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1. Welcome to class . We will begin shortly

2. IMPORTANT DATES ASSSIGNMENT S – May 24 (Fri) MIDTERM – May 31 (Fri) FINAL EXAM: June 7 ( Fri )

3. Part 1– Negotiation: A 30,000-foot view

4. Part 1– Negotiation: A 30,000-foot view

5. Negotiations: A natural gift? Part 1

6. I Thought We Were Negotiating Here?

7. It is important to look at the big picture of ne gotiation. Anyone with the will to learn and improve has the potential to become a world-class negotiator.

8. Negotiation: A natural gift? The best negotiators are self-made, not manufactured by their parents. People can adapt and improve with conscious effort, and, in fact, that is the only path to becoming a good negotiator. Your ability to do well in life’s most important negotiations isn’t determined by your basic personality or genetic structure. It’s most strongly determined by a simple factor: your motivation to improve.

9. Negotiation: A natural gift? The “magic bullet,” when it comes to experiences that enhance negotiation skills, is the I–C–E rule: Immediate feedback (preferably within one hour) Clarity about useful (and useless) behaviors Empirically tested best practices (that don’t require a lot of time and expense)

10. Negotiation: A natural gift? Negotiation is often perceived as a natural gift, but in reality, it is a skill that can be learned and developed. While some people may have innate qualities that make them more predisposed to successful negotiation, such as strong communication skills, empathy, and confidence, negotiation itself involves a combination of strategies and techniques that anyone can acquire through practice and education. While some people may be naturally better at negotiation due to their inherent traits, negotiation is fundamentally a skill that can be taught and honed. With the right mindset, training, and experience, anyone can become a proficient negotiator.

11. Negotiation: A natural gift? Innate Traits vs. Learned Skills: Innate Traits: Certain personal characteristics can give individuals a head start in negotiations. These include being a good listener, having emotional intelligence, and being naturally persuasive. Learned Skills: Effective negotiation involves understanding human behavior, mastering various negotiation tactics, and being able to plan and execute strategies. These skills can be developed through training, experience, and deliberate practice.

12. Negotiation: A natural gift? Education and Training: Many educational programs and workshops are available that teach negotiation techniques. These programs often cover topics like BATNA (Best Alternative to a Negotiated Agreement), the importance of preparation, active listening, and how to manage conflict. Books, online courses, and seminars by negotiation experts can provide valuable insights and practical tips.

13. Negotiation: A natural gift? Practice and Experience: Like any other skill, negotiation improves with practice. Real-world experience allows individuals to refine their techniques, learn from mistakes, and develop a personal style. Role-playing exercises and simulations can be particularly effective in helping people practice negotiation scenarios in a controlled environment.

14. Negotiation: A natural gift? Psychological and Social Factors: Understanding psychological principles, such as the importance of rapport-building and the impact of cognitive biases, can enhance negotiation effectiveness. Cultural awareness and social intelligence are also critical, as negotiation practices can vary significantly across different cultures and social contexts.

15. Negotiation: A natural gift? Continuous Improvement: Successful negotiators often engage in continuous learning and self-improvement. They seek feedback, reflect on their performance, and stay updated with the latest research and trends in negotiation.

16. The magic bullet: Preparation Rehearsing does not equal preparation. There are two styles of preparation, and only one of them works. Let’s call the two styles Pattern X and Pattern Y.

17. The magic bullet: Preparation Preparation is often referred to as the "magic bullet" in contract negotiation because it significantly enhances the chances of reaching a successful outcome. Effective preparation involves several key steps that enable negotiators to enter discussions with confidence, clarity, and a strategic approach. Preparation equips you with the knowledge, strategy, and confidence needed to navigate the negotiation process effectively. By thoroughly preparing, you increase your chances of achieving a favorable outcome while maintaining a positive relationship with the other party. We will take a detailed look at how to prepare effectively for contract negotiations.

18. The magic bullet: Preparation Understand Your Objectives Identify Goals: Clearly define what you want to achieve from the negotiation. This includes your primary objectives and any secondary goals. Prioritize: Determine which goals are most important and which ones are negotiable.

19. The magic bullet: Preparation Know Your BATNA Best Alternative to a Negotiated Agreement (BATNA): Understand your alternatives if the negotiation does not result in an agreement. A strong BATNA provides leverage and confidence. Evaluate Alternatives: Assess the feasibility and desirability of your alternatives.

20. The magic bullet: Preparation Research the Other Party Background Information: Gather as much information as possible about the other party, including their business, needs, priorities, and past negotiation behavior. Interests and Motivations: Try to understand their underlying interests and what they hope to achieve from the negotiation.

