Negotiations Psychology

Jim Camp – Start With No

My Opinion

Very useful book on the strategies and tools needed for successful negotiations. Jim Camp presents his system in a well-structured way with many example that make a practical application possible.

Reading Recommendation: 6/10

A negotiation is an agreement between two or more parties, with all parties having the right to veto.

The negotiation really does start with “no”. In any negotiation, this is the key word. Everything that precedes it is mere window dressing. “No” gets you past emotional issues and trivial issues to essential issues. 

“No” is a decision. An early “ yes” is probably a trick and “maybe” doesn’t lead anywhere. “No ” is a decision that gives everyone something to talk about, that helps you maintain control.

In a negotiation, decisions are 100 percent emotional.

Get your counterparts to say “No”. This might be difficult. We all want to be liked, we don’t want to hurt someone’s feelings and we don’t want to come across as too blunt or surly or arrogant or demanding. Therefore, we often say “maybe” or even “yes”. We haven’t had to say the nasty word and our adversary hasn’t had to hear it. This is inefficient. We’re stuck in our emotions and don’t get to the core of the negotiation.

Control your neediness. You do NOT need this deal, because to be needy is to lose control and make bad decisions. Always ask “no-oriented questions”:

  • It’s not always the startup that is needy, investors can be too.  When talking to startups as an investor: “Bill, my name is Bob Jones. I’m not quite sure that we as a venture fund fit where you’re going. I just don’t know. What I’d like to do is meet with you so we can see where you’re going and you can look at where we’re going at our fund and see if there’s a fit. When’s the best time on your calendar?”
  • When asking for a sales appointment: “Well , Mary, I have no idea whether what we do has any relevance for your business. I just don’t know, maybe it doesn’t. If not, just tell me and I’ll be on my way, but if whoever handles your market research…”
  • When cold calling: “Pete, I’m not sure that anything I do fits with you. I don’t know. So if this doesn’t make any sense, just tell me and I’ll get off the phone. Is that fair?”

We use the word “need” much too casually. The only things we truly need are the basics of physical survival – air, water, food, clothing and shelter.

Talking can be an overt showing of need. Talking and showing need go hand in hand.

When emotions run hot and heavy in negotiations, the high – pitched voice is a sure sign of need. The rushed delivery is another sure sign. While needy negotiators raise their voices, negotiators under control lower their voices. So lower your voice in times of inner turmoil. Slow down.

Fear of rejection is a sign of neediness – specifically, the need to be liked.

Urgent closing betrays neediness on your own part. “No Closing” since you don’t need to close.

We compare ourselves to others in order to see how we stack up. When we are with people we think we are ahead of, we feel comfortable. Conversation comes easily and questions seem to have no risk. We feel okay. But in the presence of people to whom we feel inferior, whether culturally, socially, or intellectually, we feel unokay and can become defensive, aggressive or resentful or a lot of other emotions.

Therefore, only one person in a negotiation can feel okay and that person is the adversary. By letting your adversary be a little more okay, you start to bring down barriers.

Effective keynote and afterdinner speaker often tell a self-deprecating story in the first few minutes of his performance. His first implicit message to the audience: “You may be paying me ten grand to stand up here and my suit may be more expensive than yours, but I’m no better than you, I’m just folks.”

Example of a renegotiated contract (before it was due): “You have done such a great job negotiating and we are so incompetent and so weak in negotiating, that we have been a poor supplier. We have put you in a terrible position and we apologize for that. We take responsibility for our ineptness in negotiation.” This was the truth, but it also helped to disarm the adversary.

Every negotiation always needs a mission and purpose. This is true for the whole negotiation and often breaks down into the individual sessions and even single emails or telephone calls. The mission and purpose must always be written. Example: To help [ the other company’s ] management at the very highest level see our company as a new and revitalized organization that is going to change its effectiveness to the benefit not only of their company but also to that of the whole industry by becoming a more effective and competent supplier to that industry.”

Stop trying to control the outcome. Control what you can control, forget the rest. What you can control is behavior and activity, what you cannot control is the result of this behavior and activity .

