The Secret of Negotiation

I'm often called upon by my clients to negotiate on their behalf. Sometimes, it's a straightforward process--they have a basic understanding of a "deal" with a client, and they need someone to negotiate and define the finer points in an agreement. Altogether too often, I find that as I'm working to be prepared to represent a client in a transaction, I'm asking them questions to which they have no ready answer. My process in trying to understand their desired deal leads to greater introspection and consideration on the client's side. And thus, the secret to good negotiation:

Preparation.

We have to think carefully about what we are negotiating for, and what our best outcomes are. We have to gather information about the costs we are looking at, and what our other options (and their respective costs) may be. We have to gather information about the party we are negotiating with, their interests, their personality and their likely negotiating style. We have to consider our past transactions, successes and failures--as well as those of our counterpart.

We have to think about our negotiating strategy. Is price a big negotiating factor? If yes, do we throw out the first offer, or do we let the other party? If we're making the first offer, do we use an extreme number to try to set a mental anchor in our counterpart's mind? Or will an extreme number make our counterpart walk away?

Is the negotiation time sensitive? Are the deadlines real, or are they self-imposed? Can we leverage a deadline to our advantage?

Is this a one-time negotiation where maximizing our personal gain is most important, or is this a negotiation that will be used to build a long-term relationship, where establishing mutual trust is critical? In that latter case, is there an opportunity to "tip our cards" a bit, to show how fair and reasonable we are being?

If the negotiation takes an unexpected turn, how do we pivot and address the changing circumstances? What additional information or resources do we need to have available at the bargaining table or readily accessible to us? Alternatively, is there value in not having key decisionmakers there, so we have an excuse to leave the table??

Sometimes, there can be value in saying, “I’m sorry, I can’t respond to this right now; I need to get some additional information and get back to you.”?That can buy you time to do more research or evaluation, can get you out of a high-pressure negotiation pitch from the other side, or can introduce delay that can aid you in creating artificial (or real) time pressure on the other side.?

With any important transaction, spending the extra time up-front and preparing a good agreement is an incredibly good investment, because it will save much more time and expense on the backside of a deal (as compared to a bad contract that doesn't protect their interests). With negotiation, that same concept applies. The time that you spend?preparing for a negotiation?is always time well spent. It will save you time at the negotiating table, and will pay dividends in enhancing your outcome.?

If we’re trying to arrive at an agreement with another party, we completely accept that we will have to communicate with them, make offers back and forth, review their proposal(s), and otherwise participate in an interactive process that will take time.?We also need to normalize the process of investing preparation time in advance of negotiation. We need to literally write out the relevant questions and their answers, so that we can be prepared for the circumstances that are likely to arise. The level of effort in preparing for a negotiation should be commensurate with the importance of the deal.

This sounds obvious, right? It should be--but even experienced businesspeople often forget this critical step. Even if you know your side of the transaction inside and out, have you fully evaluated it from the perspective of your counterpart? Have you contemplated their motivation or desired outcomes? Or at the most basic level...do you want to run the risk that you're the least prepared person at the table?