process.<br />
Your counterparty will be behaving<br />
competitively for one of two reasons.<br />
Either they understand negotiation and<br />
are deliberately acting this way because<br />
they believe they hold the balance of<br />
power. In this case, you will have to<br />
fight harder to broaden the agenda and<br />
make it plain that<br />
they have a greater<br />
chance of getting<br />
what they want by<br />
offering you some<br />
of what you want.<br />
Or, they do not have<br />
a very sophisticated<br />
understanding of<br />
negotiation and think<br />
the only way to get<br />
what they want is<br />
to bang the table.<br />
If you can educate them, by a series of<br />
proposals, into understanding that there<br />
is another, more collaborative way, they<br />
will quickly come around to it.<br />
If you have a question for Alistair and<br />
would like it to be considered for our<br />
next issue, please email it to<br />
alumni@thegappartnership.com<br />
26
THE NEGOTIATION SOCIETY<br />
Tricks of my Trade<br />
This edition’s TGP consultant in the hot seat is Chris<br />
McNally from the UK & MEAN team. We asked Chris to<br />
talk us through his extensive commercial experience, and<br />
how it has shaped the way he approaches negotiation.<br />
<strong>The</strong> <strong>Negotiation</strong> <strong>Society</strong>: What did you do before<br />
becoming a negotiation consultant?<br />
Chris: Quite a bit! I began in customer relationships;<br />
talking to people is a core skill and I’ve never been<br />
accused of being shy! Perhaps unsurprisingly, I then<br />
moved into sales. As a firm believer that you should<br />
work for a business you’re passionate about, I went<br />
to Red Bull and worked in a whole variety of<br />
commercial roles. What struck me was my immersion<br />
in the business – all salespeople went to the Red Bull<br />
Academy and there wasn’t an element of the strategy<br />
and product we didn’t know.<br />
TNS: What’s that got to do with negotiation?<br />
Chris: By having a complete understanding of your<br />
business and your customer’s, the balance of power<br />
shifts in your direction. You spot opportunities and<br />
synergies, identify new variables and create lowcost/high-value<br />
proposals. Your ability to move the<br />
negotiation in your preferred direction and take<br />
control of it increases exponentially.<br />
TNS: Why did you move on?<br />
Chris: I was ready for a new challenge. I joined Lactalis,<br />
the world’s biggest dairy company with a stable of<br />
brands as well as an own brand offering.<br />
TNS: Was the negotiation process different?<br />
Chris: Very! It was a culture shock and forced me to<br />
adopt a more integrated approach. I learned to use a<br />
stronger arm on own brand than brand – a competitive<br />
right-hand Clockface position. My approach flexed<br />
from meeting to meeting, retailer to retailer. Plus I was<br />
not just negotiating with the buyers, but also internally<br />
with my own quality, finance and supply chain teams.<br />
TNS: What was the most important thing it taught<br />
you about negotiation?<br />
Chris: <strong>The</strong> importance of team roles. Only have one<br />
leader, one figures person, one observer and one<br />
spokesperson. Don’t jump into a role that’s not yours,<br />
promise the world and leave it to the rest of the team<br />
to pick up the pieces.<br />
TNS: What was the next stage of your career journey?<br />
Chris: I wanted to progress, in seniority and sector.<br />
I was offered a role at Coty and landed in another<br />
totally different proposition – non-food, 1,000 SKUs,<br />
and 98% of them I’d never use!<br />
TNS: Was there a credibility issue negotiating for<br />
brands that you didn’t experience as the end user?<br />
Chris: I preempted it by saying “I don’t use this<br />
product…” But I was passionate about the brands.<br />
For example, Rimmel and the “London Look”<br />
campaign inspired me. I didn’t need to wear make<br />
up to become a brand advocate. <strong>The</strong>n we went<br />
through a huge acquisition, with Coty buying fragrance,<br />
cosmetics and hair care from P&G. <strong>Negotiation</strong>s<br />
became far more challenging with an expectation<br />
of better terms and more investment.<br />
TNS: How did you manage this new, more<br />
challenging negotiation landscape?<br />
Chris: My experience from my previous<br />
roles was invaluable. I was also sent on<br />
<strong>The</strong> Complete Skilled Negotiator which<br />
resulted in many lightbulb moments.<br />
Breakpoints was a mindset shift – focusing<br />
on their walkaway point, not ours. “If you,<br />
then we” was another game-changer.<br />
And to stop giving stuff away for free!<br />
It tapped into my passion for negotiation<br />
and coaching and inspired me to want to<br />
take people through this journey.<br />
TNS: Any final thoughts?<br />
Chris: My career has been about<br />
being uncomfortable, pushing<br />
myself into industries I didn’t<br />
know and product mixes I<br />
didn’t use. But discomfort,<br />
stretch and challenge gets<br />
you the greatest reward.<br />
<strong>Negotiation</strong> is the same.<br />
Get used to being<br />
uncomfortable, and you<br />
will get the best results.<br />
27
KNOW WHAT YOU HAVE<br />
AND WHAT YOU<br />
REALLY WANT<br />
Dr Sarah Federman asks how we can truly know what we want from<br />
our negotiations if we don’t first take a long, hard look at what we have.<br />
During my first semester at<br />
the University of Baltimore,<br />
I taught masters students<br />
negotiation strategies I<br />
had learned from Harvard Business<br />
School and my decade-long career in<br />
advertising. <strong>The</strong>y enjoyed the lectures,<br />
discussions, and simulations.<br />
During one-to-ones and after<br />
reading reflection papers, however,<br />
