I like to win. How about you?
It’s only natural, we’re programmed to like it. It’s in our DNA to want to ‘win’ things.
We need to focus on how to build strong relationships.
It makes us feel good, bolsters our immediate view of ourselves. Fake self-esteem.
In a primitive evolutionary perspective, winning against a predator or prey would mean survival.
Competition between hunters and gatherers incentivises working harder to ensure you get enough of the scarce resources.
The hunters and gatherers would bring back the resources and then give them out to others in return for other products and services. Bartering their goods. Sometimes not explicitly, you give and you receive but not in a direct trade.
This bartering is another, more subtle, competition.
This is evidence of the importance of strong relationships with those around you.
For example, you have children, and you need to go hunt for food. Well, someone needs to be there to protect them, so they stay behind while you go to hunt and in return you share your food with them.
Life is a whole league. Not just one match.
In one single competition you win the game by getting more than your competitors.
It’s important to keep in mind that, that is only one game, in a series of games.
Life is a whole championship league.
It’s better to play the game in a way that makes others want to play with you again in the future. Competition is actually a form of collaboration.
If we define ‘winning’ here to be executing the optimum strategy perfectly for the best outcome overall. It would not be to ‘run the well dry’ in the first interaction.
If you leave the other party feeling robbed, it is unlikely they’ll want to trade/play with you again.
This is a Scarcity Mindset.
FIX YOUR MINDSET.
If you come across a bush of dates as a starving gatherer. Do you (A) Stuff your mouth because you don’t know when you’ll see your next meal or (B) Eat just a few, and bring the rest back to the tribe and give them out.
(A) is a Scarcity Mindset, common, but unattractive trait for a team member.
(B) is the first step to an Abundance Mindset.
People want to be around those with Abundance Mindsets. People with AMs are generous and thoughtful, and so they build strong bonds with those around them.
If you observe someone taking actions that only someone with a SM would do, you mistrust them moving forward.
Why would you trust someone to go gather for you (as you care for their kids) if you know they’ll probably eat more than their fair share out on the road.
Principle: Adopt an Abundance Mindset.
How does this translate to business and relationships?
Let’s group both of these as relationships first, for simplicity. Business contacts are also a type of relationship. I have previously made the case that you should become friends with contacts before engaging in business, if possible.
Relationships are all a series of negotiations.
A negotiation is just a candid discussion where you want to make a decision between you. Ideally one that helps you both with whatever task you are trying to accomplish together.
Whether it’s who will do the dishes and who will cook, or what percentage equity you will give to your Technical Cofounder making your app.
Strong relationships will have a smoother time navigating ‘choppy waters’.
Of course, different relationships will have differing natures of ‘negotiations’.
I’m not suggesting you treat your romantic partner how you treat a client in your consulting services business… Almost the opposite.
You have different skills for the different expectations the person has on how you will behave.
Now that we have taken the potential ‘sting’ out of the word negotiation (low stakes… it ain’t a hostage negotiation), let’s think about how to approach these negotiations to ‘win the championship’ instead of the ‘match’.
The winning strategy
I want you to lose the negotiation on purpose.
Yep, I didn’t mistype.
Lose, in the traditional sense of the word: Don’t get exactly what you want. The “on purpose” part here is the crux of it. You will be trying to give the other person something that they want. Even if you can ‘win’ by taking everything you want, you shouldn’t.
I.e. if you are an aggressive ‘discusser’ you may be able to convince your partner to both cook dinner and wash up afterwards. Should you? No. You should not.
This “win” may be a win in the short-term, you didn’t have to cook or clean today. But you have alienated your team-mate. Your partner. Forcing them to build a resentment towards you. They’ll do the task. Because you both agreed to it. But only because you gave them no choice.
In this negotiation you took the “last dime on the table”.
Forcing someone into submission will work, but only for a short time. It’s a poor medium to long-term strategy. People learn this is how you behave and avoid negotiation with you. Meaning you lose your seat at the decision-making table.
This example is obvious, because we know better than to subjugate and take-advantage of someone we love.
What about in a business setting where we are more inclined to feel “head-to-head”?
A hypothetical example
Should you negotiate $150/hr as a mid-range [insert your service/job here] even though the market rate is $60-$120/hr?
The client says they want to pay $120/hr but you push to get to your $150/hr figure, they begrudgingly accept.
They will accept if you have a compelling sales pitch, they’re desperate and/or you have a good relationship to begin with. Especially if they don’t have a good grasp of the market standards.
You have over-reached, which can work in your favour for now. But from the moment you commence work, they’ll be looking for reasons to fire you and as soon as a cheaper alternative comes around you will be earning $0/hr (because they’ll end your contract).
If they have a 6 month contract, requiring about 20 hours a week (or 80 a month) then here’s the comparison if they drop you after a month on the higher rate:
- You over-reach and nickel and dime them to $150/hr. You’ll make $12,000 that first month and $0 for the following 5 months.
- Instead, earning $120/hr for the FULL SIX MONTHS is $57,600.
If you’re optimising for maximum financial return of the contract then the second option is best… PLUS the huge multiplier of a strong reputation with them because you completed the whole job, at a fair price. Leaving them feeling good.
Reputation is the most valuable asset
Almost every single one of my contracts has been given by word of mouth.
They recommend me because I am fair, have an abundance mindset (so they can rest at ease that I am not ‘screwing them over’) and will do a good job.
Important note: this is not a suggestion that you undercharge. Charge what you are worth.
Of course, cheaper will mean people will hire you more often and for longer (that’s basic supply/demand mechanics). I am suggesting to consider giving back a bit in this tug of war.
In this example we went over the top of the normal range. Over-charged.
We’re using this very simplified and specific example as a heuristic to observe a more general principle.
Give a little, to gain a lot.
Leaving your negotiation partner with some in the tank will make them more likely to want to deal with you again, and recommend that others do the same.
When you recommend someone’s services, you have to believe you’re doing a favour to the referee.
If they feel ‘robbed’ or taken advantage of, they are not going to recommend anyone do business with you. This is a whole topic I will write separately about in the future.
Starting from a strong relationship, a strong future can blossom.
For more info I highly recommend, Sun Tzu’s Art of War.
Next time you are negotiating, have a think, how can you leave value on the table. So your negotiation partner can leave feeling like they got a good deal.
This isn’t just about dollars, it’s about building trust between you that you have an Abundance Mindset.
If you fully decide your sense of self-worth based on other people’s opinions you should consider diversifying your self esteem.
I will write about finding what that optimum compromise is using the Nash Equilibrium from Game Theory next time. Subscribe to be notified.