CHAPTER 13

Misdirection

Straw Man

A straw man is where the other party will make one or more demands that they say are very important to them, but which, in fact, are not really so important. The idea is to have you make concessions in areas that are really important to them, in return for which they give up their straw men.

This tactic will only work if their demands are for something that is either difficult or impossible for you to agree to. If their demand is for something that is very easy for you to agree to, it will look to you like the makings of what we call an asymmetrical trade, something that is high value to them and low cost to you. (This tactic is covered in greater detail later on.)

However, if what is being demanded is difficult or impossible to achieve, such as a tight delivery schedule that cannot be met, or a fill rate that is simply impossible to achieve, or similar things, the straw man tactic can be extraordinarily effective.

The sequence of events will usually be something like this. Let’s imagine a company called Ceramic Design which has invented a new ceramic product that will be useful in high-temperature production processes. Ceramic Design is negotiating with Lakeside Industries concerning the possibility of licensing its technology to them. There are a number of issues on the table including the amount of an initial payment, the royalty rate, the geography involved which Ceramic Design wants limited to the United States, sublicensing which Ceramic Design does not wish to permit, and minimum royalty rates.

Early in the process, the Lakeside Industries’ team leader says:

Ceramic responds:

And Lakeside says:

The negotiation goes forward and makes good progress. Agreement is reached on the majority of the terms and conditions. No one mentions worldwide rights or sublicensing although it is sort of like the elephant in the corner that nobody is willing to acknowledge. Now the negotiation has come down to those two issues and the initial payment that Lakeside will have to make to Ceramic. Ceramic is demanding $1 million and Lakeside is offering $100,000. At this point, the Lakeside representative says:

In fact, Lakeside did not really care that much about either worldwide rights or sublicensing. What they cared a great deal about was the initial payment. If Ceramic Design doesn’t recognize this tactic they may end up giving a lot of money away on the initial payment in return for something that Lakeside really didn’t care about in the first place.

The basic defense against the straw man is the ability to recognize when the other party is not being totally straightforward about what is important to them. Watch for things that seem excessive, or don’t seem to make sense. In fact, when Lakeside first made such a strong case about worldwide rights and sublicensing, that would’ve been to the time to start working with “why” questions.

If these are real issues for Lakeside, they should have some pretty clear answers. If not, then they are probably using the straw man tactic. Often when you really press these issues with “why” questions, the other party will back off, go to another subject, and you will never hear of that straw man again.

Or, the other party’s sudden willingness to trade these sticking points near the close of the negotiation in return for something else should indicate these issues were not critical and in fact only straw men. Maybe you will have to give a little on the initial payment for them to give up their straw man and still not lose face, but it’s very likely that you don’t really need to give a whole lot.

Authority Limits

The authority limits tactic is where someone says that they don’t have the authority to make a deal and must first check with someone else, although really they can act on their own. This is a tactic that can be used in a lot of different ways. Probably the most common is to get a delay. Now, frequently in a negotiation, you would just simply be able to say to the other person:

You would only use the authority limit tactic if you felt that directly asking for a delay would put you at a disadvantage. Then you might say something like:

The authority limit tactic can also be used in a number of other ways as well. For example, you might use it to cement a win-win outcome. Let’s say that you are negotiating the royalty rate for that new technology of yours. You initially asked for 15 percent and they offered you 7 percent. Your best guess is that their Least Acceptable Settlement (LAS) is 11 percent. You have now gotten them to come up to 11 percent and they are starting to get very stubborn, confirming your belief that 11 percent is their LAS. You currently have 13 percent on the table and since 8 percent is your LAS, you are ready to jump on this and close the deal. You could simply say:

But maybe you sense that if you jump on it right away, they may think that they left a lot of money on the table. That is not going to produce a win-win outcome. Remember, they are only really going to be happy about the deal if they are convinced that they reached your LAS. So instead of just taking the deal, you might say:

When you come back with the deal approved, moaning and groaning about how hard you had to fight for them, you reinforce that they really have gotten the best possible deal.

An alternate to this is to bring back a “no” from the authority. In this situation, you could have said no yourself, but your experience with this buyer is that she never accepts it when you say no. Instead, you go to the authority and come back and say:

This has the effect of reinforcing and cementing your refusal to give them what they were asking for. It can also be used to preserve your relationship with the other party so that you are the “good guy” and it’s the organizational “bad guy” who said no. However, be careful about too often painting your organization as the bad guy, as this can sometimes backfire.

Authority limits can also help you manage the other party’s perception of your LAS and does so in a somewhat surprising way. Usually, when someone says during a negotiation, “I’ll have to check with my boss,” or the manager or the department head, the expectation is that the person they are checking with will give their approval. Here, however, the authority is going to say, “No.”

Let’s say that you are selling blood analyzers to hospital laboratories. Your equipment lists for $225,000, but because your company makes most of its profit on the reagents and other disposables that the equipment consumes, your LAS is $160,000. Fortunately, you have a very good relationship with the laboratory manager and other members of the staff. You have learned that the laboratory manager really likes your equipment and the other day her administrative assistant blurted out that they had budgeted $210,000 for it.

