1 00:00:00,000 --> 00:00:02,480 [MUSIC PLAYING] 2 00:00:08,440 --> 00:00:12,700 I refer to losing something, loss aversion, 3 00:00:12,700 --> 00:00:15,290 as bending reality. 4 00:00:15,290 --> 00:00:17,240 Fear of loss and what people loss 5 00:00:17,240 --> 00:00:19,310 completely distorts their perception 6 00:00:19,310 --> 00:00:23,090 so much that it effectively bends their reality. 7 00:00:23,090 --> 00:00:24,750 You have to take that into account, 8 00:00:24,750 --> 00:00:27,560 and you have to find out how they 9 00:00:27,560 --> 00:00:30,170 feel they are losing because that's 10 00:00:30,170 --> 00:00:32,330 going to be the single dominating factor 11 00:00:32,330 --> 00:00:34,010 in their decision-making. 12 00:00:34,010 --> 00:00:37,590 What are they going to lose if they don't make the deal? 13 00:00:37,590 --> 00:00:40,220 What are they going to lose if they do make the deal? 14 00:00:40,220 --> 00:00:44,560 It's never rational, and it's always bent 15 00:00:44,560 --> 00:00:47,040 based on their distortion of reality. 16 00:00:47,040 --> 00:00:51,940 Now any given situation can be offered as a gain or loss. 17 00:00:51,940 --> 00:00:55,050 For example, you're a company that's 18 00:00:55,050 --> 00:00:59,220 going to make them 23% more money. 19 00:00:59,220 --> 00:01:03,180 You can say, work with us, and you'll make 23% more money. 20 00:01:03,180 --> 00:01:05,250 There will be a 23% gain. 21 00:01:05,250 --> 00:01:09,750 The return on your investment will be 23%. 22 00:01:09,750 --> 00:01:13,560 Or you can say, choose not to work with us, 23 00:01:13,560 --> 00:01:17,780 stay where you are, don't change anything, 24 00:01:17,780 --> 00:01:23,150 and it's going to cost you 23% every day. 25 00:01:23,150 --> 00:01:28,200 While you sleep not working with us 26 00:01:28,200 --> 00:01:33,740 is going to cost you 23% day in and day out. 27 00:01:33,740 --> 00:01:38,510 Fear of loss is what keeps people up at night. 28 00:01:38,510 --> 00:01:43,880 Nobody loses sleep, nobody gets insomnia because life is good 29 00:01:43,880 --> 00:01:46,200 and they're making money and tomorrow 30 00:01:46,200 --> 00:01:48,350 is going to be more profitable than today was. 31 00:01:48,350 --> 00:01:51,980 They sleep like a baby over gains. 32 00:01:51,980 --> 00:01:54,320 Fear of loss is what keeps people up 33 00:01:54,320 --> 00:01:56,960 at night because you get a loss in your head, 34 00:01:56,960 --> 00:02:00,770 and it burrows into your psyche, and it eats at you, 35 00:02:00,770 --> 00:02:02,390 and it keeps you awake. 36 00:02:02,390 --> 00:02:05,120 And that's why it's one of the dominating factors 37 00:02:05,120 --> 00:02:06,890 in human decision-making. 38 00:02:06,890 --> 00:02:09,290 [MUSIC PLAYING] 39 00:02:13,012 --> 00:02:16,792 All right, now, I'm going to tell you about the F word-- 40 00:02:16,790 --> 00:02:18,900 fair. 41 00:02:18,900 --> 00:02:20,950 The F bomb. 42 00:02:20,950 --> 00:02:23,800 Fair comes up in nearly every single negotiation. 43 00:02:23,800 --> 00:02:26,380 As soon as you look for the word fair and aware of how much 44 00:02:26,380 --> 00:02:29,510 it comes up, rarely does it not come up. 45 00:02:29,510 --> 00:02:31,780 People use it to manipulate other people. 46 00:02:31,780 --> 00:02:34,150 People use it when they're backed into a corner. 47 00:02:34,150 --> 00:02:37,030 The concept of fairness is fundamental to what 48 00:02:37,030 --> 00:02:38,620 we are as human beings, and that's 49 00:02:38,620 --> 00:02:40,720 why it comes up all the time. 50 00:02:40,720 --> 00:02:45,730 A classic example is something called the ultimatum game. 51 00:02:45,730 --> 00:02:49,270 Let's say two people are walking down the street. 52 00:02:49,270 --> 00:02:52,090 $10 falls out of the sky. 53 00:02:52,090 --> 00:02:55,410 It's $10 in found money. 54 00:02:55,410 --> 00:02:57,530 They have the opportunity to split the $10. 55 00:02:57,530 --> 00:03:00,000 One of the two people gets to propose 56 00:03:00,000 --> 00:03:01,880 how it's going to be split. 