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What Are Negotiation Skills?
Negotiation skills are a set of behaviors that enable effective bargaining between two parties in order to achieve an agreed-upon, desirable outcome. A negotiation process generally includes a discussion, offers and counteroffers, and, if the negotiation is successful, a final agreement.
Why Are Good Negotiation Skills Important?
From buying a new car to starting a new job, negotiation skills are important for almost anyone to develop. Business negotiation requires a next level set of skills in order to give a company a competitive advantage. Even for a small business, negotiation strategies can lead to positive outcomes, like growth and expansion.
Effective negotiation is when everyone comes out feeling like they’ve received favorable deal terms, though negotiation outcomes sometimes do result in a win-lose situation. For instance, one party might have the upper hand in a salary negotiation or real estate transaction where the buyer settles for a lower price (or a buyer ends up paying a higher price.)
Any successful business leader uses negotiation skills—like good communication, the power of persuasion, confident body language, and smart decision-making—to get what they want and improve their company’s market share.
6 Negotiation Techniques to Develop
Before you sit at the bargaining table, follow these six negotiation techniques to learn how to stack the odds in your favor.
- Prepare. Be prepared with all of your information and have your bottom line in your head.
- Aim high. Never be afraid to ask for what you want. You just might get it.
- Be prepared to compromise. Plan ahead and know what you’re willing to let go of in any negotiation. Your first offer most likely won’t be accepted, so get ready to go back and forth, and be prepared to settle for your best alternative option.
- Hone your listening skills. Sit tight and let the other party present their case, or their offer, first. Listen to their point of view.
- Seal the deal. When the deal is made, make sure all parties have the necessary documents signed. Business relationships suffer, or break, when a deal is not spelled out on paper.
- Know when to walk away. An essential negotiation technique is simply knowing when the deal is not right, or the other party is not authentic in their offer, and being able to walk away.
Bob Iger’s 3 Tips for Successful Negotiation
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Bob Iger has mastered the art of negotiation. As a result, The Walt Disney Company has seen huge success since he took the reins in 2005. Here are his three tips for successful negotiation in business:
To the novice, Bob might appear to be tipping his hand by being candid. But Bob believes that being upfront with your needs is imperative. Not only does it save time by nixing the gamesmanship of negotiation, but it also gives the other party an opportunity to outline what they hope to gain from the deal. Bob’s strategy means you have to let go of zero-sum-game thinking. Instead of seeing yourself as the winner or loser of a negotiation, you instead open yourself up to the ways both parties are benefitting.
How Bob Iger Used His Negotiating Skills to Acquire Pixar
There are numerous case studies of Bob Iger’s negotiation skills during his tenure at Disney, but the most impactful one was his successful negotiation to acquire Pixar. This purchase was a win-win for both Disney and Pixar, a business deal that cemented their long-term relationship.
Disney had been co-financing, marketing, and distributing Pixar’s features since the release of Toy Story in 1995—movies like Finding Nemo and Monsters, Inc. had far surpassed recent Disney Animation efforts in terms of both visibility and revenue. So he went to the company’s board his second day on the job and made an audacious proposal: What if, rather than trying to fix Disney’s animation division from within, the company straight up bought the best animation studio in the business? That way, Disney could hitch its wagon to Pixar’s rising star, and additionally, the guys running Pixar at the time—John Lasseter and Ed Catmull—could oversee Disney Animation going forward.
Of course, buying Pixar meant dealing with Steve Jobs, the company’s controlling shareholder. And things were tense with Jobs when Bob assumed command of Disney: Due to a very public clash with Bob’s predecessor, Michael Eisner, over contract negotiations the year prior, Jobs had decided it was time for Pixar to break up with Disney after nearly a decade of splitting profits; the turmoil that led to that announcement left a bad taste in everyone’s mouth. Jobs’ personal feelings about Disney aside, there was also fear on the part of the board that Jobs would gain too much control over their company. Bob saw things differently—and this is where humility and the forfeiture of ego in service of the company came into play.
Bob’s for-the-greater-good style of thinking shows that bold business leadership isn’t about self-aggrandizement and power. It’s about removing any conflation of your own identity with the company you run so you can assess situations as objectively as possible. This strategy is sort of like playing the long game with your reputation: Bob knew that if the Pixar acquisition turned Disney around, it would reflect positively on him, resulting in a longer tenure as CEO.
So he did it (with the blessing of the board). He pitched Jobs on the idea. Jobs was interested and reticently invited Bob up to Apple headquarters. There, the two men hashed out a pros and cons list. The primary fear on Jobs’s end was that Disney would destroy Pixar’s culture of total respect for the creative process and its commitment to telling wildly original stories. This weighty con, in addition to numerous others, seemed to totally outweigh the pros. But Jobs saw a way forward.
The path forward involved a careful preservation of Pixar’s legitimately synergistic relationship between the tech side of the business and the storytelling side of the business. There was an impressive connection between the left brain and right brain as well as a general openness to imagination and inventiveness, and Bob knew he needed to keep those attributes intact. Per a 2010 Harvard Business School case study, a critical part of the deal for Bob was avoiding a “potential creative talent exodus”—he had to ensure that the master storytellers at Pixar stayed on after the acquisition. To mitigate the fear of corporate oppression, Bob assured Jobs from the get-go that Pixar’s culture would be allowed to exist untouched, effectively sealing the deal.
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