Chapter 38
Information Power
Why do countries send spies into other countries? Why do professional football teams study the replays of their opponents’ games? Because knowledge is power and the more knowledge one side is able to accumulate about the other, the better the chance for victory. If two countries go to war, the country that has the most intelligence about the other has the advantage. That was certainly true in the Persian Gulf War; the CIA spies photographed every building in Baghdad, and we were able to completely take out their communication systems in the first few bombing runs.
You Should Know What the Other Side Will Propose
Governments spend billions of dollars finding out about the other side before they’ll go into an arms control talk. It was interesting to see Henry Kissinger being interviewed before a summit meeting. “Mr. Kissinger,” the interviewer said, “do you think it’s possible our negotiators know what the other side will propose at the talks, before they propose it?” He said, “Oh, absolutely—no question about it. It would be absolutely disastrous for us to go into a negotiation not knowing in advance what the other side was going to propose.”
Can you imagine the cost of getting that kind of information? In October 1997, the CIA declassified its budget for the first time in its 50-year history. The agency spends $26.6 billion a year gathering information, even now that the Cold War is over. If governments think it’s important to spend that kind of money, doesn’t it make sense that we at least spend a little time before we go into negotiations, to find out more about the other side?
When Bill Richardson, our former United Nations ambassador, was asked by Fortune Magazine what it took to be a good negotiator, the first thing he said was, “You have to be a good listener. You have to respect the other side’s point of view. You have to know what makes your adversary tick.” When asked how he prepared for a negotiation, he again immediately went to information gathering: “I talk to people who know the guy I’ll be negotiating with. I talk to scholars, State Department experts, and journalists. Before meeting with Saddam Hussein, I relied a lot on Iraq’s ambassador to the United Nations. He told me to be very honest with Saddam—not to pull any punches. With Castro, I learned that he was always hungry for information about America. Sure enough, he was fascinated by Steve Forbes and fascinated with the congressional budget impasse. He fancies himself an expert on U.S. politics. With Cedras of Haiti, I learned that he played good guy, bad guy frequently.”
If two companies are planning to merge, the company that knows the most will usually end up with the better deal. If two salespeople are vying for an account, the salesperson who knows more about the company and its representatives stands a better chance of being selected for the account. Despite the obviousness of the important role information plays in a negotiation, few people spend time analyzing the other side before starting a negotiation. Even people who wouldn’t dream of skiing or scuba diving without taking lessons will jump into a negotiation that could cost them thousands of dollars without spending adequate time gathering the information they should have.
Rule One: Don’t Be Afraid to Admit That You Don’t Know
If you’re a homeowner, think back to when you bought your present home. How much did you know about the sellers before you made an offer? Did you know why they were selling and how long they had been trying to sell? Did you find out how they had arrived at their price? How much did you know about their needs and their intentions in the negotiation? Very often the listing agent doesn’t know, does he? He’s been in direct contact with the sellers when they listed the property. However, when asked about the objectives of the sellers, he will very often reply, “Well, I don’t know, I know they want cash out, so they’re not willing to carry back paper, but I don’t know what they’re going to do with the cash. I didn’t think it was my place to ask.” In my all-day and two-day seminars I have the students break into teams of negotiators with some of them assigned as buyers and others as sellers. I give them enough information to complete a (win-win) successful negotiation. In addition, I purposely give each side discoverable strengths and weaknesses. I tell each side that if the other side asks them a question to which they have been given an answer, they may not lie. If one side unearthed only half of these carefully planted tidbits of information, that side would be in a powerful position to complete a successful negotiation. Unfortunately, no matter how many times I drill students on the importance of gathering information, even to the point of assigning 10 minutes of the negotiation for only that—they are still reluctant to do a thorough job.
