Deepak Malhotra Shares His Award Winning Negotiation Tips | CNBC

why some of the sessions that you've been through and they've been fantastic we're going to jump into something a little bit different which is going to be on negotiations before I dive into it I just want to give you about a 30 second to 1 minute introduction on Who I am and where I'm coming from because I think it's sometimes useful to know who you're going to be dealing with for the next half hour or 40 minutes as mentioned my name is Deepak Malhotra I'm at the Harvard Business School I've been on the faculty there for about 15 years I got there in 2002 and my area of work is negotiations negotiation deal making disputes conflict diplomacy anything in that area is things that I find interesting now being at a business school most of my work is in the world of business and most of the stuff I do outside of Harvard Business School is working with companies often early-stage companies or entrepreneurs thinking about how to help them consult with them advise them on difficult deals strategic partnerships issues they face and scaling or other kinds of strategic problems but while I work a lot with businesses I also do some work in some other areas I work with some governments thinking about how to help resolve armed conflicts ethno-political conflicts they're dealing with insurgencies or a peace process I do some work with hospitals and doctors so they can think more carefully about how they might have effective conversations with their patients so that their patients can make better health decisions and the reason I mentioned that the work outside of the business area in the world of conflict in the world of medicine etc the reason I mentioned that is because it's gone a long way in shaping my own view about what negotiation is and what negotiation is not and I like to lay out my perspective at the very beginning before I dive into specifics having negotiated and worked on negotiations and consulted with instead of negotiations in different industries also in different domains like conflict and healthcare one of the things I've come to appreciate is that at the end of the day negotiation is not about dollars and cents and it's not about deal terms and it's not about emotions and it's not about lives lost or lives saved it's not about ceasefires at the end of the day negotiation no matter where you're negotiating what the substance of the negotiation is how many people you're dealing with negotiation is always fundamentally about human interaction and the question we are always trying to answer the problem we're always trying to solve as negotiators is how do we engage with other people in such a way to achieve better understandings and better agreements that's it doesn't matter what we're negotiating through which medium were negotiating what the stakes are how complex it is what we're always doing as negotiators is trying to figure out how do we engage with other people in such a way as to achieve better understandings and better agreements and I'm going to try to do over the next 30 minutes or 40 minutes is talk about some of the things that you might do perhaps differently than you've been doing to make it more likely that you achieve success in that endeavor as you're dealing with other human beings now I spend all of my time thinking about negotiations and I'm pretty sure you don't spend all of your days thinking about negotiations but most of you would probably admit that many of the interactions you have in your work but also outside of the professional sphere have a negotiation element to them anytime you're dealing with someone who has a different perspective than you do anytime you're dealing with someone who has different interests than you do a negotiation lens can be useful and so we're going to be talking about now is some of the ways in which you can make sure that when you're negotiating when you find yourself in a situation where you're doing a deal or you're in a dispute or some kind of conflict you might be able to navigate it a little bit better and the way we're going to do it is what we call the session is negotiation tweaks and the inspiration for that term comes from golf I don't golf very much but whenever I tell someone I like golfing and I would like to be better at golf often what they will tell me is it's a really good idea to go to a coach to a professional to get at least one lesson and I'll say well what's one lesson going to do and they're going to say well it's not going to make you a great golfer but immediately they're going to look at how you golf and they're going to be able to give you a few tweaks they'll see the way you grip you know the golf club they'll look at your swing they'll look at what you're bending your arm or not they'll look at how your feet are position and they'll be able to pick up a couple of things that you can do that are quick fixes easy tweaks that you can make that will have downstream consequences to make you more effective at golf I haven't done that but I like the idea and so I'm going to do the same thing in this world of negotiation in the 40 minutes I have and now of course less than 40 minutes I'm going to try to go through 22 things you might consider doing in your negotiations some of these things maybe you're already doing some of these things might be the opposite of what you've been doing some of these things might be something you never thought about before and my hope is that everybody who's listening to this either in the audience live here or online will be able to find at least one or two or three things that you look at you say oh that's interesting I never quite thought of doing it that way or that's something I should really share with my team because as an organization we don't do that systematically enough and the way we're going to go about it is the flow of the conversation is going to be by and large from what happens in the early stages of negotiation before you get into the room to what happens as you go through it and then when you leave the room that's kind of how we're going to be thinking about this and since I'm going to try to get through 22 of these things some of these we're going to cover quickly others we're going to cover even more quickly all right so that's how this is going to go so the first thing I want to point out having advised on lots of deals million-dollar deals billion dollar deals multi-billion