You are now negotiating with one of the buyers in the hospital purchasing department. He is pushing you very hard to make big concessions. You are pretty sure their LAS is $210,000 but just to give yourself a little leeway, you have decided to start a little below that. You have made concessions in decreasing steps as part of the process of managing their perceptions and you are now down to $206,000. But the buyer is insistent on getting more.

At this point the buyer is expecting you to come back with a big price reduction. However, the next day you call him back and say:

If you use authority limits in this way, you can see that it makes a very powerful statement. However, because it is so powerful, you better be sure that you really do know the location of the other party’s LAS within a very narrow range, because you have now pretty much backed yourself into a corner.

Defending Against the Authority Limits Tactic

How do you handle the authority limits tactic when the other party uses it against you? First, you need to be reasonably sure that the behavior you are observing is in fact a tactic. This is true in countering all tactics. In other words, is it part of the bluff and misdirection that goes on a negotiation or is it not a bluff at all?

If they really don’t have the authority, you are now negotiating with an agent, and not with the principal decision maker. As noted earlier, this should have been one of the items on your Information to Find list discussed in Part II. If you don’t already have the answer to that question, it is now imperative that you find out. Unfortunately, asking the question directly may offend the other party’s ego, so you may want to approach it in a more indirect manner.

If you’re not dealing with the decision maker, you may try to move the negotiation to that person. Unfortunately, this is often not possible as the agent won’t allow it. In that case, you must use the agent as a messenger.

One way to deal with this may be to have the other person get various points agreed to by the person or group with authority on a step-by-step basis. This will be resisted in a lot of situations, but you might be able to move it forward with statements like:

If you are in sales, be prepared for buyers to use authority limits in a somewhat different manner.

When buyers use this tactic, they tend not to be very concerned about the flow of the negotiation. If they want a delay, they will simply tell you that they will call you back later. The biggest problem with authority limits with buyers is that they will use it to ratchet you down further. Here the buyer will almost agree to a deal, but then says:

Then he comes back and says:

This is either simply a ploy, and they really can make the decision, or they are working jointly with the other parties who are supposedly in authority, but either way it is still a ratcheting game. We will talk more about how to deal with the nibble later, but in essence, the key to dealing with the nibble and ratcheting strategies is to recognize that the deal is not almost over and if you make one final little concession you have the deal. You must realize that the negotiation is still going on and this was just a ploy.

Policy and Resource Limits

Every organization has policies and limits on the resources available. These policy and resource limits can form very strong building blocks for an LAS. Of course, there’s often the possibility of making exceptions to policies, and often budgets have flexibility. Nonetheless, these limits can be used to effectively manage the other party’s perception of your LAS. Let’s continue with our hospital laboratory equipment example, but this time let’s take it from the buyer’s point of view.

Using the earlier example, let’s say that you are the lab manager and you were conducting this negotiation directly with the salesperson. Other lab managers have told you that they have purchased this equipment for as low as $165,000. When you created your annual budget, you agreed with your vice president that you would set aside $215,000 for this equipment since you really need it. However, you agreed to set up two line items for this money. The first was for $165,000 for this piece of equipment and the second was for $50,000 for other miscellaneous capital expenditures.

You are meeting with the salesperson and you say:

You sit silently and the moment drags on and on. Just as the salesperson is about to say something, you get up, go over to your bookshelf, and take down the hospital’s official budget binder. You sit down at your desk, think for a moment, and then open it to the page in the laboratory’s capital equipment section that has the line item for this equipment. (The line item for miscellaneous capital expenditures with your additional $50,000 is carefully located on a different page.)

You walk around your desk, put the book down in front of the salesperson, and point directly to your line item. You let him look at it for just a minute and then quickly take away and put it back on your shelf.

With this tactic you have some flexibility because if you have guessed wrong and they really cannot go as low as $165,000, you do have the room to move toward your miscellaneous capital expenditures item.

Keep in mind that this tactic worked, as does so much else in negotiation, because you anticipated this situation in advance. Negotiation is a lot like chess or billiards. To really be successful, you need to think multiple moves in advance.

Bluffing

You can’t play poker without a good poker face. Otherwise, you give away too much and you are going to lose a lot of chips. Just as in poker, negotiation involves some degree of bluff, and you need to be good at it or the other side will see through you.

Also, we sometimes tend to underestimate the acting skills of the people with whom we negotiate. People are often more than capable of developing a bluff and then backing it up with tone of voice, body language, and everything else so that it seems entirely credible and believable. So don’t underestimate the acting skills of the people across the table from you. They may be really good at it.

In fact, people get to be such good actors that they develop what I call the negotiator’s mask. This can be particularly true with professional buyers since they do this kind of negotiating all day long.

Let’s say you are a salesperson from Sierra Distributing and have made a proposal to Bravo Metals to provide them with the complete range of all their MRO (Maintenance, repair, and operations) supplies. However, the Bravo buyer says that although Sierra provided an excellent proposal, your competitors do the same job for a much lower price.

