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I can see why this book is so famous. It's one of those rare business books that has no filler material: it's concise, to the point, and stuffed full of powerful ideas and insights. Well worth reading for anyone, as negotiation skills are useful in all aspects of life, and not just business: e.g., buying a house, getting a better job offer, convincing your kids to do something, etc all require negotiation.
Some key insights I got from this book:
(A) Don't use positional bargaining, where you toss offers back and forth and defend positions (this is the default for most people). E.g.,
"I'll give you $20."
"What? It's worth at least $100!"
"$100 for this old thing? No way. Best I can do is $25."
"It's not old, it's a classic. $95."
"But it's dirty! I'll have to spend time cleaning it. No way it's worth more than $30."
"It's a one-of-a-kind. $90."
And so on and so forth. This approach is ineffective, as all you're doing is getting more and more entrenched in your positions, and once entrenched, you then defend those positions, not because they lead to a better deal for you, but because you want to save face. Each side in such a negotiation does a lot of posturing, takes extreme positions, only offers small concessions, and the negotiation often takes forever as a result. Worst of all, even if you do come to an agreement, this sort of process can be bruising, hurting your relationship and eroding trust.
(B) Instead, use principled negotiation. This is based on 5 principles:
1. Separate the people from the problem
2. Focus on interests, not positions
3. Invent options for mutual gain
4. Insist on using objective criteria
5. Know your BATNA
I'll dive into each of these next.
(C) Separate the people from the problem. All negotiations are done by people, and if you don't take into account the way people think, feel, and communicate, you will not be an effective negotiator.
- Attack the problem; never the person. Ideally, you both see the negotiation as a problem you solve jointly. E.g., If you're negotiating a job offer, instead of thinking of it as you vs the employer, think of the problem as "how do we build something great together" that you and the employer are solving together.
- How a person feels during the negotiation—not the facts, not the positions, not the power relationship, but how they feel—is often the most important aspect in determining the outcome. Dismiss the feelings of others at your peril.
- Try to give the other side a win. There are often things you're "obviously" willing to concede in a negotiation; don't assume those are obvious, but call them out explicitly instead, to give the other side an easy win. Look for wins for the other side that are cheap for you to concede, but valuable for them. Similarly, let the other side save face. You're far more likely to get the concessions you want if you can give the other side a way to concede those things without putting their reputation or personal identity at stake.
- Listen actively. That means acknowledging what the other person is saying, and repeating it back to them in your own words to make sure you've understood them. Understanding the other side is not the same as agreeing with them. Making the other person feel like they have been heard and understood is perhaps the cheapest concession you can make.
- When expressing your feelings, focus on how they affect you, rather than attacking the other person. For example, instead of, "you are a racist," try, "I feel discriminated against." If you attack the other person, they will become defensive, and push back; if you express how that thing makes you feel, there's not much they can argue against, but it still delivers the same information.
- When presenting information, remember that the word "but" is the great eraser: it negates everything that came before it. Try to use "and" instead. E.g., "Your offer of $100K is very generous, but I can't accept it unless you also add 4 weeks of vacation time" makes the generous sound like meaningless flattery. Whereas "Your offer of $100K is very generous, and I'll be thrilled to accept it if we can add 4 weeks of vacation time" makes the generous sound like why you want to accept the offer.
(D) Focus on interests, not positions. Behind every position someone takes in a negotiation, such as "I'll only sell this for $100," there are some underlying interests that they are trying to meet, such as, "I paid $85 for it and need to make a profit or I go out of business." Most negotiations should focus on flushing out the interests of both parties, rather than positions.
- Knowing the underlying interests increases the chances of finding a solution that makes everyone happy without resorting to a compromise that doesn't make anyone happy. This was the same point in Never Split the Difference. You'll often find that there are interests you can meet for the other side at little cost to you, and that the other side can meet for you at little cost to them, leading to a better deal for everyone. For example, when negotiating a job offer, if you just toss back and forth salary numbers, you are unlikely to get a result that makes everyone happy. But if you flush out the interests, you may find out that the employer's interests are around being able to get great employees for a long time while minimizing cash spend, while the employee's interests are around a good work-life balance; you can then shift the negotiation to discussing equity and PTO, leading to an offer that works better for everyone.
(E) Invent options for mutual gain. Once you know everyone's interests, the next step is to try to come up with as many options as you can that could possibly meet everyone's interests.