dollar deals and things where money is not at stake one of the most important things I can tell you right off the bat is you want to have a strategy meeting you do not want to walk in there relying only on your intuition relying a relying only on gut instinct in my experience intuition is very nice gut instinct is very very nice but it is not strategy nor should it be a substitute for careful analysis when the stakes are higher the situation is complex invite more people into that strategy meeting than you think you need I have never regretted bringing in a couple of other folks the fourth or fifth or sixth person will not add as much as a second or third person did but they will shape the conversation in a way that will be useful and they will add something that will be useful they're going to see it from a perspective that's different from the ones you've been seeing it the bizdev person brings something different than the then the general counsel brings somebody different from the sales person brings something different from the operations person and somebody who's on the front lines you want to have a strategy meeting too many people walk into a negotiation thinking negotiation is about knowing what you want and then having four or five or six arguments for why they should give it to you and they go into the room and they say here's what I want and here's why it should happen this way and then they hope for the best that's not negotiation as we're going to find out as we go forward there's a lot more you need to be doing and you need to be coordinated as a team one other thing about being in a meeting like this one of the mistakes I've seen people make especially leaders of organizations or senior managers or team leaders is that they create a culture they create an environment in their meetings and in their organizations that rewards people for coming up with the right answer now that seems like a reasonable thing to do you want the right answer so you should reward people for coming up with the right answer or the right strategy but I actually think that's the wrong way to go about it you don't want people in the room to come up with or to feel like they're going to be rewarded for coming up with the right answer you want to reward people for coming up with good arguments because this is not a math problem usually it's not like there is one right answer that the smartest person in the room is going to be able to figure out if it's an interesting enough negotiation if the stakes are high if it's a complex negotiation the solution is not going to be obvious to one person it's going to be built on the good arguments that different people make and it's not that you walk in and say okay whoever comes up with the right strategy is going to get a thousand dollar bonus but we do it implicitly see when the leader talks in a meeting and you're sitting in a boardroom you're sitting in any kind of meeting whether he or she is the CEO or the founder or a team leader when the leader talks they look at everybody as they're talking but when anybody else in the room talks are almost always looking right at the leader and they're looking to see is this person nodding along are they liking what I'm saying and they try to get to the right answer as quickly as they can that's not the kind of environment you want you want to reward people for coming up with good arguments next you have to know what's going to happen to you if there is no deal this should be sort of obvious you will make crucial mistakes if you haven't thought through carefully as a team what is our walkaway point how bad is it really if we don't get this deal or how good is it really if we don't get this deal you need to know this but there's a caveat you don't want to become obsessed with what happens to you if there's no deal one of the things that we've learned the research through experience is that it turns out negotiators who walk into a room obsessed with what's going to happen to me if there is no deal those folks get systematically worse outcomes than people who walk into a room knowing what happens to them if there's no deal but making the negotiation about what happens to the other side if there's no deal when you frame the negotiate around what happens to them if there's no deal now you're essentially making it about the value you bring to the table for the other side and when you make the negotiation about the value you bring to the table that's when you have the possibility the opportunity to monetize the value you create in the system for the other side for their organization etc so know what happens to you if there's no deal otherwise you're going to make crucial mistakes but as much as you need to know that you need to focus on what happens to them if there is no deal why are they here today what keeps this person up at night what do I do for them that nobody else can do for them if you frame it around that you have a greater opportunity for creating and capturing value in that deal next too many folks get obsessed with the substance of the deal for good reasons substance is all of the things that are going to be in the in the deal the terms the offers and counteroffers are about the substance of the deal the language in the contract is the substance of the deal what you don't want to lose sight of is process process is what gets us from where we are today to the finish line and the finish line might be a signed deal it might be the implementation of a deal depending on the kind of negotiation you're doing one of the things I advise all of my clients and all my students to do is to get into the habit of negotiating process before substance here's what I mean by that imagine a scenario where you've been negotiating for say six months or nine months or ten months and imagine that this is the kind of deal where that's a good amount of time and after these six or nine or ten months you finally get to the point where you think the finish line is in sight you think this deal might be able to be done now you've got a couple of concessions saved up in your back pocket for exactly a moment like today and you throw those out there hoping it will seal the deal and the other side looks at you and says thank you this is great we really appreciate this this is very helpful now let me just go talk to my boss and see what she thinks about it and you're sitting there going away what you have a boss I thought this