Obama's Rookie Mistake - Negotiating Against Himself

Obama "opened his Kimono" too early to show he had nothing to hide, thinking they'd open up too. Instead, the Right took that opportunity to kick him right up the middle.
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The stakes for Obama's speech on health care reform could not be higher. It will determine if his promise of real change will actually happen, or if reform will be watered down to appease a population of people with an extraordinary inability to decipher misinformation from fact.

Obama, who came in with a mantra for change, now faces an unapproachable right, an insecure center, and an inconsolable left when it comes to the subject of health care. The reason? He made an easy rookie mistake -- he negotiated against himself ahead of the deal.

As a sales person for a tech start up and former wall street sales person, I've done a fair share of negotiations. One of the things you learn with trying to close deals or contracts is to not negotiate yourself into a hole. If you know you will have to negotiate, you have to give yourself room for a counter offer. If you don't allow for that, your counterpart will force you to give up something anyway because that's his job, and you will end up loosing money on the deal, or loosing the deal completely.

Obama, like many sales rookies, began to negotiate before he even came to the table. His team was meeting with the key players -- Republicans, drug companies, insurance companies, etc. -- giving up liberal components of reform like single payer because they thought the good faith gesture would be rewarded. Sure, details would need to be worked out, but the principles were all there and all the players seemed reasonable enough.

This assumption that the smiling faces looking back from across the table would play ball can only be described as a slap-yourself-on-the-forehead moment. The insurance companies played both sides, the Republicans catered to the town hall crazies, and the lobbyists launched a misinformation campaign so intense and brutal, people actually believe Obama is trying to kill their grandparents.

In sales, negotiations can be complicated, but are often very simple -- once a client agrees to buy, you negotiate terms of the agreement. I know of two approaches most sales people use when negotiating. One is to simply start with a high number, knowing it's ridiculous, and hope the client is not offended and comes back with a number close enough to your end target.

The other, which I usually subscribe to, is to come up with a highly defensible number, that considers cost, margin, service levels, usage, etc., and that also gives some room to negotiate -- for example, a cheaper per-user price for a higher number of users. While fair, it doesn't give you much room to battle over price, so you have to be firm in your proposal and have to be willing to walk away.

Obama could have done either. He could have started out in the far left -- universal health care, or a type of single payer option. This would have angered conservatives but they were bound to get angry anyway. Alternatively, he could have come up with a concrete campaign to defend the pre-negotiated plan by using the machine that got him elected to garner support for the measure.

Instead, his team did neither. They did not come out strong and aggressive, nor did they have a plan to defend their position until after the message got away from them, and the cable news networks were filled with death-panel and government take-over crazies and their congressional enablers.

To give another analogy, Obama "opened his Kimono" too early to show he had nothing to hide, thinking the opposition would open up too. Instead, the Right took advantage of the opportunity to kick him right up the middle.

The Republicans know the game they are playing. They know they don't need to come up with a plan, just attack the one on the table. The want to force Obama and the Democrats into a center/right compromise in order to get something done. They aren't thinking of the merits of reform, but how much they can present themselves as anti-Obama for votes in 2010 or 2012.

Obama must now rely on his oratory skills to get him out of this hole. But really, how do you get a deal done when the person who pretends to be negotiating continues to low ball their counteroffer or doesn't present one, and who is more motivated to stop the deal than work towards a fair close? You stop negotiating with them and engage a different decision maker. You sell around them. Obama can do this by unifying the Democrats, getting them what they want including a public option, co-opt some Republican ideas like tort reform and inter-state competition, and get a bill passed, even without Republican votes.

Obama, all rookies are allowed their mistake. You tried to play nice, but you need to stop negotiating with yourself and push this through. Keep that kimono closed, and instead, show some teeth, and save this deal. Too many people's lives are in the balance.

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