21. The magic bullet: Preparation Prepare Your Proposals and Counterproposals Initial Offer: Develop a well-thought-out initial offer that reflects your goals but leaves room for negotiation. Concessions Strategy: Plan the concessions you are willing to make and the order in which you will make them. Aim to make concessions that cost you little but are valuable to the other party.

22. The magic bullet: Preparation Understand the Market and Legal Environment Market Conditions: Be aware of the current market conditions, trends, and competitive landscape relevant to the contract. Legal Considerations: Ensure you understand the legal implications of the contract terms and seek legal advice if necessary.

23. The magic bullet: Preparation Develop a Negotiation Strategy Tactics and Techniques: Decide on the negotiation tactics you will use, such as anchoring, framing, and mirroring. Communication Plan: Plan how you will communicate your points, including the language and tone you will use.

24. The magic bullet: Preparation Prepare Your Team Role Assignment: If negotiating as a team, assign specific roles to each member based on their expertise and strengths. Coordination: Ensure all team members are on the same page regarding the negotiation strategy and objectives.

25. The magic bullet: Preparation Anticipate Challenges and Questions Objections Handling: Prepare responses to potential objections and questions the other party might raise. Scenario Planning: Consider different scenarios and outcomes and plan your responses accordingly.

26. The magic bullet: Preparation Logistics and Environment Meeting Setup: Arrange the logistics of the meeting, whether it’s in-person or virtual. Ensure a conducive environment for negotiation. Materials: Prepare all necessary documents, presentations, and data you might need during the negotiation.

27. The magic bullet: Preparation Psychological and Emotional Preparation Mindset: Enter the negotiation with a positive and flexible mindset. Be ready to listen and adapt as needed. Emotional Control: Be aware of your emotions and manage them effectively. Maintain composure even if the negotiation becomes challenging.

28. The magic bullet: Preparation Pattern X Preparation These activities seem to be useful but aren’t: Rehearsing your demands Pumping yourself up Making a personal pledge to yourself or your partner to act tough Figuring out how to derail the other negotiators or make them feel uncomfortable, which includes rearranging furniture, deliberately arriving late, and making them face glaring light Preparing backhanded compliments and outright insults Rehearsing phrases such as “This is my final offer”; “My bottom line”; “This is a deal-breaker”; “Nonnegotiable”; and “Then we don’t have a deal” Framing your opening offer as a demand

29. The magic bullet: Preparation Pattern Y Preparation These activities are extraordinarily useful, but negotiators often don’t engage in them: Brainstorming all issues under consideration (for example, payment, terms and conditions, indemnities, volume, distribution) Arranging those issues in order of importance or priority to you (either by using a simple rank order or allocating 100 points among the issues to reflect what percentage of overall importance each represents) For each issue, brainstorming all the alternatives (for example, payment terms might range from 0 percent to paid-in-full) Brainstorming issues the other party might care about Identifying your most desirable set of terms for each of the issues Identifying and prioritizing your alternative courses of action to negotiating with this person (for example, liquidating your product) Identifying the other party’s potential alternative courses of action Preparing an opening offer

30. The magic bullet: Preparation Pattern Y Preparation If negotiators did even a subset of these activities to prepare for a negotiation, they would fare dramatically better than if they didn’t. In other words, Pattern Y negotiators have measurably better outcomes than do Pattern X negotiators. Pattern X is more likely to strike out; Pattern Y gets you to yes.

31. The magic bullet: Preparation Pattern Y Preparation Guided preparation is a step-by-step method to follow. Professor Jeanne Brett at the Kellogg School of Management devised an easy-to-follow model that you can use with a single sheet of paper divided into three columns: List all the issues to be negotiated in the first column. (Be ready to add issues the other party mentions.) For each of the issues listed, in the second column, indicate its relative importance to you (by rank ordering or allocating 100 points among the issues), your most desired terms, and your underlying interests. For all issues, in the third column make your best guess about the counterparty’s interests, rankings, and most desired terms. If you have accomplished these three things, you can get some sleep, knowing you have prepared effectively.

32. Your industry is unique (and other myths) Myth #1: Your industry is unique No matter what the industry, negotiators have specific issues that are important to them. For example, a home buyer might focus on price, closing date, and financing terms. A sales manager might focus on price, volume, and rebates. The key thing for both of these negotiators is not the nuances of how closing dates and royalty rates work but rather the fact that they both care about certain issues and may or may not be willing to make concessions in regard to them. Similarly, both a home buyer and a sales manager might have a “bottom line” and might be inclined to make threats. The parallels between negotiations in different industries far out number any differences.

