In Part 1 of "Negotiations For Game Devs", I covered some fundamental concepts and terminology of negotiating. If you missed that post, take a gander before continuing on, as I'm about to make heavy use of that foundation. In this post, I'll walk you through the fundamental steps of conducting a successful negotiation.
How to Conduct a Negotiation
Step 1: Prepare
Do your homework. Identify your BATNA, reservation price, and target price. Do the same for your counter part. Identify the issues to be negotiated, and each of your positions and interests. Also rank the importance of each issue for you and your counterpart.
This is where us empathic types have a huuuuuuuge advantage over the bullies and blow-hards. Engage your empathy. Look at the negotiation from your counterpart's point of view. You may surprise yourself with how well you can zero on his or her perspective.
Justin Fischer is a video game producer and consultant. He is currently laying the groundwork to start his own studio and pitching in on Ray's The Dead. His game credits include Disney Infinity, Avengers Initiative, Guilty Party. He earned an MBA from Northwestern University’s Kellogg School of Management.
He wants to make life better for his fellow game developers (and end crunch) through more effective processes. To that end, he applies the knowledge he acquired through his MBA to game development at his blog Breaking The Wheel.
He can be found on Twitter at @justin__fischer (two underscores!) and is always happy to talk shop!
You can do yourself a major solid by preparing a negotiation planning doc like the one below. One column for you and your counter part, one row per issue, and a row each for BATNA, reservation price, and target price. For each issue, identify the position, interest, and priority respective to each party.
Create a Planning Document!
Again, filling out the column for your counterpart will involve lots of guesses and assumptions. That's okay. The goal isn't to be 100% accurate or clairvoyant. You're just trying to establish hypotheses that you can test, validate, and modify as you go through the negotiation.
The planning doc is like your script for the negotiation. You will need to improvise and adapt, but your planning doc is your guiding light
The planning doc is like your script for the negotiation. You will need to improvise and adapt, but your planning doc is your guiding light:
Step 2: Talk
Don't rush right into numbers, offers, and battles of wits. Strike up a conversation. Ask about your counterpart's personal life. Ask how business is going.
This isn't just idle talk. You're building rapport. Integrative negotiations, like relationships, are built on trust. Getting everyone in the room relaxed and in a cooperative mindset can make it much easier to collaborate on creating deals that work for everyone.
Once you have some rapport, ask about the issues. Ask your counterpart why she wants to make a deal? How would a deal like this fit into her company's strategy or current activities? Ask how your company can help or support that strategy. What pain points is her company currently experiencing? What's the mood at the company?
Integrative negotiations, like relationships, are built on trust. Getting everyone in the room relaxed and in a cooperative mindset can make it much easier to collaborate.
Ask about the individual issues. Ask why one issue is important to her. Or why Issue A is more important to her than Issue B. How do these issues play into her company's strategy?
The above is called a Q&A strategy, and it's an excellent tool for building trust and crafting better deals.
Don't approach this conversation with a conniving mentality. Your goal is not to trick your counterpart into revealing compromising information. Your goal is to find fodder for making a creative deal and to test some of the assumptions you made in your planning doc.
You may learn that the interest driving a particular position was something different from what you assumed. Or you may realize that your counterpart has different priorities than you thought.
Your Counterpart Is Not Your Enemy - Show Some Trust, And You Can Expect It In Return
And don't be afraid to reveal information of your own. In fact, if your counterpart is tight-lipped, you may need to offer some tidbits to trigger a norm of reciprocity and get her to reveal something in return.
If your counterpart is tight-lipped, you may need to offer some tidbits to trigger a norm of reciprocity and get her to reveal something in return.
Q&A Is Not Universally Effective
One caveat is that Q&A strategies are useful when negotiating with parties from so-called "Dignity Societies": North America, Western Europe, or Australia. However, Q&A is less effective for negotiations with parties from Asia ("Face Societies") or parties from South America, Africa, South Asia or Eastern Europe ("Honor Societies").
Face and Honor societies require far more nuanced and risky negotiation strategies, such as what's called a Substantiation and Offer strategy (S&O). S&O and the distinctions between dignity, honor, and face societies are outside the scope of this post.
Step 3: Offers and Counter Offers
Eventually the conversation will actually move to an offer. If your counterpart makes the first move, take your time. Review the offer, match it against your planning document. Use the offer to try to suss out what's important to your counterpart. Then draft a counter-offer. And, like I said in Part 1, remember to always make multi-issue offers.
Take lots of notes and track the progress of counter-offers. You can use your counterpart's offers to try and triangulate his sensitivities. If he yields a lot on one issue, but barely budges on another, its a safe bet that the latter is the high priority issue for him.
If the negotiation is happening in person, the norm is for the party making the offer to leave the room to give the receiving other party time to consider.
And while you never want to directly reveal your reservation price, you can signal that you're getting close to walking away by giving less and less on subsequent rounds of counters.
You can use your counterpart's offers to try and triangulate his sensitivities. If he yields a lot on one issue, but barely budges on another, its a safe bet that the latter is the high priority issue for him.
