Negotiationrocketspace Handoutspdf

Negotiation Skills
Brian Worsfold
© Ashridge Executive Education 2017

Why Me?
Pre-Ashridge Experience Ashridge Teaching Experience
Corporate Strategy
Banking
Venture Negotiation
Capital
Influencing
Corporate
Innovation Hub
Collaboration
M&A and
M&A/
Partnerships
Partnerships
Strategy
Director Innovation

Proposed Agenda
• What is a negotiation?
-Principled vs distributive negotiation; and achieving a good negotiation
• Preparing to negotiate
-Understanding other parties to the negotiation; knowing your BATNA and recognising
emotional as well as rational drivers in a negotiation;
• Negotiating strategies and tactics

-Influencing others and building trust; when to be collaborative and when more
transactional, handing competitive tactics;
• What would you most like to

• Protecting your interests post negotiation get out of the next 2 hours?
-Contracts and lawyers; Keeping interests aligned; • Is there anything else you
would like to add?
What is negotiation?
In pairs please discuss the following questions:
1. What do we mean by the term ‘negotiation’?
2. Based on your experiences to date and without breaching any

confidences:-
• When does a negotiation go well? …or
• When does it go badly?

Nelson Mandela:
Only free men can Orlando A.Battista: Joseph Joubert:
negotiate. The fellow who says Never cut what you
Prisoners cannot he'll meet you can untie.
enter into halfway usually
contracts. thinks he's standing
on the dividing line.
J. Paul Getty:
My father said: "You must
never try to make all the
Otto Von Bismarck: money that's in a deal. Let the
When a man says that he Chester L.
other fellow make some
approves something in principal, Karrass:
money too, because if you
it means he hasn't the slightest In business, you
have a reputation for always
intention of putting it in practice. don't get what you
making all the money, you
deserve, you get
won't have many deals.
what you negotiate.
Marvin Gaye: Keiser:

Negotiating Prepare by knowing your walk away conditions and by
means getting the building the number of variables you can work with
best of your during the negotiation... you need to have a walk
opponent. away... A combination of price, terms, and
deliverables that represents the least you will accept.
Without one, you have no negotiating road map.

To negotiate…
• “To hold communication or

conference with another for the
purpose of arranging some matter
by mutual agreement; to discuss a
matter with a view to some
settlement or compromise”
• Oxford English Dictionary
• A process to get the outcomes you need, in a

way that is acceptable to others…’
(my preferred definition)
Achieving a good negotiation
© Ashridge Executive Education 2017 RE: K.Thomas & R.Kilmann

Distributive negotiations
Hard Hard
“Winning at all costs” “Winning at all costs”

•Other party = adversary •Other party = adversary
•Demanding concessions •Demanding concessions
•One sided gains as condition of •One sided gains as condition of
relationship relationship
•Digging in •Digging in
•Making threats •Making threats
•Applying pressure •Applying pressure
•Generating distrust •Generating distrust

Distributive negotiations
Hard Soft
“Conceding everything necessary to

“Winning at all costs”
reach agreement”
•Other party = adversary
•Other party = friend
•Demanding concessions
•Making concessions
•One sided gains as condition of
•Accepting losses to develop
relationship
relationship
•Digging in
•Changing position easily
•Making threats
•Making offers
•Applying pressure
•Yielding to pressure
•Generating distrust
•Building trust

The criteria of a good negotiation
1. Should produce a wise
agreement, if agreement is
possible
2. Should be efficient
3. Should improve – or at least not

damage – the relationship
between the parties

Principled Negotiation
Hard Soft
CHANGE THE GAME!
“Conceding everything necessary to

“Winning at all costs”
reach agreement”
•Other party = adversary
•Demanding concessions Principled Strategy •Other party = friend
•Making concessions
•One sided gains as condition of
relationship (PIES) •Accepting losses to develop
relationship
•Digging in
•Changing
•Other party viewed as joint problem position easily
solver
•Making threats
•Demonstrates a desire to get•Making
to reach aoffers
wise
•Applying pressure
•Yielding to pressure
outcome amicably and efficiently
•Generating distrust
•Building trust

Principled/Interest Based Negotiation
What is it?
1. Separate People from the problem

a) Perception, b) Emotion, c) Communication
2. Focus on Interests NOT positions

Interests define the problem; what’s the driver?
3. Explores a variety of Options and possibilities

Prevents ‘fixed-pie’ perspectives
4. Result to be based on objective Standards

Increases sense of ‘fairness’
R. Fisher and W. Ury:- “Getting to Yes”

