Negotiation: When to Stay and When to Walk Away
Make your next negotiation a success through these negotiation tips and examples.
Negotiation is at the heart of almost every business transaction — whether working on terms with potential investors or communicating with colleagues. Listen to Ghanian educational entrepreneur Charles Yeboah as he shares his real-world negotiation challenges, and gain surprising insights from Stanford Graduate School of Business professor Margaret Neale on how to turn your next negotiation into a win-win.
Charles Yeboah never imagined he’d be in the business of education. But after searching for a school for his daughter, necessity became the mother of invention. Today, International Community School is educating over 2,000 students across Ghana with plans to expand to other countries. When it came time to expand, Yeboah needed to put his negotiation skills to the test with potential investors. He learned firsthand what Professor Neale researches and teaches: that walking away from a deal is sometimes the best outcome… even when a $20 million dollar investment is on the line.
Professor Neale believes that negotiators require a different mindset, moving from the idea of negotiation as a battle to an opportunity for collaborative problem solving. She advises to never begin a negotiation without understanding what your alternatives are or what happens to you in the case of an impasse. “If I have a really good alternative, then you’re going to have to pay a premium for me to stay and play in this interaction. Otherwise, I can just walk,” says Neale.
Yeboah followed that advice in his own negotiations. “Whether it’s talking to a banker or talking to a potential equity investor, you think about what you want to achieve with that investment and what they want to achieve with that investment. And then you want to make sure that you marry the two aspirations,” he says.
Listen to Yeboah’s real-world experiences of sticking to his values while negotiating and get Professor Neale’s practical tips for preparing well and negotiating better.
Grit & Growth is a podcast produced by Stanford Seed, an institute at Stanford Graduate School of Business which partners with entrepreneurs in emerging markets to build thriving enterprises that transform lives.
Hear these entrepreneurs’ stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.
Charles Yeboah: I had an investor that had deep pockets that could invest virtually any amount that I wanted and take us to the level that we could even dream about. $20 million, he would put it in.
Darius Teter: Negotiation: for most of us, it’s a stressful, high-stakes process, but some of the biggest moments in your life will be negotiations. So how do you get to the point where you’re not only offered $20 million, but then you walk away from it?
Charles Yeboah: We were going to sign the agreement. After lunch, I said, “You know what? The deal is off. We can’t do this deal.”
Darius Teter: Negotiation would seem, by its nature, to be adversarial. It’s you, it’s me, and there’s a desk in between. Mano a mano! I have what you want and you have to take it from me, whether it’s a higher salary, a lower price, or a bigger investment. I win, you lose. That’s the art of the deal. But what if that’s wrong? Not only wrong, but harmful, actively limiting your possibilities? Let me introduce you to one of the best negotiators I know.
Charles Yeboah: So, hi, my name is Charles Yeboah.
Darius Teter: Charles lives in Ghana in the city of Kumasi.
Charles Yeboah: Kumasi is the second largest city in Ghana with, right now, probably about 3 million people. So if you think about Kumasi, you think about their Ashanti kingdom, you think about timber, you think about gold. You think about the central market, the largest in all of west Africa. I grew up in Ghana, went to school in Abidjan. I ended up in the states for my masters and PhD. Came back to Ghana in ’98. Actually studied theology and philosophy, so I was actually planning to become a theologian teaching at the Baptist seminary. School was not really a part of the game plan.
Darius Teter: That school that Charles is talking about is actually his business, International Community Schools.
Charles Yeboah: I was looking for a school for our daughter who was then eight. We didn’t find one that we really thought how they transitioned back to Ghana. So we decided to start one. This was 1999. And the school that started in our living room with seven kids now has become respected in Ghana with currently about close to 1,900 students spread on four campuses.
We grew quite fast. So by September we’re about 25. We did some kind of open house and then a year later, about 40, 50, we moved out. And it was at that time that we saw this appears to be something that may grow into something big. Two years later, we started looking into buying a permanent property income asset that we could build a future school on.
Darius Teter: As International Community Schools grew, Charles realized he would have to find external funding, either from a bank or institutional investors. And that meant negotiations. And when you want to learn about negotiations, there’s one person you go to.