- Many people think of negotiation as a zero-sum game, where if you get more, I get less, but that's rarely the case. In most negotiations, there are many ways to grow the pie before splitting it. Don't assume there's just one solution; instead, be open to exploring options, and you'd often be surprised what you'll find. Example: two people are in a library, and one wants the window open, while the other wants it closed. This seems like a zero-sum game, where if one wins and the other loses, but it might not be! For example, if you start with the underlying needs, you may find the person who wants it open is interested in fresh air, while the person that wants it closed is interested in avoiding a draft that would blow papers all over the place. If you then start tossing options out, you may discover one that makes both parties happy: open a window in another room! This gives you fresh air without the draft. Both parties win.
- You should explicitly try to separate the process of coming up with options from the process of deciding. For example, you can have a brainstorming session where (a) everyone is encouraged to toss out ideas, (b) no one is committing in any way to any decision during the brainstorming session, (c) in fact, no one is allowed to judge or criticize ideas at all during the brainstorming session. The point is to encourage coming up with as many ideas as you can, no matter how wild or crazy. Ideas tend to build on each other, leading to far better options than you may have originally considered. This process works best if you are both sitting on the same side of the table, facing a white board, as you toss out ideas. In fact, sitting on the same side of the table is a good idea in general in a negotiation, as it'll make you feel like you're working on a problem together, rather than against each other ("separate the people from the problem").
- As you toss out options, make sure you understand what decision the other side is really making. That is, the person you're negotiating with directly is rarely the only party involved. They almost always have to convince someone else—a boss, a spouse, a colleague, etc. Make sure you understand who these other parties are, and give the person you're negotiating with ammo they can use to convince those other parties. Also, try to make the decision easy for them: e.g., give them an option that makes them look really good in front of their boss.
(F) Insist on using objective criteria. Whenever possible, look for objective criteria you can use for coming up with options. E.g., Instead of making up a price off the top of your head for a car, look at what similar cars are selling for in other dealerships or what the value is in Kelly's Blue Book.
- Objective criteria changes it from a battle of wills to a common baseline you can both use.
- If the other side doesn't want to play along and just tosses out positions, ask them how they came up with those: "E.g., I see you're offering $100, but what's the theory behind that? How did you come up with that price? What are you basing that on?"
(G) Know your BATNA. BATNA = Best Alternative To a Negotiated Agreement. If the negotiation falls through, you should always know in advance what your fallback is—and what the fallback is for the other side!
- Flush out your BATNA in advance. In fact, you may have to actively work to improve your BATNA. This is especially important in negotiations where the power is not equal: e.g., a solo employee negotiating with a huge company is in a much better position if they have several job offers, and their BATNA is "take another job," rather than one job offer, where the BATNA is "be unemployed."
- Flush out the other side's BATNA too. You should think through it in advance, but also discuss it explicitly with them. You can actually weaken their BATNA by forcing them to flush out realistic details: e.g., "If you don't hire me for this role, you'll have to start your hiring process all over again, spend months interviewing, and there's no guarantee you'll find someone nearly as good." If they perceive their BATNA as weaker, your offer will automatically become stronger.
(H) Negotiation ju-jitsu. Just because you want to do principled negotiation doesn't mean the other side will. They may want to keep using positional bargaining, and in doing so, they will typically assert their position, attack your ideas, and attack you personally. If this happens, don't fight it head on; instead, use "ju-jitsu" to redirect them into the principled negotiation process you want.
- If they keep asserting their position, listen to it, and instead of accepting or denying it, reframe it as one option. Ask why they have adopted that position; try to unwrap if that option meets the underlying needs; play out the position, forcing them to grapple with the details to see if it works; ask what theory or standards they used to come up with that position. "Ah, OK, so you're offering $100. So now we have one option on the table. I'm curious, why $100? How did you arrive at that number? Also, how does it work in practice? If we agreed to $100, what does that do on your side? How will it work for me in terms of X, Y, and Z?"
- If they attack your ideas, don't defend your ideas, but instead, invite the criticism and advice, and then use the feedback they have presented to better understand their interests. "It looks like you're pushing back pretty hard on my suggestion to pay me based on the average salary data I presented to you for this role. What's the reasoning for that? Is there a company policy on how you calculate salaries? Are you worried that this salary is higher than other people at the company with the same role and that wouldn't be fair? Is the company struggling financially and can't afford this salary?"
- If they attack you personally, don't defend yourself. Instead, listen, and let them let off steam. Ask questions to let them flush it all out. When they have spent themselves, try to recast the personal attack as an attack on the problem. E.g., If they call you "greedy" when you ask for a higher price, try to recast it around the market: "Look, I know it's tough to build a business in this part of the world, with prices so high. I think we're all facing it. My costs are super high too. We'll have to find some way to make it work. Perhaps a payment plan might help?"
