“The problem is not usually faulty preparation, but a lack of preparation at all”
This quote from Deepak Malhotra in his book, Negotiation Genius is a pretty good reflection of what happens in many negotiations. Due to the time pressures on the participants, it is all too common for parties to start a negotiation by winging it, relying on past experience and expertise in a very unstructured way.
Where preparation does occur before the negotiation, it often focuses on the what of the negotiation – what information do I need to know, what are my budgets, what is the impact of success/failure. Parties think about the content of the negotiation without always considering the process – or how they will negotiate. This latter element is often the different between a good negotiator and a great one.
Like with most things in life, a little preparation can go a long way in a negotiation. While there are many things to consider before getting in to a negotiation, I’ve summarised the preparation into four basic areas.
Before starting, think about whether you are the correct person to be doing this negotiation. Is there someone more skilled or who has a better relationship to the other party. For example, where you are emotionally attached to an outcome, having a more neutral party assisting in the negotiation may be beneficial.
Think also about who is the correct person to be negotiating with on the other side. Is the person the ultimate decision maker? Do you have a good relationship with them or is there an alternative person who may be easier to negotiate with. One of my clients was a banker working in the farming sector. He had been struggling with his negotiations with some of the farmers. It was only when he realised that he needed to include the farmers’ wives in the discussion that his results improved!
This is the part where you prepare your content. Do you have all your facts to hand? Are you across all the background and have enough data to support your position?
One of the challenges here is we tend to only look for the data which supports what we want. To be truly effective, you should also intentionally look for data that supports the other party’s position. Doing so may reduce your risk of getting surprised in the negotiation.
It is also important to think here about what happens if you don't reach agreement. Knowing the alternatives is critical to determining when to exit the negotiation rather than agreeing to something that doesn't best suit your needs.
At the heart of negotiation is understanding interests. Ensure you know not just the outcome you are hoping for but also why that is important to you. What are the underlying interests that you are trying to satisfy.
I once mediated a dispute about ownership of some video footage of pro-wrestling. Both parties were seeking ownership of the footage. In private sessions, I asked the parties why they needed the footage. They needed to stop and reflect on this for a while but the first party told me they only wanted it to make sure the other party didn’t get it. The second party wanted it because he didn’t want to redo his website which contained some short snippets of the footage. We quickly came to an arrangement where the first party retained ownership but granted a licence to the second party for the footage on their website. If they had focused on their "why" earlier, both parties could have saved thousands of dollars in legal fees and a lot of stress.
This is the process piece of the puzzle. Negotiators need to plan for the way in which they plan to negotiate. This can include a range of strategies to think about:
When is the best time to schedule the negotiation? Will you arrive early, on time or late?
Where should the negotiation be held? Choosing the location of one of the parties or a neutral location may signal something to the other party.
How should seating be arranged at the meeting?
How will you structure the negotiation? Having a clear idea of an agenda for the discussions is a critical part of managing the negotiation.
Will you be the first to put an offer on the table? Knowing the right time to make an offer and how to structure your offer effectively can have a big impact on the final result.
For many negotiators, planning is impacted by time constraints. However, if the negotiation outcomes are important to you, investing the time, and seeking support from third parties who can bring a different perspective, is well worth it.
If you think you could benefit from assistance with your commercial negotiations, contact us to discuss how we can help.