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Archive for the ‘Negotiation’ Category

Learn More from Your Proposals

I found this article of great interest and value. Having studied at Harvard’s PON and negotiated global business deals, this article will provide some very interesting and valuable insight into creating value and mutual gains outcomes when working on complex international business deals. If you conduct, participate in or plan and execute complex business deals, this will be of interest to you. Check it out!

-DF

Learn More from Your Proposals

Adapted from “Lessons from Abroad: When Culture Affects Negotiating Style,” by Jeanne M. Brett (professor, Northwestern University) and Michele J. Gelfand (professor, University of Maryland), first published in the Negotiation newsletter, January 2005.Harvard Law School – PON.

Imagine that you have identified a great opportunity to expand your business by negotiating a joint venture with another company. You need to get information about this company’s needs and priorities. Which of the following options would you prefer?

A. Ask the other side about their priorities and give them only a little information about your own.
B. Do not ask direct questions; instead, be indirect and try to deduce what the other side’s priorities are by listening to their reactions to your proposals.

Around the world, negotiators understand the need to find wise tradeoffs that improve outcomes for all. But how do you get the other party to reveal the information you need about preferences and priorities?

Research shows that Western negotiators typically share information by asking questions about each other’s preferences and priorities—assuming the other party is trustworthy and answering truthfully—and giving information to reinforce the exchange. This direct approach can be used to identify tradeoffs that can be accumulated into a final, multi-issue proposal. It reflects the American preference for explicit, context-free communications.

Now consider how managers in Japan, China, Hong Kong, Thailand, and Russia glean information about one another’s preferences and priorities. Research conducted by Wendi Adair of Cornell University’s Johnson School of Management, Tetsushi Okumura of Shiga University in Japan, and Jeanne M. Brett of Northwestern University found that Japanese managers made many more proposals than did U.S. managers.

Subsequent research by Adair and Brett indicates that, beginning in the first quarter of their negotiation, non-Western negotiators were using proposals significantly more frequently than were Western negotiators. This difference was sustained until the last quarter of the negotiation, when Westerners’ proposal rate rose to match that of non-Westerners.

Gathering information about relative preferences and priorities from proposals requires highly developed inferential skills and a “big picture” approach. Doing so is common in collective cultures, where context matters and indirect communication is the norm. When proposals include all the issues in a negotiation, Western negotiators should be able to work effectively in this environment. But consider that Asian negotiators do not limit themselves to multi-issue proposals; they also make more single-issue proposals than Western negotiators.

Drawing inferences from a pattern of single-issue proposals requires a heavy focus on context. Imagine a two-issue negotiation over price and delivery. The other side offers a delivery date that you don’t explicitly reject; you then offer a price. Now it’s the other side’s turn to build toward a settlement based on his delivery date and your price. Suppose the other party makes an alternative offer on price, keeping in mind its prior offer on delivery. If your counterpart tracks your reaction to these alternative proposals, he can start deducing your priorities.

Westerners can do this cognitive work, of course—it is just a matter of preference regarding how to exchange information during negotiation. The message from Asian cultures: there is more than one way to get information in a negotiation. When negotiators are reluctant to share information directly, try proposals and look for the pattern of preferences revealed by changes in the proposals over time.

Written by David Frederick

May 31, 2011 at 10:43 AM

Difficult Conversations and Nine Mistakes to Avoid

No one likes to have difficult conversations and no one is immune to workplace tensions: It is inevitable that you will have some trying conversations with colleagues or clients over your career. At best these conversations are unpleasant, at worst they can blow up into larger issues which have real emotional, productivity and economic impacts.

I have discussed how to improve communication in this blog numerous times. But even with the best communicators, there are still times when you will have to have a difficult conversations. As such, I wanted to share with you nine mistakes you should avoid when having a difficult conversation. By avoiding these nine mistakes, it should help you achieve a more positive outcome regardless of how tough things get.

These nine mistakes come from a great article by Sarah Green, based on Holly Weeks “Failure to Communicate“.  I think you will find this information of value and can be applied immediately.

-DF

Mistake #1: We fall into a combat mentality.
When difficult conversations turn toxic, it’s often because we’ve made a key mistake: we’ve fallen into a combat mentality. This allows the conversation to become a zero-sum game, with a winner and a loser. But the reality is, when we let conversations take on this tenor – especially at the office – everyone looks bad, and everyone loses. The real enemy is not your conversational counterpart, but the combat mentality itself. And you can defeat it, with strategy and skill.

Mistake #2: We try to oversimplify the problem.
If the subject of your argument were straightforward, chances are you wouldn’t be arguing about it. Because it’s daunting to try to tackle several issues at once, we may try to roll these problems up into a less-complex Über-Problem. But the existence of such a beast is often an illusion. To avoid oversimplifying, remind yourself that if the issue weren’t complicated, it probably wouldn’t be so hard to talk about.

Mistake #3: We don’t bring enough respect to the conversation.
The key to avoiding oversimplification is respecting the problem you’re trying to resolve. To avoid the combat mentality, you need to go further – you need to respect the person you’re talking to, and you need to respect yourself. Making sure that you respond in a way you can later be proud of will prevent you from being thrown off course if your counterpart is being openly hostile.

