A couple of days ago I finished a book on negotiation "Never Split The Difference" by an ex-FBI Chris Voss. As usual, I want to share a short review of the book with you. I am not a professional negotiator and don't have a lot of experience in bargaining and business deals. However, I have been interested in behavioural sciences and social psychology since I read the first psychoanalysis book in 9th grade. And "Never Split The Difference" provides strong insights on behavioural facets of negotiation.
The basic idea of the book is that anything in your life is negotiation. And to negotiate, you need to listen, analyse, and be focused on the counterparty, not on yourself. And, of course, you should NEVER split the difference.
1. People are irrational and have hidden agendas. And strong negotiators should unfold these secret motives, understand them, show this understanding to the person, and make this person more willing to cooperate.
2. Majority of people are scared of being misunderstood or ignored. To make them more open and friendly, you should show them that you understand and actually hear them.
3. Smart negotiators make the other person feel as if it's her decision to lower the price or to increase the salary. Smart negotiators don't focus on themselves most of the time - they dive deep into other person's mind, mirror her words, gestures, and posture, and allow the other person to do the talking.
What impacts the outcome of negotiation:
4. Body language and face expression influences the result of negotiation by 55%.
5. Tone of the voice influences negotiation by 38%.
6. Words influence the outcome by only 7%.
7. The stats above mean that sometimes it doesn't matter what you say during the negotiation. What matters is how you say it. If the other person is nervous and scared, you should better soothe her emotions by a slow tone and deep calm voice. Also, your face should express sheer interest, attention to the counterparty, and understanding. By doing these 2 things, you are very likely to make the other person relaxed and more agreeable.
Negotiation is a little bit of manipulation:
8. The other person needs to feel as if the outcome of negotiation depends mostly on her. This result can be achieved by active listening, calibrated questions, and labelling.
9. Let the other person talk more, express her opinion, think out loud, and tell everything she wants to tell. Be an active listener: nod, ask clarifying q's, mirror the last words that the person said. For instance, if she says "We actually expected your valuation to be lower", answer by "Lower?". Most probably you would receive the rationale behind the lower valuation. Continue mirroring the last words of the counterparty until you get the information you want to get.
10. Ask questions with "How" and "What". "What do you suggest that we do?"; "How can we help you achieve your goals?"; "How can we solve this problem?" etc. Make the other person feel in charge and cooperate.
11. Label one's attitude towards you or the the deal you are trying to strike. Assume, you are a startup talking to an investor. You are pre-Seed, earning less than $5,000 per month, but you want to be valued at $7,500,000 pre-money. Before pronouncing the latter number, say something like "I know, that you will say that it's too high and you might think that I am crazy or too ambitious, but the valuation I have in mind is $7,500,000 pre-money". Ideally, if this valuation is already a bit higher than that, which you actually have in mind.
12. Don't push too hard. If you are assertive type of a person, control your impulses to act assertively and avoid pushing the investor towards a decision. People under the pressure may feel in danger and decide against making any deals with you.
Other interesting lessons:
13. "No" is better than "Yes". When you get a "yes" answer, you don't get any insights inside the other person's mind. And when you get a "No", you can start a discussion, let the other person to speak, unfold her concerns, and then help diminish these concerns by encouraging the person to cooperate with you. Thus, if you get a "yes", you should try to explore whether a person has any hesitations against the deal or agreement to make her talk anyway and decrease the probability of "no" in the future.
14. Black swans are an essential part of negotiation. Black swan is an example of so called "unknown unknowns" - things that we couldn't even imagine to exist, but they do exist. Sometimes, such black swans can be considered as a hidden agenda or secret motivation of the other person. Finding out these hidden agendas may help you get the deal that you want. But to find out, you need to listen, read between the lines, and think.
15. People make irrational decisions and usually they decide with emotions, not rationale. For instance, an investor usually knows if she wants to invest in a startup after the 1st meeting. This is called the fast thinking. Depending on the decision, made by "fast thinking", the person will use her "slow thinking" (= logic) to confirm her position. So your task is to get the person excited, diminish all reasons to hesitate immediately, uncover all possible "no's", and solve them. Then this person is very likely to look only for arguments FOR this deal, and not AGAINST it. This is called confirmation bias:) And yes, I know, that the theory in p.15 belongs to Kahneman.
16. "Never split the difference" means that you should not seek for compromise, but try to get what you actually want. Compromise is morally convenient, but it doesn't serve your initial goals. And you would not be very happy with a compromise.
17. Empathy is everything. You need to learn to put yourself in the other person's shoes and label her emotions/feelings/situation. Labelling of negative emotions diminishes them. Labelling of positive ones, intensifies them.
18. You should remain reasonable. If there's obviously no fit between you and the counterparty. If you are a Series B startup wanting to get financing from a Pre-Seed investor, it probably won't work for you.
The book is a very detailed negotiation manual with a lot of references to psychology, behavioural sciences, and emotions. It is a good guidance to understand the basics of negotiations. But of course, it should not be treated as an ultimate source of knowledge in negotiation. Each situation, counterparty, business, industry is different. And it's the reader's task to take the basics and apply them to her reality.
Disclaimer: The opinion above belongs to the Senior Investment Analyst of Genesis Investments, Elena Mazhuha, and by no means expresses the official opinion of Genesis Investments, its management, or Genesis Tech. and its founders as well as its management.