Ron Shapiro is a legendary negotiator, but his style can be
surprising. That's because the Baltimore attorney holds to a
guiding philosophy that makes him very different from most
negotiators: "Never beat up on the other side."
Sound crazy? Not judging by the rich deals Shapiro has made for
clients ranging from businesses to pro athletes including $32
million over five years for Orioles star Cal Ripken Jr. and about
the same for former Minnesota Twin Kirby Puckett. What's more,
despite winning those lucrative contracts, Shapiro is so highly
regarded by Major League Baseball's owners that he frequently
gets mentioned as a strong candidate for baseball commissioner.
"Both sides can leave a negotiation happy," says
Shapiro. "Get all you can, but try to accommodate the other
side's needs, too. Use the negotiation to build relationships
for the future."
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Nowadays the co-founder of the Shapiro Negotiations Institute
regularly conducts "Making the Deal" seminars for
executives and entrepreneurs. Can we, in fact, learn to negotiate
and build relationships? "Absolutely--I've taught
thousands of people through the years, and there's no doubt
this skill can be taught," promises Shapiro, who here shares
some of his negotiating secrets.
Entrepreneur:Why shouldn't we try to beat up the
other side in a negotiation?
Ron Shapiro: That's how most people think of
negotiating, but it is exactly how not to do it. The battle
mentality is a real negative--in the end, this win-lose approach
turns into lose-lose, and nobody comes out ahead.
Entrepreneur:Another case of that kind of negotiation
is the baseball strike of a few years ago.
Shapiro: And today, too. Remember, the strike was ended
by court order; the talks continue. They are the ultimate example
of how not to negotiate. Management clearly came to the table to
beat the union once and for all, while the union clearly did not
want to relinquish its string of wins in recent years. The two
sides started out fighting over a whole pie, then a slice of the
pie, and soon they may be fighting over crumbs unless they find a
way to accommodate the needs of both sides. This shows what's
wrong with the battle mentality in a negotiation.
Entrepreneur:But should we just surrender to the
other side?
Shapiro: [In our seminars,] right after we show how
negotiation isn't win-lose, we show how it isn't
"wimp-wimp," either. Negotiation isn't appeasement;
it's persuasion. When you negotiate a $30 million deal for a
baseball player, that's not appeasement. But the deal can still
take into account the needs of the other side. I've been doing
negotiations for 25 years, and my view has always been that the key
is to do business not just for today but for tomorrow as well.
That's how you achieve lasting success.
Entrepreneur:Do we really need to learn how to
negotiate?
Shapiro: You are in negotiations probably the greater
part of every day. I'm in negotiations with my youngest son
every night about bedtime. You check into a hotel, and you're
in a negotiation for a better room, a better price. Wherever you
go, you are in negotiations, and if you are comfortable doing it,
you're more effective not only in your business but throughout
your life.
Entrepreneur:When does the negotiation start?
Shapiro: In my mind, I'm in a negotiation days and
weeks before sitting at the table. I'm preparing, gathering
information that relates to the other side--its financial resources
and competitive factors. The next step is probing, where I sit at
the table and try to find out what the other side's interests
are. What's their bottom line? Then, finally, we propose an
offer and enter what some describe as the haggling stage.
That's the "Three-P" negotiating strategy we
teach--prepare, probe, propose--and it works.
Entrepreneur:Which "P" gives entrepreneurs
the most trouble?
Shapiro: Two of them--preparation and probing. The Greek
philosopher Epictetus said we have two ears and one mouth. Most
entrepreneurs act as though they have one ear and four mouths. They
want to get down to haggling. But once you get the mind-set that
preparation and probing are important, you become much more
effective. The actual negotiation at the table is only the tip of
the iceberg. In an effective negotiation, a lot of the iceberg is
under the water.
Entrepreneur:How, specifically, do you
prepare?
Shapiro: If it's a public company, I go to the
[Securities and Exchange Commission] or the computer and pull up
information. If it's a private company, I go to trade
association publications, newspaper clips, the Internet. I want to
know all the key facts.
Entrepreneur:How do you probe if the other side
doesn't want to open up?
Shapiro: Ideally, you probe just by sitting down with the
other side and asking questions. If they are resistant, probing
gets tougher--but not impossible.
For instance, if you can, go over to their office. Look at the
pictures on their walls. Look at their diplomas. Search for ways in
which you can connect and bond with them--ways to get a
relationship started. And keep looking for creative solutions that
satisfy their needs as well as yours.
Entrepreneur:Is it just a bluff when the other side
says "This is non-negotiable?"
Shapiro: Usually. When you've been negotiating for a
while, you don't even listen to it. Even when price isn't
negotiable, there are other issues that can be
addressed--there's delivery, service and so forth. That's
why I spend a fair amount of time trying to find out what the other
side is thinking. Often I find things in this probing process that
let us shape a deal that works for both parties but doesn't
change the price.
Entrepreneur:Is it possible to make a deal where you
win and the other party loses?
Shapiro: Sometimes you could--in cases where you have a
lot of leverage. But what I admonish people is, get everything you
can, but don't make this a search-and-destroy mission. Why? You
may well have to deal with that party at another point in time.
What goes around comes around.
Entrepreneur:Is part of the negotiator's job to
help the other side see how they can give you what you're
asking for?
Shapiro: I always say, to get what you want, help the
other side see what they want. Then convince them they can have
that while you still get what you want. That's the way to
achieve a true win-win result.
Entrepreneur:In the proposing stage, you warn that
the first offer and counteroffer are crucial. Why?
Shapiro: The first offer creates a boundary. If you can,
get the first offer from the other side. There are times that the
other side comes up with a first offer that's far bigger than
you hoped to end up with.
If you cannot get the other side to make the first offer and you
must go first, put out an offer that creates a high enough boundary
so you are left with room to negotiate. If you're the buyer,
offer less than what you're willing to pay. At the same time,
since you've done preparation, build in at least some of the
other side's needs in your first offer. But don't put in
all their needs--there's still a negotiation ahead of you.
Entrepreneur:What are some tactics the other side may
try, and how do you disarm them?
Shapiro: Good Cop-Bad Cop. The Higher Authority.
Manipulating physical surroundings--for instance, putting you in a
hot room and seating you in a chair where the sun shines in your
eyes. Know these "getting the upper hand" tactics, and
you know to do what the witch doctors do. The witch doctor calls up
the evil spirits, and the evil spirits go away. You can do the
same. Look across the table and say, "Hey, that's good
cop-bad cop." Or "Why don't you bring your higher
authority into the room so we can talk this out?" Or "Can
I change my seat?" These are easy techniques that let you
disarm these tactics if you recognize them.
Entrepreneur:What's the worst mistake a
negotiator can make?
Shapiro: Getting personal. Don't insult the other
person. By the same token, don't take things personally and get
angry. If somebody is angry at you and you get angry at them, where
do you end up? Losing control of your emotions is about the worst
thing you can do.
Entrepreneur:A big worry is that, somehow, in
becoming effective negotiators, we'll lose our integrity. Is
that a real concern?
Shapiro: A lot of people ask that. The answer is, you go
into the negotiation with goals, but if you give up your integrity
in winning your goals--if you lie or don't keep your word--you
may be giving up being an effective negotiator.
When you have integrity and you say something, people know you
mean it. You cannot give away integrity because once you do, you
cannot buy it back.
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