Monday, January 5, 2009

Trust Me! I'm An Uber Negotiator!

A recurring theme on this blog is the ability to negotiate profitably, if not professionally. I say profitably, rather than successfully, because some folks forget they're negotiating for a profit. Instead they settle for successful negotiations.

So what's the difference?

Roger Dawson and Barney Zick were the first two gurus that introduced me to both negotiating philosophies and resultant gambits.

Barney Zick taught me about "Targeted Negotiations" and how superior this was to generic "win/win" negotiations. In fact, I would be embarrassed if anyone thought I was still negotiating for banal "win/win" transactions.

Anyone who knows, knows that "win/win" is the code word for "trust me" that the amateurs and residential real estate agents use to con the unsophisticated into thinking that they are being served in some altruistic fashion. Agents work for their own best interests. They work for closings and nothing else. Some agents are smoother about it than others, but without closings everybody starves.

Meanwhile, the Uber Negotiators I find are the ones that pull in the big bucks. These are the negotiators that focus 100% on the objective and don't get knocked off the tracks with win/win sob stories of one kind or another that would cause them to lose track of their primary objective which is to make money --- and lots of it.

Recently I heard of an investor who got tangled up in a sob story, and failed to ask for what he wanted in the deal in a professional manner, and ended up failing to close profitably. He confused his objective with that of some humanitarian effort of some stripe.

What's worse the story was relayed to testify to what an honest guy he was --- that his first priority was to "help people," and then passively allow the stars to line up as other party came around to ostensibly forge a profitable deal with him later. Ho hum. It's the old "Trust me. I'm really a nice guy." or the "Karma" approach to negotiations. Puh-leeze!

Been there. Done that.

Win/win is...more often, than not, a con. Or maybe at best its a way to deal with a neurotic guilt trip over actually making a profit off of somebody. Either way, run from anyone who says "Trust me. I'm a great guy! Look what I've given up to help others." The ones that impress me, are the ones that never say what they've done, but let others share the good fortune they've had dealing with that person. This would be called a "referral."

Of course I'm not suggesting that we shouldn't be honest in our dealings with those we do business with. It's a small world out there, and once a person wrecks his reputation by cheating people, or taking "undue" just makes doing business that much harder and more expensive --- if he can stay in business.

I like cheap and easy business dealings. So I suggest that we remain honest about what we're about, and not confuse our identities with "frustrated priests." We're in the business to make money, not compete with charities.

To illustrate the otherwise confused mind that some folks allow to occur, let me share a situation that happened several years ago with a family friend.

Our family "bud" had a TV stolen from his motor home. After the police caught up with the thief, our friend was so sympathetic to the crook (with emphasis on pathetic) that he offered to drop charges and offer the burglar the TV to keep "if he really needed one".

The cops told him that was stupid. We told him that he was naive. Everyone told him that he was missing the point of the whole "prosecution" effort. However, our neurotic friend was so motivated to let this crook off the hook, as it were, that he lost all perspective of the situation and essentially undermined law enforcement efforts.

That's exactly what happens when the negotiator takes his focus off of making money, and internalizes a victim's situation to the point where the problem becomes the personal property of the negotiator. When this happens the negotiator begins operating from a position of weakness. He confuses his objectives with that of the prospect. And sabotages his own position.

Now let's consider the opposite...

There are a large number of negotiators that go overboard in their advantage taking. They'll equity strip Grandma Moses, if there's an opportunity. That's not what I'm saying we should do. What I am saying is that it's not a sin to make money. It's honorable if we are acting in good faith, doing what we say we'll do, not making false or empty promises, and keeping our intentions and actions clear and respectable.

Advantage taking, of course, is not a virtue by any account. However, keeping our heads on straight, and not confusing our efforts with some secondary objective is a virtue.

When a client calls me, they already know that I'm an investor. I don't call myself anything other than that. If the prospect doesn't like investors, he won't call me. That's fine. There's a bunch of other crap he won't like either if, for starters, he doesn't like those who negotiate for a profit.

So I say be honest about yourself. Don't lose perspective by internalizing the prospect's problems and fail to negotiate clearly in your own best interest. Remember there's a huge difference between having sympathy and being empathetic. Sympathy will draw you into donating blood. Empathy will motivate you to find blood donors.



MattJohnson said...

I like Barney Zick's take about not taking on a seller's problem when negotiating: "Learn to negotiate profitably, make a lot of money, then donate to charity".

You're right on about targeting negotiations. A few months back, I had a crooked contractor who I had to fire. He then came after me with all kinds of items that I supposedly owed him money for (some legit, some not, but this guy cost me a bundle by botching/not completing numerous jobs and dragging out my rehab for months).

Not wanting the hassle of a mechanic's lien on my house, I made a list of everything he had screwed up/not done, and the associated costs. I purposely arranged the list so that I could lose several small battles, then win on a big budget item. When negotiating with him and his sub (they were related - another mistake of mine), I gave concessions on numerous small things, but made sure I won on the bigger items. Since they were winning 2-3 battles in a row and then losing 1, I was "playing nice" in their minds. Because of this, they didn't dig in their heels too much on the items where I stood my ground. End result was his $9000 bill wound up being $0!

MattJohnson said...

BTW, like the picture. I'll be reminded of it every time I see one of those Priceline commercials from now on.

Jay said...

That's a great story! I love the illustration where you kept your head and out-negotiated the brothers.

I know of a situation where the negotiations turned ugly, and cost $900,000 to settle a $300,000 issue. Whoopsie.

Great posts!