A Simple Skill That Can Dramatically Improve Your Life

I recently completed a course titled Mergers and Acquisitions (M&A) offered at the Aresty Institute of Executive Education, The Wharton School, University of Pennsylvania. My purpose was to brush up on my financial analysis skills for my M&A advisory practice. But to my delight, I got more than that. One of the areas of unexpected benefit was a section on “negotiation.” It was titled “Negotiations for Competitive Advantage” and was taught by Professor Stuart Diamond.

Diamond argued that while many people and organizations focus on financial aspects of transactions, the spoils go inordinately to those equally skilled in the art and science of negotiation.

Diamond’s sessions included lectures, case studies and group exercises. He promised that if we incorporated some of the competencies into our lives (negotiation is about everyday life, not just business), we’d enjoy a lifetime of returns. I’m sharing them here in case you want to incorporate them into your life and work.

Develop trust. Trust is an essential element for trade. Without it, parties would either not trade (negotiate) or would spend inordinate amounts of time protecting themselves against betrayal. As a negotiator — and you ARE a negotiator — the most significant asset you have is your reputation for trustworthiness. Build it. Protect it. Don’t ever betray it. Then profit from it.

Defuse tension and reduce stress. People don’t negotiate well under stress and/or discomfort. They withdraw, remain distracted, and outcomes are often suboptimal for all parties. So pay attention to the negotiating party’s state of mind. Arrange for comfortable surroundings. Make everyone feel relaxed and at home.

Expand the pie. Diamond continually urged us to consider how to “expand the pie,” in other words, create a win/win. All negotiating parties benefit from a bigger pie because then there is more for everyone.

Information is power. Gather information at every opportunity. Dig deep. Role-play. Ask questions:

If you were me, what would you be most concerned with?

If you were me, what would you be most interested in?

What do I need to know to give you what you really want?

What, if anything, am I missing?

If you had your wish, what would you add or take away from this negotiation?

Think these questions won’t get you good answers? Think again. Develop an environment of trust and you’ll get meaningful information.

Forget the past and things you can’t control. In most negotiations, you can’t change the past. All you can do is impact the future. The past is dead and gone. All that matters is what you can do together today to improve the future for both of you. Of course, you can deal only with things within your control. So focus on those — get them all out on the table — and work out a deal that makes you both better off than you would be otherwise.

Standards. One way to get the other party to agree with you is to use a standard — a set of rules or principles that guide decision-making. It might be a principle that your counterpart has adhered to in the past or can agree to today. For example:

• We’re going to put the past behind us and start anew.

• We’re not going to worry about what we can’t control.

• All we care about is how much money we both make (or save) on this deal.

Get off your high horse. Negotiating is not about who is right or wrong. It’s simply about what we should do now. It’s about getting what you want by giving them what they want. Who cares whether you agree, philosophically or otherwise? If you are hung up on being right, you won’t be a good negotiator.

Don’t let your behavior get in the way. In difficult negotiations, take care not to lose your cool. If someone becomes irate or rude, remain calm and respectful. Throw a tantrum, say something stupid or act inappropriately, and you’ll likely not get what you want.

Expand the time frame of the negotiation. It’s not over until you say it is. You haven’t failed until you’ve quit. So be patient and persistent. Keep communicating. As long as you stay in the game and keep communicating, investigating, offering trades, listening and checking, there’s hope.

Expand the time frame of the relationship. Goodwill, fairness and generosity should play a part in your negotiation. One way to establish this is to talk about connections the two of you enjoy, personally or organizationally. What’s the history? Review it fondly, as far back as it goes. How about the future? Successful negotiations today can lead to fruitful, mutually beneficial relationships. Don’t feel that what we do today matters only for today. It’s much bigger than that. Relationships are important and can last for generations.

Make friends, not enemies. Get close. Build trust. Cooperate. Work together. Meet each other’s needs. Build bridges, don’t burn them.

Use power subtly. People don’t respond well to force. Successful negotiations occur when all parties feel a sense of mutual cooperation. Playing the power game is risky and often results in suboptimal outcomes.

When you’ve come to deal, the more chips the better. Good negotiators don’t mind complexity. In fact, they thrive on it. More complexity leaves more room for win-win combinations. So as you prepare for a negotiation, get all the issues and possibilities out on the table.

Frame your goals in the interests of your counterpart. Tell them why something is in their best interest, based on their goals, and you’ll have a better chance of getting them to agree to what you want. You are the least important person in the negotiation. Of course, your goal is to satisfy your own needs, but you won’t get very far if you don’t focus on understanding your counterpart’s goals and needs, and figuring out how to satisfy them while satisfying your own. Said another way, get out of the win-lose mentality.

There’s a lot more in a deal than money. Diamond tried to help me realize that we often have a lot more to trade than typical terms of a sale agreement. My task is to discover what my counterpart wants that would not cost me much. An introduction to someone? A reference? Exposure in my publication? Help with solving a problem?

I went to Wharton to brush up on my financial acumen. I returned with a clear sense that by becoming a more skilled and effective negotiator I could garner more for myself, my family, my employees, my partners and my clients. You can, too.

Each day, you negotiate: where to go for dinner, how to resolve a family spat, children’s allowances, caring for an elderly parent, car repairs, employee compensation, product returns, vendor credit terms, and so forth. Logically, if you improve the outcome of each negotiation — whether the outcome is happier participants, better relationships or better terms for you and yours — the cumulative impact on your life, and the lives of those around you, would be considerable.