Goals you can control, objectives you cannot. By following your behavioral goals, you get to your objectives.

The single most important fuel that you have, the most important behavioral goal and habit you can develop, is your ability to ask questions.

The doctor is trying to understand her patient’s case, the lawyer is trying to find out as much as she can about the testifier’s knowledge of the case, and the negotiator must try to see and understand her adversary’s world.

Starting with M&P and going from there, you want to inhabit the adversary’s world, because that is the world about which you need information and that is the perspective from which the adversary makes decisions.

Make sure you explain where you are heading. What’s the vision? Obviously, this needs to be communicated in the world of the adversary. No vision, no real decision: this is a rule of human nature.

Questions not only serve the purpose of helping us control our own neediness and to be unokay. They also have the vital purpose to allow us to move around in the adversary’s world and see what they see and then lead them to a clear vision and decision as well.

Use open-ended questions as opposed to verb-lead questions to obtain further information:

  • “Is this the biggest issue we face?” versus “What is the biggest issue we face?”
  • “Is this proposal tight enough for you?” versus “How can I tighten this proposal?”
  • “Can we work on delivery dates tomorrow?” versus “When can we work on delivery dates?”

Asking good questions is key. Use the four fuels when formulating questions: nurturing, reversing, connecting, and 3+. 

Nurturing should be part of your body language. When you’re seated, refrain from a sudden forward movement, lean back, relax your neck, face and hands. 

The reverse is the behavioral tactic that answers a question with a question, the answer to which will do you some good. 

  • Question: “That was certainly well thought out. By the way, what are your cost constraints?”
    Answer: “We definitely have to talk about that, but before we go there …” 
  • Question: “Interesting. Really interesting. How soon will you be up against a deadline here?” 
  • Answer: “That’s something I hadn’t thought of. When could you deliver?” 

We have a tendency to want to save our adversary, to be liked. This instinct can impel us into these three common negotiating errors 

  • Never answer an unasked question
  • Don’t interpret a statement as a question
  • Never reply to random statements 
  • Example: “I don’t like what I see, Jim.” Many of us will feel an urge to reply in some way, to try to set things right. “Well, Damon, this isn’t written in concrete.” No! Instead ask further open-ended questions or use connectors like “Aaaaaand?” or simply remain silent (also an effective connectors, people don’t like silence)

The fuel “3+” is the ability to remain with a question until it is answered at least three times, or to repeat a statement at least three times 

  • Based on the saying “Tell them what you’re going to tell them, tell them, tell them what you told them.”
  • Important: You are not rushing to close three times but asking for “no” three times (e.g. “Are you really sure, you want to do this?”)

Don’t discuss the price in the early phase of a negotiation.  Example of a Novice negotiator: “It looks good. What’s going to be your discounted price?” The novice provides some number and there he is, locked in for the rest of the negotiation 

Note taking reinforces listening skills. As we take our notes, our concentration is automatically focused on what is being said. Also, as we take notes, we are also allowing the adversary to be more okay by making her feel more important because we are taking notes on what she has to say.

For preparation: Before a negotiation, see that negotiation unfolding in your mind. Picture yourself asking the questions, taking the notes and negotiating with perfect behavior. See yourself relaxed with no expectations, no need and no fear — a perfectly blank slate.

Often there is no more effective way to paint the adversary’s pain than by asking them to tell you “no.” When your adversary carefully considers exactly what this entails, their pain becomes very clear.

Budget breaks down into three budgets that help us account for and control this real price in a) time & energy, b) money and c) emotional investment. 

Be aware of sunk costs when making decisions and don’t be seduced into egregiously violating your mission and purpose.

Time intensifies pain. Build their energy budget. Increase the preparation required by the adversary to complete the deal (“This just doesn’t make sense to us . Can you redo it?”). 

A consumer may not be able to see value if the price of a given product is too low in his frame of reference. On the other hand, he will search for value if the price is deemed high.

