If I know you’ll take as little as $3 for an apple, but no less (because someone else will pay $3 for it), and you know I won’t pay more than $5 (because that’s my max budget), then we can work out a deal anywhere between $3 and $5.
But that still leaves lots of room in the middle for jostling and kicking.
And BATNA doesn’t really tell us anything about how to “win.”
So here’s an uber-fast masterclass in strategic creativity that’ll help you win more every time you negotiate.
Call a Cab
There’s a famous negotiations example that illustrates creative bargaining strategy.
It distills the idea that understanding initial BATNAs is most useful as a starting point in bargaining, and that creatively altering BATNAs is one way to win a sweet deal:
Two tweed-wrapped professors travel internationally for a conference and pick up a cab at the airport. At the pickup, the driver tells them it’ll cost $50 for the ride to their posh hotel.
The cabbie knows the presence of other cabs at the airport means he can’t bargain for a higher fare; all cabs charge the $50 rate. And the profs know there’s no use in haggling since there are plenty of other people in need of cabs, and taxis are the only way to town. So they all agree on price and the professors get in. Both parties’ BATNAs are right at $50.
But then the cabbie has an (unethical) idea: Maybe he can alter the profs’ BATNA a little to wrest more value from the negotiation.
So the cabbie changes course and, instead of heading to the five-star hotel, drives the profs and their tweed deep into the very worst part of town. The taxi jounces over broken pavement. Abandoned buildings and burned-out cars lining the streets tell stories of recent violence, and roving gangs of wild dogs tear at wreckage strewn across the horrorscape as they eye the cab like it’s a Happy Meal.
The cabbie pulls into an abandoned lot and stops the car. He turns around in the front seat and says, “New negotiation: I’ll drive you to your fancy hotel from here for $100. Or you can get out right now, and you’ll surely be robbed of all you own. At best.” A lupine howl caroms through the alleyways, and the profs think they hear Blind Melon playing on an infinite loop from a nearby boombox. They are undoubtedly in one of the outer rings of hell.
At this point, the profs’ BATNA seems like it’s certain death. So they have little choice but to bend over and take the $100 fare. Or at least that’s the result you’d get without strategic creativity. Which changes things dramatically.
The creative tweedy prof looks at the other professor and grins. The less-creative prof thinks maybe the creative one is having a mental break and frantically starts digging around in his pocket for more cash. Just then, the creative prof rolls up both back windows, locks the doors and kicks off his shoes, settling back into the seat.
The prof says, “Cabbie, your income depends on fares. But we’ve got nothing to do the rest of the day. So here’s the newest negotiation: You drive us to the hotel right now for $25, or we’ll sit back here all day, making sure you don’t get another fare. Oh, and I’ve got horrendous gas from those peanuts on the plane.”
Get a Room
The profs won that negotiation and received a (somewhat circuitous) drive to their hotel for half the standard rate. Not too shabby. And that was in the context of dealing with an underhanded and unethical counterparty.
The point is that it’s not always just understanding your and your counterpart’s best alternatives; it’s that sometimes you can alter the negotiations landscape in your favor by getting a little creative with what the alternatives are and how they’re framed.
There’s no formula for getting the most out of creative efforts in a negotiation. But there are a couple of pointers that can be helpful in setting the stage for thinking creatively.
1. Understand Your Counterpart’s Position Completely
It’s always a good idea to understand the opposite party’s position as fully as possible anyway. Otherwise, you can’t really estimate their BATNA. And understanding your “opponent” has been sage advice for those looking out for Number 1 since the time of Sun Tzu.
But it’s sometimes possible to understand opposing parties’ positions even better than they do.
The two profs illustrated this theme with the simplicity of their re-re-negotiation. The taxi driver got it wrong when he perceived the profs only had two options: Pay the $100 or get eaten by dogs. They really had a third: Just stay in the car. Which was extremely costly for the cabbie and virtually costless for them.
The creative prof understood the cabbie’s situation better than even the cabbie did, and the cabbie understood the profs’ condition worse than the creative prof did.
2. Don’t Fixate on Price
It’s often said that the best negotiating strategy is to expand the scope of negotiations to incorporate variables other than price.
By expanding the scope to encompass non-price variables, there’s a better chance of claiming an advantageous result from the negotiation. In part, that’s because it opens the door for mutual satisfaction of non-zero-sum interests by both parties. But it’s also because there’s a better chance that your creative mind will latch onto something relevant and valuable to be used in bargaining.
When the gassy professor rolled up the windows and let rip some legume vapor, he implicitly brought into the scope of negotiations the cabbie’s personal comfort.
Which meant the profs could get a big win on price by giving the cabbie some comfort back – by rolling the windows back down once they were en route to the hotel. (And note that the cabbie’s comfort was decidedly not zero-sum: Nobody likes to breathe legume vapor.)
3. Don’t Panic
It’s well documented that stress inhibits creativity. So pretty much the worst thing you can do during negotiations is get all freaked out and wreck your pants.
By staying calm, you maintain space in your brain for game-winning creativity, lateral thinking and general greatness.
4. Be Funny
Or at least think about the negotiation like it’s a joke.
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