Why win-win doesn't work in tough negotiations. Insights from Matthias Schranner, CEO of The Schranner Negotiation Institute

Hello, my friend, and welcome to another episode of Negotiate Anything. Thanks for spending time with us today. It's listeners like you in 181 different countries that have made Negotiate Anything the most popular negotiation and conflict resolution podcast in the world. I'm your host, Kwame Christian. I'm a business lawyer, mediator, professor, and the director of the American Negotiation Institute. Before we get started, I have two quick questions for you. Is negotiation a critical part of what you do? Do you need to resolve conflict, persuade at work? If you answered yes to both of those questions, visit our website to learn more about our negotiation workshops. We've traveled the country working with professionals just like you, and we'd love to have the opportunity to work with you, too. Check out the link in the description to learn more. Our guest today is Matthias Schreiner. Matthias is a negotiation expert that was originally trained by the German police and the FBI as a lead negotiator for high stakes situations. For the past 15 years, he and his team at the Shriner Negotiation Institute have been advising clients including the un, global corporations and parties in difficult negotiations. I know you're going to get a.

Lot out of this one.

So without further ado, let's jump into the interview.

Matias, thanks for joining us today.

Thank you for having me. Thank you.

Oh, it's my pleasure. I am excited for this interview. I've been excited for this interview for a really long time. But before we jump into it, can you tell the audience a little bit about yourself and what you do?

Well, I'm a. I'm a former hostage negotiator. And what I do now, I transfer my knowledge, my experience from tough negotiations, really, to, let's say, very dangerous negotiations, into the business and political world. Because what I have experienced that most of the business managers are not prepared for tough negotiations.

I love that. No, that's a really great point. I think in using military terms, I think a lot of the people in the business world are trained for peacetime, not for wartime. And so I can definitely see where those skills could translate.

Yes. Following up to your statement, most people are trained for peacetime. As you mentioned it in our language, in our negotiation language, that means they are trained for win, win results. And in tough negotiation, there is no win win. There is a winner and a loser. And this is why we came up with our philosophy of negotiations, which is you shouldn't avoid a deadlock scenario, you should create one. Because if you create a deadlock scenario, then the real, the tough negotiation starts. And then you need to use different strategies and tactics.

I love that. That's a brilliant point. So when you say deadlock scenario, what do you mean by that?

A deadlock means that there's a high demand and no cooperation. This is the, let's say, a hostage taker telling the police negotiator, if I don't get this, like, getaway car, I will kill the first hostage. So high demand and no cooperation. And this is very often in business as well, that, let's say procurement department is telling the key account manager, if you don't reduce the price by 3%, we will choose your competitor. It's also high demand and no cooperation. And the question is how to handle such a situation.

So in your opinion, when you have that type of scenario where you have created the deadlock, what is the first thing you suggest people do in that scenario?

If you create a deadlock, then you send two signals. Signal number one, I'm in a powerful position because I believe I do have the power to get what I want. Signal number two, more importantly, from my perspective, you're prepared to negotiate. So you don't want to avoid a conflict. You want to get into the conflict right now. This is a clear signal to the other side. I'm here to negotiate.

I love that. And I really like the fact that you started off with signaling that you're in a powerful position, but then immediately sending the second signal that although I do have a power position, I'm willing to still utilize the diplomacy first model.

You're right. It's always a combination. It's a signal of I'm in a powerful position. Here's what I want. We call it let's put the fish on the table. So here's my demand. Always in combination with a willingness for cooperation, because otherwise it would be a threat. And if you threaten your negotiation partner, then it's not a prepared deadlock situation. Then it would be an emotional deadlock situation.

I like that distinction. So prepared deadlock versus emotional deadlock. Can we dig a bit deeper into that? What exactly do you mean?

If you create a deadlock, that means you have a clear target, you have a clear strategy and tactical steps. It's a rational approach. In an unprepared deadlock, it's an emotional deadlock because you're emotionally attached. So in a tough negotiation, for example, if you believe that you are right, if you believe that your standpoint is right, then you expect from the other side, they come up with some cooperation, that they understand your standpoint, then they have the same understanding of a Negotiation, if they don't do what you want, then you're really disappointed and then you get emotionally attached and then you end up in a so called emotional deadlock scenario.

Okay. And so to avoid that emotional deadlock, what are some things that people can do to or some things that they should keep in mind?

So principle number one, never believe that you are right. Because if you are right, then you tell your negotiation partner that they are wrong. And a negotiation is not about right or wrong. A negotiation is not to convince your negotiation partner. So this is our principle number one in our philosophy. Whenever negotiate against someone, we negotiate to achieve an agreement. We always try to find a solution which is not convincing a negotiation partner. And this is a completely different approach.