was it I thought we were done I've got nothing left to give that's an example of what can go wrong when you don't negotiate process before you jump into negotiating substance negotiating process before you dive into substance is about asking like how long does it take an organization like yours to do a deal like this who are all the people that need to be signed on before this deal goes through what are some factors that might speed things up and what are some factors that might slow things down process before substance is also about having conversations like what are we going to be discussing in the meeting tomorrow who's going to be in the room what about these other issues that we care a lot about when will we be able to touch on those all of these things none of these things have to do with the substance of the deal it's all about how we're going to get from where we are today to where we want to go and if you think about the negotiations that fail many of them fail because people did not give enough attention did not respect enough process they didn't have a process strategy they didn't coordinate on process they didn't think through process one other thing I'm going to talk about unprocessed it's going to be the next lesson it's a point number five it actually comes from the world of mediation and have you ever been through a mediation like a conflict of dispute mediation some of you clearly have if you ever go through a really ugly conflict it could be a business conflict it could be a family conflict any kind of conflict and it's really ugly and you go to a mediator whose job is to help you solve this problem one of the things an effective mediator might do on day one when he or she brings the people into the room the mediator might say something like this you two think you hate each other today we're going to be at this for a week and about three days into this process you're going to hate each other more than you've ever hated each other and when that happens I just want you to remember something that's normal that's normal now think about why a mediator might say that what happens if the mediator doesn't say that and three days into the week you hate each other more than you've ever hated each other the emotions have gotten even stronger there's more anger and anxiety than ever before what are you going to think you're going to think this is not working alright we're moving in the wrong direction and you're going to quit the process entirely and what the mediator is doing it's called normalizing the process the mediator is normalizing the process for you they're letting you know that things don't go from bad to good getting better every when you try to take on these difficult challenges the process from bad to good goes a little bit like this and that's how you get there so when you're down there you don't over wait it too much you don't read too much into it this idea of normalizing the process is something we should be doing in negotiations of all kinds not just ugly conflicts I was talking to God from he had a business in South Asia and his business was he had a lot of manufacturing facilities one of the things he told me we were talking about something else you brought this issue up he says one of the things I've learned is I will not do business with anybody from the West he said and by the West he meant the US Europe etc he said I will not do business with anybody from the West unless they are willing to fly into my city get out of the airport get into a car that will send for them and drive from the airport to our manufacturing facilities which are about 18 kilometers away and take about three hours to get to until they've done that once they don't know how it works here and the first time something goes wrong they assume it's because we're stealing from them or because we don't know what we're doing you need to normalize the process for them even when you're selling to them but too often we don't do that we're so busy trying to seal the deal sign the deal get them to say yes then we make it sound like nothing will go wrong there will be no disruptions there will be no delays will always be seeming as enthusiastic as we are today and when any of those things change or go wrong they end up over waiting it but when you've let them know along the way here's what's normal here's how we get from here to there we'll get there but here's the path to it it's less likely that delays disruptions and other sorts of bumps in the road end up being relationship killers down this down line next I know a lot of people who talk too much in negotiations I know almost no one who asks too many questions if you could have one mindset going into every future negotiation people get in very different mindset some people go in thinking this is war some people thinking going this is relational some people are thinking long term some people have a short term attitude some people are thinking strategically some or thinking tactically you can have any mindset you want really but if you had to pick one if you could take only one mindset and click it on before you walk into every future negotiation I would strongly suggest walking into every future negotiation with a learning mindset you are there above all to learn as much as you can but all of the parties that are relevant to this negotiation whether they're inside the room or not what are their interests what do they care about more what do they care about less what keeps them up at night why are they doing this deal today rather than six months from now or a year ago what are their constraints what are the things they can and cannot do how are they seeing the situations think about the questions you ask write down all the things you wish you could know they're not going to answer every question but they're more likely to answer them if you ask then if you don't ask and when you're done coming up with every question you can think of I suggest you add another ten more to the list all right and your team will help you alright a lot of people talk a lot not enough people ask enough questions now it's not just about asking more questions you also have to ask the right questions now every negotiation is different and so the right question will vary depending on the context a situation where in the process you are but one little hint in general why is more important than what people talk about what all the time what they want you