Why are people reluctant to gather information? Because to find things out, you have to admit that you don’t know, and most of us are extraordinarily reluctant to admit that we don’t know. Let me give you a quick exercise to prove this point. I’m going to ask you six questions, all of which you can answer with a number, but instead of having you try to guess the right number, I’ll make it easier for you by asking you to answer with a range. So if I asked you how many states there are, instead of saying 50, you’d say, “Between 49 and 51.” If I asked you for the distance from Los Angeles to New York, you might be less sure so you’d say, “Between 2,000 and 4,000 miles.” You could say from one to a million and be 100 percent sure of course, but I want you to be 90 percent sure that the right answer falls within the range you give. Do you have the idea? Here are the questions:
1. How many provinces are there in Canada? Between ___ and ___.
2. How many wives did Brigham Young have? Between ___ and ___.
3. How much did we pay Spain for Florida in 1819? Between ___ and ___.
4. How many Perry Mason novels did Erle Stanley Gardner write? Between ___ and ___.
5. How many eggs do chickens lay each year in the United States? Between ___ and ___.
6. What is the length of Noah’s Ark in feet, according to Genesis? Between ___ and ___.
1. There are 10 provinces in Canada (and two territories).
2. Brigham Young, the Mormon leader, had 27 wives.
3. We paid $5 million for Florida.
4. Erle Stanley Gardner wrote 75 Perry Mason novels.
5. About 67 billion eggs are laid in the United States each year.
6. Noah’s Ark was 450 feet long. According to Genesis 6:15, the ark was 300 × 50 ×30 cubits, and a cubit equals 18 inches.
How did you do? Did you get them all right? Probably not, but think how easy it would have been to get them all right. All you would have had to do is to admit that you didn’t know and make the range of your answer huge. You probably didn’t do that because just like everyone else, you don’t like to admit that you don’t know. So the first rule for gathering information is: Don’t be over-confident. Admit that you don’t know and admit that anything you do know may be wrong.
Rule Two: Don’t Be Afraid to Ask the Question
I used to be afraid to ask questions for fear the question would upset the other person. I was one of those people who say, “Would you mind if I asked you?” or “Would it embarrass you to tell me?” I don’t do that anymore. I ask them, “How much money did you make last year?” If they don’t want to tell you, they won’t. Even if they don’t answer the question, you’ll still be gathering information. Just before General Schwarzkopf sent our troops into Kuwait, Sam Donaldson asked him, “General, when are you going to start the land war?”
Did he really think that the General was going to say, “Sam, I promised the president that I wouldn’t tell any of the 500 reporters that keep asking me that question, but since you asked I’ll tell you. At 2 a.m. on Tuesday we’re going in”? Of course Schwarzkopf wasn’t going to answer that question, but a good reporter asks anyway. It might put pressure on the other person or annoy him so that he blurts out something he didn’t intend to. Just judging the other person’s reaction to the question might tell you a great deal.
As I travel around the country, I’m always looking for bargains in real estate. Several years ago, I was in Tampa and noticed a For Sale By Owner classified advertisement that offered a waterfront home on an acre of land for $120,000. To someone who lives in Southern California, as I do, it seemed like an incredible bargain. If you could find an acre of waterfront land here, it would sell for many millions. So, I called the owner to get more information. He described the property, and it sounded even better. Then I said, “How long have you owned it?” That’s a normal question that very few people would have trouble asking. He told me that he’d owned it for three years. Then I asked, “How much did you pay for it?” That’s a question that many people certainly would have trouble asking. They might think that it would upset the other person and make him angry. There was a long pause on the other end of the line.
Finally, he responded, “Well, all right, I’ll tell you. I paid $85,000.” Immediately I knew that this wasn’t the great deal that it appeared to be. It has been a very flat real estate market in Tampa, and he hadn’t improved the property. So, I learned a great deal from asking that one question. What if he had refused to answer the question, if he had told me that it wasn’t any of my business what he paid for it, would I still have been gathering information? Of course I would. What if he’d lied to me? What if he’d said, “Let’s see what did we pay for it? Oh, yes, we paid $200,000. We’re really losing money.” If he had lied to me like that, would I still be gathering information? Of course. So, don’t be afraid to ask the question.
You Can Solve A Tough Problem Just By Asking
Sometimes people are involved in a conflict negotiation, and they’re afraid to ask the other side what they want. Many years ago, I was the assistant manager of the Montgomery Ward store in Auburn, California. Our company’s policy stopped me, or any other employee, from saying no to a customer. If we didn’t feel that a customer’s complaint was justified, they would transfer the complaint up the customer-service ladder. This meant that if a customer kept complaining without getting satisfaction for his or her complaint, the problem would eventually work its way to the chairman of the board at the head office in Chicago.