I started to rethink the course.<br />
<strong>The</strong> financial precarity of many of<br />
their lives concerned me. What good<br />
is it to help people save $5,000 on a<br />
car if they don’t have a retirement<br />
account or any savings?<br />
A deaf student who worked in<br />
construction had no health insurance,<br />
meaning one broken leg would eat up<br />
anything saved in a car negotiation.<br />
Students didn’t understand that school<br />
loans must be repaid even in the event<br />
of personal bankruptcy. Knowing many<br />
students had taken on loans to be in<br />
my classes, I felt a responsibility to<br />
help free them from debt.<br />
TAKING STOCK AS PREPARATION<br />
I redesigned the course. Now early<br />
on, we talk about building a strong<br />
financial ship. Students figure out<br />
their net worth, calculating their credit<br />
card debt and home loans and looking<br />
at their retirement plan and health<br />
coverage. A financial advisor speaks to<br />
the class about financial basics, such as<br />
the difference between a fiduciary and<br />
a stockbroker, the former required by<br />
law to make decisions which serve the<br />
client before themselves. This should<br />
be the first step in any negotiation class.<br />
You have to first know what you have.<br />
This personal financial component<br />
had immediate results. One student<br />
turned down a job promising her an<br />
easier commute and more vacation.<br />
But the salary was not sufficient to pay<br />
off her school loans and cover monthly<br />
expenses. She said learning about the<br />
loans helped her make this decision.<br />
Preparation is in every negotiation<br />
book or seminar. By “preparation”, the<br />
experts mean working out what you<br />
are willing to pay, your alternatives<br />
and your counterpart’s interests and<br />
alternatives. What many neglect to<br />
discuss is how you know. You need<br />
to know where you are and where<br />
you are going, and it’s just as true<br />
for companies. When salespeople<br />
understand their company’s operating<br />
costs, they can feel more confident<br />
negotiating with potential customers.<br />
Negotiating helps you cover your<br />
costs while securing money for your<br />
future. So, how do you know<br />
your future?<br />
KNOWING WHAT YOU<br />
REALLY WANT<br />
<strong>The</strong> course now adds a second<br />
component rarely addressed deeply in<br />
negotiation classes. Students spend<br />
time clarifying not only what they<br />
want, but why they want it.<br />
<strong>The</strong>y consider how the object or<br />
resource will contribute to their lives.<br />
28
THE NEGOTIATION SOCIETY<br />
Unless grounded in what matters most<br />
to us, we can become caught up in egobased<br />
negotiations in which we try<br />
to capture more of whatever is on the<br />
table, whether or not we really want it.<br />
William Ury’s book, Getting to Yes<br />
with Yourself, discusses the importance<br />
of introspection. Decades of helping<br />
people acquire what they thought they<br />
wanted, only to find they were still<br />
not happy, inspired the book. Ury now<br />
urges political leaders, business owners<br />
and individuals to stop and think about<br />
what fulfills them.<br />
Students often tell me<br />
they need more help figuring<br />
out exactly what they want.<br />
My advertising career helped<br />
me understand how marketers<br />
tell people what they should<br />
want. Few are totally immune<br />
to the influence of marketing,<br />
but we can interrogate<br />
its messaging.<br />
People receive more<br />
marketing messages to acquire<br />
something new than to pay<br />
off their debt. Experian estimated<br />
in 2018 that the average American<br />
carries $6,375 in credit card debt, up<br />
3% from the previous year. With a<br />
national average of 17% interest, many<br />
can barely pay off the monthly interest.<br />
Advertising encourages consumers to<br />
believe that buying more is worth it.<br />
One student described the<br />
consumption trap: “I spent my money<br />
buying fancy things to impress my<br />
friends, but became annoyed when<br />
they didn’t seem impressed. Eventually,<br />
I cleaned it all out and started taking<br />
care of myself.”<br />
It might be a shock to accept that<br />
our “wants” may not be our own.<br />
How do we know if what we want<br />
came from ourselves or was planted<br />
in our minds by advertisers, parents,<br />
colleagues, or even a business<br />
competitor? In class we do some of the<br />
difficult work of disentangling that.<br />
I remind students of psychoanalyst<br />
Carl Jung’s observation, “Nothing has<br />
a stronger influence psychologically<br />
on their environment and especially on<br />
their children than the unlived life of<br />
the parent.”<br />
Yes, we go deep. But by thinking<br />
critically about what influences us, we<br />
have a better chance of being fulfilled<br />
when we succeed.<br />
“It might be a shock to<br />
accept that our ‘wants’<br />
may not be our own.<br />
Now, students write an essay about<br />
what they want and why they want it.<br />
<strong>The</strong>y consider and refine their goals<br />
throughout the semester, culminating<br />
in the final assignment – a “Come As<br />
You Will Be” party. Students arrive as<br />
they will be in five years, dressing up<br />
and bringing props like business cards,<br />
book covers and wedding rings.<br />
<strong>The</strong>y stay in character and ask each<br />
other questions about their personal<br />
and professional lives. Students<br />
have created fascinating consulting<br />
companies, talked about improved<br />
health and shared funny stories about<br />
their children, partner and homes.<br />
<strong>The</strong> goal is to be as convincing<br />
as possible.<br />
