WICT Webinar Getting (MORE OF) What You Want in negotiating deals big and small Margaret A. Neale Stanford Graduate School of Business

The Common View of Negotiation: A Battle This battle mental state creates a negative frame through which negotiators Assess their counterparts’ behavioral intentions Sets the tone for the interaction Escalates conflict where winning becomes more important than the quality of what is won The Common View of Negotiation: A Battle

To Get More of What You Want: Broaden Your Definition Negotiation is the process where two or more people decide what each is willing to give and hopes to get in their interaction and, through a process of mutual influence and persuasion, exchange proposals and agree on a common course of action.

Reframe Your Perspective Collaborative problem solving rather than a battle Negotiations are interdependent – you and your counterpart must voluntarily agree to an outcome. Create solutions where you are better off than the status quo (or your alternatives) and your counterparts may be better off, but certainly not worse off, than their alternatives or status quo.

Expand What is Negotiable Everything: From (Big “N”) Negotiations including Nuclear treaties with Iran to (little “n”) negotiations over routine issues such as those in meetings or family interactions Develop fluency across different negotiating situations and counterparts

What you want from your negotiation is a good deal! Getting an agreement is not the goal of a negotiation! What you want from your negotiation is a good deal!

Winning by Losing? Malmendier, U., Moretti, E., & Peters, F. (2012). Winning by losing: Evidence on the long-run effects of mergers. NBER Working Paper No. W18024, National Bureau of Economic Research.

Know What’s a Good Deal To assess the quality of a proposed deal, you need to know: What are your alternatives if no agreement were reached?

The Importance of Alternatives Think of your alternative as a safety net Your alternative influences your willingness to walk away. Your willingness to walk away (or at least convince the other side that you will) is your greatest source of power in a negotiation. The better your alternative, the more value you can claim and the more aggressive and assertive you will act Alternatives can anchor you to what you believe is a reasonable outcome . Pinkley, R. L., Neale, M. A., & Bennett, R. J. (1994). The impact of alternatives to settlement in dyadic negotiation. Organizational Behavior and Human Decision Processes, 57(1), 97-116. Morris, M. W., Larrick, R. P., & Su, S. K. (1999). Misperceiving negotiation counterparts: When situationally determined bargaining behaviors are attributed to personality traits. Journal of Personality and Social Psychology, 77, 52-67

Know What’s a Good Deal To assess the quality of a proposed deal, you need to know (at a minimum!): What are your alternatives if no agreement were reached? What is your reservation price (bottom line)?

Reservation Prices Reservation price is a bright-line standard between agreement and impasse One of the most strategic pieces of information Does it make sense to reveal your bottom line? If you do, it may be the most you will get! If you do, will your counterparts believe you? Revealing your true reservation price increases the likelihood of impasse. And it is the person to whom the reservation price is revealed who is more likely to walk away! Is there a better way ? White, S. B., & Neale, M. A. (1994). The role of negotiator aspirations and settlement expectancies in bargaining outcomes. Organizational Behavior and Human Decision Processes.

Know What’s a Good Deal To assess the quality of a proposed deal, you need to know (at a minimum!): What are your alternatives if no agreement were reached? What is your reservation price (bottom line)? What is your aspiration?

Aspirations An optimistic assessment of what you could achieve in this negotiation Offsets your natural tendency to anchor on your alternatives Influences your expectations of what is possible

Three Secrets to Getting (more of) What You Want Expectations Justifications Packages

Expectations

Expectations Drive Behavior Pygmalion Effect Robert Rosenthal, Pygmalion in the Classroom: Teacher Expectation and Pupils' Intellectual Development, 1968 First offers Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of personality and social psychology, 81(4), 657-669

Expectations Drive Behavior Galinsky, A. D., Mussweiler, T., & Medvec, V. H. (2002). Disconnecting outcomes and evaluations: the role of negotiator focus. Journal of personality and social psychology, 83(5), 1131.