Making the PIES bigger
• Separate the people from Good
People the problem

Negotiating
• Focus on interests, not

Interests positions
Explore • Generate a range of options

before deciding what to do
Options
• Insist that the result be based
Standards on some objective standard
After. R. Fisher and W. Ury:- “Getting to Yes”

• Preparing to Negotiate

Negotiation Process
Preparation
Determines strength of your position when
entering negotiation
Problem Definition
Both parties seeking solution to a problem ‘Opening’
Clearly define before looking for a solution ‘Exploration’
Problem Solving
Where ‘trading’ takes place – offering &
‘Bidding’
receiving concessions
Completion
‘Closing’ the deal. ‘Agreement’
Making sure it is watertight ‘Close’
Understanding other parties and their drivers
How might the following parties view a financial transaction with
your organisation?
Merger Partner, Joint

Venture or Trade Buyer
Customers and Suppliers
How do they perceive Risk and Value? What else might be

important to them?
Know when to walk away!
‘Best Alternative To a Negotiated Agreement’

[Fall-back position]
 What is your best option if negotiation does not

conclude in agreement?
You might also want to think about your WATNA if your BATNA doesn’t work out!
© Ashridge Executive Education 2017 R. Fisher and W. Ury:- “Getting to Yes”

Is the timing right to do the deal?
• Is the timing good or bad for the deal?
• Where are we in the economic cycle?
• Are there any age related factors

going on in the board rooms?
• What is our relative financial position

now vs in 12 months time?
• If we don’t do the deal, will our

competitors do it?

Separating emotion from logic and avoiding
other traps in decision making
Reasons for bad decisions:- Safeguards to prevent this:-
• Misleading experiences • Experience, data and analysis
• Misleading pre-judgements • Debate and challenge
• Inappropriate self-interest • Governance
• Inappropriate attachments • Monitoring

*Think again – Why Good leaders make bad decisions and How to keep it from
happening to you – Sydney Finkelstein, Jo Whitehead and Andrew Campbell – 2008

Set Targets for the Negotiation
• Always set targets Be realistic.
• Why? Negotiating is
• Clarify, focus and protect your interests about trading
• Reflect objectives concessions, so
• Show allowable concessions and concession patterns you MUST have
• Determine the scope of the solution items in all three
• Aim for the best deal. categories.
• You can always trade down but it is more difficult to trade up.
• Now in your mind divide the variables into:
Musts: Ideals: Loss leaders:
those things you
what you feel what you prefer
are prepared to
you must take to achieve to
trade in order to
from the table if make the ‘ideal’
close a deal
the deal is going deal
(even if you would
to be acceptable
prefer to keep
to you
them)

Planning Summary
1. Gather & summarise
• ‘The only place where information
success comes before work
is in the dictionary’. 2. Consciously see it from the
• Successful negotiators do other party’s point of view
their homework.
• Identify the other party’s 3. Set your targets, consider
needs their targets. Plan fall-backs
• Prepare to conduct the 4. Plan more information
meeting gathering
• Group Negotiations
• Clear allocation of roles 5. Plan concession patterns –
• Rehearsal the cost and value of your
concessions

• Negotiating strategies and tactics.

Negotiation Process
Preparation
Problem Definition
Problem Solving
‘Bidding’
Completion
Building Trust can be helpful and this
is a two way process…..
Trust = Credibility + Reliability + Intimacy
Self-orientation
D. Maister.
How do you think you are perceived by the party you want to negotiate
with? How do you perceive them? What can you do to change this?
Adapting your influencing styles to
achieve more affective outcomes….
Do you have a
preferred style (s)?
How easily can you

adapt your
approach?
Knowing how and when to use

different influencing approaches
is a key skills in negotiations.

The Science of Persuasion: Cialdini’s Six Principles
•People like those who like them
Liking •Make friends to influence people – establish similarities, common ground,
opportunities for co-operation, areas for genuine compliments & appreciation
•People repay in kind

Reciprocity •Be the first to give – you then me, then you, then me, offer
•concessions, information
•People follow the lead of similar others

Social Proof •Show responses of several others – use examples, testimonials,
evidence of past success
•People align with their clear commitments

Consistency •Build commitment – from public positions to voluntary choice
•People want more of what they have less of

Scarcity •The rule of the rare – emphasise genuine scarcity, unique features,
exclusive information
•People defer to experts