I love that. That's brilliant. And what's interesting is that although one of the first signal that you've sent is one of power, it is tempered by humility and respect. Because you have to have a significant amount of humility to go into a conversation not believing that you're right with that level of openness.

Right, exactly, exactly. It's exactly what you said. This signal of being in a powerful position. It's more like, I'm well prepared, I know what I want. Let's negotiate always, as I said before, with a high willingness for cooperation.

Right. Now let's move on to that second signal. So we talked about sending the signal that you're in a powerful position and then the second signal which is showing that you're prepared to negotiate. Let's say we are dealing with somebody who is emotionally triggered. Personality wise, they have a high level of emotionality. What are some things that we can do to temper our approach to make sure that, or at least decrease the likelihood that they'll interpret what we're doing as a threat?

Well, as an police negotiator, you learn two very important tactics. Number one, always talk about common interests, never talk about the conflict. So say, okay, we are in the same situation, we have the same target, we have the responsibility to find a solution. So talk about common interests. And number two, it's not about being right or wrong. So you would never say you are wrong. You're not allowed to do it. It's always from my perspective, based on my experience. So it's always about your perspective, not about your position.

I love it. That's brilliant. That is brilliant. One thing that I've noticed when I've traveled doing these workshops, especially on the procurement side, there's situations where people are single sourced, so they only have one supplier for this Specific need, and it's a critical supplier, so they can't simply do without the thing in question. And so at times they've had the experience where the supplier makes a unilateral demand and says, listen, I need you to agree to a price increase or we're going to stop shipment. And so the procurement folks feel as though they don't have the power. So circling back to the first signal that you send to show that you're in a powerful position, where would they find that power?

Well, if someone is negotiating with you, then, you know they need something, otherwise they won't negotiate. So if a single source is telling you, we don't need you, we will choose your competitor, something is wrong. Because if they could choose your competitor, they wouldn't negotiate with you. So if someone is starting a negotiation, then you know they need you. If they start with high demand and no cooperation, this is what we teach them. It's a clear signal I'm in a powerful position and they have a willingness to negotiate. So if they start with high demands, then you have to start with your demand saying, okay, thank you so much for expressing your demands. From our perspective, it would be important to double the volume, for example, and then you are at the starting point of a negotiation.

Okay, so the response isn't to respond in fear and kind of give into that threat. It's to find your powerful position and then respond in kind and in a way.

Right, exactly. If you give in or if you. So what most people do, Most people try to avoid this. This conflict. They try to offer a compromise, they try to give in, they try to postpone a decision. Or worst case, they try to escalate within the company. Like, I can't decide it by myself. I need to involve my top management. This is the wrong signal, because it's a signal I'm in a very weak position and I'm not ready to negotiate. You have to do exactly the other way around, saying, hey, thank you for expressing your demand, and here's what I want. Let's get started.

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I love this. And so this is how you would handle the beginning of the negotiation. When it's a difficult situation. First you would create that deadlock and then send those two signals. One, that you're in a powerful position, two, that you're prepared to negotiate. What would you say is the next step? Where what happens in the middle game?

In the middle game it's about moving. There's the so called principle of reciprocity. It's give and take. That means if the other party is moving a little bit, then you have to move as well. So if they offer say to focus on a three year instead of a two year contract, then you have to say thank you, both parties are focusing. A long term agreement. Could we in addition ask for and then you come up with your demand. So it's if the ball is rolling, you need to keep, to keep the ball rolling, you have to always be in this willingness for cooperation. That means you have to come up with a new demand. And this is why we, in our philosophy, we never prepare arguments for negotiation. We always prepare demands if they start to. So if a negotiation partner, if they start to move, then you have to move as well with the demand, not with an argument which is completely different. You know, as a police negotiator you start almost every negotiation in a deadlock because if you arrive as a police negotiator, the deadlock is already there. Like a hostage taker. If you don't do this or someone is committing suicide, if I don't can see my wife, I will jump. So it's always a deadlock. So for a police negotiator it's a standard situation.

And one thing I wanted to get into as well, because I think this was a brilliant point, is the distinction between an argument and a demand. What is that distinction in your eyes?

