WEBVTT 00:00.000 --> 00:02.480 align:middle line:90% [MUSIC PLAYING] 00:02.480 --> 00:08.440 align:middle line:90% 00:08.440 --> 00:12.700 align:middle line:84% I refer to losing something, loss aversion, 00:12.700 --> 00:15.290 align:middle line:90% as bending reality. 00:15.290 --> 00:17.240 align:middle line:84% Fear of loss and what people loss 00:17.240 --> 00:19.310 align:middle line:84% completely distorts their perception 00:19.310 --> 00:23.090 align:middle line:84% so much that it effectively bends their reality. 00:23.090 --> 00:24.750 align:middle line:84% You have to take that into account, 00:24.750 --> 00:27.560 align:middle line:84% and you have to find out how they 00:27.560 --> 00:30.170 align:middle line:84% feel they are losing because that's 00:30.170 --> 00:32.330 align:middle line:84% going to be the single dominating factor 00:32.330 --> 00:34.010 align:middle line:90% in their decision-making. 00:34.010 --> 00:37.590 align:middle line:84% What are they going to lose if they don't make the deal? 00:37.590 --> 00:40.220 align:middle line:84% What are they going to lose if they do make the deal? 00:40.220 --> 00:44.560 align:middle line:84% It's never rational, and it's always bent 00:44.560 --> 00:47.040 align:middle line:84% based on their distortion of reality. 00:47.040 --> 00:51.940 align:middle line:84% Now any given situation can be offered as a gain or loss. 00:51.940 --> 00:55.050 align:middle line:84% For example, you're a company that's 00:55.050 --> 00:59.220 align:middle line:84% going to make them 23% more money. 00:59.220 --> 01:03.180 align:middle line:84% You can say, work with us, and you'll make 23% more money. 01:03.180 --> 01:05.250 align:middle line:90% There will be a 23% gain. 01:05.250 --> 01:09.750 align:middle line:84% The return on your investment will be 23%. 01:09.750 --> 01:13.560 align:middle line:84% Or you can say, choose not to work with us, 01:13.560 --> 01:17.780 align:middle line:84% stay where you are, don't change anything, 01:17.780 --> 01:23.150 align:middle line:84% and it's going to cost you 23% every day. 01:23.150 --> 01:28.200 align:middle line:84% While you sleep not working with us 01:28.200 --> 01:33.740 align:middle line:84% is going to cost you 23% day in and day out. 01:33.740 --> 01:38.510 align:middle line:84% Fear of loss is what keeps people up at night. 01:38.510 --> 01:43.880 align:middle line:84% Nobody loses sleep, nobody gets insomnia because life is good 01:43.880 --> 01:46.200 align:middle line:84% and they're making money and tomorrow 01:46.200 --> 01:48.350 align:middle line:84% is going to be more profitable than today was. 01:48.350 --> 01:51.980 align:middle line:84% They sleep like a baby over gains. 01:51.980 --> 01:54.320 align:middle line:84% Fear of loss is what keeps people up 01:54.320 --> 01:56.960 align:middle line:84% at night because you get a loss in your head, 01:56.960 --> 02:00.770 align:middle line:84% and it burrows into your psyche, and it eats at you, 02:00.770 --> 02:02.390 align:middle line:90% and it keeps you awake. 02:02.390 --> 02:05.120 align:middle line:84% And that's why it's one of the dominating factors 02:05.120 --> 02:06.890 align:middle line:90% in human decision-making. 02:06.890 --> 02:09.290 align:middle line:90% [MUSIC PLAYING] 02:09.290 --> 02:13.012 align:middle line:90% 02:13.012 --> 02:16.790 align:middle line:84% All right, now, I'm going to tell you about the F word-- 02:16.790 --> 02:18.900 align:middle line:90% fair. 02:18.900 --> 02:20.950 align:middle line:90% The F bomb. 02:20.950 --> 02:23.800 align:middle line:84% Fair comes up in nearly every single negotiation. 02:23.800 --> 02:26.380 align:middle line:84% As soon as you look for the word fair and aware of how much 02:26.380 --> 02:29.510 align:middle line:84% it comes up, rarely does it not come up. 02:29.510 --> 02:31.780 align:middle line:84% People use it to manipulate other people. 