might say what you want we want the deal done in six months we want more money up front we want exclusivity we don't want exclusivity that's the what these are the demands people make the positions they hold your job as a negotiator is to try and get underneath that and figure out why they want these things what are the things that are driving them what's the underlying motivation and when you shift the conversation from what to why you often find more ways of resolving the dispute resolving the conflict resolving the deadlock often the two sides have seemingly incompatible positions I want exclusivity they don't wanna give me a so Civet ii those seem incompatible and if they're deal-breakers for both sides you're done but sometimes what you find is when you start digging a little bit underneath the surface why what's their real fear what are they concerned about is it that they never want to give it or they don't want to give it for more than a year is it the specific competitor that are worried about what's the story here when you go from what to why often you find that seemingly incompatible positions actually are hiding underlying interests that are actually reconcilable get into the habit of asking more questions get into the habit of asking why and figuring out what's actually driving their demands next they're going to be doing the same thing they're going to be asking you questions and sometimes these are not the questions you want to hear how many of you know who Mike Tyson is okay boxer heavyweight champion known for a few other things there's a story about Mike Tyson and it may be apocryphal but it's an interesting story nonetheless when Mike Tyson had been heavyweight champion for some time he was being interviewed and somebody asked him Mike how do you sustain this level of success the question is not how you got here but how do you continue to stay here and more specifically every boxer that walks into the ring with you now every one of them has studied you they've seen all the footage they've walked into the ring with a plan designed specifically to beat Mike Tyson how then do you continue to win and Mike Tyson says everybody has a plan until they get punched in the face now whether he actually said there's not this is true and the same is true when you're out pitching your where's your product your service your solution your idea your approach you need to think about all of the things that can go wrong and have answers for them or have a way of dealing with in general a little tip in sales if there's a weakness in your argument it's almost always better if it comes out of your mouth before it comes out of their mouth if it comes out of their mouth first it becomes a bigger thing the fastest way to lose credibility as a salesperson is to walk in and make it sound like you think your product your solution is right for everybody on the planet even if you believe that's true the moment you sound like that you lose credibility in their eyes because they don't believe it they assume your competitors exist for some reason there's their other interests and other ideas out there for some reason and so what you need to be thinking about is if there's a weakness in the argument if there's a counterpoint if the competitors are actually telling them to ask these tough questions how am I going to manage those so have a learning mindset but respect the fact that they see the world differently next there is this notion that you should let the other side make the first offer now I could have talked about this point for about 20-30 minutes and get into all the evidence all I want to suggest for right now is that I disagree wholeheartedly with this notion that you want the other side to make the opening offer I am NOT saying that there are not occasions where that might be the right tactic but I am a huge fan of being the party that presents the first offer presents the first MOU the first term sheet the first LOI whatever it may be because it helps you control the frame of it you set the reference point you shape expectations think carefully about who's going to make the opening offer there is tremendous power in the party that sets the opening offer that creates the opening expectation alright so if you've heard this and you may have heard it on TV on some shows where they talk a lot about negotiations I strongly suggest think about this little bit more deeply next one of the other things I'm a huge fan of telling my students my clients is never let your offer speak for itself what are you making the opening offer or a counteroffer when you make an offer don't let the numbers speak for itself $50,000 five million hundred million tell the story that goes with it we are asking for X because dot dot dot dot dot we're asking for X here's our model here's our analysis here are assumptions the richer the narrative the richer the story again the more likely your number sticks more likely that the other side has to come up with a compelling reason before they choose to just ignore it it is much easier to ignore an offer that does not come with a story that does not come with a justification that does not come with a narrative than it is to ignore one that has all of those features to it next label your concessions the idea of telling the story that goes with it if you sort of zoom out for a moment what we're really trying to say here is don't leave it up to chance how they will interpret what you're saying as a negotiator you want to manage the attributions people make of what you're doing so when you make a concession for example the exact same concession in a negotiation can seem like a nice gesture it can seem like a wise approach to negotiation but a concession can also seem like what could be a gift what else weakness you could look desperate you could look naive well what do you want them to think when you make a concession well ideally you want them to ideally you want them to think you are wise and nice smart and nice not naive or desperate but the same concession can be interpreted many different ways so one of the things you always want to be doing whether it's making a concession whether it's calling them back whether it's choosing not to call back is think about the attributions are going to make and get into the habit of trying to manage the attributions and how you do it depends on the situation you're not going to say here's a concession and just so you know