The art of negotiation is a lifelong skill that you start learning in early childhood. I’m sure all of us remember a point in time when we were told if you finish your dinner, you will get desert, or some other reward. And those with young children can relate to using similar phrases today. This raises the question as to why some people are better in negotiations than others; is it nature of nurture? I believe that negotiation is a skill that you can learn just like learning any new skill, such as how to swim or golf. Of course, not everyone is going to exceed at certain activities and go on to be an elite athlete like Michael Phelps and win 28 Olympic medals, but with dedication, it is possible to be a great swimmer if you learn the right techniques and you practice.
Negotiation is a process and there will typically be multiple iterations in addressing each of the parties’ concerns before a final agreement is reached. Before entering the negotiation process, you should try to ascertain the path of the negotiation process that you will undertake and follow. You may not know in advance the process that will be followed so it is important to be prepared so that you can properly react to the scenarios as they are presented. Negotiations can be either cooperative, adversarial or a compromise. In a cooperative process, the intention is to reach a mutually beneficial agreement in which all parties feel good with the outcome. In an adversarial process are typically one sided agreement and one party obtains a disproportionate better outcome than the other party. In certain situations, in order to reach an agreement the parties need to comprise in order to mitigate potential negative repercussions. These types of situations typically result in each party feeling that they lost, but it is for a broader benefit.
In principle, and especially when expecting to have a long term relationship with the other party, you should follow the win- win scenario. As stated by Eli Broad, an entrepreneur who built two US based fortune 500 companies, “the best move you can make in negotiation is to think of an incentive the other person hasn’t even thought of – and then meet it.” To achieve this, it is helpful to create a rapport with the other party and build mutual respect and trust. If it is a long-term relationship that you are entering, keep in mind that this is an entity, or person, that you will have to interact with over a long period of time on a continual basis – long after the negotiation is finalized. Is this a group that you can, and want to, work with?
In some case, you will be faced with situations in which the other side will have an all or nothing attitude, and only be concerned with their own intentions. This win-lose negotiation scenario tends to be confrontational. It is a difficult process to go through as each side attempts maximize their benefits at the expense of the other side. As President John Kennedy, the 35th president of the USA, stated, “you cannot negotiate with people who say what’s mine is mine and what is your is negotiable”.
In rare occasions, there will be situations in which the negotiations are extremely adversarial where both sides just wish the destruction of the other side with a scorched-earth attitude. I can recall two partners who had a startup company and ended up bankrupting the company rather than compromising and giving some concessions to the other partner. You want to avoid being in such situations and it would better to just walk away from the negotiation.
In terms of your personal behavior once the negotiations have been concluded, I suggest that you should learn to be graceful winner and avoid being a sore winner that will make the other party feel very uncomfortable.
I have summarized a few rules that I have learned over the years that I recommend following in order to maximize your benefits during the negotiation process.
Don’t poison the well water – One day you will want to drink the water but it will not be available for you. It is important to not make enemies during negotiations. Keep in mind that you will have to work with the other party and any perceived unfair heavy hand negotiation will come back to bite you in the ankle when you are not expecting it.
Start with a “win” – Find an item that the other party can say yes to right from the start. This will help set the tone for a positive negotiation process and may help you on another item later on in the process.
Winning by losing – As the lyrics in ABBA’s “Waterloo” song states, “I feel like I win when I lose”. At times, you may wish for tactical reasons make a concession by giving in on items that are important to the other party which will provide you with a strategic long term value. Choose your battles wisely and minimize the potential broader repercussions by compromising at times.
Is it 6 or 9? When two parties sit of opposite sides of the table and look at the same document from their vantage points, one side reads the number 6, whereas the other party observes the number as 9. Both are right as both are viewing things differently depending of their point of view. Work hard to understand the other party’s point of view.
It is business not personal – There are different negotiations styles, and at times, you may face difficult people representing the other side. Remember that the ultimate goal of each party during a negotiation process is to obtain the best outcome for itself. Try not to get distracted by the style of the other party, but rather focus on the substance of the negotiation.
What’s your angle? – Each side always has an angle prior to entering a negotiation process. It is vital that you determine and define your angle ahead of time and in order to maximize your outcome and also to attempt to deduce and/or find out as early as possible the angle of the other side.
Are we there yet? Negotiations are all about the process. Just as parents tell their children to be patient when asked the question: are we there yet? Negotiations tend to resemble a rollercoaster ride with its ups and downs over time. Exercise patience.
Don’t be the first to the party – It is disadvantageous to be the first party in making an offer during the negotiation process. However, you can break this rule if you find it timely to float an anchor offer which highlights your position – either at a high or a low value, based on your position as either being the buyer or seller.
“All that is gold does not glitter” – This is a poem written by J.R.R Tolkien for his novel “The lord of the Rings” that implies appearance and reality may not be the same. During the negotiation process, you may be offered time bound concessions that you will find very attractive at that moment of the process. When these are presented, it is worthwhile to pause and evaluate the true value of the offer based on your overall desired outcome from the negotiation.
Don’t negotiate against yourself – The Cambridge Dictionary defines negotiations as “the process of discussing something with someone in order to reach an agreement with them”. As the old saying goes “it takes two to tango”. A negotiation is a bilateral process consisting of give-get cycles. It is important that you must not keep on providing a “give” without receiving a “get”.
In order to become a better negotiator, you must learn and follow various best practices of negotiation tactics. The following list will provide you with the guidelines and principles to master tactics that you will need before, and during, the negotiation process that will help you optimize the outcomes in your favor.
Prior to the commencement of the negotiation, you need to do a lot of planning to define your position and prepare you for the negotiation process, specifically,
Create “what if” scenarios – Be prepared by identifying multiple options and carry out “war game” like scenarios to focus on your alternatives, and what position can be expected from your opponents against each of your options. This activity could also highlight potential weaknesses in your position and help you refine your stance.
Consider using a negotiating surrogate – The longer the negotiation process takes, the higher likelihood that it will create an emotional attachment with a few, or all, of the participants. Being emotionally attached introduces variables that are outside the realm of the substance being negotiated and is bad for achieving a positive outcome from the negotiation. Using a trusted surrogate to carry out the detailed negotiations on your behalf is very helpful while you continue to manage the process in the background.
Develop a red line to walk away from if line crossed- Set up a hard objective before the negotiation begins that specifies the bottom line of your position which will make you walk away from the negotiation if it is crossed. The reason to have a predefined red line is that once you are vested in the negotiation process, you will tend to shift your position.
Once the negotiation cycle has commenced, you have to maintain your composure by being firm, yet cordial, and remember to follow the “give” and “get” tactics. Specifically,
Listen more than you speak – Remember that you have two ears and one mouth. Listening carefully to the other side will enable you to better understand their position on the various points that under discussion, and hopefully uncover their hidden angle for the negotiation.
Focus on what the others side wants – The best way to achieving your objectives is to find out what the “red lines” of the other side are, and have a plan to address them. I was able to close a $2 million contract in 1 hour by having each one of us list our red lines. This created an alignment of our respective objectives and we only had to work on the details of contract fulfillment.
Create leverage – As you go through the negotiation process, especially a lengthy one, the ground conditions might change over time. This may provide you with the opportunity to better your position by presenting a stronger plan.
Pause if you have to – At times, when the negotiations go sideways, rather than walking away from the process, you can decide to pause for a period of time to give each side a period to re-assess their positions and come back with fresh, new ideas.