 This is the Art of Charm podcast, a show where we bring you actual tips and strategies on how to better connect socially, boost your intelligence, and navigate social behavior. I'm AJ. And I'm Johnny. Last month was all about decision making. We had a few of you write in about becoming more decisive, listening to those episodes. If you haven't had a chance, check out last month's episodes, especially our Tool Box episode, where we go into our decision making process here at the Art of Charm. Of course, this month means a new theme. Well, I just want to say I really enjoyed last month and it's, of course, it does tell them what we're going to be doing this month, but, you know, now we have a few hundred thousand people who are going to know our thought processes on how we go about making decisions. Yeah. Doesn't that freak you out at all? I try not to think about that. Personally, I think about talking to you across from me. And as long as it's not falling on deaf ears, I'm pretty happy. Well, I had recently got an email saying that some, the, the person who listens to the show really loves our stories and really feels like they get to know us. And I'm like, yeah, that's, that's a problem in itself. It's a one way storytelling. Well, how much stuff, you know, like we're so open about things that that people are able to put together, I think, a pretty good picture of who we are as people, though without knowing us. And it kind of freaks me out a little bit every once in a while. When I actually think about it, which I try not to think about at all. Well, thank you. What a great way to kick off this month's theme on negotiation, which is essentially two parties coming to a decision together. So last month, we focused on your internal decision making process. This month, we hopefully are going to change your perspective on how you view negotiation. We're going to talk about creating high value outcomes for both parties. And instead of going into negotiations with a win, lose attitude, looking at things from a win, win attitude. Now, this is the grand scheme that we've been working on here at the art of charm with our monthly themes. We want you at the end of this episode to understand how we at the art of charm have made some mistakes along the way in negotiating and shifted our own mindsets. So hopefully that we could be more effective negotiators. I know a lot of us, when we think about negotiation, we think about this first idea of a zero sum game where someone is going to win, someone is going to lose. And when we forge a compromise, well, we're both going to have to back away from what would be our traditional idea of winning. And a lot of these negotiations that we get questions about are written in about tend to be one off and really short-sighted, not thinking about the long game of negotiating. And with everything that we talk about here in the art of charm, these are skills that are developed through experience. So what we're going to try to do is reset some of your mindsets and attitude around negotiation and then hopefully inspire you to practice utilizing some of the tools we're going to lay out for you. Well, obviously it's the things that make us nervous. The things that make all these a zero sum game, a win-lose situation has to stem from how we view it. Where do you think a lot of these ideas about negotiation come from that have us looking at them in the wrong way? You know, possibly I was trying to think about this, but a television plays a large role. You know, when you see shows like Shark Tank, for instance, you know, sometimes it seems as if they could be true. But yes, it's for the tension of the television show. If they were all looking for happy win-wins for everyone, it wouldn't really be much of a tension filled show. And if you don't have a very tension filled show, well, do you have a show? Well, I think a lot of us view negotiation as conflict. Yeah. And I know myself growing up being conflict diverse, trying not to get into shouting matches. I really avoided negotiating. And many times negotiating can start with by asking for something. So for me, I've never really developed that skill of negotiating until we started the business The Art of Charm. And I know what we're talking about here, this idea of zero sum game is how a lot of us approach negotiations. And this is what's called positional bargaining. You've probably done this a few times in your life. Well, I just and I just wanted to say on that is that when you watch shows like Shark Tank or whatnot, like, for instance, Mark Cuban has been known to be an incredible businessman. He's not going to have people who are going to want to continue to work with them. If he if it's always about how much can I get off of everybody? It's he's looking for a win-win situations. Well, I think and will also illuminate this in the later half of the show here. Understanding how the sharks negotiate, they're not looking at just the trade of dollars for equity. They're talking about value adds more than just money to paint a win-win scenario for the founder that they're talking to. So we're going to dive into that. But a lot of us when we think about negotiation, we think about those one off conversations. I got to talk to my credit card company. I got to negotiate this used car. I got this guy on Craigslist who's trying to buy an office chair. How do I get myself the best deal? And this positional bargaining is that both parties are somewhat content with the deal being made. But as I said, no one really walks out feeling like it's a win. There's a reason for this. And I know we are huge fans of Daniel Kahneman. We talk a lot about cognitive biases. He won a Nobel Prize for this exact thing and the starting of behavioral economics, looking at how we go into negotiations and the mental tricks that we will play on ourselves that hinder us from being effective negotiators. And this first cognitive bias that we want to talk about is the idea of anchoring. When we think about positional bargaining situations, we typically go into that negotiation thinking about the outcome that we want or the win that we have in mind. And inevitably that win that we have in mind becomes anchored in our mind. So if that win is $50 for the office chair and Sam on Craigslist comes over to the house and he's only got 20 and we start dickering back and forth. And now we've whittled our way down to about $35 on that office chair. Well, because of the cognitive bias of anchoring and the idea that $50 is what I've established