Negotiation Dynamics

Objective
In many areas of management, issues are unclear and consequences of decisions are hard to evaluate. Negotiations, in contrast, have a direct and measurable impact on profits. While there is no doubt that negotiating skills are valuable, questions are often raised to what extent these skills can be developed through training. Some people, it is said, just seem to have a knack for it.

In this intensive three-day program, you will learn to play the negotiating game with greater confidence and superior tactical finesse. You will benefit from the practical knowledge of savvy dealmakers around the world. Key insights from Game Theory and Social Psychology will enhance your understanding of the tactical and psychological dimensions of negotiating. And you will gain invaluable experience by engaging in a broad range of face-to-face negotiations.


Key benefits
By attending this program, you will learn to:

• Master price negotiations
• Structure complex package deals
• Identify opportunities to create value
• Avoid arguments
• Maintain composure under pressure
• Manage long-term business relations

Approach
LEARNING BY DOING
The best way to learn about negotiation is to negotiate. Participants are immediately thrown into the water. "Swimming" techniques are discussed only after participants have tried out whatever techniques come natural to them – and after they have observed an astonishing range of different results from fellow participants.

FEEDBACK
Contrary to popular belief, learning from our own experience is often not very effective. The main problem is feedback. How do we know whether a deal is brilliant, mediocre, or downright poor? And typically we don’t get any process feedback at all! During this program, you will be able to benchmark your own deals against similar deals negotiated by thousands of executives who participated in  Negotiation Dynamics programs all over the world. In addition, valuable process feedback both from Professor Dierickx and from fellow participants will enable you to identify some of your real strengths in negotiation, as well as some of your weak spots.

DIVERSITY OF EXPERIENCE
While most executives negotiate on a regular basis, their experience base is usually relatively narrow. As a result, they develop routines and – like experienced drivers – may acquire bad habits. This workshop will expose you to a broad array of diverse negotiating problems and encourage you to critically examine your own negotiating routines. You will learn to spot - and take advantage of – other negotiators’ bad habits … and, perhaps, identify some of your own bad habits as well!

REAL LIFE CASES
One cannot learn real life negotiating skills from ‘academic’ negotiating cases. In Negotiating Dynamics, all the material cases and role-plays are based on real life negotiations. Examples and anecdotes are drawn from thirty years of negotiating experience. You will also get savvy negotiating tips to deal with many common negotiating challenges (dealing with sharp, intrusive questions, handling aggressive price challenges, etc.).

PRACTICAL SKILLS
Particular emphasis is given to negotiation practice, captured by the experience of negotiation professionals. Concepts and techniques are illustrated by countless anecdotes and practical examples. Most importantly, participants build up a personal repertoire of effective moves to deal with common negotiating problems including aggressive challenges on a single issue (such as price) and handling tough questions.

Day 1
Price Negotiations: Concepts and Tactics
Drawing on the participants’ experiences in a face-to-face negotiation involving the purchase/sale of a parcel of land, this session analyzes the conceptual structure of single issue bargaining problems, develops alternative perspectives on the negotiating process and illustrates a variety of tactics used when negotiators bargain over price.

• One-on-one negotiation exercise
   
• Price negotiations: Diagnosis and preparation
   -  The twin pillars of ‘bargaining power’: Alternatives and information
   -  What should we be doing, really? The three fundamental tasks of a negotiator
   -  Negotiating with a customer you can’t afford to lose
   -  Negotiating within an ongoing business relationship
   
• Price negotiations: Positioning and bargaining
   -  Indirect approaches to frame the negotiation
               -  Parables
               - ‘Negotiation jiu-jitsu’
   -  Opening offers
   -  Challenging (and defending) price
   -  Focal points
   -  Concession patterns
   -  Commitment
   -  Closing the deal

Package Deals: Defining the Optimal ‘Architecture’ of Complex Agreements
This session illustrates pitfalls and limitations of negotiating within a single issue framework and proposes an alternative: package deals. Participants will have an opportunity to put their bargaining skills to the test in a complex multi-issue negotiation. In this session, we tackle the problem of designing the right ‘architecture’ of package deals based, identify efficient tradeoffs, and introduce the fundamental concept of ‘efficiency ratios’ in multi-issue negotiations. In addition, we will review the obstacles that negotiators can expect to encounter in a business deal and suggest practical steps to overcome those obstacles and successfully implement the ‘package deal approach.

• Team negotiation exercise
   
• Debriefing
   -  Identifying the different types of issues on the agenda
   -  Claiming and creating value
   -  The fundamental logic of ‘give and take’
   
• Structuring smart package deals
   -  Creating a negotiable agenda
   -  Measuring the impact of concessions
   -  Evaluating tradeoffs: ‘Efficiency ratios’
   -  ‘Homans’ Law’
   
• Package deals: Managing the process
   -  Settle the easy issues first or agree on the package as a whole?
   -  ‘Salami slicing’
   -  Exploring options: ‘mini packages’
     

Day 2
The ‘Nuts and Bolts’ of Negotiation: Mastering the Process Fundamentals
This is a very hands-on session that aims to equip participants with some ‘pre-recorded’ responses to effectively handle particularly difficult or sensitive negotiating situations. When a particular configuration of pieces on a chessboard occurs regularly, Grand Masters study the pattern and all of its common variations. They analyze and evaluate a wide range of potential responses, which enables them to build a repertoire of smart moves to deal with the problem. Obviously, Grand Masters improvise, but when they encounter a characteristic pattern, improvisation is supported by a solid foundation of analysis.