- In general, your most powerful weapon is to ask questions. If you make a statement, they can argue against it and push back. But you can deliver the same information in the form of a question—especially with a phrasing like "please correct me if I'm wrong"—leaving little to push back against; instead, it forces them to grapple with what you're asking. Also, don't forget to pause. Silence is a powerful tool. E.g., Instead of a statement like, "You charged me $X for rent, but the law says you can't charge more than $Y, so this is illegal!" you could try, "Please correct me if I'm wrong, but I believe you charged us $X, right? Well, I saw here that the law says you can't charge more than $Y, or do I have that wrong?"
(I) One text negotiation. One way to do a negotiation, especially if there are many parties involved, is to have a mediator go around to each party individually, gather requirements, and then produce a single text (a single document) that tries to best meet all the requirements. The mediator will bring this text to each party for feedback, incorporate corrections and suggestions, and repeat the process, until there is an agreement on paper that seems to best take into account everyone's needs. At that point, the mediator goes around one more time, and offers to each party to make a single decision: Yes or No. There's no negotiating between parties, no endless battles over specific positions; just a single document, assembled by repeatedly collecting requirements & feedback, and a single decision, to either go with what the document says, or not.
(J) There are always two negotiations: negotiating the actual substance, and negotiating the rules of the negotiation itself.
- The rules are often implicit, but you're usually better making them explicit.
- If someone is playing tricks, call them out explicitly: e.g., "Looks like you have a good cop / bad cop thing going. Do you need some time to come to an agreement amongst yourselves?"
- Don't attack personally. Question the tactics, not the person.
- Ask for reciprocity. "Will you sit in this small chair tomorrow if I sit in it today?"
- Use contingencies. "Oh, so you're sure your client will make these child support payments? 100% sure? Ah, OK, so then you'll be OK with adding a contingency where if they miss the payments, we get some equity in the house?"
- Don't use threats. And call out theirs. Warnings are better, esp for things you aren't doing as a deliberate punishment. E.g., "If we don't agree to this, the press may have a field day with it."
- Don't be afraid of commitments. "I only negotiate based on reason and principle; not based on someone else's promises." "That was your final offer, but that was before we discussed X, Y, and Z."
Some key insights I got from this book:
(A) Don't use positional bargaining, where you toss offers back and forth and defend positions (this is the default for most people). E.g.,
"I'll give you $20."
"What? It's worth at least $100!"
"$100 for this old thing? No way. Best I can do is $25."
"It's not old, it's a classic. $95."
"But it's dirty! I'll have to spend time cleaning it. No way it's worth more than $30."
"It's a one-of-a-kind. $90."
And so on and so forth. This approach is ineffective, as all you're doing is getting more and more entrenched in your positions, and once entrenched, you then defend those positions, not because they lead to a better deal for you, but because you want to save face. Each side in such a negotiation does a lot of posturing, takes extreme positions, only offers small concessions, and the negotiation often takes forever as a result. Worst of all, even if you do come to an agreement, this sort of process can be bruising, hurting your relationship and eroding trust.
(B) Instead, use principled negotiation. This is based on 5 principles:
1. Separate the people from the problem
2. Focus on interests, not positions
3. Invent options for mutual gain
4. Insist on using objective criteria
5. Know your BATNA
I'll dive into each of these next.
(C) Separate the people from the problem. All negotiations are done by people, and if you don't take into account the way people think, feel, and communicate, you will not be an effective negotiator.
- Attack the problem; never the person. Ideally, you both see the negotiation as a problem you solve jointly. E.g., If you're negotiating a job offer, instead of thinking of it as you vs the employer, think of the problem as "how do we build something great together" that you and the employer are solving together.
- How a person feels during the negotiation—not the facts, not the positions, not the power relationship, but how they feel—is often the most important aspect in determining the outcome. Dismiss the feelings of others at your peril.
- Try to give the other side a win. There are often things you're "obviously" willing to concede in a negotiation; don't assume those are obvious, but call them out explicitly instead, to give the other side an easy win. Look for wins for the other side that are cheap for you to concede, but valuable for them. Similarly, let the other side save face. You're far more likely to get the concessions you want if you can give the other side a way to concede those things without putting their reputation or personal identity at stake.