An elderly couple had bought a Franklin stove from the company’s catalog. They had installed it themselves and, according to their complaint letter, the stove had malfunctioned, blackening the walls of their home and burning a hole in their carpet.
Everyone who tried to deal with this complaint assumed that it would be very expensive to satisfy this couple, so everyone was reluctant to admit blame and offer a settlement. The letter made its way from desk to desk until it came to rest on the desk of the regional vice president. The last thing he wanted to do was let the complaint reach the head office in Chicago, so he wrote to me, requesting that I visit the couple and take some pictures so that they could estimate the cost of a settlement.
I drove to their small cottage in the countryside and met the people who were complaining. They were a sweet, trusting old couple who had bought a stove out of the catalog and were genuinely disappointed at the results. The husband calmly showed me how soot from the chimney had blackened the outside of his home. Then he took me inside to show me the hole in their carpet caused by hot coals falling from the stove. He quickly convinced me that the stove had malfunctioned, and the problem wasn’t the way they had installed it.
Fearing we would be talking about a settlement of several thousand dollars, I started with a question I assumed many of our people had asked them before: “Exactly what do you think our company should do for you? How can we compensate you?”
To my surprise, the husband answered, “You know, we’re retired and have a lot of time on our hands. The wall is a mess, but we can clean it up. It’s no problem at all. However, we are concerned about the hole in our carpet. It’s quite large, but we really don’t expect you to replace the entire carpet. If we had a scatter rug that we could put over the hole, that would take care of it.”
He was asking for so little that it stunned me. Then I recovered enough to say, “Do you mean to tell me that if we gave you a scatter rug, that would solve the problem?”
“Oh, yes,” he answered, “we’d be very happy with that.”
So we got into my car and drove straight to the store, where I helped them choose a rug to put over the hole in their carpet. I got them to sign a complete release form confirming that the settlement satisfied them and sent it off to the regional vice president.
Days later I got a letter from the vice president congratulating me on “what was obviously a masterful job of negotiating.” That was nonsense, of course; I had solved the problem merely by asking what nobody had the courage to ask before: “What exactly is it you want?”
This lesson served me well in the coming years as I worked my way up the corporate ladder. I was able to easily solve customer complaint problems simply because I bothered to get adequate information, starting with “What do you want?”
During my real estate experience, I started using the lesson to solve the problem of buyers who were not happy with the home they’d bought. The sellers had usually moved out of the area, leaving the company and me to solve the problem. I would sit my visitors down in my office and with a large piece of paper in front of me, ask, “Please, I would like to know exactly what your complaints are and exactly what you think we should do for you in each instance.”
They would reply, “The light in the living room doesn’t work.” I would write on the paper, “Light switch in living room.” I would continue to ask them if there was anything else until they had aired all of their grievances and, carefully write them down on my paper.
When they ran out of complaints, I would draw a line across the sheet under the last item and show the paper to them. Then I’d negotiate what we would or wouldn’t do for them. Most people are willing to compromise, and if I offered to send out a plumber to fix the leaking faucet, they would be willing to replace the light switch in the living room. With this method, what they wanted was clear from the beginning; they had laid all of their cards out, face up, and I was in the controlling position because I could decide what my response would be.
Doing it the other way is foolish, but it’s the way most people who handle complaints do it. They ask what the problem is and then handle it item by item. The homeowners complain the light doesn’t work and because that’s not an expensive item, the person handling the complaint says, “No problem, we’ll take care of it.” The homeowners would immediately think that it would be easy to get more concessions and keep thinking of other things that were wrong. In negotiating terms, that’s called escalating the demands. By asking them to commit first to a list of demands, you put parameters on the demands.
If you want to learn about another person, nothing will work better than the direct question. In my own experience—now that I’m no longer afraid to ask—I’ve met only a few people who were seriously averse to answering even the most personal questions.