33. Your industry is unique (and other myths) Here’s an analogy. Suppose your child said, “I really want to learn how to play card games, and I need to know ‘card math.’ Can you teach me?” Later that evening, your child says, “Can you please teach me basketball math to figure out players’ stats?” Then at bedtime, “I have to figure out how to do candy math so when I buy candy, I can count the change.” You’d probably say, “I have good news: There’s no difference between card math, basketball math, and candy math. For that matter, there’s no difference between grocery store math, checkbook math, and dessert math. Math is math. There are certain key rules and operators you can use whether you’re playing poker, analyzing basketball stats, or buying lollipops. Once you know the rules, you can use them anywhere.”

34. Your industry is unique (and other myths) You can use the same principles to negotiate with a loan officer that you can with a colleague or spouse. There’s a science to negotiation, and once we crack the code, we can use our skills any time with anyone.

35. Your industry is unique (and other myths) The notion that "your industry is unique" is one of several myths that can cloud the reality of contract negotiation. While industries do have specific characteristics and requirements, the fundamental principles of negotiation are universally applicable.

36. Your industry is unique (and other myths) Myth #2: Businesspeople care only about money This is false. Businesspeople seek to maximize their utility. So do professors, students, home buyers, parents, children, spouses, and professional wrestlers. Your utility is not your money. Your utility represents your overall satisfaction with a particular situation. When I negotiate with my child or someone else, I care about, I want him to be happy, too. So, his happiness is part of my utility, and in my negotiations with him, I am seeking to maximize my utility, which includes my welfare and his. Excellent salespeople know that customers are valuable, so part of their own utility is pleasing the customer.

37. Your industry is unique (and other myths) Myth #3: Always maintain a poker face: Never reveal anything This is false, too. Negotiators who fail to reveal anything are doomed to lose–lose agreements.

38. Your industry is unique (and other myths) Myth #4: Never make the first offer Again, this one’s false. There isn’t a single published scientific investigation that supports this advice in any way. I challenge you to find any scientific evidence that does. In fact, many studies support the wisdom of making the first offer.

39. Your industry is unique (and other myths) Myth #5: Negotiation is an Adversarial Process Successful negotiations often adopt a collaborative approach where both parties seek to create value and find win-win solutions. Focusing on building long-term relationships can lead to better outcomes and repeat business, rather than treating negotiations as a zero-sum game.

40. Your industry is unique (and other myths) Myth #6: The Best Negotiators are Born, Not Made Negotiation is a skill that can be developed through education, practice, and experience. Training programs, workshops, and mentorship can significantly improve negotiation abilities. Even experienced negotiators continue to learn and refine their skills throughout their careers.

41. Your industry is unique (and other myths) Myth #7: Preparation is Overrated Preparation is one of the most crucial aspects of successful negotiation. It involves understanding your goals, the other party’s goals, market conditions, and legal implications. Being well-prepared provides an information advantage that can be pivotal in shaping the negotiation outcome.

42. Your industry is unique (and other myths) Myth #8: Bluffing and Deception are Effective Strategies Bluffing and deception can backfire and damage trust and relationships. Transparency and honesty often lead to more sustainable agreements and better long-term relationships. Maintaining integrity and building a reputation for fairness can be far more advantageous in the long run.

43. Your industry is unique (and other myths) Myth #9: Negotiations End When the Contract is Signed The relationship between parties often continues long after the contract is signed. Effective contract management, communication, and problem-solving are crucial for the ongoing success of the agreement. Regular follow-up and performance reviews can ensure that both parties are meeting their obligations and that any issues are addressed promptly.

44. Your industry is unique (and other myths) Dispelling these myths is essential for approaching contract negotiations with a clear, realistic, and effective mindset. Recognizing that negotiation skills are universally applicable, learnable, and adaptable can empower individuals to achieve better outcomes across different industries and scenarios. By focusing on preparation, collaboration, and value creation, negotiators can navigate the complexities of contract negotiation more effectively.

45. Win–win, win–lose, and lose–lose negotiations Management guru Mary Parker Follett tells a story of two sisters quarreling over a single orange. Both sisters want the orange, and they are willing to fight for it. They state their demands, and the negotiation escalates. Battle weary, the sisters finally agree to compromise and cut the orange exactly in half. One sister squeezes the juice from her half to make fresh orange juice and discards the peel. The other sister grates her half of the peel for an orange scone recipe and throws out the juice. The garbage truck comes and goes with the discarded remains.... In the heat of the argument, the sisters overlooked a simple win–win solution: One sister would get the whole peel, the other all the juice. Tragically, by the time the sisters realized their error, the fruit’s remains were gone. By acting purely competitively, the “Orange Sisters” turned an easy win–win into a lose–lose negotiation. Why? The sisters made demands and stated positions but failed to communicate their interests. Most negotiations contain potential for win–win agreements. For example, had the sisters been willing to reveal what their goals, interests, and intentions were, they might have discovered the win–win solution of giving the entire peel to one sister and all the juice to the other.

