Negotiation

Interest-Based Negotiation For Acquisition Professionals

John F. McElhenny III, FMP

Negotiation WHATISNEGOTIATION?
Aprocessofcommunicatingbackandforthfor thepurposeofreachingajointdecisionona issue,itemorservice Abasicmeansofgettingwhatyouwantfrom others Aprocessinwhichpartiesattempttoresolve theirdifferences

Negotiation WHYDOWENEGOTIATE?
Becausewe: Wantsomethingthatsomeoneelsehas Wantthemtodosomething Andwecantjusttakeitfromthemorforcethem todoitwithoutsufferingseriousconsequences.

Question
WhyAreNegotiationSkillsImportantWithin theDepartmentofDefense?
1. Becausewespendover$300Billionannuallyinthe procurementofgoodsandservices. 2. Thevastmajorityoftheseexpendituresinvolve contractingwiththeprivatesector. 3. Contractsawardedtotheprivatesectormostoften involvediscussionsand/ornegotiation.

Negotiation

WhatDoWeNegotiateOverin GovernmentAcquisition?

TwoTypesOfNegotiation
PositionBased TheWhat InterestBased TheWhy

TwoTypesOfNegotiation
PositionBased: Positionsarepredeterminedsolutions Eachpartyopenswithitsownsolution Focusisonpositions defendyours andattacktheirs

TwoTypesOfNegotiation
InterestBased: Interestsarethoseneeds,desires, concerns,andfearsthatmotivateone tonegotiateinthefirstplace

InterestBasedNegotiation
TheFiveBasicPrinciplesofIBN: Separatethepeoplefromtheproblem Focusoninterests,notpositions Createoptionsformutualgain DevelopyourBATNA Defineobjectivecriteria

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TheIBNProcess
Separatethe peoplefromthe problem Develop your BATNA Focusoninterests notpositions Defineobjective criteria Createoptions formutualgain

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SeparatethePeople fromtheProblem
Separatethe peoplefromthe problem

SeparatethePeople fromtheProblem
Effectivenegotiatorshavetheabilitytoseparate theproblemfromtherelationship People&problemsgetentangledby:
Perceptions:Areselectiveanddoneincontext Emotions:Theycangetintheway Communication:Areyouaregoodlistener? Assumptions:Theresultofincorrectperceptionsor filteringdata

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SeparatethePeople fromtheProblem
Perceptions
Placeyourselfintheirshoes Donotinterprettheirmotivesbyyourfears Discusstheperceptions

Emotions
Recognizetheyexist Acknowledgethemandallowforventing Donotreacttothem

Communication
Listen&avoidmisunderstandings
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SeparatethePeople fromtheProblem
Bepatient
Toleratetheneedfortheothersidetoventand thenengage

Leadership
Bepreparedtobuildormaintainarelationship/trust ifnecessary
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FocusonInterestsNotPositions
Separatethe Peoplefromthe Problem

Focuson Interestsnot Positions

FocusonInterestsNotPositions

PositionsarepredeterminedOUTCOMES InterestsareyourNEEDSTOBESATISFIED

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Positionsvs.Interests
Thinkofthemas partsofaniceberg
10% Positions

90% Interests

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FocusonInterestsNotPositions
Lookforinterestsbehindpositions Prioritizeinterests Considerothersidesinterests Criticaltopreparationbeforethenegotiation!
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FocusonInterestsNotPositions
Positions
Solutionstoproblems Specific&definite Basisforargument Requirejustification Enddiscussion

Interests
Whyaparticular solutionispreferred Reasonsunderlying positions Requireexplanationnot justification Startdiscussion

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FocusonInterestsNotPositions
Examiningtheprioritizationofinterests highlightsareasofmutualgain Exchangealowpriorityforyoutomeeta highpriorityforyourcounterpart

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CreateOptions forMutualGain
Separatethe Peoplefromthe Problem CreateOptions forMutualGain

Focuson Interestsnot Positions

CreateOptions forMutualGain
Positions

Optionsfor MutualGain

Interests

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CreateOptions forMutualGain
Thereoftenismorethan1option Lookforwaystoworktogether Findvalueindifferences Commonsourcesofdifferences:
Risk Timing Perceptions Marginalvalueofthesameitem
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Create Options for Mutual Gain