This celebratory event can be<br />
challenging because it puts everyone<br />
into the driver’s seat of their own lives<br />
and disrupts the unconscious chasing of<br />
something “out there” that will increase<br />
their happiness.<br />
<strong>The</strong> same strategies are useful in<br />
business. Organizations need to know<br />
who they are and what matters most<br />
to them. “Money” as a single goal is<br />
insufficient to inspire the best from<br />
employees. This is why companies<br />
invest in quality mission statements.<br />
Salad shop Sweetgreen’s mission is<br />
to “inspire healthier communities<br />
by connecting people to<br />
real food.” Patagonia, an<br />
outdoor equipment and<br />
clothing company, wants<br />
to “build the best product,<br />
cause no unnecessary harm,<br />
use business to inspire and<br />
implement solutions to the<br />
environmental crisis.”<br />
<strong>The</strong>se are big aspirations<br />
to inspire employees at all<br />
levels to endure the occasional<br />
drudgery of their day-to-day. Being<br />
wealthy and number one are not the<br />
primary goal.<br />
Without being grounded in a deep<br />
knowing of who they are and what<br />
they want, businesses may mindlessly<br />
pursue the competitor’s clients and<br />
miss untapped markets. A sole focus<br />
on beating the competitor can likewise<br />
distract from creating innovative<br />
solutions, so companies become<br />
knock-offs of one another.<br />
A simple sailing metaphor can<br />
get negotiators on the right track.<br />
Know the status of your vessel<br />
and be clear about the destination.<br />
<strong>The</strong>n, use negotiation tactics to<br />
move you swiftly along your way. TNS<br />
29
Get comfortable<br />
with being uncomfortable.<br />
<strong>The</strong>y are arguably the most uncomfortable negotiations you<br />
will undertake in your career, as Angelique Bradford reports.<br />
Having worked as a recruitment<br />
consultant for over 15 years,<br />
I have seen countless job<br />
candidates and employees negotiate the<br />
three negotiation “biggies”: job offers,<br />
counter offers, and the ultimate internal<br />
negotiation, asking for a pay increase.<br />
As a result I’ve borne witness to the<br />
“It’s worth putting some<br />
considered and mindful<br />
thought into how to manage<br />
this all-important first step.<br />
whole gamut of negotiation behaviors,<br />
from bartering and hard bargaining to<br />
the more thoughtful, collaborative style.<br />
I have chosen that word, thoughtful,<br />
carefully: the average worker spends<br />
the majority of their time at work,<br />
meaning they spend more time with<br />
colleagues than at home with their<br />
nearest and dearest. It follows that they<br />
should take this into account when<br />
choosing how they approach these<br />
conversations. After all, these are three<br />
of the most important negotiations that<br />
a prospective candidate will undertake.<br />
<strong>The</strong>y could make the difference to<br />
whether you get an upgrade on your<br />
car, extension on your house, go on that<br />
dream vacation… You get the picture.<br />
For starters, the job offer on so<br />
many occasions, is downplayed as just<br />
a simple transaction at the end of a<br />
journey of interviews. <strong>The</strong> reality is<br />
that this next step for both employer<br />
and employee could be life-changing –<br />
adding tangible value to the employer’s<br />
business, improving the employee’s<br />
financial circumstances, creating new<br />
teams that result in a happier and more<br />
productive workplace. <strong>The</strong> employer<br />
has a candidate<br />
that is going to<br />
make a difference<br />
to the business; the<br />
candidate has a job<br />
that is going to make<br />
a difference to their<br />
lives. This is why<br />
it’s worth putting<br />
some considered and<br />
mindful thought<br />
into how to manage<br />
this all-important<br />
first step in an appropriate way that<br />
not only builds trust from the outset,<br />
but is also more likely to secure the<br />
preferred outcome.<br />
Let’s take a look at best practice<br />
negotiation approaches for these<br />
three big recruitment events.<br />
<strong>The</strong> Job Offer<br />
Look at this negotiation as if you were<br />
in a new relationship. You’ve been on<br />
a few dates and had a good time.<br />
You really like this person, and all the<br />
signs are that this person likes you.<br />
You both decide you are going to make<br />
it official, be that moving in together<br />
or announcing to the world you are<br />
in love. At this point you decide this<br />
is the perfect time to tell them your<br />
name is not John, it’s Bert…oh, and<br />
you have a family. Imagine the surprise<br />
on their face! This is exactly the same<br />
look of surprise an employer has when<br />
a candidate states that they want a lot<br />
more money and more benefits than<br />
were originally discussed at the start<br />
of the journey. <strong>The</strong>y wonder why this<br />
wasn’t mentioned at the start, and<br />
doubt starts to arise in their mind.<br />
If the candidate has not come clean<br />
about this at the beginning, what else<br />
is yet to be revealed?<br />
I have come across this countless<br />
times over the years and have watched<br />
the employer go through various<br />
emotions from doubt, to anger, to the<br />
killer blow – not interested.<br />
How to avoid this undesirable<br />
situation? When a candidate starts<br />
their search for a new role, they should<br />
sit down and look at all the variables<br />
before interviewing. What is<br />
a reasonable salary increase? What is<br />
the going market rate for their skill set?<br />
(We would all love to be earning<br />
a million a year; however it will<br />
