How to bargain and close on deals by “letting the other chaps have it your way”
This is one of the volumes in a series of anthologies of articles that first appeared in Harvard Business Review. Having read all of them when they were published individually, I can personally attest to the high quality of their authors’ (or co-authors’) insights as well as the eloquence with which they are expressed. This collection has two substantial value-added benefits that should also be noted: If all of the articles were purchased separately as reprints, the total cost would be at least $60-75; also, they are now conveniently bound in a single volume for a fraction of that cost.
Those who aspire to possess highly developed skills in bargaining and deal making will find the material in this HBR book invaluable. For example, how to seal or sweeten a “bargain” by uncovering the other side’s motives, counter faulty assumptions and premises, forge only those deals that support your strategy, and “know when to walk away”…and why. Authors of the ten articles focus on one or more components of a process by which to “persuade others to do what you want – for their own reasons.”
This is a slight variation of an observation made to me years ago by an English professor at Oxford who was (then and now) a personal friend. We were at a reception for the England’s ambassador to the United States. I asked my friend if there was a “secret” to effective diplomacy. He replied, “As a matter of fact, there is. Letting the other chaps have it your way.”
I now provide two brief excerpts that are representative of the high quality of all ten articles:
In “Deals Without Delusions,” Dan Lovallo, Patrick Vigueroie, Robert Uhlander, and John Horn recommend several strategies (“antidotes”) for countering mental biases at each stage of the M&A process:
Preliminary Due Diligence
o Confirmation bias
o Underestimating cultural differences
o Underestimating time, money, and other resources needed for integration
o Bidding above the target’s true value when multiple players enter the game
Final Due Diligence
o Sunk costs fallacy
They discuss the strategies, antidotes, and other key elements and components in the immensely complicated – and perilous — M&A process, Pages 19-38.
In “The Fine Art of Acquisition,” Robert J. Aiello and Michael D. Watkins share their own thoughts about both the art and science of M&A as they discuss screening potential deals, conducting initial discussions, establishing a civil (preferably cordial, if not pleasant and friendly) atmosphere within which to address various issues, gearing up for rigorous negotiations, sizing up the other side, and getting to final terms and conditions. They also discuss “Managing the Deal Cycle” and the “Postmortem Questions” to be asked. You’ll find the complete article on Pages 155-175.
My own opinion is that the same basic principles that continue to be most effective during formal discussions such as those required by the M&A process can (with only minor adjustments) also be effective during informal conversations whose purpose is persuasion. Honesty is essential as are mutual respect and trust. Negotiation should not be viewed as a zero sum game. Treacherous and deceitful people who succeed initially are losers eventually.
Here is an excerpt from an article written by Karen Freeman, Patrick Spenner, and Anna Bird for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
Note: This post is the last in a three-part series.
* * *
Most marketers think that the best way to hold onto customers is through “engagement” — interacting as much as possible with them and building relationships. It turns out that that’s rarely true. In a study involving more than 7000 consumers, we found that companies often have dangerously wrong ideas about how best to engage with customers. Consider [the first of] three myths.
Myth #1: Most consumers want to have relationships with your brand.
Actually, they don’t. Only 23% of the consumers in our study said they have a relationship with a brand. In the typical consumer’s view of the world, relationships are reserved for friends, family and colleagues. That’s why, when you ask the 77% of consumers who don’t have relationships with brands to explain why, you get comments like “It’s just a brand, not a member of my family.” (What consumers really want when they interact with brands online is to get discounts).
How should you market differently?
First, understand which of your consumers are in the 23% and which are in the 77%. Who wants a relationship and who doesn’t? Then, apply different expectations to those two groups and market differently to them. Stop bombarding consumers who don’t want a relationship with your attempts to build one through endless emails or complex loyalty programs. Those efforts will be low ROI. Chances are there are higher returns to be had elsewhere in your marketing mix.
* * *
To read the complete article, please click here.
To check out more of their blog posts, please click here.
Karen Freeman is a managing director with the Corporate Executive Board. Patrick Spenner is a managing director and Anna Bird is a senior researcher in CEB’s Sales, Marketing and Communications practice.