negotiation strategy

Master Negotiator Strategy

To become a Master Negotiator, you have to request more than you expect to get. Henry Kissinger encapsulated this maxim in the following sentence:

Effectiveness at the conference table depends upon overstating one’s demands.”

To come up with good reasons for overstating your demands, try answering these questions:

  • When in a store, should you ask for a bigger discount than you expect to get?
  • When preparing for a job trip, should you ask for an executive suite if you expect to get a private office?
  • When applying for a job, should you ask for a bigger salary and better benefits than you are being offered?
  • When in a restaurant, should you ask for the cancellation of the entire bill for a bad meal or settle for a discount?

If you work in sales, answer these questions:

  • Why should you ask a buyer to recommend your products/services to friends if you are convinced that they’ll do it anyway?
  • Why should you charge a full list price if it’s considerably higher than the price the customer is paying now?
  • Why should you ask a customer to purchase the most expensive product in the line if you know that they are extremely stingy?
  • Why should you offer an extended warranty to a customer who has never bought one before?

If you had approached this mental exercise seriously, the chances are that you thought of many reasons to ask for more at the negotiating table. The most obvious reason to hike up your demands is to secure yourself some negotiating room. In sales, it is always possible to knock down a price; however, it is virtually impossible to go up on a price. The exact opposite happens when you are buying: you can go up, but you cannot go down. For this reason, what you should be aiming at is a maximum plausible position (MMP). This is the most you can request without appearing unreasonable to the other side in negotiations.

Know Less Ask More

No matter how counterintuitive it seems, a negotiator with the least information usually does better. The less you know about the other party, the higher your MMP should be.  There are two reasons for this:

  1. Your assumptions might be off. When you don’t know the other person’s needs and possibilities, they might be able and willing to pay more than you expect. If the opposite side is selling, they might make more generous concessions than you think.
  2. In new relationships, you’ll get much more by appearing cooperative and making larger concessions. It is only possible if your initial MMP is high. Also, the better you know the other party, the more flexible you are in modifying your position. When you do not know your opponent, drive up your MMP.

Imply Flexibility

When your initial request exceeds your actual MMP, imply some flexibility. Otherwise, the other party might be incensed by your ‘take it or leave it’ attitude, which would prompt them to walk away from the negotiating table. Upon hearing your ridiculously-high opening position, they would retort with something along the lines of: “In such a case, there’s nothing to talk about.” However, you would be more successful with an inflated opening position if you suggest that there is some room for negotiation.

Let’s say you are buying a house and saying the following:

I do realize that you ask for $300,000 for the real estate. It seems to me that you are a reasonable person and ask a fair price based on your knowledge of the property. And you are absolutely justified in doing so since you might know something about the house that is unavailable to me. However, judging from the research I’ve conducted, the price should be closer to $240,000.

The seller might think that the price is laughably low; however, after seeing your sincerity, they would be more willing to negotiate and try to drive it up.

If you work in sales, you might say the following to a buyer:

The offer is not final – we might adjust it once we know you and your needs better – however, based on your knowledge of your order quantity, product quality, and choice of packaging, the asking price is $9.75 per item.

The buyer might oppose the price and consider it outrageous; nonetheless, they would be more likely to negotiate upon seeing your flexibility.

Don’t be Afraid to Ask for More

Unless you are already a Master Negotiator, you will have a problem with driving up your MMP. Therefore, the position you are likely to ask for is, in actuality, much lower than it should be. That’s okay; we are all afraid of ridicule. No one likes to be laughed at when making an unreasonably high request. This fear might undermine your confidence and diminish your negotiating power.

As an aspiring negotiator, you should stop worrying about asking too much. The fear is more pernicious than a refusal. Banish it.

Ask for More, and You Might Get It

If you are familiar with the power of positive thinking, the following reason for making brave requests will be obvious to you:

You might get it!

The alignment of the universe might be propitious that day. What if your patron saint thinks:

Look at that hard-working person. He has been trying so hard, why not to help him?

In other words, you might get what you want by simply asking. The only way to find out if it will work is to go and try.

Increase in Perceived Value

The value of your offer rises along with the asking price. It means that by requesting more than you expect to get, you modify the perception of your service or product in the customer’s mind. If you are selling a car, the high asking price will make the buyer think that the product costs more than it actually does. In case of a job interview, an HR manager will think that you are more experienced and knowledgeable employee than you really are if you ask for a higher salary.

