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Deepak Malhotra Shares His Award Winning Negotiation Tips | CNBC — Transcript

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0:00watched some of the sessions that you've
0:01been through and they've been fantastic
0:02now we're going to jump into something a
0:03little bit different which is going to
0:04be on negotiations before I dive into it
0:07I just want to give you about a 30
0:08second to one minute introduction on who
0:10I am and where I'm coming from because I
0:12think it's sometimes useful to know who
0:14you're going to be dealing with for the
0:15next half hour or 40 minutes uh as
0:17mentioned my name is Deepak mahotra I'm
0:18at the Harvard Business School I've been
0:20on the faculty there for about 15 years
0:22I got there in 2002 and my area of work
0:25is negotiations uh negotiation deal
0:27making disputes conflict diplomacy
0:30anything in that area is things that I
0:32find interesting now being at a business
0:34school most of my work is in the world
0:35of business and most of the stuff I do
0:37outside of Harvard Business School is
0:39working with companies often early stage
0:41companies or entrepreneurs thinking
0:43about how to help them consult with them
0:44advise them on difficult deals uh
0:46strategic Partnerships issues they face
0:48in scaling or or other kinds of
0:50strategic problems but while I work a
0:52lot with businesses I also do some work
0:54in some other areas I work with some
0:56governments thinking about how to help
0:58resolve armed conflicts uh
1:00ethnopolitical conflicts they're dealing
1:01with insurgencies or a peace process I
1:03do some work with hospitals and doctors
1:05so they can think more carefully about
1:07how they might have effective
1:08conversations with their patients so
1:10that their patients can make better
1:11health decisions and the reason I
1:12mentioned that uh the work outside of
1:14the business area in the world of
1:16conflict and the world of medicine Etc
1:18the reason I mentioned that is because
1:20it's gone a long way in shaping my own
1:21view about what negotiation is and what
1:23negotiation is not and I like to lay out
1:26my perspective at the very beginning
1:27before I dive into specifics
1:31having negotiated and worked on
1:33negotiations and consulted with and
1:35studied negotiations in different
1:36Industries also in different domains
1:38like conflict uh and Healthcare one of
1:41the things I've come to appreciate is
1:42that at the end of the day negotiation
1:43is not about dollars and cents and it's
1:46not about deal terms and it's not about
1:48emotions and it's not about lives lost
1:50or lives saved it's not about ceasefires
1:53at the end of the day negotiation no
1:55matter where you're negotiating what the
1:57substance of the negotiation is how many
1:59people dealing with negotiation is
2:01always fundamentally about human
2:04interaction and the question we are
2:06always trying to answer the problem
2:08we're always trying to solve as
2:09negotiators is how do we engage with
2:11other people in such a way as to achieve
2:13better understandings and better
2:15agreements that's it doesn't matter what
2:17we're negotiating through which medium
2:19we're negotiating what the stakes are
2:20how complex it is what we're always
2:22doing as negotiators is trying to figure
2:24out how do we engage with other people
2:25in such a way as to achieve better
2:27understandings and better agreements and
2:29what I'm going to try to do over the
2:30next 30 minutes or 40 minutes is talk
2:32about some of the things that you might
2:34do perhaps differently than you've been
2:35doing to make it more likely that you
2:37achieve success in that endeavor as
2:40you're dealing with other human beings
2:41now I spend all of my time thinking
2:43about negotiations and I'm pretty sure
2:45you don't spend all of your days
2:47thinking about negotiations but most of
2:49you would probably admit that many of
2:51the interactions you have in your work
2:53but also outside of the professional
2:55sphere have a negotiation element to
2:58them anytime you're dealing with with
3:00someone who has a different perspective
3:01than you do anytime you're dealing with
3:03someone who has different interest than
3:04you do a negotiation lens can be useful
3:07and so what we're going to be talking
3:08about now is some of the ways in which
3:10you can make sure that when you're
3:12negotiating when you find yourself in a
3:14situation where you're doing a deal or
3:16you're in a dispute or some kind of
3:17conflict you might be able to navigate
3:19it a little bit better and the way we're
3:20going to do it is uh what we call this
3:22session is negotiation tweaks and the
3:24inspiration for that uh term comes from
3:28uh golf uh I don't golf very much but
3:30whenever I tell someone I like golfing
3:33and I would like to be better at golf
3:35often what they will tell me is it's a
3:38really good idea to go to a coach to a
3:40professional to get at least one lesson
3:42and I'll say well what's one lesson
3:44going to do and they're going to say
3:45well it's not going to make you a great
3:46golfer but immediately they're going to
3:48look at how you Golf and they're going
3:49to be able to give you a few tweaks
3:51they'll see the way you grip uh you know
3:53the golf club they'll look at your swing
3:55they'll look at whether you're bending
3:56your arm or not they'll look at how your
3:57feet are positioned and they'll be able
3:59to pick up a couple of things that you
4:00can do that are quick fixes easy tweaks
4:03that you can make that will have
4:04Downstream consequences to make you more
4:07effective at golf I haven't done that
4:10but I like the idea and so I'm going to
4:12do the same thing in this world of
4:13negotiation in the 40 minutes I have and
4:16now of course less than 40 minutes I'm
4:18going to try to go through 22 things you
4:20might consider doing in your
4:21negotiations some of these things maybe
4:23you're already doing some of these
4:24things might be the opposite of what
4:25you've been doing some of these things
4:26might be something you never thought
4:28about before and my hope is that
4:29everybody who's listening to this either
4:32uh in the audience live here or or
4:33online will be able to find at least one
4:35or two or three things that you look at
4:37and you say oh that's interesting I
4:38never quite thought of doing it that way
4:40or that's something I should really
4:41share with my team because as an
4:42organization we don't do that
4:44systematically enough and the way we're
4:46going to go about it is the flow of the
4:48conversation is going to be by and large
4:50from what happens in the early stages of
4:52negotiation before you get into the room
4:54to what happens as you go through it and
4:56then when you leave the room that's kind
4:57of how we're going to be thinking about
4:58this and since I'm going to try to get
5:00through 22 of these things some of these
5:02we're going to cover quickly others
5:05we're going to cover even more quickly
5:06all right so that's how this is going to
5:07go so the first thing I want to point
5:09out having advised on lots of deals uh