When you've hit your limit (either in terms of patience or reservation price), don't be afraid to indicate that your next offer is final. You don't need to be hostile about it, just plainspoken. And if you say it's your final offer, stick to it, although it is okay to let your counterpart make one final counter-offer in return.
And if you need to walk, walk. There's no shame in sticking to your guns, especially if you sincerely tried to find middle ground. Remember that value is a matter of perspective. Sometimes two people's perspectives just don't line up, and that's okay.
Here are some things you should never do in a negotiation.
Never negotiate one issue at a time
As stated in Part 1 it may feel expedient, but all you accomplish is mutilating a perfectly good integrative negotiation into a series of distributive ones.
Never negotiate just for the sake of negotiating
There's a fine line between negotiating and haggling. If your counterpart makes a great offer (in terms of what's on your planning document), don't make a counter offer just because you feel like you should.
And if you need to walk, walk. There's no shame in sticking to your guns, especially if you sincerely tried to find middle ground.
It's okay to push for more, but always remember that you're trying to establish a relationship. Coming across as a pushy prick is not a good start to a relationship. And always keep reciprocity in mind. If you do want to ask for more on one issue, consider yielding ground on an issue that's less important to you.
The one weird caveat is that, if you accept your counterpart's very first offer, he may think he just got hit with a Winner's Curse and overpaid. So, as bizarre as it might seem, making Counter-offer, even if his first offer was perfectly acceptable, might make him feel better about the outcome of the negotiation. What can I say? We're human beings. We're weird.
Never enter a negotiation you're not willing to walk away from
If you can't willingly walk away, you're giving your counterpart license to dictate the terms of the agreement.
Again, a negotiation is typically the starting point of a new relationship. You don't want to corrode the relationship before it starts. Plus, word has a nasty way of getting around.
This always looks dramatic and decisive in movies and television. In reality, it's the quickest way to completely torpedo a negotiation. People don't like to be threatened, and they usually threaten back.
If your counterpart threatens you, the most effective repost is to point out the way that you could retaliate, but that you'd much rather make a deal. This can often get discussions back on track.
And, if you feel that you absolutely, positively, MUST make a threat, it better be something you can back up. If you threaten to walk, and your counterpart calls your bluff, you better walk.
And, if you feel that you absolutely, positively, MUST make a threat, it better be something you can back up. If you threaten to walk, and your counterpart calls your bluff, you better f'ing walk. As my high school history teacher used to like say, don't let your mouth write checks you ass can't cash.
Never make an offer you don't actually like
Remember that any offer you make can be accepted. So never make an offer that you can't live with. On a related note...
Never rescind or modify an offer after it's been accepted
This is simply bad form and completely destroys your credibility.
Never make open-ended offers
Some negotiations happen at the table. Others happen via correspondence and phone calls over time. If a negotiation plays out over time, make sure you specify the lifespan of any outstanding offers you have made. It could be a limit of three months, thirty days, or the end of the week. There are two reasons to do this.
One is that it keeps the negotiation in motion and creates accountability for the counterpart to respond.
The second is that it limits your liability. By setting a lifespan, you are establishing that your counterpart can't just show up on your doorstop at some indeterminate point in the future, when you circumstances may be drastically different, and attempt to hold you to a stale offer.
By setting a lifespan, you are establishing that your counterpart can't just show up on your doorstop at some indeterminate point in the future.
But remember, this is a shield, not a sword. Don't use it as a weapon to pressure your counterpart into accepting a deal.
The Keys to Successful Negotiations: Prepare, Stay Calm, and Play to Your Strengths
One of my favorite movie quotes ever is from Michael Douglas's character in The Ghost and the Darkness: "Everybody has a plan until they've been hit". Negotiations are fluid and sometimes unpredictable.
The best you can do is to take the time to prepare as much as you can and, once you're in the negotiation, stay calm, and play to your strengths. Don't be afraid to take the time to think before responding. Don't be afraid to ask for a moment to consider an offer.
Prepare as much as you can and, once you're in the negotiation, stay calm, and play to your strengths. Don't be afraid to take the time to think before responding.
Understand your own strengths. Are you charismatic? Aggressive? Introverted? Empathetic? Analytical? Instinctive? Every disposition has it's pros and cons in a negotiation. Play to your strengths, be mindful of your weaknesses.
If you're aggressive, keep the conversation moving (nicely), but don't be hasty. If you're analytical, slow it down and give yourself time to think, but don't get so buried in the numbers that you miss non-verbal signals.
Always, always remember: the negotiation is the starting point, not the end game. You want to capture the most value for yourself, but not at the expense of the relationship. The best deal is the one that gives you the most value while also making your counterpart happy.
Always, always remember: the negotiation is the starting point, not the end game.
A good deal is an act of finesse, not brute force. Be Mohammad Ali, not Macho Man Randy Savage.
If you enjoyed this two parter on negotiations, swing by my blog, www.breakingthewheel.com! It's chock full of more meaty game development managerial goodness like this!
And if you are interested in learning more about negotiations and other soft-skills that can help you establish better deals, I have a killer resources page that I personally curated.