Leadership quote

WE LIVE IN THE WORLD OUR QUESTIONS CREATE .
David Copperrider

Learning fron Anne Hathaway incident

After she was exposed without wearing underwear, she gave us a lesson on how to answer difficult questions

Anne Hathaway's response to the incident:

“It was obviously an unfortunate incident. It kind of made me sad that we live in an age when someone takes a picture of another person in a vulnerable moment and, rather than delete it, sells it. I’m sorry that we live in a culture that commodifies sexuality upon unwilling participants. Which brings us back to Les Mis because that’s who my character is. She is someone who is forced to sell sex to benefit her child because she has nothing. So let’s get back to Les Mis.”

What happened is instructive. Hathaway gave the perfect response. She acknowledged the incident (saying “no comment” is simply the worst way to answer a tough question), offered a short observation about it, and used the question to segue to the topic she came to discuss—her movie.

CONFLICT RESOLUTION STRATEGIES

Gerhard Schwarz identifies six fundamentally different strategies for dealing with conflict. We all have these six strategies in our personal repertoire, although the extent to which we use them varies greatly from individual to individual.
1. Escape
Man is good at running away – and has been since the earliest days of mankind. Our very first strategy is to avoid conflict; anyone who spontaneously reacts differently to conflict is in a minority! In a professional context, there are various ways of adopting the escape strategy: by ignoring conflict, actively denying it, declaring it irrelevant, deliberately not dealing with it, or by labeling others who openly refer to the conflict as "conflictive".
2. Destruction
According to Schwarz, this strategy was originally Plan B for when escape was not possible. In the early years of mankind, a fight was usually to the bitter end with only one of the combatants surviving. In a professional context too, we will frequently witness conflict that ends in a "it's him/her or me" ultimatum (and once it's over, one or sometimes even both of the conflicting parties looks for "an interesting new challenge" within or outside the organization).
3. Submission
The battle can also end without bloodshed if the winner accepts his opponent's submission as victory. Without submission, long-term cooperation - and thus the development of large organizations - would be inconceivable and so in everyday situations it usually occurs in undramatic forms: falling into line with the opponent's viewpoint and cooperating despite one's own objections come under the heading of this conflict strategy.
4. Delegation
The two parties agree to put their disagreement to a third party for resolution, in other words to delegate the decision. This third party may be a decision-maker (line manager, judge) or a mediator, or it may even be a set of rules or a law etc. The two partners agree not to pursue the conflict by testing their strength against one another. They allow a third party to make the decision for them, and undertake to abide by the decision even if they do not agree with it.
5. Compromise
This is the typical negotiating strategy. Both parties know that they will not get 100 per cent of what they want, and therefore seek to achieve the greatest possible win relative to the win of the other party. A compromise may be "50:50" but can also be "70:30", and the views of the two parties on this point may differ widely. Some compromises are only achieved through the attrition of the tolerance of the other party to the conflict, and the "rottenness" of these compromises then puts their durability in question.
6. "Consensus"
Schwarz's definition of "consensus" is a long way from the common usage of the word. Whilst the term is usually used to describe a solution which has the agreement of all parties, Schwarz uses the same word to describe a new, surprising resolution to the conflict which completely satisfies the interests of all parties. This kind of solution generally only arises during lengthy negotiations where the parties are being extremely open – because only by being very open about one's own interests is it generally possible to create a trusting atmosphere. As desirable as this "consensus" might appear, in some situations it will be objectively impossible to find such a solution,  even with the best will of those involved.
Your personal repertoire:
The first two conflict strategies - flight and fight – are known as the "primary strategies". It is assumed that everyone uses both these primary strategies to some degree, and the extent to which they are used will not change greatly over the course of a person's lifetime. The other conflict strategies, on the other hand, will be greatly influenced over a person's lifetime by the experience he or she has of them. For example, in one work context compromise might be the predominant conflict strategy  but if a person moves out of this environment to another job, if may be that he or she has to learn to rely more on one of the other strategies, such as delegation.

How should I respond if the other side seeks to change something (in its favor, of course), after a deal has been reached?

Chances are they’re afflicted with the "winner’s curse": whenever they reach a deal, they become cursed with the thought that they could have gotten more.

When the other side seeks to change one item, you should express some surprise or disappointment. Explain that if they must make a change, then they must understand that you will want to open up other issues as well. You agreed to a total package. A change on one issue affects the whole package. Are they willing to renegotiate other issues?

If the answer is yes, then the other side was sincere, and you should proceed with the renegotiating. If they reconsider and withdraw the request for change, then they were just testing you. If they insist that they must have this change and no others, you can express dismay, but you must decide whether the adjusted deal has sufficient value for you to agree.

Is it better to deal with difficult or easy issues first?