5:12Million Dollar Deals Billion Dollar
5:14Deals multi-billion dollar deals and
5:15things where money is not at stake one
5:17of the most important things I can tell
5:19you right off the bat is you want to
5:21have a strategy meeting you do not want
5:23to walk in there relying only on your
5:26intuition relying only on gut instinct
5:29in my experience
5:30intuition is very nice gut instinct is
5:32very very nice but it is not strategy
5:35nor should it be a substitute for
5:36careful analysis when the stakes are
5:38high or the situation is
5:40complex invite more people into that
5:43strategy meeting than you think you need
5:45I have never regretted bringing in a
5:47couple of other folks the fourth or
5:49fifth or sixth person will not add as
5:51much as a second or third person did but
5:53they will shape the conversation in a
5:55way that will be useful and they will
5:56add something that will be useful
5:58they're going to see it from a
5:59perspective that's different from the on
6:00you've been seeing it the BISD person
6:02brings something different than the than
6:04the general counil brings somebody
6:06different from the sales person bring
6:08something different from the operations
6:09person and somebody who's on the front
6:10lines you want to have a strategy
6:12meeting too many people walk into a
6:14negotiation thinking negotiation is
6:16about knowing what you want and then
6:19having four or five or six Arguments for
6:20why they should give it to you and they
6:22go into the room and they say here's
6:23what I want and here's why it should
6:24happen this way and then they hope for
6:26the best that's not negotiation as we're
6:28going to find out as we go forward 's a
6:29lot more you need to be doing and you
6:30need to be coordinated as a team one
6:32other thing about being in a meeting
6:35like this one of the mistakes I've seen
6:37people make especially leaders of
6:39organizations or senior managers or team
6:41leaders is that they create a culture
6:44they create an environment in their
6:45meetings and in their organizations that
6:47rewards people for coming up with the
6:49right answer now that seems like a
6:50reasonable thing to do you want the
6:52right answer so you should reward people
6:54for coming up with the right answer or
6:55the right strategy but I actually think
6:57that's the wrong way to go about it you
6:59don't want people in the room to come up
7:02with or to feel like they're going to be
7:03rewarded for coming up with the right
7:05answer you want to reward people for
7:07coming up with good
7:08arguments because this is not a math
7:11problem usually it's not like there is
7:13one right answer that the smartest
7:14person in the room is going to be able
7:15to figure out if it's an interesting
7:17enough negotiation if the stakes are
7:19high if it's a complex negotiation the
7:21solution is not going to be obvious to
7:23one person it's going to be built on the
7:24good arguments that different people
7:26make and it's not that you walk in and
7:28say okay whoever comes comes up with the
7:29right strategy is going to get $1,000
7:31bonus but we do it implicitly see when
7:34the leader talks in a meeting and you're
7:36sitting in a boardroom you're sitting at
7:38any kind of meeting whether he or she is
7:39the CEO or the founder or a team leader
7:42when the leader
7:43talks they look at everybody as they're
7:46talking but when anybody else in the
7:48room talks they're almost always looking
7:49right at the leader and they're looking
7:51to see is this person nodding along are
7:53they liking what I'm saying and they try
7:55to get to the right answer as quickly as
7:56they can that's not the kind of
7:58environment you want you want reward
7:59people for coming up with good arguments
8:03next you have to know what's going to
8:05happen to you if there's no deal this
8:07should be sort of obvious you will make
8:09crucial mistakes if you haven't thought
8:11through carefully as a team what is our
8:13walkway Point how bad is it really if we
8:16don't get this deal or how good is it
8:18really if we don't get this deal you
8:20need to know this but there's a
8:22caveat you don't want to become obsessed
8:25with what happens to you if there's no
8:26deal one of the things that we've
8:28learned through research through
8:30experience is that it turns out
8:33negotiators who walk into a room
8:35obsessed with what's going to happen to
8:37me if there's no deal those folks get
8:40systematically worse outcomes than
8:43people who walk into a room knowing what
8:45happens to them if there's no deal but
8:47making the negotiation about what
8:49happens to the other side if there's no
8:51deal when you frame the negotiation
8:54around what happens to them if there's
8:55no deal now you're essentially making it
8:58about the value you bring to the table
9:00for the other side and when you make the
9:02negotiation about the value you bring to
9:04the table that's when you have the
9:05possibility the opportunity to monetize
9:08the value you create in the system for
9:11the other side for their organization
9:12Etc so know what happens to you if
9:14there's no deal otherwise you're going
9:16to make crucial
9:17mistakes but as much as you need to know
9:19that you need to focus on what happens
9:21to them if there's no deal why are they
9:23here today what keeps this person up at
9:25night what do I do for them that nobody
9:27else can do for them if you frame it
9:29around that you have a greater
9:30opportunity for creating and capturing
9:31value in that deal next too many folks
9:36get obsessed with the substance of the
9:38deal for good reasons substance is all
9:41of the things that are going to be in
9:43the in the deal the terms the offers and
9:46counter offers are about the substance
9:48of the deal the language in the contract
9:50is the substance of the deal what you
9:52don't want to lose sight of is
9:54process process is what gets us from
9:56where we are today to the finish line
9:59the Finish Line might be a signed deal
10:01it might be the implementation of a deal
10:02depending on the kind of negotiation
10:04you're doing one of the things I advise
10:06all of my clients and all my students to
10:08do is to get into the habit of
10:09negotiating process before substance
10:12here's what I mean by that imagine a
10:14scenario where you've been negotiating
10:16for say six months or nine months or 10
10:18months and imagine that this is the kind
10:20of deal where that's a good amount of
10:21time and after these six or nine or 10
10:24months you finally get to the point
10:26where you think the finish line is in
10:28sight you think this deal might be able
10:30to be done now you've got a couple of
10:33concessions saved up in your back pocket
10:35for exactly a moment like today and you
10:37throw those out there hoping it will
10:39seal the deal and the other side looks
10:41at you and says thank you this is great
10:43we really appreciate this this is very
10:45helpful now let me just go talk to my
10:48boss and see what she thinks about it
10:50and you're sitting there going wait what
10:51you have a boss I thought this was it I
10:53thought we were done I've got nothing
