15. The Art of Negotiation: How to Get More of What You Want
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Hi, Matt here. I invite you to look into Stanford Continuing Studies. For over 20 years, I have taught in the program. Discover a diverse range of courses available both online and in person to anyone, anywhere in the world. Classes cover everything from fundamental business skills to the fascinating world of AI. This fall, join me for Communication Essentials for Work and Life, a new course designed to enhance and hone your communication skills in various situations.

Each week, guest speakers will join me for interactive lectures and Q&A sessions on topics like persuasion, storytelling, nonverbal presence, and reputation management. The course starts September 24th, and registration is now open. Learn more at continuingstudies.stanford.edu. The biggest fight, or should I say negotiation, my wife and I have ever had was over toothpaste.

You see, my wife is a roller and I'm a squeezer. And nothing upsets a roller more than a squeezer. To this day, after 20 years of marriage, we still have two tubes of toothpaste.

Welcome to Think Fast, Talk Smart, the podcast. Negotiation plays an important role in our daily lives. You might be striving to get an increase in your salary, support for a project, less screen time for your kids, or more quality time with your romantic partner. Becoming a better negotiator can help you and the people you interact with.

Today, I am so excited to be joined by Maggie Neal, the Adams Distinguished Professor of Management Emerita at the GSB. Additionally, along with Thomas Leis, Maggie is the co-author of the book, Getting More of What You Want.

Her research focuses on negotiation and team performance. Welcome, Maggie. Thanks so much for being here. Thanks, Matt. It's a pleasure. Yep. You are well known for your keen insights, your engaging teaching style and humorous storytelling, and along with your love of horses. So excited to have you here. I'd like to get started. I know you have a particular way of looking at negotiation. How do you define negotiation and what do you see as the definition of a successful negotiation? Well,

Well, too many of us approach a negotiation as a battle. And that battle is characterized by, I'm going to try to get stuff from you, and I'm going to try to keep you from getting my stuff. And if that's how you think about negotiation, you're already in an uphill climb. Because what that perspective does is it frames how you interact and evaluate your counterpart and yourself. You're going to evaluate your counterpart through that screen of battle,

And so what I suggest is rather than thinking about your counterpart as your enemy, think about negotiation as collaborative problem solving. Collaborative problem solving has three dimensions. The first is that I, as the protagonist negotiator, am better off, better off than my alternatives, better off than my status quo, better off than had I not negotiated.

Now that may sound like a low bar because what reasonable person is going to negotiate to be worse off? That's true. Except we all have, you know, each of us have been in negotiations multiple times, probably where we knew at the moment, the second before we said, yes, we should walk away. But we said yes anyway, because we privileged agreement over the quality of deal. So that's number one is I, as the protagonist need to be made better off. But number two is,

There's no command and control in negotiation. I cannot force you to say yes. All that I can do is present proposals to you where you think it's in your interest to say yes, and we agree on a common course of action. So that means I need to understand who you are, what your interests are, your preferences, your motivations, what your challenges are, and I need to be able to answer the question, why would you say yes to my proposal?

Because if I don't have the answer to that question, I'm not ready to negotiate. So the second part is really about reconnaissance and reflection into who you're negotiating with. Absolutely. And the third point is that when I present a proposal to you, I'm going to present that proposal as a solution to a problem that you have. Okay.

And that's the crux of the collaborative problem-solving perspective. What it does is it takes this out of me against you. I like that a lot. That reinforces several things that we've heard across many of these podcast episodes is you really have to know your audience, who you're talking to, and you have to frame your communication in a way that helps and supports them. It's not just about you. So I love that you're echoing that.

Yes, and the not just about you is the whole point. What suggestions do you have to help us better plan for our negotiations? Are there things we can do to prepare ourselves and those we negotiate with? Absolutely. So I need to understand my situation. The first thing I need to understand is what are my alternatives? What happens to me in the case of an impasse? There has been a ton of research in this area, and it's really very clear.

Those folks with better alternatives on average walk away with more in the negotiation. And the reason they do that is because they're more willing to walk away. So let's say I have a really good alternative. It makes it easier for me to walk away. So if you want an outcome, a negotiated outcome with me, you've got to actually pay me to stay and engage with you.

but my alternatives are outside the negotiation, but they have a huge impact on how I behave because they affect the second parameter, which is my reservation price. My reservation price, it's the tipping point in a negotiation. And it is arguably the most strategic piece of information because it tells me where that point is

where I am willing to walk away. In fact, if I am negotiating it and I am at my reservation price, I should be so indifferent as to the outcome that I can flip a coin. And if it lands heads, I walk away. And if it lands tails, I say yes. And I would argue most of us don't ever think about. You know, most people don't. And even people who do oftentimes don't have the discipline

to be able to honor that reservation price because they value getting a yes over the quality of the deal. And this is what's so critical because if you don't have a reservation price, if you don't have a point, your bottom line, if you're not clear what your bottom line is, and you don't have the discipline to maintain that bottom line, then whatever surplus exists in the negotiation can easily flow to your counterpart.

Because it really is that point where you say, "No, I won't do this." But you need to know where that is. And now if all you focused on were those two aspects, your bottom line, or what happens if you got an impasse, then what's going to happen is you're going to systematically underperform in your negotiation. And you do so because of a very powerful psychological process. Expectations drive our behavior.

