This is part two of our textbook, Preparing
goals. So today, we're going to look at
preparing your goal. And it's important
to introduce this very basic idea of
negotiation, which I think most people
kind of overlook, buut it's key to
success in negotiation. And that is
setting a goal. In other words, what you
want? What do you want? Now, when we think
of negotiation, we often think about it
in general terms. When I buy something at
the night market, and I want to negotiate,
I want to bargain, what do I do? I ask
for a lower price. So let's say that the
thing I'm buying is one hundred dollars,
and now what do I want? I want lower. How
much lower? Well, 99 is better than 100. 95 is
better than 99. 90 is better than 95. Of
course, ultimately, you would like to have
it for free, for 0. Wouldn't you? Is that
possible? Of course, it's not possible. So
when you don't have a goal, you're just
thinking in a very general term. "I want
to get something more. I want to get
something better." Certainly, you've had
that experience, where you bargain, where
you negotiate to buy something, and you
say, "Well, I want the price to be lower or
can you give me something?" And then they
give you something for free. So you're
going to buy a keyboard, maybe from the
computer store, and you say, "The price is
too high. Can you cut the price? can you
lower the price?" And they say, "No, but
we'll give you this USB." And you say, "Oh
wonderful. I got a free USB." But, of course,
you go home, and you have like 100 USBs.
At home, this is completely useless, but
you got something for free, so you feel
good. So this is a way companies actually
use, in marketing, to help consumers feel
they've gotten something for free. But
the company doesn't really pay or it
doesn't really cost anything
significant to the company. It's a way to
fool you into thinking you got something.
You've got a bargain, you kind of
negotiated, even though, in reality you
didn't because did you really need a USB?
What's the value of that to you? The USB
memory stick was the value about 0 because
already have so many of them. So without
a goal, you're just kind of randomly
thinking, "Oh, I just want something better.
I just want something more." More
importantly, it's hard to know did you
succeed in your negotiation or did you
fail? And that is really important for
business. Because, as a business student,
you studied before, we need to have that
feedback loop. I need to set goals. I need
to execute. I need to then see how far did I
miss my goal, and then cycle back and
change again, and try again, and keep this
cycle going, a feedback and adjustment. If
you don't do that, how can your business
succeed or move forward? How do you judge
if you're doing better or worse than
before? So that's very important. Let's
look here at the book, this very, very
core idea of negotiation, which is
setting the goal. Now, in our RPG, we're
going to be talking about price. We're
going to be talking about shipping. And,
of course, you always want to have what? a
lower price. Of course, you always want to
have faster shipping. Of course, you
always want to have higher quality
products if you're the buyer, don't you?
Of course, if you're working somewhere,
you would always like to have higher pay.
I don't know anyone who tells me, "My pay
is too much. I need to get less pay." So
everybody always wants to get more, right?
Of course, the problem here is how do you
judge your success for your failure? So
we're going to look at this introduction
as helping us understand we need to set
goals. We need to be clear. Being clear is
better than being unclear. So how do we
define this? Do we say it's winning? Is
that how we say that? because that's the
way a lot of people talk about
negotiation. They say I'm a winner.
Everybody else is the loser. I win,
you lose. So I'm winning. I got more
than
you did, so I win. Let's look at an
example of this. Let's say Nancy. Let's
say that Nancy wants to get a bicycle.
She's living in the USA, and she wants to
buy bicycle. And she goes and she finds
this bike for one hundred fifty dollars,
and she negotiates. She bargains. She haggles,
and she gets the price down to 100. And wow that a really nice
reduction. That's like a one-third
reduction down to 100. That's great, so
she should be happy, right? So she goes
home and she feels like "Yeah, I'm a
winner. I got that price down." And then
she tells her friend. She said, "Hey I got
this great deal. I'm a great negotiator. I
bought this $150 bike, but i got it for
100". And then her friend, Ted, tells her,
tells Nancy, says, "Oh you know what? I
bought that same bike, that same model,
for $75." And Nancy's like, "What? I paid
100, and you got it for 75. I must be a
loser. I must be a loser." So wait a second,
Nancy just had a moment where she was a
winne, and now she's a loser. That seems
really odd. How is that possible? She
still has the same bike. Remember she
still has the same bicycle. So you're
going to use the bicycle for the same
things. Nothing changed. So what did
change? Well, her goal changed, and
specifically, in this case, she has no
goal. So she just thinks 150, bargain. Ok,
negotiate. Well one one-hundred is better
than 150, therefore, I must be ok. And then
she finds out Ted got it for 75. 75 is
better than 100, so that's even better.
