Chapter 4
The Lover and The Fighter: Choosing Your Negotiation Approach
Negotiation approaches fall into two main categories: the "lover" (cooperative) and the "fighter" (competitive). The cooperative approach seeks solutions beneficial for both parties, creating value through collaboration. The competitive approach views negotiation as a fight for value with winners and losers, focusing on claiming maximum value even at the other's expense. While you likely have a natural tendency toward one style, great negotiators know how to use both approaches strategically at different moments.
Before choosing your negotiation strategy, understand these six critical dynamics: First, know the game you're playing by observing the other side's actions, not just their words. Second, recognize that each move contains both substance (what's exchanged) and signals about approach. Third, you can't cooperate effectively against someone committed to competition. Fourth, sometimes competition is necessary to produce cooperation. Fifth, competition carries costs that can damage trust or kill deals. Finally, the best negotiators know when to compete and when to cooperate.
Understanding whether you're facing a competitive or cooperative negotiator is crucial but rarely as simple as asking directly. Instead, observe their actions. The author shares an experience with an opposing attorney who sent a deceptively cooperative-sounding letter about professional conduct that was actually a competitive weapon. Without experienced advice, the author might have misread the negotiation dynamic completely.
Every negotiation move contains both substance and signals about the negotiator's approach. Outrageous opening offers typically signal a competitive negotiation, while reasonable offers coupled with inquiries about your goals suggest cooperation. Reading these signals helps you understand the true nature of the negotiation you're in.
People often lose in negotiations because they take a cooperative approach when facing competition. Whether due to misinterpreting the situation or simply feeling more comfortable with cooperation, this mismatch is devastating. Competition overwhelms cooperation every time-when someone takes an extreme position, you must match their competitive approach or risk exploitation.
Ironically, competition can be necessary to create cooperation. When competitive negotiators extract easy concessions, they have no incentive to change tactics. By countering extreme positions with your own, you create distance that suggests no deal might happen-a potential loss for both sides. This pressure often forces both parties toward more cooperative approaches.
Negotiators, like pilots, must carefully plan their approach considering multiple factors. Using the Thomas-Kilmann grid, negotiators evaluate how important an issue is versus how important a relationship is. This determines where on the competitive-cooperative spectrum they should operate. High issue importance with low relationship importance suggests competition, while high relationship importance with low issue importance suggests accommodation. When both are important, compromise or collaboration becomes necessary.
Chapter 5
The Competitive Dance: Mastering the Predictable Patterns
Competitive negotiation is fundamental to market economies, determining "fair market value" through what willing buyers pay willing sellers. It's dramatic enough to inspire TV shows and movies, consequential enough to impact life-changing moments like home purchases and salary negotiations, and predictable enough to manage once you understand its patterns.
Competitive negotiation answers the question "Who gets how much?" - it's how people capture value in the world. An engineering firm demonstrated this when, after attending negotiation training, they boldly asked for 50% of a stormwater management project instead of their planned 33%, resulting in an additional $14 million in revenue. Beyond the immediate financial gain, they learned a repeatable lesson about capturing more value by simply asking for more.
Even if you philosophically prefer collaboration over competition, you'll inevitably face competitive negotiations throughout life. When justice is at stake - like protecting a child from abuse - competition becomes necessary. Whether you embrace competitive negotiation or not, you need to understand how to win when faced with it.
Car buying exemplifies competitive negotiation's predictable pattern. The process begins when you enter the dealership and are approached by an overly friendly salesperson who's sizing you up while asking personal questions. After the test drive, they orchestrate a comparison between your old car and potential new one. The negotiation starts with the MSRP as their position and your counteroffer (typically 20% lower). What follows is "the dance" - a series of back-and-forth concessions that grow smaller over time, with frustrating waiting periods between offers, gradually closing the gap until you settle near the midpoint.
Competitive negotiation follows eight predictable characteristics: (1) It assumes a fixed pie; (2) It's a zero-sum exchange where one side's gain is the other's loss; (3) Parties bargain from positions; (4) A series of concessions is necessary; (5) Each move gets smaller but takes longer; (6) Negotiations gravitate toward the midpoint of the first two reasonable offers; (7) You can't short-circuit the dance without paying a price; and (8) Tensions increase as the process progresses.
To leverage competitive negotiation's predictability, ask yourself four strategic questions: (1) How will you set up the process to close a gap in your favor? (2) Is the midpoint of the anticipated gap a good place to do a deal? (3) Does each concession maintain or improve the established midpoint? (4) How will you manage the tone and communication knowing tensions will rise?
Chapter 6
The Critical First Move: Setting the Stage for Success
The opening offer is the most critical element in competitive negotiation, as demonstrated by a technology company's sales team that increased profits by 3% simply by adding 10% to their price quotes. Despite initial resistance, this strategic adjustment produced significant results without decreasing sales volume, proving that negotiators are rewarded for their ambition.
