Friday, May 10, 2013

Trump Style Negotiation: CH6--Harness the Power of Human Nature-- Psychological Negotiating Tactics


Making Friends or Enemies

   Once human becomes friends or enemies, it is virtually impossible to change. So, make friends and avoid making enemies. Again, in any negotiation, do not focus on the deal. Focus on building a long-term relationship. Begin the negotiation by talking to the other side. Find what they need. Try to satisfy what both of you can live with. 






Aura of Exclusivity

It is easy to sell something unique. If your item is not that unique, you need to create an atmosphere to maintain the aura of exclusivity. Think. What can you offer that the other side cannot get elsewhere. Envy People wants what they can’t have or what others want. Try to create competition. If it is an auction, the value of the items gets greater as the number of bidders increases. Overwhelmed by Complexity People fear complexity. They might not look at it and not make decision. So break complex things down into simple pieces. Make it easy to digest.

Aura of Legitimacy

People believe in what is seemingly true or legitimate. Examples are anything in writing (e.g., price tag, newspaper, television), or words from a powerful person. A sale price tag may just be made up by the store to attract you. News, either in newspaper or magazine, may just be the interpretation of columnists or reporters. When the president Bush announced that Saddam Hossain has weapons of mass destruction, everyone believed him. It took us three years to know that there’s no weapon of mass destruction in Iraq. So create aura of legitimacy in your negotiation. Gather information and show reference to the other side. You may even get powerful person to speak for you. Also, you have to be careful. When the other side tries to use aura of legitimacy, don’t get too excited. Calmly assess the legitimacy. Don’t be fool by aura of legitimacy.

Superiority

People have an innate fear of superiority (e.g., having more money or more intellect). If the other side is more sophisticated, you need to find a way to match that. Do not let the other side over power you. Also, do not over power the other side. Every one prefers dealing with equal peer to those with superiority.

Dumb is Smart

You don’t have to show off what you know. There are two reasons for this. First, people hate the one which likes showing off. Second, you don’t want to give out too much information by trying to be smart. Just play dumb and collect information.

Zipf’s Principle of Least Effort

People are not willing to spend effort. If you prepare the document, they might not find what you left out or added.

Free Stuff

People like free stuff. Sometimes, they even forget to assess how much the free things worth. Usually, free stuff worths much greater than when your offer is to discount the item by the same dollar amount (of the free stuff).

Mutual Exchange

People believe in mutual exchange: If I do something for you, you should give me something in return. Here is how it works. First, make a list of issues and ask the other side ‘if we can solve all the issues, do we have a deal?’ If the answer is no, keep update the issue until you get a ‘yes’. Next, prioritize the list. Identify what you must have and what you can give up. You may exchange something you can give up for things you need. But you need to convince yourself and other that all things are equally important. Note that the exchange does not have to be one to one. You may give up 3 items in an exchange for an important item. 

Simple Solution

          Everyone likes simple solution. Offering simple solution will help you move forward faster. Here are examples of simple solution. 

Splitting the difference

Suppose you are the buyer and the other side is the seller. You want to get an item at $20,000, but the price tag is $80,000. Suppose you know how much you and other side can live with (i.e., satisfied)--$25,000 and $26,000, respectively. You can ask the other side to split the difference. In other word, the price would be halfway of what you ask for (i.e., $20,000) and what the other side can live with (i.e., $25,000)

Maybe Later

          When the negotiation gets so heated that nothing works. Tell the other side that you’d like to discuss about it later. Leave!

Third Party

          You can also tell the other side to leave the decision to  another person (e.g., boss of the other side).

Think Outside the Box

          No one likes deadlock. If you can propose a creative solution, both sides will be willing to consider it. 

Weaknesses

          Everyone has weakness. And, most people do not accept it. You need to accept it, and you need to find a way to cover up your weakness. If you’re weak in calculation, bring in a calculator. If you’re not good at details, tell the other side ‘I need to have my lawyer review this document’. 
          On the other hand, find the weakness of the other side. The chance is the other side will not accept that they are weak. If that their choice, that’s their choice. You can exploit their weakness as much as you can. 

Admit Your Mistake

          Humans has tendency to forgive. If you mess up something and you try to defend yourself, the argument will heat up and you will lose anyway. Just say ‘I make a mistake.’ The other side will have nothing more to say to you. And, if you say ‘ I know I made a mistake. But if you don’t help me out, it will cost my job’, most people, not everyone, will try, more or less, to help you. Admitting your mistake is your strength, not weakness.

Deadline

          Most people hate deadline. They believe that all deadlines are equal and not meeting any of them is equal to disaster. A skilled negotiator needs to assess how important each deadline is. Some could be very serious. Other could be a made-up one. For example, if you say ‘I have to catch a plane at 3 pm. So you need to make the decision by 2.15 pm.’, you will have great advantage over the other side.

Invested Time Principle

          People hate wasting time and money. If the deal does not go through, the party that invest more will lose more. Make the other side invest as much time and money  as they can.

Power Limit

          People are aware of their constraints, e.g., time and money. They will not perform effectively when they are running out of time or money. Try to learn power limit of the other side and use it to your advantage. 

Aim high and hold back. 

Be patient. Hold back your best offer and concession. Do not accept anything for the price tag. Negotiate. Always end with something like 
A: How much is this item?
B: $5,000
A: It’s a good item. But it’s too pricy. If you can lower the price, I might consider buying it.
B: How much are you willing to pay for it.
A: $2000
B: I can’t possibly sell you for that price. How about $3500?
A: That’s the start. But you’ve gotta do better than that ...
At the end you may end up saying 
A: ‘It’s a bit expensive, but I can live with it. So I’ll take it.”
          If you are a seller, on the other hand, do not give free things away so easily. You need to make the other side appreciate the value of the free things. Don’t tell them that it’s free. Negotiate with them make them agree to pay dearly for it. Then, you can tell them that it’s free. They will appreciate what you give them. 

Use All the Tactics

          In any negotiation, you should use all the tactics mentioned above. Make the deal simple so that the other side can understand the deal better (Zipf’s principle of least effort). Lure the other side with free and exclusive stuff, but put deadline into it. Find a reference or credible statistics to support your argument. These things will help you in the negotiation process.


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Book or Audiobooks?

Personally, I prefer audiobooks. It's fun, and I can listen when I'm doing something else. It also makes other activities (e.g., jogging) a lot more fun. For more detail about audiobooks, please read [this post].

There is one more reason that may encourage you to go for the audiobook version. You can get it now for FREE. Audible offers you a free trial for 14 days. Even if you get the book and cancel the subscription right away (so that you don't have to pay), you can keep the book. And, don't worry if you lost the audiobook file. Just log into audible.com. You can keep downloading the over and over again.
About the summary: It takes time to finish up a book. And, when you do, sometimes, you want to review what you learn from the book. If you do not make  notes as you read, you might have to go through the book once again. This can be time-consuming when you are dealing with a book. But you can still flip through the book and locate what you are looking for.

However, when the material is an audiobook, it is extremely hard to locate a specific part of content. Most likely you will have to listen to the entire audiobook once again.

This book summary will help solve the pain of having to go through the book all over again.

I am leaving out the details of the books. Most books have interesting examples and case studies, not included here. Reading the original book would be much more entertaining and enlightening. If you like the summary, you may want to get the original from the source below.

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