in my mind is the value of the chair. Well, of course, I'm not going to feel like it's a win if I sold the chair for $35 and Sam's not really going to feel it gets a win if he went in hoping to get the chair for $20. So you can see right out of the gate with positional bargaining. Mentally, we're going to start working against ourselves. And it's going to be very difficult to feel like we're winning, which is why a lot of us avoid negotiations in the first place. Well, yeah. And if coming off your $50 is going to be a losing situation, how good can you feel about going into this situation and negotiate knowing that anything that you do coming off that $50 is a loss? Well, remember last month, Dan Ariely talked about his friends trying to sell a house and not understanding the value outside of just selling the house and making the money back, not understanding that having to carry a mortgage for X number of months and the probabilities that go along with the math. So a lot of us, again, fall victim to this cognitive bias of anchoring. We have value in our mind that we want out of the negotiation and we know that we're going to have to give a little bit and we hope that we don't give too much and the other person doesn't take advantage of us. But ultimately what ends up happening is it doesn't feel like a win-win. It feels like a little bit of a loss for both parties. And that conflict can lead to you not working again. You could imagine, Sam's like, screw you, AJ. I'm not going to buy the Xbox off of you now. You're a tough negotiator. So this positional bargaining framework and understanding of negotiating doesn't really develop relationships with the people you're negotiating with. And I think that's one of the big things, especially if you see working together or this person being in your life long term, then that needs to be part of a part of this negotiation. And I think it's better to start from a place of assuming that there's going to be future deals with this person than writing it off completely and going in an adversarial way. If you remember last month, the example that we gave, and this was a big learning lesson for us here at The Art of Charm, we were excited. We hired a web design team to rebuild our website. And it was a pretty big project. We were excited with the web team that we had, the development team that we had found, they had done a bunch of big websites on the internet. And we were excited to work with them. Well, and of course, this also, this is like one of the first times that we had put together this amount of money to do something like this. So this was, this was a big deal for us at the time. And I, not being a very savvy negotiator myself or feeling like one, I deferred to another member of our team on this negotiation. And this team member tended to have this exact mindset of positional bargaining, right? Yes. Get maximize the deal for us, even at the cost of the other party. And with this adversarial mindset, what ended up happening was we negotiated fiercely down from their asking price. We had come in our mind hoping to spend a lot less than their initial quote was. And of course, after some wrangling, they agreed to take on the project. But we had to go up in budget. They went down in budget, right? So now neither party in this negotiation feels like they're really getting a win. We had to spend a more money than we had hoped. And they're getting less money that they had hoped and quoted us. So right out of the gate in this situation, we've been anchored to that price point. They were anchored to their proposal. We're anchored to what we thought was the best value. In losing in that negotiation, feeling like it's not quite a win in either side. Well, what ends up happening over time, both parties in realizing that it's not a win, start second guessing and doubting the other side. So of course, as the project started to get going, more and more hours are being consumed, trying to build out the website. And I'll be honest, we're not the easiest clients to deal with. We're not designed minded. And we had some thoughts and ideas around conversion, optimization and things that we've seen on other websites that we wanted to incorporate in their design. Well, of course, them being the expert, they feel like they're wrestling with us a little bit, the project's going a little bit off track. And they're getting less money than they had originally quoted. How do you think that made them feel? Oh, they weren't thrilled at all. Incredibly frustrated. And now, because we felt that we spent more than we had actually valued the work at, well, we were really invested to get more out of this project. So you can see how immediately this adversarial dynamic is starting to develop because of positional bargaining. And I did. So another thing I want to point out. And this is we've heard this time and time again, and this happened to be true in this case, which is if you're fiercely negotiating with somebody and it's and they are just they are standing firm and they're on this positional bargaining and and everything is a fight with this person, then you can imagine that working with this person is going to be just as tough. Well, and certainly they're negotiating strategy and tactics didn't line up with the outcomes that we were looking for. But it really took us understanding this weak framework of negotiating, creating a dynamic where we both have to go in and ferociously negotiate for our side and there's going to be concessions. Well, guess what? The way our mind works is concessions are taken as a loss. Our mind views any concession made as a loss. And here's the thing. And this is what Daniel Kahneman and his researchers found. It's called the prospect theory. In short, we will work much, much harder to not lose a hundred dollars than we would to earn an additional hundred dollars. So let's restate that. Yes, that loss of a hundred dollars is so great to us that we will expend more effort and energy to save and prevent the loss than we would spend to just go out and make the extra hundred dollars elsewhere. So understanding that concessions out of the gate are going to be something that mentally we are fighting hard against. And when they are framed as concessions, we actually do a disservice to the other side. As we saw in our web development project, what ended up happening is they felt a little taken advantage of. They made concessions to work with us. Those concessions were losses in terms of revenue that they're proposed project and typically