• Consider how events in the political or economic space might affect you or your counterpart. Are there any relevant changes or trends in your respective industries? What government policies or regulations might have an impact on the negotiation? Does your counterpart have a business cycle you should know about? For example, car sales at the end of the month or toy sales before Christmas might provide an opportunity for you.
You can see that there is a lot to take into account before you negotiate. Gathering information is crucial in preparing for a negotiation. With all of the information available online, you can learn a great deal before you even introduce yourself to a counterpart. But you can also glean useful information from your counterpart.
Stage 2: Laying the foundation
Never begin a negotiation by making or soliciting an offer. Save that for later. First you need to lay a foundation with your counterpart. Get to know them. Make small talk. Build rapport. Present yourself as likable. Let them get comfortable with you.
Ask questions. Try to learn about them, their needs, and their situation. A simple question such as “How’s business?” not only breaks the ice, but can get you useful information. If they reply, “Things have been slow lately,” wouldn’t that be good to know?
Try to get a sense of what they want. Are they knowledgeable and prepared, or trying to wing it? Are they more focused on price or reliability? Do they have any constraints, such as timing, budget, or other concerns?
Check your assumptions by asking the same questions in different forms. Are their answers consistent? Are you learning anything new? Continually reassess the value of information as you move into the bargaining phase and throughout the negotiation.
Stage 3: Bargaining
After gathering information and preparing to negotiate, you will move to the main event: bargaining. This is what most people think of as negotiating. It may involve face-to-face discussions, phone calls, e-mail exchanges, and even text messages. You and your counterpart will make offers and counter-offers, employ tactics and counter-tactics, explore options, make concessions, test assumptions, clarify understandings, and probably encounter one or more deadlocks throughout the negotiation.
During the bargaining phase, you will encounter new information that will force you to reassess what you thought you had learned in the preparation and laying the foundation stages. This is normal. Treat information gathered during these early stages as part of a working hypothesis. A good negotiator is open-minded enough to accept that some of his original ideas were wrong, and flexible enough to learn and adapt along the way.
Just remember that the formal bargaining event is only part of the negotiation process. If you think the negotiation begins and ends with bargaining and you did not put in the effort during stages one and two (preparation and laying the foundation), you have probably already lost. Do not confuse the grand finale—the handshake, the signing of the contract—with the work, research, and preparation that gets you there.
Stage 4: Closing the deal
Hopefully, as a result of all this work, you will reach an agreement that satisfies your interests as fully as possible. Even so, you are not done yet. In a formal business negotiation, you will need to document the terms in a formal agreement. You will need to anticipate what might go wrong as you implement the agreement and protect against these deal breakers. This may be the last thing you feel like doing after a protracted negotiation—you’d much rather celebrate your success and bask in the warm afterglow. And you might be able to do that—if you have a lawyer or PA to tie up all the loose ends. Otherwise, it’s on you. Agreements don’t execute themselves, and most business agreements are not fully implemented. How unfortunate, when you consider that the whole point of business is to make things happen.
What if a dispute over the terms arises later on? Are you going to call your lawyer, spend a fortune on legal fees, and sabotage your business relationship with your counterpart while waiting for a judge to decide your case two years down the road? Or will you provide for some dispute resolution mechanism to streamline the process?
What if you later think of a way to improve on your agreement? Will you smack yourself in the head and say, “Oh well, too late now”? Or will you ask to renegotiate or propose a Post-Settlement Settlement?
We’ve all seen that silly sign on the wall of an office somewhere: “The job isn’t finished until the paperwork is done!”
THE NEGOTIATING ENVIRONMENT
Negotiation does not take place in isolation. The environment can have an impact on the process. I have met people who manipulated the environment in devious ways. One client told me he would make the room so cold his counterpart would agree to almost anything just to get out! Another would schedule negotiations in mid-afternoon and seat his counterpart facing the window, where the glare of the sun was intense. You don’t have to be so sneaky, but you should consider how the physical environment can affect the dynamics of a negotiation.
Venue
When it comes to the venue there are few rules, only guidelines. A good negotiator will consider all of these variables before deciding on an appropriate venue that will set the stage for the formal bargaining phase of the negotiation:
• Where should the negotiation take place? In your office or theirs? You may like the feeling of confidence and control that comes with the home field advantage, where you can choose the room and the seating arrangements and can manipulate the environment to project the image you desire. You also have your colleagues to back you up, as well as the administrative support of your staff.
• You may prefer to meet your counterpart in their own surroundings, where they feel more comfortable. This gives them the illusion of control. It gives you the opportunity to observe them on their own turf and draw inferences about them. For example, does their organization run smoothly or do they seem to be in disarray? What does the environment say about their financial condition and their ability to spend?