Break an Impasse

Another undeniable benefit of making bold initial requests is their ability to break an impasse in negotiations. Consider a famous Persian Gulf War case: what did we request Saddam Hussein to do? In his State of the Union address, President George Bush, asked the Iraqi President to 1) move his military personnel out of Kuwait, 2) restore the legitimate government of the occupied country, and 3) issue reparations for the inflicted damage to Kuwait. The opening request was powerful. Unfortunately, Bush undermined its power by stating that it was non-negotiable. By indicating that the opening position is the least for which he was ready to settle, he drove the negotiations into a deadlock. The leader of Iraq didn’t have room for bargaining.

An alternative approach would be to make an acceptable offer and hint that it might be improved even further. President Bush should have negotiated for the exile of Iraqi puppets and cronies from Kuwait. He should also have followed with the request to oversee the removal of military equipment from the country. Finally, he should have indicated some flexibility and only afterward requested the reparations.

If you don’t think that Saddam Hussein is a kind of person to be reasoned with, I agree. Nonetheless, by sounding unshakable, one risks to bring negotiations to a standstill.

There are two conclusions to be drawn from the scenario discussed above. The first one is that State Department negotiators are irredeemable, bumbling idiots. The second conclusion you might reach is that President Bush intentionally tried to get into a deadlock. Why? Because it served the country’s purpose. The President was unwilling to settle for the three conditions he laid out before Saddam Hussein. According to the then Army general Norman Schwarzkopf, “The minute we got there, we understood that anything less than a military victory was a defeat for the United States.” If one gives a moment’s thought to that situation, they would realize that allowing Iraqi President to transfer more than half a million troops across the border was not an option. After all, they could have been deployed at any moment. Therefore, the country opted for the military solution.

The situation under discussion called for a deadlock. You, as a negotiator, should be able to recognize such situations and avoid inadvertently creating deadlocks.

Let the Other Party “Win”

Another reason to drive up your asking price is to let the other party think that they have won. Master Negotiators don’t venture into a discussion with an offer that equals their expectations. If this were the case, the other side wouldn’t feel satisfied.

  • Only novices open negotiations with their best offer.
  • Only inexperienced job seekers are afraid of asking for higher salary and better benefits.
  • Only the first-time homeowner is afraid to ask “too much” when selling their real estate.
  • Only a rookie salesperson approaches their manager and requests permission to cut a price on a product to attract a customer who might be unwilling to pay the full price.

Master Negotiators know the power of raising stakes and letting the other party feel the victory. Asking for more is not a minor rule in their rulebook – it’s a cornerstone principle of their negotiating strategy.

Let’s summarize the five key reasons for asking more in negotiations:

  1. You might get what you ask for.
  2. It gives you the space for a maneuver.
  3. It increases the perceived value of your product/service.
  4. It prevents the emergence of gridlocks.
  5. It allows the other party to believe that they have won.

Outlandish Initial Demands

It is not uncommon for high-stakes negotiations, such as strike actions in professional associations, to open with outlandish initial demands. A recent negotiation between a union and a company was characterized by unbelievably outrageous demands on both sides. The union requested a tripling of workers’ salaries. The company retorted with an attempt to destroy the union’s power at one of its key locations by making an ‘open shop’ as a condition of hiring. A Master Negotiator involved in the dispute knew that the initial demands are always intentionally inflated; therefore, they were not bothered by them.

If you find yourself in a similar situation, you should keep in mind that the outlandish initial demands are a normal state of affairs. Do not be disheartened by them; don’t dig in your heals. Instead, try to meet the other side in the middle. Then, you can both triumphantly announce a victory at a press conference.

Several years ago, an attorney John Broadfoot tried to put the ‘ask for more’ theory to test. He negotiated with a real estate agent on behest of his client. Even though the attorney was convinced that he secured a great deal for the client, he wanted to try the theory and further sweeten the deal. Therefore, Broadfoot came up with 23 paragraphs of initial requests some of which were ridiculously unreasonable. The attorney expected that at least half of his requests would be rejected right away. However, he was surprised to find out that only a few requests were denied by the seller. Broadfoot insisted on his initial demands for several days and then “reluctantly” conceded one of them. Nonetheless, the real estate agent and the seller felt that they walked away from negotiations with a victory under their belt.

Remember these powerful lessons if you want to succeed in the world of negotiations:

  • always ask for more
  • make the other side think they have “won.”