Six common costly blunders with opening offers include: not dropping the anchor, putting comfort over strategy, using a "let's see what happens" approach, putting up a reasonable offer in response to an insulting offer, misunderstanding the purpose of the opening offer, and starting off too aggressively.
Anchoring is a powerful psychological process where people gravitate toward initial information when making decisions. Like Serendipity3's $69 hot dog that made their $17.95 burgers seem reasonable, the first proposal in negotiation becomes the reference point for all subsequent offers. To overcome anchor bias from others, increase your knowledge through research, mentally reject unreasonable anchors, and be prepared to drop your own strategic anchor.
Though making the first offer can cause anxiety, research shows it leads to better economic outcomes. To overcome this anxiety, practice role-playing first offers in safe settings and discuss your strategy with trusted colleagues. As expert Carol Frohlinger advises, "Don't bargain yourself down before you get to the table."
Taking a passive "let's see what happens" approach without a committed opening offer strategy leaves you vulnerable to the other side's influence. A young lawyer's experience with an insurance claim demonstrates this-when the claims professional initially valued a case at $35,000 but authorized $75,000 after receiving the plaintiff's $300,000 demand, it showed how powerfully opening offers can shift perceptions of value.
When facing an insulting offer, responding with a reasonable one can be a costly mistake. In a business acquisition case, a buyer responded to an $8 million asking price (significantly overvalued) with a reasonable $5 million offer based on proper valuation. This created a midpoint of $6.5 million-far above the buyer's maximum of $5.5 million. The buyer should have countered with $3-4 million to establish a more favorable midpoint.
Many mistakenly view opening offers as first attempts at reaching a deal, but they actually serve five strategic functions: starting the dance, dropping the anchor that sets parameters, managing the other side's expectations, creating possibility for a great deal, and putting you in control.
To prepare for this crucial move, answer three key questions: Who makes the first offer? Where do you start? And how do you make the offer? The author recommends capturing influence by going first, using an extreme position to allow flexibility to concede and manage expectations, and pairing a soft approach with an extreme offer.
Chapter 7
The Strategic Concession: Giving to Get What You Want
Concessions play three vital roles in negotiation: facilitating value exchange needed for agreement, communicating signals that manage expectations, and addressing psychological aspects of negotiation. To master concessions, top negotiators use seven essential tools.
First, set up the process with an extreme opening offer that creates room for substantial concessions. Without enough room to move, the other side perceives a take-it-or-leave-it approach, creating a sense of losing. One global organization struggled with being perceived as arrogant negotiators despite hiring economists to ensure fair deals. Their problem wasn't substance but process-they started with reasonable offers and refused to move. The solution was to start with more aggressive opening offers, allowing room for larger concessions.
Second, keep your target deal in mind throughout, ensuring the midpoint stays close to your target. For success, your target must be somewhat reasonable, and every move should be evaluated against whether the deal is progressing toward that target.
Third, let the deal come to you by making smaller concessions that capture more value despite creating tension. Despite the natural urge to conclude deals quickly, making smaller concessions and taking your time positions you to capture more value.
Fourth, manage perceptions by making the other side feel they're winning even when you're capturing more value. Sophisticated negotiators give opponents the perception of winning even when they're actually losing. Express reluctance and difficulty when making concessions through timing, process complexity, or communication style.
Fifth, create a win for the other side, as deals unprofitable to them eventually become problematic for you. J. Paul Getty shared his father's wisdom: "Never try to make all the money in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals."
Sixth, strategically say "no" to signal you've reached your bottom line. When buying his wife's car, John needed the salesman to refuse one of his requests to confirm he'd gotten the best deal possible. After successfully negotiating price reductions, trade-in value, and financing rate, John requested additional accessories until the salesman finally refused. This "no" signaled they'd reached the bottom line.
Finally, use linkage with the word "if" to connect different value pools. When negotiations reach an impasse, linkage strategically connects various value pools, ensuring you get value in exchange for what you give. One CEO trying to close his company's largest deal used linkage when a sports franchise wouldn't agree to his price. Instead of simply reducing the price, he identified seven things the franchise could provide that were valuable to his firm but cost the franchise little.
Competitive negotiation creates tension that most people instinctively avoid. The solution involves understanding the distinction between substance (the value being exchanged) and style (how you communicate). You can be competitive on substance while maintaining a cooperative style with professional, respectful communication.
Chapter 8
Beyond Positions: Uncovering the Hidden Interests
When competitive negotiation fails due to power imbalance, a creative, cooperative approach becomes essential. This approach moves beyond positions to uncover the underlying interests driving both parties, creating value rather than merely claiming it.