Margaret Neal: My name is Margaret Neal. I go by Maggie. I am the Adams Distinguished Professor of Management, Emerita, at the Graduate School of Business at Stanford. For the last 30 years, I have been studying synergy among human beings, and I do it usually within two contexts: negotiation — how do we create and claim value? — and also, how do we manage our teams for innovation?
Darius Teter: Margaret’s the kind of person who’ll tell you if there’s food stuck in your teeth. She doesn’t come across as a kind of ruthless shark that you might picture when you think of a master negotiator, because that’s not how she approaches negotiation at all.
Margaret Neal: Most folks think about negotiation as a fight. And that fight’s characterized by, “I’m going to try to get stuff from you that you don’t want me to have. And I’m going to try to keep you from getting my stuff.” But if that’s how you think about negotiation, you are already in an uphill climb. Because what that does is, when you have that mindset, it provides the filter through which you evaluate your counterpart’s behavior. They’re “the other.” They’re the enemy. They’re who’s keeping you from getting what you want. So what I want to suggest is that when you think about negotiation, number one, you expand your definition. You move beyond that simple, “negotiation is battle,” to “negotiation’s a process.” It’s an opportunity for collaborative problem solving.
Darius Teter: So I’m fighting with my teenagers all the time, but maybe I need to recast that as collaborative problem solving.
Margaret Neal: Well, that’s the perspective to take. You want to move away from negotiation as battle. I was an associate dean at the Graduate School of Business. So whenever I would engage with one of my colleagues, they would come into the meeting and they’re already armored up. They’re like, “Okay, I’m ready for that fight. Because you study negotiation, you write books on negotiation, you teach negotiation. This is a negotiation.” And I said, “No, it’s not. No, no, no. I negotiate with people out there. But with you, it’s collaborative problem solving. We’ve got to find a solution that works for both of us.”
So, for example, you can start the negotiation by throwing down an offer. And it turns out that’s a really bad way to start a negotiation, because that just raises all of these flags about zero sum, battle mentality, fixed pie. So rather than that, start the negotiation with a conversation. Why are we here at the table? Why are you and I here at this table right now? What are we trying to achieve? How would we know what a good deal is, right? How would we know what a good solution is? What are the characteristics of that? What’s important to you? And let me share what’s important to me. We’re in this together. Let’s try to find a way to make us both better off.
Darius Teter: You’ve conditioned them out of battle mode so they hear you. They hear you—
Margaret Neal: They’re more likely to hear me, yes.
Darius Teter: More likely to hear you. That’s fascinating. But now that they’ve read your book, they’re going to come in there and so they’re going to think, “Oh, she’s going to use that collaborative advantage, Jedi mind trick on me.”
Margaret Neal: Yeah… they don’t read my book.
Darius Teter: This style of negotiation might feel unfamiliar. So how can you tell if you’re in a collaborative process or a battle?
Margaret Neal: There are three factors that go into this collaborative problem-solving perspective. The first is that, think about yourself as the protagonist. Am I better off from engaging in this interaction? Now that may seem like a low bar. I mean, why would any reasonable person engage in an activity that would make them worse off? And yet every one of us has, and we have taken an outcome that’s made us worse off and we knew it was going to make us worse off, but we privileged agreement. So the first criteria is: Is this likely to make me better off?
The second one is, because there is no command and control in negotiation, I need to understand my counterpart. What motivates them? What their interests are, their preferences, their challenges? Because I’ve got to get them to voluntarily walk this path of agreement with me. But the third and the most important component is that when I make a proposal, I’m going to frame that proposal as a solution to a problem that my counterpart has.
Darius Teter: See yourself as the protagonist, understand your counterpart, frame your proposal as a solution. I wanted to see if Margaret’s factors resonated with Charles’s real world experiences.
Charles Yeboah: I can remember a chain of schools, a gentleman, who was in West Africa, looking for schools to potentially partner with. And I think what really shocked him was that I knew what I wanted and that I was not particularly interested in just being part of a chain of schools that have so many campuses in South Africa. I wasn’t necessarily interested in being just part of a great movement. And I was interested to be aligned with somebody who shares our thoughts and ambition. And he thought that once he says, “We are from South Africa, we have all these schools,” I’ll be so wowed that I would say, “I want to be part of that.” You know? And when he realized that is not what moved me, he didn’t come back.
