How to Leverage Competition and Legitimacy for Your Benefit
Written on
Chapter 1: Understanding the Role of Competition
When you cultivate competition for something you own, its perceived value increases significantly.
Consider this scenario:
"I have an amazing idea."
"Have you shared it with anyone else?"
"Yes, but they don’t see its worth."
In this case, the lack of competition diminishes the idea's value. However, if you respond with:
"Yes, I’ve discussed it with others at your level, and they’re eager to hear more because it sounds fantastic!"
By fostering competition, you've transformed your idea into something valuable and sought after.
Imagine you need a loan.
Approaching the bank while pleading, "Please help me. I'm in dire straits," is not the right tactic. Instead, don a suit and an expensive watch. Assemble a group of friends dressed similarly. Walk into the bank projecting confidence as if you’re a high-ranking executive, exuding the attitude, "I’m not here for your mediocre money; I have better options."
By adopting this "stay away from my money" mindset, Lance managed to secure 381 loans from 41 banks.
Why did these banks compete to lend him such substantial amounts?
- Other banks were already providing him loans, which suggested he was a low-risk borrower.
- His nonchalant demeanor gave the impression that he had no need for their money, creating an aura of desirability.
- Most importantly, he had multiple options available to him.
This competitive landscape compelled banks to vie for his business. However, once they discovered that he was in desperate need of funds to repay other debts, their willingness to lend quickly vanished.
Lance recognized and capitalized on his options.
You should strive to do the same in all negotiations. Above all, never enter discussions without alternatives.
Negotiation is inherently flexible, including the price tags you see.
Chapter 2: The Influence of Legitimacy
Printed materials—documents, books, and signs—carry weight and often go unquestioned. However, you should know when to leverage this legitimacy to your advantage and when to challenge it.
When someone insists, "The book states it clearly," don’t hesitate to counter, "But does that book include my name? Does it specify my building's location?"
If they respond negatively, you can assert, "Then I don’t believe it applies to me."
People often accept the authority of the written word without question. Think of a time when I successfully contested an IRS document, which was born from bureaucratic negotiations interpreting existing regulations. Since this document was the result of negotiation, it too could be negotiated.
Before you can achieve remarkable results, you must be willing to invest effort and take calculated risks.
Always encourage the other party to invest in the negotiation. Hence, your initial approach should be collaborative, as if you genuinely need their assistance.
In negotiations, sometimes being less knowledgeable can be advantageous, and expressing uncertainty can work in your favor.
Train yourself to admit, "I don’t know." Reflect on your own experiences with individuals who struggle to understand complex arguments. Your sophisticated reasoning can become futile when faced with someone who cannot grasp the concepts you’re discussing.
Don’t rush to conclusions. Always ask clarifying questions, even when you believe you know the answer.
During a lengthy presentation, the Japanese audience smiled politely and responded, "We don’t understand. Could you explain again?"
When a client expressed desperation over a dream home, stating, "I’ll do anything to negotiate the price down," it became clear he was overly attached to the outcome.
Did he end up paying $130,000 or $150,000 for the house? You guessed it—he paid $150,000. With such a strong emotional attachment, he was fortunate not to have been pressured into paying even more.
The lesson here is to care, but not excessively. When you feel desperate for something, you risk overpaying and becoming easily manipulated by the other party.
Maintain an awareness of the "odds" while staying philosophically flexible.
Take reasonable risks that you can handle without anxiety over potential losses. Before making any changes, weigh the odds to see if the potential rewards justify the risks involved.
Be rational in your decisions, avoiding impulsive choices driven by pride, impatience, or the desire to rush through a situation.