For example, how many people get offended when you ask them, “Why were you in the hospital?” Not very many. It’s a strange fact of human nature that we’re very willing to talk about ourselves, yet we’re reticent when it comes to asking others about themselves. We fear the nasty look and the rebuff to a personal question. We refrain from asking because we expect the response, “That’s none of your business.” Yet how often do we respond that way to others?
If you ever want to win a bet with someone, bet that you can walk up to a stranger and get him or her to tell you what brand of underwear he or she is wearing. Of course, it will help immensely if you approach that stranger with a clipboard in your hand and explain that you’re taking a survey. If people tell you things like that on the street, why should you be nervous about asking the questions you need answered in a negotiation?
As president of a real estate company in California, I wanted to encourage our agents to knock on doors searching for leads. Real estate people call it farming. I found our agents very reluctant to do it. So I eventually formulated a plan where I would take each one of our 28 office managers out separately knocking on doors, and we would play the information game. I would say, “Okay, I’m going to knock on the first door, and I’m going to see how much information I can get from these people. Knock on the second door—see if you can get more information than I did.”
It was amazing to see the amount of information the people would volunteer to a stranger on the doorstep. I could get them to tell me where they worked, where their wives worked, sometimes how much money they made, how long they’d been in the property, how much they paid for it, how much their loan payments were, and so on. People are often eager to volunteer information if we’ll only ask.
Asking for more information in your dealings with others will not only help you to be a better negotiator, it will also be a major factor in helping you get what you want out of life. Asking questions is a good habit for you to adopt. Just ask. Sounds easy doesn’t it? Yet, most of us are so squeamish about asking someone a question.
When you get over your inhibitions about asking people, the number of people willing to help you will surprise you. When I wanted to become a professional speaker, I called up Danny Cox, who is a speaker I greatly admire, and asked him if I could buy him lunch. Over lunch, he willingly gave me a $5,000 seminar on how to be successful as a speaker. Whenever I see him today, I remind him of how easy it would have been for him to talk me out of the idea. Instead, though, he was very encouraging. It still astounds me how people who have spent a lifetime accumulating knowledge in a particular area are more than willing to share that information with me without any thought of compensation.
It seems even more incredible that these experts are very rarely asked to share their expertise. Most people find experts intimidating, so the deep knowledge that they have to offer is never fully used. What a senseless waste of a valuable resource—all because of an irrational fear.
Rule Three: Ask Open-ended Questions
Power Negotiators understand the importance of asking and of taking the time to do it properly. What’s the best way to ask? Rudyard Kipling talked about his six honest serving men. He said,
I keep six honest serving-men.
(They taught me all I knew);
Their names are What and Why and When
and How and Where and Who.
Of Kipling’s six honest serving men, I like Why the least. Why can easily be seen as accusatory. “Why did you do that?” implies criticism. “What did you do next?” doesn’t imply any criticism. If you need to know why, soften it by rephrasing the question using what instead: “You probably had a reason for doing that. What was it?’ Learn to use Kipling’s six honest serving men to find out what you need to know.
You’ll get even more information if you learn how to ask open-ended questions. Close-ended questions can be answered with a yes or a no or a specific answer. For example, “How old are you?” is a close-ended question. You’ll get a number and that’s it. “How do you feel about being your age?” is an open-ended question. It invites more than just a specific answer response. “When must the work be finished by?” is a close-ended question. “Tell me about the time limitations on the job,” is an open-ended request for information.
Here are four open-ended Gambits you can use to get information. First, try repeating the question. They say, “You charge too much.” However, they don’t explain why they feel that way, and you want to know why. You repeat the question: “You feel we charge too much?” Very often, they’ll come back with a complete explanation of why they said that. Or if they can’t substantiate what they said because they were just throwing it out to see what your response would be, maybe they’ll back down. The second Gambit is to ask for feelings. Not what happened, but how did they feel about what happened? You’re a contractor, and your foreman says, “Did they ever cuss me out when I showed up on the job. The air was turning blue.” Instead of saying, “What caused that?” try saying, “How did you feel about that?” Maybe the response you get will be, “I probably deserved it. I was an hour late and they did have three truckloads of concrete sitting there, waiting for me.”