My first case as a lawyer involved a woman injured during a hospital transfer. Though her lawyer demanded $150,000, what she truly wanted was threefold: improved safety protocols, an apology, and continued access to the hospital. The litigation manager addressed these underlying interests directly-promising better transfer procedures, sincerely apologizing, and welcoming her future patronage. She cried in response, and we settled for far less than the original demand.
Cooperative negotiation creates value by understanding everyone's needs. When parties hold different positions on an issue, continuing to argue positions leads to escalation and potentially no deal. The transformative approach is to "transition from positions"-perhaps the most important concept in negotiation. By moving from positions to interests (including egos, fears, motives, values, goals, relationships, and circumstances), you discover what people truly care about.
Research shows only 30% of consumer decisions are based on logic or analysis-the remaining 70% are driven by emotion. Even in business transactions, people make decisions based more on how they feel about a deal than what they think about it. More specifically, people are driven by how they feel about themselves when considering doing business with you. As a negotiator, your job is to create a process where the other side feels good about themselves when saying yes.
When negotiating with formidable people, your objective remains finding ways to meet their needs while satisfying yours. Marillyn Hewson's negotiation with President Trump over the F-35 fighter plane contract demonstrates this approach brilliantly. After initial criticism from Trump about costs, Hewson hired Trump's former campaign manager to better understand the president's style and needs. She discovered Trump's interests centered on his image as a successful dealmaker and job creator. By promising to grow the workforce, reducing costs, and publicly supporting Trump's agenda, Hewson transformed a potentially adversarial relationship into a productive one.
The movie Saving Mr. Banks perfectly illustrates transitioning from positions to interests. When P.L. Travers refused to grant Walt Disney rights to Mary Poppins, Disney initially tried strengthening his position by impressing her with creative direction. After Travers continually objected and left for London, Disney discovered her real name was Helen Goff and that her objections centered on how George Banks (based on her beloved father) was depicted. By understanding her true interest was protecting her father's legacy-not the creative details-Disney secured the rights.
Chapter 9
The Roadmap to Resolution: Six Steps to Cooperative Success
Moving from positions to interests doesn't happen naturally in negotiations. People resist this transition because it feels like losing control as conversations become messier with emotions and personal interests emerging. While positions require compromise, interests demand creativity and new resources. Since people aren't accustomed to this approach, they tend to avoid it.
To overcome this resistance, negotiators need a clear roadmap that educates counterparts on the process and restores their sense of control. This six-step roadmap helps people become comfortable with the transition before execution begins:
1. Steer the conversation in a new direction. Transitioning from positions to interests requires steering conversations in new directions. People resist this shift because they fear losing control. By slowing down and focusing on mutual goals rather than immediate positions, you create space for more productive dialogue. Like the leadership coach who redirected my fee discussion toward understanding student needs, this approach builds rapport that often leads to better outcomes.
2. Ask questions. Asking questions is a negotiator's secret weapon. Unlike competitive negotiation's focus on offers and persuasion, cooperative negotiation uses questions to shift conversations from adversarial exchanges to collaborative exploration. Well-crafted questions build trust, uncover crucial information, spark innovation, and put you in control. The most effective approach avoids "why" questions that trigger defensiveness. Instead, use open-ended prompts like "Help me understand..." or "I'm curious about..." to get people talking freely.
3. Listen. Though listening seems obvious, it's surprisingly difficult. Our brains process words at 400-800 words per minute while people speak at only 125-175 words per minute. This processing gap leads to wandering minds and poor body language that signals disinterest. The solution is intense focus-not just on what's said but what remains unstated. People rarely articulate ego needs or fears directly, so you must listen for these hidden interests.
4. Create options. After gathering interest-based information, it's time for creativity. Brainstorm every possible solution without immediate evaluation. Invite the other side to participate, demonstrating your commitment to protecting everyone's interests. A powerful technique is working together at a whiteboard, listing each side's interests and reflecting on them. Often you'll discover these interests don't actually clash.
5. Develop options. After brainstorming, critically assess which ideas are actually feasible. This stage requires balancing realism without becoming pessimistic. This moment often tests people's commitment to the cooperative approach, so maintaining optimism and confidence in finding a solution is crucial.
6. Evaluate options. The final step asks: "What doable option best meets my interests AND the other side's interests?" The sequencing here is critical-evaluation must come last. Like the colleague who criticizes ideas without offering solutions, evaluating too early kills creativity and participation.
When you follow this roadmap correctly, you'll not only reach durable agreements that truly solve problems but also build stronger relationships through the shared accomplishment of cooperative negotiation.