Well, an argument means I'm right. So if I say my product is better than the product from my competitor is telling you I am right and you didn't see it. So I have to convince you that my product is better. If they say I want a three year contract instead of a two year contract, it's a demand in. With an argument you can't negotiate because you have to accept it or not. Just take it or leave it. It's not, it's not a Negotiation with a demand. I'm prepared to negotiate. So if I say what about a three year contract? Then we offer you the or I show you my willingness to, to negotiate. And this is why it's so important. This is from my perspective, one of the biggest mistakes in business. Most business negotiators like in sales, key account managers, they are prepared to come up with an argument that they are prepared to convince the negotiation partner, which is definitely wrong. A negotiation is not about convincing your partner, it's about reaching an agreement. And this is why you need demands and not not argument.

That's brilliant. I think that's a brilliant distinction and I can see why it's so important to take the time before these conversations to prepare thoroughly and understand the way that you're going to approach it. Because especially as humans, we have that tendency to get emotional when the stakes are high, especially if we haven't been, we're not familiar with this level of tension in a conversation. That emotionality will lead us to frame what we're saying in terms of arguments. It takes experience to frame it, frame it in terms of demands because it's not the natural human tendency.

You're right. You know, you don't learn it in school or at university. You don't learn to formulate new demands and to negotiate. And as you said, if you're emotionally attached, if you believe you are right, then you try so hard to convince a negotiation partner that they have to understand that you're right. And that's a deadlock.

Mm, exactly. Yeah. In my book I talk about the fact that great negotiators have unnatural responses to these situations because your built in psychological response, the limbic response will lead you in the wrong direction. And oftentimes the first thing we want to say is the wrong answer. And so you want to try to pre think as much of this process as possible. And that's why we have the free negotiation guides on the website. So if you ever are interested in learning how to prepare systematically for a negotiation, if you go to americannegotiationinstitute.com guide, you can get that preparation guide and learn more in your experience. What are the keys to effective preparation?

Well, number one is what do I want? What's my target? What do I want to achieve? That's number one. And this is very critical because you also have to define your walk away position. So walk away means if I want to achieve my target, what are the consequences? Number two, what's my strategy? And number three, the tactical topics. So during the Preparation, it's very important to push yourself in this play to win position. That means if you prepare demands instead of arguments, you get the feeling you're in a very powerful position. Play to win means I want to win this game. Number two, after preparing your demands, you have to define your team structure. Because what we see very often incorporate the corporate setup that teams are not well prepared, that there is no game plan for deadlock scenario. So what we suggest is to use that. We call it the FBI principle. You talk to Chris Foss or Gary Neusner, to these guys, they always negotiate in a team. We call it the speaking negotiator, the negotiator, the non speaking negotiator, we call them the commander and a decision maker. In a company, for example, a CEO as a decision maker is not allowed to join a negotiation because as a decision maker, your job is to define the target, not the strategy and not the tactics. You only have to say, dear team, this is what you want. Go for it. Then you have the commander. As a commander, you're responsible for the big picture. You talk about common interests, you talk about the future, about long term topics. And then we have the negotiator. Negotiator is responsible for the conflict. So these guys, they start with a high demand, they are leading the negotiation and they are moving forward with the negotiation partners. In summary, play to win and a clear team structure. It's so important in a negotiation when you're negotiating a company.

That's a brilliant example and I really appreciate what you're talking about with the FBI model. And I remember in Chris Voss's book, Never Split the Difference, he said that the best negotiators are the ones who are able to get the other side to believe that they have very little power in terms of authority where it comes to decision making power. So they can go to somebody else, kind of abdicate that responsibility strategically so they're not committing at the wrong time during the negotiation. Is that kind of what you're talking about one of the benefits with that structure?

Exactly. So you show the other party that you're responsible for the negotiation. However, you're not responsible for the final decision, which is completely different. So as a negotiator you have to make sure that, that you show your negotiation partner, you are the right guy to get this done. So you have the full power to negotiate. And there's a decision making process behind you. And it's so important, especially in intercorporate community. Never say a name, always say or always focus On a process. So you shouldn't say Mr. Miller is responsible for this negotiation. You should say our internal buying center. So always you have to come up with a process, not with an individual.

This is great. And I'm seeing a few benefits. Now tell me if I'm on the right track or not. Because we have the ability to put the decision making power in the hands of somebody else. Making it more of a nebulous target makes it difficult for them to circumvent you and find the person and negotiate around you. And then the other thing is, since it's again an ill defined target for from their perspective, from the outside looking in, you're not making anybody within your organization look bad. But it also sets the person up who is the negotiator or the commander at the negotiation table to use the common enemy approach to establish rapport. Oh, I wish I could do that. But the center that makes the decision within our decision making process said no, I wish I could do that. So it's almost commiserating with the person on the other side.

Exactly. You got it. Never say a name because if it's an individual name, you allow them to call them and then you lose your face because then you show the other party you're just a messenger from an individual to the other party. If you work in a corporate environment, people understand that there's an internal process, that there is an internal buying center, that the legal department that they have concerns. So always come up with the process, never with an individual name.

