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Basic Principles Make You a Smarter Negotiator
The way that you conduct yourself in a negotiation can dramatically influence the outcome. I’ve been teaching negotiating to business leaders throughout North America since 1982 and I’ve distilled this down to five essential principles. These principles are always at work for you and will help you smoothly get what you want:
Get the Other Side to Commit First
Power Negotiators know that you’re usually better off if you can get the other side to commit to a position first. Several reasons are obvious:
1. Their first offer may be much better than you expected.
2. It gives you information about them before you have to tell them anything.
3. It enables you to bracket their proposal. If they state a price first, you can bracket them, so if you end up splitting the difference, you’ll get what you want. If they can get you to commit first, they can then bracket your proposal. Then if you end up splitting the difference, they get what they wanted.
The less you know about the other side or the proposition that you’re negotiating, the more important the principle of not going first becomes. If the Beatles’ manager Brian Epstein had understood this principle he could have made the Fab Four millions more on their first movie. United Artists wanted to cash in on the popularity of the singing group but was reluctant to go out on a limb because United Artists didn’t know how long the Beatles would stay popular. They could have been a fleeting success that fizzled out long before their movie hit the screens. So they planned it as an inexpensively made exploitation movie and budgeted only $300,000 to make it. This was clearly not enough to pay the Beatles a high salary. So United Artists planned to offer the Beatles as much as 25 percent of the profits. The Beatles were such a worldwide sensation in 1963 that the producer was very reluctant to ask them to name their price first, but he had the courage to stay with the rule. He offered Epstein $25,000 up front and asked him what percentage of the profits he thought would be fair.
Brian Epstein didn’t know the movie business and should have been smart enough to play Reluctant Buyer and use Good Guy/Bad Guy. He should have said, "I don’t think they’d be interested in taking the time to make a movie, but if you’ll give me your very best offer, I’ll take it to them and see what I can do for you with them." Instead, his ego wouldn’t let him play dumb, so he assertively stated that they would have to get 7.5 percent of the profits or they wouldn’t do it. This slight tactical error cost the group millions when the director Richard Lester, to every one’s surprise, created a brilliantly humorous portrait of a day in the group’s life that became a worldwide success.
If both sides have learned that they shouldn’t go first, you can’t sit there forever with both sides refusing to put a number on the table, but as a rule you should always find out what the other side wants to do first.
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Copyright© 2002, Roger Dawson
Copyright © 2002, The Negotiator Magazine