Negotiations workshop

TEN SPONSOR MEETING

NEGOTIATION WORKSHOP

JANUARY 15, 2013

Established in 2002

IT Optimization Firm

100% Client Advocacy Firm

Completely Supplier Agnostic

Many public and private references

#1 Company in our Space

Global Company (US, Europe, Latin America, Asia)

1500 Global Clients

15,000 Field Engagements

Partner with major Private Equity Firms

Work with Clients Big & Small

$100 Billion+ of Client Value captured since 2002

AT-A-GLANCE SUMMARY

CONFIDENTIAL © 2013 ALL RIGHTS RESERVED 2

WHAT IS IT NEGOTIATION


WHAT IS NEGOTIATION?


Examples?

Best Experience?

Worst Experience?

What was the difference?

WE NEGOTIATE WHEN

We decide which movie to see with our significant other

We decide which city to live in with our spouse

We buy a car

We try to get a raise

We plea bargain a criminal charge

We establish project priorities and timelines

We establish boundaries between Israel and Egypt

We determine protocol of Iraqi arms inspectors


NEGOTIATION TIPS

Be Prepared

“Lack of Preparation is perhaps

our most serious handicap”

Roger Fisher and Danny Ertel

The Getting to Yes Workbook


HOW DO YOU GET PREPARED?


Negotiations have a structure, which is independent of the content

Most negotiations, large-small, commercial-personal, involve the same issues

Let’s look at the structure of negotiations

ULTIMATUM GAME

Playing to Win

Player 1 gets $100

Player 1 proposes to share an amt w/ Player 2

Player 2 either agrees to the shared amt, or not

If Player 2 agrees, both get paid

If not, neither get paid

No Discussion

Write offer on Card

Make your Decision

Who wins the Money?


WHAT HAPPENED?

50:50?

Not Fair?

Not Enough / Lowball Offer

Player 1 kept too much / Windfall Profit

Player 2 got an economic Improvement

Even $1 is better off – so what’s your problem?

Player 1 didn’t understand the Game

Player 2 didn’t understand the Game


ULTIMATUM GAME

What was the currency involved in this deal?

Scientific Study of the Brain during these kinds of deals

The Neural Basis of Economic Decision-Making in the Ultimatum Game

Alan G. Sanfey, James K. Rilling, Jessica A. Aronson, Leigh E. Nystrom and

Jonathan D. Cohen , Science, New Series, Vol. 300, No. 5626 (Jun. 13, 2003),

pp. 1755-1758


ULTIMATUM GAME

Analysis

Feelings of Fairness are Powerful

50:50 Splits are very often NOT the fair answer

At $20, 68% of Player 2s agree



Determining the emotional response to fairness is a key consideration in deal structuring


ULTIMATUM GAME

Does it matter who

makes the offer?

Two kinds of

“Player 1” Human

and Computer

Why the difference? 0

10

20

30

40

50

60

70

80

90

100

$5:$5 $7:$3 $8:$2 $9:$1

Acc

ep

tan

ce R

ate

s

Offer

Human

Computer


ULTIMATUM GAME

Implications for our Negotiations at work

It is critical to understand the currency involved in the deal

It is often not the obvious one

It is critical to understand the sense of “Fairness”


LESSONS LEARNED Search for deal structures where your Supplier has shared goals and objectives and believes the split arrangements are fair.

If the Supplier benefit can be tied to yours, you stand a much better chance of achieving collective success and long term sustainability.

If the deal can be structured in a way to enhance Supplier emotions – all the better.


TRUST EQUITY GAME

Playing to Win Player 1 gets $100

Player 1 proposes an amount

to Share with Player 2

That amount is tripled

Player 2 will share back an

amount with Player 1

The Selected team gets to

keep their amount

Is Trust a Good Investment?


EXAMPLES Trust Equity Game

Team Player 1 Shared 3x Amt Player 2 Returned

1 Ray $100 $300 Andrea $200

2 Catherine $100 $300 Mike $150

3 John $50 $150 Kimberly $75

4 Ginny $0 n/a Bob n/a

5 Jeff $10 $30 Alison $3


WHAT HAPPENED?

Is there one answer?

Did we all get the full value?

Do we all evaluate trust equally?

