How to Negotiate Practically Anything
Advice from Bob Woolf, the man who's closed deals for everyone from Larry Bird to Gene Shalit
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If you're like most people, you don't like to negotiate. It's confrontational, unfriendly, sometimes downright mean. What's more, if you don't do it right you stand to get beat, which will cost you. And you're pretty sure you don't do it right.
Bob Woolf no doubt has mixed feelings about all this. On the one hand, he wants to strip negotiating of its (he thinks) undeserved terror. He's quick to tell you that 95% of the folks you'll ever negotiate with feel just as you do: scared. On the other hand, fear of negotiation has made Woolf rich.
Woolf today is perhaps the preeminent sports and entertainment attorney alive. In 1962, 10 years after he began practicing law, Woolf fell into some work for an obscure Boston Red Sox pitcher named Earl Wilson. Wilson referred several of the city's athletes to him, and pretty soon the attorney's practice also included negotiating the contracts and finances of 9 out of 12 members of Bill Russell's legendary Boston Celtics. Later came actors, entertainers, media personalities, eventually even politicians. Woolf traveled with Michael Dukakis last summer, and only Woolf's adept and creative last-second negotiation with Ted Koppel, Roone Arledge, and the Dukakis team saved the candidate's opportunity to do a "Nightline" interview one-on-one with the host. (Well, it seemed like a good idea at the time.)
Woolf estimates that he has negotiated more than 2,000 professional contracts plus countless other agreements in the course of managing his clients' personal affairs. Bob Woolf Associates, his Boston firm, handles more than $100 million in contract value annually and has 25 employees. Woolf himself is finishing a book on negotiating called It Doesn't Hurt to Ask, due out at the end of the year.
What will the book reveal? Among other things, Woolf's simple but unexpected belief: kindness counts. Forget macho, he says. Forget Machiavelli. What every businessperson should know is that, in negotiating, the race is to the friendly, the honest, and the fair.
Woolf spoke with Inc.'s Paul B. Brown and Michael S. Hopkins.
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INC.: Nothing, you say, is as important to a negotiation as creating the right atmosphere in which to negotiate -- having the right attitude yourself and getting the other side to feel the same way. But pleasant though it sounds, a lot of people will find it hard to buy your idea that "nice guys finish first" at the negotiating table. Your argument?
WOOLF: Only that it works. Think about it: why do companies spend millions and millions of dollars on public relations and goodwill advertising to develop a nice relationship with the public? Because they want to do business. They want to create a nice atmosphere. They do it because it works.
INC.: Then why do books about winning through intimidation keep showing up on best-seller lists? It seems to us that hardball is in fashion these days.
WOOLF: Maybe, but in fact you don't win through intimidation. The deal doesn't go through. Remember, people are frightened of negotiating to begin with. Who likes confrontation? It's not pleasant to negotiate, whether you're asking your boss for a raise or selling your company. Most people would rather not do it. They're afraid.
So the last thing you want to do is to turn a negotiation into a confrontation. You want to make it a situation of mutual respect. After all, you want the other side to be reasonable, not defensive -- to work with you. You'll have a better chance of getting what you want. Treat someone the way that you would like to be treated, and you'll be successful most of the time.
INC.: But negotiations by definition are adversarial. You want more money from the boss, a better deal from a supplier. . . .
WOOLF: Right, you have a goal. More money, better terms, whatever. That doesn't mean you holler, pound on the desk, or make threats -- that's ridiculous. It's just another part of the misconception that people who are dishonest and cunning are going to win. They're not. They're going to lose. That's what I believe. And so does everybody I know who's a professional negotiator, in whatever area.
Granted, there are those who'd like you to believe they know something you don't know. They're the ones who at the racetrack tell you they won the 3d, the 8th, and the 11th race, leaving out the other 8 races they lost. But if you want to win all 11 races, and each time come to an agreement, you'll play fair, work hard to be gracious, and always deal in good faith. Your individual wins may not be as big as the other guy's, but they'll be bigger when you add them up.
INC.: If it's clear that a good atmosphere produces a good result, why do people hang onto this other view of negotiating?
WOOLF: I don't know. It's crazy. I've been hired by people because they say, "Boy, he is one hard-nosed, rough kind of guy, and that's the kind of guy I want negotiating for me." And I'm thinking, who are they talking about? Not me. I go in every time to set a nice atmosphere. I want to make you happy.
INC.: Aren't you afraid the guy across the table will perceive your eagerness to please as weakness and think he can raise the stakes?
WOOLF: Maybe, but I know it's not a weakness, and there are plenty of ways to let him know, nicely, that my pleasantries have nothing to do with the stakes. I just keep reducing his expectations -- nicely. He proposes a number and I say, "Gee, that's not really what I was thinking. I never anticipated anything like that. That's kind of way out of line." And I keep on saying it. If I can reduce expectations, things get a heck of a lot easier. It isn't costing me anything to be nice, and it does make the negotiation go better. You can be a tough, hard, efficient negotiator and still be a nice person. And it will help you reach an agreement.
