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What’s the book Negotiation Genius about? Are you ready to be an expert negotiator who gets the best deals?
In Negotiation Genius, Deepak Malhotra and Max H. Bazerman give advice to prepare, create value, and maximize satisfaction in your negotiations. They also look at common obstacles you might face and explore ways to avoid them or use them to your advantage.
Read below for a brief Negotiation Genius book overview.
Negotiation Genius by Deepak Malhotra and Max H. Bazerman
In their Negotiation Genius book, negotiation experts Deepak Malhotra and Max H. Bazerman provide a comprehensive system for negotiating successfully in all areas of your life, whether you’re negotiating a deal with a customer, a salary with a potential employer, or how to divide household chores with your roommate. To be a “negotiation genius,” you must prepare extensively before a negotiation and learn to not only claim but create value. By applying the authors’ strategies, you can avoid common negotiation pitfalls, make attractive deals, and strengthen relationships along the way.
Malhotra and Bazerman are best-selling authors and professors at the Harvard Business School (HBS). Their negotiation techniques are based on years of research, their experiences as negotiators and consultants, and the courses they teach at HBS.
Prepare for Your Negotiation
According to Malhotra and Bazerman, the first step to good negotiation is preparation. Before you enter a negotiation, you must gather as much information as you can about the other party. Being well-prepared allows you to identify opportunities to add value to both parties, recognize the most effective negotiation strategies to use, and anticipate potential challenges.
Calculate BATNAs, RVs, and the ZOPA
The authors suggest you prepare three main things before entering your negotiation: your and your counterpart’s best alternative to a negotiated agreement (BATNA), reservation value (RV), and zone of possible agreement (ZOPA).
Step 1: Calculate Your BATNA and RV
In every negotiation, you want to make a deal that leaves you better off than if you hadn’t negotiated. To ensure this outcome, you must determine when you should walk away. You can do this by calculating your best alternative to a negotiated agreement (BATNA) and your reservation value (RV).
Your BATNA is the course of action you’ll take if your current negotiation fails and ends without a deal. For example, if you’re selling a boat, your BATNA is what you’ll do if you can’t agree on a price with a potential buyer—for example, you might take a lower offer from another buyer.
To determine what your BATNA is, identify all available options should your current negotiation fail. Then, select the option that has the highest value as your BATNA. For example, if your alternative options are to sell your boat to another buyer for less money, keep the boat for yourself, or give it away to a relative, you might decide that accepting the lower offer gives you the most value out of the three and should therefore be your BATNA.
Next, define your RV, the worst deal you’re willing to accept in your current negotiation. For example, this might be the highest price you’re willing to pay or the lowest price you’re willing to sell. You need to know your BATNA before you can accurately calculate your RV. Let’s continue the example to illustrate this.
You have two potential buyers for your boat. Buyer #1 has already offered you $9,000, but you think you can persuade them to increase their offer to $10,000. Now you’re negotiating with Buyer #2.
In your negotiation with Buyer #2, what is your best alternative option if the deal falls through, and what’s the lowest offer you’ll accept from Buyer #2? Since you know you can definitely get $9,000 from Buyer #1, which gives you more value than keeping the boat, that offer is your BATNA. And since you’re confident you can get Buyer #1 to give you $10,000 for the boat, $10,000 would be your RV in your negotiation with Buyer #2—you can walk away from anything less than $10,000 from Buyer #2 because you believe you can get $10,000 from Buyer #1.
Step 2: Calculate Your Counterpart’s BATNA and RV
To get the best possible deal for yourself, you must also calculate your counterpart’s BATNA and RV to assess how much value they’re willing to offer that you can seize.
First, calculate your counterpart’s BATNA by thinking about what they would do if the negotiation ended without a deal. Consider the information you’ve gathered in your research and think through possible alternatives. For example, if you and your counterpart fail to reach an agreement on your boat’s price, their alternatives may include finding another boat to purchase, renting, or waiting until a similar model is available.