Mistake #4: We lash out – or shut down.
Fear, anger, embarrassment, defensiveness – any number of unpleasant feelings can course through us during a conversation we’d rather not have. Some of us react by confronting our counterpart more aggressively; others, by rushing to smooth things over. We might even see-saw between both counterproductive poles. Instead, move to the middle: state what you really want. The tough emotions won’t evaporate. but with practice, you will learn to focus on the outcome you want in spite of them.

Mistake #5: We react to thwarting ploys.
Lying, threatening, stonewalling, crying, sarcasm, shouting, silence, accusing, taking offense: tough talks can present an arsenal of thwarting ploys. (Just because you’re trying to move beyond the combat mentality doesn’t mean your counterpart is.) But you also have an array of potential responses, ranging from passive to aggressive. Again, the most effective is to move to the middle: disarm the ploy by addressing it. For instance, if your counterpart has stopped responding to you, you can simply say, “I don’t know how to interpret your silence.”

Mistake #6: We get “hooked.”
Everyone has a weak spot. And when someone finds ours – whether inadvertently, with a stray arrow, or because he is hoping to hurt us – it becomes even harder to stay out of the combat mentality. Maybe yours is tied to your job – you feel like your department doesn’t get the respect it deserves. Or maybe it’s more personal. But whatever it is, take the time to learn what hooks you. Just knowing where your vulnerable will help you stay in control when someone pokes you there.

Mistake #7: We rehearse.
If we’re sure a conversation is going to be tough, it’s instinctive to rehearse what we’ll say. But a difficult conversation is not a performance, with an actor and an audience. Once you’ve started the discussion, your counterpart could react in any number of ways – and having a “script” in mind will hamper your ability to listen effectively and react accordingly. Instead, prepare by asking yourself: 1. What is the problem? 2. What would my counterpart say the problem is? 3. What’s my preferred outcome? 4. What’s my preferred working relationship with my counterpart? You can also ask the other person to do the same in advance of your meeting.

Mistake #8: We make assumptions about our counterpart’s intentions.
Optimists tend to assume that every disagreement is just a misunderstanding between two well-intentioned people; pessimists may feel that differences of opinion are actually ill-intentioned attacks. In the fog of a hard talk, we tend to forget that we don’t have access to anyone’s intentions but our own. Remember that you and your counterpart are both dealing with this ambiguity. If you get stuck, a handy phrase to remember is, “I’m realizing as we talk that I don’t fully understand how you see this problem.” Admitting what you don’t know can be a powerful way to get a conversation back on track.

Mistake #9: We lose sight of the goal.
The key in any tough talk is to always keep sight of the goal. Help prevent this by going into conversations with a clear, realistic preferred outcome; the knowledge of how you want your working relationship with your counterpart to be; and having done some careful thinking about any obstacles that could interfere with either. (Remember, “winning” is not a realistic outcome, since your counterpart is unlikely to accept an outcome of “losing.”) If you’ve done the exercise described in Mistake #7, this should be easier. And you’ll be less likely to get thrown off course by either thwarting ploys or your own emotions.

When we’re caught off-guard, we’re more likely to fall back into old, ineffective habits like the combat mentality. If you’re not the one initiating the tough conversation, or if a problem erupts out of nowhere, stick to these basics: keep your content clear, keep your tone neutral, and keep your phrasing temperate. When disagreements flare, you’ll be more likely to navigate to a productive outcome – and emerge with your reputation intact.

You can purchase Holly’s document here!

NOTE: I have no financial interest in this document.

Written by David Frederick

April 29, 2011 at 10:29 AM

Saying Thank You

You know, one of the most effective management action I ever did when I managed employee’s in a global work force was to simply, sincerely and genuinely say thank you for something some one did regardless of how insignificant. I never reserved it for only above and beyond moments, but used it regularly and sincerely. Maybe it was the way I was raised, my life and management philosophy, or that it simple works and is the right thing to do. People in general, at the most basic level want to be appreciated. It’s as simple as that.

I have found that it is not only productive in working with your employee’s, friends, family, spouse, etc. it also naturally produces superior results. In the work place, it also makes you a better manager and engenders a stronger environment for communication, productivity and the willingness of your employee’s and colleagues to go the extra mile when that’s needed. Not surprisingly, it also works well with your clients, suppliers and others you interact with. You would be surprised what a simple heartfelt thank you can accomplish. You should try it sometime. 😉

On this simple topic of thank you, I came across this blog article by Whitney Johnson talking about this exact point. I think its worth sharing and consideration. Check it out here!

-DF

Written by David Frederick

March 1, 2011 at 10:44 AM

When Clients Drive Your Business and Drive You Crazy!

Have you ever had a client or clients that totally hijacked your business operation, strategic direction, product/service development OR innovation funnel? I bet if your like most organizations, I am sure you have.

