Continuing on for Week 3. These are things that are going to happen in a negotiation. It doesn't mean you shouldn't think about them as we talked about before as you're gathering information and looking at strengths and weaknesses, but these are things that hopefully you've thought a little bit about and more importantly when they occur in the negotiation, you know how to deal with it. So we'll going over these four things; position and interests, needs and wants, tactics, and concessions. What I said earlier, many of these things you should think about before you go in negotiation, but when they occur, you need to know how to deal with them. Let's go to the first one, positions. It's very critical that you understand the difference between positions and interests, and we'll go through that in a minute. So these are these opening offers that either side may throw out. Remember I said, like the $10 price, just to see what reactions you might get. I mentioned that in the previous week. So they're stated things, but you probably know that when you hear that or the supplier heard that he knows that he's not going to pay $10 and we're going to work our way through this to some equitable agreements. You really want to probe and listen for interests. These are things people don't necessarily talk about. You want to have good listening skills, listen to what's going on. People generally won't come out and say what their price is or what they're trying to get there, or the volume or whatever. You're going to have to probe and listen for these things. Sometimes they're personal, where maybe because of last time the guy felt that he didn't get a fair shake and this time he's going to try to get it back. You don't know. But you really need to pay attention because interest is where you want to be. Positions are only just a position, something where somebody states something and you go, "Yes, I heard you, but let's keep moving." You got play detective. For those of you my age or a little bit younger, people like Colombo or Spectre Crusoe, a joke only in these old movies. You got to try to discern what's going on here, and you want to ask a lot of open-ended probing questions and then you want to listen, I can't stress that enough. Always focus on the party's underlying interests, not its position. So in the case of this guy throwing this out, don't worry about the position, try to understand where he's coming from and where he wants to get to. That may be x volume or three-year contract, whatever it is, or he's having trouble with the last time he didn't feel he got a fair shake. Let's get that behind us and move forward, those types of things. So you want to get to interests, not positions. Needs, and wants. We actually talked about this when setting objectives. So needs are what a particular outcome that you want to get it's really critical, and wants are things that are like nice-to-haves. The reason this is important to get this particularly from the other party is that you want to find out what his needs are and hopefully you'll be able to help him that he must achieve and you can trade back and forth the wants all day long and be exchanged. But you better understand what his needs are and you better be able to communicate what your needs are, that these things that you're not going to budge on these particular needs. So look for needs and wants when you're negotiating. So you want to recognize the suppliers needs, and it could be that he wants us to be a long-term agreement for long-term success, he's done business with you for 20 years, doesn't want to lose this. It could be some critical issues that around the buyer and seller. So usually the way you get around needs, you can have a give-and-take. You can't expect to prevail in every issue, but hopefully both parties get what they need and you can come to a mutual agreement. But you need to find out in probe what your counterparts or your supplier needs are, and then be able to make tradeoffs that will be able to get you to a mutual agreement. So you remember this. We saw this before. So we saw the buyer wanted to pay 11, but he'd be willing to pay 11.45. The seller, of course, would loved be have 11.50, but he'd be willing to accept 11.15. So these are what's his needs. So the seller needs to get 11.15 and you would love to get 11, but you'll take 11.45. So you want to come to some sort of an agreement around each other's needs. If you do, you'll have some sort of an agreement and you'll move forward. But let's move on to tactics. There is a lot along lengthy paper in the reading of all the different type of tactics and the background and when you use them or not. So I'll go through just a few of these to have a little bit of fun, but it's important to understand two things. One, you have to decide what tactics you're going to use, and then what tactics might be used on you, and if so if you recognize them, what are you going to do about it? So I'm going to ask these, show you a couple of them that you know how you react to them. So the first one is the wince. So somebody says, I need $12 for this part. So you go, "That's a lot, it's a lot of money." So I think that the wince can work and be very effective. Limited authority, the sales guy go, "I can't agree to that because I have to have my boss." Well, how do you overcome that? Well, one way to overcome it is when you establish the meeting, you make it clear that who has to be in this meeting from a supplier perspective, that can make an agreement today because I don't have time to go back and forth. Then if he comes in and tries to use that, you say "I agreed with you a week ago that we agreed that you had the authority and make this." Conversely, you can use it also. You can say, "I'd like to agree to that, but I got to go see my boss." Silence. This is when somebody says something, and you ask a question about, how