INC.: OK, let's say it's time to start the negotiation. Prac-tically speaking, how do you create this atmosphere from the start? You walk into the room . . .
WOOLF: . . . and I let you know what my attitude is. I'm forthright and positive. I tell you I want to make a deal. I tell you I'm not here to outwit you.
INC.: You tell me?
WOOLF: Right. Straight out. I really am an average guy and I want you to know it. I also ask if you have any particular problems or anything that I should know about that would help me as we talk. Maybe I can work within your needs, maybe I know something that could help you. I try to make it a partnership. You and I have a problem, and we're trying to solve it so you're happy and I'm happy. A successful negotiation isn't one where I get everything and you get nothing.
INC.: No? By some standards, that's perfect success.
WOOLF: I don't think so. I haven't done a single contract that I couldn't have gotten more money on. I always leave money on the table.
INC.: Forgive us, but people will read that and think you're nuts. Let's assume you can sell a computer system for $220,000. You're saying you'll take $200,000 for it? Why not pick up the extra 10%?
WOOLF: Because it's possible to push the price so far, create such antagonism, that the extra 10% isn't really worth it. If someone feels you held them up, they're going to take it out on your business or -- if it's an employee -- on you. In my case, they'll take it out on my client, make him miserable, trade him. Obviously, a negotiation isn't about only money.
You have to give the other people a profit margin and let them live. You want them to thrive and grow. It's only practical: if they go out of business, it doesn't help you any. As they grow, maybe you'll participate in the growth. The idea is to be a deal maker, which means sometimes you'll have to compromise on your demands.
Just never compromise on your principles. You've got to develop a reputation for being smart and honest -- so people know you won't renegotiate, you won't play tricks. You can't play tricks, because you'll probably be going back to these people again -- or to someone they know. Your good reputation is incredibly important.
INC.: You're talking about a negotiation in which there is an ongoing relationship. What about a deal in which you're buying a house, or you're selling your company for cash and moving to Bimini, and you'll never see the other person again?
WOOLF: Look, if someone wants to be a bastard, fine, be my guest, but most people don't. When you buy a car, aren't you just trying to get a fair deal? Or are you trying to prevent the guy from making any profit on the transaction? Would you try to do that? Most people wouldn't.
INC.: No. But if I'm negotiating, I don't think it's my job to figure out what's fair for the other guy. Doesn't it make sense to depend on him to protect his interests? And when it comes to leaving money on the table, doesn't it make sense to push for a stiffer deal if it's a onetime relationship?
WOOLF: Well, yes, if it really is a onetime deal then I wouldn't leave as much, but I still wouldn't try for the last dollar. And you're wrong not to judge what's fair from the other side's point of view. If you don't have a pretty good idea before you start talking, then you haven't done your research. You haven't prepared.
In addition to writing my own goals and scenarios before every negotiation I do, I also prepare what I think my counterpart wants. I write down his goals, making believe I'm him. What would I want? What would I give up? I try to figure out what's really important to him.
INC.: What exactly do you do before you sit down to talk?
WOOLF: I try to find out everything I can about the person I'm negotiating with, about what's going on in the marketplace, and with my own client -- or, if I'm a CEO, about my company and its needs.
WOOLF: There's no formula. Just ask questions. Talk to people who know the person, are around him, deal with him. That includes his secretary and the person he sends to get you at the airport. I want to know everything about who I'm negotiating with. What kind of person is he? What is his reputation? Is he a good negotiator? Is he fair? Does he try to intimidate you? Does he know what he's talking about? Does he have authorization, or will he have to go to someone else to get the deal approved?
INC.: So if I'm considering a deal with a new parts supplier, say, I get a list and call his customers. I call the people who sell him his materials. I call people in his town -- banks, newspapers, local government officials who might have contact with him. If I'm real serious, I might call civic and social organizations I've discovered he belongs to. . . .
WOOLF: Absolutely. Information is power. And I start the attitude process early, too. If I know someone who's close to the person I'll be negotiating with, often I'll have that person call ahead and say, "Hey, Bob's not a bad guy, believe me, he's going to live up to his contracts." I might call ahead myself just to lay that foundation.
INC.: And after you've got the story on the guy?
WOOLF: Then I question myself. I ask whether I'm the right person to do the negotiation. Is my own ego going to get in the way? Is there something about me or the circumstances that will jeopardize the negotiations?
INC.: Has the answer ever been yes?
WOOLF: Oh, yeah. Lots of times I know I'm not the right person. For instance, right now I'm trying to help a friend. He's been a sports announcer on television for 27 years, and he asked me to do his contract. He's making just $66,000, but out of friendship I'm trying to do it. The fellow on the other side, however, is antagonistic and offering a $3,000 raise. His posture has nothing to do with my "client." The fellow's just thrilled that I'm calling him, and he's gonna show me. He's gonna beat Bob Woolf. In this case, I'm not the right person to do the negotiation.
