Matthew Andrews
Product Manager ・ Software Engineer ・ Executive MBA Graduate ・ Tokyo Resident
8 tips for better negotiation — or, how to gain a magical superpower

Listen to a recording of this article:



One of the most eye opening moments of my Executive MBA was our short one day course on Negotiation.

Before, I’d thought negotiation skill was a kind of magical superpower out of reach of mere mortals, like me. But the truth is negotiation is not magic. It can even be learned from a book. By following a few simple steps I’ve been able to get what I’ve wanted faster and more smoothly, whilst helping my counterpart achieve their goals too.

Furthermore with this new understanding, where before I might look upon “tough negotiators” with respect and admiration for their gall and negotiation skill, I now see confident amateurs losing opportunities for better deals.

1. Prepare, prepare, prepare

The more you prepare, the stronger your negotiating position.

Make sure you have answered the following, ideally in writing for yourself, before entering negotiations:

About yourself

  • What are your goals? How are they prioritised?
  • What are the issues to be negotiated and how important are they are to you?
  • What are your BATNAs? — best alternative to negotiated agreement
  • What would be the minimum terms you would accept?
  • What will be your starting position? — the maximum you will push for

About the other side

  • What do you think their goals are? How do you think they prioritise them?
  • What do you think is their BATNA?
  • What do you think the minimum terms they would accept would be?

About the situation

  • Deadlines? Which side is under more pressure to conclude negotiations quickly?
  • Are there any precedents that could benefit you? (Or work against you?)
  • What would you like to avoid talking about? What will you say if they bring it up?

2. Start high, but not stratospheric

In your research you should identify your starting position. This should be ambitious but not outrageous, otherwise you risk not being taken seriously or causing offense. The more you can back up your starting position with research the better.

You could say:

Based on my research from asking some of my contacts performing similar roles at other firms, I would like to ask for a salary of X.

There are people who say it’s better to let the other set the starting bid, others who say it’s better for you to. But bear in mind that studies show that the opening bid acts as an anchor, pulling the final agreement up (or down).

Finally, remember once you’ve stated your opening offer, you can only negotiate down, not up.

3. Prepare your BATNAs

BATNA stands for “best alternative to a negotiated agreement” and is your fallback should negotiations fail.

This explains why you are in such a stronger position to find a new job when you already have one.

But don’t leave it at just that. Develop multiple BATNAs. Nurture and strengthen your BATNA. And above all, make sure you do nothing to weaken your BATNA.

When applied to job negotiations, this can mean:

  • Pursue multiple opportunities in parallel.
  • Ask to hold offers whilst you consider other opportunities from other parties.
  • Even if you hate your job, you don’t need to let the other party know that!

4. Listen

Don’t jump in and start making demands. First listen.

Before stating your perspective, listen first to the way they see it. Ask why in a neutral, friendly tone. Genuinely listen and learn. Either by asking directly or indirectly, validate the research you’ve done on the other side’s goals and priorities.

5. Remember negotiation is just one stage of a longer-term relationship

Except for the rarest of simple transactions, a negotiation is just one small part of your relationship with the other party.

Being perceived to have squeezed the other side too hard can have consequences that you may pay for eventually.

Remember that after concluding negotiations for your new job, you will need to work with the people you have negotiated with potentially for several years to come.

6. Don’t treat the other side as the enemy

Respect that each side needs to prioritise their own interests but that you also have common interests: namely getting to a deal.

A good negotiation should not lead to a win-lose, it should be win-win.

The more collaborative and trustful a relationship you can develop between you and your counterpart, the more likely you will be able to help each other identify opportunities to make the deal better for both of you.

7. Don’t focus purely on money

Don’t focus on headline figures alone. In job seeking, companies are structured to have multiple budgets and salary pulls only from one.

Don’t dismiss this as spare change. These extras can be significant.

Personal development, travel opportunities, annual leave allowance, flexible working arrangements, job title, size of your team… can all make a massive difference to the value you get from your role (and can be far more tax efficient than paying for them yourself out of your income). Also consider the effect your job has on your health, happiness and general well-being.

8. Post-Agreement Negotiation

Once you have come to an agreement, offer your counterpart the opportunity to improve it.

This is not about re-opening negotiations. Honestly and genuinely commit to honouring the agreement you have already negotiated. But suggest both parties treat it as both of your new BATNA’s.

If the initial negotiation has gone well for both sides, there will be areas of the deal you wish you had done better and areas your counterpart wishes they could have done better too.

This is your chance not to make a new deal but improve what you’ve already agreed on.