Is trust always a good investment?

Can we create value by giving trust?

What would you do differently?


ANALYSIS

BATNA

Player 1 - $100

Player 2 - $0

ZOPA

Player 1 - $0-$300

Player 2 - $0-$300

Defection

Claims Value

Win/Lose Negotiations

Defines our slice of the Pie

Cooperation

Creates Value

Win/Win Negotiations

Increases the Pie for

Everyone


SUPPLIER DILEMMA

Even when we as a Customer have shared

objectives with our Suppliers, it is still often

difficult to achieve full optimization because

our trust isn’t always a good investment.

Customers need to evaluate Supplier

relationships carefully to determine if Trust is

a good investment.

6/22/2010 © 2002-2010 NET(net), Inc. All Rights Reserved. CONFIDENTIAL © 2013 ALL RIGHTS RESERVED 19

NEGOTIATION TIPS

Ask, Don’t Tell

Making statements leads to positions

Asking questions builds common understanding

Making statements creates agendas

Asking questions builds trust and leads to Win-Win negotiation


NEGOTIATION TIPS Know your BATNA

Best Alternative To a Negotiated Agreement

Not “bottom line”, more of a “what if”

Know the other person’s BATNA

Back to preparation

Know their alternatives and you gain power at the table


NEGOTIATION TIPS

Know Thyself

When you go into a negotiation, take a personal inventory. How do you feel about

negotiation? Do you want to get it over fast? If so, you may give in too quickly, or give away

too much. Or, do you want to win, no matter what the cost? If so, you may become

adversarial and damage the relationship.

Do Your Homework

Know who you’re negotiating with before you begin. What’s his or her reputation as a

negotiator? Win/Win model or Win/Lose model? Does the person want to negotiate with you

(Oh Boy!), dread the negotiation (Oh No), or is this a neutral situation (Show Me)

Prepare and Practice

Lack of preparation is the number one stumbling block in a successful negotiation It s not

enough to know what you want out of negotiation. You also need to anticipate what the

other party wants.


NEGOTIATION TIPS Build Trust

Negotiation is a highly sophisticated form of communication. Without trust, there won’t be communication. Instead you’ll have manipulation and suspicion masquerading as communication. Be trustworthy. Honor your commitments. Tell the truth. Respect confidences.

Develop External Listening

Most people carry on an inner dialogue with themselves. When you’re trying to communicate with someone else, this inner dialogue becomes a problem because you can’t listen internally and externally at the same time. When you negotiate, turn off your inner voice and only listen externally. You won’t miss important nonverbal messages, facial expressions of voice inflections, when you listen externally.

Move Beyond Positions

It’s risky to make yourself vulnerable to someone. That’s why in a negotiation you begin by stating your position. Later, when the trust has deepened, you and the other party can risk more honesty and identify your true interests. As a negotiator, it is your responsibility to ask questions that will uncover the needs or interests of the other party. If you’ve also done your job of creating a supportive climate, you’re more likely to get honest answers.


NEGOTIATION TIPS Know Your Power

Don’t assume that because the other party has one type of power, e.g. position power, that he or

she is all-powerful. That’s giving away your power! Balance power by assessing the other parties

source(s) of power, and then your own. While there are many sources of power, they all break down

into two categories; internal power and external power. The former no one can take away from you

and includes your personal power, level of self-esteem, and self-confidence.

Know Your BATNA

Before you begin a negotiation, know what your options are. Can you walk away from the deal?

What other choices do you have? What are the pros and cons of each choice? Don't stop here. Also

consider the BATNA of the other party.

Know What a Win Is

What is your best case scenario? What is your worst case scenario? The area in between is called

your settlement range. If you can reach an agreement within your settlement range, that’s a Win!

Don’t drop below your bottom line; you’ll feel bad about yourself and the deal afterwards, and you

may not follow-through on your commitments.


GENERAL DISCUSSION ON NEGOTIATION


Does this resonate with your experiences

What are other areas of negotiation that can present difficulties/opportunities?

Who is the best negotiator you know? Why?

THANK YOU!


John Fisher Chief Value Officer

+1 (616) 546-3100 x689 (312) 953-0297 Mobile

[email protected]

Negotiations workshop

Technology

Transcript of Negotiations workshop