Next, calculate your counterpart’s RV by considering why they want to make a deal. Then, think about how much benefit they expect from this desired outcome. For example, if you think your counterpart plans to flip your boat for a profit, you might research how valuable that could be. Then, you could reason that their RV is higher (they’re willing to pay more) than if they were simply using the boat for entertainment purposes.
Step 3: Calculate the ZOPA
Once you’ve calculated BATNAs and RVs, identify the zone of possible agreement (ZOPA): The space between your RV and your counterpart’s RV. For example, if the lowest you’re willing to sell is $10,000 and the highest your counterpart’s willing to pay is $15,000, then the ZOPA is between $10,000 and $15,000. This range gives you a more tangible measurement of how much value you can either claim or surrender during a negotiation. To claim the most value, you want to make a deal as close to your counterpart’s RV as possible.
Uncover Hidden Information
Beyond your counterpart’s RV or interests, you should also pay attention to less obvious factors that may influence their willingness to accept or reject your offer. The authors suggest you look for information that negotiators commonly overlook, such as:
1. Other parties involved. Reflect on how the actions of other parties may impact a negotiation. If you only focus on the negotiation at hand, you may achieve a deal that produces less value rather than more. For example, if two parties are in a bidding war for a company and a deal will result in a financial loss for the losing party, the two parties may continue to raise their bids until they both end up worse off. The winning party overpays while the losing party loses money.
2. How the other side makes decisions. Your counterpart may be bound to specific decision-making rules, such as being required to weigh criteria differently or needing to get the approval of a supervisor. By discovering this, you can figure out how to meet these criteria in a way that’s most suitable for you.
3. How strong the other side’s position is. Negotiators may overlook their competitor’s strengths or underestimate how much information they have. To avoid this, the authors recommend you deliberately consider what unique advantages your competitors may have.
Create and Seize Value During Your Negotiation
Now that you’ve learned to gather information and estimate BATNAs and RVs, let’s dive into the negotiation process itself. When negotiating, your goal should be to get the best possible deal for yourself while strengthening your relationship with the other party. Building relationships ensures cooperation and enhances your reputation as a negotiator. To achieve a good deal and a stronger relationship, you must not only claim but create value.
According to Malhotra and Bazerman, value is anything that people consider desirable or useful. Others may not value the same things that you value. Because value depends on perception, you must find ways to make more value available and apparent during the negotiation. In the following sections, we’ll explore tips for claiming and creating value during your negotiation.
Gather Information About Your Counterpart
At the start of a negotiation, you only have assumptions and estimates to work from. To create value, you must gather information about the other side’s needs and interests, verify or correct your assumptions, and fill gaps in your understanding. Here are some tips on how you can do that:
Tip #1: Build trust. Use vocabulary that your counterpart understands and consider spending time with them outside of the negotiation setting. This will make them more cooperative and open to sharing information with you.
Tip #2: Ask indirect questions. Most likely, your counterpart will be unwilling to directly share their RV, so you must use indirect questions to tease out information that could help you identify their true RV. For example, if you’re negotiating a salary for a job, you might ask questions about the company’s outlook and financial health.
Tip #3: Share some information. When you share information, your counterpart will feel inclined to reciprocate. The authors suggest you tell them what your priorities are but don’t give away anything pivotal, like your RV.
Create Value Through Logrolling
After you’ve shared and gathered information, consider what you’ve learned about their needs and interests to create value through logrolling—trading negotiation items that your counterpart cares about more for things that you care about more. Recognize how your priorities differ and use those differences to make deals that are agreeable for both sides. For example, if you hate driving in traffic, and your partner dislikes cooking, you might agree to cook dinner while your partner agrees to pick up the kids from school.
Malhotra and Bazerman give tips for creating value through logrolling:
Step #1: Identify your interests. Since logrolling requires trading between multiple items, you should first make a list of everything you value that the other side may be able to provide (when negotiating the purchase of a home, this could be price, move-in date, inclusion of furniture, and so on). Then, create a scoring system using a common metric, like a number of points out of 100 or a dollar value based on how important each item is to you. This method allows you to compare items more easily and decide whether to accept or reject their offer.