But she's not thinking what was her goal.
What is she getting from this? what is
the value of this bike to her? Ok. And
remember they can be different values,
right? If I buy a bicycle, and I need my
bicycle because, once in a while, I like
to ride my bike around town,
then it's just kind of fun. But if you
buy bicycle because you need your
bicycle to go to work, and every day you
have to ride a bicycle 10 minutes across
campus to get to work, you need your
bicycle. Of course, your bicycle should be
more valuable to you than my bicycle is
to me. Even though we may buy a bicycle
at the same price, yours, actually, has
more value. So if the price was different,
who would pay more? You would pay more
because you think it has more value. So
in this kind of situation, it's very clear.
Nothing changes. It's the same bicycle. There's
too many things here we don't know. What
is the value of this bicycle to Nancy?
Does she need to use it? Does she want to
use it just for fun? And what is the
value of this bicycle to Ted? Now, of
course, you could argue, you could say,
"Well, if they both use the bicycle for
the same reason, then, obviously, she paid
more. Nancy paid 100. Ted paid 75, so he
got a better deal. He is more of a winner
than she is." And I guess that's kind of
true, but are their goals exactly the same?
That's really hard to say. Even people
who are using it for the same reasons
have different can have different goals.
Then how much money does Nancy have in
the bank? and how much money does Ted
have? I mean if nancy has lots of money
and twenty-five dollars more is not a big
deal to her, then maybe it makes no
difference. So this is important to
understand. In one moment, Nancy is a
winner. In the next moment, Ted's the
winner, and Nancy feels like a loser. How
many times does that happen to you? where
you think you've got something good, and
you find out somebody else got something,
and now you feel like a real loser. "I was
so stupid. Why didn't I bargain more?" Or
how about the time where you go to
negotiate. You go to buy something, and
maybe you're going to buy it and it costs
one hundred dollars. And you say, "Ah ok.
I'll pay you 85. And then the sales
person says, "Ok, 85." And right away, you go
"Oh, how could I be so stupid? They agreed
too fast. I should have said 75." Right? You
got what you asked for. Why now do you
feel bad about it?
Okay, so the point here is Business is..
got has to be more objective. You have to
make business more clear than your
personal life. And, in fact, you would be
good to do this in your personal life too.
You need to make your goals very clear,
especially in a business context. You
need to make your goals easy to
understand. And you need to have a good
reason or rationale why you have these
goals, what's going on with these goals.
If your goal is ten dollars per unit, you
need to share that with your team.
Because when you're in business, you're
not doing things all alone. And you need
to let your team understand why is it at
that ten dollars. If the price that
you're offered is 10.50, then, you need to
understand how is that different from 10,
and what does that mean, and how can that
difference be overcome, and how important
is that fifty cents to your company. So
we need to move away from general goals.
We need to move away from saying
something is just... more is better. I get
more it's better. Or I pay less is
better. We need to move away from that,
and we need to move into this idea of "I
have a specific goal. I'm going to try to
get my goal, and the closer I get to my
goal, the better." So a better goal maybe
for your... this example here, pay. I go
to work, and of course everybody wants to
have a pay raise. Everybody wants more
money, right? So what do you do? You tell
your boss, "I want more money." Of course,
what's your boss going to think? What do
you mean more? And then maybe your boss
gives you five percent more. And then you
feel, "Hey that was stupid. I should have
asked for six percent. He agreed to five
percent. Why did I only ask for five
percent? So before you go and ask for the
raise, what do you need to do? You need to
think clearly. What is it you want? Do you
want a twenty percent raise? If you want
a twenty percent raise, make that clear.
If you want a fifteen percent raise, make
that clear. You need to be really
clear about that. So if you make it the
twenty percent raise, but then your boss
only gives you ten, now you know you made
it halfway from 0 to 20. You made it
halfway, so you have fifty percent
success rate on your goal.
And then later, you can go back when you
make other goals and try to understand
"What did I do wrong? or how can i adjust
that to get closer to one hundred
percent? Maybe my goal was not realistic."
So the basic point of this chapter is
something that most business people
understand, and people with business
experience understand. But I think that
lots of times, we're just so busy doing
our business. We're so busy living our
lives, we don't plan. And the first part
of planning in negotiation is what is
your goal? what is it you want? Thank you.