significantly narrow the search!)<br />
What benefits are essential and<br />
desirable? E.g. commute time,<br />
working from home, private<br />
healthcare. What is of high value?<br />
What are they less concerned about?<br />
<strong>The</strong>n they should analyze their gives<br />
and takes and set their breakpoint.<br />
From that, the negotiation can<br />
commence with their future employer.<br />
<strong>The</strong>re will always be room to negotiate,<br />
but starting the journey in an<br />
appropriate and relationship-building<br />
way – collaborative not competitive –<br />
provides more room and more<br />
chance of securing a good outcome.<br />
30
THE NEGOTIATION SOCIETY<br />
<strong>The</strong> Counter Offer<br />
From Your Current<br />
Employer<br />
So you have found an exciting<br />
relationship and you can’t wait to<br />
embark on the new journey. You then<br />
have to go back to your old relationship<br />
and tell them that you’re moving on,<br />
possibly using the classic breakup line<br />
“it’s not you, it’s me”. This is when they<br />
decide that they simply can’t afford to<br />
lose you and throw everything at you –<br />
money, vacation, flexible working hours<br />
and more. You feel flattered and begin<br />
to consider their offer. This is the point<br />
to stop and think. Why did you start<br />
looking in the first place? If it was just<br />
money, then you should have asked the<br />
question of them before. Why didn’t<br />
they see your value before you said you<br />
were leaving? If it’s because you don’t<br />
like the environment, the job itself,<br />
the commute etc. – then arguably yes<br />
you will have more money but those<br />
issues will still be there in six months<br />
time. <strong>The</strong> worst feeling in the world<br />
would be for you to look back and<br />
realize you let the other one get away.<br />
<strong>The</strong> Internal<br />
<strong>Negotiation</strong> – Asking<br />
For A Pay Rise<br />
You’ve seen the marketplace change<br />
and have noticed salaries being<br />
advertised with other companies. It’s<br />
the same job as yours but with more<br />
money. You love your job and you love<br />
the company and don’t want to move<br />
on. But the cost of living has increased<br />
and you want more money, and now<br />
you have proof that you are worth<br />
more than you’re currently being paid.<br />
In the past I have seen people come<br />
at this negotiation as if it were hard<br />
bargaining, because they are inside their<br />
own heads worrying that if they ask<br />
it will ruin the relationship; counterintuitively<br />
this causes them to come in<br />
aggressively – “if I don’t get xyz then<br />
I am leaving!” This approach never ends<br />
well, and in fact all that happens<br />
is you are now a flight risk, so what<br />
you were worrying about is happening.<br />
However, if you look at this as a<br />
collaborative negotiation making sure<br />
you have all the facts and figures behind<br />
you then you can open the negotiation<br />
with “Why?” It always helps when<br />
arranging that meeting with your line<br />
manager to let them know what it is<br />
about. This will allow them to look<br />
at it if they can. Get inside their head.<br />
<strong>The</strong>y will now be worrying about<br />
losing you! TNS<br />
31
10<br />
REMINDERS<br />
If you are reading this magazine then it’s probably safe to assume that you are a<br />
highly capable professional, most probably well-rehearsed in the art and science<br />
of negotiation. But even the most practiced negotiators can sometimes miss the<br />
fundamentals of negotiation when busy or stressed. As a refresher, we have compiled<br />
the ten most common oversights when it comes to planning for negotiation.<br />
1<br />
FAILURE TO SET, OR<br />
ALIGN OBJECTIVES<br />
<strong>The</strong> first question we ask at the<br />
beginning of any engagement. What<br />
are your objectives for this negotiation?<br />
What does good look like and, more<br />
important, what’s a bad deal that<br />
we need to walk away from? If the<br />
negotiating team do not understand<br />
the parameters of negotiation, they<br />
are likely to fail.<br />
2<br />
COMPETING PRIORITIES OR<br />
STAKEHOLDERS<br />
Often, we find that different internal<br />
influencers of the negotiation will have<br />
competing views of what is the priority<br />
outcome. <strong>The</strong>se rarely surface at the<br />
commencement of the negotiation itself<br />
but can materialize as the negotiation<br />
unfolds. <strong>The</strong> result is that priorities are<br />
defined in the high-stress environment<br />
mid-negotiation, when no one has time<br />
to properly consider all eventualities.<br />
At this point the loudest voice often<br />
takes precedence.<br />
3 MISINTERPRETATION OF RISK 5<br />
We all see risk in different ways; our<br />
perception is very different. We can, as<br />
a result, find ourselves reacting to low<br />
risk or low importance issues, while<br />
allowing higher impact subjects to<br />
drift. Review of all potential risks using<br />
objective criteria will allow greater<br />
emphasis on critical points and enable<br />
us to plan the risk mitigation as part of<br />
our negotiations.<br />
4 COMMUNICATION FAILURES 6<br />
<strong>Negotiation</strong>s can be derailed purely<br />
due to poor communication. Internally,<br />
with high value negotiations, sponsors<br />
and stakeholders can lose their nerve if<br />
they are not kept appraised of progress.<br />
Externally, we have to be very careful<br />
about what our communications –<br />
especially emails – are saying.<br />
We spend a great deal of time crafting<br />
communications with our clients<br />
and interpreting the meaning behind<br />
incoming messages which, when<br />
reviewed with objective eyes, can be<br />