For example, if the person you’re trying to buy a home from offers to include some furniture in the price of the house (30 points) and lets you move in early (10 points), you might be OK if they don’t renovate their basement ahead of the purchase because you only value that renovation at 20 points.
Step #2: Identify your counterpart’s underlying interests. Discover their underlying interests by asking yourself why your counterpart is making their demands. This can clue you in to what they really want and help you find other ways to satisfy their needs, especially if you find their demands hard to meet. For example, if your counterpart demands a lower price, you might discover that they’re mostly concerned with wasting money on a faulty product. Instead of lowering your price, you might then offer a warranty.
Step #3: Discuss multiple issues at a time. To create more opportunities for logrolling, the authors suggest you introduce as many issues as you can into the negotiation. These might include timing, quality, price, contract length, warranties, and so on. Discussing multiple issues at a time helps you identify different priorities you and your counterpart have and allows you to make package offers. For example, if you care more about price and your counterpart cares more about timing, you could ask for a higher price for your product but offer to deliver it sooner.
Decide Whether to Make the First Offer
At some point during your negotiation, you must decide whether to make the first offer or allow the other party to make it. According to Malhotra and Bazerman, if you’re confident you know what your counterpart’s RV is, you should make the first offer. Having an accurate estimate of their RV allows you to make a good first offer that’s sufficiently aggressive and allows you to capture the most value (as opposed to making an offer that’s too weak or too aggressive).
The authors argue that the first offer largely impacts the outcome of a negotiation because of the anchoring effect. The anchoring effect is the tendency for people to be swayed by the first piece of information presented. By making the first offer, you set a reference point that the other side must adapt to. For example, if you ask for a high salary in a job negotiation, you signal to the recruiter that you have a lot of value. This makes it challenging for the recruiter to justify a much lower offer.
Conversely, if you’re uncertain about your counterpart’s RV, you should let the other side make the first offer. This way, you avoid making an offer that’s too soft or too aggressive.
However, if you let your counterpart make the first offer, you must resist being influenced by the anchor by shifting the focus of the conversation away from it. The more you talk about the anchor, the more it affects the negotiation. To pivot the conversation, you can reply that you view things differently than they do and shift the conversation to a different topic as a way to find common ground. Another way you can respond is by making an aggressive counteroffer and then suggesting both sides moderate their offers. You can then take control of the conversation by explaining why you made your counteroffer.
Make and Invite Fair Concessions
After voicing your initial offers, you and your counterpart will begin haggling—taking turns making concessions until you reach an agreement.
To ensure both parties take turns making concessions, you must invite reciprocation: Clearly communicate when you’re making a concession and state that you expect reciprocation. Practice being comfortable with silence and resist making further concessions if your counterpart doesn’t reciprocate.
When concessions progressively get smaller, it may mean that you’re approaching your counterpart’s RV and they’re less flexible about how much they can concede. However, be wary of the other side using this as a tactic to confuse you about their real limits.
Use Influence Tactics to Make Your Offer More Attractive
Now that you’ve learned to gather information, create value, and overcome obstacles, let’s look at how you can make your offer seem more attractive by using psychology-based techniques and taking advantage of cognitive biases.
1. Highlight potential losses. People tend to fear losing things more than they care to gain things. To make your offer sound more attractive, focus on what your counterpart stands to lose rather than gain.
2. Bundle negatives and split up positives. People prefer to face one big loss rather than many small ones and receive many small gains over one big one. For example, when asking for concessions, you might ask for them all at once. When giving concessions, split them up and offer them separately throughout your negotiation. This minimizes the pain of losses and maximizes the joy of gains.
3. Use the “door-in-the-face” technique. Make an initial extreme demand that your counterpart will likely refuse. Then, ask for something less extreme—what you really want. Your second demand will seem like a concession and sound much more reasonable in comparison, which makes your counterpart more willing to comply.
4. Use the “foot-in-the-door” technique. Conversely, you can make a small, easy demand your counterpart will likely agree to. Then, ask for what you really want from them. Because they already complied with your previous demand, they’ll feel committed to continue helping you.
5. Justify your demands. The authors cite studies showing that people are more likely to agree with a demand if you provide a reason for it—even if the reason itself isn’t very convincing. This is because our brains are hardwired to help others with legitimate needs to form mutually beneficial relationships.