02:31.780 --> 02:34.150 align:middle line:84% People use it when they're backed into a corner. 02:34.150 --> 02:37.030 align:middle line:84% The concept of fairness is fundamental to what 02:37.030 --> 02:38.620 align:middle line:84% we are as human beings, and that's 02:38.620 --> 02:40.720 align:middle line:90% why it comes up all the time. 02:40.720 --> 02:45.730 align:middle line:84% A classic example is something called the ultimatum game. 02:45.730 --> 02:49.270 align:middle line:84% Let's say two people are walking down the street. 02:49.270 --> 02:52.090 align:middle line:90% $10 falls out of the sky. 02:52.090 --> 02:55.410 align:middle line:90% It's $10 in found money. 02:55.410 --> 02:57.530 align:middle line:84% They have the opportunity to split the $10. 02:57.530 --> 03:00.000 align:middle line:84% One of the two people gets to propose 03:00.000 --> 03:01.880 align:middle line:90% how it's going to be split. 03:01.880 --> 03:07.460 align:middle line:84% The second of the two people gets to only accept or reject. 03:07.460 --> 03:09.770 align:middle line:84% They get to throw out one number. 03:09.770 --> 03:12.890 align:middle line:84% The proposer can only propose a split one time. 03:12.890 --> 03:14.150 align:middle line:90% There's no back and forth. 03:14.150 --> 03:14.900 align:middle line:90% There's no debate. 03:14.900 --> 03:15.860 align:middle line:90% There's no convincing. 03:15.860 --> 03:18.590 align:middle line:84% There's no subsequent rounds of negotiation. 03:18.590 --> 03:24.118 align:middle line:84% This game has been played around the world. 03:24.118 --> 03:25.785 align:middle line:84% One of the things I love about this game 03:25.785 --> 03:28.710 align:middle line:84% is that it drives game theorists crazy. 03:28.710 --> 03:33.270 align:middle line:84% They hate it because people react as human beings. 03:33.270 --> 03:37.470 align:middle line:84% People say 5/5 is the only fair way to do it. 03:37.470 --> 03:40.540 align:middle line:84% And I say, all right, so you wouldn't take 3? 03:40.540 --> 03:43.090 align:middle line:84% You know, I might say to you, what about 2, what about 4? 03:43.090 --> 03:45.960 align:middle line:90% No, that's not fair! 03:45.960 --> 03:49.410 align:middle line:90% Well, how is 0 better than 3? 03:49.410 --> 03:51.750 align:middle line:84% You're saying I, you know, I feel disgusted 03:51.750 --> 03:53.400 align:middle line:90% if I'm asked to take 3. 03:53.400 --> 03:55.290 align:middle line:90% I should get 5. 03:55.290 --> 03:57.870 align:middle line:84% Well, if 3 makes you feel disgusted, how does 0 03:57.870 --> 03:59.970 align:middle line:90% make you feel? 03:59.970 --> 04:04.720 align:middle line:84% But people will destroy deals if they 04:04.720 --> 04:06.790 align:middle line:84% feel they've been treated unfairly, 04:06.790 --> 04:12.730 align:middle line:84% intentionally destroy deals and walk away with nothing. 04:12.730 --> 04:15.190 align:middle line:84% On the other hand, people are much more 04:15.190 --> 04:18.779 align:middle line:84% likely to make a deal if they feel the process was fair, 04:18.779 --> 04:23.650 align:middle line:84% and they might take a bad deal or a less than optimal deal 04:23.650 --> 04:26.180 align:middle line:84% if they feel they were treated fairly. 04:26.180 --> 04:30.776 align:middle line:84% So fairness is really the issue that makes or breaks deals. 04:30.776 --> 04:33.256 align:middle line:90% [MUSIC PLAYING] 04:33.256 --> 04:36.728 align:middle line:90% 04:36.728 --> 04:39.870 align:middle line:84% All right, here's the way to counterpart. 04:39.870 --> 04:43.740 align:middle line:84% We'll try to use fair to their own advantage. 