So for me, I think you are thinking about the business you run and you are thinking about what is best for the business. But you’re also thinking about what the person on the other side is thinking. I think you’ll be hard-pressed if you thought all about what you want to gain in this negotiation, they didn’t think about what the other party may be thinking about. So for me, whether it’s talking to a banker or talking to a potential equity investor, you think about what you want to achieve with that investment and what they want to achieve with that investment, and then you want to make sure that you marry the two aspirations.
Darius Teter: You need to calibrate a relationship to ensure that you can live together. It’s like a marriage. If you can’t live together, there’s going to be a lot of problems in the business.
Charles Yeboah: They have to be able to hear the story. You have to be able to tell a story about where you started from and where you are going. And most investors want to know that you have an interesting future that they can buy into, and everybody wants to buy into future success, you know? So if you can tell that, articulate that, then it becomes easier for people to buy into it.
Darius Teter: In his own way. Charles has developed a similar framework to Margaret’s. And one of the most empowering things about this approach is that it allows you to say “no.”
You have this great quote, which I heard in one of your presentations: “Every bad deal you’ve ever gotten, you’ve agreed to.” Tell me a little bit more about the psychology of settling.
Margaret Neal: Well, negotiation is an interdependent decision process. Both of us have to say yes. So when you’re confronted with a potentially bad outcome, if you say yes, you know exactly what you’re going to get, that bad outcome. But what I suggest is that you pause and you think maybe this isn’t a good outcome for me. Maybe my alternatives are better. Maybe walking away is the best option.
Darius Teter: Charles is a great example of how the deals you walk away from can be just as important as the deals you make.
I want you to walk me through an example of a negotiation with an investor that didn’t work out. Give me that story.
Charles Yeboah: Right after Seed. When we made a decision.
Darius Teter: So 2014?
Charles Yeboah: 2014, that we were going to come to Accra, I had an investor that had deep pockets that could invest virtually any amount that I wanted and take us to the level that we could even dream about. But this investor wanted to turn ICS into a premium school. So that would mean that our fees would have to grow up about four, probably about six times over a period of two years. And he will put in $20 million. He will put it in.
So you have to decide whether you want a big, glamorous campus that has only 200 kids, or you have equally good-quality school for a greater number of people. It’s a choice you have to make, right? You know, I remember I had to fly to London. We were going to sign the agreement. He was actually shocked when after lunch, I said, “You know what? The deal is off. We can’t do this deal.” $20 million is a lot of money. It can do a lot. We definitely will be huge competitor, but that is not what we wanted at that time. Money is good. It can come to you at the latter time without having to sacrifice your values.
Darius Teter: So I think this is a really crucial point. You were willing to pause on your long-term growth ambition rather than have it governed by an investor who was not aligned with that vision.
Charles Yeboah: Yeah.
Darius Teter: Even though, in the end, it was five or six years before you secured another investment of that size.
Charles Yeboah: There have been also two instances where I have signed an agreement and later I have thought about it and said, no, no, no, I think this was too harsh. And I think we need to renegotiate.
Darius Teter: The ability to walk away from a deal is a key form of leverage. But how do you ensure that it’s an option? For Margaret, it all comes down to preparation.
Margaret Neal: One of the strong perspectives that I take in negotiation — there are three criteria that you need to have control of before you initiate a negotiation. And the first is understanding what your alternatives are. What happens to you in the case of an impasse? And there have been tons of research done on the impact of alternatives on negotiator performance. And while there’s a lot of nuance in all of those studies, the main effect is clear: those folks with the better alternative walk away with more in the negotiation.
Darius Teter: So if you’re anchoring too low, you’re going to end up getting less than you should have.
Margaret Neal: Well, what I’m suggesting here is that my alternative determines where I anchor, right? And if I have a really good alternative, then you’re going to have to pay a premium for me to stay and play in this interaction. Otherwise, I can just walk.