that is because I'm wise and I'm smart and I am being nice not those things but you need to think about am I going to come across as desperate if I make it now or in this way without dot dot dot and how do I make sure that the right attribution gets established all right one of the mistakes people often make in negotiation is they get into what's what I would call mindless haggling now there's going to be some haggling in a negotiation they're going to start one place you're going to start some other place but the mistake we often make is to take a rich complex negotiation and turn it into a series of haggles we need to talk about price we're going to haggle on price and tomorrow we're going to talk about financing terms are going to haggle over financing terms I'm going to talk about exclusivity they were going to haggle over exclusivity a better approach to negotiating typically is instead of going one issue at a time is to negotiate multiple interest simultaneously one of the pieces of advice we often give is try to break the habit of going one issue at a time and trying to get resolution on that issue and then moving on to the next thing you're much more likely to find wise trades where they're more flexible where there's less flexibility what you should be given what you do not have to give if you are negotiating multiple issues simultaneously rather than doing a series of haggle one issue at a time have comprehensive offers and counteroffers that you give if somebody says to me you know could you do like 60% up front instead of 40% up front my answer is not yes or no my answer is I have no idea what you're talking about in what context what are the other terms of this deal and it's much more effective for both sides if you get into the habit of making package offers and counteroffers but when it comes to making an offer so next time you're in a negotiation consider doing something a little bit differently than you might have done in the past in your next negotiation there will come a time when you have to make an offer either it's the opening offer it's a counteroffer next time you're supposed to make an offer don't make an offer instead make two or three offers at the same time this is a notion of what's called making multiple offers simultaneously instead of saying my offer is this price with this royalty rate with these terms you give them two or three full packages we can do it option a we can do option B or we can do option C the reason to do that is because often you don't know where they have more or less flexibility when you give them two or three different ways of doing it you're not only signal flexibility which they appreciate you can say legitimately to them listen we know what works for us but we also want to make sure it works for you so if you can do it a very very high royalty rate here's what that would take but if you don't have much flexibility on there but you have flexibility on these other terms we could do it this way or this way as well my record I believe for the most number of offers I made at one time to the other side was a deal we were doing in Australia was 27 now it sounds crazier than it was there was 3 broad categories of offers we can do it this way this way this way would some permutations that were sort of described in each one and the reason we had to do it was because they weren't willing to sit down with any of the people that were bidding for this project and so we wanted to make sure that we're not guessing incorrectly what they care about more and what they care about less where they do endow and have flexibility so we're going to tell them all the different ways we can do it generally speaking I am a huge fan of saying to the other side of the negotiation I know where I need to get I'm flexible on how we get there I will often say exactly those words I know where we need to get I am flexible on how we get there so as long as you can meet these needs we're going to be flexible on style structure and anything else that you need or to put it a different way the more currencies you allow someone to pay you in the more likely you get paid all right so it's one thing to want this much but if you're also going to tell them and the only we're going to accept it is if you do it this way you're creating more constraints if you show more flexibility in the deal structure all of a sudden there's more degrees of freedom for them to be able to give you what you need to be able to say yes happily initial reactions matter we know this in general let me give you one specific example of it having been in the room and having been in a lot of negotiations where this often goes wrong is a small tweak somebody makes you an offer on the phone or in a meeting face to face whatever and it's a ridiculous offer if it's a ridiculous offer don't waste any time before you reject it or signal this to them sometimes you feel like well I don't have the authority to say yes or no so I'm going to go back to my team and sort of discuss our response it doesn't work so well if somebody says to you so we're offering X and you say okay well let me write that down I'll get back to you and then you go back and then you come back and say it's totally ridiculous it doesn't seem totally ridiculous because it was totally ridiculous you probably would have seen note it before too often we're not ready to respond to some things that my come up it's not so different from being prepared to answer the toughest questions they may raise think in advance about what kind of signals you want to send them under different situations otherwise the signal might now be credible next understand and respect their constraints there are things in negotiations that you deserve that are rightfully yours that you quote should get which you will not get simply because their hands are truly tied and the sooner and the more effectively you figure out where they have more and less flexibility where the hands are truly tied and where they might be able to give the more likely you can navigate the deal in the direction that's going to get you what you want while allowing them to say yes you need to put yourself in their shoes you need to respect the fact that just because you want it and you think it's rightfully yours it may be that there actually is some issue there where they have some hard constraints think about why they might reject your legitimate demands now as you start giving them