Negotiating in Times of Change
In the wake of Coronavirus, the Polsky Center has organized its first virtual Small Business Bootcamp in the hopes of helping small business owners and entrepreneurs navigate these difficult and unpredictable times.
The Small Business Bootcamp offered 10 live-streamed lectures over the span of a week. Kicking off the series was Professor George Wu presenting on “Negotiating in Times of Change.” In his session, Professor Wu encouraged the audience to remember their strengths and what their businesses have to offer, especially when difficult times already require so much sacrifice.
While the series was focused on how to negotiate during this pandemic, Professor Wu pointed out that this skill is useful during both stormy and sunny times. Effective negotiating requires recognition of when a conversation is needed and should not be used recklessly. It should produce not only positive outcomes but also stronger relationships. Most importantly, negotiation should always follow an elementary rule: treat others how you would like to be treated.
In explaining the basics, Professor Wu cited fellow Booth Professor, Nicholas Epley, whose research reveals people naturally aren’t very good at perspective-taking. To carry out a strong negotiation, it’s important to put yourself in the other’s shoes and put in the time to prepare before meeting at the table. What may seem like a great deal might not actually be the most productive. Professor Wu offered the example of sisters fighting over the last orange. The parent resolves their fight by making the sisters split the orange, but later learns that one sister wanted to eat the orange, while the other wanted the peel for baking. Both sisters valued the orange for different reasons and could have both satisfied their interests if they communicated.
In order to avoid a situation like the sisters’, Professor Wu stresses preparation. Each party is trying to do better by negotiating than they can do otherwise. This means you would ideally give up something relatively cheap for something relatively valuable. It is important to identify your priorities as well as your interests and positions. You may find yourself stuck on a position, a specific demand on an issue when your interest can actually be resolved in a variety of ways. Find the hidden rationale and organize your priorities so that when you’re at the table, you can alter your proposal as the negotiation develops and not lose sight of your goal.
Throughout the lecture, Professor Wu emphasized the importance of both identifying your own goals and remembering that there’s another person on the other side. These arguments came together in his discussion of fairness. He explained that people generally think of themselves as fair, so appeals to fairness can be powerful. He offered the example of Sarah Talley and Walmart.
Many years ago, Sarah became a supplier of pumpkins and melons for Walmart. In 2005, harsh growing conditions caused a massive shortage of watermelons, but Walmart needed an abundant supply for the 4th of July for very low prices. Sarah couldn’t make a profit from Walmart’s offer, and Walmart was convinced conditions would change by summer so Sarah’s prices were too high. Sarah didn’t challenge, but offered a contingent deal, if Walmart’s projection was right she would give a discount, but if she was right, Walmart would have to pay her price. Sarah was correct and Walmart agreed to pay her prices.
During these difficult times, many business owners are struggling to pay their commercial leases. Most tend to acquiesce or walk away, but Professor Wu suggests asking two questions:
- Imagine that you got exactly what you wanted, what did you do?
- If you say no, what’s your landlord’s reaction?
When there are disagreements during negotiations on commercial leases, tenants tend to focus on only the catastrophe they might face, lower revenue, having to furlough everyone, shutting down, etc. However, it’s important to remember that if there’s disagreement, your landlord’s reaction is likely also “oh no!” They are also in a jam.
Negotiations are often looked at as a point of conflict, but Professor Wu shows how negotiations can be productive, fair, and unifying.
The Polsky Center’s virtual Small Business Bootcamp was made possible through a partnership with the Rustandy Center for Social Sector Innovation and the Office of Civic Engagement at the University of Chicago, on behalf of a larger coalition of University groups and partners.
// We will be recapping the Bootcamp all week, but all the sessions were recorded and can be found online, here.
Interested in seeking continued coaching and support? Apply for the Small Business Circle. Applications are due Thursday, April 28 at 5:00 p.m. CST. Learn more and apply. >>