Negotiation 101: The 6 Principles
We all negotiate something at some point of time every single day.
This is especially true if you are working in procurement or sales.
The idea for this post came as for quite some time we have noticed an unfortunate recurring pattern, more than 80% of negotiations are done without an underlying method and very often end in sub-optimal results or worse … stalemate. The ultimate reason for a negotiation of any kind is to find an agreement between parties (good or bad). I think that you will all agree on this.
In what follows, we will give you an outline of a very simple method which is taught in almost every business school but seems to be systematically forgotten when you get into the field.
We will give you 6 simple and universal principles which will ensure that your negotiation is going somewhere and will eventually give you an edge.
This is a longer post than most, but I hope that it will help you to become a better negotiator!
Goal? Yes, goal!
You would be surprised to know how often people do forget to clearly establish their goal or even enter a negotiation without having one!
And when we say goal it is not only simple statements on the expected results but an agreed position on your side that will eventually satisfy all involved stakeholders.
A couple of days before a negotiation, arrange a meeting with all stakeholders on your side and ask them the following very simple questions:
- What is our goal?
- What do we want?
- What would make us leave the room happy?
- What is our measurement of success?
You will be surprised by the answers …
Those are the best questions to be raised to suddenly mute all noises going around a busy meeting room. Most of the time, you will end up facing people chasing flies on the ceiling or having a big question mark on their face.
But a bit more seriously, it will be a very good occasion to structure your goal, make sure that you have an internal consensus, that people are aligned and avoid any surprises after the negotiation.
Having a common, understood, agreed and aligned goal is paramount to successful negotiations!
Get only to the next step when you have one!
2. Separate the people from the problem
Now that we have a goal, we can start to get closer to the negotiation …
What we do often forget is that negotiations involve people! And people have emotions! When you negotiate, especially if the stakes are extremely high, emotions are running extremely high.
It is therefore of utmost importance to try to avoid involving people and focus on the problem. This is of course easier said than done.
One very simple method is to take control of the exchanges, especially if the opposite party is aggressive, provocative or even has somehow crossed the limits:
- Make sure that you understand the opponent parties statements.
- Pace your answers and cool your team down (I know, sometimes difficult).
- Write down your possible answers (if possible).
- Try to imagine what would be the opposite parties reaction.
- Rephrase your answer not to include a statement on people.
- Once you have a consensus on the proper answer … shoot it!
Here time is you biggest ally! Especially if the meeting didn’t turn in the direction you imagined or wanted.
Don’t let emotions get you and reply using sentences starting by
“You have …“, “You made …“, “You are responsible …“
Such answers will trigger an even more extreme answer and your negotiation will be all but gone … Always refocus your answers onto the problem at hand.
This is even easier if you did a good job at defining your goal!
3. Focus on interests, not positions
This principle is quite interesting!
Defining and working out a good goal is unfortunately a double-edged sword when not used wisely, especially if you stated your goal as a set of strong positions. If both parties enter the meeting room and start exchanging on positions, you will soon notice sandbags pilling up (I like to picture out situations), people digging trenches, polishing machine guns and preparing to hold positions without giving in.
If you listened to what your history teacher desperately tried to tell you, this is exactly what happened in the First World War in which it took three years for the French and German armies to “haggle” over a couple of kilometres (I don’t even want to mention casualties). We do not want that! Do we?
Fortunately, we are businesspeople and do not have the luxury of three years to negotiate and for the most part operate in peacetime.
In order to avoid getting in such situations, make sure that you understand the implications of your demands to the other party and always try to highlight both of your interests in what you are going to propose them.
I have sat in so many meetings in which I saw one party continuously bringing forward its own position without even trying to clearly state what was their ultimate interest!
Keep in mind that it is always easier for an opposite party to formulate an appropriate answer if they have a clear grasp of your interest! Working on positions only limits the answers to yes or no!
How can you make an agreeable compromise when you are left with only two options?
Working on interest will only make you stronger!
4. Invent options for mutual gain
This is among the most complex task that a successful negotiator needs to master! The complexity comes from the fact that you must be able to understand what the other party could gain from negotiating.
You need emotional intelligence, empathy, some serious analytic skills and a good grasp on strategies …
In summary … you need experience!
You will understand this once you have stayed in a negotiation for a couple of hours on the fryer being managed (yes… managed) by a very experienced negotiator unfortunately sitting on the opposite side. It is like having someone able to read your mind and anticipate your every move … You learn a lot from it!
So, let’s go back to the main point.
You already know how to estimate or formulate your gain. If not, stop, go back to the drawing boards and return once you do.
The only thing you need now is to find a way to map your gain to the other parties gain.
The easiest way, in a commercial negotiation, is to formulate the gain in terms of savings (for a buyer), turnover or profit (for a salesperson), market share (in general) or any other gain metric which is easy to assess.
You might also add some softer elements in your assessment but absolutely need to make sure that you can systematically map your gain and estimate the other parties gain easily.
Negotiation positions change very fast. You do not want to get stuck. Be prepared.
Once you have done this, you can:
- Take a couple of negotiation positions.
- Estimate both your gains and the opposite parties.
- Determine the ones who bring the highest gain for both of you.
Those positions are the ones which will very likely end up into an agreement after several rounds of negotiation.
In summary, don’t think only about yourself!
5. Insist on using objective criteria
So many people are still stuck in subjective positions which are extremely difficult to weigh and compare? What can be more objective than numbers?
Insisting on objective criteria is essential if you want your negotiation to be successful. You need to have easy criteria which at any moment can help you to compare positions.
You cannot rely on arguments which are not precise! Negotiation needs rigor!
Make sure that for any criteria of interest you have:
- A clearly defined and agreed measure.
- An evaluation of your current position formulated into this measure.
- An agreed goal to achieve these criteria.
You might even cut the corners and announce to the opposite party your criteria and what your goal is.
If they understand it this will put you in a very strong negotiating position (according to the game theory).
Numbers are your friend!
This is maybe the most technical of the 6 concepts.
BATNA stands for “Best Alternative To Non-Agreement”. In simple terms, it is what you would be willing to agree to avoid leaving the negotiation table empty handed.
You will certainly ask: Why would you even think about such a kind of position before having started a negotiation?
Well, experience says that negotiations are extremely hard and very often need several iterations. In some cases, they even end up pretty easily in stalemate because you hadn’t thought about what your BATNA would be should you find yourself in that position!
A BATNA helps you to prepare yourself for such situations and once you have a bit experience dealing with them, will be used as critical pivots in your negotiation preparation.
The best way to avoid a stalemate. Anticipate being in one!
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