Ron Shapiro has represented Hall of Fame players, helped settle a major symphony orchestra strike, diffused racial tension in a metropolitan police department, raised millions of dollars for charitable causes and assisted in ending Major League Baseball's historic labor deadlock. In his recently released and revised classic, The Power of Nice: How to Negotiate So Everyone Wins - Especially You!, he demonstrates the value and practicality of his systematic approach to negotiation -- the 3 P’s: Prepare, Probe, Propose. The following excerpt illustrates elements of the third P -- Propose.
As Cal Ripken's consecutive game streak started to edge toward record levels -- after he passed 1,200 games, then 1,500, and 1,700 -- people would approach Cal, through me, to ask if he would write a book about his career. Each time they asked me, I asked Cal. And each time, he said, "No, Ron, not yet." He didn't want anything to interrupt his full concentration on his job or detract from his ability to perform on the field, game after game.
After he passed the 1,800-game mark, I asked him about a book again. Again, he said, "No, Ron, not yet." The last thing he wanted to do was write about a consecutive game streak because he didn't play for a streak. He played every game because, in Cal's own words, it's "the only way I know." Even after he played in 2,000 games, and people came to me to ask about the book, Cal still said, "No, Ron, not yet."
Then, on September 5, 1995, Cal Ripken, Jr., played in his 2,131st consecutive baseball game, breaking Iron Man Lou Gehrig's record. When the streak was formally announced, in the fifth inning, the sellout crowd at Camden Yards rose spontaneously and erupted into a 50,000-fan cheer. (The notables and celebrities in attendance are too numerous to list, but among those standing and cheering was the President of the United States.) After 10 solid minutes of ovation, Cal's teammates literally pushed him out of the dugout and onto the field to fulfill the fans' need to see their hero. Still, they wouldn’t quiet down. Finally, in an effort to satisfy the roaring, clapping, stomping crowd, Cal lapped the field, waving and smiling to the fans. When he came around the third base side of the field, just above the Orioles dugout, he leaned over to my box, hugged me, and whispered in my ear,"Okay, Ron, now."
Okay, maybe I embellished a little when it came to the whispered statement. Just the same, it was after Cal's record-breaking feat that we began to pursue the book in earnest. First, we narrowed the field of publishers down to the two we thought best.
We had a favorite but we wanted a solid alternate candidate to strengthen our position and increase our bargaining power. I made appointments in New York with both, scheduling the favorite first thing in the morning and the other for a lunch meeting. I wanted to be able to honestly say to the first publisher, "We have to leave for a meeting with another publisher."
Before the meetings I prepared, researching precedents of the advances paid to sports figures and other superstars for this type of mega-book. I found that for sports stars, the up-front money for such a book was in the $500,000 range. We knew, in Cal, we had someone who was a star even among stars so we set our sights high and decided to ask for $700,000.
But rather than walk in and say, "We want $700,000," we went to the meeting, asked questions, listened, and waited for the publisher to put a figure on the table. We followed the first rule we’ll deal with in this chapter: Don’t make the first offer. We said, "You're the experts; you know the market. We just know baseball. You tell us." The first publisher’s initial offer was $750,000.
Imagine if we had gone first. What if we had crossed our fingers and said, "Gee, we want $700,000.” We’d have already left $50,000 on the table and this was only their opening offer. So, when they said $750,000, did I leap across the table, shake their hands, grin from ear to ear and say, "Deal!"? No. We followed the second rule we’ll talk about in this chapter. Don't (immediately) accept the first offer. If I had jumped at that first offer, what do you think the publisher would have thought? Buyer's remorse. "Uh-oh, I paid too much." And if I had jumped at the offer, I also might never have learned what our potential was. I took a lesson from Hank Peters when he sat across from me in the Brooks Robinson deal. I said to the publisher, "I'll get back to you."
We went to the second meeting, with the second publisher, and learned that it too, had a high interest. It appeared they would be willing to pay as much or more than the first publishing house. But, since we maintained our leaning toward the first, we didn’t even push for a detailed offer from the second. Instead, we used our time to think and plan our next step.
When we got back to Baltimore from New York to take stock of our situation, we discovered that Cal's endorsement and licensing value was skyrocketing daily. Hundreds of inquiries and offers were pouring in. Realizing that Cal Ripken’s market value was reaching extraordinary levels, we revised our goal to a $1 million book advance, double what the precedents had indicated.