46. Win–win, win–lose, and lose–lose negotiations Win–win negotiation is the process of crafting arrangements that represent mutual gains for all parties involved. Win–win deals involve both creating value and claiming value. To create value, we need to cooperate with the other party and genuinely work with their interests in mind. For example, the sisters needed to find it in themselves to ask questions and gain insight about why each needed the orange. When it comes to claiming value, no one wants to get no part of the orange or just a sliver. For this reason, each negotiator must be her own best advocate. And, so, it’s necessary to make claims in a negotiation. But making claims is different from making demands. Claiming value, then, refers to how negotiators garner resources for themselves and their companies. It’s possible to be both competitive and cooperative in a negotiation: competitive about looking after your own interests but cooperative in terms of exploring creative options. Too often, I see negotiators make one of two mistakes: They either concede too quickly—accommodate excessively—or act too tough. Both mistakes can result in win–lose outcomes or lose–lose outcomes.

47. Win–win, win–lose, and lose–lose negotiations Win–win negotiation A true win–win negotiation is a solution in which parties have reached an agreement that cannot be mutually improved upon. Had the sisters come up with the elegant solution of giving the entire peel to one and the entire fruit to the other, this would have been win–win. The term win–win negotiation actually reflects an important economic concept: Win–win solutions lie on what economists refer to as the Pareto Optimal Frontier, after the Italian economist Vilfredo Pareto. A true win–win negotiation is a solution in which parties have reached an agreement that cannot be mutually improved upon.

48. Win–win, win–lose, and lose–lose negotiations Lose–lose negotiation Pareto’s litmus test was simple: If there is no way to improve upon an agreement from the standpoint of either party, the negotiators have reached the Pareto Optimal Frontier. However, if there is another agreement that both parties would prefer or that one party prefers and the other is indifferent to, the negotiators have suboptimized, failing to reach the Pareto Optimal Frontier. When this happens, I call it a lose–lose agreement.

49. Win–win, win–lose, and lose–lose negotiations Lose–lose negotiation These are the tell-tale signs of a lose–lose negotiation: The other party immediately accepted your first offer. You made an offer, the other party counteroffered, and then you agreed to split the difference. You and the other party considered fewer than five potential deals. You didn’t ask the other party any questions. The other party didn’t ask you any questions. Neither party tried to “tweak” the deal to improve it. You revealed nothing to the other party. The other party revealed nothing to you. You negotiated only one issue (such as price). You negotiated more than one issue, but you negotiated each independently of the others.

50. Win–win, win–lose, and lose–lose negotiations Win–lose negotiation Win–lose negotiations happen when one party makes all the concessions, and the other party makes excessive demands. In the orange example, imagine if one sister had been tougher than the other. The tough sister would have gotten the entire orange for herself, and the concessionary sister would have not gotten anything. We call this win–lose negotiation. Win–lose negotiators create problems in long-term relationships because parties often want to get even or hold a grudge.

51. Win–win, win–lose, and lose–lose negotiations Win–lose negotiation Negotiators struggle with the question of whether to be tough and demanding or nice and conciliatory. “Do I want to succeed, or do I want to build relationships?” Sometimes negotiators opt to make concessions and sacrifices because they want the other party to like and trust them, and frankly it’s just more comfortable. The downside: These negotiators perform less well economically. The book move away from the stark choice of being tough versus being soft. Tough, unrelenting negotiators risk not making deals at all (lose–lose), or they may win this one but leave the other party feeling embittered and resentful (win–lose).

52. Win–win, win–lose, and lose–lose negotiations In negotiations, outcomes can typically be categorized into three types: win–win, win–lose, and lose–lose. Understanding these categories helps negotiators strive for the most beneficial results while recognizing potential pitfalls. Understanding the dynamics of win–win, win–lose, and lose–lose negotiations is crucial for negotiators aiming to achieve the best possible outcomes. Striving for win–win scenarios generally leads to more sustainable and positive results, fostering long-term relationships and mutual respect. Recognizing the signs and potential pitfalls of win–lose and lose–lose negotiations can help negotiators adjust their strategies to avoid negative outcomes and work towards more collaborative and beneficial agreements.

53. Four sand traps in the golf game of negotiation Every negotiation table is like a golf course: We may not have played a particular course before, but all courses have sand traps, and it helps to know where they are. If we know where the problem spots are, we’re in a better position to reach our goals. If we hit our ball into a marsh on the first hole, we may never recover.