57 00:03:01,880 --> 00:03:07,460 The second of the two people gets to only accept or reject. 58 00:03:07,460 --> 00:03:09,770 They get to throw out one number. 59 00:03:09,770 --> 00:03:12,890 The proposer can only propose a split one time. 60 00:03:12,890 --> 00:03:14,150 There's no back and forth. 61 00:03:14,150 --> 00:03:14,900 There's no debate. 62 00:03:14,900 --> 00:03:15,860 There's no convincing. 63 00:03:15,860 --> 00:03:18,590 There's no subsequent rounds of negotiation. 64 00:03:18,590 --> 00:03:24,120 This game has been played around the world. 65 00:03:24,118 --> 00:03:25,788 One of the things I love about this game 66 00:03:25,785 --> 00:03:28,715 is that it drives game theorists crazy. 67 00:03:28,710 --> 00:03:33,270 They hate it because people react as human beings. 68 00:03:33,270 --> 00:03:37,470 People say 5/5 is the only fair way to do it. 69 00:03:37,470 --> 00:03:40,540 And I say, all right, so you wouldn't take 3? 70 00:03:40,540 --> 00:03:43,090 You know, I might say to you, what about 2, what about 4? 71 00:03:43,090 --> 00:03:45,960 No, that's not fair! 72 00:03:45,960 --> 00:03:49,410 Well, how is 0 better than 3? 73 00:03:49,410 --> 00:03:51,750 You're saying I, you know, I feel disgusted 74 00:03:51,750 --> 00:03:53,400 if I'm asked to take 3. 75 00:03:53,400 --> 00:03:55,290 I should get 5. 76 00:03:55,290 --> 00:03:57,870 Well, if 3 makes you feel disgusted, how does 0 77 00:03:57,870 --> 00:03:59,970 make you feel? 78 00:03:59,970 --> 00:04:04,720 But people will destroy deals if they 79 00:04:04,720 --> 00:04:06,790 feel they've been treated unfairly, 80 00:04:06,790 --> 00:04:12,730 intentionally destroy deals and walk away with nothing. 81 00:04:12,730 --> 00:04:15,190 On the other hand, people are much more 82 00:04:15,190 --> 00:04:18,780 likely to make a deal if they feel the process was fair, 83 00:04:18,779 --> 00:04:23,649 and they might take a bad deal or a less than optimal deal 84 00:04:23,650 --> 00:04:26,180 if they feel they were treated fairly. 85 00:04:26,180 --> 00:04:30,780 So fairness is really the issue that makes or breaks deals. 86 00:04:30,776 --> 00:04:33,256 [MUSIC PLAYING] 87 00:04:36,728 --> 00:04:39,868 All right, here's the way to counterpart. 88 00:04:39,870 --> 00:04:43,740 We'll try to use fair to their own advantage. 89 00:04:43,740 --> 00:04:46,650 Let's say I've given you a fair offer. 90 00:04:46,650 --> 00:04:50,840 Or they might say, I just want what's fair. 91 00:04:50,840 --> 00:04:54,380 In either instance, they've accused you 92 00:04:54,380 --> 00:04:57,320 of being unfair in a very subtle way. 93 00:04:57,320 --> 00:04:58,880 If you don't take that deal or if you 94 00:04:58,880 --> 00:05:01,400 don't make the deal that they want, you are being unfair. 95 00:05:01,400 --> 00:05:05,790 Your fairness as a human being has been called into question. 96 00:05:05,790 --> 00:05:09,390 It's a great way to manipulate you short term, 97 00:05:09,390 --> 00:05:13,520 and you will react because you don't want to be unfair. 98 00:05:13,517 --> 00:05:15,097 So it's going to have an effect on you 99 00:05:15,100 --> 00:05:16,690 if you don't see it coming. 100 00:05:16,690 --> 00:05:20,460 So how do you respond to that tactic when it's used on you? 101 00:05:20,460 --> 00:05:26,010 Say, I'm happy to be shown how I've been unfair. 102 00:05:26,010 --> 00:05:27,900 Show me the information. 103 00:05:27,900 --> 00:05:29,880 I'm open to learning. 104 00:05:29,880 --> 00:05:31,500 Let me see what it is. 105 00:05:31,500 --> 00:05:33,090 They either are not going to have it, 106 00:05:33,090 --> 00:05:34,620 or they know they don't have it. 107 00:05:34,620 --> 00:05:37,320 So how do you use the F bomb positively? 108 00:05:37,320 --> 00:05:38,910 How do I use it? 109 00:05:38,910 --> 00:05:40,860 At the beginning of a negotiation, 110 00:05:40,860 --> 00:05:42,950 I want you to say to the other side, 111 00:05:42,950 --> 00:05:46,060 it's my intention to treat you fairly. 