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Red Chips Mean – Stop!


Red Chips mean STOP!

Have you ever lost in a negotiation because you were unclear about the colors of your negotiation chips? I’m referring to critical importance of identifying a RED chip from a BLUE chip to help arrive at a successful agreement in a negotiation.
A critical step early in the negotiation process is to do preliminary preparation to start the process of identifying and understanding the other side’s real needs. A inflexible “need” is is an issue that is a non-negotiable and thus we or the other party simply can’t move on. In the One Minute Negotiation process, we refer to these issues as “red chips.”
Think of RED CHIPS just like you would a red stop light. The first step in determining the nature of any red chips your side might have is to take time to know which issues would fall into one of the two dimensions of this chip category.
• The first dimension is “situational” red chips; these are deal-specific issues. Here’s an example: Your company may be introducing a new product that will not be available for shipment until the start of the next quarter. If a customer wanted this product before that time, there is simply no way you could meet that condition … thus it is a situational RED CHIP issue.
• The second dimension deals with “ethical” or “legal” red chips. For these issues, it would be a violation of the law or documented company policy for you to agree to do what is being requested. These red chips are in place for every negotiation in which you engage. As an example, a prospect might be asking for money under the table, or want you to falsify information on a form. No matter how much they ask, or how much they offer, such an activity simply can’t be agreed to …. an ethical RED CHIP issue.
Just as important as knowing your red chips, is how you state them. When addressing situational red chips you want to be sure this is made clear early in the negotiation. You might state it this way: “I want you to understand that this product will not be available for shipment for a minimum of six weeks.”
An appropriate response when addressing an issue involving “ethical” or “legal” red chips your response might be “That is something we simply can’t even entertain. Please do not ask.”
For both types of red chips, should the other side bring the issue up again it is critical that you make clear that this topic is off the table; though you are open to discussing other non-red chip issues.
One final thought:
When red chips are inconsistent, the negotiation will result in a stalemate – no deal. As an example, if they must have your product before it is even available…you have a red chip, non-negotiable situation.
But all too often when negotiating, people wrongly classify blue chips (considered very important, but with flexibility) as red chips (no flexibility). Understanding the difference between these two types of issues can make or break what could be a successful outcome. When you confuse a red chip with a blue chip issue, you could be headed for a stalemate that did not have to occur. What did you do to avoid this confusion between inflexible and important issues in your last negotiation?

George Lucas, co-Author with Don Hutson of the One Minute Negotiator, NYTimes Best Seller

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