understood in very different ways.<br />
UNREALISTIC TIMETABLES<br />
This is the single biggest negotiation<br />
of the year, but we are pushing to<br />
conclude it by month end/year end/<br />
boss’s birthday. It is shocking to see<br />
the concessions that are made merely<br />
in order to meet a timetable. Consider<br />
this, on a three year deal, would it not<br />
be better to spend another two weeks<br />
if it will have a material effect on<br />
the outcome?<br />
ESCALATION<br />
It is vital to understand the escalation<br />
path of a negotiation; when to bring<br />
the senior player into the mix and<br />
when it is better for them to stay out.<br />
It is a truism that the more junior the<br />
negotiator, the more likely they are<br />
to say no. <strong>The</strong> more senior, the more<br />
likely that they will say yes. Your skilled<br />
counterparty will work to override the<br />
formal negotiation paths in order to<br />
achieve greater concessions, so this<br />
needs to be planned for.<br />
32
THE NEGOTIATION SOCIETY<br />
7<br />
POWER<br />
In most of the work that we take on<br />
our second discussion is about the<br />
real power between the two parties.<br />
It is usually misperceived, either it<br />
is under-valued or over-assessed.<br />
Both of these can lead to dangerous<br />
judgments in negotiation. Simply put,<br />
power gives you choices and time spent<br />
understanding and influencing the<br />
power balance is always time well spent.<br />
8<br />
TEAM ALIGNMENT<br />
A strong leader is always an asset, but<br />
strong leadership requires humility<br />
and the ability to listen. Often the<br />
success or failure of a negotiation sits<br />
with relatively junior members of the<br />
team. If they are unsure or unconvinced<br />
about the negotiation plan then they<br />
will not be able to negotiate with<br />
confidence. Failure to listen to the<br />
fears of the team could mean that a<br />
predictable danger is overlooked,<br />
with disastrous results.<br />
9<br />
MOVING GOALPOSTS<br />
Trust. Vital if the negotiating team are<br />
to be successful. We often see leaders<br />
setting breakpoints or goals which<br />
are deliberately unrealistic in order<br />
to ensure that their team does not go<br />
soft or give everything away. It is souldestroying<br />
for the negotiation team to<br />
fight for the targets that they have been<br />
set, only for their leader to step in and<br />
break their own breakpoints.<br />
10<br />
“I’VE ALWAYS DONE IT<br />
THIS WAY”<br />
No two negotiations are the same.<br />
No two counterparties think the<br />
same way. Your logic does not have<br />
to correspond to their logic. It is<br />
vital to the success of the negotiation<br />
that we consider all possibilities and<br />
conclusions, understand the commercial<br />
environment and the organization or<br />
people with whom we are negotiating,<br />
then modify our style to optimize<br />
results. Unfortunately, not everyone is<br />
prepared to make those concessions.<br />
All of these issues can be<br />
solved or avoided by stepping<br />
back and taking stock before the<br />
negotiation commences. We hope<br />
that, with these reminders, some<br />
of these common errors will be<br />
avoided in your next negotiation.<br />
Happy hunting!<br />
In <strong>The</strong> Gap Partnership’s consulting<br />
practice, we work with clients every<br />
day to help them strategize, tactically<br />
plan and execute their negotiations.<br />
If you would like more information<br />
on how we can support your business<br />
to achieve the greatest value from<br />
your negotiations, please get in<br />
touch by emailing<br />
chris.atkins@thegappartnership.com<br />
33
QUESTION<br />
Our panel of experts mull over<br />
a thought-provoking question –<br />
is negotiation an art or a science?<br />
Lloyd Barrett<br />
HEAD OF RETAIL ANZ,<br />
THE GAP PARTNERSHIP<br />
<strong>The</strong> answer that immediately<br />
sprang to my mind was art. But why?<br />
Perhaps because of references to art<br />
in negotiation and related disciplines:<br />
the art of selling, the art of<br />
conversation, the art of questioning.<br />
It just feels right to call it an art.<br />
<strong>The</strong> Oxford English Dictionary<br />
defines art as works produced by<br />
human creative skill and imagination,<br />
or a skill at doing something, typically<br />
acquired through practice. <strong>The</strong> more<br />
you do something, the less you have<br />
to think and the easier it becomes, to<br />
the point where you reach mastery and<br />
perform in a state of flow, bypassing<br />
conscious thought. But this is a<br />
dangerous place to be in a negotiation,<br />
making you vulnerable to inappropriate<br />
decisions based on rapid conclusions<br />
made by your unconscious mind.<br />
As a negotiation consultant,<br />
I advocate that you must remain in<br />
a state of conscious competence.<br />
If you slip into your unconscious mind<br />
where skill and artistry reside then you<br />
become susceptible to rash decisions<br />
and illogical tricks of the mind.<br />
<strong>The</strong> ultimate danger is that you stop<br />
being proactive and become reactive.<br />
If art is about creativity or<br />
unconscious execution, science by<br />
contrast can be broken down into<br />
constituent parts – explained, defined<br />
and repeated to achieve consistent<br />
results. <strong>Negotiation</strong> is likewise a<br />
process, albeit a fluid one. Each<br />
negotiation has different people and<br />
circumstances. You can’t unconsciously<br />
reproduce a series of learned behaviors.<br />
To be truly effective you must<br />
consciously call upon identifiable and<br />
definable behaviors, skills and activities<br />
in order to consistently achieve the<br />
desired outcome.<br />