In general, dealing with easier issues will build momentum, deepen the parties’ commitment to the process, and enable the parties to become familiar with each other’s negotiation and communication styles before hitting the tough stuff.

In some instances, however, you may want to deal with a more difficult issue as a threshold matter. If you cannot reach tentative agreement on the difficult issue(s), then you will not have wasted time on the smaller issues. It is also true that once the most difficult issue is resolved, smaller issues often fall more easily into place.

In a complex deal, is it better to reach agreement issue by issue, or wait until the end?

Every deal is different, but it’s generally better to aim for tentative agreements, or agreed-upon ranges, for each issue, one at a time. This will give you the necessary flexibility to make value-creating tradeoffs between issues, and to create alternative packages of different options.

Negotiation Authority

Conventional wisdom says you should insist that the negotiator on the other side of the table have full authority. Otherwise, you’ll fall victim to the old "car dealer" trick, where just as you are about to reach agreement with the salesman, he has to check with his manager. In other words, the first negotiation with the salesman is used to bring you to your bottom line, and the second negotiation with the manager, to push you beyond it.

There are advantages to negotiating with the person who has the power to sign on the dotted line:

You know that all of your reasoning is heard directly by the decision maker.
The benefits of the good relationship you have built are likely to be reflected in the deal and its implementation.

You are less likely to have disputes or confusion about the interpretation of a particular provision.

You avoid the "car dealer" trick described above.

As a practical matter, you won’t always be able to negotiate with the individual (or committee) who retains final authority. This can sometimes be an advantage, however: people without formal authority may be freer to discuss their company’s interests and to invent creative options. If you are dealing with someone who does not have full authority, view this as freedom from the need to commit.

Confirm the ground rule that neither side will be committing his or her company in the negotiation. (If they’re not committing, you shouldn’t have to either.)

Suggest using the opportunity to discuss your respective interests and to come up with creative options and packages.

When negotiating about dollar issues, leave yourself some "wiggle room," in case the final negotiator pushes harder in a second round.

If there’s no "wiggle room," strongly convey the message that this is your best offer.
Instead of insisting on full authority, it’s more important that you determine the authority level of the person with whom you will be negotiating, so that you can plan accordingly. Thus, try to ascertain who will be at the negotiating table what her formal title and area of responsibility are
how long she has been with the company how the company is structured. Is it very hierarchical, with significant decision-making powers centered at the top, or is it relatively decentralized?
how the negotiator is viewed within the organization. Is she generally respected and listened to, or not? (Granted, this information may be difficult to obtain, but it’s well worth digging for. If you know other players in the industry or business community, you may be able to learn this through an informal, off-the-record phone call or two.)

If you learn that the negotiator for the other side has very little formal authority and is not respected or listened to by the decision makers, try to get another representative to participate in the negotiations as well. One tactful way to do this is to suggest that you will be bringing a colleague (either with more formal authority or because your joint recommendation will carry more weight), and request that the other side do the same.

As for your side, always know exactly how much authority you have in a negotiation. For example:

Are you authorized only to commit to a predetermined deal for which committee approval has been obtained? What if you can negotiate something better? What would the committee consider to be better?

Are you authorized to commit to a deal that meets certain objectives (with freedom to structure the deal in the best way you can)? Would your company prefer that you bring such a deal back for formal review and approval?

Is your authority limited on dollar issues but not on other creative options without significant financial implications?

Are you authorized to provide information about your company’s needs, interests, and preferences if the other side engages in a good-faith, reciprocal exchange?

You may be frustrated if you don’t get the authority you seek, but at least you won’t unwittingly overstep your bounds. Here again, less authority is sometimes better. The need to check back for certain decisions may be strategically helpful, and may enable you to be more creative in inventing options.

Is it okay to bluff or puff during a negotiation? If I do not want to be a positional hard bargainer, does that mean I can’t bluff or puff at all?

One man’s puff is another’s positive spin. One woman’s bluff is another’s best foot forward.

Lying about a material fact in a negotiation is unethical, and it is almost certainly grounds for legal action. In certain circumstances, creating a false impression or failing to disclose material information may be a formal ethical breach and actionable as well.

Even a cooperative, creative negotiator, however, must have a sense of strategy. As long as what you bring to the table has real value, you need not reveal all the circumstances making you desperate for a deal. Thus, if you are negotiating the terms of a job offer, there is nothing wrong with describing the major projects for which you have been responsible, and the likely next step on the corporate ladder in your current company. There is no shame in describing your achievements in a positive light. You need not mention that the new division president is impossible to deal with or that one or two projects have not turned out well. This is not hard bargaining; it is effective self-advocacy or salesmanship.

When asked by the other side to name a dollar figure, is it okay to state my range?