Conclusion

By following these tips, I have negotiated better deals for myself at work and in my personal life and, occasionally, have succeeded in making a deal where others had thought impossible.

I feel I really have gained a magical superpower.

Further reading

In defence of copying

I was recommended to read Zero to One by Peter Thiel, which starts with an evocative question: what important truth do very few people agree with you on? Thiel then proceeds to describe the difference between “truly new innovation” (going from 0 to 1) against iterative improvements (going from 1 to n) and citing the example of Chinese copying products and business models from elsewhere as not innovation. I don’t believe this to be true and I believe the author is downplaying the value of copying.

In the infancy of each of China’s industries, they did indeed imitate and copy the leading incumbents. Much like the Japanese electronic and car industries when they started. Later, Japanese car makers led the world. Likewise, China leads the world in retail technology, low-carbon transportation, Drone technology and more.

Whenever learning anything new we start with imitation. The most innovative creators of entertainment draw inspiration from the leaders that came before them. Even more creative innovations come from copying the practises from one industry and applying them to another.

And yet in the world of product development, copying is anathema.

Copying, especially when entering an unfamiliar problem-space, is a low-risk way to gain expertise on the customer problems and avoid some of the mistakes others have already learned from.

The author argues that imitation is a kind of crutch that holds back innovation. When used excessively, that’s certainly true. The imitator can never exceed the imitated. But writing off copying as a universal bad practise is just as bad as using it excessively.

Copying is a tool. Like all tools there are times when it’s appropriate and other times when it is not. A smart innovator knows when to copy and when to create.

So, my universal truth very few people agree with me on:
Copying is an essential tool for the creation of innovative products.

Antifragile Supply Chains Pecha Kucha

To give you a flavour of the sort of work I had to produce for my MBA, here is one fun and interesting assignment from my Supply Chain Management class: introduce Antifragility and apply it to the topic of Supply Chains through a Pecha Kucha-style presentation.

A Pecha Kucha presentation is a form of lightning talk made by a 20 slide presentation, 20 seconds per slide. I was assigned the topic of antifragility, promoted by Nassim Nicholas Taleb.

Please enjoy the video (or read the text) below …

Transcript

Konnichiwa S1! (S1 is our class group name)

Welcome to my Pecha Kucha on Antifragile Supply chains. Or, whatever doesn’t kill you makes you stronger. Today we’re going to learn how Netflix and others build their businesses by trying to destroy themselves.


So firstly, what is antifragile? Antifragile is a made-up word that has the opposite meaning of fragile. So, what is fragile? Fragile is something that breaks easily. Like a mirror, if you kick it, it breaks and that’s the end of it.


Other things are robust. Like a brick wall, if you have the same level of body strength as me and you kick a wall, nothing happens to the wall.

But robust is not the opposite of fragile – in the same way the opposite of positive is not zero – it’s negative. Being robust is neutral.


So if robust is not the opposite of fragile, what is?

People who promote the idea of antifragility claim there’s a third type, which we can call antifragile. Something that actually gets stronger the more you beat it up.

So, let’s look at some examples of antifragile systems…


You are! You’re antifragile.

As you exercise or do some sports, your body gets tired – it’s being damaged at a cellular level. But afterwards, when you rest, your body recovers but not just back to its original state – it grows stronger.

That’s an antifragile system.


The concept of antifragility was originally introduced by a book of the same name by Nassim Nicholas Taleb.

He argues that we as humans need to seek out experiences that stress us, that hurt us – so that we can grow stronger. The same is true for companies. And, yes, supply chains


But simply subjecting yourself to extreme stress without breaks doesn’t work.

The stressors must meet two critical conditions:

  • Sufficient recovery
  • Not overload in each dose

The core idea is about breaking down a stressor into smaller doses to be taken at regular intervals so that you can raise your overall tolerance to it.


Let’s talk about Netflix’s content delivery supply chain and how they apply antifragile principles.

Even though Netflix delivers its products over the internet, the principles are exactly the same as a traditional supply chain — except it’s a supply chain that operates at the speed of light


And that means when things go wrong, customers are immediately impacted.

So Netflix built a tool called CHAOS MONKEY.

It’s a virtual wild animal that they let loose on their digital estate causing chaos.

Chaos Monkeys turn off servers, reconfigure settings and generally wreak havoc.

Why?


By constantly putting their systems under stress then identifying and implementing improvements, the system gets stronger.

This effort paid off in 2011 when a huge Amazon outage broke numerous popular websites. Netflix’s service however, despite running on Amazon’s cloud, continued without interruption.


