Introduction

In the pursuit of mastering the art of negotiation, the journey began in the year 1976. It was an era marked by a burgeoning interest in understanding the complexities of human interaction, particularly in the realms of business and diplomacy. Recognizing the profound impact that effective negotiation tactics could have on outcomes, my partner Iwar Unt embarked on an ambitious project to dissect and analyze the very fabric of negotiation processes.

Over the course of several decades, Iwar and I meticulously observed and evaluated more than 35,000 negotiations, spanning various industries, cultures, and contexts. This extensive research initiative was not merely quantitative in its approach but deeply qualitative, involving the participation of seasoned negotiators. Together, we sought to uncover the underlying principles that govern negotiation dynamics.

By studying a large group of negotiators to see whether there are significant differences between those who are successful and those who are not, we formed a clear picture of some of the factors that influence the negotiation result in a positive or negative direction. This also gave us an understanding of why problems occur and how they could be avoided or handled. At the same time, we realized that this did not provide a simple explanation for success or failure. Sometimes the fundamental prerequisites were so unfavorable that no negotiation technique could create any further success. Conversely, sometimes the prerequisites were so favorable that failure was nearly impossible. Some negotiators are lucky, while others simply run into bad luck.

Our methodology was rigorous and multidimensional. We employed a combination of observational studies, controlled experiments, and extensive fieldwork. Each negotiation was recorded, annotated, and examined through various lenses, ranging from nonverbal communication patterns to the strategic deployment of information. We analyzed successes and failures alike, learning as much from the stumbles as from the triumphs.

Through this expansive research, we gradually began to identify recurring patterns and strategies that consistently yielded favorable results. These patterns were not happenstance; they were the product of deliberate and skillful execution of specific negotiation elements. We categorized these elements into several domains, including nonverbal communication, knowledge acquisition, strategic tool utilization, emotional intelligence, and overarching strategy.

Each element was then subjected to further scrutiny. We sought to understand not only how and when it was used but also why it was effective. To this end, we integrated insights from behavioral science, economics, and even game theory. Our aim was to construct a robust framework that encapsulated the multifaceted nature of negotiation.

In addition, over the last 20 years, I have researched and studied thousands of companies of many different kinds. As you might expect, I found some were more successful than others. As part of my investigations, I looked into their history of collaborations to see how much of their success (or lack thereof) could be attributed to this variable. I found the companies that were doing better in cooperative situations-whether buying, selling, and project management or otherwise-tended to succeed in proportion to their relative mastery of four fundamental factors:

• Having a defined negotiation strategy (discussed in Element 16)
• Closely monitoring the financial consequences of Tru$tCurrency (discussed in Element 16)
• Articulating the rules of the game before entering into any bargaining situation (discussed in Element 17)
• Practicing NegoEconomics (discussed in Element 17)

The culmination of this research effort is what I now present as the 103 Elements of Negotiation. These elements are not mere tactics; they are the distilled essence of what we learned from our comprehensive study of negotiation. They represent the science of human interaction, the psychology of persuasion, and the strategy of decision-making.

Keep in mind that as you integrate these elements into your negotiation practice, you are not merely applying techniques; you are embodying a legacy of research and knowledge that has transformed the landscape of negotiation.

How Much Do Mistakes Cost?

Studies show that only two-thirds of all negotiators land a deal, and then even one where they lose, on average, approximately 40 percent of the overall negotiation potential. This potential consists of unrealized yet realizable added value (NegoEconomics) that would have enabled the parties to get more out of the transaction without the opponent feeling like the loser. In this potential, we will certainly find part of the added value that negotiators in boardrooms picture when they calculate great merger gains-an added value that will never be realized now, and that contributes to the failure of the majority of all major mergers.

The question of how much all the mistakes cost is impossible to answer by looking at one single instance of negotiation. However, we will try to find out what the consequences are when negotiators fail in finding the most economical solution to the problem under negotiation.

In a negotiated agreement where the price is $1,000,000, the supplier has a gain of 25 percent, which most people would consider a very nice gain. But when we look at all the data that is available to the parties, we can see that an added value (NegoEconomics) of $200,000 in total could have been created. This added value can be realized if they design the agreement differently than originally planned in the offer; for example, by suggesting alternative payment conditions, another delivery time, a changed technical requirement specification, and improved servicing.

During the negotiations, they arrive at some of the changes that will provide the added value (NegoEconomics), but if they negotiate as the average negotiator in our study did, as much as 40 percent of the realizable added value of $200,000, ($80,000) will remain unutilized. If it was the seller, for example, who had found this $80,000 and they alone would benefit, their profit would have grown from $250,000 to $330,000, that is, by as much as 32 percent.

To this can be added that a little more than a third of the negotiators who participated in the test failed completely and never managed to enter into an agreement. The gain they lose is even greater. The overall cost of all the mistakes committed at the negotiation table will most likely amount to very large figures. Added to this are the very negative effects in the shape of superfluous environmental destruction, a poor working environment, unnecessary technical and economic risks, and the time and energy the negotiators invest in fighting.

Even though the mistakes are very costly, we should not let the result depress us. Instead of focusing on the failures, we ought to look at the great potential available. For the skilled negotiator, there is a lot to gain. The negotiation skill can and must be developed. Many of our companies are not so good at protecting and benefiting from the intellectual capital. The money and resources spent on developing the employees' negotiation skills are far too few compared to the enormous potential available.

The Ketchup Effect

The study shows that during the 120 minutes that the negotiators have at their disposal, only about 10 percent can finish without feeling any pressure of time. Fifty-five percent do not reach an agreement until the moment when they feel that time is running out. Under stress and pressed for time, they force a conclusion through. This can also be experienced in real life. When time is almost up, the negotiators are forced to reach an agreement, often in the shape of a compromise where the parties meet halfway, that is, no one must lose more than the other. Since there is no time to reconsider, they cannot be sure that all the significant points have been discussed and studied.

To study whether time had been lacking and whether this had influenced the result, the group of negotiators who had not reached an agreement after 2 hours was given another chance by having the negotiation period prolonged by another 30 to 60 minutes. In the group which had been given more time, only 6 percent managed to reach an agreement. The others could not break their destructive pattern. A skilled observer of negotiations would have realized at an early stage that these negotiators would have a hard time.

Time seems to have been of minor importance. Despite the extra time, 33 percent of the negotiators failed at reaching an agreement. Nothing came of the planned partnership about which they were supposed to reach an agreement.

The study shows that the small group of 10 percent that managed to reach an agreement at their own leisure without getting stressed as a result of lack of time also entered into better agreements than the others. They utilized up to 20 percent more of the available negotiation potential. They spent their time in another way than those who found themselves pressed for time.

It is not lack of time that makes the negotiation fail. What causes the failure is the negotiation methods-a fact that many have difficulty accepting.

During the exercise, we furthermore tried to step in and help the negotiators who got stuck in meaningless arguments and those who reached a dead end, having come up with solutions that were unacceptable for various reasons. Such help they would...