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Leverage

Published: Mar 22 , 2018
Author: Robin Copland

So, there I was in the hotel lobby telling the team behind the desk all my woes.  This was about the fourth hotel I had been to; no, I didn’t have a booking but I had my wife and three children outside in the car and I was kind of desperate; no, I didn’t know that there was a major conference in the town that we were visiting and yes, had I known about it, then I would probably have either avoided the place altogether or, at the very least, booked a family room.

“Oh, you have a family room,” I repeated.  Wonderful.  A late cancellation?  Lucky for us.  “What are the chances of a special deal, given how late in the day it is,” I asked?  They just looked at me.  It was the kind of look that ET might have expected.  It was the kind of look that asked the question, “What planet are you from?”  From a negotiating perspective, it was about all I deserved.

In his book, the Art of the Deal, Donald Trump talks about “leverage”.  He writes. “The worst thing you can possibly do in a deal is seem desperate to make it.  That makes the other guy smell blood, and then you’re dead.  The best thing you can do is deal from strength and leverage is the biggest strength you can have.  Leverage is having something the other guy wants.  Or, better yet, needs.”  Colorfully put perhaps, but he has a point.  I had made the fatal mistake of not only telling them what I wanted (a good thing, typically), but how badly I needed it.  The words, “desperate” and “good deal” rarely go together.

Victims tend to think that power in a negotiation is a function of size, but we in Scotwork teach that “power” is derived from that combination of things that the other side want – or want to avoid.  So, negotiators should, as part of their preparation, have a long, cold look at the power balance.  Analyze the other side’s needs.  Can you address them?  Do you have anything in your arsenal that they would rather avoid?  Do you have leverage?  Then think about it from your perspective.  What do they have that you want, or want to avoid? 

I am constantly surprised by this answer to the question, “who is more powerful in a negotiation, you or the other side?”  Just about everyone – whether they be a buyer, seller, manager, employee, or even family member! – just about everyone says, “the other side.”  It is rare that the power balance is one-sided; negotiators often have more power than they think. 

But just to add to that, consider this quote from Cheverton and van der Velde in their book, Understanding the Professional Buyer.  “If you think that the buyer has all the power, then you are probably right.”  You can substitute the words “the other side” for “buyer”.  Here is the nub of the problem for a victim.  They convince themselves that the other side has all the power and in so doing, they actually concede the power balance to their opponents!  How often do negotiators strike bad deals because they don’t analyze the power balance more effectively? 

My advice is clear: don’t be a victim; don’t underestimate your power in a negotiation; spend time analyzing and thinking about the power balance and, instead of ceding the power to the other side in your head, or by your actions, analyze the situation forensically and, to use Trump’s word again, give yourself some leverage.

 


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Robin Copland
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