- Listen actively. That means acknowledging what the other person is saying, and repeating it back to them in your own words to make sure you've understood them. Understanding the other side is not the same as agreeing with them. Making the other person feel like they have been heard and understood is perhaps the cheapest concession you can make.
- When expressing your feelings, focus on how they affect you, rather than attacking the other person. For example, instead of, "you are a racist," try, "I feel discriminated against." If you attack the other person, they will become defensive, and push back; if you express how that thing makes you feel, there's not much they can argue against, but it still delivers the same information.
- When presenting information, remember that the word "but" is the great eraser: it negates everything that came before it. Try to use "and" instead. E.g., "Your offer of $100K is very generous, but I can't accept it unless you also add 4 weeks of vacation time" makes the generous sound like meaningless flattery. Whereas "Your offer of $100K is very generous, and I'll be thrilled to accept it if we can add 4 weeks of vacation time" makes the generous sound like why you want to accept the offer.
(D) Focus on interests, not positions. Behind every position someone takes in a negotiation, such as "I'll only sell this for $100," there are some underlying interests that they are trying to meet, such as, "I paid $85 for it and need to make a profit or I go out of business." Most negotiations should focus on flushing out the interests of both parties, rather than positions.
- Knowing the underlying interests increases the chances of finding a solution that makes everyone happy without resorting to a compromise that doesn't make anyone happy. This was the same point in Never Split the Difference. You'll often find that there are interests you can meet for the other side at little cost to you, and that the other side can meet for you at little cost to them, leading to a better deal for everyone. For example, when negotiating a job offer, if you just toss back and forth salary numbers, you are unlikely to get a result that makes everyone happy. But if you flush out the interests, you may find out that the employer's interests are around being able to get great employees for a long time while minimizing cash spend, while the employee's interests are around a good work-life balance; you can then shift the negotiation to discussing equity and PTO, leading to an offer that works better for everyone.
(E) Invent options for mutual gain. Once you know everyone's interests, the next step is to try to come up with as many options as you can that could possibly meet everyone's interests.
- Many people think of negotiation as a zero-sum game, where if you get more, I get less, but that's rarely the case. In most negotiations, there are many ways to grow the pie before splitting it. Don't assume there's just one solution; instead, be open to exploring options, and you'd often be surprised what you'll find. Example: two people are in a library, and one wants the window open, while the other wants it closed. This seems like a zero-sum game, where if one wins and the other loses, but it might not be! For example, if you start with the underlying needs, you may find the person who wants it open is interested in fresh air, while the person that wants it closed is interested in avoiding a draft that would blow papers all over the place. If you then start tossing options out, you may discover one that makes both parties happy: open a window in another room! This gives you fresh air without the draft. Both parties win.
- You should explicitly try to separate the process of coming up with options from the process of deciding. For example, you can have a brainstorming session where (a) everyone is encouraged to toss out ideas, (b) no one is committing in any way to any decision during the brainstorming session, (c) in fact, no one is allowed to judge or criticize ideas at all during the brainstorming session. The point is to encourage coming up with as many ideas as you can, no matter how wild or crazy. Ideas tend to build on each other, leading to far better options than you may have originally considered. This process works best if you are both sitting on the same side of the table, facing a white board, as you toss out ideas. In fact, sitting on the same side of the table is a good idea in general in a negotiation, as it'll make you feel like you're working on a problem together, rather than against each other ("separate the people from the problem").
- As you toss out options, make sure you understand what decision the other side is really making. That is, the person you're negotiating with directly is rarely the only party involved. They almost always have to convince someone else—a boss, a spouse, a colleague, etc. Make sure you understand who these other parties are, and give the person you're negotiating with ammo they can use to convince those other parties. Also, try to make the decision easy for them: e.g., give them an option that makes them look really good in front of their boss.
(F) Insist on using objective criteria. Whenever possible, look for objective criteria you can use for coming up with options. E.g., Instead of making up a price off the top of your head for a car, look at what similar cars are selling for in other dealerships or what the value is in Kelly's Blue Book.
- Objective criteria changes it from a battle of wills to a common baseline you can both use.
- If the other side doesn't want to play along and just tosses out positions, ask them how they came up with those: "E.g., I see you're offering $100, but what's the theory behind that? How did you come up with that price? What are you basing that on?"
(G) Know your BATNA. BATNA = Best Alternative To a Negotiated Agreement. If the negotiation falls through, you should always know in advance what your fallback is—and what the fallback is for the other side!
