Presentation and Workshop on Negotiations Best Practices for the Technology Executives Network (TEN)

1. TEN SPONSOR MEETING
NEGOTIATION WORKSHOP
JANUARY 15, 2013

2. AT-A-GLANCE SUMMARY
Established in 2002
IT Optimization Firm
100% Client Advocacy Firm
Completely Supplier Agnostic
Many public and private references
#1 Company in our Space
Global Company (US, Europe, Latin America, Asia)
1500 Global Clients
15,000 Field Engagements
Partner with major Private Equity Firms
Work with Clients Big & Small
$100 Billion+ of Client Value captured since 2002
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3. WHAT IS IT NEGOTIATION
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4. WHAT IS NEGOTIATION?
Examples?
Best Experience?
Worst Experience?
What was the difference?
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5. WE NEGOTIATE WHEN
We decide which movie to see with our significant other
We decide which city to live in with our spouse
We buy a car
We try to get a raise
We plea bargain a criminal charge
We establish project priorities and timelines
We establish boundaries between Israel and Egypt
We determine protocol of Iraqi arms inspectors
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6. NEGOTIATION TIPS
Be Prepared
“Lack of Preparation is perhaps
our most serious handicap”
Roger Fisher and Danny Ertel
The Getting to Yes Workbook
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7. HOW DO YOU GET PREPARED?
Negotiations have a structure, which is independent of the content
Most negotiations, large-small, commercial-personal, involve the same issues
Let’s look at the structure of negotiations
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8. ULTIMATUM GAME
Player 1 gets $100 Who wins the Money?
Player 1 proposes to share an amt
Playing to Win 2
w/ Player
Player 2 either agrees to the
shared amt, or not
If Player 2 agrees, both get paid
If not, neither get paid
No Discussion
Write offer on Card
Make your Decision
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9. WHAT HAPPENED?
50:50?
Not Fair?
Not Enough / Lowball Offer
Player 1 kept too much / Windfall Profit
Player 2 got an economic Improvement
Even $1 is better off – so what’s your problem?
Player 1 didn’t understand the Game
Player 2 didn’t understand the Game
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10. ULTIMATUM GAME
What was the currency involved in this deal?
Scientific Study of the Brain during these kinds of deals
The Neural Basis of Economic Decision-Making in the Ultimatum Game
Alan G. Sanfey, James K. Rilling, Jessica A. Aronson, Leigh E. Nystrom and
Jonathan D. Cohen , Science, New Series, Vol. 300, No. 5626 (Jun. 13, 2003),
pp. 1755-1758
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11. ULTIMATUM GAME
Analysis
Feelings of Fairness are Powerful
50:50 Splits are very often NOT the fair answer
At $20, 68% of Player 2s agree
At $30, 80% of Player 2s agree
At $50, 94% of Player 2s agree
Determining the emotional response to fairness is a
key consideration in deal structuring
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12. ULTIMATUM GAME
100
90 Human
Does it matter who 80 Computer
Acceptance Rates
70
makes the offer? 60
Two kinds of 50
“Player 1” Human 40
30
and Computer 20
Why the difference? 10
0
$5:$5 $7:$3 $8:$2 $9:$1
Offer
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13. ULTIMATUM GAME
Implications for our Negotiations at work
It is critical to understand the currency involved in the deal
It is often not the obvious one
It is critical to understand the sense of “Fairness”
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14. LESSONS LEARNED
Search for deal structures where your Supplier has
shared goals and objectives and believes the split
arrangements are fair.
If the Supplier benefit can be tied to yours, you stand
a much better chance of achieving collective success
and long term sustainability.
If the deal can be structured in a way to enhance
Supplier emotions – all the better.
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15. TRUST EQUITY GAME
Is Trust a Good Investment?
Player 1 gets $100
Playing to Win
Player 1 proposes an amount
to Share with Player 2
That amount is tripled
Player 2 will share back an
amount with Player 1
The Selected team gets to
keep their amount
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16. EXAMPLES
Trust Equity Game
Team Player 1 Shared 3x Amt Player 2 Returned
1 Ray $100 $300 Andrea $200
2 Catherine $100 $300 Mike $150
3 John $50 $150 Kimberly $75
4 Ginny $0 n/a Bob n/a
5 Jeff $10 $30 Alison $3
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17. WHAT HAPPENED?