• You may choose to meet on neutral territory, such as a restaurant or a hotel conference room. Meeting on neutral ground would help mitigate the effects of a home field advantage, and can also take you away from the distractions of your office. Would a formal or casual setting work better for you? Many business deals are sealed on the golf course, not in the boardroom.
Seating
There is a reason why round tables are used whenever heads of state meet at an international summit—there is no head of a round table, so everyone appears equal. However, most corporate conference rooms have long tables, with a head and a foot. The head, obviously, is the power seat. It is reserved for the captain of the home team, and adds to his authority. You want your counterpart to sit at the head of his table and feel in control. Do not sit at the head of his table yourself, unless you think challenging your counterpart is a useful tactic.
What if you are sitting at a smaller table? Sitting opposite your counterpart at a table suggests an adversarial dynamic. After all, we play chess, table tennis, and other competitive games from opposite sides of a table. Sitting side by side, or kitty-corner, suggests both parties are attacking a problem together, from a common perspective. This sends a more positive message. It is even better if the table is round. Better still, consider sitting informally on a sofa or chairs around a coffee table (though not directly opposite one another) as this more relaxed setting may help the parties loosen up and speak freely.
SETTING THE AGENDA
Develop an agenda before you sit down with your counterpart. The agenda should reflect the items to be discussed and their relative importance. Start with smaller or easier items to establish a pattern of success. Use this momentum to help carry you through the more difficult points.
Ideally, you should create the agenda yourself. Your counterpart may appreciate you taking on this extra work. It also gives you some control over the negotiation.
If your counterpart prepares an agenda, review it carefully to make sure it works for you. Keep in mi
nd that it may have been crafted to give him certain advantages. If you see anything you would like to modify, suggest a change, and offer a reason for it. Everything is negotiable—even the agenda!
Watch out if the other party tries to deviate from the agenda during the negotiation. It’s easy to lose track of items that are taken out of order.
Make notes on your copy of the agenda to aid your memory later. Even with the best of intentions, you may forget a detail or the context of a discussion. Use your annotated agenda as the basis for a memorandum that you will draft shortly after the session.
SHOULD YOU BRING A TEAM?
It’s a good idea to bring a team, or at least one other person, to a negotiation whenever possible. Solo negotiators generally achieve substantially less favorable outcomes than those who negotiate as part of a team. Most people tend to perform better when others are backing them up, giving them confidence, and depending on them. Also, when you have others around, you have the benefit of multiple sources of experience, talent, and perspective. Two (or more) heads are always better than one.
Having a partner with you also allows you to use the good guy/bad guy tactic, which we will consider in Chapter 7. It also gives you a psychological edge.
However, do not bring your whole team. You will not be able to limit your authority if all the decision makers are present. Leave yourself an out by making sure there is a higher authority not involved in the negotiation whom you will need to consult for final approval. This higher authority could be your accountant, your operations manager, or simply your “people.”
What if your counterpart has a team and you don’t? That could be intimidating, but it shouldn’t be. Negotiation is a voluntary process, and you don’t have to agree to anything that is not in your interests. Be confident in knowing that you are prepared, and remember that they need you as much as you need them. And take heart in the knowledge that solo negotiators can still achieve good results. A deal can be either good or bad regardless of how many people are in the room.
YOU’RE NOT JUST NEGOTIATING WITH HIM
Most negotiators focus on the person sitting across the table from them. They may even tailor their words and approach to this person’s personality, negotiating style, and other individual characteristics. This sounds good, but it isn’t enough. The person you’re looking at is often just the tip of the iceberg.
There’s more to consider than just the person sitting at the table with you. Your counterpart has other constituents to answer to. He will need to gain their buy-in. For example, his boss will be interested in the outcome, and he will be concerned about what his boss will think. You will have to justify your proposals to your counterpart, and help him justify his actions to his stakeholders. Try to identify who these stakeholders are, what their interests are, and how you can win their support.
Consider your counterpart negotiating a purchase from you. His boss is concerned about the price. Your counterpart is concerned about his boss. If you want him to agree to a higher price, help him justify to himself and his boss why your product is worth more. Help make him a hero in his boss’ eyes.
THE WIN-WIN NEGOTIATOR’S CHECKLIST
In negotiation, as in so many other areas of life, preparation is the key to success. At the end of this book you will find the Win-Win Negotiator’s Checklist. This checklist will help you prepare for all of your future negotiations, laying out the main points you need to consider from beginning to end. I mention it here because it is a crucial part of your preparation for any negotiation.
