G. Richard Shell was among the first professors at Wharton to teach what has become one of the most popular courses at the school – negotiation. Since then he has founded the Wharton Executive Negotiation Workshop, a week-long program offered three times a year to global managers. A professor of legal studies and management, Shell has taught negotiation at the World Economic Forum at Davos and consulted with such organizations as General Electric, Johnson & Johnson, Hewlett-Packard, Christie’s and the FBI. His award-winning book, Negociar con ventaja: Estrategias de negociacion para gente razonable, was published in Spanish in April. Universia Knowledge at Wharton interviewed Shell last week.
Q: Since the publication of Bargaining for Advantage: Negotiation Strategies for Reasonable People in 1999, the book has appeared in 10 languages and been used by numerous academics and negotiation practitioners. That suggests that the book has an unusually broad appeal. Who did you set out to write the book for?
A: I wrote the book for global business executives – especially those who have not had time to think systematically about how the negotiation process works and what makes it tough psychologically. I also included examples from real-life negotiations all over the world. So there are stories from China, India, Southeast Asia, Africa and the United States. It gives readers from many different cultures a “real life” feel for the negotiation process.
Q: What do you see is the biggest stumbling block to a successful negotiation? i.e. what typically tends to make two negotiators back away from a deal, shaking their heads in either dismay, anger or frustration?
A: Three major failures explain why deals fall apart. The first is the most obvious: The deal does not happen because the interests of the parties are not aligned. This sounds obvious but it can take a long time to figure out when parties are bluffing, posturing and pretending. When the interests of the parties do not match up, the best possible result is to say “no deal” and move on to other opportunities. The second reason for failed negotiations is mismanagement of the bargaining process. This includes things such as moving too quickly or too slowly, inviting the wrong people to meetings, using e-mail instead of face-to-face discussions and failing to nail down real commitments at the end. The best negotiators are very careful about how the process works, thinking carefully about how to optimize each move. The third reason for failed deals is human psychology: The people involved do not like each other, do not understand each other, or misinterpret what the other person’s motives are. You cannot be too careful about how you handle the “people part” of a negotiation. It is very easy to insult people or get them angry and resentful. And nothing will kill a deal faster than mistrust between the parties involved.
Q: Are great negotiators born or made? In other words, is it possible to turn a ‘poor’ negotiator into a good one? Is it largely a matter of self-confidence?
A: Anyone can be a good negotiator if he or she studies the process and practices a lot. So the only reason someone is a poor negotiator is that he is content to leave this aspect of his professional life to others. I think truly great negotiators are somewhat special. They tend to be people who not only know a lot about the process, but also love to study human nature under crisis conditions. They learn something from every negotiation they are in and relish the chance to prove themselves at the bargaining table. They are also exceptionally patient people. Some of this can be taught, but some of it comes from natural talents.
Q: When businesspeople negotiate, what do the most important issues tend to be?
A: Most people immediately focus on things they think they will disagree about – such as price. But the better practice is to see if there is some sort of rapport or relationship that can be built up between people first. It can also be useful to see what standards of fairness the market can provide before exchanging offers. Many times the price is just one of several issues – with others being quality, quantity, delivery terms, service and so on. By talking about price too soon, people sometimes lose sight of the total value of the package they are negotiating.
Q: Who, in your opinion, are some of the most successful negotiators in the business world, and why?
A: That is a tough question because different people can be excellent in so many different ways. For example, the current CEO of Time Warner, Richard Parsons, is not known as a great dealmaker. But he is an exceptionally good mediator between people and can get cooperation from even the most stubborn enemies. Richard Branson, meanwhile, is a wild card negotiator. People do deals with him just for the fun of being affiliated with his energy and brand. Donald Trump is a great competitive negotiator. And Russia’s Vladimir Putin is someone who always manages the situation so he negotiates from a position of overwhelming authority and strength. In general, the most successful negotiators are people who have found a niche in which their personal strengths are well-matched to the negotiation demands of their job or position.
Q: Does the stereotypical image of negotiator as ‘bully’ have a place in the business world? Is it wrong to be aggressive, indeed to try and slightly intimidate a person sitting across the table from you? Doesn’t good negotiation require a forceful stance?
A: Sometimes you need to be forceful. Sometimes it helps to be soft. When you have no leverage, for example, you cannot afford to be a bully. People will just ignore you. On the other hand, when leverage is not a problem and the other side does not seem to be listening, you must make your needs known to them in a clear and compelling way. This can involve showing emotion or walking away from the bargaining table. Different people need to be treated differently in order to be persuasive. One of the arts of the great negotiator is figuring out just what it takes to get the message across so the other side truly understands it.
Q: How is your book different from the other negotiation books on the market?
A: Most negotiation books focus on tactics – good guy/bad guy routines, ultimatums, different methods of asking questions, and so on. My book focuses almost entirely on psychology. I am interested in what makes the negotiation process work and how a few psychological principles can explain a great deal of what is happening. There are deep patterns in the process that transcend culture, gender and even history. Once you understand the patterns, you have a huge advantage over people who do not have this understanding.
Q: What is the most important quality a good negotiator has?
A: There is no single quality that dominates everything else. Among the most important factors are a deep understanding of how negotiations work, good listening skills, high goals, integrity and reliability, and the ability to communicate clearly.
Q: Given the global nature of many business negotiations these days, is it more difficult than ever to prepare for a tough negotiation? Any advice in these situations?
A: It is always hard work to prepare for a tough negotiation, but the global nature of business makes it even more complex. For example, it is critical that you understand the cultural backgrounds of the people at the table and be prepared for different assumptions about how the process is supposed to run. Most of the countries in the world operate based on what I call “relationship culture” assumptions. They require extensive warm-up periods before bargaining starts, during which people can get to know and trust one another. But countries in North America and northern Europe are much more “transactional” in the way they approach things. Negotiators from countries like the United States, Sweden, Germany, and the Netherlands like to get down to business more quickly and start talking about terms and conditions.
Of course, there are great variations in practice, but you need to know the assumptions of the other parties in terms of the pacing of negotiations. Otherwise you can make mistakes. You will think people are being evasive when they are really just trying to get to know you. Or you may think they are rushing things when it really is just an eagerness to see if the interests of the two sides can be aligned so that a longer-term relationship can be discussed.
In general, the best preparation for any negotiation covers six things: the stylistic differences between the people negotiating, the goals of each side, the standards and norms that will govern what a “fair” price is, the prospects for a future relationship, the underlying interests that are bringing the parties together, and the issue of who needs the deal more (in other words, the leverage differences). If you have covered these six topics, you will be well-prepared for most negotiations.
Q. Any parting thoughts for our readers?
A: Negotiation is a critical skill for most professionals today, so it is well worth studying. As you mentioned, most business schools in the world have required courses on this subject. But the real lessons of negotiation are learned in practice. So my advice to all my students is to use the real world as a laboratory to experiment with their negotiation skills. When you practice something, you almost always get better at it. And that leads to greater confidence – one of the most important keys to a successful negotiation.