Brainstormpossiblesolutionstogether DontviolatethethreeCs Consideroptionsforjointbenefit Createwhatneitherofyoucoulddoon yourown Lookforpossibletradeoffsthatcan turnpotentialintoreality

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DevelopYourBATNA
Separatethe peoplefromthe problem Develop your BATNA Focusoninterests notpositions Createoptions formutualgain

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DevelopYourBATNA
BestAlternativeToaNegotiatedAgreement
WhatyouwilldoifanagreementisNOTreached (e.g.,whatwillhappeninlitigation,whattheGAOor BCAwilllikelyhold) AlternativesareOUTSIDE theADRnegotiation Mustberealandconcrete notpieinthesky

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DevelopYourBATNA
BATNA

Positions

Optionsfor MutualGain

Your Interests

Their Interests

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DevelopYourBATNA
DevelopingBATNAiscreatingalternatives BEFOREyournegotiation QuestionsthatassistindevelopingBATNA:
Ifwedontagree,Icanalways.. WhatwillIdoifthisnegotiationfails? WhatalternativesdoIhave? WhatalternativescanIcreate? HowcanIweakentheBATNAofmycounterpart(s)?
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ExampleofBATNA
Air Force negotiates a purchase of planes with a Defense Contractor

Use another contractor Refurbish old system Terminate mission Status Quo

ExampleofOptions&BATNA
WhatisthedifferencebetweenOptionsandBATNA? Options
Insidethenegotiation

BATNA
Outsidethenegotiation

Createdwithcounterpart Brainstormingsession Potentialsolution(s) BOTHyouandcounterpart receivebenefit

Fallbackpositionifnegotiation fails ONLYimpactsyou

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BATNA
BATNA
InsidetheNegotiation
your reservation point your aspiration point

Anyoptionwithinthiscontinuumshouldbeagreeable

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IdentifyandStrengthenYour BATNA
KnowyourBATNA
Focusonwhatyouwanttoachieveandthe differentwaystoaccomplishthis

StrengthenyourBATNA
ConstructyourBATNAtobemoreachievable, probable,orsatisfyingmoreofyourinterests Improvesyourconfidenceduringthenegotiation

ConsiderwhattheothersidesBATNAis
MaketheirBATNAlessattractivetothem
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DefineObjectiveCriteria
Separatethe peoplefromthe problem Develop your BATNA Focusoninterests notpositions Defineobjective criteria Createoptions formutualgain

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ObjectiveCriteriaExamples
Othersintheindustrydo.(Whatiscustomary) Thelasttimethishappenedwe.(Precedent) Thestandardcontractsays(Law) Ifyouweremewouldyou.?(Reciprocity)

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ObjectiveCriteriaExamples
Needausedcar?
ObjectiveCriteria: Blue Bookvalue

Howmuchtopaya babysitter?
ObjectiveCriteria: Rangeofratespaidby neighbors
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ReachinganAgreement Consensus: Ageneralagreementbyallteam membersthattheycanlivewith andbecommittedtoaparticular courseofaction.

WIN-WIN
I can live with it I love it

I cant live with it

I hate it

LOSE

Summary
UnderstandingInterestBasedNegotiation Understandingthe5principles
Separatethepeoplefromtheproblem Focusoninterestsnotpositions Createoptionsformutualgain DevelopyourBATNA Defineobjectivecriteria
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LetsHaveSomeFun

EXERCISETIME

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HusbandandWifeare PlanningTheirVacation
The wife is interested in an active vacation filled with sightseeing, cultural tours, eating out and fitness activities.

The husband is looking to decompress with a relaxing vacation of sitting in the sun, reading a book, and catching up on much needed rest.

Theyarecommittedtogoingonvacationtogether.

HusbandandWifeare PlanningTheirVacation
Husband Wife Iwantavacationatthebeach IwantavacationatLasVegas Interests Interests EatingOut Sittinginsun Reading Takingnaps Havingnosetplans Entertainment Sightseeing Exciting Eatingout Spa Gambling SittingintheSun

Theyarecommittedonvacationingtogether
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WhatareTheirOptions forMutualGain?