10:55left to give that's an example of what
10:57can go wrong when you don't negotiate
10:59neate process before you jump into
11:01negotiating substance negotiating
11:03process before you dive into substance
11:05is about asking things like how long
11:08does it take an organization like yours
11:10to do a deal like this who are all the
11:12people that need to be signed on before
11:14this deal goes through what are some
11:16factors that might speed things up and
11:18what are some factors that might slow
11:19things down process before substance is
11:22also about having conversations like
11:24what are we going to be discussing in
11:25the meeting tomorrow who's going to be
11:26in the room what about these other
11:28issues that we care a lot about when
11:29will we be able to touch on those all of
11:32these things none of these things have
11:34to do with the substance of the deal
11:35it's all about how we're going to get
11:36from where we are today to where we want
11:38to go and if you think about the
11:39negotiations that fail many of them fail
11:43because people did not give enough
11:45attention did not respect enough process
11:48they didn't have a process strategy they
11:50didn't coordinate on process they didn't
11:51think through process one other thing
11:53I'm going to talk about on process it's
11:56going to be the next lesson this point
11:57number five it actually comes from the
11:59world of mediation any of you ever been
12:01through a mediation like a conflict a
12:03dispute mediation some of you clearly
12:05have if you ever go through a really
12:07ugly conflict it could be a business
12:09conflict it could be a family conflict
12:11any kind of conflict and it's really
12:13ugly and you go to a mediator whose job
12:15is to help you solve this problem one of
12:18the things an effective mediator might
12:20do on day one when he or she brings the
12:23people into the room the mediator might
12:25say something like this you two think
12:28you hate each other today
12:30we're going to be at this for a week and
12:32about 3 days into this process you're
12:34going to hate each other more than
12:35you've ever hated each
12:36other and when that happens I just want
12:39you to remember something that's normal
12:43that's normal now think about why a
12:45mediator might say that what happens if
12:48the mediator doesn't say that and three
12:51days into the week you hate each other
12:53more than you've ever hated each other
12:55the emotions have gotten even stronger
12:57there's more anger and anxiety than ever
13:00before what are you going to think
13:02you're going to think this is not
13:03working all right we're moving in the
13:05wrong direction and you're going to quit
13:06the process
13:07entirely and what the mediator is doing
13:10it's called normalizing the process the
13:13mediator is normalizing the process for
13:15you they're letting you know that things
13:16don't go from bad to good getting better
13:19every day when you try to take on these
13:21difficult challenges the process from
13:23bad to good goes a little bit like this
13:26and that's how you get there so when
13:28you're down down there you don't
13:30overweight it too much you don't read
13:32too much into it this idea of
13:34normalizing the process is something we
13:36should be doing in negotiations of all
13:38kinds not just ugly
13:40conflicts I was talking to a guy from uh
13:43he had a business in South Asia and his
13:45business was he had a lot of
13:47manufacturing facilities one of the
13:48things he told me we were talking about
13:50something else he brought this issue up
13:52he says one of the things I've learned
13:53is I will not do business with anybody
13:56from the West he said and by the West he
13:58meant the US Europe Etc he said I will
14:01not do business with anybody from the
14:03West unless they are willing to fly into
14:06my city get out of the airport get into
14:09a car that we'll send for them and drive
14:12from the airport to our manufacturing
14:14facilities which are about 18 kilometers
14:16away and take about 3 hours to get to
14:20until they've done that once they don't
14:21know how it works here and the first
14:23time something goes wrong they assume
14:26it's because we're stealing from them or
14:27because we don't know what we're doing
14:30you need to normalize the process for
14:32them even when you're selling to them
14:33but too often we don't do that we're so
14:35busy trying to seal the deal sign the
14:38deal get them to say yes that we make it
14:40sound like nothing will go wrong there
14:41will be no disruptions there will be no
14:43delays we'll always be seeming as
14:45enthusiastic as we are today and when
14:47any of those things change or go wrong
14:50they end up overweighting it but when
14:52you've let them know along the way
14:54here's what's normal here's how we get
14:55from here to there we'll get there but
14:57here's the path to it it's less likely
14:59that delays disruptions and other sorts
15:01of bumps in the road end up being
15:03relationship Killers down down line
15:07next I know a lot of people who talk too
15:10much in
15:12negotiations I know almost no one who
15:15asks too many
15:17questions if you could have one mindset
15:21going into every future
15:23negotiation people can have a very
15:24different mindset some people go in
15:26thinking This Is War some people
15:27thinking going this is relational some
15:29people are thinking long-term some
15:30people have a short-term attitude some
15:32people are thinking strategically some
15:33people are thinking tactically you can
15:35have any mindset you want really but if
15:38you had to pick one if you could take
15:40only one
15:41mindset and click it on before you walk
15:44into every future negotiation I would
15:46strongly suggest walking into every
15:49future negotiation with a learning
15:51mindset you are there above all to learn
15:54as much as you can about all of the
15:56parties that are relevant to this
15:57negotiation whether they're inside the
15:59room or not what are their interests
16:01what do they care about more what do
16:02they care about less what keeps them up
16:04at night why are they doing this deal
16:06today rather than 6 months from now or a
16:07year ago what are their constraints what
16:10are the things they can and cannot do
16:11how are they seeing the
16:13situations think about the questions you
16:15ask write down all the things you wish
16:17you could know they're not going to
16:18answer every question but they're more
16:19likely to answer them if you ask than if
16:21you don't ask and when you're done
16:23coming up with every question you can
16:25think of I suggest you add another 10
16:27more to the list all right right and
16:29your team will help you all right A lot
16:32of people talk a lot not enough people
16:34ask enough questions now it's not just
16:35about asking more questions you also
16:38have to ask the right questions now
16:39every negotiation is different and so
16:42the right question will vary depending
16:43on the context the situation where in
16:45the process you are but one little hint
16:48in general why is more important than
16:52what people talk about what all the time
