Thursday, June 23, 2016

Three golden rules in negotiation

Yesterday, I attended a dinner with my ex-colleagues and ex-bosses. They belonged to the government a decade ago, and we were together engaging in the enforcement of the Medical Treatment and Supervision Act, a new legislation of forensic mental health in Japan. It was a tough but exciting experience for me.

I have learned many things from the conversation with them. I recognized again about the essence of negotiation at that time. Negotiation is generally exhausting act, and it is not easy to make the opponent accept your request. There are some golden rules you must not miss, at least not to make efforts in vain. I summarize them into three tips:

1. Estimate the worst case scenario.
This rule is famous, as being emphasized in Harvard University. You imagine what will happen if any negotiation results in failure. At last, which will cry for the moon, you or the opponent? If the answer is the latter, you may stay here as you wish. The opponent must take the next move. Or, you can make a proposal not to realize the worst case. The opponent will have no choice but to surrender. If you are more suffering when all negotiations are unsuccessful, you have to find a point of compromise. This difference is crucial. In many cases, in reality, the both will lose profit when the negotiation fails. You can discuss the matter with the opponent sharing the stance to avoid this result.

Harvard Law School: Negotiation and Leadership

2. Be aware of who is the casting voter.
In many negotiations, only a few people have the right to make a decision. It is wasting time for you to talk with opponents who have no vote. When you call for a customer service, the telephone operator never accepts your request directly, with making an apology that he has no authority to make a decision. In a tough negotiation, you should not bring the boss easily to the field of negotiation. Your opponent also tends to hide who is the decision maker. By contrast, you can reveal the process of decision making to the opponent in particular cases. For example, when the deadline is approaching fast, and your opponent is disadvantageous in a negotiation, you can let your boss appear in front of your opponent. Your opponent will be eager to make a final contract as soon as possible because your boss represents the final chance of negotiation. In another case, some small contracts were accomplished previously each of which a certain person was involved. The opponent has recognized that that person has the casting vote regardless of his position. You can let him propose a plan on the table; then the opponent will consider that this plan is the final option.

3. Think about the remaining matter.
This point can be ignored in many theoretical setting. But it is quite important. In a table game, you can get the victory after deceiving your opponent. However, in the real situation, your opponent will survive after the negotiation in most cases. Prisoners’ dilemma, a popular concept for studying game theory, is a good example. Each prisoner gains profit if they betray the opponent, regardless of the opponent’s behavior. As a result, the both betray each other, leading to an undesirable result. However, in reality, betrayal is a very risky option. Even if you can avoid sanction for the reward of betraying the opponent, you will be fearful to the revenge of the opponent. Competitors in business are in many cases allies with a longitudinal point of view. The best strategy in theory is not always the best in real.

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