their budgeted projects go for. So as the project started to consume more time and energy, well, they wanted to expend less resources on the project. Of course. Those resources became scarce based on our tough negotiation. Now, guess what happened with the outcome? They felt burned. We felt burned. How do you think the website turned out? Do we even have that website? The website turned out half baked and we had to spend a bunch of hours outside of the original specced out hours internally as a team, getting the website up and running to the standards that we had hoped for at the start of the project. Well, that's what I remember most because I was like, why are we spending all this time outside of this to develop a website that we commissioned to have done? As the project went on longer and longer, they were less and less willing to spend time. So we would come up with nitpicks and they would be brushed aside. So this did not create a dynamic. And I think it doesn't need to be said, but I'll restate it. We're no longer working with them. They don't want to work with us. So when we come at negotiations with this positional bargaining situation where we hope that through some concessions, we can meet in the middle and create a win-win mentally. Cognitive biases get in the way and don't allow for that to happen. Well, the minute you go to positional bargaining, you are arguing from scarcity. Yeah. And and if you're arguing from scarcity, then you have no power. So how can we negotiate differently? And this, for me, is really exciting because this new way to negotiate that we're going to unlock for you changed everything for me. I stopped looking at negotiations as adversarial and I started to get excited about negotiations because when you come at it from a different lens, you see more opportunity and ultimately a better outcome for both parties. And some of the things we're going to be discussing here is that you can get creative with negotiations. There's tons of things that come into play here. Now, of course, we love science. We've talked about the Harvard Happiness Research. Well, today we're going to talk about the Harvard Negotiation Project. In 1979, William Urie and Roger Fisher and their teams at Harvard Law School start researching negotiations all around the world. And they want to see how negotiation could be improved and ultimately translated into a better framework that, of course, they could teach their lawyers who are going through law school, but ultimately to create better dynamics when we have to go into these situations to negotiate. And of course, this is a massive project that's still ongoing. Now, what did they discover? There's a bunch of books all around bargain negotiation, positional bargaining that we talked about earlier. We're not going to delve into those. Today, we're going to focus on how to create a bigger pie. So it's not a win-lose. We're not fighting over a zero sum game. But instead, we are unlocking other opportunities that the other person going into the negotiation may not have even thought of to create a win-win dynamic. So there's no anchoring. There's no cognitive biases that allow us to feel that we've made concessions or there was losses, because as we talked about earlier, those losses can impede our ability to get to a finished result. And this is where the Harvard Negotiation Project takes a different course. Their ideas surrounding negotiation were exactly that. How can we increase the pie? So when we talk about splitting, both sides leave the negotiation feeling that they got more than they even went into the negotiation looking for. You could imagine how that changes the dynamic. If I go into the negotiation hoping that I'm going to get $50 for the office chair and Sam from Craigslist is hoping to get $20 for the office chair. But at the end of the negotiation, I get $30 from Sam, but I get another $25 gift card to Target that allows me to buy some new paper for the office. And Sam gets rid of that gift card that really didn't have any value to him. He's not shopping at Target. We've now created a dynamic where there's a greater pie to be split. And both of us can feel like we're winning. So how do we do this? And negotiation tactics, as we said at the start, are skills that we want to build up through practice. So as we unpack this negotiation strategy, we highly encourage you to go out and look for more opportunities to negotiate. I think that's one of the great things about the show is we can figure out unique opportunities to practice and stuff where you're not going to have to wait to the first time you're in negotiation to then listen to this podcast and brush up on it so you can go in and nail it tomorrow. That's not what this is about. This is about incorporating some mindsets that are going to allow you to be successful, whether you're in negotiations or whether you're just hanging out with your friends, because it's always going to be a conversation. Lots of things come down to negotiations. And let's be honest, when resources are scarce, your ability to negotiate becomes even more valuable. And this is something that we learned very early on, bootstrapping at the art of charm. When you only have X number of dollars in your bank account and it's not overflowing, well, you start to figure out creative ways to get what you want out of negotiations. And that's exactly what we're talking about here. So instead of fighting over who gets the biggest piece, we want to increase the pie so that everyone feels like they're winning. And of course, this is going to involve some emotional intelligence. This is going to involve some empathy because we need to make strategic use of the simple fact that people have different needs, interests, resources, values and so on. And the more that we could take into account these variables when we are in a negotiation, the greater likelihood there will be that we could create the win-win that everyone is looking for. Now, Yuri and Fisher actually provided a detailed list of elements to look at, and we're going to get to those in a moment. But first, let's go back to this negotiation with our web development team. Because as we said, when we created a win-lose or concession-based negotiation strategy, it didn't lead to the results that we were looking for. So how could we, thinking about the Harvard negotiation project, potentially go at this from a different direction? Well, first off, we have to realize that there are more resources that the art of charm is bringing to the