54. Four sand traps in the golf game of negotiation Sand trap #1: Leaving money on the table Leaving money on the table is a lose–lose negotiation. Lose–lose negotiation, not surprisingly, is the opposite of win–win. On average, people settle for terms worse for both parties in one out of every five negotiations! The problem is that they are unaware that win–win possibilities exist. Leaving money on the table can significantly diminish the value of a negotiation outcome. By employing strategic tactics, maintaining a clear understanding of value, and being mindful of alternative options, negotiators can avoid this sand trap and strive for more favorable agreements that meet their objectives.

55. Four sand traps in the golf game of negotiation Sand trap #1: Leaving money on the table Description: Opportunity Loss: Negotiators may settle for less favorable terms or fail to capitalize on opportunities to create value. Suboptimal Agreements: Accepting the first offer or conceding too early can result in agreements that do not fully align with one’s objectives or interests. Lack of Creativity: Focusing solely on price concessions may overlook other valuable aspects of the deal, such as terms, add-ons, or long-term benefits.

56. Four sand traps in the golf game of negotiation Sand trap #1: Leaving money on the table Strategies to Avoid: Know Your Value: Understand your worth and the value you bring to the table. Conduct thorough research on market standards, benchmarks, and comparable deals. Anchor Effectively: Start the negotiation with a strong anchor or initial offer that is ambitious but realistic. This sets the tone and establishes a reference point for further discussions. Expand the Pie: Look for opportunities to expand the value of the deal for both parties. Identify additional interests, needs, or creative solutions that can enhance overall value. Trade Concessions Wisely: Prioritize your concessions based on their importance to the other party and their cost to you. Aim to trade concessions strategically to maximize overall value.

57. Four sand traps in the golf game of negotiation Sand trap #1: Leaving money on the table Strategies to Avoid: Focus on Interests: Explore the underlying interests and priorities of both parties beyond just monetary considerations. Finding common ground on non-monetary issues can create value and build rapport. Be Patient but Persistent: Avoid rushing to accept the first offer or giving in too quickly. Be patient and persistent in pursuing your objectives while remaining open to constructive dialogue. Consider Alternatives: Evaluate your alternatives (BATNA) and the cost of walking away from the negotiation. Knowing your alternatives empowers you to negotiate from a position of strength. Use Objective Criteria: Base your arguments on objective criteria, such as market data, industry standards, or performance metrics, to justify your position and counter proposals effectively.

58. Four sand traps in the golf game of negotiation Sand trap #1: Leaving money on the table Example: Imagine negotiating a salary for a new job. Instead of accepting the initial offer outright, you conduct research on industry standards and comparable positions. You present a counteroffer based on this research, highlighting your qualifications and the value you bring to the role. Through constructive negotiation, you secure a salary that reflects your worth and aligns with your expectations.

59. Four sand traps in the golf game of negotiation Sand trap #2: Settling for too little This is also known as the winner’s curse. Consider Ron, for example, who was in Kuwait during the Gulf War. During his time of service, Ron was engaged, and he wanted to buy his fiancée a gold necklace before he returned to the States. He spotted the perfect necklace in a Kuwait jewelry store. It was priced at about $600 U.S. dollars. Ron offered the merchant $300. “Sold!” the merchant said immediately, beaming. Ron was proud of his ability to get such a great deal. But the merchant was giddily happy and even offered Ron a free matching set of earrings. Ron’s pride turned into regret. He had fallen prey to the winner’s curse, which occurs when a negotiator’s first proposal is immediately accepted by the other party, signaling that the offer was too generous. When Ron realized he had fallen prey to the winner’s curse, he couldn’t easily retract his offer in good faith. The merchant had already packed the necklace and earrings in a charming gift box and embraced Ron, wishing him “a wonderful married life!”

60. Four sand traps in the golf game of negotiation Sand trap #2: Settling for too little Settling for too little in negotiation can be another significant "sand trap," where negotiators accept terms or outcomes that fall short of their objectives or fail to fully capture the value they could have achieved. Settling for too little in negotiation can result in missed opportunities and undervaluation of your worth. By knowing your value, setting clear objectives, practicing assertiveness, and exploring alternative options, you can avoid this sand trap and negotiate agreements that fully reflect your interests and objectives.

61. Four sand traps in the golf game of negotiation Sand trap #2: Settling for too little Description: Undervaluing Worth: Negotiators may underestimate their own value, leading them to accept less favorable terms than they deserve. Fear of Conflict: Avoiding confrontation or discomfort may lead negotiators to settle prematurely rather than push for better terms. Limited Perspective: Focusing solely on immediate gains or concessions may obscure opportunities for greater value creation or long-term benefits.

