If you read one book about negotiating…

image I just finished reading The Secrets of Power Negotiating by Roger Dawson and as Tim Ferriss says in Four Hour Working Week “if you only read one book about negotiating, make it this one”.

The first reason I like this book is Roger’s solution driven approach to negotiations.  Most deals are complicated and there are many elements that can be traded off against each other if the negotiators are skilled enough to listen and find out what is important to the other side.  As Roger notes repeatedly throughout the book there may be concessions you can make which cost you little or nothing but are meaningful for the other side.  In-experienced negotiators, however, are more prone to getting focused on a single issue (often price) which leads to conflict and occasionally deadlock and lost deals.

In the context of venture capital deals the valuation of the company is always important, but there are a number of other elements which are material and where there is often more room for each side to make easy concessions.  The most common of these are liquidation preference, anti-dilution rights, size of the option pool, good leaver/bad leaver, and provisions determining the balance of control between investor and the company post transaction.

When a VC invests in a company/entrepreneur it is often likened to a marriage and it is very important that the relationship doesn’t get off to a bad start with acrimonious negotiations over deal terms.  It is thus more important than in most negotiations that both sides work hard to find the white spaces that form the basis of a happy agreement rather than approach discussions as a zero sum game.

As an aside, one of the small things that Roger advocates is always leaving the other side happy, and he offers a number of tips for doing so.

The second reason I like Roger’s book is that it is full of actionable recommendations for getting the best deal available whilst maximising the chances of the negotiations reaching a harmonious conclusion.  They are too numerous to list here in full but in they group into:

  • Ways to maintain flexibility in your position and avoid deadlock – e.g. NEVER go too quickly to your best offer as problems will follow if the other side then tries to negotiate you down further.  A common mistake is to take the approach of cutting straight to a ‘fair’ position which leaves little room for manoeuvre if the other side has a different idea of what ‘fair’ is.  Better to start with a more extreme position and then get to know how your opposite number thinks.
  • Tools to help you better understand the other side (and yourself) – these range from questions to ask (e.g. always ask for more), to descriptions of different national negotiating styles and analysis of the different types of power negotiators can hold (e.g. power to reward).

Finally, the book is extremely well written.  It is an easy read, key concepts are referred back to multiple times as the book progresses, making them easy to remember, and it is often humorous.

Discussions between experienced negotiators are a bit like a game of chess.  The two sides enjoy pitting their wits against each other and understanding and countering the tricks and tools that the other side employs and if there is space for an agreement then the two sides will find it.  It isn’t easy for most people to become experienced negotiators though, they don’t get that many chances to practice and when they do the situation is often loaded with too much significance for it to be a good learning experience.  This book can help anyone to get up the learning curve more quickly and reduce the chances of a deal that could have been great getting ruined by poorly conducted negotiations.

I have had two negotiations in the last six months that were a real pleasure, one over a compensation package and one over deal terms.  Each time both sides pushed hard and discussions were occasionally tense and we ended up with a fair deal that everyone was happy with, and I also finished the discussions with more respect for the other side than when I had started (good negotiating skills are an asset to every business).  I hope that more of my negotiations in the future will be like those.

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  • Any thoughts on how this compares to Ury and Fisher’s “Getting to Yes” which seems to be a common text for b-school negotiation classes?

  • Iaindarroch

    Its an invaluable skill. The two which occupy my bookshelf and I’d recommend are Robert Cialdini’s Influence and Max Bazerman’s Negotiating Rationally. Its worth flicking through any decent books like this just to pick up a couple of tips to use.

  • Cialdini’s ‘Influence’ is a great book

  • I haven’t read ‘Getting to Yes’

  • Yes Bill Ury and Roger Fisher wrote the “Getting to Yes” book which was one of the foundation themes for courses run at the Program for Negotiation at Harvard, very much real world case studies as they were coaching Fortune 500 companies in parallel to the teaching work. I can highly recommend both as I studied there with Jeff Rubin (sadly missed) and Jeswald Salacuse as part of my Masters in International Business in 1991. The main thought being removing adversaries to a creative space to get them to a win-win. There is a link below to a free PDF outlining some of their thoughts and a link to an overview of the courses.
    http://www.pon.harvard.edu/freemium/improve-your-negotiation-skills-negotiation-training-from-the-pros
    http://www.pon.harvard.edu/category/courses-and-training

  • Thanks Damon

  • “Getting to Yes” and “Influence” are definitely two others one should read as other comments have noted. I’ve now ordered this book upon your recommendation. Thanks for the heads-up.

  • A pleasure 🙂

  • A pleasure 🙂

  • Dawson’s book is great on tactics. However, choosing with who and when to negotiate is even more important. 3D Negotiation, by David Lax and James Sebenius, made much more of an impression on me and helped me understand much more of the process. It would be my “if you read only one book..” choice.

    (Also, the section on ethics in Bargaining for Advantage, by Richard Shell, made me approach negotiations in a much more adult way.)

    If you have not read these books, I whole-heartedly recommend them!

  • Thanks Joost. I will check them out