table than just dollars and cents. We have exposure. We have the ability to refer them to new business. We have plenty of opportunity to help support the web development team outside of just compensating them with money. But if all you're doing is going into that negotiation, looking for the lowest amount of money that you can spend and only thinking on those terms, well, you're not making use of all these other resources that we outlined. You're not making use of our network. You're not making use of our traffic. You're not making use of our footer to link to the design team. There are a lot of things that we could bring to the table that aren't just money. You know, this is where good lawyers come into play, right? They're able to see all the different ways that they can help make the pie bigger so that you and said company can successively negotiate a win-win for both sides. So how could we have potentially helped the web development team feel like they got more out of the deal than the actual price that was quoted to us? Well, you can imagine we have friends that also need websites that also need their stuff redesigned. So coming to the table and pulling those resources and saying, hey, my buddy also needs a website. What do you say you knock out both of these websites? So we're bringing new business to the table that the web development team would have to pay resources for to try to chase and find. That's one option. Another option that we could have done to give them some more value and some more clips and some more exposure could have been offering to put a link to their design team in the footer of our website, knowing that we get millions of visits every month. Some of those visits are probably people who are excited about our web design and might be interested in also utilizing our design team. So these are all options that you need to think about before you actually sit down to negotiate. All right. That's what I meant by having high emotional intelligence. We have to start paying attention to other items and other resources that are available to us that have value to the other person. And when we start thinking about it from a value perspective, as we've talked about on this show, value is not just the money you have in your bank account. There are a lot of things that humans value and they don't all have monetary values associated. Well, once again, it comes back to attention, approval and acceptance. If you think about value in those terms, then there's multiple ways of growing the pie. As you mentioned, we were talking about getting them more attention, more eyes. We live in the attention economy. This is a big piece of it. The more people that you can get their attention and get them to understand your services, the better you're going to do. Yeah. So let's unpack that, right? The AOC value scale, attention, as I said, giving them more eyeballs and more people, more exposure is a great way to get them that attention. Well, how could we give them some appreciation or approval? Well, we could write them a glowing Yelp testimonial. We could record a video testimonial that they put on their website that has the AOC stamp of approval. Look, we can allow them to showcase our website in their portfolio. That's also valuable in terms of them gaining new clients. And what about acceptance? Well, that's referrals. That's actually having them work on future work for us, redesigning the podcast logo in the cover art. So all of these are ways that we can increase the pie for both of us by giving someone else more value outside of just, hey, the negotiated price is 30 K, we can only pay 20 K. How can we make this work? And when we start to think about other people's needs, wants, values and interests, we're now negotiating at a higher level. Most people, as we said, focus on positional bargaining. They only focus on the here and now and what can I get out of the other side? They're often not thinking about ways that they can give the other side more value that may not be more skin off their back or more money out of their bank account. It may mean something that you really don't value that much and you have in spades, but you can definitely benefit the other party with. Well, and of course, if you have a relationship that you're going to be working together, then both of you are going to want to see that mutually, you're escalating quality of life for each partner. Well, as I said, in a win, lose scenario or a lose, lose scenario where we're both conceding, we both feel shortchanged, we both feel taken advantage of, what is the likelihood that they're going to redesign our next website, that they're going to want to work on another project with us? I think you should think about it in this manner. When it comes to negotiations, especially when it comes to negotiations where your work is involved, both parties should be thinking about the investment in each other's products. So for the web design company, we want to be invested in their growth and we want them invested in our growth. So now as we continue to work together, both of us are escalating business opportunities for each other and that payback is now working on both sides. So it's never about that cash up front. It's about the investment together, growing together. It's a relationship. That's exactly it. We want you to shift your mindset around negotiations from one-off to investment in your future. You are also either building or breaking relationships with everyone you negotiate with. So imagine this. Imagine that in my negotiation with Sam over the office chair that we're trying to get rid of at the art of charm, I ask him a few questions to understand. What is he using the office chair for? What are some of his other needs? I may find out that he's looking for a bunch of office furniture, not just one chair. And I happen to have a buddy who also is getting rid of some of his office furniture. Would that give Sam some value? Absolutely. So when we're thinking about negotiating, we also want to zoom out from just us and the interaction that we're having with the other person. We want to start to think about the interactions that that person is having with others and how we can provide the value that exceeds what that person went into the negotiation looking for. So how do we do that? According to Yuri and Fisher, we need to look at four elements of negotiation. And these are called boundary conditions. It's people, interests, options, and criteria. And we're going to unpack each of those for you. The