Chapter 10
The Power of Empathy: Understanding as Strategic Advantage
Empathy-the process of identifying, sharing, and experiencing another person's feelings-has emerged as a critical business strategy recognized by organizations like the World Economic Forum. Far from being just about feelings, strategic empathy drives successful negotiations by illuminating paths to mutually beneficial deals.
Many negotiators-especially in legal and business settings-resist empathy, preferring to focus solely on facts, legal issues, and financial metrics. This approach misses the deeper understanding that drives engagement and performance. In today's world, negotiators who exercise empathy communicate more effectively, gather better information, and ultimately achieve superior outcomes.
Empathy in negotiation means understanding your counterpart's perspective non-judgmentally. Unlike sympathy ("I feel terrible for you"), empathy says "I understand why you feel that way" without necessarily agreeing. Neuroscience identifies two types: affective empathy (responding to others' emotions) and cognitive empathy (understanding others' intentions and perspectives). By tuning into emotions beyond just words, empathetic negotiators encourage counterparts to share additional information that can be strategically leveraged.
The "lead-with-need model" centers on four core strategies: observe (listening attentively), understand (encouraging counterparts to fully explain concerns), respect (acknowledging emotions without necessarily agreeing), and solve (using gathered information to build trust and explore solutions). This approach transforms adversarial dynamics into collaborative problem-solving, where parties work together on the same side of the table against the problem rather than against each other.
Great negotiators are "empathy engineers" who create environments conducive to understanding. Four practical approaches include: 1) Setting up rooms with comfortable furniture rather than imposing conference tables to foster relaxed dialogue; 2) Listening well and acknowledging others' perspectives with phrases like "Thank you for sharing that"; 3) Finding common ground to increase likability and provide a foundation for deals; and 4) Being a "learn-it-all" negotiator like Microsoft CEO Satya Nadella, who transformed his company through empathy-driven leadership after personal experiences with his son taught him to see things differently.
Chapter 11
The Secret to Satisfaction: Creating Lasting Value Beyond the Deal
Successful negotiation ultimately comes down to psychology - how we think and feel about outcomes. While we typically prepare with facts and data to create economically valuable offers, negotiation involves more than economics. The concept of subjective value encompasses four interrelated components: feelings about relationships with counterparts, feelings about one's own behavior, perceptions of process fairness, and feelings about outcomes.
Research shows our satisfaction often depends on how we perceive our counterpart's reaction - ironically, we sometimes feel more satisfied when opponents are disappointed than when they're happy with the same outcome. This subjective value may be desired independently from economic value, especially when negotiators prioritize long-term relationships over maximizing short-term gains.
Emotions significantly impact negotiation outcomes. Anxiety typically triggers withdrawal responses, resulting in weak first offers, quick responses to counteroffers, and premature exits from negotiations. When expressed openly, anxiety often leads to counterparts taking advantage. Overexcitement and overenthusiasm can be just as problematic as anger, potentially leaving negotiators vulnerable to bad moves through overconfidence.
Post-negotiation regret often stems from dwelling on "what could have been" - what academics call counterfactual thoughts. These thoughts significantly impact psychological satisfaction. When imagining better possible outcomes, satisfaction decreases; when recognizing avoided worse outcomes, satisfaction increases. Surprisingly, even when initial offers are immediately accepted, negotiators often experience regret, wondering if they could have done better.
There are three ways to create satisfaction in any negotiation:
1. Process: People want control over their destiny and will be satisfied with processes that are fair, inclusive, creative, and efficient. Many customers abandon businesses not because of poor products but because of inconvenient or inefficient processes - like crowded parking lots, long lines, or glitchy apps.
2. People: The human element is crucial in creating satisfaction. People desire to be treated well during negotiations. The author illustrates this with a personal story about nurses who, before attending to clinical duties after his grandfather's death, first offered hugs to the family - recognizing that the moment required a human response before a clinical one.
3. Product: While product satisfaction matters, it's not the sole driver of overall satisfaction. Many negotiators mistakenly believe solving the substantive problem alone will create satisfaction. However, even giving customers, employees, or family members exactly what they want may still leave them dissatisfied if the process and people aspects were neglected.
When you can't deliver satisfaction in all three areas, focus on excelling in the remaining dimensions. The author shares a story about Disney World, where despite a product failure (a child getting injured on a ride), they created satisfaction through excellent process (taking the incident seriously) and people treatment (sending a personalized Mickey Mouse gift). This approach not only salvaged the experience but encouraged the family to return and spend more money.
The key to becoming a great negotiator lies in balancing two critical qualities: ambition and empathy. When these characteristics are developed, utilized, and properly balanced, they make a profound difference in negotiation outcomes. By mastering both the competitive and cooperative approaches, you can achieve not just better economic results, but also the lasting satisfaction that makes negotiation truly successful.
