The Power of Understanding

Increasing Negotiation and Leadership Performance through the Power of Understanding

Laws of Power 30: Leverage Negotiation Basics

By Karen S. Walch

In classic lessons about power, parties leverage their capabilities in a MAD – Mutually Assured Destruction (MAD) method. MAD is a doctrine most often used in national security policy, but also used in negotiation strategy. It is believed that a rational guaranteed destructive use of weapons (i.e. nuclear threats) by two opposing sides results in a balance of power between the parties. A fundamental assumption is that in a world of conflict and limited resources, negotiators must predominately prepare for the worst-case scenario. Throughout the Laws of Power, we have addressed how to use negotiation preparation not only to prepare for the worse case scenario, but also how to generate positive, creative opportunities despite the limitations. This week we will continue this theme and build on studies from social psychology about cooperation.

Assumptions from this research provide a framework about negotiation basics and why it is important devote resources toward the creation of best case possibilities.

Social psychologists remind negotiators that conflicts are not inevitable and that resources can be shared. The fundamental assumption here is that egoism is the source of conflict in a social environment, not the limited resources themselves.

Negotiators can increase their leverage and influence of others through their social awareness and engagement skills in order to share limited resources and risks. Negotiators who plan for and practice cooperation skills make more efficient use of their time, energy and costs in negotiation.

Negotiators who can lead others in stressful negotiation situations are able to build conceptual bridges from conflict to conciliation, can invent new options, and facilitate joint problem solving.

Negotiation leverage in the 21st century interdependent world is increased by balancing power not only through destructive means, but with a focus on how to generate cooperation and risk sharing. The trends today we see in the negotiation field is that strengthening leverage is not founded on ways where negotiators can annihilate one another.

In contract to classic MAD theories, there are many talented negotiators today who perfect their problem-solving skills to find equilibrium between the parties not by planning for the worst possible outcome, but on the best.

It is critical that negotiators plan for both the worst- and best-case scenario for a negotiation. However, the classic predominant focus on planning for the worst and posturing to make the other party afraid is seen as unproductive and unrealistic.

It is especially important to increase one’s leverage if one is vulnerable. Research in social psychology concludes that systematic planning and social engagement skills can increase leverage even where negotiators once perceived weakness.

In last week’s law, we explored the role of having alternatives or a Plan B to increase strategic leverage and why it is important to understand the relative needs between the parties. Remember to go back to the basics of preparation which uncover your alternatives and the potential weak alternatives of your counterpart.

This can shift the balance of power significantly, whether you disclose it or not in a negotiation. A better understanding of the distinct value you can provide to a counterpart is a basic way to increase your confidence to lead a problem solving negotiation process. This can be useful in some of the most difficult negotiation situations, such as when your counterpart turns the negotiation into a bidding war or an auction.

Antonio recently reported a case where he provided a bid to a purchasing agent. Even after the loss of his bid, he continued to stay engaged with the agent. As a result, he was ultimately able to package an arrangement that was satisfying for both parties. Even though the purchasing agent initially accepted a competitor’s bid, Antonio won the contract because of the relationship and problem-solving approach he used with the purchasing agent.

Antonio also had spent considerable amount of time building a relationship with not only the agent, but also with the customer the agent represented. One of the reasons he was able to win the contract was that he contacted the customer often and always sent a courtesy copy of his correspondence with the agent to the customer. Between the three of them, they were ultimately able to create an agreement that met the needs of all parties despite the budget and time constraints in this situation.

In addition, Antonio also remembered how important it was to manage his anxiety in this stressful situation. He did not want to inadvertently reveal his own perceptions about his weak position and frustration with the negotiation process.

He says the “real leverage” he creates for himself over time is in the way he manages his emotions and behavior in frustrating situations. His story provides an example of a significant trend in successful negotiation preparation. That is, it is not merely the strategic leverage that is important, but the powerful social and psychological preparation and skills.

Like Antonio, negotiators who reflect on their assumptions about vulnerability, scarcity and win-lose situations, are able to accomplish more of their aspirations and expectations in productive and satisfying ways.

At some point in every negotiator’s life, we will need to increase our leverage when we find ourselves in a weak position relative to a counterpart. Inadvertent disclosure of the perception of a vulnerable situation in a negotiation is one of the worst ways to increase leverage.

Through a discipline in emotional intelligence, negotiators can manage their anxiety in perceived vulnerable situations. As negotiators, leverage the basics of negotiation preparation on the strategic, social and psychological dimension they can encourage others to cooperate in the most difficult situations.

Law 30 Tips

1. Do not obsess about what makes you weak, but go back to the basics on systematic planning.

2. Think of your highest aspirations and be confident to ask for what you need and offer to share the risk.

3. Encourage cooperation, reciprocity and recognize your counterpart’s need for your distinct value.

Extra Credit

This is a good time to go back and review with Negotiation Genius by Deepak Malhotra and Max H. Bazerman (Bantam Books, 2007).

48 Laws for 21st Century Global Negotiators: Join Thunderbird Professor Karen S. Walch, Ph.D., as she explores the laws of power for 21st century global negotiators. Each Monday she discusses one law and provides an exercise to identify and enhance individual negotiation power. Go to the main menu for the series.