[MUSIC PLAYING]
I refer to losing something, loss aversion,
as bending reality.
Fear of loss and what people loss
completely distorts their perception
so much that it effectively bends their reality.
You have to take that into account,
and you have to find out how they
feel they are losing because that's
going to be the single dominating factor
in their decision-making.
What are they going to lose if they don't make the deal?
What are they going to lose if they do make the deal?
It's never rational, and it's always bent
based on their distortion of reality.
Now any given situation can be offered as a gain or loss.
For example, you're a company that's
going to make them 23% more money.
You can say, work with us, and you'll make 23% more money.
There will be a 23% gain.
The return on your investment will be 23%.
Or you can say, choose not to work with us,
stay where you are, don't change anything,
and it's going to cost you 23% every day.
While you sleep not working with us
is going to cost you 23% day in and day out.
Fear of loss is what keeps people up at night.
Nobody loses sleep, nobody gets insomnia because life is good
and they're making money and tomorrow
is going to be more profitable than today was.
They sleep like a baby over gains.
Fear of loss is what keeps people up
at night because you get a loss in your head,
and it burrows into your psyche, and it eats at you,
and it keeps you awake.
And that's why it's one of the dominating factors
in human decision-making.
[MUSIC PLAYING]
All right, now, I'm going to tell you about the F word--
fair.
The F bomb.
Fair comes up in nearly every single negotiation.
As soon as you look for the word fair and aware of how much
it comes up, rarely does it not come up.
People use it to manipulate other people.
People use it when they're backed into a corner.
The concept of fairness is fundamental to what
we are as human beings, and that's
why it comes up all the time.
A classic example is something called the ultimatum game.
Let's say two people are walking down the street.
$10 falls out of the sky.
It's $10 in found money.
They have the opportunity to split the $10.
One of the two people gets to propose
how it's going to be split.
The second of the two people gets to only accept or reject.
They get to throw out one number.
The proposer can only propose a split one time.
There's no back and forth.
There's no debate.
There's no convincing.
There's no subsequent rounds of negotiation.
This game has been played around the world.
One of the things I love about this game
is that it drives game theorists crazy.
They hate it because people react as human beings.
People say 5/5 is the only fair way to do it.
And I say, all right, so you wouldn't take 3?
You know, I might say to you, what about 2, what about 4?
No, that's not fair!
Well, how is 0 better than 3?
You're saying I, you know, I feel disgusted
if I'm asked to take 3.
I should get 5.
Well, if 3 makes you feel disgusted, how does 0
make you feel?
But people will destroy deals if they
feel they've been treated unfairly,
intentionally destroy deals and walk away with nothing.
On the other hand, people are much more
likely to make a deal if they feel the process was fair,
and they might take a bad deal or a less than optimal deal
if they feel they were treated fairly.
So fairness is really the issue that makes or breaks deals.
[MUSIC PLAYING]
All right, here's the way to counterpart.
We'll try to use fair to their own advantage.
Let's say I've given you a fair offer.
Or they might say, I just want what's fair.
In either instance, they've accused you
of being unfair in a very subtle way.
If you don't take that deal or if you
don't make the deal that they want, you are being unfair.
Your fairness as a human being has been called into question.
It's a great way to manipulate you short term,
and you will react because you don't want to be unfair.
So it's going to have an effect on you
if you don't see it coming.
So how do you respond to that tactic when it's used on you?
Say, I'm happy to be shown how I've been unfair.
Show me the information.
I'm open to learning.
Let me see what it is.
They either are not going to have it,
or they know they don't have it.
So how do you use the F bomb positively?
How do I use it?
At the beginning of a negotiation,
I want you to say to the other side,
it's my intention to treat you fairly.
If at any point in time I've been unfair, let me know.
We'll go back and address it and fix it.
Be proactive.
Put yourself in a position where they'll deal with the problem
because otherwise, if they feel they've been treated unfairly,
it's going to explode on you.
[MUSIC PLAYING]
Here's how I would encourage you to think about deadlines when
it comes to negotiations.
Somebody setting a deadline is an attempt
to kick some progress into gear.
And if it's a real deadline, there's
probably less time than they actually gave you anyway.
But deadlines are designed to get progress started.
Every once in a while, in extreme circumstances,
a deadline is a hard deadline.
Very rarely of the thousands of businessmen
that I have coached, business men and women that I have
coached in negotiations since I left the FBI 12 years ago,
one person has told me one instance when the deadline was
a hard deadline.
That's thousands and thousands of instances.
And in your career, maybe you can think of one time
when it was hard.
The rest of the time it wasn't real.
It was something put into the situation by one side
in order kick some progress into gear.
And if people are making substantive progress
on what they're trying to accomplish, deadlines go away.
So any time a deadline comes up, shift your thought
from the deadline to how do we make progress to work together
towards a goal.
And the vast majority of the time, the deadlines
will go away.
[MUSIC PLAYING]
Two of the techniques that we've covered already
are great ways to respond to deadlines.
First way is labels.
Simply say, it seems like you're under a lot of pressure here,
it seems like you're trying to get things done
by a certain time, it seems like this is an involved process,
It seems like the world's going to come to an end
if we don't meet that deadline.
You know, that's either an accurate label or a mislabel,
but you're going to cause the kind of thinking that you
need from the other side.
And also, it makes them think about how hard they feel
the deadline really is anyway.
If you say, seems like the world's
going to come to an end, well, it's not
going to come to an end, is most likely the response.
And then they're going to tell you exactly what's going on
on the other side.
The other way to respond to deadlines
is with calibrated questions, what and how questions.
What happens if we don't get this done in time?
How do we get back on track if we fall behind schedule?
How do we pull victory from the ashes of defeat
if we don't meet the deadline?
Any one of those calibrated questions
are designed to shape their thinking.
Which, again, how do we pull victory
from the ashes of defeat if we don't meet the deadline,
begins to get them to look at success,
and that's their overriding goal anyway.
[MUSIC PLAYING]
When you're feeling attacked, the things that you really
want to say, the words you can just
taste how good they're going to feel when they cross your lips,
are probably wrong.
You know, we're giving in to an aspect
of our natural human nature that wants to get back,
that wants to put somebody down, that wants
to feel like we've gotten the last word in.
When the last word is a cheap shot,
we're giving into that piece of ourselves
that's 75% negative, that human nature aspect where
we want to get in the last shot or we're
afraid to not have control.
We're afraid to not have the last negative word.
By the same reason that that getting the last cheap shot in
was bad, the last impression is a lasting impression.
The last impression seeds the next interaction.
When you begin to talk about it like that, that it seeds
the next interaction, you begin to realize
how you can really get the upper hand by making
the last words positive.
You sit down with somebody in a contentious negotiation,
you want to open it positively.
You might say, look, you know, we're here
because we want to make a deal.
We're here because long-term relationships matter to us.
We're here because we want our partners to be profitable.
Just take what you would've said at the beginning
to try to open it positively, take it and put it at the end.
When you've gone through the contention, say, you know,
we're-- we're here because we'd love to have a great long-term
relationship.
We'd love for our partners to prosper
from doing business with us.
Let us know how we can proceed.
How do you want to proceed?
But make the last point you made to be inarguably
positive and collaborative, and the last impression
will be the lasting impression, and it'll
seed the next interaction in a very positive way.