For an example in a more traditional supply chain, recall last week’s Amazon case: how they simulated stressful holidays conditions by artificially constraining their supply chain at other times of the year.

Closing 15 out of the 20 doors available for supplier deliveries they were able to identify process bottlenecks and refine their procedures.


In both the Netflix and Amazon examples, they’re not leaving the stresses on their systems to chance — they’re proactively managing them.

Another feature of these systems is, unlike during real disasters or genuine spikes in demand, if things start going wrong in your test, you can always stop the test early and let things get back to normal.


But the idea goes deeper than just dress rehearsals for disasters and seasonal demand.

In Taleb’s view we’ve be fragilising (ie. treating things as if they are fragile) the economy, our health, political life, our children and more.

We’ve made life too easy that we’ve lost our strength.


Opportunities to create antifragile systems exist everywhere.

E.g., Customers sometimes write negative reviews online, and each review is a small attack on the company behind the product.

A company that believed in antifragility – and had a system for learning from bad reviews, might actively encourage customers with bad experiences to post them online.


Now, think about the concept of variability. In a supply chain, variability is a form of stress because it’s more expensive to cope with than consistency.

Although it might make financial sense and be more efficient to reduce variation, doing so creates fragility.

So in the long run, a supply chain that is more flexible is more antifragile.


But by far the most controversial corollary of antifragility thinking relates to debt.

Remember one of necessary conditions for an antifragile system was not overloading on stress.

Debt creates fragility because it leaves less room for errors — increasing the chance of a catastrophic failure.


Like any idea, antifragility is not without its critics.

It’s not really a new idea — it’s basically the same idea as Charles Darwin figured out 200 years ago

It oversimplifies complex situations to a single dimension

Not every system gets stronger when subjected to stress.


In summary, an antifragile system is one that follows this circular flow chart.

It feeds on doses of random stress, pain and discomfort
that are small enough not to cause irrecoverable damage
and is given, time and resources to recover,
So that it can grow back stronger and more resilient to ever higher doses of stress.


Examples of antifragile systems include:

Organisms – this concept is not so different to the theory of evolution
You when you do exercise
Simulations of supply chain disruptions
Anything that encourages chaos and randomness in your lives and work

But it’s important allocate recovery time and not to overload.


Thank you for listening to my notes on antifragility and making it to the end.

Do you think your company could become stronger if it were subjected to more stress?
Or do you think this is a load of homeopathic nonsense that oversimplifies things to the point of no use?

I’m looking forward to reading, and growing from, your criticisms on the forum.


References:

IE Executive MBA Review — What I learned

I graduated from IE Business School’s Executive MBA programme in Madrid, Spain in December 2019.

The 15 month programme was conducted mostly online so I took most of the classes crouched over my laptop in the dead of the night from my adopted home in Tokyo, Japan.

Here’s me happily accepting my certificate:

A colleague of mine asked me today:

(How) do you think it has been valuable for you?

Before I answer I want to first write a short disclaimer.

MBAs are very expensive, many are designed for a world that is increasingly out of date and I am certain free or low cost online equivalents of the vast majority of the course content now exist on Udemy, YouTube, Coursera, etc. I genuinely believe a Harvard Business Review subscription, especially reading back through their greatest hits, gives you a third of the value of an MBA with less than 1% of the cost.

For me I was extremely fortunate in three ways that made the full MBA worthwhile:

  • Firstly, my employer chose me as one of the three candidates they put forward each year for full sponsorship.
  • Secondly, I joined IE: an incredibly forward-thinking school who have technology capable of running truly collaborative and engaging classes connecting teachers and students across all the world’s populated continents at once.
  • Finally, almost everything we learnt was new to me. I believe had I already studied business at undergraduate level and complemented it with relevant work experience, I would have got much less out of it.

Your mileage may vary.

(How) has an MBA been valuable for me?