this benefit of the doubt again step back a little bit because there's a broader point I want to make very often people will come to me and they'll say something like you know I'm dealing with these folks and they're completely irrational or I'm dealing with these folks and they're very very stubborn or I'm dealing with these folks it's a very difficult negotiation because they're very untrustworthy never in my life has somebody come up to me and said I'm in this really tough negotiation I'm the irrational one I'm the untrustworthy one I am the stubborn one and I start to think that the nicest people on the planet must reach out to me for help because it's never them what I want to suggest to you is that it doesn't do you any favors to see them as irrational I got to tell you and I've been in many parts of the world with many different kinds of negotiations and conflicts and disputes the people you're dealing with are not irrational it is highly unlikely that you're dealing with someone who is actually irrational by irrational I mean someone who is knowingly doing something that they know will reach the opposite of outcome of what they want that's probably not what's happening that would be irrational I know a is going to cause B I don't want B and I'm still going to knowingly do a that's not how people behave usually what looks like rationality to us is one of two things it could be ignorant or it could be that they have interest that we don't fully appreciate so when somebody is saying no to what you know is the best offer they're ever going to get and they're walking away when it's only going to be worse for them if they walk with and saying yes that seems irrational but maybe it's not irrationality it's ignorance maybe they haven't fully understood the value to them and if that's the problem the solution might be how do we educate them about the value we bring to the table or it could be that they have different interests maybe accepting this offer makes them look bad even if it's the best deal they're going to get but saying yes maybe makes them look bad and they don't want to look bad that's not in rash no they just have other interests or it's the best deal they're going to find but if they do it it sets a bad precedent in future deals there's something else going on before you jump to assuming somebody's irrational or crazy or evil or out to get you step back and really try to understand how do they see the situation what's actually driving this behavior how does this person go to bed at night not thinking of themselves as irrational or crazy or evil and when you have this level of empathy you're not doing it to do them a favor when you see the world this way when you have this level of empathy you're actually doing yourself a favor because if somebody is irrational the only solution is to lock them up alright or walk away if they're evil they must be destroyed but if there's something else going on it gives you more levers to push and pull to solve the issue all right now when it comes to this notion of economics and the psychology of the deal it may be the best deal that they're ever going to get but they're still saying no because one of the things that I've found in business deals and other deals is that often people can't say yes without looking bad and there's a phrase that was claimed initially by a fella by the name of Bill Yuri who's a colleague of ours at Harvard Law School for many years he came up with this phrase which I love he talked about it in the context of conflict we need to get into the habit of writing their victory speech for them we need to write their victory speech for them we can't be so selfish on what we need that we lose sight of the fact that they have an audience and so one of the things you want to be doing in a deal especially if it's a difficult negotiation is think about the person who's on the other side of the table and ask yourself how will this person possibly say yes to what I'm proposing and still be able to go back and declare victory to whoever their audience is maybe it's their boss maybe it's their partners maybe it's their team maybe it's their shareholders maybe it's their investors maybe it's their voters whoever it may be how are they going to pitch this how are they going to look good at the end of this deal all right because what you don't want is to be generous to bring a lot of value to the table to negotiate in good faith and still not get the deal even though it was a right deal for everyone because you didn't understand their real problem in negotiations you can't walk away saying well that's their problem anything that looks like their problems somehow finds a way of becoming your problem all right because you're in a negotiation next let's take this same principle and apply it in a more tactical way any of you ever been in a negotiation where somebody made an ultimatum to you throw out an ultimatum like we'll never do this you must do this yes yes if you've lived you've had an ultimatum thrown at you my response if somebody makes an ultimatum to me to our side if I'm in a negotiation if I'm in a conflict if I'm in a deal scenario if it's a diplomatic situation whatever if the other side makes an ultimatum to us I don't care if it's face to face if it's an email if it's a phone call my response almost always is the same if you're going to make an ultimatum to me my response is going to be to simply ignore it I'm not going to ask you to repeat what you said I'm not going to ask you to explain what you said I'm going to pretend it was never said and move on and address everything else you've touched on accept the ultimatum now why is that a week from now a month from now a year from now there may come a time when what you said you never do you realize you must do or what you said you would never do you realize is actually in your interest to do and when that day comes the last thing I want you to remember is having said I will never do this because I'm really last thing I want you to remember is me remembering you having said you'll never do this because on that day that will be the problem it's the same principle I'm thinking about how to write your victory speech for you on that day I'm going to ignore your ultimatum so that I never force somebody to choose between doing what's smart and doing what makes them look good to the extent possible you want to align those two things now you might ask legitimately