04:43.740 --> 04:46.650 align:middle line:84% Let's say I've given you a fair offer. 04:46.650 --> 04:50.840 align:middle line:84% Or they might say, I just want what's fair. 04:50.840 --> 04:54.380 align:middle line:84% In either instance, they've accused you 04:54.380 --> 04:57.320 align:middle line:84% of being unfair in a very subtle way. 04:57.320 --> 04:58.880 align:middle line:84% If you don't take that deal or if you 04:58.880 --> 05:01.400 align:middle line:84% don't make the deal that they want, you are being unfair. 05:01.400 --> 05:05.790 align:middle line:84% Your fairness as a human being has been called into question. 05:05.790 --> 05:09.390 align:middle line:84% It's a great way to manipulate you short term, 05:09.390 --> 05:13.517 align:middle line:84% and you will react because you don't want to be unfair. 05:13.517 --> 05:15.100 align:middle line:84% So it's going to have an effect on you 05:15.100 --> 05:16.690 align:middle line:90% if you don't see it coming. 05:16.690 --> 05:20.460 align:middle line:84% So how do you respond to that tactic when it's used on you? 05:20.460 --> 05:26.010 align:middle line:84% Say, I'm happy to be shown how I've been unfair. 05:26.010 --> 05:27.900 align:middle line:90% Show me the information. 05:27.900 --> 05:29.880 align:middle line:90% I'm open to learning. 05:29.880 --> 05:31.500 align:middle line:90% Let me see what it is. 05:31.500 --> 05:33.090 align:middle line:84% They either are not going to have it, 05:33.090 --> 05:34.620 align:middle line:90% or they know they don't have it. 05:34.620 --> 05:37.320 align:middle line:84% So how do you use the F bomb positively? 05:37.320 --> 05:38.910 align:middle line:90% How do I use it? 05:38.910 --> 05:40.860 align:middle line:84% At the beginning of a negotiation, 05:40.860 --> 05:42.950 align:middle line:84% I want you to say to the other side, 05:42.950 --> 05:46.060 align:middle line:84% it's my intention to treat you fairly. 05:46.060 --> 05:50.450 align:middle line:84% If at any point in time I've been unfair, let me know. 05:50.450 --> 05:53.020 align:middle line:84% We'll go back and address it and fix it. 05:53.020 --> 05:54.490 align:middle line:90% Be proactive. 05:54.490 --> 05:59.137 align:middle line:84% Put yourself in a position where they'll deal with the problem 05:59.137 --> 06:01.720 align:middle line:84% because otherwise, if they feel they've been treated unfairly, 06:01.720 --> 06:02.928 align:middle line:90% it's going to explode on you. 06:02.928 --> 06:05.225 align:middle line:90% [MUSIC PLAYING] 06:05.225 --> 06:09.807 align:middle line:90% 06:09.807 --> 06:12.390 align:middle line:84% Here's how I would encourage you to think about deadlines when 06:12.390 --> 06:14.970 align:middle line:90% it comes to negotiations. 06:14.970 --> 06:17.340 align:middle line:84% Somebody setting a deadline is an attempt 06:17.340 --> 06:21.510 align:middle line:90% to kick some progress into gear. 06:21.510 --> 06:23.130 align:middle line:84% And if it's a real deadline, there's 06:23.130 --> 06:27.180 align:middle line:84% probably less time than they actually gave you anyway. 06:27.180 --> 06:33.510 align:middle line:84% But deadlines are designed to get progress started. 06:33.510 --> 06:37.830 align:middle line:84% Every once in a while, in extreme circumstances, 06:37.830 --> 06:40.080 align:middle line:90% a deadline is a hard deadline. 06:40.080 --> 06:44.850 align:middle line:84% Very rarely of the thousands of businessmen 06:44.850 --> 06:47.610 align:middle line:84% that I have coached, business men and women that I have 06:47.610 --> 06:53.370 align:middle line:84% coached in negotiations since I left the FBI 12 years ago, 06:53.370 --> 06:57.360 align:middle line:84% one person has told me one instance when the deadline was 06:57.360 --> 06:59.660 align:middle line:90% a hard deadline. 