Are they bluffing or not? Let’s go behind the scenes at Bravo to see what they have really been up to. We could imagine three different scenarios:

In Scenario 1, someone from the plant has met with the buyer to discuss Sierra’s integrated supply proposal. Sierra’s proposal is 10 percent higher than that of the competitor but offers much better service. The purchasing agent wants to use the competitor’s price as a negotiating lever, and the plant says okay as long as they eventually get Sierra. They want Sierra so badly, you can get the business without negotiating at all. In this case their LAS is your offer. Your added value exceeds the 10 percent difference in price between you and your competitors.

In Scenario 2, Sierra is still 10 percent over the competitor, only this time, the competitor’s service is pretty good but that of Sierra’s is better, so the added value is only worth 5 percent to Bravo. The buyer decides that if Sierra won’t come down by 5 percent, then they will go with the competitor. Okay, you are going to have to do some negotiating here to get the business, but you only have to come down by 5 percent. If this is the case then their LAS is 5 percent lower than your proposal, but still 5 percent above the competitor’s price due to your added value.

In Scenario 3, the competition’s service and quality are equal to Sierra’s, so the added value advantage has now been erased. The decision is going to be made on who has the lowest price. Now, of course, this is your worst case, because now you are just a commodity. A buyer will always want you to believe that Scenario 3 is the reality. But is it really?

How can you determine which of the three scenarios is more likely? Unless you have a mole inside the plant, all you can do is research and gather as much information as possible using the techniques outlined in Part II. Develop that Information to Find List as much as possible. The buyer will never tell you and you will have a very hard time penetrating that buyer’s mask, because buyers become such good actors. Their tone of voice, their body language, and everything else will back up what they are saying and it’s going to be hard to see through it. Do your homework before the negotiation starts. Focus on that Information to Find list in the earlier stages, where people may not be thinking as clearly about the negotiation to come, and you will always be one step ahead of the game.

Mind Tricks

Mind tricks are designed to throw you off your game, but they only work if you don’t recognize them and allow yourself to become upset. As I have said before, a tactic recognized is a failed tactic. Once you recognize the tactic, you can either choose to confront it or ignore it, but it will no longer throw you off your game. Here are some examples of mind tricks.

Guilt peddling:

Technical snow job and using jargon:

Using professionalism as used by an attorney, physician, accountant, PhD physicist, and so on:

Condescension:

Intimidation:

Once you recognize the tactic, you can either choose to confront it or ignore it, but it will no longer throw you off your game.

If you do choose to confront it, here are some possible responses to each of the aforementioned.

Guilt peddling:

Technical snow job and using jargon:

Using professionalism as used by an attorney, physician, accountant, PhD physicist, and so on:

Condescension:

Intimidation:

Change the Negotiator

Whenever there is a change in the primary negotiator, it can be quite frustrating. You have to bring the new person up to speed, educate them, and then try to pick up where you left off. The other side may change the negotiator for a number of reasons. The old negotiator may have left or moved to a new responsibility, or even occasionally the other side may feel, and you may agree, that the person you have been negotiating with was an impediment to reaching an agreement and it’s time to bring in a new player.

Occasionally, however, it is used as a truly tactical move and if you don’t spot it, it can really throw you off. You might hear something like this:

The message is that we will keep all your concessions, we are taking ours off the table, and you are going to have to give us even more in order to just keep this process going. At this point, you probably want to throttle the other person. You have worked so hard to hammer out the agreement and now somebody is suddenly coming in, throwing it all away, and saying that you have to give even more.

The other side will not be thrown off when you get angry because they expect it. They don’t care. They figure after you blow your stack, you will accept the situation and give them more concessions. The key here is, don’t get angry. Keep your cool. You might try responding:

The message is simple. “If you want to take back all your concessions, fine. We will simply take back all of ours and we can start over. If you really thought that you were going to get us to give you more just because you’re new, it won’t work.”

Be aware, however, that there is one negotiating arena where Change the Negotiator is used all the time. This is in sales and purchasing negotiations and it is used primarily on the purchasing side. The way the tactic is used is that when the salesperson appears to reach agreement with the end user, the end user suddenly proclaims they can’t make the deal. They have to turn it over to the purchasing department. When the salesperson goes over to purchasing, the purchasing agent says,

If you are the buyer, this can be a really effective strategy since some salespeople go into total panic mode when this happens and give away the store.

If you are on the sales side and the buyer does this to you, it can be extremely frustrating, especially if you think you almost had a deal and suddenly, it gets pulled out from under you. Just keep in mind that this is a standard tactic. The fact is that you never really were that close to a deal, this is just a game they are playing. Don’t get angry, don’t get upset, just play it out. Just go back to what we said earlier, offer to start all over again and see what happens.

Or, if you think that you really do have a deal with Joe and that this is just a Nibble tactic (see the following), you could say:

Broken Record

Strange as it may seem, the more you repeat something, the more believable it becomes. That is the essence of the broken record strategy. If you use the broken record, don’t just repeat yourself. Come up with a different way to phrase it each time. This will disguise the fact that it is a broken record tactic and actually add even more credibility to what you’re saying.

For example, in our technology licensing example, you simply have to convince the other party that they cannot have worldwide rights and that only North American rights are available. Here are some broken record scripts for the global technology licensing example: