Assumption that good intuition will allow you to sail through negotiations is simply wrong

Too much trust in intuition can lead to irrational decisions. In negotiations, schedule more time than you think you will need. Most negotiators believe they are capable of distinguishing between situations in which they can safely rely on intuition from those that require more careful thought—but often they are wrong.

Richard F Madison University have distinguished between what they call System 1 and System 2 thought. System 1 thought describes our intuition: quick, automatic, effortless, and influenced by emotion. By comparison, System 2 thought is slower, more conscious, effortful, and logical. When you are carefully considering options, you are using System 2 thinking. When you are simply acting on intuition, you are using System 1 thinking. We can all think of instances in which we acted rashly, relying on System 1 thoughts and emotions, as well as times when we carefully evaluated a situation using System 2 logic.

When you approach negotiation based on intuition you tend to address the negation without considering available options. Decision analysis is a methodology typically used to support decision makers actively in assessing alternative courses of action. This Is a systematic approach helps to managers weighing their options and designing the logical solutions in systematic fashion.

Find out interest of parties: To analyse a negotiation it is necessary to identify all of the parties’ interests. There is a difference between the parties’ stated position and their underlying interests. Positions are what parties demand from the other side and Interests are the motives behind these positions

To be fully prepared you should know how important each issue is to you, as well have a sense of how important each issue is to your counterpart. After understanding the interest of each parties finally you should be prepared of alternative options. BATNA is finding alternatives in your negotiations.

When negotiators encounter differences with other parties, the common response is to see this as a problem.Negotiators should seize every opportunity to create value – if another party values something more than you do then let them have it. Don’t give it away! Trade it. But creating value is not just what a “nice’ negotiator does when they care about the other side – it’s what a rational negotiator does categorically to increase the size of the pie that the parties have to divide.

Six Strategies of Creating Value

Build Trust and Share Information – this is the easiest way to create value; but easier said than done. Requires trust, maybe harder to negotiate with others in your own firm and the Best way to build trust is to be trustworthy

Ask Questions – Most people have a tendency to think negotiating is an opportunity to influence the other party; the result –

·         Most talk and don’t listen.

·         Even when the others talk, we concentrate on what we are going to say next!

·         We fail to ask questions as we believe they won’t be answered; Examples “How are you going to use our products?” What would an ideal supplier do to make its products attractive to you?” “How can we make our offer better than that of our competitors?”

Strategically Disclose Information – If other party I not answering questions; then disclose some information (comparatively minor);

·         Giving away information helps expand the pie.

·         Behaviours in negotiation are often reciprocated (scream = scream back..etc..)

Negotiate Multiple Issues Simultaneously – “What do we discuss first?”

·         Better to discuss issues simultaneously  - can create value across issues

·         Nothing is settled until everything is settled

Make Multiple Offers Simultaneously – Many negotiators will put an early offer on the table to “anchor” the discussion – but often before working to create value

·         If you make an offer and it is rejected; we know little more than before the offer

·         Better to make multiple offers simultaneously, in which all offers are equally valuable to you. Other party may reject all, but don’t worry. Ask “Which one do you like most?” “Could I rework one of these offers?” Responses will give you hints. Also allows you to appear a flexible negotiator