The third Gambit is ask for reactions. The banker says, “The loan committee requires a personal guarantee from small business owners.” Instead of assuming it’s the only way to get the loan, try saying, “And what’s your reaction to that?” She may come back with, “I don’t think it’s necessary, if you guarantee to maintain adequate net worth in your corporation. Let me see what I can do for you with them.”
The fourth Gambit is to ask for restatement. They say, “Your price is way too high.” You respond, “I don’t understand why you say that.” Chances are that instead of repeating the same words, they’ll come back with a more detailed explanation of the problem.
Let’s recap the open-ended Gambits for gathering information.
1. Repeat the question. “You don’t think we can meet the specifications?”
2. Ask for feelings, “And how do you feel about that policy?”
3. Ask for reactions, “What was your response to that?”
4. Ask for restatement, “You don’t think we’ll get it done on time?”
Rule Four: Where You Ask The Question Makes a Big Difference
Power Negotiators also know that the location where you do the asking can make a big difference. If you meet with people at their corporate headquarters, surrounded by their trappings of power and authority and their formality of doing business, it’s the least likely place for you to get information. People in their work environment are always surrounded by invisible chains of protocol—what they feel they should be talking about and what they feel they shouldn’t. That applies to an executive in her office, it applies to a salesperson on a sales call, and it applies to a plumber fixing a pipe in your basement. When people are in their working environments, they’re cautious about sharing any information. If you take them away from their work environments, information flows much more freely. It doesn’t take much. Sometimes all that it takes is to get that vice president down the hall to his company lunchroom for a cup of coffee. Often that’s all it takes to relax the tensions of the negotiation and get information flowing. If you meet for lunch at your country club, surrounded by your trappings of power and authority, where he’s psychologically obligated to you because you’re buying the lunch, then that’s even better.
Rule Five: Don’t Ask the Person With Whom You Will Negotiate
If you go into a negotiation knowing only what the other side has chosen to tell you, you are very vulnerable. Others will tell you things that the other side won’t, and they will be able to verify what the other side has told you. Start by asking people who’ve done business with the other side already. I think it will amaze you—even if you thought of them as competition—how much they’re willing to share with you. Be prepared to horse trade information. Don’t reveal anything that you don’t want them to know, but the easiest way to get people to open up is to offer information in return.
People who have done business with the other side can be especially helpful in revealing the character of the people with whom you’ve been negotiating. Can you trust them? Do they bluff a great deal in negotiations or are they straightforward in their dealings? Will they stand behind their verbal agreements or do you need an attorney to read the fine print in the contracts?
Next, ask people further down the corporate ladder than the person with whom you plan to deal. Let’s say you’re going to be negotiating with someone at the main office of a nationwide retail chain. You might call up one of the branch offices and get an appointment to stop by and see the local manager. Do some preliminary negotiating with that person. He will tell you a lot, even though he can’t negotiate the deal, about how the company makes a decision, why one supplier is accepted over another, the specification factors considered, the profit margins expected, the way the company normally pays, and so on.
Be sure that you’re “reading between the lines” in that kind of conversation. Without you knowing it, the negotiations may have already begun. For example, the branch manager may tell you, “They never work with less than a 40-percent markup,” when that may not be the case at all. And never tell the Branch Manager anything you wouldn’t say to the people at his head office. Take the precaution of assuming anything you say will get back to them.
Next, take advantage of peer-group sharing. This refers to people having a natural tendency to share information with their peers. At a cocktail party, you’ll find attorneys talking about their cases to other attorneys, when they wouldn’t consider it ethical to share that information with anyone outside their industry. Doctors will talk about their patients to other doctors, but not outside their profession.
Power Negotiators know how to use this phenomenon because it applies to all occupations, not just in the professions. Engineers, controllers, foremen, and truck drivers all have allegiances to their occupations, as well as their employers. Put them together with each other and information will flow that you couldn’t get any other way.
If you’re thinking of buying a used piece of equipment, have your equipment supervisor meet with his counterpart at the seller’s company. If you’re thinking of buying another company, have your controller take their bookkeeper out to lunch. You can take an engineer from your company to visit another company and let your engineer mix with their engineers. You’ll find out that unlike top management—the level at which you may be negotiating engineers have a common bond that spreads throughout their profession, rather than just a vertical loyalty to the company for which they currently work. So all kinds of information will pass between these two.