Authority •Showing knowing – your professionalism, credentials, industry or
environment knowledge, admit your weaknesses first.
Source; Dr R Cialdini :Harnessing the Science Of Persuasion HBR Oct 2001
How might you use these in one of your negotiations?
When to be more transactional and
when more collaborative…..
• More transactional • More collaborative
where there is no where there is an
ongoing relationship; or ongoing mutual
dependency
• The future can be
planned with more • When the future is less
certainty and the certain and less able to
relationship managed plan and contract in
on a more arms length detail;
basis via a contract.
• Where there is an
• Other partner options opportunity to expand
exist Which approach will deliver the size of the pie
© Ashridge Executive Education 2017 better results?
What are the ingredients of the PIES?
• What is being negotiated?
Risk
Specification Timescale
Delivery
Finance
What are the elements of the package – the
variables - that you are negotiating on?
They will include a host of things, such as:
• price • follow up
• discount • service Always make
• delivery • timing sure you
overlook
• payment terms • schedules
nothing.
• people • urgency
• extras • guarantees What else would
• contracts • conditions you add to this
• terms • place list?
• documentation • options

Negotiation Process
Preparation
Problem Definition
Problem Solving
‘Bidding’
Completion
Concessions
Rules for Concessions
1. Plan them
2. Trade them, don’t give them
3. Think of the other party value
as well as your cost
4. Plan how and when you will
• OPTIMISE YOUR present them
CONCESSIONS 5. Establish a pattern of
• Build up the value and decreasing value
significance of anything 6. Keep some room for
you offer to trade manoeuvre
7. Make the other party work for
every concession
• MINIMISE THEIR
8. Keep all concessions
CONCESSIONS
conditional
• Reduce the value that 9. Keep notes, keep a record
the other party puts on
anything offered to you
Some helpful behaviours
• Persuasive yet • Keep thinking

acceptable (projection & • Spell out why you are
empathy) doing things
• Silence
• Hold your fire
• Body language
• Don’t get hung up on
• Watch for it ,use it
deadlines
• Summarise frequently
• Active listening
• Take notes
• Ask probing questions
• Read between the lines
• Control the temperature – Not too many, phrase
carefully, open
What if they play ‘rough’?
• Response?
Stressful Personal Calculated  Recognise it
situations attacks delay  Don’t’ accept or reject
 Ask questions
Manipulation Good cop/ Nibbling  Address explicitly
Bad cop  Listen and re-cast
 USE SILENCE
 Ask for their advice
Threats Extreme
demands  Ask for the rationale
 Never be rushed
 Be firm
Slicing Dubious • CHANGE THE GAME!
intentions

Negotiation Process
Preparation
Problem Definition
Problem Solving
‘Bidding’
Completion
Due diligence

Working with lawyers
• Understand how the game is played, what is
important and what is less so.
• Leverage the skills of your own lawyers,

particularly facilitation skills, but remember
whose in charge.
• Don’t let the legal process destroy your

relationship with the other party (unless it is a
completely transactional relationship).
• Contracts are important but it rare for them to

be actually enforced in courts of law. Disputes
are usually solved via other means.
© Ashridge Executive Education 2017 Most deals seem to be signed after midnight!
Completion
• When do we complete the
negotiation?
• Knowing when reached a limit ‘Nail down the agreement’
beyond which we will be
accepting a bad deal 1. Agree what we have agreed
• Knowing when we have got what 2. Summarise each issue
we want 3. Record what we have agreed
• Judging how close the other party in an acceptable way
is to their limit 4. Confirm in writing the agreed
• Being fully aware of what issues
concessions have been given and 5. Decide and record an agreed
received plan of action
• Reading and assessing the
reactions of the other party

• Your questions

Summary
• Criteria for a good 1. Should produce a wise agreement, if agreement is possible
negotiation 2. Should be efficient
3. Should improve – or at least not damage – the relationship
between the parties
• Separate the people from the

People problem
• Make the PIES • Focus on interests, not

bigger with Interests positions
principled
negotiation Explore • Generate a range of options
Options
Key takeaways
• Understanding other parties perspectives and points of view is critical to
getting the best outcome for you; different providers of finance have very
different objectives and styles of operating;
• Being able to distinguish between logical and emotional drivers for you
doing the deal will help you to make better decisions;
• Knowing your BATNA or walkaway position and sticking to it is a key
part of your negotiating preparation and practice;
• How do you know when to take a more collaborative and when a more
transactional approach in negotiations?
• How do you factor Risk alongside Value in your Negotiations.