For these reasons, I propose we are at<br />
the dawn of a new field of “negotiation<br />
science”, and negotiation is now more a<br />
science than it is an art.<br />
34
Milena Trentadue<br />
HEAD OF SALES & REVENUE MANAGEMENT<br />
CHURCH & DWIGHT CANADA<br />
In my opinion both art and<br />
science are involved in the drive<br />
to achieve an effective negotiation<br />
outcome. However, for me a satisfying<br />
negotiation is, in essence, an art form.<br />
Science by definition includes<br />
organizing knowledge, observation<br />
and experimentation. All are necessary<br />
to evaluate your negotiation strategy<br />
and determine appropriate variables.<br />
However creativity, or art, is of greater<br />
importance to allow the other party<br />
to perceive value and ultimately be<br />
influenced in your direction.<br />
Think of ballroom dancing. <strong>The</strong>re<br />
is structure, positioning, rhythm and<br />
precision involved, for all dances from<br />
a mambo to a waltz and everything<br />
in between. You must get the timing<br />
and order right to achieve its design.<br />
However, imagine a dance competition<br />
in which you need to step up your<br />
game to win over the judges and<br />
crowd. Using creative elements<br />
such as costume, flair, embellished<br />
movement and smooth transitions<br />
entices your audience, draws them<br />
in and leaves them appropriately<br />
entertained (i.e. satisfied). Simply<br />
relying on structure and form is not<br />
enough to gain the greatest result.<br />
This is perhaps an unconventional<br />
example. But reading it you imagined<br />
a scene that affected your perspective.<br />
Only artistry, imagination and creativity<br />
can do that. Artful, fluid negotiation<br />
brings forth exploration of variables<br />
not even on the table, which can result<br />
in new levels of satisfaction. This<br />
complements the “science” element in<br />
that it invites experimentation.<br />
<strong>The</strong>refore, my negotiation<br />
philosophy is to start with the science:<br />
to categorize and catalogue. <strong>The</strong>n I<br />
take a step back to see the situation<br />
from a creative perspective. <strong>The</strong>n I<br />
take one more step back and begin<br />
choreographing the dance.<br />
Chris Perowne<br />
HEAD OF DESIGN<br />
INITIALS<br />
Within the creative communications<br />
industry, a project’s success is often<br />
the result of an efficient and dynamic<br />
journey from concept through to<br />
production. Reaching an agreed solution<br />
with multiple stakeholders, sometimes<br />
with differing business interests and<br />
always with differing opinions can be<br />
challenging, especially when dealing<br />
with intangibles such as design.<br />
Effective negotiation is therefore hugely<br />
important to navigate this process.<br />
I always prefer a collaborative<br />
negotiation strategy between agency<br />
and client. It relies on the designer<br />
understanding the culture and<br />
preferences of the client, but also a<br />
reciprocal trust that they have their best<br />
interests at heart. Established principles<br />
such as “getting inside their head” can<br />
be applied to make something you<br />
know works for their business, and also<br />
something that they will love.<br />
But what happens when there is a<br />
difference of opinion? Knowing when<br />
to stand by your view and when to<br />
concede is a sophisticated and nuanced<br />
skill. An objective rationale for what<br />
can seem like a subjective design<br />
decision makes negotiating much<br />
more straightforward, but if it actually<br />
doesn’t matter what color it is, or you<br />
can’t justify why you’ve picked a specific<br />
typeface, it is perfectly acceptable to<br />
make concessions. On the other hand,<br />
there are often occasions when years of<br />
professional experience tell you to trust<br />
your instinct and stand your ground. As<br />
the experts, you shouldn’t need to use<br />
too many tricks to convince your client.<br />
<strong>The</strong>se negotiations are only possible<br />
when you connect on a personal level,<br />
using relationships, discretion and<br />
mutual trust to come to an agreement<br />
(9-12 o’clock on the Clockface model<br />
for those in the know). Each negotiation<br />
is as unique as the creative work and<br />
the client who is commissioning it,<br />
and for this reason I would define<br />
negotiation as more of an art than<br />
a science.<br />
Caroline Haimei Wu<br />
PURCHASING CATEGORY<br />
TEAM MANAGER, HENKEL<br />
One summer I prepared a<br />
negotiation proposal for the first time<br />
for my biggest supplier. Sandeep, the<br />
supplier, came into the meeting room<br />
and threw my proposal on the desk,<br />
declaring, “It’s non-negotiable!”<br />
As a junior buyer, I was shocked.<br />
How could we progress? Luckily, my<br />
supervisor was there. She smiled, put<br />
the proposal down and started chatting<br />
with Sandeep. First the weather, then<br />
family, and then she started talking<br />
about the increasing demand of our<br />
plants. Sandeep visibly relaxed, and<br />
said haltingly, “You know, we all need<br />
to survive…” <strong>The</strong> meeting lasted half<br />
an hour. Twenty minutes chitchat.<br />
<strong>The</strong> last ten minutes discussing price<br />
and the final discount of 10%.<br />
After years of working in<br />
procurement – and participating in<br />
several negotiation training courses –<br />
I still remember this case. It marked<br />
the start of a fundamental realization:<br />
people are human, and believe me, noone<br />
is unemotional. Even if they don’t<br />
show it directly and pretend they are<br />
cool, it is there, underlying everything.<br />
In negotiation, it matters who you<br />
are dealing with. Science can give<br />