Why do organizations do this? Is it desperation? Lack of confidence in their offering? Is the customer is always right as the old saying goes? I don’t think so. Customer service is one thing, but what do you do when a customer totally hijacks your business by demanding you add functionality to your product, or demands you do something you don’t typically do, etc? Well, there are a couple of pretty straight forward options here right? Obviously you can either say no and redirect, but what if that doesn’t work? OR you can acquiesce and comply. Either way its a lose lose for your organization.

Now you may say, if you had a strong relationship with your client this wouldn’t happen right? Wrong! To many times your customers under the guise of “partnership” will beat you up and totally take you off track. They just do it with a smile.

Over my 25 years of experience, I have seen over and over again organizations trying to win, keep or drive more revenue from their customers when the customer demands things that are unrealistic, out of scope, or not something you simply dont do. BUT….. because you want to make the client happy, you do it…. at the cost of revenue, time, focus, direction and support. I have seen it time and time again. The bigger your customer the tougher it is. Lets say your a large global organization. This organization can use its market position to force you to do what you don’t want to do i.e. “if you want to do business with megamart XYZ, you need to do it this way because this is how we do it.” So you are left with little choice or options.

So what can you do? Try these as a potential remedy to this problem:

1: Set very clear objectives and expectations on your deliverables, offerings and relationship
2: Maintain “go forward” expectations. Ask questions about future uses of your products, services etc., to understand potential hurdles
3: Know that your client will want more from you or your product and services and will more than likely ask you to do things you cant or wont do. Be prepared. Set expectations.
4: Stand firm. If the client wants something your product or service doesn’t do, you will need to take a stand, redirect, look for a work around or ultimately walk away. But be prepared to lose the business. Acquiescence is not a positive, productive or profitable option.
5: Work to build a true partnership and communicate. Most issues like this are a result in lack of clear and effective communication between parties both in your company and with your clients.
6: Ask questions. Why are they asking you these questions? What’s really driving this objective? Are their alternative solutions and work arounds? Why do they want to do what they claim they want to do? Discuss the impact to both you and they client by taking the action being discuss (demanded). By asking penetrating questions, you may discover what they are trying actually do and what they say they want to do are two different things. You will save your self a lot of money, time, energy, focus, etc. by asking questions.

Look, this stuff isn’t binary. Its complex, multifaceted, intertwined with other initiatives, business units, etc. and its sensitive. The real problem is if you acquiesce, you run the very real and probable risk or losing focus, changing your road map away from your core product or service spec, spending money you don’t have on promises, compromising your vision and confusing your market position. Yes, one large client can do all of this. I have seen it. I have seen the millions of dollars of wasted investment, distraction, employee moral plummet, resentment and ultimately a very bad business relationship will ensue. Not good.

Is there a way to strike a balance? Most likely there is, if you follow some of the rules above. It ultimately comes down to communication and expectation. But doesn’t most things in life! Let me know what you think. Have you ever had this experience?

Thanks,
-DF

Written by David Frederick

July 30, 2009 at 5:16 PM

The Consensus Building Approach: Larry Susskind’s blog on the uses of consensus building tools and techniques for more democratic decision-making.

The Consensus Building Approach: Larry Susskind’s blog on the uses of consensus building tools and techniques for more democratic decision-making.

Larry is a colleague, was my professor, and is the foremost thought leader and practitioner in the area of mutual gains complex negotiation. Fortunately for the masses, he now has a new blog on the uses of consensus building tools and techniques for more democratic decision-making. I encourage you to check it out. I guarantee you will learn much and gain helpful and useful perspective!

– Dave

http://theconsensusbuildingapproach.blogspot.com/

About Larry:

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Larry Susskind: MIT Professor of Urban and Environmental Planning; Founder – Consensus Building Institute, Co-founder – Program on Negotiation at Harvard Law School

Written by David Frederick

February 11, 2009 at 8:31 PM

Knowing When To Walk Away

You know, I have been thinking a lot lately about complex multinational business negotiations. Mainly, because I have been engaged in them more frequently. These things are tough. Especially when negotiating from and with large global organizations. So many parties, so many roles, complexity, cultur, all fighting for something different. Its almost impossible to establish a BATNA. What’s a BATNA you ask? Simple – Best Alternative To a Negotiated Agreement (BATNA)—or in simple speak “what will happen” if you walk away.

It seems like there is less and less mutual gain these days or at least, its harder to reach it. Perhaps is because of the economy and the pressures organizations are under. But since these pressures are not going away and will more than likely get worse over the next year or so, I wanted to share an article from Andrew Maxfield from the CBI on knowing when to walk away from a deal/negotiation. You can do that you know. 😉

Hopefully, you will find this interesting and helpful. When I studied Strategic Negotiation for Technology at Harvard Law School’s PON (http://www.pon.harvard.edu/) it brought order out of chaos for me, as well as put a framework in place around mutual gains in the negotiation. I hope this article will help bring some order out of chaos for your when it comes to negotiation.

– Dave

Links:
[1] http://cbuilding.org/user/andrew-maxfield
[2] http://cbuilding.org/sites/default/files/CBI%2520Negotiation%2520Preparation%2520Checklist.pdf

Written by David Frederick

February 11, 2009 at 8:24 PM