Negotations 101: Part 1 - Mutual Problem Solving and Knowing Your Deal.
A week or so ago, we began a series discussing the twelve things that we think are important
about negotiation. At that time we promised (threatened) that we would follow up on each of these in a more detailed manner. Well, that was no idle threat, my friends.
We should clarify things a little. For example, are the twelve things we listed all you need to know about this subject? Obviously, no. They may not even be the most important things. There are just things we have observed as being relevant to negotiations over the years. Also, the types of negotiations that are more suitable to these principles are complex business deals with a lot of moving parts. These principles are less appropriate to haggling over the price of a car or the settlement of a personal injury lawsuit. These usually involve just taking a position rather than negotiation and the one with the upper hand, either in bargaining position or by the application of the facts and law, usually do better in those situations.
So, with those limitations in mind, in this post we are going to address the first two items in our list, viz:
1. Approach each negotiation as a mutual problem solving exercise.
2. Know the deal you want and how much leeway you have within acceptable parameters.
The approach of treating each negotiation as a mutual problem solving exercise could be described as just trying to get a "win-win" arrangement but that would be somewhat limiting. Each party to the negotiation has a problem they would like to solve. For example, the outsourcing vendor has a service it would like to offer, a number of employees it would like to engage and a revenue number it needs to hit to keep its investors happy and make its sales people adequate commissions. The potential customer has a function it believes would be better done by someone else at a lower price. The customer wants to have a predictable burn rate for such function and wants to trim its staff and avoid having to make a large capital expenditure for equipment.
The people at the Harvard Negotiation Project believe this best reached by being truthful about your own interests, brainstorming with the other party to broaden options and look for ways to make mutual gains. Therefore, if you focus on interests and not positions, you may discover that there are ways to satisfy both parties' needs. Nobody can (or should) get everything they want in a negotiation, but a successful result would be to get an acceptable arrangement in which each side's interests are addressed in a manner that allows them to further their individual and joint business needs.
The second issue is probably glaringly obvious. You should know where you want to go in order to get there. You must be honest with yourself and with the other party to the negotiation in order to really address what you want and need out of the deal at hand. For that reason, the Harvard Negotiation Project recommends that you decide before hand what your best alternative to a negotiated agreement is. They refer to this as a "BATNA" (clever acronym). This merely means that you must determine what will happen if you don't do the deal and if the last and best offer by the other side is not superior to your BATNA, you must be prepared to reject the deal. This overlaps with the principle that we will discuss later on about never being unable to walk away. If you can live with the results of walking away better that you can with the proposed arrangement, you should beat a hasty exit.