some guidance, but in the real business<br />
environment it’s an art. You deal with<br />
the person you want to negotiate with<br />
individually. You study what they like<br />
and what they hate. You observe their<br />
emotions, body language, and reactions<br />
to questions. You even notice their<br />
clothing. You draw out all the relevant<br />
information you can. Finally, you come<br />
to a conclusion and formulate a plan to<br />
try and get the deal.<br />
You have treated all sensitive<br />
information appropriately: when to use<br />
the information, when to react, when<br />
to put on your “negotiation face”.<br />
All allow you to construct your<br />
masterpiece and get the deal.<br />
35
Tim Green<br />
No one ever<br />
won a war with<br />
soggy ammo<br />
Recently a small article in a British newspaper caught my eye. A guy – let’s<br />
call him Bill – was in a pub in the north of England, and having paid for a<br />
round of drinks received a pound coin in his change. Nothing remarkable<br />
in that you might say, apart from the fact the pound coin in question, rather<br />
than being gold and silver, was all-silver. As he was discussing his find with the<br />
barman, another customer (let’s call him Ted) said he was a coin collector and<br />
offered him £50 for the £1 coin. Highly appropriately Bill said no. Ted immediately<br />
upped his offer to £100 and even got his cash out to make the deal. Bill again<br />
wisely declined and left the pub happy in the knowledge that he had something<br />
that could be of considerable more value than the £100 offered by Ted, who left<br />
empty handed having lost the chance to secure something that was clearly valuable<br />
for an absolute steal.<br />
As I was reading the article and focusing particularly on Ted’s behavior, I found<br />
myself shaking my head and muttering a phrase that my Great-Aunt Marjorie<br />
used to trot out whenever she felt it was<br />
appropriate (and often when it wasn’t, as she<br />
meandered in and out of increasingly frequent,<br />
sherry-soaked Sunday afternoons getting<br />
“You can’t allow your own<br />
personal desires to overtake<br />
your need to be a negotiator<br />
comatose on our couch): “He should have kept<br />
his powder dry!” (hiccup…zzz).<br />
This expression reputedly originates from<br />
a well-authenticated story concerning Oliver<br />
Cromwell. At the battle of Edgehill in 1642<br />
his troops were about to cross a small stream<br />
to engage the Royalist enemy in the opening<br />
fight of the English civil war. Cromwell gave<br />
a rousing address to lift his troops, which he concluded with the words – “Put your<br />
trust in God, but mind to keep your (gun) powder dry.”<br />
Sage advice, as no one ever won a war with soggy ammo! Translating it to<br />
modern-day parlance the expression is used to mean waiting calmly until you<br />
see how a situation develops before deciding what to do. This piece of advice is<br />
something that negotiators the world over would do well to keep front of mind,<br />
especially when, as in Ted’s case, they are negotiating over something for which<br />
they have a strong personal motivation.<br />
So where did our numismatic friend Ted, like so many negotiators, go wrong?<br />
First and most obviously, he clearly wasn’t in control of himself. You can almost<br />
see the pound signs flashing in his eyes when he spied the rare coin. You can’t<br />
allow your own personal desires to overtake your need to be a negotiator. By<br />
not controlling himself, Ted could never control the negotiation process nor the<br />
36
THE NEGOTIATION SOCIETY<br />
actions of Bill. He was only ever going to either leave the<br />
pub empty-handed or keep paying a higher and higher<br />
price. Feigning ambivalence can be a hard act to pull off<br />
convincingly, especially when you know that you desperately<br />
want the item in question, but it could save you a lot of<br />
money when you reluctantly agree a final price.<br />
In a fascinating article in this edition of <strong>The</strong> <strong>Negotiation</strong><br />
<strong>Society</strong> magazine, my colleague Nick Hunter writes about<br />
auctions. <strong>The</strong>se are an example of the dangers of allowing<br />
your unconscious (and all too often very conscious) desires<br />
to drive your behavior. Being too bold too fast, or not<br />
controlling your desire to own the item in question, can<br />
end up inflating the final price you pay. Once you bid, the<br />
auctioneer knows you’re interested. As you keep bidding they<br />
know you want it. How badly you want it is what they need<br />
to establish, and if they can get other people bidding against<br />
you, then they will always come out on top because your<br />
desire to win will take over, pushing the price ever higher.<br />
Don’t be too quick to share how much you know. Our<br />
ego wants us to look capable and knowledgeable, but playing<br />
dumb can pay dividends when it comes to transactional<br />
negotiations. Offering information about the coin, then<br />
immediately tabling a large sum for it instantly weakened<br />
Ted’s position. As Bill told the newspaper, “it was obviously<br />
worth way more than he offered”.<br />
Don’t say you’re an expert unless you use it as positioning<br />
to shift the other party’s perception of value in your favor.<br />
Casting doubt in the other party’s mind about an item’s<br />
worth by referencing your own expertize can be highly<br />
appropriate. Saying you’re an expert and then setting an<br />
expectation of high value in the other party’s mind that<br />
works against you, as Ted did, is highly inappropriate!<br />
Linked to all of this is the value to be found in taking<br />
time to establish what knowledge the other party might<br />
have about the item being discussed. Effective questioning<br />