112 00:05:46,060 --> 00:05:50,450 If at any point in time I've been unfair, let me know. 113 00:05:50,450 --> 00:05:53,020 We'll go back and address it and fix it. 114 00:05:53,020 --> 00:05:54,490 Be proactive. 115 00:05:54,490 --> 00:05:59,140 Put yourself in a position where they'll deal with the problem 116 00:05:59,137 --> 00:06:01,717 because otherwise, if they feel they've been treated unfairly, 117 00:06:01,720 --> 00:06:02,930 it's going to explode on you. 118 00:06:02,928 --> 00:06:05,228 [MUSIC PLAYING] 119 00:06:09,807 --> 00:06:12,387 Here's how I would encourage you to think about deadlines when 120 00:06:12,390 --> 00:06:14,970 it comes to negotiations. 121 00:06:14,970 --> 00:06:17,340 Somebody setting a deadline is an attempt 122 00:06:17,340 --> 00:06:21,510 to kick some progress into gear. 123 00:06:21,510 --> 00:06:23,130 And if it's a real deadline, there's 124 00:06:23,130 --> 00:06:27,180 probably less time than they actually gave you anyway. 125 00:06:27,180 --> 00:06:33,510 But deadlines are designed to get progress started. 126 00:06:33,510 --> 00:06:37,830 Every once in a while, in extreme circumstances, 127 00:06:37,830 --> 00:06:40,080 a deadline is a hard deadline. 128 00:06:40,080 --> 00:06:44,850 Very rarely of the thousands of businessmen 129 00:06:44,850 --> 00:06:47,610 that I have coached, business men and women that I have 130 00:06:47,610 --> 00:06:53,370 coached in negotiations since I left the FBI 12 years ago, 131 00:06:53,370 --> 00:06:57,360 one person has told me one instance when the deadline was 132 00:06:57,360 --> 00:06:59,660 a hard deadline. 133 00:06:59,660 --> 00:07:02,680 That's thousands and thousands of instances. 134 00:07:02,680 --> 00:07:05,810 And in your career, maybe you can think of one time 135 00:07:05,810 --> 00:07:06,670 when it was hard. 136 00:07:06,670 --> 00:07:09,570 The rest of the time it wasn't real. 137 00:07:09,570 --> 00:07:13,670 It was something put into the situation by one side 138 00:07:13,670 --> 00:07:16,810 in order kick some progress into gear. 139 00:07:16,810 --> 00:07:19,820 And if people are making substantive progress 140 00:07:19,820 --> 00:07:23,590 on what they're trying to accomplish, deadlines go away. 141 00:07:23,590 --> 00:07:26,970 So any time a deadline comes up, shift your thought 142 00:07:26,970 --> 00:07:30,540 from the deadline to how do we make progress to work together 143 00:07:30,540 --> 00:07:32,310 towards a goal. 144 00:07:32,310 --> 00:07:35,160 And the vast majority of the time, the deadlines 145 00:07:35,160 --> 00:07:35,790 will go away. 146 00:07:35,790 --> 00:07:38,280 [MUSIC PLAYING] 147 00:07:42,585 --> 00:07:45,635 Two of the techniques that we've covered already 148 00:07:45,630 --> 00:07:48,510 are great ways to respond to deadlines. 149 00:07:48,510 --> 00:07:50,490 First way is labels. 150 00:07:50,490 --> 00:07:53,980 Simply say, it seems like you're under a lot of pressure here, 151 00:07:53,980 --> 00:07:56,500 it seems like you're trying to get things done 152 00:07:56,500 --> 00:08:02,200 by a certain time, it seems like this is an involved process, 153 00:08:02,200 --> 00:08:06,400 It seems like the world's going to come to an end 154 00:08:06,400 --> 00:08:08,300 if we don't meet that deadline. 155 00:08:08,300 --> 00:08:10,770 You know, that's either an accurate label or a mislabel, 156 00:08:10,768 --> 00:08:13,058 but you're going to cause the kind of thinking that you 157 00:08:13,060 --> 00:08:14,550 need from the other side. 158 00:08:14,550 --> 00:08:17,140 And also, it makes them think about how hard they feel 159 00:08:17,140 --> 00:08:18,770 the deadline really is anyway. 160 00:08:18,770 --> 00:08:20,440 If you say, seems like the world's 161 00:08:20,440 --> 00:08:22,270 going to come to an end, well, it's not 162 00:08:22,270 --> 00:08:24,680 going to come to an end, is most likely the response. 163 00:08:24,683 --> 00:08:27,103 And then they're going to tell you exactly what's going on 164 00:08:27,100 --> 00:08:28,810 on the other side. 165 00:08:28,810 --> 00:08:31,180 The other way to respond to deadlines 166 00:08:31,180 --> 00:08:35,200 is with calibrated questions, what and how questions. 