#Bizomics: Neuroscience and Negotiation

5 Jun 2017

Last week, I attended a lecture on the neuroscience of negotiation at the British Computer Society, delivered by Tom Flatau, MD Teamworking International.

 

Here are my notes - I hope you find them useful!

  • Negotiation is culturally neutral, but can utilise cultural niceties

  • Some ways that negotiations can go wrong:

    • Different expectations

    • Misunderstanding terms

    • Right product, wrong timing

    • Aggression

    • Speaking (just pitching) rather than listening

    • Lack of compromise

    • Not being heard

    • Emotions

  • Passion and building rapport, by showing a personal part of yourself, doubles your chances of success

  • We were shown a video of a man and his two companions successfully taking the prey of a pride of lions, and observed the following:

    • Always leave some for the other side

    • Understand your competitor (comes with experience)

    • Confidence, teamwork and planning are essential

    • Focus on the other party (instead of worrying about our own behaviour)

  • Studies show that when making decisions, we base them mostly on emotion (80%) and less so on factual evidence (20%). We are much more emotional and much less logical than we like to think we are!

    • An example of this, which many of us would not like to admit, is commercial advertising

    • We were shown an example where three products were offered: the cheapest was to have something in print only, and the more expensive two were to have the product in print and online, or only online. Due to the fact that having the product both online and in print is the same price as only having it online, people chose the former, thinking they were paying less for more product. It turns out that once this option was removed, people chose the cheaper option of print only.

    • What this means, is that we are willing to pay more if we think we are getting more, even when we don't want more! By removing a product that no one wants, we actually reduce sales.

    • Lesson: always include a 'phantom' product to steer your customers in the direction you want

  • Benchmarking: start high so you end up nearer what you want

  • Emotional brain vs. logical brain

    • The limbic system occupies most of our brain and is loosely known as the emotional brain.

    • The logical brain requires much more energy to function, so we use our emotional brain most of the time. We use our logical brain when we are in a low or bad mood.

    • Lesson: keep the other party in a good mood!

  • Fundamentally, the brain wants to

    • minimise danger by continuously scanning for threats

    • maximise reward

  • When we feel threatened, cortisol and adrenaline are released into our bodies

    • In excess, cortisol shuts down the brain

  • When the reward centres in our brains are stimulated, oxytocin and dopamine are released

    • Oxytocin, known as the cuddle hormone, makes us feel more connected and trust the person who made us happy

  • Losses loom in our minds for approximately three times longer than wins

  • Negotiating behaviours that increase threat levels

    • Time pressure

    • Ultimatums

    • Aggression

    • Complexity (start using logical brain instead of emotional brain - not good!)

  • Negotiating behaviours that increase reward

    • Finding points of agreement

    • Solving the problem

    • Giving enough strategic options to make it a win-win situation (but not too many options that they have to use their logical brain)

  • The brain makes a decision before the conscious brain becomes aware of it. There can be up to a seven-second delay. I remember learning about this during my undergraduate degree in biology and found it fascinating!

  • Body language is more important than anything

  • A good way to slow things down so that you have time to think, is to repeat what your opposition is saying to you in the form of a question.

Tom informed us of a process to follow in negotiations. He goes though these in depth on his course Black Belt Negotiation, which you can find more information about here.

 

 

  1. Prepare

    • Under pressure, the thinking brain shuts down.

    • Do your homework about the opposition on social media before meeting them

    • Think about your tradeables: aspects of your product that you can use to tailor your product. For example, tradeables for an airline are seat reservation, luggage allowance, leg room, food.

  2. Discuss

    • What do they want? Ask questions and listen

    • Build rapport

    • Look out for verbal and non-verbal signals

    • Never give false expectations

    • Interest vs Position

      • Position is what you see (the part of the iceberg above the water)

      • To find the hidden bit, the real interest, you must ask questions. Use this information to create a win-win situation.

  3. Propose

    • If you... then I...

    • Don't disclose your numbers yet; this gives you flexibility and avoids your opposition setting a reference point.

    • No firm commitments should be made at this stage

  4. Trade

    • Most people skip 1-3 in the process and start here!

    • Choose your number strategically so that they are midway between two ordinary points. For example, If I offer you 50 of a product with a 13% discount, your counter offer would be 70-100 of the product with a 15% discount; raising the discount by only 2%. What would have happened if I started out with a 15% discount? You would have asked for 20%.

    • Make a counter offer

    • Get something back for anything you give

    • Provide options

  5. Close

    1. Seal the deal with a handshake!

    2. Reopening negotiations whilst closing the deal is known as nibbling and is considered unprofessional. If it happens to you, remember to ask for something in return.

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