first one is people. Now, it is important to mentally draw a line between the people who are involved in the negotiation and the problem that we are trying to solve. We talk about this a lot. The problem isn't the other person. And we talk about this in a way also when it comes to body language, when you're meeting somebody for the first time, if you're facing them with full positive body language, you're putting tension and pressure in between that party and you. And until you break that space, it's going to continue to rise. That tension and pressure has nothing to do with you in an adversarial role with the other person. It is just what happens naturally upon meeting somebody for the first time between both people. And if you move to neutral position side by side, now you can both allow, well, you can now both look at the tension and pressure that between the both of you, but you can do that as if you're on the same team. And in that way, you can discuss the feelings of meeting this person for the first time. You can understand it. You can allow it to wash over you, but it's not connected to the other person. It's just nature working and taking effect. It's also, it has the same situation here where if you see the other person as adversarial, then they're going to be painted in a negative light for the negotiations. They're now the enemy. And if they're the enemy, well, then you cannot have a conversation with them. And certainly they're not going to want to have a conversation with you after the negotiation. No, right. You treat them like the enemy. Right. You don't build relationships with your enemies usually. How do we diffuse the person from the negotiation itself and the problem that we're trying to solve? And oftentimes we will blend them together. The problem that we have and the person we have it with becomes synonymous. Your stingy landlord and the broken water heater. The messy flatmate in the dishes that never get done. Your loud neighbors and the gigantic scratch their kid put in your car. In all of these scenarios, you can see how very quickly we're linking the person to the problem, but Yuri and Fisher found that in order to negotiate a win-win deal, you actually need to maximize both how you deal with the person and how you deal with the problem. And that obviously affects your relationship with the party. This is what they call the substance of the negotiation. If you hate your landlord because he's so stingy, then yes, you could use that new heater to make him pay through the nose. To get back at him for being so stingy. But how's that going to help you in the long run? How's that going to help you if you getting the hot water heater makes your landlord feel like he got taken advantage of and he's already stingy? He's probably going to be slow to respond to your next problem, the leaking toilet. Oh, the roof is leaking. Well, let me get on that. You can see that when we can't separate the problem from the person we're negotiating with and we fuse those two together, we're creating this vicious cycle that's adversarial, that's going to lead to conflict. Or let's separate your dislike of your landlord's financial decisions being stingy and the problem that you need solved. Well, there's an easy way of going about that, which is you have to put yourself in his shoes and realize that maybe he has a few apartments or properties that he has to maintain. He's trying to do that to the best of his abilities. He's not in your head. He can't understand what you're going through. And so he's going, he has to deal with all the properties and the best way that the best supports what was going on and what he's doing. And so that's going to be difficult. However, if you put yourself in his shoes and realize that, then all of a sudden you can start to think about how you can speak to him in a way that the problem is both of your problems. It's not he's the problem. You're working to solve the problem with him. Yeah, and helping him with his problem. And he's going to appreciate that. So now that that he sees that it's going to allow for him to sit down and discuss best ways of going about this with you. And let's think about that, right? This is where emotional intelligence comes in. We have to think about the other party. So why do you think he's being stingy? Well, maybe money is a bit tight. And because money is tight, that's causing him to be stingy. So instead of looking at it as like being stingy is a negative behavior. This is a negative person. We think about the underlying reasons that he might be stingy. Well, he's financially strapped. We can start to unpack the two. And here is where this is key. Why does this matter in a negotiation? Well, if you know that this water heater is going to be a large expense up front, you could imagine how the stingy landlord is going to view that, right? He's not going to be happy for that cash outlay. But knowing that this newer hot water heater is going to create some efficiency and energy, it's going to lower his bills. It comes with a warranty that ensures that it's not going to have to be repaired or replaced at his expense for the next three, five, seven years, whatever the warranty is. Well, these are going to be important details and information that are going to be incredibly valuable to your stingy landlord. So when it comes to negotiating, what we have to do is try to learn more about the other party. If your goal is for the outcome in the negotiation for both sides to feel like winners, well, we need to figure out how that person views winning. What are some ways that he or she is going to feel like they won in the negotiation? So instead of googling hot water heaters and installation costs, right, we also want to be curious about why the landlord is so afraid of money. What's causing all these financial woes? Maybe there's a big repair coming up next year that he's saving for and nervous about. Just think about googling how to handle this situation and you could see somebody having this situation. And rather than looking at it from any other way, the Google entry is, how do I deal with my slumber? How do I deal with a stingy landlord? Right off the bat, you're going into this researching all wrong. I'm actually now picturing myself in front of Google. You're going to do it. Stingy landlord hot water heater problems. Yeah, there you go. All right. So the financial concerns are pressing and they are on your landlord's mind. How else can we use this to find some value here? Well, what if your lease is about