what if it's a real ultimatum and there you are ignoring it practically speaking experientially what I'll tell you is that's not a serious issue and the reason is if it's a real ultimatum they really cannot do this don't worry they're going to keep repeating that ultimatum over and over again through every channel through the entirety of the negotiation and at some point you can decide based on your understanding of the situation and where they've shown more and less flexibility and everything else you've learned in the process that maybe this is a real redline for them but it's also the case that often what comes across as an ultimatum isn't a real ultimatum sometimes people just feel like they've been pushed long enough and they're trying to assert some control sometimes you're just trying to get some tactical advantage I'll say you can never do it and then they'll have to to move sometimes maybe cross-culturally especially the language just gets used a little bit more strongly than it was intended or needed to be used and for all those reasons it's often better to just ignore it now I will give you one variation on the theme sometimes it is difficult to ignore what somebody said if we're negotiating and the only thing you say to me is I'm never going to do this and that's all you said and you're sitting right there it's hard to ignore again when I am dialed in you if I must engage with what somebody said and it's an ultimatum what I will often do this is the variation on the theme I will reframe it as a non ultimatum before I move on so if you say to me I can never do this I might say something like listen I understand given where things are today this would be very hard for you to do I get that and what I'm doing is creating at least two outs first given where we are today in other words tomorrow or a year from now we may not be where we are today and secondly this would be very hard for you to do and I get that rather than this is of course never going to happen all right and never in my experience has somebody stopped me at that point and said no no that's all I said I said never ever ever ever usually they'll let it go in to understand okay point has been made and now both sides have some outs all right now that's the giving getting ultimatums let me also just say a quick word point number 19 about making ultimatums because we will often ask you know should you make ultimatums and negotiations I have sort of two criteria when it comes to making ultimatums that we will never do this sort of getting aggressive or absolutist no flexibility on something I will only make an ultimatum if a it's a real ultimatum in that I will actually follow through on what I said because for me safeguarding our credibility and legitimacy is paramount I'm only going to make an ultimatum if I will actually follow through on it if they don't do what was asked for second even if it's a real ultimatum even if I am ready to follow through on it I will not use an ultimatum if I can find some other way of solving my problem because ultimatums can sometimes leave a bad taste in people's mouths people don't like to be told what to do they don't like it when they think you're being very aggressive or forcing them to do certain things some sort of psychological reactance comes in so if I can find a better way of achieving what I'm trying to achieve conveying what I'm trying to convey getting the concession I need to get without getting aggressive tactically I'm going to do it but if both of these criteria are met this is what I need to do then I'm perfectly okay doing it and often it's good that the other side knows what you can and can do if this is truly a deal-breaker for me we're both better off if this is conveyed next point one of the things that often happens is people walk out of negotiation and they didn't get a deal which is okay a lot of deals shouldn't happen if there's a better partner they should be working with if there's a better product for their problem you shouldn't get the deal No Deal is not a problem No Deal is only tragic when you really were the right partner for them when you actually did create value for each other when there was nobody better for both of you than the two of you together and when those deals ended no that's a little tragic because you've destroyed some value the thing that I don't like is when somebody walks out of a room and if I ask them so what happened is how I wouldn't get the deal and say okay well what went wrong or how come and sometimes the answer is and I still have no idea I still have no clue I still don't know what they really wanted that's the thing I don't like I can live with the we didn't get the deal but my view is and it's not always possible to acomplish but it often is don't let negotiations end with a no negotiation should end either with a yes or with an explanation as to why not if you're going to walk away and the deal is still a no still push still probes still ask questions exactly what would have made it different I've often said to the other side I understand it - no I understand this deal is not going to happen but paint me a picture imagine a world where you were actually saying yes not no paint me a picture what would that world need to have look like what would need to have been different about that and people are often open to that conversation and sometimes what I learn is I have even more confidence that this deal was never going to happen because what they would need is impossible for us to give at this point sometimes I say wait a second we can actually address that problem and sometimes I say okay we can't get the deal today but at least now I know what it's going to take in the future either with them or with people like them if we run into this kind of thing all right next point small points small tweaks small tactical thing again but something you see often happening when you get done with the meeting if it was face to face phone call whatever it was I'm a huge fan of sending an email sending an email afterwards allows you to do a couple of things first it allows you to make sure you're so on the same page that what you thought you agreed to actually has been agreed to so you can sort of confirm where things are because the closest you'll ever be with that person of being on the same page is the moment you leave the room and every moment after that you're just drifting farther and farther apart regarding