Decision-making processes in an organization are driven by people’s need to feel okay. When we walk into a reception area, what is the receptionist fighting for? The feeling of being okay. 

A valid agenda or mini-agenda has five basic categories: 

  1. Problems 
  2. Our baggage 
  3. Their baggage 
  4. What we want 
  5. What happens next 

Any given agenda can include issues in some or all of the categories, but every issue you need to negotiate will fit into one of these five categories. 

Example for 1)

  • “George, I’m new in this business. If my inexperience is going to be a problem in this deal, let’s talk about it now.” 
  • “Yes, now’s a good time. John, the only problem I have with your being new is that if we come up against something you can’t handle with confidence, I want your assurance that you’ll call in someone to help. Someone who really knows how to handle that problem. If that’s okay with you, I’m comfortable.” 
  • “That’s fine with me. Are you sure it’s okay with you?” 
  • “Yes, John. It’s okay with me.” 
  • “All right, that will be our deal. If I can’t handle something with complete confidence, I’ll call my boss to help. That’s our deal. Agreed?”

Try to avoid presentations. By definition, it puts the adversary into the intellectual mode. This only serves to create objections, so you end up answering questions rather than asking them. Example:

  • “We need a presentation on your business.” 
  • “Well, I don’t have any idea how to do that. I really don’t. If I had an idea where you stand, what you need, what you’re interested in, then I’d be happy to address your concerns. That’s what I’m here for. What’s driving you to ask me for a presentation? I mean, why do you want my widget? You’ve been dealing with USA Widgets for seven years. You must have the best price in the world from them by now. How could we ever compete with USA Widgets? Why are you now interested in Widgets International?”
  • “But you called us.” 
  • “Yes, and I’m glad I did. I was interested in how it’s going with USA Widgets. There must be some reason why you invited me to this meeting. You must have some interest in something about Widgets International. I just need an idea what it is.”

Putting it all together:

  • First, you make certain you have a good, strong mission and purpose that’s set in the world of your adversary
  • Second, you make sure that you know the adversary’s real pain. You ask questions, you create vision 
  • Third, you assess all the budgets involved – time and energy, money, and emotional investment – for both you and your adversary. You never forget about these budgets, you monitor them at all times, and you see how they seem to be influencing the decisions on both sides 
  • Fourth, you make certain you’re dealing with the real decision makers 
  • Fifth, you don’t make a phone call, you don’t write an email, without writing down an agenda for that phone call or email 
Negotiations Psychology

Chris Voss – Never Split the Difference

My Opinion

Highly useful tips on the art of negotiation. Ex-FBI Hostage Negotiator Chris Voss describes a range of tools and strategies that can be applied in almost any kind of negotiation. He pairs each tool with a real-life story from his own experience.

Reading Recommendation: 7/10

My Notes

The history of negotiations is closely related to the history of science. From a purely rational based approach (homo oeconomicus) to an empathy-driven one that incorporated the conception of humans as emotionally-driven creatures. 

Voss states: “Negotiation […] is nothing more than communication with results.” As Kahneman and Tversky published their research in the field of Behavioural Economics questioning the fundamental tenets of science back then, the field of negotiation had to evolve centered around “Tactical Empathy”. 

  • For Voss, empathy is “the ability to recognize the perspective of a counterpart and the vocalization of that recognition”.
  • Tactical is one step further aiming at understanding what is behind the feelings of a counterpart to increase leverage in negotiations 
  • If we look very closely at a person and observe their face, gestures and tone of voice a process called neural resonance is triggered. Our brain starts to align with our counterpart helping us to understand better their current feelings.

Fundamentally, this incorporates listening well, recognizing the counterpart’s perspective, gaining their trust and making them feel understood. 

Don’t assume anything. Hold multiple hypotheses and listen carefully. Approach the negotiations with a “mindset of discovery”. 

Don’t be too fast. Voss argues that one of the biggest mistakes we make is rushing the negotiation, making people feel not sufficiently heard. 

Use your voice. Use your light and playful voice to relax your counterpart as a default voice. Use your “Late-Night DJ Voice” in selective circumstances – deep, soft, slow and reassuring. 