So if my expectations about what I can get in this negotiation are centered on my bottom line or what happens to me if I get an impasse, if that's where my mind is, that's where I will end up. So I must leverage up my expectations. I must think about an aspiration. An aspiration is life.

an assessment and that doesn't mean I look at them and say, oh, if things went really well, the perfect world, I would get all of this. No. What I say is here's my situation. Here's my skills and ability. Here's my counterpart. Here's their situation. If everything went in my direction in this situation, optimistically, what could I hope to achieve?

That doesn't say my counterpart completely, you know, sort of rolls over on their back and he says, I give. No, they're going to be trying to get more of what they want. But if things go my way, what could I hope to achieve? And what I've found, Matt, is that folks rarely, rarely identify an aspiration. Sometimes they will identify a reservation price. Absolutely. Sometimes there are alternatives. Yes.

But they rarely use what I think is really one of the secret ingredients in successful negotiation, which is setting an aspiration and having a focus from your perspective on that aspiration. Previously on this podcast, we've talked a fair bit about how to structure our messages. Are there specific best practices for how you structure negotiation messages? For example, I know you've done some research on chunking, and I find it really compelling. Can you tell us a bit about that?

Well, there's two different ways to think about chunking. So number one is that too often in negotiation, we tell ourselves that the correct way to negotiate is one issue at a time. And that strategy is a recipe for value destruction in a negotiation. And so part of what we want to do is we want to be able to negotiate multiple issues simultaneously.

And the reason we want to do that is because not every issue is equally important to both of us. And so what I want to do is I want to get a sense of value or importance of the issues over which we could negotiate. How important are they to you compared to how important they are to me? I'm quite willing to concede on an issue that's important to you, especially if it's not that important to me, in order to get a concession on an issue that's important to me.

That's the beginning of the chunking process. So where are the asymmetries in our preferences? And then what I want to do is I want to negotiate at the package level. So think about as you make a proposal, all the issues and kind of try to work with them all simultaneously. I want to craft a proposal that reflects our unique contributions as opposed to I want to win that issue. You won the last issue.

I see. So in essence, chunking gives you multiple levers to pull that you don't have if you're going issue by issue. So often when we negotiate, we bring emotion to the party. We're frustrated, we're nervous, we're excited. What role does emotion play in negotiation? And do you have any guidance on how to handle our emotions in the heat of a negotiation?

There's been a fair amount of research on the emotional aspect of negotiation. So the first thing I would like to say, which is sort of counterintuitive, is that emotions affect how we think and the different types of emotions affect how systematic our thinking is. And so there's a fair amount of research that looks at what emotions encourage deep thinking versus encourage top of the mind thinking.

And it turns out that it's not about happy or angry, right? It turns out that actually happy and angry both create an emphasis on top of the mind thinking. You want to sort of think about the emotions that actually get your counterpart to think deeply. And those are things like surprise or sadness. Those are emotions that actually are associated with much more deep information processing.

Thank you for that information. We have a tradition on this podcast. Before we end, I'd like to ask everybody the same three questions. Okay. Question number one. If you were to capture the best communication advice you have ever received as a five- to seven-word presentation slide title, what would that be? I'd say insight often arrives from unlikely sources. Ah.

I like that. Sounds like you've got some history with that advice. I do. Anything you're willing to share? Well, part of the issue, and let me give a little pitch here. I have a TEDx talk from Stanford about negotiating with my horse. One of my most failed negotiations was with my horse. And she also taught me a whole lot about negotiation subsequent to that. Insight comes from really interesting places.

Yes. I'm impressed that we went so long without talking about horses. So I'm glad it came up. Question number two, who is a communicator? I guess I will say a human communicator that you admire and why? So I'm going to give you two because one of them is historic and one of them is current. Tony Fauci is an amazing communicator and has to manage such a tightrope to communicate to multiple and competing audiences simultaneously. I am just in awe of his ability.

That's number one. And I actually had the opportunity to work with him years and years ago when he was presenting some of his HIV research at a conference. And he is as authentic and genuine as you see him today. He was back then. He is who he is. And I think that's part of what makes him successful. Who is your historical reference? John Kennedy. Mm-hmm.

And the reason is because John Kennedy moved an entire generation to do stuff they never thought they were going to do. And it even goes back to his inaugural speech, you know, ask not what your country can do for you, but what you can do for your country.

Many folks answered that call and began doing things like the Peace Corps and went out to basically change the world because that was what he asked us to do. So number three, what are the first three ingredients that go into a successful communication recipe? First one is concern for the other.

If I'm trying to communicate to somebody, I need to understand where they are. And I need to frame my communication in a way that meets them where they are. And then I need to sort of help figure out how that communication can move them to a place that I would prefer them to be. And so that's why I think, for example, negotiation is such an important skill. Maybe together we can come up with a better solution than either one of us could have imagined separately.

What a great recipe that would make. Maggie, thank you so much. Your insights into negotiation will help all of us do a better job of getting what we want and fostering more collaborative relationships. I really appreciate your time. Thanks so much, Matt. It was great talking to you.

Thanks for joining us for another episode of Think Fast, Talk Smart, the podcast. Produced by Stanford University's Graduate School of Business. For more information and episodes, visit gsb.stanford.edu or subscribe to our show wherever you get your podcasts.

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