16:55what they
16:57want you might say what you want we want
16:59the deal done in 6 months we want more
17:01money up front we want exclusivity we
17:03don't want exclusivity that's the what
17:05these are the demands people make the
17:06positions they hold your job as a
17:08negotiator is to try and get underneath
17:10that and figure out why they want these
17:12things what are the things that are
17:14driving them what's the underlying
17:15motivation and when you shift the
17:16conversation from what to why you often
17:18find more ways of resolving the dispute
17:20resolving the conflict resolving the
17:22deadlock often the two sides have
17:25seemingly incompatible
17:27positions I want exclusivity they don't
17:29want to give me exclusivity those seem
17:31incompatible and if they're deal
17:33breakers for both sides you're done but
17:36sometimes what you find is when you
17:37start digging a little bit underneath
17:39the surface why what's their real fear
17:41what are they concerned about is it that
17:43they never want to give it or they don't
17:44want to give it for more than a year is
17:46it there a specific competitor they're
17:47worried about what's the story here when
17:49you go from what to why often you find
17:52that seemingly incompatible positions
17:55actually are hiding underlying interests
17:57that are actually Recon cons ilable get
18:00into the habit of asking more questions
18:01get into the habit of asking why and
18:03figuring out what's actually driving
18:04their demands next they're going to be
18:07doing the same thing they're going to be
18:09asking you questions and sometimes these
18:10are not the questions you want to hear
18:13how many of you know who Mike Tyson is
18:16okay boxer heavyweight champion known
18:18for a few other
18:19things there's a story about Mike Tyson
18:23uh and it may be apocryphal but it's
18:24it's an interesting story nonetheless uh
18:26when Mike Tyson had been heav way
18:29Champion for some time he was being
18:30interviewed and somebody asked him Mike
18:32how do you sustain this level of success
18:35the question is not how you got here but
18:37how do you continue to stay here and
18:39more specifically every boxer that walks
18:42into the ring with you now every one of
18:44them has studied you they've seen all
18:46the footage they've walked into the ring
18:48with a plan designed specifically to
18:51beat Mike Tyson how then do you continue
18:54to win and Mike Tyson
18:57says everybody has a plan until they get
19:00punched in the
19:02face now whether he actually said
19:04there's not this is true and the same is
19:06true when you're out pitching your wares
19:08your product your service Your solution
19:10your idea your
19:12approach you need to think about all of
19:15the things that can go wrong and have
19:17answers for them or have a way of
19:19dealing with in general a little tip in
19:21sales if there is a weakness in your
19:23argument it's almost always better if it
19:25comes out of your mouth before it comes
19:27out of their mouth if it comes out of of
19:28their mouth first it becomes a bigger
19:31thing the fastest way to lose
19:33credibility as a salesperson is to walk
19:35in and make it sound like you think your
19:37product Your solution is right for
19:39everybody on the planet even if you
19:41believe that's true the moment you sound
19:44like that you lose credibility in their
19:46eyes because they don't believe it they
19:48assume your competitors exist for some
19:50reason they assume there are other
19:51interests and other ideas out there for
19:53some reason and so what you need to be
19:55thinking about is if there's a weakness
19:56in the argument if there's a
19:58Counterpoint if the competitors are
20:00actually telling them to ask these tough
20:01questions how am I going to manage those
20:03so have a learning mindset but respect
20:05the fact that they see the world
20:06differently
20:08next there is uh this notion that you
20:14should let the other side make the first
20:15offer now I could have talked about this
20:16point for about 20 30 minutes and get
20:19into all the evidence all I want to
20:20suggest for right now is that I disagree
20:24wholeheartedly with this notion that you
20:25want the other side to make the opening
20:27offer I not saying that they're not OCC
20:28where that might be the right tactic but
20:31I am a huge fan of being the party that
20:33presents the first offer presents the
20:35first the first term sheet the first Loi
20:38whatever it may be because it helps you
20:40control the frame of it you set the
20:42reference point you shape expectations
20:44think carefully about who's going to
20:46make the opening offer there is
20:47tremendous power in the
20:49party that sets the opening offer that
20:53creates the opening expectation all
20:55right so if you've heard this and you
20:57may have heard it on TV on some shows
20:59where they talk a lot about negotiations
21:01uh I strongly suggest think about this a
21:03little bit more deeply next one of the
21:05other things I'm a huge fan of telling
21:07my students my clients is never let your
21:08offer speak for itself whether you're
21:10making the opening offer or a counter
21:11offer when you make an offer don't let
21:13the number speak for itself $50,000 5
21:17million 100 million tell the story that
21:20goes with it we are asking for X because
21:24dot dot dot dot
21:27dot we're asking asking for X here's our
21:29model here's our analysis here are our
21:31assumptions the Richer The Narrative the
21:33Richer the story again the more likely
21:35your number sticks more likely that the
21:37other side has to come up with a
21:39compelling reason before they choose to
21:41just ignore it it is much easier to
21:43ignore an offer that does not come with
21:44a story that does not come with a
21:45justification that does not come with a
21:47narrative than it is to ignore one that
21:49has all of those features to it next
21:53label your concessions the idea of
21:55telling the story that goes with it if
21:57you sort of zoom out for moment what
21:58we're really trying to say here is don't
22:01leave it up to chance how they will
22:04interpret what you're saying as a
22:06negotiator you want to manage the
22:08attributions people make of what you're
22:10doing so when you make a concession for
22:13example the exact same concession in a
22:16negotiation can seem like a nice gesture
22:19it can seem like a wise approach to
22:22negotiation but a concession can also
22:24seem like
22:26what could be a gift what else weakness
22:31you could look desperate you could look
22:34naive well what do you want them to
22:36think when you make a concession well
22:38ideally you want them to oops uh ideally
22:41you want them to think you are wise and
22:43nice smart and nice not naive or
22:46desperate but the same concession can be
22:49interpreted many different ways so one
22:50of the things you always want to be
22:51doing whether it's making a concession
22:53whether it's calling them back whether
22:55it's choosing not to call back is think
22:57about the attributions they're going to
22:58make and get into the habit of trying to