• Appendices

Every negotiator has two kinds of interests,
the substance and the relationship
• Separate the people
People from the problem
• Negotiators are people 1. Put yourself in their shoes

with hopes and fears, 2. Don’t deduce their intentions
values, preconceptions from your fears
3. Don’t blame them for your
• Separate the relationship problem
from the substance; deal 4. Look for ways to act
directly with the people inconsistently with their fears
5. Make emotions explicit –
problem
acknowledge as legitimate
• ‘Positional bargaining’ puts 6. Keep communicating
relationship and substance 7. Build a working relationship
into conflict

Reconcile interests not positions
• Focus on interests,
Interests not positions
• Interests define the 1. Use ‘Why?’ and ‘Why not?’

problem questions to identify the
interests
2. Realise each side has
• Behind opposing positions multiple interests
3. Most powerful interests are
there are often compatible
the basic human needs
interests as well as 4. Make a list of interests
conflicting ones 5. Make your interests come
alive – be specific
6. Acknowledge their interests
7. Focus on future – not past
8. Be concrete, but be flexible
9. Be hard on the problem, soft
© Ashridge Executive Education 2017 on the people.
Make the pie bigger before you cut it up
Explore • Generate a range of options
Options
• 4 major obstacles to Invent creative options:
prevent the development 1. Separate the act of inventing
of options: options from judging them
2. Broaden your options
• Premature judgement • Ultimately you will select
• Searching for the single solution from a broad
answer range of options
• Assuming that the pie is a 3. Look for mutual gain
fixed size • the pie is not necessarily
• Thinking that “solving their fixed
problem is their problem” 4. Make their decision easy

Commit yourself to reaching an agreement
based on principle, not pressure
• At some point – despite 1. Concentrate on merits of

problem, not mettle of parties
everything else – interests
• Be open to reason,
will conflict closed to threats
• At this point people tend to 2. Develop objective criteria
fall into positional • Standards & Procedures
• Independent, unbiased,
bargaining – what they are clear and practical
& are not willing to accept 3. Frame each issue as a joint
search for objective criteria
• Reason and be open to
reason
• Never yield to pressure,
only to principle

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Negotiation Skills

© Ashridge Executive Education 2017

© Ashridge Executive Education 2017

• Negotiating strategies and tactics

• What would you most like to

1. What do we mean by the term ‘negotiation’?

2. Based on your experiences to date and without breaching any

© Ashridge Executive Education 2017

Marvin Gaye: Keiser:

© Ashridge Executive Education 2017

• “To hold communication or

• A process to get the outcomes you need, in a

© Ashridge Executive Education 2017 RE: K.Thomas & R.Kilmann

“Winning at all costs” “Winning at all costs”

© Ashridge Executive Education 2017

“Conceding everything necessary to

© Ashridge Executive Education 2017

3. Should improve – or at least not

© Ashridge Executive Education 2017

CHANGE THE GAME!

“Conceding everything necessary to

© Ashridge Executive Education 2017

1. Separate People from the problem

2. Focus on Interests NOT positions

3. Explores a variety of Options and possibilities

4. Result to be based on objective Standards

R. Fisher and W. Ury:- “Getting to Yes”

People the problem

• Focus on interests, not

Explore • Generate a range of options

After. R. Fisher and W. Ury:- “Getting to Yes”

© Ashridge Executive Education 2017

Merger Partner, Joint

Customers and Suppliers

How do they perceive Risk and Value? What else might be

‘Best Alternative To a Negotiated Agreement’

 What is your best option if negotiation does not

© Ashridge Executive Education 2017 R. Fisher and W. Ury:- “Getting to Yes”

• Is the timing good or bad for the deal?

• Where are we in the economic cycle?

• Are there any age related factors

• What is our relative financial position

• If we don’t do the deal, will our

© Ashridge Executive Education 2017

• Misleading experiences • Experience, data and analysis

• Misleading pre-judgements • Debate and challenge

• Inappropriate self-interest • Governance

• Inappropriate attachments • Monitoring

© Ashridge Executive Education 2017

© Ashridge Executive Education 2017

© Ashridge Executive Education 2017

© Ashridge Executive Education 2017

Trust = Credibility + Reliability + Intimacy

How easily can you

Knowing how and when to use

© Ashridge Executive Education 2017

•People repay in kind

•People follow the lead of similar others

•People align with their clear commitments

•People want more of what they have less of

•People defer to experts

© Ashridge Executive Education 2017

• Persuasive yet • Keep thinking