your recollections of what happened and what didn't happen and those are being biased by what happened since then to each of you and based on your own self-interest so you can confirm you can get some confirmation and if they're going to say no that's not our understanding better to know that now than later it also allows you to sort of reframe the the situation if you didn't frame it well in the room sometimes you walk out of a room and you say man I think we came across this too desperate we didn't even mention that we're talking to these other people or we came across too aggressive and it allows you to sort of reframe and use some more language around what your perception of the situation is and the third benefit is you can get more information sometimes you walk out of the room saying we forgot to ask them this we don't even know who's supposed to be reaching out next we don't know what the process is so for all these reasons small tweak get into the habit of reaching out to people over email or some such thing after you're done with the negotiation to make sure you're on the same page make sure you're framing the negotiation in the way that you want and that you can get more information last point I do not allow any of my clients to in any negotiation that I've ever been to lie I am a huge proponent of telling the truth always always always that is not the same as saying every time we walk into a room we tell them everything we know so this is the most we'll ever be able to pay and here's the thing and here's how much money is in my wallet that's all I mean I'm talking about not lying and the reason is first it's the right thing to do it's not fair I think to say well we're we're negotiating so that's different than how we are in real life or that was a deal this is your real life this is what you're doing and incidentally if you're sitting in this room or if you're on cnbc.com and you're watching this or wherever else you might be live-streaming it I don't think is doing as well I'm pretty sure that there's nobody in this room or anybody who's watching this thing who can't afford to be more ethical there are people out there who don't have very much none of those people in this room so everybody here has the ability to just be more ethical when it comes to these things and at least in my experience people don't lie because they're slimy people they often lie because they're not prepared they're not prepared to answer the tough questions or they're impatient they want to get somewhere sooner whether that somewhere is success or there somewhere is farther in the deal process I always have to remind people on our site not because they're worse people than I am I have the same temptations you got to step back and you got to make sure you're being honest and every great negotiator I've ever met in business and diplomacy people that I really think of as effective negotiators I think every one of them would tell you they guard their credibility with their life if they say they're going to do something they will you know walk over coals to make sure they do it and if this hasn't happened to you yet I assure you somewhere along the way in your journeys as deal makers as negotiators there will come a day when the only leverage you have in a negotiation is your credibility it'll be the only reason somebody's willing to sit down with you it will be the only reason they're willing to take the risk you're asking them to take you have no other leverage except they think you're credible they know you're honest they know you're saying it and you mean it they know they can respect or trust you and when that day comes you'll be even more glad that you didn't end up letting these things slide because most people I don't get all preachy here but uh but since it's item number 22 why not most people don't lose their credibility by one you know histrionic act of backstabbing that they did that everybody heard about usually people lose their credibility and they lose their reputation a little at a time you said something to do you didn't end up doing it because it was inconvenient you said earlier in the deal process this is really important you can't not have this but later on you ended up making concession now they're like wait a second how do we ever know what what you mean so you have to be very very mindful of it and I don't know where to draw the line except always because anytime you draw the line anybody anywhere else you know then there's there's no accountability even to yourself so that's 22 tweaks I was told I had 40 minutes and I hope that's actually true because if it's true then then we're within time and if that's not true then you know we've taken somebody else's time we're going to stop here these are things that I'm not assuming I'm assuming most of you are actually pretty good negotiators I don't walk into a room like this thinking here's people don't know anything about negotiation I actually assume the opposite I assume most of you are very good negotiators some of you may be amazing negotiators but I also think that every one of us could be even better and so if we talk about 22 things and you find one thing that you find out I never thought about doing it that way or I should talk to my team about it I think this will be a you know time well-spent and I'm going to stick around after this session and I'm going to stick around I think of a reception today at 5:00 I'm gonna try to be there as well I'm happy to have any conversations you want about any of this good luck in your future negotiations I hope you found something of value hey there thanks for checking out CNBC on YouTube be sure to subscribe to stay up-to-date on all of the day's biggest stories you can also click on any of the videos around me to watch the latest from CNBC thanks for watching

Channel: CNBC

Views: 134,847

Rating: 4.8960109 out of 5

Keywords: CNBC, Mad Money, Squawk Box, Power Lunch, Opening Bell, Closing Bell, Financial News, Finance News, Stock News, Stocks, Trading, Stock Market, US News, World News, road to iconic, negotiation tips, iconic conference 2017, tips, how to negotiate, negotiation skills, negotiation techniques, salary negotiation, negotiation tactics, negotiation strategies, good negotiation skills, Deepak Malhotra, professor Deepak Malhotra, Harvard Business School professor Deepak Malhotra

Id: VsaxtLqh4h0

Length: 46min 26sec (2786 seconds)

Published: Fri Jun 09 2017