The art of negotiation and why I believe Obama lost.

[riderinthestorm]

Anyone who has been in business for themselves, for even a nanosecond, realizes some important truths. I have an MBA from the University of Chicago so while I've been formally trained in negotiating, I've also had several decades of experience in real life applications.

Here are some core fundamentals: Let's start out with Kenny Rogers'....

"You got to know when to hold 'em
Know when to fold 'em
Know when to walk away
Know when to run

You never count your money
When you're sittin' at the table
Ther'll be time enough for countin'
When the dealin's done"

The three most important concerns in any negotiation are first, relationship, then risk, and lastly, value. These concerns are the actual decision criteria that underlie any business transaction leading forward into the future. My starting goal is always to seek a win-win outcome. This is usually possible, but there are those unusual cases where win-lose or walk/run away become the only practical outcome. It should only be the other party's intransigence that necessitates the latter results.

First, however, in order to have a successful negotiation, there are three important mental bridges that must be crossed over before you enter the room to negotiate. These are:

1. Clarify the relationship - Simply put, what is the current real and perceived business and personal relationship and its true value to your organization's future. All too often we hold on to the past, not realizing that often we must be willing to let go of what we have in hand, if we are to be free to reach out for something better. Cautiously determining what could be lost in this negotiation, but alternatively looking for new doors which may open before us, given the new found freedom we would gain without the existing relationship. As humans, we frequently continue to pursue existing relationships beyond their prime, simply because it is easier and more comfortable than striking out to develop a new relationship that better suits our organization's future. Thus we must place a well focused thought on value in continuing the relationship, and be mindful of the pending negotiations.
2. Clearly Structure the Outcome Desired by Both Parties - I often find that parties will start a negotiation with the drive to win or even win-win, but have never committed to paper beforehand precisely what that means. Oh yes, they have a general idea, i.e., to place the contract at the best price or cost. However, they have not defined what is the optimal combination of price/cost and all other terms that reflect both parties' best long-term interests. What is that magic package that permits everyone involved to believe they have been dealt with fairly and therefore, the relationship blossoms? I like to begin by preparing a written scenario that outlines what each party should view as a "great deal." This is the optimum "win-win" agreement.
3. Determine Your "Walk-Away" Point - This is sometimes the hardest, but always the most important pre-negotiation decision you must reach. It is not a decision to be considered later, in the heat of the negotiation. It must be approached calmly and with the prior two points in mind, for we truly must understand what each side needs to make it a "great win-win" agreement. Then, if the other side becomes unreasonable and prevents it from occurring, we must weigh the predetermined value we placed on the relationship as well as ask the question, do we really have a mutual relationship or merely one party taking undue advantage of the other?

What concerns me, is that Obama appears to prioritize his relationships with Congress (and the PTB?) and refuses to see their intransigence on substance. He never appears to draw that line in the sand, nor does he appear to have a "walk away" point. I know. I'm just a horse dealer. But if the pony is worth $20k, dammit, no way am I giving in to a lowball offer of $10k. And I know exactly how to make sure my buyer knows this, AND keeps my friendship, AND pays $20k.

In my own small and insular business world, most of us understand the rules. We "know" each other, we know exactly the dance steps that must be followed. And that's what makes Obama's capitulation on this so perplexing (and damning). He knows the guys he's dealing with - both the PTB, and Congress. His actions only make sense if he's capitulating to the PTB.

[wtmusic]

1. If you enter negotiations with unrealistic demands -

on average - you walk away with better results. Republicans know this, someone needs to clue Obama in.

[gateley]

2. Interesting -- thanks. Wouldn't you think Obama has people who excel in the

art of negotiation on his team? If not, send in your CV!

Out of curiosity, all things being as they are, you're POTUS, what would you have done?

[riderinthestorm]

5. Obama's proclivity towards starting politically far to the right

and then "compromising" towards something right of center are so well documented on DU, that I'm not going to re-hash them.

But if I were POTUS, I would never have allowed unemployment bennies, and the tax discussion to have become linked - in the first place. That was an enormous leap (and successfully made), that as a negotiator, I'm staggered at the linkage in the first place. Brilliant (and heartless).

The tax issue should have been it's own topic. And if I were Obama I would have linked THAT to the deficit, both in private and in public.

Unemployment is a basic human, social condition that should have had it's own discussion in terms of our unique economic times.

All of this is just for starters.

[gateley]

7. You make a lot of sense, and you make it sound so reasonable and obvious!

So that makes it all that much more frustrating.

Thanks again!

[madrchsod]

3. i`m bookmarking this post because...

my wife might be negotiating her unions next contract.

excellent post.

[DefenseLawyer]

4. You assume "our side" was negotiating to win.

A very false assumption, it appears.

[BzaDem]

6. Aren't the outcomes of negotiations defined by the default position (what happens if one party walks

away)?

In this case, if one party walks away, nearly every family of 4 loses at least around 2k, with people making a few times the poverty line losing even more. Everyone will notice, and everyone will blame Obama. It doesn't matter that Republicans are to blame -- most people don't even know who controls Congress!

When it comes down to it, most in the middle class care about their own situations a lot more than the situations of the rich. They notice their own check shrinking by thousands, and they blame Obama for breaking his campaign promise of not raising the taxes of the middle class.

That is the default position. Obama couldn't afford to walk away, and Republicans knew it. Any threat would have been bluster, and Republicans would have just sat back waiting.

[riderinthestorm]

8. Obama just had to walk away from the tax issue

You can say that most taxpayers would notice the increase, but I believe that most taxpayers never noticed the decrease in the first place. If they had, it would have been a bigger issue in 2010 elections than it was. Nobody noticed.

You, and many others, believe American citizens are monitoring every paycheck line by line, but most are just too tired, and unaware. While $5 - 10 per paycheck may be a Washington DC talking point. Sarah Palin just shot a caribou!!!111!! grabs most of them far more. And she's trumpeting the deficit. Over and over. As are the Rethugs.

They have their cake and eat it too. The message is now that they saved the "economy" with jobs-creating tax cuts", (while the impact on the deficit is ignored for now).