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Negotiation Genius: How to Overcome Obstacles and Achieve Brilliant Results at the Bargaining Table and Beyond From two leaders in executive education at Harvard Business School, here are the mental habits and proven strategies you need to achieve outstanding results in any negotiation. Whether you've "seen it all" or are just starting out, Negotiation Genius will dramatically improve your negotiating skills and confidence. Drawing on decades of behavioral research plus the experience of thousands of business clients, the authors take the mystery out of preparing for and executing negotiations - whether they involve multimillion-dollar deals or improving your next salary offer. What sets negotiation geniuses apart? They are the men and women who know how to:
This book gets "down and dirty." It gives you detailed strategies - including talking points - that work in the real world even when the other side is hostile, unethical, or more powerful. When you finish it, you will already have an action plan for your next negotiation. You will know what to do and why. You will also begin building your own reputation as a negotiation genius. Chapter 1 The year was 1912, and the U.S. presidential election was in full swing. Former President Theodore Roosevelt had decided to return to the political arena due to his frustration with the way his successor, President William Howard Taft, had been running the country. It was a tough campaign, and every day seemed to present a new challenge. But here was a challenge that no one had anticipated: three million copies of Roosevelt's photograph had already been printed for circulation with a campaign speech when Roosevelt's campaign manager discovered a catastrophic blunder - the photographer had not been asked for permission to use the photograph. To make matters worse, copyright law allowed the photographer to demand as much as $1 per copy of the photograph. In 1912, a loss of $3 million would be equivalent to a loss of more than $60 million today. No campaign could afford this price. The alternative was almost equally unattractive; reprinting three million brochures would be tremendously costly and could cause serious delays. The campaign manager would have to try to negotiate a better deal with the photographer. If you were the campaign manager, how would you handle this negotiation? | ||||||||
Now consider how Roosevelt's manager dealt with the situation. After carefully analyzing the problem, he sent the following telegram to the photographer: "Planning to distribute three million copies of campaign speech with photographs. Excellent publicity opportunity for photographers. How much are you willing to pay to use your photographs?" Respond immediately. The photographer did not take long to issue a reply. He sent back a telegram with the following message: "Appreciate opportunity, but can only afford $250." Most people, when they hear this story, are taken aback. How did the campaign manager turn around such a hopeless situation so completely? The reason for this reaction is that even the most seasoned negotiators may not think systematically about negotiations, nor prepare for and execute negotiations strategically. Our goal is to make the manager's solution to the negotiation problem appear obvious to you. By understanding and applying the principles and strategies of value claiming covered in this chapter, you, too, will be able to han- dle difficult negotiations with the kind of genius demonstrated by Roosevelt's campaign manager. Strategies for Claiming Value in Negotiation Throughout this book, we will talk a lot about value. How do we define the term, exactly? Value is whatever people find useful or desirable. You may measure value in dollars, utility, happiness, or a variety of other metrics. Negotiation helps to create value through agreements that make both parties better off than they were without an agreement. But how much better off is each party? This depends, in part, on which party managed to claim (or capture) more of the value that was created. For example, if a buyer negotiates a very low price for an item, she claims more value; the seller claims more of the value (created by the deal) when the price is high. For many people, learning to negotiate more effectively means one thing above all else: "How can I get a better deal for myself?" Or, put another way, "How can I claim the lion's share of the value in any negotiation?" While Negotiation Genius takes a much broader view of negotiation, we, too, start with this basic goal: getting the best possible deal for yourself. We begin by considering a negotiation over the sale of real estate that allows us to address key issues that you will face in virtually all negotiations. The Hamilton Real Estate case is a relatively simple negotiation: two parties (a buyer and a seller) are negotiating over one issue (price). Within this framework, we cover all of the following aspects of negotiating: preparing to negotiate, avoiding common negotiator mistakes, deciding whether to make the first offer, responding to the other side's offers, structuring your initial offer, finding out how far you can push the other side, haggling effectively, claiming maximum value without sacrificing the relationship, and managing your own satisfaction. When we use the Hamilton Real Estate case in our negotiation courses with executives and MBA students, we assign half of the participants to the role of "seller" and the other half to the role of "buyer." Each side is given confidential information regarding its needs and interests, and is asked to prepare its strategy for the negotiation simulation. The two sides then meet and try to negotiate an agreement over the sale price of the property. As you read the case from the perspective of the seller, think about how you would approach this negotiation. Hamilton Real Estate You are the executive vice president of Pearl Investments, a holding company that specializes in real-estate investments. Among your many real-estate holdings is a large piece of property located in the town of Hamilton. The Hamilton real estate is earmarked for divestment, and you are responsible for negotiating its sale. The amount that a potential buyer will pay for the Hamilton property depends on a number of factors, including the buyer's ability to pay and their planned use of the property. Each of these factors is critical. For example, your experts have estimated that if the land were developed for commercial use (e.g., a set of office buildings), the land might be worth 1.5 to 2 times as much as if it were developed for residential use (e.g., apartment buildings). Unfortunately, commercial developers are unlikely to be interested in the property because Hamilton zoning laws do not allow for commercial development. While some local politicians have recently discussed allowing commercial development in Hamilton, they have taken no action in this direction. As a result, Hamilton has fallen off the radar for commercial developers. Over the last few weeks, you have entertained offers from a few potential buyers. All but one of these offers has fallen substantially short of your expectations. The offer of most interest to you is from Quincy Developments, a developer that is planning to construct a set of high-end apartment buildings on the Hamilton property. The offer is for $38 million.
Copyright © 2007 by Deepak Malhotra About the Author Deepak Malhotra is an associate professor at the Harvard Business School, where he teaches negotiation in the MBA program, the Advanced Management Program, and the Owner/President Management Program, in addition to providing negotiation consulting and training for businesses worldwide. More by Deepak MalhotraMax H. Bazerman is the Jesse Isidor Straus Professor of Business Administration at the Harvard Business School and the author of Negotiating Rationally and Judgment in Managerial Decision Making, each of which has sold more than 100,000 copies. |
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