62. Four sand traps in the golf game of negotiation Sand trap #2: Settling for too little Strategies to Avoid: Know Your Worth: Conduct thorough research to understand your value, market standards, and the potential benefits you bring to the table. Having a clear understanding of your worth strengthens your position in negotiation. Set Clear Objectives: Define your objectives and priorities before entering negotiations. Establishing clear goals helps you stay focused and avoid settling for less than what you set out to achieve. Practice Assertiveness: Develop assertiveness skills to confidently advocate for your interests and push back against offers or terms that do not meet your expectations. Assertive communication can help you assert your value effectively. Explore Alternatives: Consider alternative options and outcomes if the current negotiation does not meet your needs. Understanding your Best Alternative to a Negotiated Agreement (BATNA) gives you leverage and prevents you from settling for suboptimal deals.

63. Four sand traps in the golf game of negotiation Sand trap #2: Settling for too little Strategies to Avoid: Create Value: Look for opportunities to expand the pie and create value for both parties. Explore additional interests, trade-offs, or creative solutions that can enhance the overall value of the agreement. Stay Calm and Patient: Avoid rushing to accept offers or concessions out of impatience or pressure. Stay calm, composed, and patient during negotiations, allowing for thoughtful consideration of proposals and counteroffers. Seek Feedback: Solicit feedback from trusted advisors, mentors, or colleagues to gain perspective on your negotiation strategy and potential blind spots. External feedback can help you identify opportunities for improvement and avoid settling for too little. Practice Negotiation Skills: Continuously hone your negotiation skills through practice, role-playing, and feedback. Developing strong negotiation skills equips you to effectively navigate challenging situations and secure better outcomes.

64. Four sand traps in the golf game of negotiation Sand trap #2: Settling for too little Example: Imagine negotiating a contract for freelance services. Instead of accepting the client's initial offer without question, you conduct research on industry rates and project requirements. You then present a counteroffer that reflects your expertise and the value you bring to the project. Through assertive negotiation and value-based arguments, you secure a contract that aligns with your worth and objectives.

65. Four sand traps in the golf game of negotiation Sand trap #3: Walking away from the table This is the “hubris” problem. Negotiators who are so prideful that they walk away from the table dramatically even when they have no other attractive options are essentially bluffing. They lack the good sense to swallow their pride and return to the table. I have known several negotiators guilty of hubris. They often dig their own graves because once they have made a take-it-or-leave-it offer, they can’t tolerate the thought of losing face by returning to the table. You may argue that it’s important to display toughness and resolve to the other side. However, earning a reputation for being tough doesn’t serve you well at the negotiation table. Indeed, a reputation as a tough negotiator leads to a number of highly undesirable outcomes—for example, counterparties will treat you with greater suspicion and act much tougher than they normally would. In an investigation of how bargaining reputation affects how others treat you, Cathy Tinsley found that “tough guys finish last,” meaning that people negotiate more aggressively with those who have a reputation for toughness

66. Four sand traps in the golf game of negotiation Sand trap #3: Walking away from the table Walking away from the negotiation table prematurely can indeed be a significant "sand trap" in negotiation, potentially leading to missed opportunities, strained relationships, and suboptimal outcomes. Walking away from the negotiation table prematurely can hinder progress and limit potential outcomes. By carefully assessing motivations, considering alternatives, reframing perspectives, and maintaining open communication, negotiators can avoid this sand trap and navigate negotiations effectively to achieve mutually beneficial agreements.

67. Four sand traps in the golf game of negotiation Sand trap #3: Walking away from the table Description: Impulsive Reactions: Negotiators may walk away hastily in response to perceived obstacles or disagreements, without fully exploring potential solutions. Loss Aversion: Fear of failure or rejection may prompt negotiators to abandon negotiations rather than face the possibility of an unfavorable outcome. Escalation of Conflict: Walking away without attempting to resolve differences can escalate tensions and damage relationships, making future negotiations more challenging.

68. Four sand traps in the golf game of negotiation Sand trap #3: Walking away from the table Strategies to Avoid: Assess Motivations: Before walking away, carefully assess your motivations and the reasons behind your inclination to leave the negotiation. Determine whether it’s driven by emotion, strategy, or a genuine impasse. Consider Alternatives: Evaluate your Best Alternative to a Negotiated Agreement (BATNA) and the consequences of walking away from the current negotiation. Compare the potential outcomes of continuing negotiations versus terminating them. Reframe Perspectives: Reframe the situation to view it as an opportunity for problem-solving rather than an insurmountable obstacle. Adopt a growth mindset and remain open to exploring creative solutions. Pause and Reflect: Take a moment to step back and reflect on the negotiation dynamics, your objectives, and potential areas of compromise. Avoid making impulsive decisions based on frustration or impatience.