Justifications

The Power of Justifications Their presence is often more powerful than their quality. More powerful the more objective they appear when scrutinized

The Power of a Justification May I use the copy machine? May I use the copy machine because I am in a rush? May I use the copy machine because I need to make copies? Giving a reason was more important than the quality of the reason. People are not very sensitive to the quality of your argument, typically they are paying attention to other things. Frank Flynn, people are more cooperative than you think they are: cell phone study. And, norm of reciprocity is more powerful.

Compliance in the Copy Line Langer, E. J., Blank, A., & Chanowitz, B. (1978). The mindlessness of ostensibly thoughtful action: The role of placebic information in interpersonal interaction. Journal of personality and social psychology, 36(6), 635.

Compliance in the Copy Line Langer, E. J., Blank, A., & Chanowitz, B. (1978). The mindlessness of ostensibly thoughtful action: The role of placebic information in interpersonal interaction. Journal of personality and social psychology, 36(6), 635.

Compliance in the Copy Line Langer, E. J., Blank, A., & Chanowitz, B. (1978). The mindlessness of ostensibly thoughtful action: The role of placebic information in interpersonal interaction. Journal of personality and social psychology, 36(6), 635.

The Power of Justifications Their presence is often more powerful than their quality. More powerful the more objective they appear when scrutinized Mitigate a counterpart’s resistance to unexpected behaviors – explaining why helps. Increase the anchoring power of an offer

Package Proposals

The Power of the Package Make proposals incorporating all issues Avoid solving-the-easy-issues-first Use if-then language to yoke concessions across issues If the issues were too complex or numerous, create multi-issue chunks. Tentatively agree to each chunk Revisit to make sure that chunks make sense in the aggregate

The Power of the Package When chunking issues, compose your package to contain At least three issues A combination of integrative and distributive issues Kimmerling, B., Herbst, U., & Neale, M. (2015). The power of the package: An analysis of the packaging strategy in buyer-seller negotiations. Working paper, University of Postdam.

In Summary Develop fluency in negotiation Adapt strategies to fit the differing values and goals of distinct counterparts Consider when it is strategic to problem-solve and when to do battle. Leverage the power of your expectations Influence the expectations of your counterparts Justify your offers Emphasize how your proposal can help your counterparts achieve their goals and what they value Package proposals Enhance a collaborative frame and mitigate zero-sum thinking Be disciplined in your preparation for the negotiation and in your implementation of your strategic plan. Know your weaknesses and develop explicit strategies to mitigate your hedonistic tendencies!

Want to know more? Babcock, L., and Laschever, S. (2008) Ask for it: How Women Can Use the Power of Negotiation to Get what They Really Want. New York: Random House Cialdini, R. B. (2009). Influence. New York: Harper Collins. Neale, M.A. and Lys, T.Z. (2015) Getting More of What You Want: How the secrets of economics and psychology can help you negotiate anything, in business and in life. New York: Basic Books (available in Dutch, British, Turkish, and Mandarin language versions)

Video Clips: And if haven’t heard enough of me . . Negotiating (More of) What You Want with Anyone Anywhere Part 1 https://www.youtube.com/watch?v=203Kt_jWTUI Negotiating (More of) What You Want with Anyone Anywhere: Part 2 https://www.youtube.com/watch?v=zKsJ9oRu3KY MSNBC – https://www.openforum.com/videos/3-tips-about-how-women- should-negotiate Stories We Tell Ourselves about Negotiations http://www.gsb.stanford.edu/exed/webinars/webinar-past-042313.html Lean In.org Negotiation http://leanin.org/education/negotiation/ Forbes.com http://www.forbes.com/sites/dailymuse/2013/06/17/why- women-must-ask-the-right-way-negotiation-advice-from-stanfords- margaret-a-neale/ The Power of Effective Negotiation https://breakfastbriefings.stanford.edu/briefings/power-effective- negotiation

And if you want to learn more . . . Stanford Innovation and Entrepreneurship Certificate – Negotiation: How to Get (More of) What You Want (online course). http://create.stanford.edu/courses/negotiating.php GSB Executive Education Open Enrollment Programs: Influence and Negotiation Strategies Executive Program for Women Leaders Managing Teams for Innovation and Success Stanford LEAD Certificate: Corporate Innovation