23:00manage the attributions and how you do
23:02it depends on the situation you're not
23:05going to say here's a concession and
23:07just so you know that is because I'm
23:09wise and I'm smart and I'm being nice
23:11not those things but you need to think
23:13about am I going to come across as
23:15desperate if I make it now or in this
23:17way without dot dot dot and how do I
23:19make sure that the right attribution
23:20gets
23:21established all
23:24right one of the mistakes people often
23:27make in negotiation is they get into
23:29what's what I would call Mindless
23:30haggling now there's going to be some
23:32haggling in a negotiations they're going
23:33to start one place you're going to start
23:34some other place but the mistake we
23:36often make is to take a rich complex
23:39negotiation and turn it into a series of
23:41haggles we need to talk about price
23:43we're going to haggle on price then
23:44tomorrow we're going to talk about
23:45financing terms we're going to haggle
23:46over financing terms then we're going to
23:47talk about exclusivity then we're going
23:48to haggle over exclusivity a better
23:50approach to negotiating typically is
23:52instead of going one issue at a time is
23:55to negotiate multiple interests
23:56simultaneously one of the pieces of
23:58advice we often give is try to break the
24:00habit of going one issue at a time and
24:02trying to get resolution on that issue
24:05and then moving on to the next thing
24:07you're much more likely to find wise
24:09trades where they're more flexible where
24:11there's less flexibility what you should
24:13be given what you do not have to get if
24:14you are negotiating multiple issues
24:16simultaneously rather than doing a
24:18series of haggle one issue at a time
24:20have comprehensive offers and counter
24:22offers that you give if somebody says to
24:24me you know could you do like 60%
24:26upfront instead of 40% up front my
24:29answer is not yes or no my answer is I
24:31have no idea what you're talking about
24:32in what context what are the other terms
24:34of this deal and it's much more
24:36effective for both sides if you get into
24:38the habit of making package offers and
24:39counter
24:41offers but when it comes to making an
24:43offer so next time you're in a
24:44negotiation consider doing something a
24:46little bit differently than you might
24:47have done in the past in your next
24:49negotiation there will come a time when
24:51you have to make an offer either it's
24:52the opening offer or it's a counter
24:54offer next time you're supposed to make
24:56an offer don't make an offer
24:59instead make two or three offers at the
25:01same time this is a notion of what's
25:04called making multiple offers
25:06simultaneously instead of saying my
25:09offer is this price with this royalty
25:11rate with these terms you give them two
25:14or three full packages we can do it
25:15option A we can do option b or we can do
25:17option C the reason to do that is
25:20because often you don't know where they
25:21have more or less flexibility when you
25:23give them two or three different ways of
25:25doing it you not only signal flexibility
25:28which is they appreciate you can say
25:30legitimately to them listen we know what
25:31works for us but we also want to make
25:34sure it works for you so if you can do
25:36it with a very very high royalty rate
25:38here's what that would take but if you
25:40don't have much flexibility on that but
25:41you have flexibility on these other
25:43terms we could do it this way or this
25:44way as well my record I believe for the
25:47most number of offers I made at one time
25:49to the other side it was a deal we were
25:51doing in Australia was
25:5327 now it sounds crazier than it was
25:56there was three broad categories of
25:57offers we can do it this way this way or
25:59this way with some permutations that
26:01were uh sort of described in each one
26:04and the reason we had to do it was
26:05because they weren't willing to sit down
26:06with any of the people that were bidding
26:07for this project and so we wanted to
26:09make sure that we're not guessing
26:11incorrectly what they care about more
26:13and what they care about less where they
26:14do and don't have flexibility so we're
26:16going to tell them all the different
26:17ways we can do it generally speaking I
26:19am a huge fan of saying to the other
26:21side in a negotiation I know where I
26:23need to get I'm flexible on how we get
26:26there I will often say exactly those
26:27words I know where we need to get I am
26:29flexible on how we get there so as long
26:32as you can meet these needs we're going
26:34to be flexible on style structure and
26:35anything else that you need or to put it
26:37a different
26:38way the more currencies you allow
26:41someone to pay you in the more likely
26:42you get paid all right so it's one thing
26:45to want this much but if you're also
26:46going to tell them and the only we're
26:47going to accept it is if you do it this
26:49way you're creating more constraints if
26:50you show more flexibility in the deal
26:52structure all of a sudden there's more
26:54degrees of freedom for them to be able
26:55to give you what you need to be able to
26:57say yes happily
26:59initial reactions matter we know this in
27:02general let me give you one specific
27:05example of it having been in the room
27:06and having been in a lot of negotiations
27:08where this often goes wrong uh it's just
27:10a small tweak somebody makes you an
27:13offer on the phone or in a meeting face
27:15to face
27:16whatever and it's a ridiculous offer if
27:19it's a ridiculous offer don't waste any
27:22time before you reject it or signal this
27:25to them sometimes you feel like well I
27:27don't have the authority to say yes or
27:28no so I'm going to go back to my team
27:29and sort of discuss our response it
27:32doesn't work so well if somebody says to
27:33you so we're offering X and you say okay
27:36well let me write that down I'll get
27:37back to you and then you go back and
27:38then then you come back and you say it's
27:40totally ridiculous it doesn't seem
27:42totally ridiculous because it was
27:43totally ridiculous you probably would
27:44have signaled it before too often we're
27:47not ready to respond to some things that
27:49may come up it's not so different from
27:52being prepared to answer the toughest
27:53questions they may raise think in
27:55advance about what kind of signals you
27:57want to send them under different
27:59situations otherwise the signal might
28:01not be credible
28:04next understand and respect their
28:06constraints there are things in
28:09negotiations that you deserve that are
28:11rightfully yours that you quote should
28:14get which you will not get simply
28:17because their hands are truly tied and
28:20the sooner and the more effectively you
28:22figure out where they have more and less
28:24flexibility where the hands are truly
28:26tied and where they might be able to
28:27give the more likely you can navigate
28:29the deal in the direction that's going
28:31to get you what you want while allowing
28:33them to say yes you need to put yourself
28:36in their shoes you need to respect the
