Harvard Business Review on Winning Negotiations: A book review by Bob Morris

Harvard Business Review on Winning Negotiations
Various Contributors
Harvard Business Review Press (2011)

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  Overconfidence
o  Underestimating cultural differences
o  Underestimating time, money, and other resources needed for integration
o  Bidding
o  Bidding above the target’s true value when multiple players enter the game

Final Due Diligence

o  Anchoring
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.