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Why Thinking Abstractly Helps You Negotiate

Life in business involves many negotiations – both large and small. Effectiveness in negotiations is related to success more broadly, which is why there are so many books on effective negotiations, and why the topic has been the source of a lot of research.

Art Markman

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One of the central problems that people have when negotiating is that they get mired in the details of the issue without keeping track of the high-level goal that the negotiation is supposed to achieve.

The people involved in a negotiation often disagree on those details, which is why they have to be discussed in the first place, but that disagreement may mask opportunities for both parties to achieve their goals.

Step outside the details

For example, a company may focus on negotiating price and delivery dates with a supplier. By focusing just on these details, the companies may not discover that a key reason why the supplier has high shipping costs is that it has no warehousing facilities in the city where the company is located.

The company might actually be able to rent out some of its extra warehouse space to the supplier in a way that would allow both companies to get a benefit.

It’s all about how you approach negotiations

They key to finding these potentially hidden win-win situations is to learn to think about the negotiation session more abstractly.

Typically, a negotiation is framed around a specific issue and the parties lay out initial positions. The general expectation is that the parties are adversaries on most of these dimensions and so the parties are focused on trying to get as close as possible to their ideal outcome along each dimension of the negotiation.

The specific elements of any negotiation, though, are really reflections of broader goals.

Minimising payment to a supplier, for example, is an attempt to reduce costs, and is related more generally to the goal of efficient use of resources. But, it is rare for people in a negotiation to be thinking broadly about the efficient use of resources when trying to minimize price.

Consequently, they may not think about other resources (like vacant warehouse space) that may provide an avenue for an ideal negotiated settlement. The two sides cannot reach an agreement over warehouse space unless the supplier is willing to admit that a limiting factor in being able to ship quickly is that all of their warehouse sites are located far away. That discussion requires some degree of trust.

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Ways to Outwit Your Competition

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In order to think of negotiation more abstractly, try these techniques to give yourself distance from the issues.

1. Pretend you are on the other side

One helpful technique involves social distance. Imagine that you are advising another company about what to do in this negotiation rather than being a part of it yourself.

2. Imagine that the negotiation is taking place in the future

A second technique is to create distance in time. Imagine that — rather than being in the midst of the negotiations — the real negotiation is not set to start for several months.

3. Give yourself physical distance

A third possibility is to create physical distance. Mentally, you can do this by imagining that you are calling in to the negotiation from another city. In addition, it can be useful to call a colleague from your company who is located at a physically distant site to get insight into the negotiation.

That person’s distance physical distance from the situation may allow them to think about it more abstractly than you can.

All of these methods for creating distance are effective ways to help you think about the negotiation setting (or anything else for that matter) more abstractly.

Thinking about the negotiation more abstractly can highlight the goals at the heart of the negotiation. In order for this strategy to succeed, though, each party has to be willing to open up a little about what they hope to accomplish.

Art Markman, PhD is a professor of Psychology and Marketing at the University of Texas at Austin and Founding Director of the Program in the Human Dimensions of Organizations, which brings the humanities, social, and behavioral sciences to people in business. He has written over 150 scholarly papers on human reasoning, decision making, and motivation. He is author of Smart Thinking and Habits of Leadership. His next book, Smart Change comes out in January, 2014.

Compete to Win

How You Can Over-Deliver To Gain The Advantage

Go over and above for the people you serve, and you will enjoy the benefits of an abundant relationship.

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Wise, established entrepreneurs know that over-delivering value — which simply means going above and beyond for the people we serve to deliver more satisfaction for our service and thus exceed expectations — is crucial to a business’s survival, growth and future. It represents the core of a company’s foundation. And without a solid foundation, a business is always vulnerable to a person or company that does over-deliver.

To ensure you don’t ever forget the importance of over-delivering value, here are three ways it will give you and your company a distinct competitive advantage:

1. Creates abundance

Success comes most to those who are surrounded by people who want their success to continue. When you over-deliver value, people may be sceptical at first, thinking that you are expecting something in return, but when you are consistent and genuine with your intentions, they begin to trust and appreciate that you are just thinking of them.

Related: Your Questions Answered With Alan Knott-Craig

You never know the value of the value you are delivering. But I’ve learnt that if you are consistently delivering greater value to people, your value becomes more and more aligned with the immediate needs of the people and companies you are serving — and abundance in the relationship is created. This is what over-delivering value is all about.

2. Earns respect

Entrepreneurs who take the time to over-deliver value are the ones who earn respect. Typically early-stage entrepreneurs tend to find ways to be the recipient of someone else’s value in a search for momentum.

You never know which transactional seed is going to grow, but when adding value to others, this type of seed is never forgotten.

For example, every quarter, I deliver a white paper to clients with the intention to challenge their thinking. My goal is for them to know that regardless of whether I am conducting business with them or not, I am thinking of them and thus strengthening our long-term relationship. And since my white papers focus on predicting future leadership trends and business strategies, when a related topic arises in one of their strategy meetings, they don’t hesitate to call me to discuss an opportunity for us to engage.

3. Enables distinction

Entrepreneurs who add value to others create and sustain a distinction in the minds and hearts of those they are serving. After all, most people are simply doing what they’re told to do inside the box they are given. Entrepreneurs can’t afford to do that.

Related: 7 Steps To Optimise Your Cycle Of Customer Service

We are the originators, the innovators and the opportunity seekers. We live our lives constantly in search of ways to add value to make things better. We disrupt the status quo. We are not in the business of fixing the old ways of doing things. We create new ways of doing things. If entrepreneurs are technically the experts at adding value through our products, services and brands, why can’t we add value through the people we depend upon most for our success?