28:38fact that just because you want it and
28:39you think it's rightfully yours it may
28:41be that there actually is some issue
28:43there where they have some hard
28:45constraints think about why they might
28:47reject your legitimate demands
28:50now as you start giving them this
28:53benefit of the doubt again step back a
28:55little bit because there's a broader
28:57point I want to make
29:00very often people will come to me and
29:02they'll say something like you know I'm
29:04dealing with these folks and uh they're
29:06completely irrational or I'm dealing
29:08with these folks and they're very very
29:09stubborn or I'm dealing with these folks
29:10it's a very difficult negotiation
29:12because they're very
29:13untrustworthy never in my life has
29:16somebody come up to me and said I'm in
29:18this really tough negotiation I'm the
29:20irrational one I'm the untrustworthy one
29:23I'm the stubborn one and I start to
29:25think that the nicest people on the
29:27planet must reach out to me for help
29:28because it's never them what I want to
29:31suggest to you is that it doesn't do you
29:34any favors to see them as irrational I
29:38got to tell you and I've been in many
29:41parts of the world with many different
29:42kinds of negotiations and conflicts and
29:45disputes the people you're dealing with
29:47are not irrational it is highly unlikely
29:51that you're dealing with someone who's
29:52actually irrational by irrational I mean
29:55someone who is knowingly doing something
29:57that they know will reach the opposite
30:01of outcome of what they want that's
30:03probably not what's happening that would
30:04be irrational I know a is going to cause
30:07B I don't want B and I'm still going to
30:09knowingly do a that's not how people
30:11behave usually what looks like
30:13rationality to us is one of two things
30:16it could be
30:17ignorance or it could be that they have
30:19interest that we don't fully appreciate
30:22so when somebody is saying no to what
30:24you know is the best offer they're ever
30:26going to get and they're walking walking
30:28away when it's only going to be worse
30:29for them if they walk away than saying
30:31yes that seems irrational but maybe it's
30:33not irrationality it's ignorance maybe
30:35they haven't fully understood the value
30:37to them and if that's the problem the
30:39solution might be how do we educate them
30:41about the value we bring to the
30:43table or it could be that they have
30:45different interests maybe accepting this
30:48offer makes them look
30:49bad even it's it's the best deal they're
30:52going to get but saying yes maybe makes
30:54them look bad and they don't want to
30:56look bad that's not irrational they just
30:57have other interests or it's the best
31:00deal they're going to find but if they
31:01do it it sets a bad precedent in future
31:03deals there's something else going on
31:06before you jump to assuming somebody is
31:08irrational or crazy or evil or out to
31:11get you step back and really try to
31:14understand how do they see the situation
31:16what's actually driving this Behavior
31:17how does this person go to bed at night
31:19not thinking of themselves as irrational
31:21or crazy or evil and when you have this
31:24level of empathy you're not doing it to
31:27do them a favor favor when you see the
31:29world this way when you have this level
31:31of empathy you're actually doing
31:32yourself a favor because if somebody is
31:34irrational the only solution is to lock
31:36them up all right or walk away if
31:39they're evil they must be destroyed but
31:42if there's something else going
31:44on it gives you more levers to push and
31:46pull to solve the issue all right now
31:50when it comes to this notion of
31:52economics and the psychology of the deal
31:55it may be the best deal that they're
31:56ever going to get but they're still
31:58saying no because one of the things that
32:00I found in business deals and other
32:03deals is that often people can't say yes
32:06without looking bad and there's a phrase
32:09that was coined uh initially by a fellow
32:11by the name of Bill Yuri who's a
32:13colleague of ours at Harvard Law School
32:14uh for many years he came up with this
32:16phrase which I love he talked about it
32:18in the context of conflict we need to
32:20get into the habit of writing their
32:21victory speech for them we need to write
32:24their victory speech for them we can't
32:26be so self-focused what we need that we
32:29lose sight of the fact that they have an
32:31audience and so one of the things you
32:33want to be doing in a deal especially if
32:34it's a difficult negotiation is think
32:37about the person who's on the other side
32:38of the table and ask yourself how will
32:40this person possibly say yes to what I'm
32:43proposing and still be able to go back
32:46and declare Victory to whoever Their
32:48audience is maybe it's their boss maybe
32:50it's their Partners maybe it's their
32:51team maybe it's their shareholders maybe
32:54it's their investors maybe it's their
32:56voters whoever it may be
32:58how are they going to pitch this how are
33:00they going to look good at the end of
33:01this deal all right because what you
33:03don't want is to be generous to bring a
33:05lot of value to the table to negotiate
33:07in good faith and still not get the deal
33:10even though it was the right deal for
33:11everyone because you didn't understand
33:13their real problem in negotiations you
33:16can't walk away saying well that's their
33:17problem anything that looks like their
33:19problem somehow finds a way of becoming
33:21your problem all right because you're in
33:22a
33:23negotiation next let's take this same
33:26principle and apply it in a more
33:28tactical way any of you ever been in a
33:30negotiation where somebody made an
33:31ultimatum to you throughout an ultimatum
33:34like we'll never do this you must do
33:36this yes yes if you've lived you've had
33:39an ultimatum thrown at
33:40you my response if somebody makes an
33:44ultimatum to me to our side if I'm in a
33:46negotiation if I'm in a conflict if I'm
33:48in a deal scenario if it's a diplomatic
33:50situation whatever if the other side
33:52makes an ultimatum to us I don't care if
33:55it's face to face if it's an email if
33:57it's a phone call my response almost
34:00always is the same if you're going to
34:04make an ultimatum to me my response is
34:06going to be to Simply ignore
34:10it I'm not going to ask you to repeat
34:12what you said I'm not going to ask you
34:13to explain what you said I'm going to
34:15pretend it was never said and move on
34:17and address everything else you've
34:18touched on except the ultimatum now why
34:21is
34:22that a week from now a month from now a
34:26year from now there may come a time when
34:29what you said you would never do you
34:31realize you must do or what you said you
34:34would never do you realize is actually
34:36in your interest to do and when that day
34:39comes the last thing I want you to
34:41remember is having said I will never do
34:43this because on or the really last thing
34:46I want you to remember is me remembering
34:48you having said you'll never do this
34:49because on that day that will be the