to be up and he's nervous that fixing this hot water tank is also going to happen in a time where he's going to have to struggle to find a new tenant to live in this apartment? Well, maybe you could add that into the negotiations as a win saying, hey, you know, I'm happy to renew my lease, but this hot water heater is starting to concern me. Well, what do you know that your lease renewal is going to be of incredible value to that landlord? It might actually calm his nerves around investing in the apartment to know that you'll renew for another year. Has that created you to spend any more money out of pocket? No. Has that created a situation where your landlord feels taken advantage of? No. So this understanding the people is the number one factor in negotiation that we have to concern ourselves with. And of course, we've been over the last year and a half plus helping you understand the science of people breaking down empathy. Toolbox episodes 767 and 768, we talk about mastering connection. So that we're not just trying to guess what the other person's intentions are. We're using the skills available to us to understand their intentions really well. And for the people who are listening to this who who are ready to ask, well, what if he's a dick? It's all that always comes up. First of all, let's give everyone at least benefit of the doubt first and try some other ways of going about things rather than just getting angry and thinking that you're just dealing with a dick property owner. Because if that is your first thought, that is going to be your first thought going into any. And what is the outcome? If that is your first thought going into every negotiation that that guy is a dick? Well, the actual outcome is you become a dick as well. Absolutely. Because when you view everyone else is trying to take advantage of you, trying to get the best deal out of you, trying to screw you over. You are going to start to take actions and behaviors that lead to screwing other people over and people feeling negatively about you. And it's also actions and behaviors that are going to lead you to to reap what you reap what you sow. And these these are this is how self-fulfilling prophecies start. You're already rolling in with a bad attitude. We cannot start there. Granted, yes, there are some property managers who just don't get it, who are incompetent, who are or who are stingy, who are awful. But but we cannot start there. We can't view that. That's what you're going to be rolling into. You have to try these other opportunities first. And you'd be very surprised because if you start with that mindset, it's going to it's it's going to affect everything. And you are always going to be continuing to negotiate from a place of scarcity. And that's not a good place to be. The second element of a principled negotiation is looking at interests instead of positions. Negotiation around a position, as you might remember from our example at the beginning, is when we're trying to strike a deal with the other person. Well, I just something I also wanted to state there as well. If you are arguing from a place of position, it's going to put the other person immediately in a place of position, a place of position. And let me tell you who is going to win that 100% of the time. It's the person with less to lose than you that who wants to go into negotiation. That's a hostage negotiation. That is. And let's just say that you are somebody who has a few things together. Well, then you will never be in the position with least to lose. You will always find yourself on the on the wrong end of that negotiation because of how you approached it. Position negotiation will is a losing fight all the time. So this idea of instead of focusing on positions, we want to focus on interest, right? When we negotiate around positions, it creates a terrible dynamic for us. Instead, Yuri and Fisher found that if we shift a negotiation over to interest, we're opening up a multitude of possible solutions, right? So you can imagine that a position is, I want to spend X amount of dollars, or I want to make X amount of dollars, right? And if that's where we stand, then our entire negotiation is going to focus around dollars. Instead, if we focus around interest, right? As we talked about the web development team, they want more customers, more customers equals more money for them. And how do they get more customers? Well, they have more eyeballs, so they have more leads coming in. Those leads see positive testimonials, which makes them more likely to buy. And oh, those leads see a beautifully designed website for the art of charm in their portfolio. I want that. Now all of a sudden, we're looking at more than just the dollars and cents of the negotiation. We're looking at all the amazing stuff the art of charm brings to the table that would be of interest to the other party. Let's use a different example. Say you want to buy a used car from a private seller. And when you're negotiating, you have a price in mind and the seller has the best price in mind. And of course, you can see that if we're just focused on price, we're going to get in a negotiation where both sides are conceding and losing. Let's shift this over to interest instead. Yes, you want the car for a great price, but you also want the car that's ready to go. It's got four brand new tires. It's had an oil change. It's fully gassed. You got a busy job. You don't have time to be running around town, getting all the documentation in order to actually make the purchase happen. Basically, you want rest assure that the car is running and ready to go. So you won't have issues for a long time. Now the other person, well, they want a good price as well, but they're moving out and they got to make this deal happen quickly. There's some pressure on them and they also don't want any hassle. Especially worrying about your check bouncing or you coming back two weeks later that something's broken. You can now see that you've added a lot more possible solutions. Thinking about the interest that that person has instead of just their position around the value they've associated with the car. How can we help them with their interests to make this happen? Well, maybe you'll both pay for an mechanic to look over the car to make sure that there are no issues whatsoever to solidify the deal. And in the end, you both get a lot more knowing rest assure that the car is working and functional. You know that the car has been serviced. It's ready to go. You don't have to worry about anything