It so happened that the editor from the publishing house was an old friend. I suppose I could have said to her, "We know each other. Let’s not play games. Let's not beat around the bush. We want $1 million." But I recognized human nature, even among old friends. (And I didn’t succumb to the temptation to go right to the bottom line, which we too often do out of fear of rejection.) Instead, we formulated our counteroffer to their opener of $750,000 and asked for $1,250,000. And we never forgot the proverb that says, "Many things are lost for want of asking," and followed the third rule of this chapter: Aim high.
Eventually we signed a deal with the $1 million advance we wanted (plus some assistance to the Ripken Foundation). The negotiation for Cal’s book was a textbook example of the third P: Propose. We didn’t make the first offer. We didn’t grab their first offer. We aimed high.
Try Not to Make the First Offer
When the other side does make the first offer, you can learn from them going first. You have a goal in mind. You expect to have to work your way up to it. But, the other side may meet or exceed it with their first offer. You might even be able to revise your expectations further upward as the negotiations continue. If you had gone first, you might have set your sights too low.
If you get a low offer, even if it’s far less than you hoped for, now you have a floor, a minimum from which to build. In fact, a low offer may suggest you try to achieve your goals creatively. Let's say you wanted to sell a business for a given price but the other side’s initial offer is so low it’s apparent, no matter how much you can inch it up, the purchase price alone won’t be enough.
Maybe you should pursue different or faster payment terms, retaining ownership, noncash remuneration such as in-kind services or other goods, or other imaginative ways to reach your goals. The knowledge you gain by the other side opening the bidding is invaluable in determining the course of the negotiation.
Don't (Immediately) Accept Their First Offer
If you grab the first offer, the other side’s first thought is likely to be that they offered too much, too good a deal, too high a price, too something. Since you are in the process of negotiating, they'll start finding ways to "unoffer" what they offered, to add conditions, subtract payment, to work their way down to where they’re more comfortable.
And chances are, their first offer is not their best offer. Wait a little. Let the negotiations play out. Ask questions. Suggest alternatives. Counter. You’ll soon see how far they are able to go. You’ll learn which parts of their offer are flexible and which are immovable. The very worst you can do, assuming their offer is still on the table, is end up where they started. You can accept their first offer later, not immediately, after you know it's the best you can do.
Set Your Aspirations High
If you expect little, you are liable to reach your goals. I’m losing money on this building. If I could just get what I paid and get out, I’d be relieved. Fine. But what if the building is worth more to someone else than it is to you?
If you set your expectations higher, you’ll often reach them. Say you're selling ad space in a program and the deadline is approaching, but you still have one page unsold. Aim low and you’re just looking for anyone who’s willing to buy that last page at any reasonable price. Aim high and you have a virtually sold-out program with only one page left. Who will pay enough to get it? Negotiators who ask for more, get more.
Caution: It's not enough to aim high; you must ask high -- not arbitrarily, but with reason (use precedents). Have you ever set a high goal in your mind, only to reduce that goal the moment you got to the negotiation table because you were afraid of rejection? We all have. When faced with this situation, write down on your Preparation Checklist the old English proverb, "Much is lost for want of asking." When the time comes to make your offer or "ask," reread that statement and bolster your confidence. There's no reason to fear that rejection. At worst, you’ll be where you are now. At best, who knows? And, further build your confidence by scripting.
How do you get them to go first, especially when they want you to go first? And how do you do it without ending up in a verbal standoff?
"You go first!"
"No, you go first!"
"No way. I asked you to go first, first!"
● Defer to the other side's expertise. They may have more experience in the category than you do. Instead of being intimidated, use that to your advantage to gain knowledge. You're in the real estate business. I'm a manufacturer who happens to own one piece of property that my business no longer needs. You tell me what an industrial park site of this size is worth. Use their experience as a basis for fairness or objectivity. "You've done more deals of this type than we have. What are the going terms in similar deals? What’s fair?"
-- Excerpted by permission of the publisher, Wiley, from The Power of Nice: How to Negotiate So Everyone Wins - Especially You! (Revised and Updated) by Ronald M. Shapiro. Copyright (c) 2015 by Shapiro Negotiations Institute. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. This book is available at all bookstores and online booksellers, including Amazon and iTunes.