Darius Teter: That renegotiation Charles mentioned? That was only possible because of his alternative.
Charles Yeboah: In 2006, when we had our first equity investor, we had to renegotiate the whole term sheet. And I was able to do that, by the way, because in addition to their funds, I was also raising some debt, funding from another source and it was almost a done deal. So it was, I had something to fall back on, even if that one didn’t go through. So they had no choice but to accept, to renegotiate the term sheet with me.
Darius Teter: But just having an alternative isn’t enough.
Margaret Neal: When you say, here’s my alternative, and this is a standard by which I judge what’s acceptable in our negotiation, I have just anchored myself to that alternative. I have limited the upside. And so rather than thinking about your alternative as a standard by which you judge acceptability, you should think about your alternative as a safety net. So it’s kind of like if you were a trapeze artist and something happens in the middle of your act and you end up in the safety net. Okay? Nobody would think that was an acceptable performance, right? It’s like, no, that was not what you wanted. It was not what you were hoping for. But if you are in the safety net, you’re really glad it’s there. So the alternatives are outside the negotiation. But what’s inside the negotiation is your reservation price. Your reservation price is your point of indifference between a yes and a no.
And when I say indifference, I actually mean indifference. That is, if you are at your bottom line, you should be willing to flip a coin. And if it lands heads, you walk away. And if it lands tails, you say, yes, that’s how indifferent you need to be. It’s a bright-line standard that you do not violate. Sometimes the best options that are available to you are what you had before you started. So you need to know where’s that point where this deal goes from being something I could say yes to, to something I should say no to.
Darius Teter: I want to explore that a little more, if I may, because I think in some cases you might have a financial model that gives you a number that gives you a reservation price. But in other cases, the other party at the table is offering you all sorts of possibilities that can’t be measured. They’re hypotheticals. If we do this deal, you’re going to get this upside in three years. It’s not in your spreadsheet, but I guarantee you that’s where the market is heading. Does that muddy the waters with the coin-flipping?
Margaret Neal: No. What it says is: let’s try to think about what that really means and what are the contingencies that need to be put into place because I guarantee you, you said, that this will happen in three years. That’s fine. Are you willing to bet on that?
Darius Teter: In his negotiations, Charles’s “reservation price” wasn’t just financial. It also reflected his values.
Charles Yeboah: So it’s a vision alignment. And so one of the things I perhaps think about negotiation is what can you let go and what can’t you let go? It’s not every money that you want on your table. It is money that is aligned with your vision. And I think it’s critical that you know what you want, and to what extent you are willing to go to make sure that even if you’re going to be diluted, that you are not over-diluted.
Darius Teter: That idea of knowing what you want is what rounds out Margaret’s negotiation prep.
Margaret Neal: Aspirations are critical because one of the things we know, again, from massive amounts of research, is that our expectations affect our behavior. So if you think about your alternative, it’s your safety net and your reservation price is the worst possible deal you can say yes to. So what you need to do, because those are setting your expectations, but they’re at the bad end of the agreement, you need to set an aspiration, an optimistic assessment of what you could achieve in this negotiation.
When I talk about optimistic assessment, it’s not a number you throw out that you don’t have any commitment to. You have done your homework. You’ve thought about your position, your strengths, your weaknesses, the environment you’re in, your counterpart, their strengths and weaknesses, and said if things went really well, what could I hope to get? You’re probably not going to reach it, but by setting an aspiration, on average, you will do better. Most folks do not set an aspiration and they don’t understand how powerful it is to set this optimistic assessment.
Darius Teter: It’s funny, because it almost shocks me that that’s a common mistake — because, why are you entering a negotiation if you don’t know what you want?
Margaret Neal: People do it all the time. They have these rules. I want more. Well, what does that mean? Do you want more of everything? Do you want more of this thing or that thing? The common mistake is people walk into a negotiation, having not thought systematically about any of those factors, not alternatives, not reservation price, and certainly not aspirations. And what distinguishes successful negotiators from their less successful counterparts is the quality of their preparation. Preparation is key in negotiations.