else because you brought in the mechanic into the equation. And for them, all of their worries around checks bouncing, you re-nigging on the deal, you feeling like you got taken advantage of by adding this third party of the mechanic, solve their worries and concerns. That's how we can start to shift from position to interest. The magic question here is why? Why do we do that, Johnny? Why do we focus on interest over position? Well, by focusing on interest, you're going to be able to find more opportunities to grow the pie. And when we're growing the pie, both sides feel good. And guess what? You'll probably get into another negotiation with that person in the future. You are working on building a relationship. Let's talk about the third thing we need to focus on when it comes to principle negotiating. And this third thing is options. When we start bringing options to the table, we start increasing that pie. If you and the other party spend time elaborating on interests, you'll find that there are a lot of other points you can negotiate around. When we start thinking about the interest that the other party has growing their web development business, getting this car deal done quickly with little skin out of their back, we start to see some new options that could benefit both sides. So we can start inventing options that both parties benefit from. Now we are experiencing gains, which allows us to feel like we're winning. This is where we need to let go of the idea that we have a single perfect answer going into the negotiation. We actually need to go into the negotiation more open and not so solely focused on one outcome. When we have interest on the table, both parties can now start generating ideas of how we can make this deal work. Oh, this is where things get creative. And compromise becomes a lot easier. Now we have a lot more that we can compromise on. And sometimes that compromise is a huge gain for the other party. And that huge gain washes away any feeling that they had of loss around the price point that you had negotiated on the car. Now there's a time savings for that car salesperson. They don't have to worry about taking it to a mechanic themselves to get it checked so that you sign the deal and they feel good. They've now saved some worry that they have around your check bouncing because you were willing to pay for cash to get the deal done. When we start thinking about the other person's interests, it creates opportunity for options. And it's important at this stage that we make clear our goal. Our goal is to brainstorm a few solutions here. So we allow the other person to start bringing options to the table too. Oftentimes you'll find a negotiation when we both come in with outcomes in mind. We have tunnel vision. We have very narrow focus. That's why it's important in all the good negotiations to think about the person. Ask questions to start to develop about what are their interests. And then let them know, hey, I want to brainstorm a few options that I think might work for both of us. And when you say that to the other person, you give them an opportunity to think about some options too. And now we're putting more cards onto the table. We're actually growing the pie. Well, it also shows that you are looking for a win-win. So they can relax. And if they're relaxed, they're going to be much more open to discussing all these finer points. And then they're going to put their attention on looking for other opportunities to grow the pie. Which means they're more likely to close the deal. And I also want to mention how you go into this and the mindset that you bring in is going to dictate how much communication and how the other person acts towards you. If you want the negotiation to be fun and looking for the win-win and an opportunity for everyone to lay the cards out and find what works best for both of you, so you both leave happy. And you have to go into it in that manner and show that. If you think, well, what if my landlord's a dick? You're going to put yourself in a position where he is going to have to be one. There are no options, right? He has to assume that role. And this is what's also key here. We want to keep this in mind. Say you are brainstorming options and no options are off the table. Allow the other person to brainstorm and throw options at you that you may not have thought of. Imagine how creative this deal-making process can now become. And in growing the pie, those options become a lot more favorable than taking the loss, than having to lose on what you initially came in on. Because as we talked about earlier, that cognitive bias, right? When we're actually losing, when we're compromising and losing something, well, that's going to stick in our craw. We're going to be pretty frustrated with that outcome. I want to go back. And for those of you who haven't listened to the episodes, the value episodes are going to define what value is and how defining yourself and acting in a high-value manner is going to open a lot of doors for you. And it's going to be a mindset. It's going to be how you go into it. And it's going to be reflected by the people that you're going into these negotiations with. The last element of principle negotiation are criteria. And all negotiations are going to have certain specific criteria. Those are laws that go into the way the contract is written. You can imagine when we're working with the web development team, they can't just willy-nilly write an independent contractor agreement in the state of California that says, we're going to pay them in jelly beans, and those jelly beans have X value. There are certain criteria that all negotiations will fall under. This involves doing your research. This involves being well-prepared to finalize that negotiation. Understanding contractual law, you don't need a law degree for, but we need to do a little bit of research. So we're not bringing to the negotiating table options that just will not work. Well, yeah. You're just not pulling numbers out of thin air and going in. There are market prices, labor costs, and community standards across the board. This is what you should be googling. This is the points that are going to help you move the negotiation forward. Exactly. So when you're negotiating with your stingy landlord around how to get the hot water tank repaired, well, you need to know the criteria as in, how much can be deducted from your rent while you don't have hot water. Knowing those numbers is important in the negotiation. That's the criteria. Here's a