When not to negotiate?
I got thinking about this thanks to an excellent post by Anand Sridharan, that said (among other things), that investors and companies that value the firm at more than 30% apart should walk away, as there is little common ground. In general, there is a deeper question, relevant to life in general - when do you give up? This could be a business deal, a relationship, an experiment ... heck, even an exam ! I will focus on what I believe is the most common incarnation of this question - a group (2 or more) of people making a decision. This could be a team staffed on a work assignment, or even a couple "sorting things out".
The decision to not negotiate should be based on two things - (a) how far apart the opposing positions are and (b) the estimated willingness to find common ground. I once negotiated a car purchase for a friend, and started with a dramatic (almost ridiculous) offer, but both I and the salesman wanted to make the deal - which is (b) - so we eventually hammered out a deal.
My hypothesis is that if neither (a) nor (b) exist, dont negotiate. Else, negotiate until common ground is found or neither (a) nor (b) exist. Thoughts?
I got thinking about this thanks to an excellent post by Anand Sridharan, that said (among other things), that investors and companies that value the firm at more than 30% apart should walk away, as there is little common ground. In general, there is a deeper question, relevant to life in general - when do you give up? This could be a business deal, a relationship, an experiment ... heck, even an exam ! I will focus on what I believe is the most common incarnation of this question - a group (2 or more) of people making a decision. This could be a team staffed on a work assignment, or even a couple "sorting things out".
The decision to not negotiate should be based on two things - (a) how far apart the opposing positions are and (b) the estimated willingness to find common ground. I once negotiated a car purchase for a friend, and started with a dramatic (almost ridiculous) offer, but both I and the salesman wanted to make the deal - which is (b) - so we eventually hammered out a deal.
My hypothesis is that if neither (a) nor (b) exist, dont negotiate. Else, negotiate until common ground is found or neither (a) nor (b) exist. Thoughts?
posted by Mukul Chawla at 3:26 PM
1 Comments:
The classical example is the hotmail acquisition by Microsoft.
Sabeer Bhatia was thinking a figure close to billion dollars and Bill gates was thinking a couple of hundred million dollars - tops. The sale was made at around half a billion or so. You do the maths!
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