VacationSolution

Acruise!Theyeachgettheirinterestsmet.Thehusband cansitbythepoolinthesunorgotoabeachandread whilethewifegambles,goesdancingheadsashorefor sightseeing,orgoestothespa.

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NegotiatingInDifficult Situations

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NegotiatingIn DifficultSituations
DontReact: GOTOTHEBALCONY DisarmThem: STEPTOTHEIRSIDE ChangetheGame: DONTREJECT,REFRAME MakeitEasyforThemtoSayYes: BUILDTHEMAGOLDENBRIDGE MakeitHardforThemtoSayNo: USEPOWERTOEDUCATE
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GOTOTHEBALCONY
Speakwhenyouareangryandyouwillmakethebestspeech youwilleverregret

Threenaturalreactionstodifficultsituations:
StrikingBack Fightfirewithfire GivingIn Justgetdonewiththenegotiation BreakingOff Nevermovingon;alwaysstartingover

Thebalconyisametaphorforamental attitudeofdetachment. Understandthattheirattackmightbeaploy KnowyourHotButtons BuyTimetoThink Donotdefendorcounterattack

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GOTOTHEBALCONY
Keepyoureyesontheprizesatisfyyour interests
1. 2. 3. 4. Identifyyourinterests IdentifyyourBATNA/WATNA Decideifyoushouldnegotiate Stayfocusedonyourgoal

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STEPTOTHEIRSIDE
AvoidtheDialogueoftheDeaf ListenActively Acknowledge:
Theirpointofview Theirfeelings Offeranapologyifnecessary

Agreewithoutconceding
Focusonthe20%onwhichyouagreenotthe80%on whichyoudisagree AccumulateYeses
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STEPTOTHEIRSIDE
ByAcknowledgethePersonsPointsand AgreeingWheneverPossible,You:
Acknowledgethemaspeople; Acknowledgetheirauthorityandcompetence; Youareshowingthemrespect; Thiscreatescognitivedissonance,aninconsistency betweenperceptionandreality; Aformeradversaryisnowlookedonasafriendor colleague

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STEPTOTHEIRSIDE
Expressyourviews withoutprovoking

DontSayBut,SayYesAnd Keyistomakeyourview(s)asanadditionto, ratherthanacontradictionof,theotherpersons POV. MakeINotYouStatements Describetheimpactoftheproblemonyou Focusesonyourneeds,concerns,anddesires Acknowledgeyourdifferenceswithoptimism Beboldinacknowledgingtheirviews,boldin assertingyourown,andboldinexpressing optimismthatthedifferencescanberesolved.
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STEPTOTHEIRSIDE
Createafavorableclimatefornegotiation
Thehurdlesyoufacearetheotherpartys:
Suspicion Hostility ClosedEars LackofRespect

Harderfortheotherpartytobesuspicious andhostiletosomeonewhohearsthemand acknowledgeswhattheysayandfeel.

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DONTREJECTREFRAME
YouWantToUseProblemSolving NegotiationsBy:
Talkingaboutinterestsandhowtosatisfythem Beingflexiblebyofferingreasonableconcessions Attackingtheproblem

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DONTREJECTREFRAME
However,TheOtherPartyInsistsOnHardball NegotiationsBy:
Insistingontheirposition Stonewallingbypocketingyourconcessionand askingformore. Attackingyou

Tochangethegame,changetheframe
Putaproblemsolvingframearoundwhatever theysay Askproblemsolvingquestions
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DONTREJECTREFRAME
AskProblemSolvingQuestions
AskWhy?
Keeponaskingquestionstouncovertheirrealinterests

AskWhyNot?
Iftheydonotrevealtheirinterestsproposeanoptionandask Whynotdoitthisway?

