MNGY Dominique van Schagen
Notes lectures Managing Negotiations Getting To Yes
Lecture 1: Introduction (29 october 2018)
Negotiating can be learned
• Effective negotiation requires practice and feedback
• Naturally gifted negotiators are rare
Importance of negotiation in career
Average person stays in job for 4.4 years
Decentralized decision making in businesses: less hierarchy means continuous negotiations
Freelance economy: negotiating every gig/project
Negotiations: a process in which two or more parties exchange goods or services and attempt to agree
upon the exchange rate for them
More broad: negotiation is an interpersonal decision-making process necessary whenever we cannot
achieve our objectives single-handedly
Scope
One-on-one <-> multiparty
Few dollars <-> billions of dollars
Few minutes <-> years
Single encounter <-> long-term relationship
Single issue <-> multiple issue
Types
• Between two persons or multiple persons (salary. Divisions of task)
• Between two organizations or multiple organizations (mergers and acquisitions, joint
ventures)
• Between two countries or multiple countries
• Between an organization and a social movement
• Between an organization and a state (Ouwehands Rhenen pandas)
Bargaining range: buyer/seller range.
Target/aspiration point: least the buyer wants to pay/maximum seller wants to get. Price you would
be happy with
Reservation point/bottom line: most the buyer wants to pay/minimum seller wants to get. Price at
which you are indifferent between getting the deal or not getting the deal (worst acceptable outcome)
Bargaining zone/zone of possible agreement: overlap between reservation points of both seller and
buyer
How to determine aspiration point?
1. Underaspiring negotiator: settles for too low; often, first offer is accepted immediately
2. Overaspiring negotiator: wants to settle for too high; refuses to make concessions
3. Grass is greener negotiator: doesn’t know what they want to settle for, only that it’s
more/different than what the other party is willing to offer (reactive)
How to determine reservation point?
Before starting negotiating, you should determine reservation point (price at which you are indifferent
between getting the deal or not getting the deal)
, MNGY Dominique van Schagen
Consider the consequences of failing to reach an agreement, and know your alternatives
Determine your BATNA (Your Best Alternative To a Negotiated Agreement) and quantify it
BATNA: Best Alternative To A Negotiating Agreement
Protects you against:
- Accepting an agreement that you should reject
- Rejecting an agreement that you should accept
Characteristics of BATNA:
- Determines lowest value acceptable
- If you don’t reach agreement, settle for your BATNA
- Any deal higher than your BATNA is better than impasse
- Time-sensitive
Negotiation is not defined by:
- Wealth
- Political connections
- Physical strength
- Friends
- Military might
It is defined by:
- Your alternative (attractiveness of not reaching this specific agreement)
‘Falling in love’-rule
- Never fall in love with one house, job, etc
- Always keep multiple options open
- Constantly try to improve your BATNA
Your BATNA is not something you wish for; it is determined by objective reality
Don’t let your BATNA be influenced by the other party’s persuasion techniques. Your BATNA should
only change as a result of objective facts and evidence
In real life, you deal with
- Incomplete information
- Uncertainty
What you can do in practice
1. Brainstorm your alternatives
2. Evaluate each alternative
3. Attempt to improve your BATNA
4. Determine your reservation price
BATNA of the other side
- Often, aspiration point is quite clear
- More important: what is their reservation price?
- Try to estimate the BATNA of the other side
- But: also be modest about what you really know
What if the bargaining zone is really small?
The chance that they reach an agreement is small.
Notes lectures Managing Negotiations Getting To Yes
Lecture 1: Introduction (29 october 2018)
Negotiating can be learned
• Effective negotiation requires practice and feedback
• Naturally gifted negotiators are rare
Importance of negotiation in career
Average person stays in job for 4.4 years
Decentralized decision making in businesses: less hierarchy means continuous negotiations
Freelance economy: negotiating every gig/project
Negotiations: a process in which two or more parties exchange goods or services and attempt to agree
upon the exchange rate for them
More broad: negotiation is an interpersonal decision-making process necessary whenever we cannot
achieve our objectives single-handedly
Scope
One-on-one <-> multiparty
Few dollars <-> billions of dollars
Few minutes <-> years
Single encounter <-> long-term relationship
Single issue <-> multiple issue
Types
• Between two persons or multiple persons (salary. Divisions of task)
• Between two organizations or multiple organizations (mergers and acquisitions, joint
ventures)
• Between two countries or multiple countries
• Between an organization and a social movement
• Between an organization and a state (Ouwehands Rhenen pandas)
Bargaining range: buyer/seller range.
Target/aspiration point: least the buyer wants to pay/maximum seller wants to get. Price you would
be happy with
Reservation point/bottom line: most the buyer wants to pay/minimum seller wants to get. Price at
which you are indifferent between getting the deal or not getting the deal (worst acceptable outcome)
Bargaining zone/zone of possible agreement: overlap between reservation points of both seller and
buyer
How to determine aspiration point?
1. Underaspiring negotiator: settles for too low; often, first offer is accepted immediately
2. Overaspiring negotiator: wants to settle for too high; refuses to make concessions
3. Grass is greener negotiator: doesn’t know what they want to settle for, only that it’s
more/different than what the other party is willing to offer (reactive)
How to determine reservation point?
Before starting negotiating, you should determine reservation point (price at which you are indifferent
between getting the deal or not getting the deal)
, MNGY Dominique van Schagen
Consider the consequences of failing to reach an agreement, and know your alternatives
Determine your BATNA (Your Best Alternative To a Negotiated Agreement) and quantify it
BATNA: Best Alternative To A Negotiating Agreement
Protects you against:
- Accepting an agreement that you should reject
- Rejecting an agreement that you should accept
Characteristics of BATNA:
- Determines lowest value acceptable
- If you don’t reach agreement, settle for your BATNA
- Any deal higher than your BATNA is better than impasse
- Time-sensitive
Negotiation is not defined by:
- Wealth
- Political connections
- Physical strength
- Friends
- Military might
It is defined by:
- Your alternative (attractiveness of not reaching this specific agreement)
‘Falling in love’-rule
- Never fall in love with one house, job, etc
- Always keep multiple options open
- Constantly try to improve your BATNA
Your BATNA is not something you wish for; it is determined by objective reality
Don’t let your BATNA be influenced by the other party’s persuasion techniques. Your BATNA should
only change as a result of objective facts and evidence
In real life, you deal with
- Incomplete information
- Uncertainty
What you can do in practice
1. Brainstorm your alternatives
2. Evaluate each alternative
3. Attempt to improve your BATNA
4. Determine your reservation price
BATNA of the other side
- Often, aspiration point is quite clear
- More important: what is their reservation price?
- Try to estimate the BATNA of the other side
- But: also be modest about what you really know
What if the bargaining zone is really small?
The chance that they reach an agreement is small.