That's brilliant. And one distinction that you made that I thought was interesting was that the negotiator who's having the conversation makes it clear that they have the full authority to negotiate on behalf of the company. But the decision, the final decision is going to be made through this internal process. So how is it that you're able to demonstrate that you have the full authority to negotiate even though this, the decision making process is outside of your hands?

So you as a negotiator and a commander, you would start a negotiation. So coming back to your single source example, you would say, ladies and gentlemen, thank you so much. It's great to have you here to focus on our long term oriented partnership based on our internal profitable compliance center. This deal needs to be profitable. This is why we need 3 year contract plus plus plus and then you start the negotiation. Then it's a clear signal to the other side that you're well prepared, that everyone internally is aligned and you have a clear target. And then you could always, you know, if there's okay, then I will choose your competitor. And if they're threatening, they're threatening you, then you could always say, okay, well, let's focus on our common target today, which is reaching an agreement. And then you can always go back to this process which you have to follow internally, which is a great tactic.

So essentially what we're doing is the decision maker is the person who is laying out the goals, like you said. And then we introduce. The commander at the table will introduce those goals essentially as an anchor at the beginning of the negotiation. And that is signaling the powerful position at the beginning of the negotiation. And then the negotiator at the table, their responsibility is to indicate clearly that we are here to negotiate. But it's interesting how you can use the decision maker, the words of the decision maker at the beginning to anchor the discussion in a way that's favorable to you in order to frame and set the reference point for the rest of the conversation.

Exactly, exactly. And so you send two signals. Number one, I'm well prepared. And more importantly, number two, I'm internally completely aligned. So don't try to negotiate behind my back because it won't work. Because you don't know a lot about my internal process because it's an internal profitable compliance, whatever.

Yeah, this is great. This is brilliant. I tell you, Matthias, if this is a sample of what people can get at the end conference in November in New York, I think this is a pretty good.

Well, you know, from. Based on my experience, I'm a former hostage negotiator and I'm in business since more than 15 years. And with our institute in Zurich, we support a lot of companies worldwide, global companies, and we do have an office in New York and in Hong Kong. And so we know the global negotiation process very well. And translating the knowledge from police negotiation into the business negotiation, it's so helpful because as I mentioned it before, most negotiators in business, they have no idea about how to handle a deadlock situation. They are not trained, they are not prepared. Because what they have learned is win win and win win is great. It's great, it's fantastic. If both parties have the willingness to reach a win win agreement. If one party don't believe in win win, if they think, okay, this is what I want, like a single source, then you have to change your strategy.

Absolutely. And I think that's a critical thing that people need to recognize. I see it in the legal world too, as an attorney in mediations as well. A lot of times people make the mistake of believing that win win is the rule, but in reality, win win is a tool. You can go into the negotiation and use that tool possibly as the right answer that could help you in this negotiation. But like you said, in some of these more difficult negotiations, if you are playing by the rule of win win and somebody else is playing by the rule of I win, it's going to turn out very poorly for you.

Yes, exactly. And I agree completely. So win win, from our perspective, is for the 95% of your business negotiations, because mostly you trust your negotiation partner. You try to achieve win win for a long term. And there are 5% which your negotiation partner is not following the principles where they think, okay, I want to win and you have to lose. And the problem is if one party is win lose oriented and the other one is win win, if you're win win, then you definitely lose this negotiation because you always believe they have to come back, they have to offer more cooperation, they have to have the same understanding of fairness. But they haven't. That's why, based on our experience, it's always better to start with high demands, sending a clear signal. And then in the second step, let's focus on win win only if the other part is also coming up with this willingness.

Right. And what is really interesting and I think is incredibly important for people to understand with the approach that you're saying it is, it's not a scenario where it's unnecessarily aggressive or abrasive. And a lot of times, if the other person is approaching it in terms of I win, you lose, it's not going to be as obvious. If they're good negotiators, they're going to conceal the fact that they're trying to run the table on you. And they'll seem friendly. And it's those friendly, tough people that are the most dangerous in these negotiation scenarios because they can take everything that you want and make you like you. Exactly, exactly. It's tough.

I'm sure you met some former police negotiators already. These guys are always extremely friendly and tough. And this is what you need in business as well. You need this combination. You need to be very respectful, very friendly, charming, and you need to know what you want. This is the right approach also in business negotiations.

Right?

This is great. Well, you know, one thing that I've recognized is throughout this conversation is that this is not going to be the last time that you're on the show. Matthias, I appreciate it. This was really fun.