AskWhatIf?
OneofthemostpowerfulphrasesintheEnglishlanguage Usedtointroduceahostofpossibleoptionswithout challengingtheirpositions Turnstheconversationintoabrainstormingsession
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DONTREJECTREFRAME
AskForTheirAdvice
Thelastthingtheyexpectyoutodo Itisflatteringtobeaskedforadvice Itacknowledgestheircompetenceandstatus Getstheminvolvedindiscussionsofoptions

AskWhatMakesthatFair?
Getsthemtalkingaboutstandardstheyareusing Thenbringupyourstandards Ifrejectedaskthemtoproposeothers
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DONTREJECTREFRAME
ReframeTactics
GoAroundStoneWalls(e.g.Takeitorleaveit, orsetsarigiddeadline)
IgnoreIt.(Iftheyareserioustheywillrepeatit.) ReinterpretIt.Useasanaspirationoratarget Testit.(Getcalledawayatlastminuteorask?)

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DONTREJECTREFRAME

DeflectAttacks:Whatiftheotherpartythreatens you,insultsyou,orblamesyou?
Ignoreit Reframeanattackonyouasanattackontheproblem Theattackerisclaimingyouandyourproposalareno good Forgettheattackonyou;dealwithyourproposal Reframefrompastwrongstofutureremedies Lookforwaystopreventreoccurrence Reframefromyouandmetowe Createasidebysideproblemsolvingopportunity
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DONTREJECTREFRAME
ExposeTricks(e.g.decisionmaking authorityandthelastminutedemand)
Thetoughesttactictoreframe Ifyouchallengeitdirectlyyoucouldbewrong orifrightthepartywilltakeoffenceatbeing calledacheatoraliar. Playalongasiftheyarenegotiatingingood faithandaskprobingquestionstotesttheir sincerity. Complimentthem:GoodGuy BadGuy

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CREATEAGOLDENBRIDGE
Buildyouropponentagoldenbridgetoretreatacross SunTzu

Youhaveofferedtheotherpartyanattractive proposal,butitisnotenough.Youmust:
Involvethemincraftingtheagreementtoavoid reactivedevaluation. Lookbeyondtheirobviousinterests,suchas money,toaddresstheirmoreintangibleneeds, suchasrecognitionorautonomy.

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CREATEAGOLDENBRIDGE

Helpthemsavefaceastheybackawayfromtheirinitial positionbyfindingameansforthemtopresentthe agreementtotheirconstituentsasavictory. Circumstanceshavechanged Callinathirdparty Helpthemwritetheirvictoryspeechbyanticipating whathiscriticsaregoingtosay

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CREATEAGOLDENBRIDGE

Goslowtogofast:Theagreementmaybetoobigandthe timespenttooshort. Guidethemstepbystep(smallsteps)acrossthebridge Dontaskforafinalcommitmentuntiltheend Dontrushtothefinish

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CREATEAGOLDENBRIDGE
Neverputtheotherpartyinapositionin whichhecantmovewithoutlosingface Offerchoicesbetweenalternativessothe otherpartywillbemorewillingtoviewthe processascooperativeandwillingtoreachan agreement

USEPOWERTOEDUCATE
Thebestgeneralistheonewhoneverfights SunTzu

Theymaystillthinkthatnegotiationasagame whereonesidewinsandtheotherloses. Youmustbreakthroughtheirpowerplays,but whatdoyoudo Ifyouusepoweryourself,escalationto litigation,strikes,orwarcanresult,(aloselose outcome), ThePowerParadox:Theharderyoumakeitfor themtosayno,theharderyoumakeitforthem tosayyes.
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BRINGTHEMTOTHEIRSENSESNOT THEIRKNEES
Lettheotherpartyknowtheconsequences ifanagreementisnotreached UseyourBATNA,defusethereaction Keepsharpeningtheotherpartyschoices Forgealastingagreement Aimformutualsatisfaction,notvictory

USEPOWERTOEDUCATE
Usepowertoeducate
ConvincethemthattheirBATNAisweakerthan yourgoldenbridge Letthemknowtheconsequencesoffailureto reachagreementbyaskingthemquestions DemonstrateyourBATNA DeployyourBATNA(minimize) Keepremindingthemofthegoldenbridge Letthemchoose
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USEPOWERTOEDUCATE
Forgealastingagreement
Keepimplementationinmind Designthedealtominimizeyourrisks Buildinadisputeresolutionprocedure

Aimformutualsatisfaction,notvictory

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