Naturally, you have to watch out that your person doesn’t give away information that could be damaging to you. So be sure you pick the right person. Caution her carefully about what you’re willing to tell the other side and what you’re not willing to tell—the difference between the open agenda and your hidden agenda. Then let her go to it, challenging her to see how much she can find out. Peer-group information gathering is very effective.
Rule Six: Use Questions For More Than Gathering Information
While the primary reason for asking questions is to gather information, there are many other purposes for asking questions:
To criticize the other side: Have you resolved the delivery problems you were having? How did that consumer lawsuit work out? Why did you close your Atlanta office after only six months of operation? Why did Universal pull their business from you? Is the PTC investigation going forward? You may already know the answers to these questions or the answer may be unimportant to you.
To make the other side think: Are you sure that expanding into Puerto Rico is the right thing to do? How comfortable are you with your new advertising agency? How would your people react to your doing business with us? Doesn’t giving all of your business to that vendor make you nervous?
To educate them: Were you at the meeting where we got the packaging award of the year? Did you see the review of our product in Newsweek? Were you aware that we have a new plant in Bangkok? Were you aware our vice president used to be president of Universal?
To declare your position: You’re aware that experts regard our delivery system as the best in the industry? Why would we be willing to do that? Do you know anybody else who believes that? Then why do 95 percent of our customers continue to increase the size of their orders?
To get a commitment: Which model would work best for you? How many should we ship you? Will you want the deluxe packaging or the mail-order packaging? How quickly will you want delivery?
To pull the two sides closer together. This is a technique used frequently by mediators and arbitrators. They say: So can we both agree on that? What would happen if I could get them to agree to a 5-percent increase? But what would you do if they decide to picket your stores? You don’t really expect them to go along with that, do you?
I think of the information-gathering process as similar to the game of battleship that I used to play when I was a youngster. You can buy electronic versions of it in toy stores today, but when I was growing up in England after World War II, no toys were being manufactured. We had to entertain ourselves with little games that we could create without having to buy anything, and the game of battleship was fun.
My cousin Colin and I would sit at the table across from each other and build a barrier between us so that we couldn’t see the piece of paper that was in front of the other person. We usually constructed the barrier with a pile of books. Each of us would take a piece of paper and draw a hundred different squares marked with the alphabet down one side and numbers along the bottom. Onto this graph, we would draw our fleet of battle ships, cruisers, and destroyers. My cousin couldn’t see where I had located mine, and I couldn’t see where he had located his. Then we would attempt to bomb each other’s fleets by calling out the graph number. When we made a successful hit, we would mark the position on our chart and in doing so gradually build up a picture of the other person’s hidden fleet.
The parallel is that the hidden piece of paper in negotiations is the other person’s hidden agenda. By questioning, you should try to find out as much as you possibly can about that person’s hidden agenda and recreate it on your side so you know exactly where he’s coming from and what he’s trying to do. Power Negotiators always accept complete responsibility for what happens in the negotiations. Poor negotiators blame the other side for the way they conducted themselves.
Performers Never Have A Bad Audience
I was conducting a negotiating seminar in the San Fernando Valley, and comedian Slappy White was in the audience. During the break, I told him how much I admired comedians. “It must be fun to be successful like you,” I told him, “but coming up through those comedy clubs with all their hostile audiences must be hell.”
“Roger,” he told me, “I’ve never had a bad audience.”
“Oh, come on, Slappy,” I replied, “When you were starting out, you must have had some awful audiences.”
“I’ve never had a bad audience,” he repeated “I’ve only had audiences that I didn’t know enough about.”
As a professional speaker, I accept that there is no such thing as a bad audience. There are only audiences about which the speaker doesn’t know enough. I’ve built my reputation on the planning and research that I do before I’ll get up in front of an audience.
As a negotiator, I accept that there’s no such thing as a bad negotiation. There are only negotiations in which we don’t know enough about the other side. Information gathering is the most important thing we can do to assure that the negotiations go smoothly.