could have helped Ted better understand Bill’s own expertize,<br />
or lack thereof, and then have informed him how to<br />
appropriately proceed to secure the coin.<br />
So, the next time you go into a negotiation for something<br />
you really really want, think about Ted, Cromwell and my<br />
old Auntie Marjorie (possibly the world’s most unlikelysounding<br />
trio). Play dumb and keep your powder dry. Which<br />
reminds me – Auntie Marjorie is still alive (amazingly) and<br />
is coming for Christmas this year (depressingly), so I’d better<br />
stock up on sherry. Experience tells me one bottle won’t be<br />
enough… Cheers! TNS<br />
37
OVERHEARD :<br />
CONVERSATIONS IN THE NEGOTIATION SOCIETY<br />
Catch up with negotiation thinking and debate online at <strong>The</strong> <strong>Negotiation</strong> <strong>Society</strong>,<br />
the private group exclusively for our alumni. Here are some recent highlights…<br />
<strong>The</strong> Gap Partnership<br />
<strong>The</strong> Lile ook of <strong>Negotiation</strong><br />
ver the course of six weeks, Chris Atkins shared each<br />
chapter of his newly published <strong>The</strong> Negotiator’s Guide,<br />
and received a fantastic response. Feedback from alumni<br />
ranged from, t’s a perfect intro into the exciting world of<br />
geng beer each day, regardless of what you know, to<br />
With the day to day work, we tend to slip towards bad<br />
habits. This is a uality reminder <strong>The</strong> last word goes to<br />
Steve Gates who commented, People ask what makes<br />
<strong>The</strong> Gap Partnership dierent This series of articles is<br />
simply a must read for anyone who negotiates.<br />
Like Comment<br />
54 11<br />
2d<br />
<strong>The</strong> Gap Partnership<br />
Grow Together<br />
n a timely thoughtpiece from TGP’s consulting team,<br />
Paul radford shone a light on evenue Growth<br />
Management GM, the pursuit of growing revenue<br />
faster than volume. He pointed out that in a retail<br />
landscape of ongoing ux, with suppliers facing<br />
category stagnation and even decline, GM is now a<br />
primary focus for many businesses. He went on to argue<br />
that the success of GM can’t lie solely in the hands of<br />
the supplier, and that cooperation and mutually<br />
beneficial action are essential to success.<br />
Like Comment<br />
36<br />
2<br />
7d<br />
<strong>The</strong> Gap Partnership<br />
3d<br />
eal or No eal<br />
<strong>The</strong> topic of ATNAs est Alternative to a Negotiated<br />
Agreement was tackled by Chris Mercer in an article<br />
that began by describing a classic trick real estate agents<br />
use to maximie the selling price of a house. Going on to<br />
reference rexit and the importance of maintaining<br />
credibility in this area, it concluded with a handy<br />
checklist for successfully delivering a ATNA. n response<br />
one alumni suggested that maybe GAP could use rexit<br />
negotiations as an example of what not to do.<br />
Like Comment<br />
46 1<br />
<strong>The</strong> Gap Partnership<br />
We’re Moving House<br />
Ann Marie Costelloe shared exciting plans to create a<br />
new community platform for all of our alumni with<br />
enhanced functionality and an expanded suite of<br />
negotiation services. She canvassed opinion from<br />
members of the group via a survey, the results of which<br />
are being used to inform and develop the new platform.<br />
For the latest news on this, and to receive early bird<br />
joiner benefits, make sure you regularly check in to<br />
<strong>The</strong> <strong>Negotiation</strong> <strong>Society</strong> online.<br />
5d<br />
Like Comment<br />
42 8<br />
38<br />
To find out more and apply to join, visit thegappartnership.com/alumni
THE NEGOTIATION SOCIETY<br />
CROSSWORD<br />
Our fiendishly challenging British-style crossword returns.<br />
ACROSS<br />
1/27 Dynamic tough egoist retained<br />
to produce broker’s handbook<br />
(3,11,5)<br />
9 Hack giving introductions to heads<br />
of research scoping exercises (5)<br />
10 Superstar in Tactical Plan<br />
Development originally<br />
restrained old dinosaur (8)<br />
12 Winnings regularly found<br />
in pubs (4)<br />
13 See 11 Down<br />
15 See 8 Down<br />
17 Two daughters in sports arena<br />
providing cold refreshment (4,5)<br />
19 Graphic flag mostly complete (9)<br />
20 Measure and depth included (5)<br />
21 Work in French passage available<br />
to all (4-6)<br />
23 Jung analyzed logic around<br />
Completion Review primarily (4)<br />
26 Asian pastry I nip back to<br />
tuck into (8)<br />
27 See 1 Across<br />
28 It’ll become visible by dark<br />
assuming electric company<br />
control ends (9,5)<br />
DOWN<br />
2 Chicken eating, or raised bird (5)<br />
3 Require Geordie journalist to be<br />
assaulted by the sound of it (4)<br />
4 Criticizes one’s group to defend<br />
one’s honor (3,12)<br />
5 Speculation surrounding most<br />
deals, strangely I’ve heard it<br />
before (3,4,3,5)<br />
6 Home alone, gutted, inviting<br />
in person (5)<br />
7 Agreed, — nothing to discover<br />
without working space (2,3,4)<br />
8/15 Consequences of control in proof<br />
we set out after those people accept<br />
current agreement (3,6,2,5)<br />
11/13 Developing general method,<br />
takes man for process of<br />
engagement (11,10)<br />
14 Posh way to take on<br />
universal language (4)<br />
16 Mammal gained energy<br />
consuming chopped liver (9)<br />
18 It’s Wednesday, turns up<br />
revealing lots of tiny beads (4)<br />
22 Execution of monarch after a<br />
key period of decline (5)<br />
24 In the morning husband<br />
lives within religious sect (5)<br />
25 Reportedly, not very pretty fruit (4)<br />
For solutions email<br />
alumni@thegappartnership.com<br />
“Don’t let it throw you - it’s just a negotiating tactic.”<br />
39
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