34:51problem it's the same principle I'm
34:53thinking about how to write your victory
34:55speech for you on that day I'm going to
34:57ignore your ultimatum so that I never
35:00Force somebody to choose between doing
35:02what's smart and doing what makes them
35:05look good to the extent possible you
35:06want to align those two things now you
35:09might ask legitimately what if it's a
35:10real ultimatum and there you are
35:11ignoring it practically speaking
35:14experientially what I'll tell you is
35:15that's not a serious issue and the
35:17reason is if it's a real ultimatum they
35:19really cannot do this don't worry
35:21they're going to keep repeating that
35:23ultimatum over and over again through
35:24every channel through the entirety of
35:26the negotiation
35:28and at some point you can decide based
35:29on your understanding of the situation
35:31and where they've shown more and less
35:32flexibility and everything else you've
35:33learned in the process that maybe this
35:35is a a real red line for them but it's
35:37also the case that often what comes
35:39across as an ultimatum isn't a real
35:41ultimatum sometimes people just feel
35:43like they've been pushed long enough and
35:46they're trying to assert some control
35:48sometimes they're just trying to get
35:49some tactical Advantage I'll say I can
35:50never do it and then they'll have to to
35:52move sometimes maybe cross-culturally
35:54especially the language just gets used a
35:56little bit more strongly than it was in
35:57intended or needed to be used and for
35:59all those reasons it's often better to
36:01just ignore it now I will give you one
36:03variation on the theme sometimes it is
36:06difficult to ignore what somebody said
36:07if we're negotiating and the only thing
36:09you say to me is I'm never going to do
36:10this and that's all you said and you're
36:12sitting right there it's hard to ignore
36:15I can't I'm sorry I didn't hear
36:17you if I must engage with what somebody
36:21said and it's an ultimatum what I will
36:23often do this is the variation on the
36:26theme I will reframe it as a non-
36:29ultimatum before I move on so if you say
36:32to me I can never do this I might say
36:35something like listen I understand given
36:37where things are today this would be
36:38very hard for you to do I get that and
36:40what I'm doing is creating at least two
36:42outs first given where we are today in
36:45other words tomorrow or a year from now
36:47we may not be where we are today and
36:50secondly this would be very hard for you
36:52to do and I get that rather than this is
36:54of course never going to happen all
36:56right and never in my experience is
36:58somebody stopped me at that point and
36:59said no no no that's not what I said I
37:00said never ever ever ever usually
37:02they'll let it go and they understand
37:04okay Point has been made and now both
37:05sides have some outs all right now uh
37:08that's the giving uh getting ultimatums
37:10let me also just say a quick word uh
37:12Point number 19 about making ultimatums
37:14because people often ask you know should
37:15you make ultimatums in negotiations I
37:18have sort of two
37:20criteria when it comes to making
37:21ultimatums the we will never do this
37:24sort of getting aggressive or absolutist
37:26uh no flexibility on
37:28something I will only make an ultimatum
37:30if a it's a real ultimatum in that I
37:33will actually follow through on what I
37:34said because for me safeguarding our
37:37credibility and legitimacy is
37:40Paramount I'm only going to make an
37:42ultimatum if I will actually follow
37:44through on it if they don't do what was
37:46uh asked for second even if it's a real
37:50ultimatum even if I'm ready to follow
37:52through on it I will not use an
37:55ultimatum if I can find find some other
37:58way of solving my problem because
38:01ultimatums can sometimes leave a bad
38:03taste in people's mouths people don't
38:05like to be told what to do they don't
38:06like it when they think you're being
38:07very aggressive or forcing them to do
38:09certain things some sort of
38:11psychological reactance comes in so if I
38:13can find a better way of achieving what
38:15I'm trying to achieve conveying what I'm
38:16trying to convey getting the concession
38:18I need to get without getting aggressive
38:21tactically I'm going to do it but if
38:23both of these criteria are met this is
38:25what I need to do then I'm perfectly
38:27okay doing it and often it's good that
38:29the other side knows what you can and
38:30cannot do if this is truly a deal
38:31breaker for me we're both better off if
38:34this is
38:35conveyed next
38:37point one of the things that often
38:39happens is people walk out of
38:41negotiation and they didn't get a deal
38:43which is okay a lot of deals shouldn't
38:45happen if there's a better partner they
38:46should be working with if there's a
38:48better product for their problem you
38:50shouldn't get the deal no deal is not a
38:52problem no deal is only tragic when you
38:56really were the right partner for them
38:58when you actually did create value for
39:00each other when there was nobody better
39:01for both of you than the two of you
39:03together and when those deals end in and
39:06know that's a little tragic because
39:07you've destroyed some
39:08value the thing that I don't like is
39:11when somebody walks out of a room and if
39:12I ask them so what happened they say we
39:14didn't get the deal I say okay well what
39:16went wrong or how come and sometimes the
39:18answer is I still have no idea I still
39:21have no clue I still don't know what
39:23they really wanted that's the thing I
39:25don't like I can live with the didn't
39:27get the deal but my view is and it's not
39:30always possible to accomplish but it
39:32often is don't let negotiations end with
39:35a no negotiations should end either with
39:39a yes or with an explanation as to why
39:42not if you're going to walk away and the
39:45deal is still a no still push still
39:47probe still ask questions exactly what
39:50would have made it different I've often
39:52said to the other side I understand it's
39:54a no I understand this deal is not going
39:55to happen but paint me a picture imagine
39:59a world where you are actually saying
40:01yes not no paint me a picture what would
40:03that world need to have looked like what
40:05would need to have been different about
40:06that and people are often open to that
40:09conversation and sometimes what I learn
40:12is I have even more confidence that this
40:13deal was never going to happen because
40:15what they would need is impossible for
40:16us to give at this point sometimes I say
40:18wait a second we can actually address
40:19that problem and sometimes I say okay we
40:22can't get the deal today but at least
40:23now I know what it's going to take in
40:24the future either with them or with
40:26people like them if we run into this
40:28kind of thing all right next Point small
40:31Point small tweak small tactical thing
40:33again but something you see often
40:35happening uh when you get done with the
40:37meeting if it was face to face phone
40:40call whatever it was I'm a huge fan of
40:42sending an email sending an email