We have touched on some of the more important aspects of preparing for a win-win negotiation. In the next chapter, we will build on this foundation and explore the mindset of the win-win negotiator.
CHAPTER 2
THE WIN-WIN MINDSET
“You can get everything in life you want, if you will just help enough other people get what they want.”
— Zig Ziglar
WHY YOU NEED TO BE A WIN-WIN NEGOTIATOR
Most successful people in business learned how to negotiate on the job. They would have gone to a few meetings with their boss and watched her in action, then they would have taken the lead in the next few meetings as their boss sat back and watched, and after a few of those meetings the boss would have said, “Congratulations, you are now a negotiator!” and left them to their own devices. Where did the boss learn to negotiate? From her boss, who learned from his boss, and so on, all the way back to the days of the cavemen. The art was passed down over centuries, but it was not the art of win-win negotiation, it was an adversarial, old-school, win-lose style of negotiating, sometimes called distributive, zero sum, or fixed pie negotiation.
Win-lose negotiators see negotiation as a pie to be divided, and they want the bigger slice. In other words, one person will win and the other will lose, so they do their best to win. How do they know when they have won? They see they have the bigger slice of the pie, or that their counterpart looks beaten. A loss for the other party is interpreted as a win for them.
This win-lose approach is only suitable for one-time transactions, where in all likelihood you will never see the other party again. In this situation, you probably don’t really care if the other guy loses. You might care, though, if you believe in fairness, or karma, or if you want to maintain a good reputation in a world that is getting smaller and more interconnected by the day. In an isolated instance, however, most people just want to win.
Throughout most of history the win-lose approach was the norm. Our caveman ancestors lived or died by the law of the jungle, eat or be eaten. But isolated, one-off negotiations are now the exception. Most of us must negotiate with the same people repeatedly over a long period of time: colleagues, customers, vendors, and partners. We need to achieve good results for our side while maintaining a healthy, long-term relationship with our negotiating partners. In today’s world, a win-win outcome is fast becoming the only acceptable result.
Take a look at your computer. Aside from the manufacturer’s brand, there are probably two or three other logos stamped onto the casing, such as Intel or Microsoft. When Intel and the computer manufacturer negotiate the price of computer chips, do you think either company would accept a win-lose result? Of course not! Both parties have lots of money, resources, expertise, and talent. They also have a long-term relationship that is more important than the outcome of any one of their many negotiations. Neither would accept a loss. They must both have a win-win result.
I suspect that you too would like to have a win-win agreement in most, if not all, of your negotiations. With the tips found in this book, your chances of negotiating win-win outcomes will increase exponentially.
Some wag once said this about the weather: everyone talks about it but no one does anything about it. That’s one of the first things that comes to my mind when I hear someone talk about a win-win outcome in a negotiation. Everyone says they want it, but very few people are able to achieve it with any regularity. In fact, few people even understand what it is.
A win-win is not just reaching an agreement. Nor is it a favorable outcome, or when both parties feel they have won. That is usually a partial win at best. A true win-win is when both parties get the best possible deal without leaving anything on the table. It is not just acceptable, it is optimal.
The elusive win-win is not easy to achieve, but you can learn how to increase the odds in your favor.
Win-win negotiators are found in the same places as win-lose and lose-lose negotiators. They are not any more experienced, and they look about the same as well. The big difference between win-win negotiators and all the others is their mindset.
Win-win negotiators understand the five styles of negotiating and are able to adapt to their counterpart’s style and to the situation. They choose to exhibit certain positive behaviors and avoid negative ones. They are optimistic, open-minded, and collaborate with their negotiating partner to solve their problems together. In this chapter, we will explore the mindset of a win-win n
egotiator.
POSSIBLE OUTCOMES
In any negotiation there are several possible outcomes:
• Win-lose
One party wins, and the other loses. This can happen when the parties are mismatched, or when one party is not prepared. It can also result from cheating. In any case, the loser will resent the winner, and any relationship between the parties will suffer. Still, we would all rather win than lose, and it is easy to see how this result could come about.
• Lose-lose
Both parties lose. You may be thinking, “How can that be? It’s easy to see how one party might lose, but how can both parties voluntarily agree to lose? It just isn’t rational!” You’re right, it isn’t rational. It is, however, surprisingly easy to become emotional in a negotiation, and one may agree to lose so long as he takes the other person down with him. In addition, much depends on how you define “lose.” You might see a suicide bombing as a lose-lose, but the terrorist sees it as a win for him.
• Partial win-partial lose
This is by far the most common negotiating outcome. Both parties get part of what they want, but neither has his interests fully satisfied. This seems fair since both come out better off than they were, and we all understand that we can’t realistically expect to get everything we want. Or can we?
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