06:59.660 --> 07:02.680 align:middle line:84% That's thousands and thousands of instances. 07:02.680 --> 07:05.810 align:middle line:84% And in your career, maybe you can think of one time 07:05.810 --> 07:06.670 align:middle line:90% when it was hard. 07:06.670 --> 07:09.570 align:middle line:84% The rest of the time it wasn't real. 07:09.570 --> 07:13.670 align:middle line:84% It was something put into the situation by one side 07:13.670 --> 07:16.810 align:middle line:84% in order kick some progress into gear. 07:16.810 --> 07:19.820 align:middle line:84% And if people are making substantive progress 07:19.820 --> 07:23.590 align:middle line:84% on what they're trying to accomplish, deadlines go away. 07:23.590 --> 07:26.970 align:middle line:84% So any time a deadline comes up, shift your thought 07:26.970 --> 07:30.540 align:middle line:84% from the deadline to how do we make progress to work together 07:30.540 --> 07:32.310 align:middle line:90% towards a goal. 07:32.310 --> 07:35.160 align:middle line:84% And the vast majority of the time, the deadlines 07:35.160 --> 07:35.790 align:middle line:90% will go away. 07:35.790 --> 07:38.280 align:middle line:90% [MUSIC PLAYING] 07:38.280 --> 07:42.585 align:middle line:90% 07:42.585 --> 07:45.630 align:middle line:84% Two of the techniques that we've covered already 07:45.630 --> 07:48.510 align:middle line:84% are great ways to respond to deadlines. 07:48.510 --> 07:50.490 align:middle line:90% First way is labels. 07:50.490 --> 07:53.980 align:middle line:84% Simply say, it seems like you're under a lot of pressure here, 07:53.980 --> 07:56.500 align:middle line:84% it seems like you're trying to get things done 07:56.500 --> 08:02.200 align:middle line:84% by a certain time, it seems like this is an involved process, 08:02.200 --> 08:06.400 align:middle line:84% It seems like the world's going to come to an end 08:06.400 --> 08:08.300 align:middle line:90% if we don't meet that deadline. 08:08.300 --> 08:10.768 align:middle line:84% You know, that's either an accurate label or a mislabel, 08:10.768 --> 08:13.060 align:middle line:84% but you're going to cause the kind of thinking that you 08:13.060 --> 08:14.550 align:middle line:90% need from the other side. 08:14.550 --> 08:17.140 align:middle line:84% And also, it makes them think about how hard they feel 08:17.140 --> 08:18.770 align:middle line:90% the deadline really is anyway. 08:18.770 --> 08:20.440 align:middle line:84% If you say, seems like the world's 08:20.440 --> 08:22.270 align:middle line:84% going to come to an end, well, it's not 08:22.270 --> 08:24.683 align:middle line:84% going to come to an end, is most likely the response. 08:24.683 --> 08:27.100 align:middle line:84% And then they're going to tell you exactly what's going on 08:27.100 --> 08:28.810 align:middle line:90% on the other side. 08:28.810 --> 08:31.180 align:middle line:84% The other way to respond to deadlines 08:31.180 --> 08:35.200 align:middle line:84% is with calibrated questions, what and how questions. 08:35.200 --> 08:38.940 align:middle line:84% What happens if we don't get this done in time? 08:38.940 --> 08:44.210 align:middle line:84% How do we get back on track if we fall behind schedule? 08:44.210 --> 08:48.110 align:middle line:84% How do we pull victory from the ashes of defeat 08:48.110 --> 08:50.380 align:middle line:90% if we don't meet the deadline? 08:50.380 --> 08:52.690 align:middle line:84% Any one of those calibrated questions 08:52.690 --> 08:55.720 align:middle line:84% are designed to shape their thinking. 08:55.720 --> 08:57.340 align:middle line:84% Which, again, how do we pull victory 08:57.340 --> 09:00.130 align:middle line:84% from the ashes of defeat if we don't meet the deadline, 09:00.130 --> 09:05.300 align:middle line:84% begins to get them to look at success, 09:05.300 --> 09:07.990 align:middle line:84% and that's their overriding goal anyway. 