Is there one answer?
Did we all get the full value?
Do we all evaluate trust equally?
Is trust always a good investment?
Can we create value by giving trust?
What would you do differently?
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18. ANALYSIS
BATNA Defection
Player 1 - $100 Claims Value
Player 2 - $0 Win/Lose Negotiations
ZOPA Defines our slice of the Pie
Player 1 - $0-$300 Cooperation
Player 2 - $0-$300 Creates Value
Win/Win Negotiations
Increases the Pie for
Everyone
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19. SUPPLIER DILEMMA
Even when we as a Customer have shared
objectives with our Suppliers, it is still often
difficult to achieve full optimization because
our trust isn’t always a good investment.
 Customers need to evaluate Supplier
relationships carefully to determine if Trust is
a good investment.
6/22/2010 © 2013 ALL RIGHTS RESERVED 2002-2010 NET(net), Inc. All Rights Reserved.
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20. NEGOTIATION TIPS
Ask, Don’t Tell
Making statements leads to positions
Asking questions builds common understanding
Making statements creates agendas
Asking questions builds trust and leads to Win-Win negotiation
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21. NEGOTIATION TIPS
Know your BATNA
Best Alternative To a Negotiated Agreement
Not “bottom line”, more of a “what if”
Know the other person’s BATNA
Back to preparation
Know their alternatives and you gain power at the table
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22. NEGOTIATION TIPS
Know Thyself
When you go into a negotiation, take a personal inventory. How do you feel about
negotiation? Do you want to get it over fast? If so, you may give in too quickly, or give away
too much. Or, do you want to win, no matter what the cost? If so, you may become
adversarial and damage the relationship.
Do Your Homework
Know who you’re negotiating with before you begin. What’s his or her reputation as a
negotiator? Win/Win model or Win/Lose model? Does the person want to negotiate with you
(Oh Boy!), dread the negotiation (Oh No), or is this a neutral situation (Show Me)
Prepare and Practice
Lack of preparation is the number one stumbling block in a successful negotiation It s not
enough to know what you want out of negotiation. You also need to anticipate what the
other party wants.
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23. NEGOTIATION TIPS
Build Trust
Negotiation is a highly sophisticated form of communication. Without trust, there won’t be
communication. Instead you’ll have manipulation and suspicion masquerading as communication.
Be trustworthy. Honor your commitments. Tell the truth. Respect confidences.
Develop External Listening
Most people carry on an inner dialogue with themselves. When you’re trying to communicate with
someone else, this inner dialogue becomes a problem because you can’t listen internally and
externally at the same time. When you negotiate, turn off your inner voice and only listen
externally. You won’t miss important nonverbal messages, facial expressions of voice inflections,
when you listen externally.
Move Beyond Positions
It’s risky to make yourself vulnerable to someone. That’s why in a negotiation you begin by stating
your position. Later, when the trust has deepened, you and the other party can risk more honesty
and identify your true interests. As a negotiator, it is your responsibility to ask questions that will
uncover the needs or interests of the other party. If you’ve also done your job of creating a
supportive climate, you’re more likely to get honest answers.
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24. NEGOTIATION TIPS
Know Your Power
Don’t assume that because the other party has one type of power, e.g. position power, that he or
she is all-powerful. That’s giving away your power! Balance power by assessing the other parties
source(s) of power, and then your own. While there are many sources of power, they all break down
into two categories; internal power and external power. The former no one can take away from you
and includes your personal power, level of self-esteem, and self-confidence.
Know Your BATNA
Before you begin a negotiation, know what your options are. Can you walk away from the deal?
What other choices do you have? What are the pros and cons of each choice? Don't stop here. Also
consider the BATNA of the other party .
Know What a Win Is
What is your best case scenario? What is your worst case scenario? The area in between is called
your settlement range. If you can reach an agreement within your settlement range, that’s a Win!
Don’t drop below your bottom line; you’ll feel bad about yourself and the deal afterwards, and you
may not follow-through on your commitments .
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25. GENERAL DISCUSSION ON NEGOTIATION
Does this resonate with your experiences
What are other areas of negotiation that can present difficulties/opportunities?
Who is the best negotiator you know? Why?
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26. THANK YOU!
John Fisher
Chief Value Officer
+1 (616) 546-3100 x689
(312) 953-0297 Mobile
JFisher@netnetweb.com
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