69. Four sand traps in the golf game of negotiation Sand trap #3: Walking away from the table Strategies to Avoid: Seek Clarification: Clarify any misunderstandings or points of contention before considering walking away. Open communication and active listening can help identify common ground and resolve differences. Explore Interests: Focus on underlying interests rather than rigid positions. Look for areas of mutual interest and opportunities for value creation that may not be immediately apparent. Re-engage Constructively: If negotiations reach an impasse, consider proposing a break or recess to allow both parties to regroup and reassess their positions. Re-engage with a constructive mindset and a willingness to explore alternative solutions. Maintain Relationships: Recognize the importance of maintaining positive relationships, even if negotiations do not result in an immediate agreement. Preserve goodwill and professionalism to facilitate future interactions.

70. Four sand traps in the golf game of negotiation Sand trap #3: Walking away from the table Example: Imagine negotiating the terms of a business partnership. As discussions stall over pricing and revenue sharing, you feel frustrated and consider walking away from the negotiation. Instead, you pause, reframe the situation, and initiate a collaborative brainstorming session to explore alternative pricing models. Through open dialogue and creative problem-solving, you find a mutually acceptable solution that addresses both parties' interests.

71. Four sand traps in the golf game of negotiation Sand trap #4: Settling for terms that are worse than your current situation The “agreement bias.” refers to the negotiator who is so desperate to make a deal that she literally forgets she has a better alternative elsewhere and accepts the offer in the heat of the moment. For example, if I currently have an offer of $300,000 for my home and your best offer to me is $295,000, it wouldn’t be in my interest to make a deal with you, all other things being equal. Nevertheless, negotiators often get swept away by a negotiation’s momentum. Indeed, once we sit down at the table and invest in a relationship, we often feel bad walking away from it. Simply put, negotiators often rationalize accepting inferior terms. Write your walk-away point on a piece of paper so you can refer to it before you accept a proposal. To prevent this, write your walk-away point on a piece of paper so you can refer to it before you accept a proposal. Obviously, the writing should be encrypted so that the note wouldn’t mean much more than a grocery shopping list if the other party sees it!

72. Four sand traps in the golf game of negotiation Sand trap #4: Settling for terms that are worse than your current situation Settling for terms that are worse than your current situation is a notable "sand trap" in negotiation, as it can lead to negative outcomes and dissatisfaction. Settling for terms that are worse than your current situation can hinder your progress and undermine your interests. By knowing your bottom line, focusing on interests, seeking input, exploring alternatives, and maintaining emotional control, you can avoid this sand trap and negotiate agreements that advance your objectives and well-being.

73. Four sand traps in the golf game of negotiation Sand trap #4: Settling for terms that are worse than your current situation Description: Fear of Conflict: Negotiators may succumb to pressure or fear of conflict, agreeing to terms that are less favorable than their current situation to avoid confrontation. Lack of Confidence: A lack of confidence in one's position or negotiation skills may lead negotiators to settle for less out of uncertainty or self-doubt. Desperation: Urgency or desperation to finalize the negotiation quickly may prompt negotiators to accept unfavorable terms in exchange for closure, even if it means compromising their interests.

74. Four sand traps in the golf game of negotiation Sand trap #4: Settling for terms that are worse than your current situation Strategies to Avoid: Know Your Bottom Line: Define your minimum acceptable terms or "walk away" threshold before entering negotiations. Having a clear understanding of your limits helps you resist settling for worse terms. Focus on Interests, Not Positions: Shift the focus from rigid positions to underlying interests and priorities. Identify what truly matters to you and seek solutions that address those interests. Evaluate Long-Term Implications: Consider the long-term implications of the proposed terms on your goals, well-being, and future opportunities. Avoid sacrificing long-term benefits for short-term gains. Seek External Input: Seek feedback from trusted advisors, mentors, or colleagues to gain perspective on the proposed terms and their alignment with your objectives. External input can provide valuable insights and help validate your concerns.

75. Four sand traps in the golf game of negotiation Sand trap #4: Settling for terms that are worse than your current situation Strategies to Avoid: Explore Alternatives: Assess alternative options and potential outcomes if the current negotiation does not meet your needs. Consider your Best Alternative to a Negotiated Agreement (BATNA) and the feasibility of pursuing other opportunities. Negotiate Incrementally: Break down the negotiation into smaller, more manageable components and negotiate each issue separately. This allows you to focus on achieving favorable outcomes for each aspect of the agreement. Maintain Emotional Control: Manage emotions such as anxiety, frustration, or impatience during negotiations. Stay composed and rational to make informed decisions based on your objectives rather than emotions. Articulate Needs Clearly: Clearly articulate your needs, concerns, and priorities to the other party. Effective communication helps ensure that your interests are understood and considered in the negotiation process.