- Flush out your BATNA in advance. In fact, you may have to actively work to improve your BATNA. This is especially important in negotiations where the power is not equal: e.g., a solo employee negotiating with a huge company is in a much better position if they have several job offers, and their BATNA is "take another job," rather than one job offer, where the BATNA is "be unemployed."
- Flush out the other side's BATNA too. You should think through it in advance, but also discuss it explicitly with them. You can actually weaken their BATNA by forcing them to flush out realistic details: e.g., "If you don't hire me for this role, you'll have to start your hiring process all over again, spend months interviewing, and there's no guarantee you'll find someone nearly as good." If they perceive their BATNA as weaker, your offer will automatically become stronger.
(H) Negotiation ju-jitsu. Just because you want to do principled negotiation doesn't mean the other side will. They may want to keep using positional bargaining, and in doing so, they will typically assert their position, attack your ideas, and attack you personally. If this happens, don't fight it head on; instead, use "ju-jitsu" to redirect them into the principled negotiation process you want.
- If they keep asserting their position, listen to it, and instead of accepting or denying it, reframe it as one option. Ask why they have adopted that position; try to unwrap if that option meets the underlying needs; play out the position, forcing them to grapple with the details to see if it works; ask what theory or standards they used to come up with that position. "Ah, OK, so you're offering $100. So now we have one option on the table. I'm curious, why $100? How did you arrive at that number? Also, how does it work in practice? If we agreed to $100, what does that do on your side? How will it work for me in terms of X, Y, and Z?"
- If they attack your ideas, don't defend your ideas, but instead, invite the criticism and advice, and then use the feedback they have presented to better understand their interests. "It looks like you're pushing back pretty hard on my suggestion to pay me based on the average salary data I presented to you for this role. What's the reasoning for that? Is there a company policy on how you calculate salaries? Are you worried that this salary is higher than other people at the company with the same role and that wouldn't be fair? Is the company struggling financially and can't afford this salary?"
- If they attack you personally, don't defend yourself. Instead, listen, and let them let off steam. Ask questions to let them flush it all out. When they have spent themselves, try to recast the personal attack as an attack on the problem. E.g., If they call you "greedy" when you ask for a higher price, try to recast it around the market: "Look, I know it's tough to build a business in this part of the world, with prices so high. I think we're all facing it. My costs are super high too. We'll have to find some way to make it work. Perhaps a payment plan might help?"
- In general, your most powerful weapon is to ask questions. If you make a statement, they can argue against it and push back. But you can deliver the same information in the form of a question—especially with a phrasing like "please correct me if I'm wrong"—leaving little to push back against; instead, it forces them to grapple with what you're asking. Also, don't forget to pause. Silence is a powerful tool. E.g., Instead of a statement like, "You charged me $X for rent, but the law says you can't charge more than $Y, so this is illegal!" you could try, "Please correct me if I'm wrong, but I believe you charged us $X, right? Well, I saw here that the law says you can't charge more than $Y, or do I have that wrong?"
(I) One text negotiation. One way to do a negotiation, especially if there are many parties involved, is to have a mediator go around to each party individually, gather requirements, and then produce a single text (a single document) that tries to best meet all the requirements. The mediator will bring this text to each party for feedback, incorporate corrections and suggestions, and repeat the process, until there is an agreement on paper that seems to best take into account everyone's needs. At that point, the mediator goes around one more time, and offers to each party to make a single decision: Yes or No. There's no negotiating between parties, no endless battles over specific positions; just a single document, assembled by repeatedly collecting requirements & feedback, and a single decision, to either go with what the document says, or not.
(J) There are always two negotiations: negotiating the actual substance, and negotiating the rules of the negotiation itself.
- The rules are often implicit, but you're usually better making them explicit.
- If someone is playing tricks, call them out explicitly: e.g., "Looks like you have a good cop / bad cop thing going. Do you need some time to come to an agreement amongst yourselves?"
- Don't attack personally. Question the tactics, not the person.
- Ask for reciprocity. "Will you sit in this small chair tomorrow if I sit in it today?"
- Use contingencies. "Oh, so you're sure your client will make these child support payments? 100% sure? Ah, OK, so then you'll be OK with adding a contingency where if they miss the payments, we get some equity in the house?"
- Don't use threats. And call out theirs. Warnings are better, esp for things you aren't doing as a deliberate punishment. E.g., "If we don't agree to this, the press may have a field day with it."
- Don't be afraid of commitments. "I only negotiate based on reason and principle; not based on someone else's promises." "That was your final offer, but that was before we discussed X, Y, and Z."
