Takeaways From The Made Simple Summit
Most of us spend much of our time in business negotiating. If we think about it, we negotiate quite a bit at home, too. Everything from deciding where the family wants to go on vacation to how much we’re willing to pay for a new house, negotiations are a normal part of daily life.
The #1 Question About Negotiation
At the recent Made Simple Summit, we had the opportunity to hear from the authors of a newly published book titled Negotiation Made Simple. As a hostage negotiator, John Lowry was involved in high-stakes negotiating, many cases with actual life-or-death consequences.
Lowry partnered with Donald Miller for both the book and a video course with the same title on the businessmadesimple.com platform. In their presentation at the Summit, one big takeaway resonated with me. It was the answer to the number one question that John gets about negotiation: Should I make my offer first, or wait to hear theirs?
The Psychology of Initiating Negotiations
The short answer to the burning question is that you should make your offer first. The unexpected data from a Harvard study showed that people who make the first offer tend to feel worse about how the negotiation went, but they get better results!
The dichotomy between how they felt and how they did can lead to a reduced inclination to make the first offer the next time but doing that would be a mistake. In a financial negotiation, for example, by making the first offer, you anchor the price by your offer, and the rest of the negotiations will be based on that starting point. The same holds true for the other party if they go first, so for you to start the conversation with your offer will set up the best possible scenario for you.
Two Types of Negotiators
Another big takeaway from the presentation was to make sure that you know what type of negotiator you are dealing with. The two general types are cooperative and competitive. Two cooperative negotiators working together will almost always yield the most positive results and thus, we should all strive to be cooperative negotiators. However, if you are dealing with a competitive negotiator, you need to immediately switch your style to competitive, too, lest you give away too much for too little return. When negotiating with a competitive negotiator, you must understand that they won’t feel good until you’ve given something back – that’s their competitive nature. They need you to lose a little for them to feel good about the interaction.
So, while it’s always important to make the first offer when it’s a competitive situation, you should make sure you give yourself room to negotiate in the other person’s favor. You’ll ultimately get what you want, but they’ll also have the chance to “win” by making you “give up” something as a part of the negotiation.
Continue Building Your Negotiating Skills
Negotiations can be nerve-wracking, particularly as the stakes go up. Getting smart and understanding the psychology at play is a big benefit of the new book, Negotiation Made Simple. You can get it at your favorite retailers, or you can subscribe to businessmadesimple.com and take the course online.
Even if you don’t dig deeper, know that when negotiating you should make the first offer. Although you may feel worse about the interaction, you will improve your opportunities for a successful outcome.