June  2015
Raphael Lapin



10940 WILSHIRE BOULEVARD, Suite 1600

Tel: 888-964-8884

Dear Clients and Friends




When negotiations are optimal, they will increase revenue, minimize risk and create strong working relationships. In  this JUNE '15 edition of NEGOTIATION STRATEGIES  we suggest ways of optimizing your negotiations.


For your reading convenience, we also distill this into a brief lessons learned at the end of the column.


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With Best Wishes 


Raphael Lapin


In negotiations, as in any business transaction, every effort  should be made to achieve a high investment/return ratio.  We should seek a strong return for the cost and effort invested.  To achieve a high ratio, negotiations must be optimal on three dimensions or axis's, which are:


1) Efficiency

2)  Value

3)  Relationships


A negotiation which is efficient, but results in low value gains, or one that achieves high value gains but destroys the relationship, or one with a lot of wasted  time due to severe inefficiencies  is said to be "sub-optimal".  For a negotiation to be optimal and to achieve a high investment/return  ratio, it should be efficient in process,  attain strong value gains and result in good  and trusting working relationships.


Although to cover these three axis's in the detail that they deserve is beyond the scope of this one-minute read, nevertheless I will provide  some useful guidelines  that you can immediately implement.


Efficiency in negotiations is a function of a constructive and productive process. Many negotiators go in unproductive circles pitching unrealistic or premature offers and counter offers; haggling and bargaining; trading contract language red-lines backwards and forwards; and reacting to the other party as opposed to leading and guiding the negotiations with a purposeful, calculated and deliberate process.


An initial part of the negotiation process is the information development phase. This stage is crucial to a successful and optimal negotiation as without it, we will remain bereft of knowledge that pertains to the other side's interests, needs, concerns, constraints, priorities and perspectives. Without this information, we cannot possibly craft a proposal that addresses their needs, because our ability to structure an agreement depends, not on our ability to persuade, but rather on our capacity to listen!


A necessary skill for this information-development part of the process, is the ability to ask focused questions and probe for relevant information. Good negotiators do little beyond asking good and probing questions with very attentive listening.


In 2000, Richard Holbrooke, the US ambassador to the UN, was trying to reduce the US obligation to the UN annual budget from 25 percent to 22 percent.  This would mean that other countries would be required to make up the shortfall. Understandably, those countries were resisting strongly. Holbrooke understood the importance of the information development stage of the negotiation process and started asking very direct and probing questions.  He asked them: "Other than the obvious reluctance to assume a higher financial obligation, what other concerns or constraints might be present?".  The information he obtained from this one well-crafted question unlocked the negotiation. He uncovered the fact that their 2001 federal budgets were already fixed and that was preventing them from increasing their contribution . Once he understood this, he was able to propose an idea that addressed their concern and suggested that they not be asked to increase their contributions until 2002 - a proposal that all could accept.


We all understand the importance of achieving value in a negotiation, but few negotiators understand the difference between claiming value and creating value, and how to create value. Many of us engage in bargaining and haggling - a process we confuse with negotiation. In that haggling process, we assume a mindset of competing over a "fixed pie" and try to claim the bigger piece, leaving our competitor with the smaller. This process is highly adversarial, inefficient and usually leaves much unclaimed value on the table. Good  negotiators understand that by creating value and getting perhaps a smaller piece of an expanded and bigger pie is a better outcome than getting a bigger piece of a small pie.  Their mindset is not "How can I get a large piece of this fixed pie?" but rather "How can I make this pie bigger so that we can both get more value?"


There are many ways to create value in negotiations. One approach is the use of contingency clauses in contracts.  Consider the 1997 negotiation between Dennis Rodman and the Chicago Bulls. Although Rodman was known for his uncanny talent to rebound and play defense, he was also known for his unpredictability and lack of consistency. In the previous season, he missed twenty seven out of the eighty two games, thereby costing the Chicago Bulls almost $3 million for which they received nothing in return - hardly a high value negotiation! 


In the contract renewal negotiations, Rodman wanted to get the best deal he possibly could while at the same time, the Chicago Bulls wanted to manage their concern,  risk and uncertainty as a result of Rodman's unpredictability. Instead of haggling over how much they would pay, they created value for both by introducing some contingency clauses. The agreement was a base salary of $4.5 million with a ceiling of $10.5 million contingent upon playing in all playoff games, winning a rebounding title, and a bonus for each game played above fifty-nine. In this way, they created value with each side's needs met without compromise from either  -  a potentially high salary for Rodman and a good ROI for the Chicago Bulls. This would not have been possible if they would have tried to claim value by haggling over a guaranteed contract  and "fixed pie"


Negotiators will often focus on getting the best deal, but yet in the process destroy the relationship. While this might be alright in one-time negotiations in which an on-going relationship is not important, in long term business and diplomatic negotiations, a deteriorated relationship in not an option. This does NOT mean conceding a substantive issue in order to preserve the relationship! It means managing the process in a way that the other side feels respected, taken seriously and that the outcome addresses their needs and concerns equitably.  In any negotiation, it is important to achieve a valuable outcome AND strengthen the relationship.


One way to help strengthen the relationship through the negotiation process is to make sure that the other side is feeling adequately heard,  immaculately understood and that you are taking their concerns and needs most seriously.  Even before you assert your position, spend ample time on their side exploring and understanding their perceptions, needs, concerns, priorities and fears. Ask clarifying questions and repeat back to them how you have understood them and confirm for accuracy.  Just implementing this one technique will go very far in strengthening the relationship with your counterpart as you negotiate.


About1About Lapin Negotiation Strategies 


Lapin Negotiation Strategies offers training, consulting, advising and executive coaching in negotiation, business diplomacy and dispute resolution services.


Our proprietary and aggressively results oriented services are designed to help your leadership, teams and individuals master the essential negotiation, relationship-building and conflict management skills that increase revenues, decrease the high cost of conflict  and build  strong working relationships .

Our skilled specialists will:
  • Help your organization build a highly effective negotiation competency and culture which translates into increased revenue and strong business relationships.
  • Develop high impact, customized learning systems to develop advanced skills and powerful techniques in negotiation, dispute resolution and relationship management.
  • Provide advice, strategy, guidance and representation in live negotiation challenges
  • Facilitate, mediate and advise in dispute resolution
  • Create a culture of collaboration by guiding and training teams and divisions to engage in dialogue, to negotiate and to partner
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Raphael Lapin

Raphael Lapin, a Harvard trained negotiation and communication specialist. He is adjunct professor of law at Whittier School of Law in Southern California and visiting professor at Southwestern Law School in Los Angeles. Raphael trains and advises Fortune 500 companies and governments around the world and is the author of "Working with Difficult People" (DK Penguin Essential Managers Series)
Working with Difficult People
 Learn more about Raphael Lapin's book, "Working with Difficult People" by clicking on the image above