Gary Shilling

As a youth, I had almost no experience negotiating anything in the economic sphere. Most retail prices were fixed by law back then. That was well before discounters and mass merchandisers like Wal-Mart existed, so shopping around for the same goods was largely fruitless. Besides, the local merchants in my small hometown of Fremont, Ohio made it clear in no uncertain terms that discounts were immoral.

I come from a medical family. Dad was a dentist and Mom was an RN, although she devoted her full attention to raising us four kids. So the idea of negotiating prices were seldom addressed in our home, one way or the other.

I got my introduction to haggling at age 13 while attending National Boy Scout Jamboree Valley Forge in 1950. We were encouraged by Scout leaders to trade with other Scouts - neckerchiefs and slides, badges, craft items we'd made, almost anything. The idea was to get us to know Scouts from other parts of the country and foreign countries as well in the process of swapping.

I enthusiastically got into the mental spirit of trading before the Jamboree and even made a big sign we hung from our dining tent: "If No Wampum, Come In, Swapum."

The reality of swapping at Valley Forge, however, proved to be a real eye-opener. I did meet many Scouts from elsewhere in the process. I was talking to an Eagle Scout from Iowa when another from the Philippines joined us. He noted that the Eagle bade in the Philippines had the same three vertical stripes as the American. But the U.S. Eagle badge has the red stripe on the left, the white in the middle and the blue on the right while the Filipino badege reverses the positions of the red and white stripes.

The Filipino Eagle Scout suggested that they trade badges, which they did by ripping them off their uniforms. Both were happy with this trade. I was very impressed by this incident, which encouraged me to complete the merit badges for my Eagle award. I did a year later and became an Eagle Scout at age 14, the youngest allowed at the time.

With my naivete in negotiating, however, my own success in swapping was quite different. In one case, I traded with a Scout from Georgia. He was older than I, dripping with Southern charm and just the right touch of cornpone to thoroughly disarm me. "What you got to trade?" was his opening gambit. Innocently, I opened my bag and displayed all my wares. I only realized later that he kept his bag closed and only took out the item he wanted to trade. "Well, I'll give you this genuine Indian clay pipe for your neckerchief," he oozed as he pulled out a crudely made clay pipe.

Luckily I was hankering for a "genuine Indian clay pipe," but he did out-trade me on other items. Nevertheless, with several days of trading mistakes and after seeing the net value of my trading bag dwindle, I did get the feel of swapping and came out about even at the end of the Jamboree.

That experience gave me a taste of the thrills and satisfaction of successful negotiations, but I found my skills useless in some circumstances. Later, back in Fremont, I asked the local record store owner for a discount on an LP record that was slightly scratched and in a shopworn jacket. He emphatically said, "No," and went on to declare that Sam Goody, then a major record discounter on the East Coast, was corrupting the youth of America with below-list prices.

Over the years, I've learned a lot about negotiating from the pros. Bob Sheridan, a former economic consulting client who was in the commercial real estate business in Chicago, gave me some excellent advice years ago. "Always be ready to walk away from a deal, Gary. If you aren't, the other side will know it and take advantage of your zeal to get the deal done."

I've used that advice in working with employees. Any time I believe an employee is indispensable, I've come to realize, I'm working for him. He's not working for me. My unstated concerns move through the ether from me to him.

Determining, for yourself, the top price you're willing to pay in a negotiation and then sticking to it is another version of this concept. In Tianenmen Square several years ago, a street vendor offered me not just a fake Rolex watch, but a genuine fake Rolex. I didn't need one, but was curious about his cost and figured he'd stop lowering his price when he approached that number. So in response to his $100 offer, I bid $5, figuring his cost had to be much higher. His price dropped as I awalked to the bus to leave, and he accepted $5 as I stepped on. I got the watch, which still runs, but never learned his cost.

Gary Shilling is President of A. Gary Shilling & Co., Inc. and publisher of INSIGHT.
Copyright 2010, author retains ownership. All Rights Reserved.

Category: Negotiating
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