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Utility Curves at a Glance

2018-11-05T19:42:21+00:00 Tags: , |

Would it mean more to someone to get a payrise from $15,000 a year to $20,000, or from $100,000 a year to $105,000? You almost certainly preferred the first option above, for a very simple reason: the utlity or value of $5,000 is not constant across every situation, or for every person. Things have different utility based on (for example) how common they are, what they can be used for, and when they are being received. Different types of utility curves include: Diminishing Returns — Money may mean less and less to you personally, the more you have of it. Accelerating Returns — The more money you have, the more you have spare to invest, allowing you to further increase your wealth faster. Parabolic — Too little free time will burn you out, while too much free time bores you... You may want a happy medium in between. Threshold / [...]

The Hidden Value of Experience

2018-11-05T22:36:49+00:00 Tags: |

Experience is often thought of as a "knowledge advantage" that directly helps people make better decisions, but there is also a hidden, more subtle value — it helps us identify better decision-making tools in the first place. Whether you rely mostly on popular, academic, or institutional knowledge on the art of negotiation (or even the Envoy insight blogs!), you will have likely realised by now that there are far too many different ways to make a decision to possibly use all of them in a single negotiation. It would simply take too much time, and at a certain point that time would be better spent on further human interaction or research rather than refining your decision-making tools even further. Luckily, there is a shortcut. Human intuition and experience can go a long way towards selecting only the most appropriate decision-making tools for the negotiation at hand. This typically works through [...]

Don’t Count On Numbers

2018-11-05T18:16:39+00:00 Tags: |

Quantifiable factors and solid data are incredibly useful tools for deciding your negotiation priorities and strategies - but they must remain a tool, rather than the master. Professionals across the world have never had better access to data, or data analysis tools to make use of the information. With almost the entirety of humanity's knowledge at our fingertips wherever we go, it can be easy to think that the solution to our problems always lies somewhere in the numbers, waiting to be brought out by an expert. Transforming your priorities into hard numbers (e.g. by rating your priorities from 1-10, then taking a weighted average of the value of each of your available solutions) can be powerful, and good data is worth its weight in gold... but we should remember that solid qualitative input can be just as valuable, and bad data still exists today. If a friend who has [...]

Currency Conversion for Negotiators

2018-11-05T19:16:47+00:00 Tags: |

Want a creative way to compare two deals, or get the best of both worlds between them? Try "converting" the currency of success in one issue, into the currency of success for another. Step out of your shoes for a moment, and into the world of a budding cafe owner, seeking to buy a pre-established business. You've frequented Cafe Jupiter for a few years now, and their desserts are out of this world... but they're selling for a cool $5,000,000 price tag and you're just not sure they're worth the money. Meanwhile, Deli Deluxe is selling down the road for just $1,000,000, but their decor needs heavy refurbishment and you just don't find yourself losing your mind over their chocolate mousse like you would at Cafe Jupiter. How are you ever going to make this decision? A possible solution might have already struck your mind — you could potentially snap [...]

The Value of Understanding It Yourself

2018-11-02T22:15:45+00:00 Tags: |

"Our tech guys took a look at the deal and they don't think it's good enough value for money. You'll have to drop the price a bit for us to consider it." What kind of reaction do you think the above sentences would receive? An immediate apology and drop in price, or confusion and defensiveness? In our experience, it is difficult enough to challenge anybody's beliefs while maintaining a positive relationship... let alone making it more difficult by challenging them using only somebody else's authority to back you up. If you want to be the best negotiator possible, you should have at least a basic understanding of the concepts and language being used for each component of the deal you are currently working on. You might never be a field-leading expert, but you should be able to coherently discuss any of the factors of the field without risk of being [...]

The Deal of Theseus

2018-11-02T22:15:05+00:00 Tags: , |

When deciding between two or more competing solutions that each have their own strengths, it can be valuable to repeatedly and hypothetically modify each solution, reconsidering their merit each time, until the choice becomes clearer. Imagine you are deciding to live in the Central Business District of a major city, close to work and entertaininment, or on a gorgeous rural property with sweeping vistas and unique flora and fauna all around. The difference between the two lifestyles offered up by these choices can be so overwhelming that you simply may not know where to begin in evaluating them. One mental tool you can use to assist you in this process is a "slight modification" exercise, where you modify each deal (keeping only its core features intact) and then reconsider how they stack up against each other. This can reveal important factors or decision-making processes that you could not see previously, [...]

Polarise Your Options

2018-11-05T18:11:39+00:00 Tags: |

Would you rather be stuck at home, at a beautiful national park, or on the highway in between the two? Unless you're a rare breed that enjoys peak hour traffic and being surrounded by other frustrated drivers, you'd much prefer to be either at home or the national park. Home offers the obvious advantages of comfort and freedom, whereas the national park likely offers nicer scenery and prospects of adventure. 1-mile-an-hour traffic flow in between offers neither. Remember that the same concept applies to negotiation and deal-making. If each party to the negotiation is directly opposed on five separate issues, it may satisfy neither party to just meet in the middle on every single one. You may be better off giving the opposition everything they want on Issue X, just so you can get everything you need on Issue Y in return. Balanced deals absolutely have their place, and are [...]

Are You Double Counting Issues?

2018-11-05T18:58:25+00:00 Tags: , |

If one of your priorities in a negotiation also impacts a second priority, chances are that you are currently overvaluing the first priority without knowing it. Let's look at how this might arise through an example — imagine you are a politician, weighing up whether or not you should accept a renegotiated bill on healthcare. You have a long list of issues to concern yourself with, but among those are: Cost to Taxpayers, Effective Coverage for the Poor, and Voter Popularity. When evaluating how the deal scores along each of those criteria, it can be extremely easy to fall into the subtle trap of letting the Cost to Taxpayers and Effective Coverage for the Poor scores heavily influence the score you give to Voter Popularity. After all, voters won't love footing an expensive bill, and they surely won't want a bill that only helps the rich... right? This train of [...]

Dream Big… Carefully

2018-10-30T01:29:33+00:00 Tags: , |

“In trying to find a language that wasn't culturally specific, the framers of the [Universal Declaration of Human Rights] eventually settled on a style that assumed, rather than reflected, universal acceptance. The end result, says Associate Professor Reinbold, was an avowedly secular document that carried a curiously religious tone and logic, [which] limited the appeal of universal freedoms during much of the Cold War/post-colonial period.” The language you use when negotiating with others matters, and it must vary based on who you are talking to and what you want to achieve. To some, extremely friendly or cooperative language may signal weakness or overinvestment in the relationship. For others, it is a simple prerequisite of any healthy partnership, and an insistence on aloof professionalism will strike them as suspicious or strange. Aspirational language that seeks to philosophically and morally unite everyone engaged in the agreement can sometimes produce greater happiness or [...]

60-40 Doesn’t Mean 60-40

2018-10-30T01:28:00+00:00 Tags: , |

Why is it that even small polling differences nationwide can lead to a massive difference in political representation? The answer is that polling percentages don’t get automatically reflected — or, more accurately, balanced out — across an entire nation. If Republicans are favored 60-40 in every single individual race across the USA, then Republicans will win every one of those races, and the actual representation will end up 100-0 in Republican favor. Spend some time thinking about how this applies to your negotiated agreements, and to the structure of your organisations and work groups more generally. For example, it doesn’t take a room full of antagonistic negotiators to leave a possible deal in ruins. It may only take a simple majority, or even a single, vindictive negotiator who has undue influence over everyone else’s attitudes and modes of thinking. And if every component of a negotiated deal leans just a [...]

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