The Kremlin School of Negotiation. Igor Ryzov
understanding of what they are fighting for, and what is at stake. Let’s take a look at the following situation.
Two years ago, a supermarket chain installed a very cheap security system in their stores. It is constantly breaking down, causing them many headaches. They should probably change it, but how much will that cost? Is it really worth the effort?
A company supplying security systems is aware of these issues, and they are trying to convince the manager’s assistant to change the bad system for their better quality, more expensive one.
The supplier’s sales manager comes to the supermarket’s HQ and launches into negotiations by saying: ‘Maria Stepanova, I know your system is always breaking down. I’d like to propose you replace it with my system, which is both reliable and great quality.’
What sort of response do you think they will get? The answer is fairly predictable: ‘No, we’re fine, thanks, you can show yourself out.’
At the risk of jumping a few steps ahead, I can say that this is exactly why this firm came to me for help.
Essentially, when you reveal your negotiation benefit – what you want to achieve – to the opponent, this marks the start of combat. This is because it is only once the benefit has been pinpointed that bargaining and other ‘uses of force’ can begin.
Combat is the stage of negotiations at which parties fight for a benefit. Both sides clearly understand what having the benefit would mean to them and to the other side. The benefit could be material – a salary, a price, commercial terms, etc. – or it could be completely unrelated to material values: a trip to the cinema, perhaps, or a visit to your mother-in-law at the weekend.
Why couldn’t the security system supplier achieve their goal and sell the equipment?
In my view, the answer to this question is obvious. The sales manager chose the wrong negotiation method. They went into negotiations along that old Napoleonic principle of ‘We’ll engage in battle, and then we’ll see.’5 This is, in fairness, a particularly Russian approach. For some time even I felt it was the right approach to take, but with the benefit of experience, I now insist on replacing Napoleon’s principle with one of Sun Tzu’s: ‘The victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.’6 By which I mean that before entering negotiations it is essential to forecast the results.
Here, you need to consider whether you have the three key components of the negotiation process: strength, means and resources.
If your opponent is armed to the teeth but you don’t have so much as a penknife, then negotiating won’t bring you anything good. This is what happened in the example above. It is crucial to learn how to arm yourself for the negotiation process, rather than hoping for a free ride.
This means that, before entering negotiations, you need to make a thorough forecast for success. It is only ever possible to enter negotiations with all guns blazing – i.e. revealing your position and benefit – if you are certain what the outcome of combat will be, if your forecast is positive and if you have all three components of the negotiation process in hand. In any other situation, you need to do some manoeuvring.
Now, manoeuvring shouldn’t be mistaken for a refusal to negotiate. Manoeuvres are simply the process of making preparations, clarifying information, finding reinforcements and more.
Two oligarchs meet. One asks the other: ‘How are things? What’s new?’
‘Oh, we’re in clover. Two months ago I bought a villa in Cyprus for my daughter, then a month ago I bought a fancy three-storey house in central Moscow for my son, then a Merc 600 for myself, my wife and kids . . . So overall, things are good.’
After a three-second pause, he adds: ‘Hey, do me a favour, lend me 500 bucks for a few weeks?’
The other replies: ‘You can kiss my . . . ankle.’
‘Ankle?’
‘Oh, sorry, don’t you like being misdirected? Wouldn’t know how that feels.’
When the security system supplier came to me, the first thing I asked them to do was to make a forecast. And we immediately found the rub. Every single person I asked, from the director down to the sales manager, was making optimistic forecasts. As is often the case in practice, their optimism was well founded: the equipment they were selling was of a high quality, whereas the equipment their potential client had was bad. But this was their fatal error: they were viewing the situation from their perspective, rendering their forecasts completely inadequate.
Basically, their forecasts were like a street cleaner looking up at the royal palace and making plans to marry the princess. He can plan all he wants, but – here’s the catch! – besides his own wishes, he’s got nothing on his side. He is short of the second and third components: resources and means.
A lot rests on the accuracy of these forecasts. They affect how we hold ourselves, how we act and what we plan to do in negotiations. When evaluating possible negotiation outcomes, we must look at the situation not from our own perspective but from that of our opponent. What matters is not how we approach our opponent, but how they view us.
To make an adequate forecast, you must look at the situation – and at yourself – from your opponent’s perspective.
This is how I recommend making a forecast:
Draw up a simple matrix, which I’m going to call the ‘forecast matrix’. This matrix should have two vectors: ‘importance’ and ‘irreplaceability’. These two vectors will serve as a measurable indicator of how our opponent views us.
Prior to negotiations, consider – on a scale of zero to ten – how much your opponent needs you and your goods or services (or how much they need you as a worker/employer, etc.). This will be your rating on the ‘importance’ vector.
You then need to evaluate – once again, on a scale of zero to ten – how hard it would be for your opponent to find a replacement. This will be your rating on the ‘irreplaceability’ vector.
Depending on your ratings, you will fall into one of four categories. This category is how your opponent views you, and you should plan your next steps on this basis.
First, let’s familiarise ourselves with each of these four categories.
Supermarket
Your opponent isn’t interested in you, and you are easily replaced. This is the category that the security systems supplier had fallen into. As a result, it was immediately clear that the forecast was not in their favour. When a person sees their opponent as one of many items on a supermarket shelf – an item they weren’t even looking for in the first place – they will have little interest in the products or services on offer. And, naturally, if you are to engage in combat with that person, i.e. immediately reveal the benefit you seek, there is a high chance that you will very soon be leaving with nothing. What is the point even haggling with you when you are both easily interchangeable (just look at all of those products on the shelf!) and unimportant?
For a forecast like this, I would categorically advise against opening with a fight for your benefit. Here, manoeuvring is key. Focus on strengthening your position. That’s what we did.
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