Smile. People are much more likely to close a deal if they like their counterparts. Radiate warmth and be friendly. This is part of one of the most fundamental characteristics of humans – their reciprocity. People who are in a positive frame of mind think more quickly and are more likely to collaborate. 

Mirror to connect. Use the last three words of what the counterpart just said. As Voss puts it: “Mirroring is the closest one gets to a Jedi mind trick.” As a reaction, people will elaborate on what they just said and further connection is created. 

  • In a study with two groups of waiters, one group used positively connotated words such as “great”, “no problem” and “sure” to confirm the order. The other group repeated the order back mirroring what was just said. The latter one received 70% more tips on average. 
  • Implementation tip: Start your mirror with “I’m sorry…”. Wait at least four seconds for the mirror to work. Repeat. 

Label to create validation. Labeling is verbalizing your counterpart’s feelings creating validation. Show them that you understand how they feel. 

  • In one brain imaging study the psychology professor Matthew Lieberman of the University of California found that people react with fear to photos of faces expressing strong emotions. If this emotion is however labeled, the brain activity moves from the amygdala (the part that generates fear) to other areas that govern rational thinking. Labeling emotions decreases their intensity. 
  • Labels always start with 
    It seems
    It sounds like
    It looks like
  • Avoid the word “I” because it creates the impression that you are more interested in yourself than your counterpart. 

Accusation Audits for labeling fears. Preface the conversation by labeling your counterpart’s greatest fears. We all do this intuitively. “I don’t want this to sound meant …” or “I don’t want to seem like an asshole…”. Doing this systematically however requires you to collect all negative things your counterpart could say about you. When labeling these negative things your counterpart’s reaction will be to add nuance and details to these aspects that provide further connection and a sense of understanding. (e.g. “You must think we are this big, bad prime contractor trying to push out the small businesses.”)

Start with ‘No’. Give your counterpart the opportunity to disagree. This is where the negotiations start. Saying ‘No’ creates a sense of control that is crucial for your counterpart to feel secure. 

No can mean different things. 

  • “I am not yet ready to agree.”
  • “You are making me feel uncomfortable.”
  • “I do not understand what you mean.”
  • “I don’t think I can afford it.”
  • “I want something else.”
  • “I need more information.”
  • “I want to talk it over with somebody else.”

If your counterpart says ‘No’, ask “What about this doesn’t work for you”, “What would you need to make it work”, “It seems there’s something here that bothers you” to learn about the real meaning of their ‘No’. 

In negotiations, everybody is driven by two primary needs: “The need to feel safe and secure and the need to feel in control”. ‘No’ gives your counterpart the opportunity to fulfill these needs and functions as a pause to slow things down.

Sometimes you need to antagonize your counterpart into ‘No’. If your counterpart isn’t listening, deliberately mislabeling their emotion is an effective method to listen and correct your statement. 

Paraphrase to show that you understood your counterpart’s argument. The goal of paraphrasing is to create “That’s right” as a response. 

Combining the tools to achieve your goals. 

  • Effective Pauses
  • Minimal Encouragers (‘Yes’, ‘Ok’, ‘I see’)
  • Mirroring
  • Labeling
  • Paraphrases
  • Summary

Use deadlines to create a sense of urgency. It’s the fear of a potential loss that makes deadlines so effective. But be aware if you are under a deadline and don’t overestimate its importance. As Voss writes: “Deadlines are often arbitrary, almost always flexible, and hardly ever trigger the consequences we think – or are told – they will. 

Understand that the need for fairness is hardwired into humans.  A decade of brain-imaging studies shows that “the human neural activity, especially in the emotion-regulating insular cortex, reflects the degree of unfairness in social interactions.” This is equally true for nonhuman primates. In a study, two primates were unequally rewarded for performing the same task. The one that was less rewarded “literally went bananas.”

