Negotiation Playbook - The Fundamentals

It's no rocket science: the better you prepare for a (complex) negotiation, the better the chances for you to succeed. The key point is how you define the "preparation" and how much time you take to prepare. „Success depends upon previous preparation, and without such preparation there is sure to be failure“ (Confucius, Chinese Philosopher). Let’s have a look at the negotiation essentials.

So, let's take a look at the question "Is it better to make the first offer or let your counterpart open?" (from previous Part A)

More than three quarters of executives believe that it’s usually best not to make the first offer. They assume that by encouraging a counterpart to make the first offer, they will gain an information advantage. But research shows that this assumption is false. Below you can find an analysis of negotiation experiments, showing that every dollar higher in the first offer translates to about 50 cents more in the final agreement.

As we discussed in the previous class, first offers serve as anchors and they set the tone for the negotiation. When we hear a first offer, we find ourselves pulled in that direction, and have trouble adjusting our own judgments. Making the first offer has two other advantages. It signals confidence & strength, and it creates more flexibility to make concessions without getting stuck with a bad deal.

As we discussed before, the credibility of your first offer depends on having a legitimate rationale to back it up and should not be too extreme (otherwise you offend your counterpart or damage the relationship). And if your counterpart has better information than you, making the first offer can backfire. Just take a look again at the "When making the first offer" Matrix from the previous class.

The Negotiation Self Assessment Test (NSAT) - A

In order to get better at negotiating, you have to be honest to yourself and you need to know your preferred negotiation strategy that you apply in most situations. Each person, even with no distinctive knowledge about negotiation and conflict resolution strategies, has an inherent, preferred way of solving disputes and approaching bargaining situations. This test aims at discovering your favorite negotiation strategy.

The test consists of several questions. Each question offers you two possibilities to answer. It might happen that none of both applies completely to your situation - then choose the most appropriate one. But make sure to answer each question, otherwise the test is not valid.

Follow the link and the instructions.

My staff will evaluate your answers and you will get your personalized report in a few days after the submission.

Have fun!

The ground work of effective business negotiations are leadership and management skills. This is the ability to negotiate effectively in a wide range of business contexts including dealmaking, employment discussions, corporate team building, labor vs. management talks, contracts, handling disputes, employee compensation, business acquisitions, vendor pricing and sales, real estate leases, and the fulfillment of contract obligations. In all these business negotiations, with their different given settings, it is critical to be creative and you should be able to break the problem into smaller parts, considering unusual deal terms, and having your side brainstorm new ideas. Let’s dig into the ground work.