Tuesday, May 7, 2013

Trump Style Negotiation: CH5--Control the Pace of the Negotiation: Use Timing, Deadlines, Delays, and Deadlocks to Your Advantage


 Controlling the pace

  Speed up and slow down when the other side is going too slow or too fast. Do not be shy to react. You obviously don’t want things to go too slow. You also need to time to gather information, analyze data, find a way to satisfy both sides (not just the deal). Make sure that your timing is reasonable. But when you are not sure whether you should go slow or fast, go for slow.



Three techniques

  1. Do not accept any offer right away: If you do, the other side might think that they could have got a better deal. 
  2. Be dubious and indecisive: Say something like ‘I don’t know about that.’ Hook the other side in the deal with their own time investment. 
  3. Don’t do quick negotiation: This usually leads to a win-lose deal. Spend time to work out a mutually satisfactory deal. 

Critical Path

In order to get your timing right, you need to create a critical path. A critical path begins and ends with start and ending (i.e., the outside date) dates of the negotiation. Along the way, you need to set up milestones. Each milestone is characterized with what you’d like to achieve at that point. You also need to figure out time needed to move from one milestone to another such that you will meet the deadline. 
The ending date of negotiation is the deadline when the negotiation is planned to be complete. Otherwise the deal should be aborted. An example of an outside date is when the contract terminates. You either renew the contract by then, or the contract will be aborted. You should plan this deadline ahead of time, even if you don’t know the exact date. Later on, you can replace this date with the real deadline.

Have a Plan B

Create multiple solutions at least for yourself. You might even propose this as an alternative to the other side. For example, you may say ‘If you pay now if I’ll deliver it to you by tomorrow without delivering fee.’
Plan B is also good for emergency exit. Murphy’s Law states that “Anything that can go wrong will go wrong at the worst possible time.” Having plan B is a very good idea.
An example Tactic to Speed Up or Slow Down
If you want to pick up the pace, tell the other side that you need the answer in two days or I’ll go somewhere else. But if you’d like to slow things down when the other side demand your answer in two days, you can say ‘why two days? I’m busy working on something else and won’t be able to get back to you in a week.’ You are not refusing the deadline. You are testing whether the deadline is actually two days. 

Time, Money, and Investment

Cause of the Delay

          One of the major cause of delay is the negotiation involve many people. The schedule of key people is not well fit to the meeting. So, you need to find out at the beginning who are these key people. It will be easier to arrange meeting when you have this information. 
The Invested Time Principle
Time and money are valuable resource. When people invest time and money in the deal (with time and/or money), they’ll be less likely to back down. This is also referred to as ‘invested time principle.’

Use Delay to Your Advantage

  • Use delay to your advantage. Ask for a better deal in order to fasten to the process.
  • Do not let the other side delay. Pressure them. Demand the reason for every delay. Use price, the loss of the deal, or other coercion to make the other side moves.


Deadline and the Deal

          People hate missing the deadline, because it makes them look bad. In fact, they hate it so much that they are willing to take worse deals. A lot of deals are finalized near the deadline.  
Here are a few guidelines about deadline:
  1. People typically wait for the deadline to reach an agreement.
  2. Every negotiation will be dragged forever, unless you have a compelling reason to close the negotiation. So drag! Let the other side spend time and money, and they will not be able to back out. 
  3. The worst deadlines were those imposed by your side.  The deadline imposed to you by your boss is the worst one. You will be pressured by both sides. Ask your by why the time frame is so short. Your boss should be able to give you reasonable answer. Tell you boss that you will get a much better deal if the deadline is flexible.  
  4. Test the deadline. See if all the deadlines are real. If the other side says that the deal needs to be closed by one week. You can test it by saying ‘unfortunately, I have to be out of town for 10 days. Can it wait?’ If so, then the deadline doesn’t really exist. If not, ask the other side to give reasonable explanation and you might learn something valuable. 

Deadlock

          Deadlock is a situation where negotiators cannot agree on something. People dislike deadlock because it looks like a failure. However, if you can control the deadlock, you can use it as a tool.
Initiating Deadlock
Here are the reason why you should initiate a deadlock:
  • It shows your confidence in your position.
  • It tests whether the other side have the same confidence and determination in their position.
  • It checks whether there is a concession which can be offered by the other side to get you to forgo for the deadlock.
  • It shows people on your side that you have done everything you can. If your people think the price can go lower, go for it. Ask the other side to lower the price. If the lower price create deadlock, people on your side would know that you’ve done everything you can. 
  • It can change the pace of negotiation.
          If you initiate the deadlock, always smile and be friendly. Always keep the door open. Do not burn the bridge. You may need to resolve the deadlock you have created. Say something like ‘Think it over. And, if you change your mind, call me.’


Big Organization

          Big organization is afraid of deadlock. Big organization has a lot of hierarchy. Before beginning of negotiation, there must have been a lot of approvals along a chain of command. If they are to change anything, perhaps they would need approvals all over again. 
          Moreover, it is likely that a certain project involves several department working in parallel. If the negotiating agent is having a deadlock, the entire project can be delayed. The agent will have to explain to all the departments why the negotiation is going so slow. 
          Their fear of deadlock is their weakness, and you can use it at your advantage. 


Resolving the Deadlock

  1. Postpone the decision on the item that causes the deadlock  and move on to other issues. Say something like ‘Suppose we agree on the deadlock. What other issues do we have?’ Once you solve all other issues, move back to the deadlock. At this point the other side would have invested a lot of time and money on the deal, they would be softer on the deadlock. 
  2. Offer a small concession and ask the other to do the same.
  3. Go off the record. Talk to other people (perhaps those who have higher authority) who are not there when the deadlock was created. Deadlock are caused partly by ego. So the outsider could act as a peacemaker and resolve the deadlock.
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