Even though negotiations – like chess games - are infinitely varied, we do encounter a number of prototypical situations. However, in contrast to Grand Masters, negotiators rarely pause to analyze these patterns – they prefer to simply ‘play it by ear’. In this session, we will thoroughly analyze two problems: how to make proposals and how to handle tough questions. The analysis will suggest a range of responses – including specific language – that will help participants to build their own personal repertoire of smart moves.

• Making proposals
   -  Poor language: A worst case example
   -  DOs and DON’Ts
   -  Winning the ‘Battle for Mind Space’: Effective and ineffective communication techniques
   
• Handling tough questions
   -  Typical examples (job interviews, price negotiations, negotiating under time pressure)
   -  The dilemma
   -  Developing a repertoire of effective responses
               -  ‘The Freezer’
               -  The ‘Marlin Fitzwater response’
               -  ‘Selective Hearing’
               -  ‘Schubert’s Unfinished Symphony’
               -  Counter a Question with a Question
               -  The ‘Lionel Jospin response’
               -  ‘Truthful misdirection
   -  Spotting lies – and knowing how to deal with them

Negotiating Deals in an Uncertain Environment
In this session, we examine challenges and opportunities when negotiating deals in a highly uncertain environment. A typical example is financing a waste incineration cogeneration power plant: the economics of such a project critically hinge on energy prices, which are subject to unpredictable fluctuations over the life of the plant. This session addresses two kinds of challenges that arise in such settings: problems in negotiating the deal, and problems in implementing the deal.

Participants will explore some of those challenges a case negotiation offering an opportunity to explore the fundamental theoretical concepts that lie at the basis of value creation in negotiation. Towards the end of the session, we review applications in a broad variety of industries including financial services, mergers and acquisitions, industrial gases and power generation.

• Team exercise: Negotiating a complex long-term contract
   
• Uncertainty
   -  Negotiating long term contracts in a highly uncertain environment
   -  Identifying opportunities to create value
   -  Differences: obstacles or opportunities?
   -  Playing on differences between negotiation partners to create value
   -  Creating 'expected' value: opportunities and limits
   
• Competition
   -  Playing on differences with competitors to lock in a sustainable advantage
   
• Designing the right ‘Architecture’ of package deals
   -  Criteria
   -  Applications
   -  Financial services
   -  Mergers and acquisitions
   -  Power generation, basic chemicals
   -  Evaluating and rewarding managers in an uncertain environment

Day 3
Breaking Deadlock - A Process Perspective
In this session, we identify the structural characteristics of situations that give rise to standoffs, analyze the psychological dynamics of conflict escalation, and offer a process perspective for achieving constructive resolution of potentially destructive conflicts. We also review the obstacles that negotiators can expect to encounter both with external parties such as clients or suppliers and in the context of managing internal relations within the company. Finally, we suggest practical steps to overcome those obstacles and successfully implement the ‘package deal’ approach.

• Aggressive negotiation challenges: Typical examples
   -  Stand-offs, stalling tactics and waiting games
   -  Structural characteristics of the problem
   -  The psychological dynamics of conflict escalation
   
• Changing the structure of the problem: “The Issue is Never the Issue”
   
•  A process perspective on breaking deadlock: The method of the ‘Five A’s

Information Asymmetries
Parties in a negotiation not only have different interests, they also have different data, different expectations and different views of the world. As a result, it is often difficult to agree on “the facts”. Furthermore, information provided by the other party may or may not be reliable. We will consider the incidence and consequences of information asymmetries, as well as ways of dealing with these problems. Concepts that emerge from the discussion will be applied in sales situations as well as in a variety of other negotiating settings, including sales, insurance, mergers and acquisitions and job negotiations.

• Team negotiation exercise
   
• Debriefing
   
• Information asymmetries (1): The credibility problem
   -  A process perspective on gaining personal credibility
   -  Using proposals to overcome the ‘credibility gap’
               - ‘signaling’
               - ‘screening’
   
• Information asymmetries (2)
   -  Promises and threats
   -  The negotiation time frame

Who should attend?
Negotiation permeates our personal and professional lives and plays a critical role in the successful completion of all business deals. While Negotiation Dynamics will benefit virtually all executives, it will be of particular interest to:

• Investment bankers
• Consultants
• Executives in liaison roles such as country managers
• Lawyers
• Entrepreneurs
• Sales managers
• Key account managers
• Managers handling procurement

Prerequisite
Participants wishing to enroll in the program should have experience in actual negotiations, for both their own benefit and the benefit of other participants.

Amsterdam Institute of Finance is registered with CFA Institute as an Approved Provider of continuing education programs. This program is eligible for 18 CE credit hours as granted by CFA Institute. If you are a CFA Institute member, CE credit for your attendance at this event will be automatically recorded in your CE Diary.
 

 "It can make an important impact on your career if you have the courage to analyze your negotiation processes and your behavior in them - especially your mistakes. The professor is simply incredibly good!"
Vice President, Principal Investments
NIBC
The Netherlands

"Negotiation Dynamics provides an interesting and somewhat provocative view of some of the common beliefs that a negotiator is pre-occupied with. It also provides an interesting insight into how value can be created in an adversary situation."
Senior Advisor, M&A and Financing
Shell International
United Kingdom

“It gave me so much inspiration and intellectual stimulation. Wonderful! Thank you.”
Treasury Manager, Corporate Treasury
Royal Vopak
Netherlands

“I would recommend the course to experienced negotiators. It provided some interesting alternative ways of approaching negotiation.”
Director of Business Development
Kayak Software Corporation
United Kingdom

“Well structured, informative, dynamic and entertaining.”
Manager M&A
PostNL
Netherlands