Negotiations: The art, science, & sport of online deals
Negotiations: The art, science, & sport of online deals
Often times negotiators find themselves in the uncomfortable position of needing to be creative. Sometimes they're trying to sell a product or land an account. Other times they have to convince someone else that their idea will work or make it worth their time and effort. This is where creativity comes in: because the goal posts are different for each negotiation, finding a way to win can be difficult. Whether you're looking for ways to outsmart your opponent at the negotiating table or are just wondering how it actually works so you don't screw up when it's your turn, this article has ideas and insight on what really matters during negotiations.
This article is a transcript of the podcast Negotiating with Robert "Bob" Cooper.
Bob graduated from Harvard Law School with honors in 1986, passed the California Bar Exam on his first attempt, and has practiced law for over 30 years. Bob has negotiated contracts and labor agreements in every industry across the U.S., Canada and Europe, including all publishing deals for Random House Inc., rights and permissions to use the work of some major artists such as Andy Warhol, Leonardo da Vinci and Marc Chagall, a stake in the operations of a large international detergent business, port-of-entry concessions at airports in China and Hong Kong, restaurant operating leases... and yes, big movie contracts including The Silence of the Lambs.
Bob Cooper is an international speaker on negotiation and has appeared on CNN, CNBC, NPR, Fox News, HBO and many other TV and radio stations around the world. He is a prolific writer for numerous publications including Institutional Investor magazine. His latest books include "The Last Word on Negotiating", "The Roadmap; How to Win Business Negotiations", and "Negotiating Your Salary." Bob was named one of the Top 100 Most Influential People in Sports Business by Sports Business Journal in 2009. He lives with his wife Diane in New York City.
You can learn more about Bob Cooper: http://www.bobcooper.com
I'm going to show you the technical things that we need to discuss, but then I'm going to follow up with some of my own experiences and some of my own thoughts. I'll tell you something interesting about how I always negotiate. I have a very simple negotiating technique. The way I negotiate is whenever someone walks in here, and you're negotiating for something, or somebody negotiates for something here, when they start talking about their product or what they're selling or how they're doing it or the goalposts are different -- if you can determine from the beginning what the goals are -- then you can say "OK". I can't do this, but what I can do is this. What I can say is, if you'll do that, then I'll do this."
For example: You want me to write a book for you. What's the goal? To sell more books. OK. So my goal is you give me a $100,000 advance payment for the book that I'm writing -- with an option to buy another book from me at $100,000 down the road -- and then if it sells more than so many thousand copies and goes into paperback, then you pay me money. How do I know it's going to sell more than so many thousand copies? Because no matter how good the book is, there's always that first 1000 people who buy it. So why would I go into a business deal where I don't know how many people are going to buy my product? So if you tell me what your goal is, I can say "OK". Not: "Oh, well, what do you want to be paid?" It doesn't work that way.
I always have a pen and paper with me. They're both very simple lists you can use to get started in negotiations. The first list is called "The 5d Formula". The second list is called "What Kind of Person is Your Opponent".
My 5d Formula is:
1) Decide what you want.
2) Decide what they want.
3) Define the deal that makes both parties happy.
4) Do it!
5) Don't be a jerk. And, remember that you're always in control of every conversation because you are in charge of the business transaction or the personal transaction. So always be aware that it is a business interaction.
My 5d Formula works because, in every negotiation I've ever been involved with, the first person to make a decision always has a more realistic chance of getting what they want than the person who is uncertain. The first person to make a decision sets the goals and then allows them to be changed to another set of goals or amended on the fly as each party sees fit.
The people who are difficult about negotiating dislike being in control. They don't like it because they get nervous. They don't like it because they lose their ability to think objectively. As a result, they will bend over backwards to give you what you want. The problem is that they are not pragmatic in their thinking and have no problem saying things like "Well, I don't know. What do you want me to do?" This is a code for: "I'm not an intelligent person so I can't come up with a specific answer."
My 5d Formula is a very fast method of thinking about the situation and determining what it takes to satisfy both parties... as well as yourself. For example, let's say your goal is to sell more books than your competitor. I have no idea how many books they're going to sell, but let's assume that competitors sell 10 or more books per day on average. If I could sell 20 books a day, that's 600 books per month -- which is a pretty good number, but still only 2,400 total for the year. That is 5% of my competitor's sales, which seems like a very small amount. But it's not. If my total sales were 800 books per month or 1,600 total for the year, then you're going to have to pay me $100,000 to put up with me. That means every book I sell is worth $3,000 or $4,000 or even more -- depending on who your competitors are and what their financial condition looks like.
Conclusion
So what's the most important thing I learned from this whole process? It's to remember that there are only two types of people: winner/winners and loser/loser. That's it. One type can tell you they're going to do something, and then when they get done doing it, they'll come out ahead of where they were before -- with a smile on their face. The other type is out for themselves -- always thinking how they can take the other person down and make them feel bad -- so when they get done taking your deal away from you, you feel worse than before... and upset at yourself for not asking for more or making a better deal.