I’m stunned by how bad so many people are at negotiation. We tend to associate negotiation with not speaking to terrorists, unions going on strike, and other nasty scenarios, but the reality is we negotiate several times a day, every day. Whether it’s agreeing on what to watch on telly, asking your boss for a raise, or trying to get a shag, getting more of what you want comes down to negotiating. Perhaps if we were to rename Negotiation as Getting-more-of-what-you-want then people would take a bigger interest.
there is more to negotiation than bartering. A lot more.
I’ve studied principled negotiation for several years now, and found it a highly valuable skill both in and out of work. But why, I hear you ask, would I want to tell others that they can be better negotiators when all it would do is strengthen their hand when negotiating with me? This point of view demonstrates perfectly what is wrong with most people’s approach to negotiation, where they see negotiation as a pitch battle where I want to sell you a cake for a tenner but you only want to pay a fiver and we barter to a midpoint of seven fifty. The problem here is I walk away feeling I didn’t get paid enough and you walk away feeling you paid me too much. Nobody feels they ‘won’. But there is more to negotiation than bartering. A lot more.
The single most important thing you need to improve the outcome of your negotiations is your BATNA. It stands for Best Alternative To Negotiated Agreement, and it basically means what it would mean to you to simply walk away from the negotiation with no agreement. Everybody has a vague idea of what they’d do if they couldn’t agree but people tend to overestimate its value by accumulating options that are mutually exclusive.
For example if I’m negotiating a starting salary for a new job then in the back of my mind I might have BATNAs of taking a year out to go wakeboarding in the Persian Gulf, or starting up my own company, or going back to art school to do a Masters. Unfortunately most people accumulate these BATNAs as a result of all the dopamine their brain released as a reaction to just considering such wonderful alternatives, resulting in an over inflated BATNA that in this case would see me expecting to be able to fall back into a student’s social life funded by the money my own company is making me while I wakeboard in Abu Dhabi.
Having a realistic BATNA is essential to getting more of what you want
Having a realistic BATNA is essential to getting-more-of-what-you-want as it gives you something finite to evaluate against the other most important thing you need to work out – your fellow negotiator’s BATNA. In some ways this is even more important that your own BATNA and it is equally overlooked. Knowing your opponent’s BATNA is kind of like being able to see their cards in poker. But like poker, if the other person doesn’t really know the rules there’s every chance you’ll end up without an agreement despite offering them something more valuable than their BATNA.
And this is why I want other people to learn to negotiate. Professional poker players don’t play in the huge knockout games in Las Vegas because they attract too many beginners who aren’t familiar enough with the game to make rational decisions. Like the negotiator who is blind to her BATNA, the n00b poker player doesn’t recognise when they are onto a good thing.
Negotiation is all
about coming to an agreement where
both parties feel they
Negotiation is all about coming to an agreement where both parties feel they have won. Instead of me selling you this cake for seven fifty, you agree to buy 3 for twenty which get’s you a better deal per cake, and as my overheads for making 3 cakes aren’t that much more than making one cake I’m also onto a winner.
BATNAs however are not always as obvious as you might think. Take this example paraphrased from Roger Fisher’s excellent book, Getting to Yes. A wealthy western tourist passes through a small village in India while on a day trip. A man by the side of the road who is dressed in rags and appears not to have washed in months is selling exquisite ceramic pots. When the potter explains his works are $10 each the tourist offers $2. He figures the potter is so poor that $2 would be worth a lot to him.
How do you think it turned out? Not as you might expect – the potter refuses to budge and sells a pot to the tourist for $10. But how? The tourist is wealthy and powerful and the poor potter is surely desperate for money? The answer becomes clearer when you consider each person’s BATNA. The potter’s best alternative to negotiated agreement is to try his luck with the next tourist to pass his way, and being India there will be no shortage of them. But the tourist is on a day trip and this is a one off encounter to buy a pot that might not be made anywhere else making his BATNA to not buy the pot and save the money. But seeing as he’s only going to save $10 this doesn’t compare to the value of owning the charming, one of a kind pot, so he agrees to pay up and when he gets home he can boast about how bought it for the paltry sum of $10.
when you encounter someone ignorant of the real value of their BATNA they don’t realise how good a deal you’re offering them and they walk away
The problem is that when you encounter someone ignorant of the real value of their BATNA they don’t realise how good a deal you’re offering them and they walk away, cutting their nose off to spite their face – and for every tourist that realises $10 for the pot is better than just walking away there will be plenty of tourists who refuse to negotiate and miss out.
If I’ve piqued your interest then I can’t recommend Getting to Yes enough, a book which I’ll leave you with one final anecdote from. Do you know how to split a cake between two children without them complaining that the other unfairly got a bigger bit? The solutions is simple genius.
One child splits the cake in two, and the other chooses which ‘half’ they want. This technique isn’t reserved for trivial negotiations though. When a group of third world countries were looking to sell off mining rights to half of their offshore oil fields they feared the big oil companies would use their considerable experience and money to select the best areas for themselves. The solution? The oil companies split the oil fields into two lots and the third world countries chose which ‘half’ they wanted.