40:44afterwards allows you to do a couple of
40:46things first it allows you to make sure
40:48you're still on the same page that what
40:50you thought you agreed to actually has
40:51been agreed to so you can sort of
40:52confirm where things are because the
40:55closest you'll ever be with that person
40:56of being on the same page is the moment
40:59you leave the room and every moment
41:01after that you're just drifting farther
41:03and farther apart regarding your
41:04Recollections of what happened and what
41:06didn't happen and those are being biased
41:08by what happened since then to each of
41:09you and based on your own self-interest
41:11so you can confirm you can get some
41:13confirmation and if they're going to say
41:14no that's not our understanding better
41:15to know that now than later it also
41:17allows you to sort of reframe the the
41:21situation if you didn't frame it well in
41:22the room sometimes you walk out of a
41:24room and you say man I think we came
41:25across this too desperate we didn't even
41:26mention that we're talking to these
41:28other people or we came across too
41:30aggressive and it allows you to sort of
41:33reframe and use some more language
41:35around what your perception of the
41:36situation is and the third benefit is
41:38you can get more information sometimes
41:39you walk out of a room saying we forgot
41:41to ask them this we don't even know
41:42who's supposed to be reaching out next
41:44we don't know what the process is so for
41:46all these reasons small tweak get into
41:48the habit of reaching out to people over
41:50email or some such thing after you're
41:51done with the negotiation to make sure
41:53you're on the same page make sure you're
41:55framing the negotiation in the way that
41:56you want want and that you can get more
41:59information last
42:04point I do not allow any of my clients
42:08to in any negotiation that I've ever
42:10been to lie I a huge proponent of
42:14telling the truth always
42:17always always that is not the same as
42:20saying every time we walk into a room we
42:22tell them everything we know say this is
42:24the most will ever be able to pay and
42:25here's the thing and here's how much
42:26money is in my wallet that's not what I
42:27mean I'm talking about not
42:29lying
42:31and the reason is first it's the right
42:35thing to do it's not fair I think to say
42:39well where we're negotiating so that's
42:41different than how we are in real life
42:43or that was a
42:44deal this is your real life this is what
42:47you're
42:48doing and incidentally uh if you're
42:52sitting in this room or if you're on
42:53cnbc.com and you're watching this or
42:56wherever else you might be like
42:57streaming it uh I don't know if Inc is
42:59doing as well I'm pretty sure that
43:01there's nobody in this room or anybody
43:03who's watching this thing who can't
43:04afford to be more ethical there are
43:06people out there who don't have very
43:07much none of those people are in this
43:08room so everybody here has the ability
43:11to just be more ethical when it comes to
43:13these things and at least in my
43:15experience people don't lie because
43:16they're slimy people they often lie
43:19because they're not prepared they're not
43:20prepared to answer the tough questions
43:22or they're impatient they want to get
43:24somewhere sooner whether that somewhere
43:25is success or there somewhere is is
43:27farther in the deal process I always
43:30have to remind people on our side not
43:31because they're worse people than I am I
43:33have the same Temptations you got to
43:35step back and you got to make sure
43:37you're being honest and every great
43:41negotiator I've ever met in business in
43:44diplomacy uh people that I really think
43:47of as effective negotiators I think
43:49every one of them would tell you they
43:52guard their credibility with their life
43:55if they say they're going to do
43:56something
43:57they will you know walk over calls to
44:00make sure they do it and if this hasn't
44:02happened to you yet I assure you
44:05somewhere along the way in your Journeys
44:08as dealmakers as
44:09negotiators there will come a day when
44:12the only leverage you have in a
44:16negotiation is your credibility it'll be
44:19the only reason somebody's willing to
44:21sit down with you it will be the only
44:22reason they're willing to take the risk
44:23you're asking them to take you have no
44:25other leverage except
44:27they think you're credible they know
44:29you're honest they know you're saying it
44:31and you mean it they know they can
44:33respect or trust you and when that day
44:35comes you'll be even more glad that you
44:37didn't end up letting these things slide
44:39because most people uh I don't want to
44:41get all preachy here but uh but since
44:43it's item number 22 why not uh most
44:47people don't lose their credibility by
44:51one you know histrionic Act of
44:53backstabbing that they did that
44:55everybody heard about you usually people
44:57lose their credibility and they lose
44:59their reputation a little at a time you
45:01said something you do you didn't end up
45:03doing it because it was inconvenient you
45:05said earlier in the deal process this is
45:06really important you can't not have this
45:08but later on you ended up making that
45:09concession and now they're like wait a
45:11second how do we ever know what what you
45:12mean so you have to be very very mindful
45:14of it and I don't know where to draw the
45:15line except always because anytime you
45:17draw the line anybody anywhere else you
45:19know then there's there's no
45:20accountability even to yourself so
45:22that's 22 tweaks I I was told I had 40
45:24minutes and and I hope that's actually
45:25true because if it's true then then
45:27we're within time and if that's not true
45:28then you know we've taken somebody
45:29else's time
45:31uh uh we're going to stop here
45:34um these are things that I'm not
45:36assuming I'm assuming most of you are
45:38actually pretty good negotiators I don't
45:39walk into a room like this thinking
45:41here's people who don't know anything
45:42about negotiation I actually assume the
45:43opposite I assume most of you are very
45:45good negotiators some of you may be
45:46amazing negotiators but I also think
45:49that every one of us could be even
45:50better and so if we talk about 22 things
45:53and you find one thing that you find I
45:55never thought about doing it that way or
45:57I should talk to my team about it I
45:58think this will be uh you know time well
46:00spent and I'm going to stick around
46:02after this session and I'm going to
46:03stick around I think you have a
46:04reception today at 5:00 I'm going to try
46:06to be there as well and I'm happy to
46:07have any conversations you want about
46:09any of this good luck in your future
46:10negotiations I hope you found something
46:12of
46:13value hey there thanks for checking out
46:15CNBC on YouTube be sure to subscribe to
46:17stay up toate on all of the day's
46:19biggest stories you can also click on
46:21any of the videos around me to watch the
46:22latest from CNBC thanks for watching

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