Over-delivering value is the key not only to being a successful entrepreneur but also to the entrepreneurial mindset we must continually cultivate in ourselves and others. No one is successful alone. We must see the value in over-delivering value by being other-directed and connecting dots of opportunity with focus and purpose to become smarter and wiser, while making ourselves invaluable to the people and businesses we serve.

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Compete to Win

How Netflix Is Now Disrupting The Film Industry By Embracing Short-Term Chaos

One wrong move and Netflix could have been nothing more than a footnote in the history of entertainment. But by staying ahead of the curve and embracing disruption, the company is threatening some very entrenched competitors.

GG van Rooyen

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Attendees of the annual Cannes Film Festival are typically not afraid to be vocal in their dislike of a new film — booing and hissing are both surprisingly common — but the recent film Okja possibly set some sort of record. The crowd was booing and jeering before the film had even properly begun. In fact, all it took was the name of the studio behind the film: Netflix.

Why the animosity? Netflix is disrupting the film industry, and the traditionalists aren’t happy. After debuting at Cannes, Okja wasn’t released in cinemas. No, instead it was released right to Netflix, free to stream as long as you have an account.

Of course, few would have guessed a few years ago that Netflix would ever get into the business of making its own television shows and movies. According to industry lore, entrepreneur Reed Hastings launched Netflix because he was annoyed with the exorbitant late fees of video/DVD store Blockbuster.

Instead of having to return a movie once you’ve watched it, he conceived of a business that would ship DVDs right to your door through the mail.

Related: Meet The 40 Richest Self-Made Entrepreneurs On Earth

It was a clever idea, but not one that seemed terribly disruptive. The whole process could be a bit of a hassle, and it required you to schedule your entertainment well ahead of time. Blockbuster even had a chance to buy Netflix, but decided that it wasn’t worth it.

The rise of streaming

Even as Netflix was hitting its stride in the early-2000s, the tide was already turning. It was becoming increasingly clear that the Internet was going to be an incredibly disruptive force, but many companies failed to notice. Or, if they did notice, they failed to take adequate action.

By 2007, the potential of streaming TV shows, films, music and books online was clear, but the DVD business was still doing well. However, Netflix decided to prepare for the future (and disrupt its own operations) by launching a streaming service. It did this by going to the traditional movie studios and television networks, and asking to licence their old content.

In the view of these studios and networks, old pieces of entertainment had run their course, so they were pleased with the new revenue stream.

This brings us back to Okja. Netflix has been creating its own content for the last few years because it realised that studios and networks would eventually catch on. At some point, they would understand that they were giving Netflix the ammunition needed to disrupt the industry. Why have Netflix stream your content if you could create your own streaming service?

“The goal is to become HBO faster than HBO can become us,” Hastings said of one of the most popular American cable channels back in 2013.

In a mere 20 years, Netflix has gone from a low-tech operation that sends DVDs through the mail to one that not only streams content online, but is also producing its own content — content from some of the most respected actors, producers and directors in the world. All of this is costing Netflix hundreds of millions of dollars, and it remains to be seen if this strategy will ultimately pay off, but betting against Netflix is risky.

Related: How To Make Money Investing, According To Ashton Kutcher

Netflix has shown itself to be uniquely capable in drastically shifting its business model. Here is how Hastings explains it: “Short-term optimisation about being efficient is the death of long-term success and innovation. Building Netflix, we created a company that tolerated some short-term chaos, and we manage right at the edge of chaos. The value of that is keeping and stimulating the amazing thinkers, so when the market shifts, like DVD to streaming, or licence to original content, we have in Netflix all kinds of original thinkers, and that is the long-term optimisation that all of us in organisations want.”

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SME Leaders: How You Can Manage Growth

Fresh growth is all around us this Spring – find out how you can powerfully manage growth as you provide leadership to your SME.

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In the transition from start-up to scale-up, a critical factor for a growing business is the quality and strength of its leadership team.

Learning to trust and empower staff is a crucial step for SME leaders who wants to grow their business upwards.

As a business grows, one of the biggest challenges for the business founder and leader is the hand-over of an idea from the founder to the people who work there, The brand moves from being one person’s idea to being the professional focus of a whole group of people.

Without effective leadership, small businesses will be held back, more than three-quarters of SMEs provide no leadership development for their staff. What does this mean for you?

Related: We Went up Against A Highly Regulated, Entrenched Industry. Here Are 4 Tips For Getting Your Foot In The Door

If you lead your business with vision and clarity, you set yourself apart from your competition. Here’s how.

Lead the pack

A growing business creates more work than a leader can handle alone.

As the team grows, founders often react by micromanaging the details of their business. In trying to take on everyone else’s job, the founder often leaves the most critical position vacant: strategist and vision-setting.

Learn to trust and empower others in the organisation and you will find you have room to innovate, which is critical for business growth.

Related: What I Learned About Dating That Will Transform Any Business

Steady the ship

An effective leader will also engage others in the business to embrace and adapt to change as growth continues.

  1. Vision: First, plot the course for where the business should go in the short term, and the long term.
  2. Change: Understand what needs to be put in place to grow the business. You might need to source better business operating systems to streamline this growth, or change a few internal business processes, or rethink how you calculate your hourly rates.
  3. People: Growth equals change, and change equals pain, so if you want growth, budget for pain. Understand that you will need to guide and coach the staff into changing their mindset and adapting to these growth changes.

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