6. Use social proof. People tend to base their decisions on other people’s actions and opinions. To make your offer sound more appealing, show your counterpart how other people are interested in what you have to offer. For example, if you’re negotiating a salary at a job interview, you might discuss offers you’ve received from other companies.
7. Give gifts to encourage reciprocation. The authors add that the size of the gift doesn’t matter. Any concession tends to make your counterpart feel more inclined to return something of value to you.
Overcome Obstacles That Affect Negotiations
Now that we’ve discussed the negotiation process, let’s look into some common obstacles during negotiations that can impede your ability to understand and communicate with your counterpart.
Cognitive Biases
According to the authors, cognitive biases are common errors in how we think, interpret information, and make decisions that can prevent us from negotiating effectively and recognizing ways to maximize value creation. To be an effective negotiator, you must learn to recognize and confront your biases, as well as those of your negotiation counterpart. The authors argue that it’s much easier to achieve a good outcome with a good negotiator than one who’s thinking irrationally.
First, to recognize and overcome your biases, the authors suggest you try to adopt an outside perspective. You can do this by discussing your negotiation with an impartial expert or friend. You could also ask yourself how you’d view the situation if you weren’t involved. Also, the authors recommend you avoid negotiating under time pressure, which prevents you from thinking clearly. Consider separating the negotiation into multiple sessions to give yourself a better chance of catching potential oversights or flaws in your reasoning.
Next, you should also help your counterpart deal with their biases so you can cooperate and agree on a mutually beneficial deal. Sometimes, the other person may act in a way that seems irrational to you—they may reject an attractive offer or get angry during the negotiation. In that case, you should try to give them more facts that they don’t know and try to understand why they feel or act that way. Likely, they simply don’t have enough information, are overwhelmed with emotions, or are influenced by factors you’re unaware of. Try to address the source of the problem and talk about how you can work together to meet their needs and interests.
Deception
Apart from recognizing cognitive biases, you must also learn how to handle deception during a negotiation. First, discourage lying by signaling to your counterpart that you’re well-prepared and have the ability to obtain and verify information. If you suspect that the other side’s lying, ask questions that you already know the answer to or ask multiple related questions that make it difficult for someone to keep their lies consistent. Depending on the situation, you should then decide whether you want to continue the negotiation or not.
If you distrust your counterpart but want to continue negotiating, consider proposing a contingency contract. A contingency contract is an agreement that leaves parts of your deal dependent on what happens in the future. For example, you may agree to buy your child a new gaming console but only allow them to play on school nights if they maintain an A in all of their classes.
A Weak Position
Sometimes you may find yourself negotiating with an extremely weak position with little to no bargaining power. In these situations, you might have a weak BATNA (few or no good alternatives) while your counterpart has a strong BATNA. The authors describe ways you can negotiate from a position of weakness:
Method #1: Focus on their weaknesses. Don’t reveal how weak you are to your counterpart but, instead, make their weaknesses apparent during the negotiation. The other side might also have a weak alternative, and they may need you as much (if not more) than you need them.
Method #2: Identify what differentiates you from your competitors that your counterpart also finds important. In doing so, you may overcome your weak position simply by highlighting your unique value.
Method #3: Leverage your weakness. If your position is extremely weak, the authors recommend you simply ask the other side to help you out of generosity and grant you some of your requests. By acknowledging your lack of power instead of negotiating aggressively, you might convince the other party to give more to you.
Method #4: Reduce the other side’s power. If possible, form alliances with other weak parties and negotiate collectively so that you can’t be pitted against one another. You can also directly combat the source of the other side’s power. For example, if you struggle to negotiate house rules with your roommate because they pay the larger portion of the rent and feel entitled to make more decisions, you could take on a side job to increase your income and contribute more to the rent. This way, you can reduce their power advantage.
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Here's what you'll find in our full Negotiation Genius summary:
- Why a good negotiation depends on your ability to create value
- How to avoid common negotiation pitfalls and make attractive deals
- How to decide whether or not to make the first offer