Darius Teter: Once you’ve prepared, you actually have to do the damn thing. And there’s plenty of so-called rules out there for how to negotiate. I wanted to find out which of those were backed up by actual research findings. And by research, I don’t mean your aunt’s cousin on Facebook.
I’m going to play the true or false game.
Margaret Neal: Okay.
Darius Teter: True or false: it is better to negotiate issue by issue.
Margaret Neal: Absolutely not.
This is one of the big fallacies in negotiation. Most of us look at negotiating issue by issue as making it easier, reach a deal on an issue. You put it aside, you reach a deal on another issue you put aside. Now it’s harder to walk away. What you’re doing is — it’s an irrational escalation of commitment, right? So I can’t walk away because I’ve already got two issues of eight done. But secondly, what happens is we have to choose which issue to work on. And we usually go with what we think are the easiest issues first. Solve the easy issues first. And this is a bad strategy. What makes you think that my easy issues are your easy issues? If I solve an issue that’s easy for me, but it turns out to be really important for you, I’ve lost a degree of freedom that I could have used to make a trade.
Darius Teter: You gave away leverage.
Margaret Neal: Without getting something in return.
Darius Teter: Yeah. That’s interesting.
Margaret Neal: So part of what is a strong recommendation is to really think about negotiating at the package level. So think about all the issues, crafting a package that reflects our unique contribution.
Darius Teter: So — true or false: whoever speaks first loses.
Margaret Neal: Well, sometimes.
Turns out that, on average, about 80 percent of folks think that the better outcome is to receive the first offer and they do so because they are believing that they get an information advantage. And I may learn when I receive the first offer that you may value the issues quite a bit differently than I do, or I might even learn that you have no clue what you’re talking about. So that’s a reason why you might receive the first offer. But the counter is also powerful. That is making the first offer. And when I make the first offer, I get to set the standard of where we start, watch what happens just by making an offer. So I make an offer to you. Is it closer to your reservation price or to your aspiration price? What do you think?
Darius Teter: I’m guessing it’s closer to my reservation price.
Margaret Neal: Yes. When I make the first offer to you, is it closer to my aspiration or my reservation?
Darius Teter: Aspiration.
Margaret Neal: So at the moment, when I make a first offer and you hear it, your mind and your expectations move to reservation price. My mind is still in aspiration-land. So by simply making the first offer, not only do I set the anchor, but I subtly suppress your levels of expectation while keeping mine at the aspirational level.
Darius Teter: Being honest is the best approach when negotiating with a third party — true or false?
Margaret Neal: So I’m pretty clear that I don’t lie in my negotiations, but that doesn’t mean I tell the whole truth and nothing but the truth all the time. And the reason I choose that course of action is because it’s important for me to not be caught in my lies. But also there’s sometimes when I tell the truth, you don’t believe me. And then what have I got? So let me give you an example. Reservation prices, bottom lines. How many times have you been in a negotiation where someone has said to you, “Okay, let’s just cut to the chase. What’s your bottom line?”
Darius Teter: Every car I ever bought.
Margaret Neal: Right. So let’s say that you and I are negotiating, you ask me that, and I give you a number. Here’s my bottom line. Number one, truthfully, do you believe me?
Darius Teter: Usually not.
Margaret Neal: So you don’t believe me because you say, why would anybody, why would any reasonable person tell me their true bottom line? What you’ve given me is your faux bottom line.
Darius Teter: Right.
Margaret Neal: And there’s still movement.
Darius Teter: Charles certainly keeps some of his cards close to his chest.
You mentioned this one case where you had an alternative to equity in the form of some type of loan and you had that in your back pocket. So when you go into a negotiation, is there important information that you don’t share, at least at the outset?
Charles Yeboah: I knew this particular debt finance was going to take much longer. They didn’t know that. So I wouldn’t tell them that it was going to take a year for me, too. They just needed to know that I have that as a way of letting them know, if it doesn’t take ours, he’s going to get this money. But I didn’t need to tell them how long this was going to take, because then that would’ve given them an upper hand. “Well, if we don’t give it to him, he’s going to be in big trouble.” Sharing some aspect of the information was good. But at the same time, it was good not to share certain aspects of the information. Because I think when people know already either they can hit who started or you may be getting what they give you when you could even get better than what somebody else you know had of it. You know? So sometimes it’s good to keep it to yourself and not share.