In a negotiation, follow these guidelines to gain leverage:

  • Bend your counterpart’s emotions and manage expectations by performing an accusation audit before making an offer
  • Unless you have an information advantage, let your counterpart go first with his offer.  
  • If you anchor a price, use ranges. “At Corp. XYZ people in this job get 110,000€.”
  • Pivot to non-monetary terms. Find out what is cheap to them and valuable for you. 
  • When talking numbers, use odd ones. This shows that you have put a lot of thought into it.

Create the illusion of control but asking open-ended, calibrated questions. “We learned that negotiation was coaxing, not overcoming; co-opting, not defeating. Most importantly, we learned that successful negotiation involved getting your counterpart to do the work for you and suggest your solution himself.” Instead of saying “You can’t go.” say “What do you hope to achieve by going?” 

As an old Washington Post editor named Robert Estabrook once said: “He who has learned to disagree without being disagreeable has discovered the most valuable secret of negotiation.”

Using calibrated questions takes the aggression out of a confrontational statement. Furthermore, your counterpart will be encouraged to speak. 

Some evergreen calibrated questions: 

  • “What is the biggest challenge you face?”
  • “What about this is important to you?”
  • “How can I help to make this better for us?”
  • “How would you like me to proceed?”
  • “What is it that brought us into this situation?”
  • “How can we solve this problem?”
  • “What’s the objective? / What are we trying to accomplish here?”
  • “How am I supposed to do that?”

Don’t use “why”. It will always trigger a defensive reaction. 

We can use the word ‘No’ four times before actually saying the word.

  • “How am I supposed to do that?” (request for help)
  • “Your offer is very generous, I’m sorry, that just doesn’t work for me.” (soft and build empathy)
  • “I’m sorry, but I’m afraid I just can’t do that.” (inability to perform can trigger further empathy)
  • “‘I’m sorry, no.” (a softened version of just ‘No’)

Active listening goes beyond just the words. The 7-38-55 rule states that only 7 percent of a message is communicated verbally. 38 percent is based on the voice and 55 percent on the body language of your counterpart. Look for incongruence between the three components to spot lies or unresolved problems. 

There are three types of negotiators. The analyst, the accommodator and the assertive.

  • Analysts are methodical and diligent. They love details and will perform extensive research before every negotiation. 
  • When dealing with analysts, come prepared. Use data to back up your arguments.
  • Accommodators are sociable, peace-seeking, optimistic and easily distracted. 
  • When dealing with accommodators, listen well and be friendly. They will value it. Also, be careful since they might leave out potential problem areas to avoid conflict. 
  • Assertives believe time is money. All they care about is winning. They have an aggressive and direct communication style. 
  • When dealing with an assertive person, make sure to first understand their point. Only then they will listen to you. 

When it comes to bargaining, use the Ackerman model:

  1. Set your target price (your goal)
  2. Set your first offer at 65% of your target price
  3. Calculate three raises of decreasing increments (to 85, 95, and 100%)
  4. Use lots of empathy and different ways of saying “No” to get the other side to counter before you increase your offer.
  5. When calculating the final amount, use precise, non-round numbers. It gives the number credibility and weight
  6. On your final number, throw in a non-monetary item (that they probably don’t want) to show that you’re at your limit. 

“In every negotiation, there are at least three Black Swans, three pieces of information that, were they to be discovered by the other side, would change everything.”

There are three kinds of leverage. Positive, negative and normative leverage. 

  • Positive leverage: You can give (or withhold) what your counterpart wants
  • Negative leverage: The ability to make your counterpart suffer. You can threaten him to take something away he currently owns (strong due to loss aversion)
  • Normative leverage: Using your counterpart’s norms and standards to your advantage. 

Stichting it all together: your preparation before a negotiation.

  1. Write down your goal (best-case scenario).
  2. Prepare a summary. Write down in just a couple of sentences the facts that have led to this negotiation. Why are you here? What do you want? Why are they here? What do they want?
  3. Prepare three to five labels to perform an accusation audit. 
  4. Prepare three to five calibrated questions. 
  5. Prepare a list of non-cash offers possessed by your counterpart that would be valuable.