Apologies for the reference to a fairly bad (but very catchy) 90s song but it reflects the advice I hear many people give in a negotiation context. But is it good advice? I'm going to say probably not. Read on to learn why.
So often, parties go in to a negotiation very clear on what they want. They have an exact outcome in mind and they don't want to walk away with anything less. The problem with this is that by fixing only on one outcome, there is a lack of flexibility in creating outcomes that will work for all parties involved in the negotiation. For this reason, it’s important to distinguish between an interest and a position in a negotiation.
Interests are the needs, goals, hopes and concerns of the parties. What are the parties seeking to achieve (or avoid) as a result of the negotiation? Understanding interests is really about understanding the party’s motivation.
A position is what someone wants. An interest is why they want it. This difference is perhaps best illustrated by an example.
Imagine you are heading in to a negotiation with an existing supplier. To make things simple, let’s assume that the deal is done other than agreeing on what the payment terms will be. You go into the negotiation with a requirement that payment terms must be 60 days. This is a position, not an interest. The interests behind the position may be things like:
I want to be able to manage my cashflow
I want to minimise my interest costs
I want to demonstrate to my boss that I can achieve favourable outcomes for the company
If we focus on the interests, we can be flexible on how to meet them. For example, I may agree to 30 rather than 60 day terms in exchange for a one percent discount on the bill. Or I may ask for 60 days if the amount is over $X and agree to 30 days where the monthly bill is less than $X and less likely to have a significant cashflow impact for the business.
When preparing for a negotiation it is important to consider your own interests. If you have an outcome in mind, why is this outcome important, what does it achieve for you?
You should also consider the other side’s interests. What might they be seeking to achieve? If you can't offer them a deal that meets at least some of their key interests, you are unlikely to get a deal across the line. And the more of their interests you meet, the more likely you are to have a sustainable, productive deal.
Interests can be both tangible and intangible and it is important to consider both. In fact, if you are offering something that meets all the other sides stated (or apparent) interests there may well be an unmet intangible interest sitting in the background. A tangible interest could be something like a revenue requirement, profit margin or timeframe. Intangible interests may include things like protecting your reputation or requiring simple implementation.
Interests may also relate to different timeframes. Some interests may be short term while others may impact over a longer timeframe.
By exploring interests as broadly as possible, you create scope for solutions that expand the value to be claimed by both sides. Whether it’s your own interests or the other parties, think beyond the obvious interests to some of the more intangible interests or perhaps longer term interests.
So, next time you need to negotiate, don't just tell them what you really want. Tell them why you really really want it!
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