The Next Time

If you watch soccer regularly you've probably witnessed this situation many times: the referee calls a penalty kick against one of the teams. Immediately, the players of the affected team surround the referee, yelling and gesturing in protest, keeping at it for enough time to make the referee uncomfortable.

Now, if you watch soccer you also probably know that a referee never takes back a penalty call. So, why do players bother to protest if the outcome is not going to change? Because they're trying to condition the referee to be more lenient on future calls. They're not thinking about now. They're thinking about the next time.

If somebody you do business with on a regular basis screws up and there's nothing they can do to fix it, you still need to complain. Not to vent or try to change what can't be changed, but because you're already negotiating for a better deal next time.

Image credits: Tony Austin

The Best Time

The best time to take a cruise or send a Fedex package is probably now. Yes, some people may be apprehensive to set sail after the recent Costa accident, just as some thought it twice before Fedex'ing a package after a video of a careless delivery guy grossly mishandling a package went viral a few weeks ago.

Think about it, though:

Businessmen (and politicians) are very good at reacting. They may be clueless about a lot of things, but once something happens they usually step into high gear to make sure that "it (whatever it is) doesn't happen again".

This means more training, stepped up oversight, better safety standards, etc.. It may also mean a better deal for those who manage to keep a level head. As Warren Buffett likes to say: "be greedy when other people are fearful..."

Skin in the Game

Negotiating is a two way street. You must create options so that both parties win. But also, you must create a mechanism by which both parties feel the pain if things don't go well. This is what Warren Buffett meant when he coined the phrase "having skin in the game".

When people don't have skin in the game there is little incentive to perform. The best example of this is the 2008 financial crisis.

The most important question we must get into the habit of asking the other party before we put our hard earned cash, time or effort on the line is:

What do you stand to lose if things go wrong?

If the answer is nothing, or not much, then sooner or later we're going to be left holding the bag.

Image credits: tpurk

Negotiating

If I needed to choose the #1 trait of a good negotiator it would be this: the ability to generate options.

Think about it. If you have no options you have nothing to negotiate.

If you have only one spare parts supplier, and the only machine that makes the widgets you have to ship to your most important customer tomorrow breaks down, you have no choice but to pay the high price he demands.

However, if you’ve created options by building a network of suppliers, you can play one against the other and buy from the lowest bidder.

You can also create an option by offering your customer a similar product that you just happen to have in stock. This would eliminate the sense of urgency and perhaps give you enough time to refurbish the defective part instead of buying a new one, saving you money.

The above are just examples, but you get the idea: The more options you create, the better the outcome of the negotiation.

Some options are easy to come up with. Others are harder and take more time, effort and research. And others, the hardest ones, will manifest themselves only after you change your perspective (what they call “out of the box " thinking).

You can create options not only for you, but also for the party negotiating with you. By doing so, you build trust and become a partner instead of a competitor.

There's plenty to learn about negotiating, but if you want to keep it really simple just train your mind to create options. Everything else revolves around that.

Image Credits: myDigitalSLR