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Bargaining vs Negotiation: Do you really know the difference?

By |February 20, 2017

Two weeks ago, I attended the SaaStr 2017 conference in San Francisco.  It was a collection of Software- As-A-Service start-up CEOs, CFOs, COOs as well as marketing and sales geniuses.  They meet once a year to network, listen to speakers and view/sell the latest products.  These attendees, by my limited observations were all 30 to early 40-somethings; all wicked smart and extremely successful.  I was clearly one of the dumbest guys in the room.


I was invited to the conference by the great folks over at who are developing a product wherein BlackSwan techniques can be used.  While there, I engaged some of the conference goers in what was titled a “60-Second  Negotiations Battle”.  The purpose for the “Battle” was to illustrate most people have a predisposition to bargaining as opposed to negotiating.  Bargaining is a discussion about what the other side wants.  Negotiation is a discussion about why they want it.  You cannot fully engage the other side in a discussion about what they want until you understand why they want it.

The ”Battle”  was set up as follows:

First, the participants were asked if they could described the difference bargaining and negotiating.  Most, not surprisingly, defined them both as the same.

Next, they were told imagine me as a bank robber.  I have no gainful employment.  Robbing banks is how I put food on the table and buy some of life’s finer things.  It is what I do to survive and I am good at it.  I know what time the employees arrive.  I know when they leave.  I know when the trucks deliver money and when the time-lock on the safes are deactivated.  Today, despite my preparations, the police arrived and interrupted my withdrawal.

The participants were instructed that they could not offer an exchange of weapons, ammunition, other hostages, drugs or alcohol.  Having received their instructions, the exercise began with me saying, “I want a car in 60 seconds or she dies.”  to a man (and one woman) who all immediately defaulted to bargaining.  Under the pressure of the stakes and time constraint, stressed kicked in.  Once stress kicked in, they became uncomfortable.  We all hate being uncomfortable and we will do whatever we can to relieve it.  In this scenario, bargaining was the most expedient way to obtain that relief.  They wanted to know what kind of car.  They wanted to haggle over the time, telling me I was being unreasonable.  One even threatened to kill me if I killed her.  If they had moved from discussing what I wanted to discussing why I wanted it they would have gotten information about my back story (unemployed, loser, two estranged children) and been rewarded with talking me beyond my deadline.

It was eye-opening for those who chose to “battle”.  They recognized how they became emotional during a high stress event which constricted their thinking and affected their performance.  What does this have to do with business negotiations?  The same factors that affect hostage negotiations; high stakes, little time to prepare, outside influences, micromanagement, high emotions; are the same factors that affect business negotiations.  It’s the same “battle”, different arena.  As hostage negotiators, our success rate is just under 95%.  What is yours?