Darius Teter: When I’m negotiating, I should not show emotion. True or false?
Margaret Neal: False, because when I show emotion, regardless of whether that emotion is true or strategic, my counterpart is very likely to believe it is true. But we’ve all seen examples on television of lawyers acting strategically, acting really angry, but they’re really not, right? So we think emotions reflect. The other point is: How do we decide what we want? And it turns out that emotions are huge clues that we have about our preferences.
Darius Teter: Are you saying that if I suppress my emotions, I’ll have a harder time understanding my aspiration?
Margaret Neal: If you suppress your emotions, not only will you have a harder time knowing what you want, but your counterpart will also be put off by that. And not… because what happens is when you spend all that emotional energy suppressing your emotion, you suppress a whole lot more. And so they think you’re more aggressive. They think you are more separate from —
Darius Teter: More secretive.
Margaret Neal: You basically are just unreadable because you’re suppressing everything.
Darius Teter: That’s interesting. That’s counterintuitive to what I thought.
Charles Yeboah: There are times where you need to be strong. You need people to know that I’m not going back on this one.
Darius Teter: So the time to be emotional to be, I think the word you used, to be strong, is in the nonnegotiables, those things that you cannot give away.
Charles Yeboah: Yeah.
Darius Teter: So it’s, I don’t know if that means strong means heated and emotional or just firm and clear.
Charles Yeboah: Firm and clear and standing your ground and saying, “This one, I’m not giving up on that.” Every investor wants far more returns than you are willing to give them. And so sometimes, even when they know what they’re asking for is unreasonable, they will still ask for it until you are able to say, “This one, you are not getting it because I’m not going to give it.”
Darius Teter: True or false: recurring negotiations are different than one-offs.
Margaret Neal: Absolutely. For example, in the future, there’s an opportunity for reputation to have an impact. A one-off negotiation, reputation is not really that important because, at least my economist colleagues would argue, that reputation is a function of future cooperation. Reputation exists to make future interactions cooperative. There’s no future interactions. Why not?
I’ll tell you a quick story about one of my deans in one of the schools I was a faculty member in. He was a big builder dean. He built lots. He built three buildings over the course of his deanship. And surprisingly, in the first two, they were under budget and on time. And I mean, who does a construction project and it’s under budget and on time? The third building he built with the same people — the same builders did all three — in the middle of the building process he announced that he was stepping down as dean. Same builders, but now that project was over budget and way late. Why? There was no tomorrow for the builders. So they’re going to take their scarce resources and apply them elsewhere. There’s no reason to do it here because there’s no tomorrow with this person.
Darius Teter: As Charles learned, even when you’ve agreed to terms, the negotiations may not be over.
Charles Yeboah: It was a time that the school needed cash. The Accra campus has started. We’re looking into the future. I had walked out of this deal in London, and this is now the next person on the table. I think I didn’t do a good job comparing the term sheet that I signed with the business agreements that were put together later. Investors have a fine way of sneaking certain things in that were not in the original term sheet that you almost have to read, if you can, page by page or have somebody look at it for you. And I have learned that you don’t quickly go to a lawyer to look at a business deal until you have actually gotten the business deal in your comfort zone.
Darius Teter: So the mistake, as I understand it, in this case, you yourself didn’t fully understand what was in the term sheet. So you were negotiating without enough information.
Charles Yeboah: I think I did understand the term sheet, but after you’ve signed a term sheet, term sheet is just about two, three pages at most. And then you have a business agreement, shareholders’ agreement, that could go for about 200 pages. And that is where you show the problem is. It is so easy to understand three pages and to read it thoroughly. And it is a totally different thing to understand 200 pages. In writing the business agreement, there are phrases.