big point. So if you go into this, showing that you're looking to make the pie bigger, you're going in looking for options that allow the other person to fill just as much that they've won as you did. And you want everyone to leave. It is up to you then to then bring the criteria to the table. You've done all this work. So now when they see that you're interested in the win-win, most people in negotiations, a lot of times are going to see you then as the leader in this. And so they're going to look to you, go, okay, then how do you want to handle this? Because you've done everything else fairly for them to feel good about this. And now you're setting it up. So when you come with the criteria, well, the market says blah, blah, blah. And these costs are dictated by blah, blah, blah. And they're like, great. Let's roll with the community standards. Let's roll with the labor costs because it's already been researched. It's already been done. They're going to feel good about that. You've showed everything that you're looking for a win-win. Put yourself in a position to lead through this. Now these are complex decisions, meaning they can't be made with a gut decision. These are not split second decisions on how we negotiate here. The best negotiators are well researched. They go in ahead of the negotiation thinking about these things. And we're going to talk about this next week, what you need to do to prepare for the negotiation. But as we discussed, when we're talking about principled negotiation here, people, interests, options criteria, you can't assemble all of that on the spot. You don't go to the youth car dealership without having researched what the going rate for a used Toyota RAV4 is. You need to be prepared when we're talking about negotiation on who those people are that you're negotiating with, separating the problem from the person, what are their interests? What are some things outside of the deal itself that might be beneficial to you? And those options that you can bring to the table that have value. And lastly, the criteria that this negotiation is going to fall under so that when you're explaining the value, the landlord understands, well, geez, I'm going to get less in rent the longer I wait on getting this hot water tank repaired. Now you're at a place where the negotiation can be finalized. We want to remove indecision. We want to remove, well, I got to go back and Google that. Oh, well, sorry, I'll get back to you tomorrow about the used car. You, when you're negotiating, you want the end result. So we need to go in prepared ahead of time to get that end result. When people see the work that you've put in and how the care that you are putting in for this negotiation to get a win-win, they're going to see you as a leader. That's why when it comes to these options, you have to have them prepared because if they see you as a leader, they're going to want to see how you want to handle this and what your options are. You cannot do all this work only to give them the ball in their court and go, we've done, here's the problem. Here's the interest. Here is the options I've come up with. And so what do you want to do? They're like, you've done all the work. It is now time for you to capitalize on this work. And they can also feel better to make that decision because you have laid out clearly all the options, all the criteria, and all the value that's being provided to create the win-win dynamic. I think here's the situation that people find themselves in. And once again, this comes from a place of scarcity. Well, if I sit down and I do all this work and I put all this together and I go in there tomorrow and then they just throw it there, he's a dick. And then I put all this time and effort into it. Once again, you're looking at it from a place of scarcity, which puts you in a place of weakness. We don't want that. No. All right, we want to feel strong in our negotiation. And next week, we're going to look at ways to get the most out of a negotiation and to confidently stand your ground when the going gets a bit tough. We'll also talk about what a Batna is and why you need one. Before we let you go, here's our challenge for you this week. We want to push you outside of your comfort zone a bit with this one. It's called get something for free and it's pretty self-explanatory. We want you to go into a shop or a restaurant and see if you can get something no matter how small it is for free. Now here's the important part. Most probably you'll be met with a confused look and a no. And that's where the challenge really starts because we want you to stick with it a bit longer. Don't give up too quickly just because you get a no doesn't mean that that's a firm no. You could ask them if they've never ever given something away for free. Maybe they'll say, yeah, that one time I have. You could ask them if maybe there's a way to try some appetizers on the menu at the restaurant or you could ask if they have anything laying around that they no longer need. There are plenty of ways to go about getting something for free. We need you to stay through that initial confused look and no. I just want to preface this with it's not about getting the free thing. It is about you being able to negotiate in the face of a no. So as you can see that approach to principal negotiation that the Harvard negotiation project developed is far and away better than purely haggling overpriced with the used car salesman. You are able now to separate the people from the problem and to try to improve both the relationship and the outcome. This all means doing a little bit of legwork. You're going to make a list of all the interests that come into play so you both can brainstorm possible solutions that benefit both sides the most. And finally, you also look for objective criteria so that you can have something to fall back onto as a measure of fairness of the deal without being swept away by emotions. Let us know or always excited to hear from you all. You can send us your thoughts by going to the articharm.com slash questions. You can also email us at questions at thearticharm.com or find us on social media at the articharm. Also, could you do us and the entire articharm team a big favor? Could you go over to iTunes and rate this podcast? It would really mean the world to us. The articharm podcast is produced by Chris Olin and Michael Harold and engineered by Danny Luber and Bradley Denham at Cast Media Studios in sunny downtown Hollywood. Until next week, I'm Johnny. And I'm AJ. Have a good one.