Not unless you can be happy with a deal that is at the least favorable end of that range—or worse. If you tell someone that you would pay $20,000 to $25,000 for a piece of property, rest assured that you will pay at least $25,000. That is the only number he will pay attention to.

The only reason to mention a range occurs toward the end of the negotiating process, to discourage the other side from pushing you beyond it. After several rounds of back and forth on a dollar figure, you are at $23,000, and the other side is at $30,000 and seems to be pushing for a deal at approximately $28,000. You could say, "My preferred range walking into this negotiation was $20,000 to $23,000, but not above $25,000." Revealing your range may make it easier for the seller to accept $25,000 because he will feel that he has pushed you to the top.

Integrative or win-win negotiations

In business, essentially integrative negotiations are more likely to take place

• in structuring complex, long-term partnerships or other collaborations
• after financial terms (or the competitive aspects) of a deal have been set
• among partners or co-venturers who value their long-term relationship
• between professional colleagues or superiors and subordinates whose long-term interests benefit from the other’s satisfaction.

In a win-win negotiation, your task is to "create" as much value as possible for you and for the other side. Often, the two sides’ interests do not compete at all. Their task is to arrive at a deal that integrates their interests as efficiently as possible. Agreeing to more of what one negotiator values does not require the other to take less of anything he or she values. The ability of one to claim or win what one side wants or needs in the deal does not detract from the other’s ability to claim or win just as much. Cooperation carries no cost here; indeed, cooperation and disclosure of information make you more effective.

In a win-win negotiation, there are often many items or issues to be negotiated; opportunities for creativity abound and the relationship between the two negotiators is often highly valued.

When participating in a win-win negotiation, do the following:

• Provide significant information about your circumstances. Explain why you want to make a deal. Talk about your real interests or business constraints. Reveal and explain your preferences among issues or options. Consider and reveal any additional capabilities or resources you have that might meet their interests, and could be added to the deal. However, if the parties’ interests are in conflict at all, it is generally not wise to reveal your BATNA or to state your minimal requirements for a deal.
• Learn as much as possible about the other side’s circumstances and preferences—including why they want to make a deal, what their real interests and business constraints are, what their preferences among issues or options are, and what additional capabilities or resources they have that might meet your interests and could be added to the deal.
• Use what you learn to find creative options that will meet both of your interests to the greatest extent possible.

Zero-sum negotiations

Classic examples of zero-sum negotiations include

• the sale of a house, where the buyer and the seller do not know one another
• the commodities market, in which the vendor and purchaser negotiate over price—of, say, silver, or hog bellies.

In a zero-sum negotiation, you are competing to "claim" value for yourself—to take it away from the other party. Cooperation and disclosure of information can make you less effective.

Often, there is only one issue in a zero-sum negotiation: money. The seller’s goal is to negotiate as high a price as possible; the buyer’s goal is to negotiate as low a price as possible. A dollar more to one side is a dollar less to the other. Thus, the seller and the buyer compete to claim the best deal possible for themselves, and bottom lines define what is possible.

A "tug of war" is the underlying negotiation dynamic (whether the parties have friendly or difficult styles). The goal of each negotiator is to "pull" the final deal point as close to the other side’s reservation price as possible (or even beyond it). They are competing to claim as much of the value in the ZOPA as possible.

In such a situation, it is impossible to make tradeoffs based on differing preferences. Because there is only one issue, you can’t trade more of what is highly valued by one party against a different item or issue highly valued by the other party. Thus, the deal is confined: there are no opportunities for creativity, or for enlarging the scope of the negotiation.

Similarly, relationship and reputation are completely irrelevant: the negotiators are not willing to trade value in the deal for value in their relationship with the other negotiator.

To achieve success in a zero-sum negotiation, remember the following:

• Harness the power of anchoring. The first offer can become a strong psychological anchor, one that sets the bargaining range. Studies show that negotiation outcomes often correlate to the first offer. So start at the right place.
• Do not disclose any significant information about your circumstances—including why you want to make a deal, what your real interests or business constraints are, what your preferences among issues or options are, and what your BATNA and reservation price are.
• Learn as much as possible about the other side’s circumstances and preferences—including why they want to make a deal, what their real interests and business constraints are, what their preferences among issues or options are. To learn about the other side’s interests and concerns, you should
  • do preparatory research
  • contact sources within the industry
  • check potentially relevant business publications
  • review annual reports (or public filings)
  • ask questions informally of the negotiator or others within the company
  • imagine what your interests, preferences, and needs would be if you were in their position
  • ask questions during the formal negotiation session.
• Exploit what you learn about the other side in setting your first offer or demand. Based on what you learned about the other side’s BATNA and what value you believe the deal would hold for them,
  • set your first dollar offer somewhat above what you believe to be their reservation price
  • attach a high price to what they value most (even if it costs you little)
  • use time to your advantage if you know that they face an external deadline.
• Don’t overshoot. If you claim aggressively or greedily, the other side may walk away. You will have lost the opportunity to make a deal that would have been better than both sides’ BATNAs. If you claim aggressively or greedily, the other side may walk away. You will have lost the opportunity to make a deal that would have been better than both sides’ BATNAs.

