Recently, “leverage” has become a popular word that found its way into public conversations regarding “fiscal cliffs”, “debt ceilings” and “sequestrations.” Who has leverage? Who wants it? What are you going to do if you discover that you have it? Ah yes, the dilemma surrounding leverage is a complex one. According to Wikipedia, leverage in negotiation is the “ability to influence the other side to move closer to one’s position.” In this definition, the word “influence” implies a persuasive effort. However, at the functional level, leverage removes the free will to choose by severely limiting the viable choices. To translate, leverage means you have to give me concessions free, or I will do something harmful to you personally, to your company (an entity) or to your country. In reality, leverage is simply the bastard child of coercion. At the street level people get it. This concept is clearly reflected in the way participants describe a negotiation manifested in phrases like “we have them over a barrel” or “we have them by the shorthair”. However, civilized people don’t use phraseology like this because it sounds too much like coercion, which has a negative connotation. Consequently, at the executive level we put on our suit and tie, stand coercion on its hind legs, put a smiley face on it and proclaim “we have leverage!” Doesn’t that have a nice professional ring to it? A wise man once said, if it looks like a duck, walks like a duck, and quacks like a duck, it must be a duck.
Why do negotiators want leverage so badly? Mainly because they don’t have to negotiate a deal, but rather simply dictate the terms of the surrender. As you can see, leverage can serve as a wild-card in the negotiation process by becoming a shortcut that retards the skill development of the players who rely upon it. I am frequently asked in class “how do I negotiate when I don’t have any leverage?” The answer is simple: negotiation is a skill, leverage is a tool. Develop your skill and know the difference between the two and you will be fine.
thesmartnegotiator 