do you feel about our $12 price? You go, it seems like a long time, doesn't it? Sometimes silence works where somebody says, "Oh, yeah, but and blah, blah, blah," and all sort of stuff. I'm not going to do all of these, but red herring, where somebody goes off on left-field and has nothing to do with the particular negotiation. Maybe about last year, how they weren't treated fairly or the blah, blah, blah, which you need to do in this case. If somebody does that, you say, "Excuse me, I understand you're upset about this problem over here, but let's come back to the agenda that we established and let's work through the real problems." Outrageous behavior, where somebody goes crazy, yells up and scream, "I can't believe this is happening, blah, blah, blah." Sometimes what you have to do, when you see that, you may want to say, "Well, let's take a timeout, let's calm down. We need to focus in on the agenda, focus in on what we're doing here, and let's take a 10-minute break, get a cup of coffee. Let's come back and then work on the agreement." Deadlines. Very good one word. You have deadlines and they have to do this by the 14th, blah, blah, blah. If we don't, we'll have to move on. Well, you can say, "I don't want to do that because we want to work together on this, and let's not have some arbitrary data out there. Let's go to work on what's best for both parties." Empty pockets says, "I don't have any money, I can't give any more." The guy pulls his wallet out he shows he doesn't have any money. Something you can say there would be, "I certainly understand where you're coming from. We'd be willing to work with you to help improve your situation. Would you be willing to give us open book or should be costing, and we can maybe have our teams look at you to help you make it more profitable?" So my point on all this in tactics is that if you decide which ones you want to use going into negotiation, and more importantly, when they're used on you, what your reactions? If you want to learn more about negotiation tactics, I have a large handout with 30 or 40 of these different things. Concessions; this is when you're going to move away from your perceived position to give the other party something, and there's a whole bunch of rules around concessions. You always want to be cognizant of the fact that, don't give away something if you don't get something in return. So look, I think I could bend a little bit on this quality thing for a year, but I need to plan for you to come back to me in a year and tell me how you going to approve it. So those are important. You want to probably have a concession strategy. Remember I said you have the must-haves and the wants. Well, in your wants are the ones that you're probably going to want to give. Because generally, the must-haves are the ones that are fixed like your LLAs, so to speak. Always make them in decreasing increments. So if you make them smaller, and smaller, and smaller, and smaller, such that the supplier gets the message that you're really having a great difficulty here and you can't go any further. You want to always consider how long it takes to go through this. Because again, these concessions and going back and forth can take a long period of time. So you want to think about how you're going to maneuver this in a lengthy negotiation. A couple of other guidelines; make sure you have plenty of room in you're concessions. Some people say you shouldn't even concede the first concession. I'm not a believer in that. I think you could make it a minor one here, but just don't make it a major one. I think there's ways to do it. So I think if even if it's a minor one, you want to make like it's a big deal. Make the other party work for a concession. So don't give up anything easily. It's very, very difficult. Make them very slowly, giveaway a little with each concession, and never reveal your deadline or your LLA or whatever you're trying to do ever to the other party, that can be disastrous. Occasionally, I think when somebody asks for something, I think in a very professional way, you just say no and see what happens. Maybe they move on, maybe they don't. Worst cases, if it's very emotional, you say, "Let's table that and come back to it later." Maybe after three hours of negotiation, after looking at other concessions on both parties, maybe that no was okay. We're going to keep a record of the concessions, as I said here, and look for patterns. As I said earlier, don't concede too soon, too often, or too much. So hopefully, I gave you some guidelines about how to give concessions and receive them. So get a good feel for it. So what are the takeaways here, things that happened in the negotiation? I think you have to understand what the differences, positions, and interests and you always want to find out what the other party's interests are. Don't worry as much about positions. You want to try to be able to figure out what wants and needs are, and you're willing to trade off some needs, so to speak. Wants are pretty firm, particularly on your side, but figure out what do they absolutely need. Lastly, be a good listener around these things, and try to be this inspector Corsell or the Columbo, if I'm not dating myself, whoever you think the most best detective is in today's series, to try to figure out what these things are. We did a couple little bit of fun with some tactics. You want to know importantly, are you going to use tactics going in, if so, which ones? Who's going to use them? More importantly, if they use them on you, what is your counter when they do that? That's really critical. Lastly, you want to think about concessions, and you just a whole bunch of rules we gave you. But basically, give them slowly, give them infrequently, and if you give one, always get one back. That's probably a good rule of thumb for concessions. So with that, we're going to end up week 3.