  For example, assume that you have been approached by a prospective buyer interested in a piece of commercial real estate owned by your company. Your reservation price is $250,000; you think the property is worth $250,000 to $300,000, based upon the general market price per square foot in that area. You also know that the property is unique and may have great value for a particular buyer. This buyer told you that he has not found any other property suitable for his business in the town and that he desperately needs to relocate. In your initial round of negotiations, you decide to demand $400,000 for the property. The buyer looks disappointed, gets up and walks out the door, saying "there is no use wasting our time." In fact, the buyer would have been willing to pay up to $275,000 for the property. Unfortunately, your high initial demand drove the buyer away. You have missed the opportunity to make a favorable deal.

Types of Negotiation

There are essentially two kinds of negotiation:

• A zero-sum negotiation, in which the parties compete over the distribution of the benefits of an agreement. This is also known as a "distributive" negotiation.
• An integrative or win-win negotiation, in which the parties cooperate to achieve maximum benefits by integrating their interests into an agreement. This is also known as an "integrative" negotiation.

Most, if not all, of your negotiations combine elements of both types: there will be some direct competition between the parties’ interests and goals, as well as some opportunities to integrate the parties’ interests and preferences. But for the purposes of understanding, let’s examine each type in its pure form right now.

What is ZOPA (Zone of Possible Agreement)?

The "Zone of Possible Agreement" is the area in which a deal can take place. Each party’s reservation price determines one end of the ZOPA. The ZOPA itself exists (if at all) in the overlap between these high and low limits, that is, between the parties’ reservation prices.

Here is an illustration. A buyer has set a reservation price of $275,000 for the purchase of a commercial warehouse (and would like to pay as little as possible). The seller has set a reservation price of $250,000 (and would like to obtain as much as possible). The ZOPA, therefore, is the range between $250,000 and $275,000.

If the numbers were reversed, and the buyer had set a reservation price of $250,000 while the seller had set a reservation price of $275,000, there would be no ZOPA—no overlap in the ranges in which they would agree. No agreement would be possible, no matter how skilled the negotiators, unless there were other elements of value to be considered—or one or both sides’ reservation prices changed.

What is Reservation Price in Negotiations?

Your reservation price (also referred to as your "walk-away") is the least favorable point at which you would accept a deal. Your reservation price should be derived from your BATNA, but it is not usually the same thing. If the deal is only about money, however, and a credible dollar offer is your BATNA, then your reservation price would be approximately equal to your BATNA.

Example: When preparing to negotiate with a commercial landlord over a lease for office space, you determined that you would not pay more than $20 per square foot in a downtown high-rise. If more than that is required, you will walk away and attempt to lease space in a different building. At the end of a lengthy negotiation session, the landlord declares that he will not accept less than $25 per square foot. You graciously suggest that the negotiations be terminated and walk away from the deal

What is BATNA?

BATNA is the acronym for "Best Alternative to a Negotiated Agreement." Knowing your BATNA means knowing what you will do or what will happen if you do not reach agreement in the negotiation at hand.

For example, if you are negotiating with a potential client about a month-long consulting assignment, your BATNA might be to spend the month developing marketing materials for other potential clients, which is likely to be more profitable.

Negotiation - Why do we negotiate?

Negotiation occurs throughout your professional and personal life. It may be a formal affair that takes place across the proverbial bargaining table, in which you negotiate over price and performance, or the complex terms of a partnership venture. But it may just as easily involve a very simple deal or a very messy dispute. Given the money, issues, and emotions that are regularly involved in negotiations, even a modest improvement in your negotiating skill can yield a sizable payoff.

When you don’t have the power to force a certain outcome or behavior, you seek to negotiate in order to influence that outcome or behavior. You agree to negotiate because you believe it is to your advantage to do so. But a negotiated solution is advantageous to you only under certain conditions—that is, only if you don’t have a better option. Any successful negotiation, therefore, must have a fundamental framework established by each side knowing

• what its best alternative to a negotiated deal is
• what its minimum threshold for a negotiated deal is
• how flexible it is willing to be, and precisely what tradeoffs it is willing to make.

Three concepts are especially important for establishing this framework: BATNA (Best Alternative to a Negotiated Agreement), reservation price, and ZOPA (Zone of Possible Agreement).

(More to come...)