Saturday, February 22, 2014

Fargo: Negotiation Strategies Illustrated in Film















The Pace of the Negotiation "Dance" 
and 
the "Nibble" Technique


Fargo, a Joel and Ethan Coen creation, follows the escalating chaos set in play by Jerry Lundergaard's effort to extort money from his father-in-law through the planned kidnapping of Lundergaard's hapless wife. Lundergaard, a car salesman at his father-in-law's dealership, has been making ends meet by falsifying records to inflate his car sales.  Now, he plans to close the financial gap by getting money out of his bullying father-in-law.  

William H. Macy plays Lundergaard.  Francis McDormand plays the pregnant sheriff in pursuit of the bungling kidnapper, played by Steve Buscemi.  

Close to the time the Coen's show us Lundergaard's mounting financial problems, Lundergaard completes the sale of a car to a couple caught in a negotiation they thought had ended long before they returned to Lundergaard's office for the keys to their new car.  

The scene helps me illustrate the timing and size of concessions in distributive bargaining.  It also illustrates a hard bargaining technique called "the nibble."  

In negotiations focused on money, the time between moves takes increasingly longer:
  • 5 minutes signals:  “We’re working it out.”
  • 10 minutes signals: “But it is getting harder for me.”
  • 20 minutes signals: “I’m running out of room.”
  • 40 + minutes signals: “Careful, we are risking impasse.”
Parties and mediators must respect this part of the dance and the implicit messages being sent.  So, a negotiator should mirror the time it takes an opponent to make a concession, even if he or she creates reasons to leave the room ("I'll talk to my boss").  And, then spends the appropriate time talking with "the boss" about something not related to the negotiation (tickets to the Gophers game). 

Thus, a negotiator should not respond immediately to a concession in the later stages of the negotiation. Respect the time intervals required to send the right message to both sides of the table.



At the same time, the amount of the offers and counter-offers gets increasingly smaller, even as the time between offers increases.  It takes twice as long to get half as much money. 
But, the message being sent is: “If we both keeping making concessions, we should get to a deal.”

With the "nibble" technique, you can get added value at the end of the negotiation (in this case the inflated cost of the TrueCoat).   Late in the negotiation, the other side is unlikely to walk away when faced with a nibble demand.  They are too psychologically committed to the negotiation by this time.  ("Where's my checkbook!")


A smart negotiator will resist the demand, even name the game, or be prepared to go buy the car (or other subject of the negotiation) from another provider (walk to your BATNA).  

Or, the negotiator can say: "Oh, I am very glad to see you would like to re-open our negotiations. We had a few additional items we wanted to discuss, as well."

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