Most executives relish upcoming major business negotiating sessions with about
same zest as they do a root canal at their friendly dentist. The stakes are always high. Negotiate too hard and deal is lost. Be too timid and you will leave money on table, which in today's economy is nearly as bad as losing. Having been a strategic negotiator for many years, I know that successful negotiation is an art, rather than a science. However, behind skills that come from years of senior executive level negotiations are a few basic principles that I call "THE GAMBLER" PRINCIPLES, after song immortalized by Kenny Rogers. Lest you form wrong idea, I do not want to infer that negotiating and gambling are synonymous, or even remotely associated. In fact, following my counsel will effectively insulate you from taking ill-advised and unnecessary risks in a moment of desperation. Now, on to Kenny's famous words: You got to know when to hold 'em Know when to fold 'em Know when to walk away Know when to run
You never count your money When you're sittin' at table Ther'll be time enough for countin' When dealin's done
The three most important concerns in any negotiation are first, relationship, then risk and lastly, value. These concerns are real decision criteria that underlie any business transaction leading forward into future. My starting goal is always to seek a win- win outcome. This is usually possible, but there are those unusual cases where win-lose or walk/run away becomes only viable outcome. It should only be other party's intransigence that necessitates latter results.
First however, in order to have a successful negotiation, there are three essential mental bridges that must be crossed well before you enter room to negotiate. These are:
·Clarify Relationship – Simply put, what is current real and perceived business and personal relationship and its true value to your organization's future. Far too often we hold on to past, not realizing that frequently we must be willing to let go of what we have in hand, if we are to be free to reach out for something better. We must carefully consider what could be lost in this negotiation, but alternately also what new doors may be opened to us, given new found freedom we would gain without existing relationship. As business leaders, far too often we continue pursuing existing relationships beyond their prime, simply because it is easier and more comfortable than striking out to develop a new relationship that better suits our organization's future. Thus we must place a well thought through value on continuing relationship, in view of pending negotiations.
·Clearly Structure Outcome Desired by Both Parties – I often find that parties will enter a negotiation with drive to win or even win-win, but never having committed to paper beforehand precisely what that means. Oh yes, they have a general idea, i.e., to place contract at best price or cost. However, they have not defined what is optimal combination of price/cost and all other terms that reflects both parties' best long term interests. What is that magic package that allows everyone involved to believe they have been dealt with fairly and therefore, relationship blossoms? I like to begin by preparing a written scenario that outlines what each party should view as a "great deal". This is optimum "win-win" agreement.
·Determine Your "Walk-Away" Point – This is sometimes hardest, but always most important pre-negotiation decision you must reach. It is not a decision to be considered later, in heat of negotiation. It must be approached calmly and with prior two points in mind, for we truly need to understand what each side requires to make it a "great win-win" agreement. Then if other side becomes unreasonable and prevents it from happening, we must weigh predetermined value we placed on relationship as well as ask question, do we really have a mutual relationship or merely one party taking undue advantage of other?
With answers to these three questions firmly in mind, we are prepared to begin negotiating. I am not a believer in much of posturing that some negotiators put great stock into, such as who opens first and how, etc. What I do believe in is TRUTH when negotiating, as in all interpersonal affairs. Truth and candor are of paramount importance in building trust between parties. This does not mean however, that you should, returning to Kenny Roger's song, necessarily show all your cards at once. After all, negotiating is merely a more formalized variation of common marketplace bartering. It is all about give and take and each party's perceptions of value. You offer they counter. You respond and so it goes. This is why it is so important that before play begins, you clearly understand structure of what that "great deal" looks like from both perspectives. But what if there are mutually exclusive components to achieving that "great deal" for both parties? You will have already considered this in your earlier analysis and concluded what give-and-take is required on both sides to arrive at best possible compromise, something slightly less than a "great deal," now maybe only a "good deal". Furthermore, if your counterpart has not reached this determination beforehand, you can slowly educate them to this conclusion through bartering process. Knowledge is indeed power. Most importantly, you clearly know when you are approaching point of no return, that point where you have already concluded in calm, quiet preceding storm of collapsing negotiations, when you will walk- away. Thus, you have opportunity to steer negotiations away from falling unnecessarily into a lose-lose downward spiral where relationships deteriorate and from which it is often impossible for parties to recover.