  • Before, I might think of an idea for a business and fantasise it would make me a gazillionaire. Now, I feel I know more clearly than ever what needs to be done to take that idea, evaluate its potential, make decisions about the trade-offs between various ways of getting it funded, and how it might be brought to life. I also realise how much work and risky it is — and now feel almost (but not quite) all of my previous ideas lack the potential to make them worth the effort.
  • I can now read & understand basic financial statements, but despite having a numerical background (BSc Mathematics) I’m not as good at it as I thought I would be.
  • Basic knowledge of accoutancy has given me better understanding about how (and why) budgeting works the way it does at Nikkei and the FT, for example why it isn’t always possible to simply roll over unused budget from previous years into the next.
  • I realised I can write quite well. I guess 8 years working for a newspaper has had some effect!
  • I learnt how to make a marketing plan … and made a basic one for part of my current project at the FT (and it was received well!)
  • I learnt what is considered best practice when Negotiating … and now use this in my daily life …
  • Studying IT/Technology from an academic & business perspective made me re-realise I’m really good at it and how much I love it.
  • On the other side, it’s given me a much greater respect for those ‘from the business side’. Finance, Strategy, Sales, Marketing are crafts in their own right and are in my opinion far more difficult than the likes of IT and operations. Why/what questions are infinitely more difficult to answer than who/how.
  • I learnt what Networking actually is and realised I’m not as bad at it and enjoy it much more than I thought.
  • It will help the next step of my career — to move into product focused technology roles.
  • And finally, I’ve met a bunch of wonderful people doing crazy amazing things around the world!
How to securely configure Cloudflare for static website hosting on AWS S3

Goal: to create a static website hosted on S3 and Cloudflare securely — by which I mean restrict access to the contents of the bucket to Cloudflare only.

Step 1 - Create your bucket

First we’ll create your S3 bucket. Login to the AWS console and head over the S3 service and click the big blue + Create Bucket button to start the wizard that will guide you through creating your bucket.

The first question it’ll ask you is for a name. The name that you will need to enter will need to match the eventual hostname website you plan to host. I’m going to create testing.mattandre.ws so I’ve named the bucket that:-

Leave the rest as default and hit Next.

Step 2 - Configure Options

On the Configure options you can leave all the other options as default.

Step 3 - Set permissions

Again leave this as default (Block all public access), which at first might not seem intuitive as we’re making a public website. But don’t worry, in a later step we will grant permission just to Cloudflare to access the content.

Step 4 - Review & Create bucket

Assuming you’ve followed everything correctly so far — go ahead and hit Create Bucket.

Step 5 - Enable static website hosting

Staying in the AWS console for the S3 service, click into your newly created empty bucket, and click Properties.

Then, click the Static website hosting box — and choose Use this bucket to host a website.

You’ll need to enter the Index document, which I’ll set to be their suggestion, index.html.

Make sure to take note of the Endpoint — you’ll need that later! In my case this is http://testing.mattandre.ws.s3-website-eu-west-1.amazonaws.com/.

Step 6 - Grant access to your bucket from Cloudflare

Next, click the Permissions tab of your S3 bucket (between Properties and Management) and click Bucket Policy.

Take a copy of the following JSON, take care to replace testing.mattandre.ws (my bucketname) with your bucket name, then paste it into the Bucket policy editor. Then click Save.

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{
"Version": "2012-10-17",
"Statement": [
{
"Sid": "",
"Effect": "Allow",
"Principal": "*",
"Action": "s3:GetObject",
"Resource": "arn:aws:s3:::testing.mattandre.ws/*",
"Condition": {
"IpAddress": {
"aws:SourceIp": [
"2400:cb00::/32",
"2405:8100::/32",
"2405:b500::/32",
"2606:4700::/32",
"2803:f800::/32",
"2c0f:f248::/32",
"2a06:98c0::/29",
"103.21.244.0/22",
"103.22.200.0/22",
"103.31.4.0/22",
"104.16.0.0/12",
"108.162.192.0/18",
"131.0.72.0/22",
"141.101.64.0/18",
"162.158.0.0/15",
"172.64.0.0/13",
"173.245.48.0/20",
"188.114.96.0/20",
"190.93.240.0/20",
"197.234.240.0/22",
"198.41.128.0/17"
]
}
}
}
]
}

(This grants Cloudflare’s IP ranges read-only access to your S3 bucket contents)

Extra step - Upload a index.html file to your bucket

Strictly speaking not necessary but useful to check everything is working.

I uploaded an index.html file with the contents <h1>Hello world</h1> to my S3 bucket.

Step 7 - Add the DNS hostname to your Cloudflare DNS console

  • Login to your Cloudflare dashboard
  • Click on the domain that you’ll be setting up a static website on (in my case mattandre.ws)
  • Then click DNS
  • Click Add record
  • Set the Type to be CNAME
  • Set the Name to be the subdomain (or leave blank if you are creating a static website on the root of your website)
  • Set the Target to be equal to the Endpoint that you were given in step 5 but remove the http:// prefix and / suffix. In my case this is testing.mattandre.ws.s3-website-eu-west-1.amazonaws.com
  • Leave TTL and Proxy Status to be their defaults (Auto and Proxied)
  • Click Save

Finished!

You’re done — load up your domain to see the fruits of your hard work: https://testing.mattandre.ws.