Planet Money – Summer School 7: Negotiating and the empathetic nibble

Intro

In this episode of the “Planet Money” podcast, titled “Summer School 7: Negotiating and the empathetic nibble,” the hosts explore the art of negotiation and provide valuable insights into successful negotiation strategies. From simple price negotiations to complex business deals, they discuss how preparation, empathy, and understanding can lead to mutually beneficial outcomes.

Main Takeaways

Preparing for Negotiations

• Negotiations are a part of everyday life, from selling a company to figuring out who will do the dishes.
• Preparation is key to successful negotiations.
• Researching and understanding the value of the item being negotiated is important.
• Knowing your alternatives and leverage is important in negotiations.

Negotiation Strategies

• Negotiations don’t have to be win-lose; there is potential to grow the pie and make both parties better off.
• The negotiator’s dilemma is the idea that in a negotiation, you have to compete and cooperate with your partner, which can be challenging.
• Start with a low offer that will make the other side a little annoyed but not offended.
• Neutralize the other guy’s argument by letting them do all the work, but be nice about it.
• Use disarming empathy to show kindness but not change your offer.
• Sleep on a decision before making a final offer.
• Be persistent and don’t settle for a price higher than what you’re willing to pay.
• Constraint rationals can be used to make the other party come up with solutions themselves.
• Having a tripwire or limit for yourself in advance is important to avoid being pushed into a bad deal.
• Always be negotiating, even if you think you have a deal.

Negotiation Success and Benefits

• Negotiating can lead to unexpected benefits, such as upgrades and vouchers.
• Asking for additional small items can lead to a bigger overall gain.
• Your negotiation strategy should be based on what success means for you in that particular negotiation.
• In a negotiation, success should be defined by what matters to you, including building a long-term relationship with your counterpart and leaving with reasonable terms with your colleagues.
• Adding other things onto the negotiation table can be beneficial, such as finding lopsided priorities that matter more to one side than the other.

Case Study: Sony and Marvel’s Spider-Man Negotiation

• Sony and Marvel’s negotiation over Spider-Man movies is a perfect example of a negotiation that worked out well for everyone.
• Marvel needed to renegotiate for Spider-Man to rejoin the Avengers, and Sony agreed to lend Spider-Man to Marvel in exchange for Marvel’s help with producing other Sony movies.
• Marvel wanted to regain control of Spider-Man from Sony.
• Kevin Feige proposed that Marvel make the next Spider-Man movie for Sony.
• Amy Pascal, who had risen in rank at Sony due to her association with Spider-Man, was initially resentful of the proposal.
• Fan pressure mounted on Sony to make a deal with Marvel.
• The final deal allowed Spider-Man to appear in both Sony and Marvel movies.

Summary

Preparing for Negotiations

Before entering into negotiations, it is crucial to prepare thoroughly. Negotiations can range from everyday situations to complex business deals. Understanding the value of what is being negotiated and knowing your alternatives and leverage will give you an advantage. Researching the topic and gathering relevant information will also contribute to your negotiation success.

Negotiation Strategies

Negotiations don’t have to be win-lose; there is potential to grow the pie and make both parties better off. However, the negotiator’s dilemma arises from the need to compete and cooperate with your partner simultaneously. To navigate this challenge, it is essential to start with a low offer that may annoy but not offend the other party. By letting the other party do most of the work and using disarming empathy, you can neutralize their arguments without changing your offer. Taking time to sleep on a decision before making a final offer and being persistent in not settling for a price higher than what you’re willing to pay are also effective negotiation strategies. Additionally, constraint rationals can be employed to make the other party come up with solutions themselves. Setting tripwires or limits in advance helps avoid being pushed into unfavorable deals. Lastly, always be negotiating, even if you think you have a deal, as there may be opportunities for unexpected benefits.

Negotiation Success and Benefits

Success in negotiations should be defined by what matters to you in that particular negotiation. It can involve building a long-term relationship with your counterpart and leaving with reasonable terms with your colleagues. Adding other items onto the negotiation table, such as lopsided priorities that matter more to one side than the other, can be beneficial. Negotiating can lead to unexpected benefits, such as upgrades and vouchers. Asking for additional small items can contribute to a bigger overall gain.

Case Study: Sony and Marvel’s Spider-Man Negotiation

The negotiation between Sony and Marvel over Spider-Man movies provides a real-life example of a successful negotiation. Marvel needed to renegotiate for Spider-Man to rejoin the Avengers, and Sony agreed to lend Spider-Man to Marvel in exchange for Marvel’s help with producing other Sony movies. Marvel’s proposal to make the next Spider-Man movie for Sony initially faced resistance from Amy Pascal, who had risen in rank at Sony due to her association with Spider-Man. However, fan pressure mounted on Sony, leading to a final deal that allowed Spider-Man to appear in both Sony and Marvel movies.

Conclusion

Negotiations play a significant role in various aspects of life, and being prepared and employing effective strategies can lead to successful outcomes. It is important to understand the value of what is being negotiated, know your alternatives and leverage, and be persistent in pursuing your desired outcome. Negotiation success should be defined by what matters to you, and exploring additional items to negotiate can yield unexpected benefits. The case study of Sony and Marvel’s negotiation over Spider-Man movies demonstrates the importance of finding mutually beneficial solutions and understanding underlying interests. By being empathetic and understanding, negotiators can create a climate where both parties are willing to open up and share their dreams.