09:07.990 --> 09:10.330 align:middle line:90% [MUSIC PLAYING] 09:10.330 --> 09:15.020 align:middle line:90% 09:15.020 --> 09:19.330 align:middle line:84% When you're feeling attacked, the things that you really 09:19.330 --> 09:22.210 align:middle line:84% want to say, the words you can just 09:22.210 --> 09:27.686 align:middle line:84% taste how good they're going to feel when they cross your lips, 09:27.686 --> 09:30.720 align:middle line:90% are probably wrong. 09:30.720 --> 09:32.840 align:middle line:84% You know, we're giving in to an aspect 09:32.840 --> 09:36.230 align:middle line:84% of our natural human nature that wants to get back, 09:36.230 --> 09:39.150 align:middle line:84% that wants to put somebody down, that wants 09:39.150 --> 09:41.040 align:middle line:84% to feel like we've gotten the last word in. 09:41.040 --> 09:43.050 align:middle line:84% When the last word is a cheap shot, 09:43.050 --> 09:44.830 align:middle line:84% we're giving into that piece of ourselves 09:44.830 --> 09:49.290 align:middle line:84% that's 75% negative, that human nature aspect where 09:49.290 --> 09:51.150 align:middle line:84% we want to get in the last shot or we're 09:51.150 --> 09:53.370 align:middle line:90% afraid to not have control. 09:53.370 --> 09:56.100 align:middle line:84% We're afraid to not have the last negative word. 09:56.100 --> 10:00.140 align:middle line:84% By the same reason that that getting the last cheap shot in 10:00.140 --> 10:05.870 align:middle line:84% was bad, the last impression is a lasting impression. 10:05.870 --> 10:08.670 align:middle line:84% The last impression seeds the next interaction. 10:08.670 --> 10:11.690 align:middle line:84% When you begin to talk about it like that, that it seeds 10:11.690 --> 10:13.910 align:middle line:84% the next interaction, you begin to realize 10:13.910 --> 10:16.340 align:middle line:84% how you can really get the upper hand by making 10:16.340 --> 10:19.160 align:middle line:90% the last words positive. 10:19.160 --> 10:22.220 align:middle line:84% You sit down with somebody in a contentious negotiation, 10:22.220 --> 10:23.580 align:middle line:90% you want to open it positively. 10:23.580 --> 10:25.288 align:middle line:84% You might say, look, you know, we're here 10:25.288 --> 10:27.150 align:middle line:90% because we want to make a deal. 10:27.150 --> 10:30.720 align:middle line:84% We're here because long-term relationships matter to us. 10:30.720 --> 10:34.478 align:middle line:84% We're here because we want our partners to be profitable. 10:34.478 --> 10:36.520 align:middle line:84% Just take what you would've said at the beginning 10:36.520 --> 10:41.240 align:middle line:84% to try to open it positively, take it and put it at the end. 10:41.240 --> 10:43.550 align:middle line:84% When you've gone through the contention, say, you know, 10:43.550 --> 10:46.670 align:middle line:84% we're-- we're here because we'd love to have a great long-term 10:46.670 --> 10:47.540 align:middle line:90% relationship. 10:47.540 --> 10:49.610 align:middle line:84% We'd love for our partners to prosper 10:49.610 --> 10:51.800 align:middle line:90% from doing business with us. 10:51.800 --> 10:53.480 align:middle line:90% Let us know how we can proceed. 10:53.480 --> 10:55.230 align:middle line:90% How do you want to proceed? 10:55.230 --> 10:59.450 align:middle line:84% But make the last point you made to be inarguably 10:59.450 --> 11:04.220 align:middle line:84% positive and collaborative, and the last impression 11:04.220 --> 11:06.650 align:middle line:84% will be the lasting impression, and it'll 11:06.650 --> 11:10.510 align:middle line:84% seed the next interaction in a very positive way.