167 00:08:35,200 --> 00:08:38,940 What happens if we don't get this done in time? 168 00:08:38,940 --> 00:08:44,210 How do we get back on track if we fall behind schedule? 169 00:08:44,210 --> 00:08:48,110 How do we pull victory from the ashes of defeat 170 00:08:48,110 --> 00:08:50,380 if we don't meet the deadline? 171 00:08:50,380 --> 00:08:52,690 Any one of those calibrated questions 172 00:08:52,690 --> 00:08:55,720 are designed to shape their thinking. 173 00:08:55,720 --> 00:08:57,340 Which, again, how do we pull victory 174 00:08:57,340 --> 00:09:00,130 from the ashes of defeat if we don't meet the deadline, 175 00:09:00,130 --> 00:09:05,300 begins to get them to look at success, 176 00:09:05,300 --> 00:09:07,990 and that's their overriding goal anyway. 177 00:09:07,990 --> 00:09:10,330 [MUSIC PLAYING] 178 00:09:15,020 --> 00:09:19,330 When you're feeling attacked, the things that you really 179 00:09:19,330 --> 00:09:22,210 want to say, the words you can just 180 00:09:22,210 --> 00:09:27,690 taste how good they're going to feel when they cross your lips, 181 00:09:27,686 --> 00:09:30,716 are probably wrong. 182 00:09:30,720 --> 00:09:32,840 You know, we're giving in to an aspect 183 00:09:32,840 --> 00:09:36,230 of our natural human nature that wants to get back, 184 00:09:36,230 --> 00:09:39,150 that wants to put somebody down, that wants 185 00:09:39,150 --> 00:09:41,040 to feel like we've gotten the last word in. 186 00:09:41,040 --> 00:09:43,050 When the last word is a cheap shot, 187 00:09:43,050 --> 00:09:44,830 we're giving into that piece of ourselves 188 00:09:44,830 --> 00:09:49,290 that's 75% negative, that human nature aspect where 189 00:09:49,290 --> 00:09:51,150 we want to get in the last shot or we're 190 00:09:51,150 --> 00:09:53,370 afraid to not have control. 191 00:09:53,370 --> 00:09:56,100 We're afraid to not have the last negative word. 192 00:09:56,100 --> 00:10:00,140 By the same reason that that getting the last cheap shot in 193 00:10:00,140 --> 00:10:05,870 was bad, the last impression is a lasting impression. 194 00:10:05,870 --> 00:10:08,670 The last impression seeds the next interaction. 195 00:10:08,670 --> 00:10:11,690 When you begin to talk about it like that, that it seeds 196 00:10:11,690 --> 00:10:13,910 the next interaction, you begin to realize 197 00:10:13,910 --> 00:10:16,340 how you can really get the upper hand by making 198 00:10:16,340 --> 00:10:19,160 the last words positive. 199 00:10:19,160 --> 00:10:22,220 You sit down with somebody in a contentious negotiation, 200 00:10:22,220 --> 00:10:23,580 you want to open it positively. 201 00:10:23,580 --> 00:10:25,290 You might say, look, you know, we're here 202 00:10:25,288 --> 00:10:27,148 because we want to make a deal. 203 00:10:27,150 --> 00:10:30,720 We're here because long-term relationships matter to us. 204 00:10:30,720 --> 00:10:34,480 We're here because we want our partners to be profitable. 205 00:10:34,478 --> 00:10:36,518 Just take what you would've said at the beginning 206 00:10:36,520 --> 00:10:41,240 to try to open it positively, take it and put it at the end. 207 00:10:41,240 --> 00:10:43,550 When you've gone through the contention, say, you know, 208 00:10:43,550 --> 00:10:46,670 we're-- we're here because we'd love to have a great long-term 209 00:10:46,670 --> 00:10:47,540 relationship. 210 00:10:47,540 --> 00:10:49,610 We'd love for our partners to prosper 211 00:10:49,610 --> 00:10:51,800 from doing business with us. 212 00:10:51,800 --> 00:10:53,480 Let us know how we can proceed. 213 00:10:53,480 --> 00:10:55,230 How do you want to proceed? 214 00:10:55,230 --> 00:10:59,450 But make the last point you made to be inarguably 215 00:10:59,450 --> 00:11:04,220 positive and collaborative, and the last impression 216 00:11:04,220 --> 00:11:06,650 will be the lasting impression, and it'll 217 00:11:06,650 --> 00:11:10,510 seed the next interaction in a very positive way.