76. Four sand traps in the golf game of negotiation Sand trap #4: Settling for terms that are worse than your current situation Example: Imagine negotiating a contract for a new job opportunity. The employer offers a lower salary than your current position, but you hesitate to negotiate for fear of jeopardizing the offer. Instead of settling for worse terms, you gather information on industry standards, assess your value, and constructively engage with the employer to negotiate a salary that aligns with your worth.

77. If you have only one hour to prepare... Negotiation does not just occur in used car lots, boardrooms, or lawyers’ offices. You negotiate every day: with your spouse to split up household tasks, with your colleagues regarding who will take a client’s call, with your kids to determine the best time for bed or for curfew....Any time meeting your goals requires the cooperation of others, you must negotiate. Sometimes you have significant time to prepare for a negotiation. But other times you get blindsided: You get a call from an old friend with a “hot” business opportunity. Or you receive a disturbing email from a colleague, claiming resources you believe to be yours. Or your nanny or assistant threatens to leave unless you give her a raise and a three-week vacation. In all these situations, you may feel there’s no time to prepare for negotiation. But even if you’ve got only an hour—or just moments—to prepare, there are several crucial steps you have to take. 1. Identify your real goals. 2. Brainstorm your options. 3. Plan your opening move. Any time meeting your goals requires the cooperation of others, you must negotiate.

78. If you have only one hour to prepare... Identify your goals Negotiators are often quick to stake out a position. A position is a demand, such as, “I want a bonus!” The danger in stating a position is that it can lead the other party to stake out a position, such as, “No way; I’m not paying you a bonus!” Conversely, negotiators who move past positions to focus on their interests usually achieve their goals. A real goal reflects a negotiator’s interests and answers the “why” question. Take the case of two colleagues negotiating who gets the more spacious office in a suite. It would be easy for both colleagues to say, “I want the bigger office.” That is a demand. If the colleagues articulate why they desire the bigger office, they are getting closer to stating their goals. For example, one colleague might want the larger office because it would allow her to have team meetings that are currently impossible to schedule in a conference room, and she is under pressure to deliver on a deadline. The other colleague might want the office to impress important clients.

79. If you have only one hour to prepare... Identify your goals People’s demands may be incompatible, but their goals might be compatible or at least complementary. People’s demands may be incompatible, but their goals might be compatible or at least complementary. For example, if the two colleagues articulate their goals, they might create an arrangement in which they share the big office, reserving it for meetings with clients.

80. If you have only one hour to prepare... Brainstorm your options Negotiations do not always end in mutual settlement. A colleague may pull rank to acquire the big office; the nanny may quit; the company may not take your offer. So, you need to face the thorny question of what you will do in the absence of agreement. In short, what are your alternative courses of action? Most people have tunnel vision when it comes to their alternative courses of action in a negotiation. They are so focused on their demands that they can’t see all the different paths through the forest.

81. If you have only one hour to prepare... Brainstorm your options Identify your options using the four fundamental rules of brainstorming: Suspend your initial judgment and just list all options that come to mind, even outlandish ones. Strive for quantity; often, a good idea emerges from several silly-sounding ones. Reserve judgment and evaluation until later. Mix, match, and combine different options.

82. If you have only one hour to prepare... Plan your opening move Your opening offer should clearly articulate your goal and suggest how to reach it. (“I would like the corner office because my client load is highest in the office, and my team is unable to fit in the current space.”) You don’t need to blurt out your opening offer the moment you meet with the other party. But, at some point, after you exchange pleasantries, it will be your turn to anchor the negotiation. Your opening offer should represent the ideal situation for you. State it clearly but do not position your offer as a demand. One direct but nondemanding way of doing this is, “In the spirit of getting the discussion started, I’ve mapped out a set of terms that works for me....” Another is, “I want to respect your time, so I have prepared a proposal that I would like to get your reaction to....”

83. If you have only one hour to prepare... Plan your opening move Be firm about your interests but flexible on how to achieve them. Don’t make take-it-or-leave-it demands. If you are feeling demanding or indignant before the negotiation, prepare an opening that you might present to someone you care about (such as your spouse or friend)—even if you don’t particularly care about the other party. The danger of making insulting, take-it-or-leave-it offers is that most people will opt to leave it.

84. If you have only one hour to prepare... When you have limited time to prepare for a contract negotiation, it's crucial to focus on high-impact activities that maximize your effectiveness within the constraints of the hour. With only one hour to prepare for a contract negotiation, prioritize tasks that will help you clarify your objectives, understand the situation, and develop a strategic approach. By focusing on key information, defining your goals, and preparing your mindset, you can make the most of your limited preparation time and approach the negotiation with confidence and readiness.

85. Deepak Malhotra Shares His Award-Winning Negotiation Tips