I have always suggested that the best way to go about opening up a negotiation is to let the other party go first. Covey’s “Seek first to understand, then to be understood” makes emminent sense, surely:  find out what value they put on the item before you position how much you’re asking for it.

  That way you won’t leave money on the table by starting too low.  Nothing worse than opening up the negotiation with your demand, and the other party says “Done!” and shakes your hand within milliseconds, leaving you wondering how much money you just left on the table.

I have just had this approach challenged by an excellent article from Harvard Business School’s Archives.  Professor Adam Galinsky suggests that if you make the first move you are far more likely to come out ahead.  Here are some of the key points:

Researchers in Germany had customers asked car mechanics for a valuation of a car that needed numerous repairs:  some suggested a high price of DM 5,000, others suggested a lower one of DM 2,800.  The mechanics estimated the car to be worth DM 1,000 more when given the high opening “anchor”.

Any negotiation is about something which has positive aspects and negative aspects.  When you start high you draw attention to the positive aspects, and of course the opposite works.

Most people making the initial offer are not agressive enough.  We worry too much that we will scare away the other party.  This fear is usually exaggerated, and Galinsky suggests being quite agressive, but not absurdly so.  Start beyond what you think your opponent will have as a worst price, but not so far beyond that you drive him away.

If the other other party beats you to it, be prepared to open up your positioning using the same principle – an aggressive counter offer, and maybe some humour to show that you are discounting their opening anchor.

If they open up with an offer which is close to your Ideal, do not accept it straight away, otherwise the other party will feel bad about the deal.  Ask for further concessions:  this will give you a better deal and increase their satisfaction with the outcome.

[youtube http://www.youtube.com/watch?v=8XaH2McUAXI]

I’ve been thinking about this a lot, as it appears to go against much of what I put forward in my negotiation training courses.   Galinsky’s approach sounds excellent for Win/Lose negotiations, in which you do not care about the other party and do not need to build a long term relationship with them.  I personally would be less likely to use this approach in a Win/Win context, because the aggressive opening offer will create a climate of playing hardball, where it is less likely that we will want to collaborate.

What do you think?  How does his suggestion play out for you?


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