For example, the investor comes in, does a valuation of your school, and he says, your school is worth 1 million cedis. And then he says, I’m bringing an equivalent of, say, 1.5 million cedis into the school, but it’s in euros. But there is a catch-22 in that. And the catch-22 that I later found out is that because he’s invested in hard currencies, at the time he dropped his money, the cedi had depreciated. So he gained value. By the time I woke up, his value had gone way up because he’s taken advantage of the time of his investment to gain value. That is something that sometimes it’s difficult to see ahead of time until it’s happened.
Darius Teter: So in other words, you had no exchange rate protection if the cedi was depreciating.
Charles Yeboah: Yes.
Darius Teter: No matter how collaborative the process, negotiation can still feel intimidating, but Margaret has some tools for lowering the stakes.
I’m struck by how much of your advice is about actually setting your own mindset about taking care of your own psychological perspective when you walk in the room as much as anything. Building on that, are there exercises for entrepreneurs that you can recommend for them to sort of get that negotiation mindset?
Margaret Neal: Well, one of the things that I think we way undervalue is the power of the ask. And I am a real proponent of asking folks for what it is you want. Because if you don’t ask for what you want, how will your counterparts know what it is you want? If I don’t ask for what I want, who will? So number one, ask for what you want and realize that we dramatically underestimate people’s willingness to comply with our requests. People are actually much more willing to accommodate our requests than we think they are.
The second thing I would do is find negotiation situations where it’s not dangerous. The first assignment that I give my MBA students when they are in a negotiation class with me, I say, “Okay, here’s your assignment. Go out into the 48 contiguous United States, and I want you to purchase something that is a fixed price item. And I want you to bring back proof and the item that you have purchased it for less than the fixed price.” And they’re like apoplectic, they’re like,
Darius Teter: “You can’t do that.”
Margaret Neal: “You can’t do that here.” Exactly. And about 85 percent are successful because it turns out this is a really easy exercise, because it turns out people do accommodate our asks. I think that part of the goal in any of these exercises is to make this notion of figuring out what your alternative reservation and aspiration price are, is second nature to you. And so that’s what the practice is about. And it’s practiced in a variety of different situations. Every time you have a meeting, if you’re in a meeting and you want to have influence, it’s an opportunity for a collaborative problem solving for negotiation. And it’s the mindset and the practice together.
Darius Teter: That formula of mindset and practice is powerful. It’s how Charles has grown his school from just seven students in his living room to almost 2,000 across Ghana.
How did you get the confidence to do all of this? And how do you demonstrate that confidence when you walk into a room?
Charles Yeboah: I think it comes over time. If you’ve done it before, it builds your confidence level, whether you can do it again, you know? So I think success always begets success, like we say. So once you’ve been successful once, you kind of gain confidence. Well, I’ve done it before. I guess I can do it again. And then just realize, I think I can do it better next time. You just have to have the confidence to face the next person and be sure that you can get what you want, and allow him or her to get what he or she wants also. So it’s not always what you want to achieve, but what he also can get.
Darius Teter: If you found this episode interesting, you’ll be excited to learn that our guest, Professor Margaret Neal, is leading a week-long intensive program at Stanford on this very topic. The influence and negotiation strategies program will help you build practical skills for negotiation based on proven methods. Most importantly, you’ll get valuable practice, actively negotiating with your peers so you can identify your weaknesses, grow your strengths, and become more comfortable asking for what you want. The program runs in person here at Stanford University in California from October 2 to 7. There is limited space and the deadline to apply is September 1, so don’t wait. And to find out more, visit the link in our show notes. I’d like to thank Charles Yeboah for his time with us and for sticking to his values in his negotiations. And I’d also like to thank Professor Margaret Neal for collaboratively problem solving with us.
This has been Grit & Growth with the Stanford Graduate School of Business. And I’m your host, Darius Teter. If you like this episode, leave us a review on your podcast app. It really helps us to share the stories of these incredible entrepreneurs with as many people as possible. To learn how Stanford Graduate School of Business is partnering with entrepreneurs in Africa and Asia, head over to the Stanford Seed website at seed.stanford.edu/podcast.
Grit & Growth is a podcast by Stanford Seed. Laurie Fuller and Erika Amoako-Agyei researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steves, with writing and production from Andrew Ganem and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll see you next time.
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