You can't let your ego get in the way. After all, you want to accomplish the goal, that's what matters. Sometimes you have to walk away.
INC.: That would be hard for me. Here I am all psyched up to do it, and you want me to back away. But this is my company, and this is an important negotiation.
WOOLF: As I'm sure I don't have to tell you, he who represents himself has a fool for a client. The trouble is, you care too much. I, as your attorney, don't. Therefore I can be more objective and keep from getting emotional.
INC.: So that means it almost never makes sense for our readers to negotiate for themselves?
WOOLF: Not necessarily. You can do the negotiation if you can keep from getting mad when someone says something you don't like.
INC.: OK, say you're the right person, you've set the right tone, and you're prepared. Where does the negotiation take place? Your office, the other side's, or a neutral place?
WOOLF: My office, if possible. I feel more comfortable there. I can be gracious. And on my own turf I have everything I need: files and whatever else I want to show.
INC.: Who makes the first offer?
WOOLF: Whenever possible, the other side does. After all, he or she may give me something more than I dreamed of. If not, I'll at least find out what their thinking is like. After the pleasantries are over I might say, "Gee, what did you have in mind? What did you think was fair?"
INC.: But of course the other side is going to come back with, "Well, we really don't know, Bob, what would you be happy with?"
WOOLF: Then I'll say, "Well, I don't know what you have in your budget." I always ask that. Has it been a good year for them? I may find out something more than I knew in the beginning, and I still haven't told them a thing.
INC.: How far will you go to keep from putting the first number down?
WOOLF: As far as I can.
INC.: But sometimes you end up having to?
WOOLF: Sometimes I have to. Sometimes they'll say, "Write me a letter and tell me what you want." Remember, I don't always win.
INC.: So what is your first offer?
WOOLF: High, of course. But before I make it, I do one more thing. If I'm representing a basketball player, I'll say to the general manager across the table, "Listen, I really don't want to be off base here, so can I check these figures I have for the other salaries on your team? We based our thinking on them, so I'd like you to correct me if they're wrong. I don't want to be out of line with what I'm asking for." I'm not threatening, but they'll know I'm prepared. If I were a businessman cutting a deal with a vendor, I'd be ready to have him check a list of prices he gives to other customers, plus a list of prices his competitors might offer me.
Anyway, my offer on the basketball contract: if everyone of my client's quality and position were getting $600,000, I might ask for $750,000, expecting I can come down to $600,000. Again, I want the other person to feel as though he's accomplished something. It's crucial to the client/team relationship. The same is true of business relationships.
INC.: OK, but let's follow that logic all the way through. The $750,000 is higher than what you're expecting. Why not let the other side really feel like it's accomplished something by asking for $1 million before coming down?
WOOLF: Well, then it becomes outrageous, and they're not going to believe anything you've said in the first place.
INC.: So you have to establish an upper boundary, beyond which trust is gone?
INC.: Is there a rule that says 30% above the norm is OK, but 50% is too much?
WOOLF: I've really never looked at it that way. I just use common sense. And all the time I'm asking questions, though I never give away anything myself. I keep asking, "Can you live with this, can you live with that? Will this be all right?" I always encourage the other party to believe that we are going to make a deal. I don't care how far apart we are, that's my attitude. It shows good faith. And when offers are being discussed and terms considered, I'm always staying with my numbers. Often I never go down.
INC.: How do you deal with things like the split-the-difference gambit? Say you're asking $100,000 for a house and I'm offering $70,000. It looks like we're never going to meet. Finally I get frustrated and say, "We could talk forever. I'm going to be a gentleman and meet you right smack in the middle -- $85,000."
WOOLF: Well, if somebody made you that offer, what would you and 99% of the people do?
INC.: Probably accept it.
WOOLF: Right. But I'd say no. I'd say, "I can't do that, but I will take $90,000."
INC.: And all of a sudden you've bumped up the floor.
WOOLF: Right. Now, you know you can get $85,000, and probably more -- in this situation it will be probably closer to $90,000.
I always come down very slowly if I'm selling, or up very slowly if I'm buying. Let's say that you're asking $100, and I'm offering $40. Just because you come down $10 doesn't mean I have to go up $10. A lot of people think that you have to do what we call tit for tat. That's not so. Maybe I'll go up $5. My theory is to go up slowly or come down slowly and then just continue the negotiation. Keep on talking.
But remember, I don't land every negotiation. You can't win every one. But if you brought it to a head, got an agreement, and you're happy and the other party is happy, then don't second-guess yourself -- it's a successful negotiation. Why is it that everyone thinks that if I win, you have to lose? It's just not true.