Negotiations touch every part of your life.

No Matter Your Role, You Can Always Benefit By Sharpening Your Negotiation Skills

Negotations Touch Every Part of Your Life and Career

It doesn’t matter whether you’re buying a car or an enterprise software system: negotiations touch every part of your life, every part of your career, and will have a major impact on your personal success. Dealing with a regular client who, at the eleventh hour, wants a little extra outside the scope of what has been agreed upon? You’re in negotiations. Trying to get consensus on a critical marketing campaign? You’ve become a negotiator by default.

Then there are all the formally recognized situations where negotiation is explicit, highly formal and usually high-stakes: sales, procurement, mergers and acquisitions, partnerships and licensing arrangements, to name a few.

One of the fundamental principles we teach in the course of our business negotiation training is this: the concept of M.O.R.E., which stands for Motivations, Objectives, Requirements and Edge — Edge being the advantage you gain once you understand the other side’s unique motivations, objectives and requirements.

You are much more likely to succeed when you come to the negotiating table with not only a clear sense of your negotiation counterpart’s business realities at the organizational level, but also the individual drivers of those involved. And making assumptions at either level can be foolhardy.

That’s why we advocate for a methodical, patient and constructive approach to negotiation that stresses listening and learning as much as possible, and taking concrete steps to discover what passions or pressures really drive a request or demand.

Of course, this means understanding your own M.O.R.E. factors, as well. (We all know what Sun Tzu had to say about the prospects for a commander who knows neither himself nor the enemy.) What are you hoping to achieve? What course can you set to articulate your own value drivers so that you have clearer guideposts to follow and create better deals for everybody?

This is why we focus on the needs and roles of every layer of a client organization: from each chair of the C-suite, to the sales director, to the project manager, to the lawyer who must carefully define and protect key terms.

Based on our three decades of work with leading global organizations, we created a high-level role-based view of negotiation from various chairs in the organization, including: CEOs, CSOs, CLOs, project managers, sales managers and attorneys.

BATNA (best alternative to a negotiated agreement) Woman tears agreement documents in front of agent who wants to get a signature

Why You Need Better than BATNA: Formulating a Defensible “Walk Away” Rationale in Negotiations

Either through becoming emotionally invested, getting pressure from leadership or being unable to analyze key factors that should indicate retreat, business negotiators often find themselves spending long amounts of time on deals of diminishing — or even illusory — value.

One of the cornerstones of negotiation theory is BATNA (best alternative to a negotiated agreement), advanced by Roger Fisher and William Ury of the Harvard Program on Negotiation (PON) in their book, Getting to YES. Read more

Using Your “Incumbency” to Create Positive Leverage in Negotiation

Some concepts are better expressed using an example. Our client was at a crucial juncture with their customer — a European bank. In just three months, the time frame was expiring on an agreement to provision identity access management. That project had been running for three years, and had progressed substantially as forecasted. So a renewal to continue with the work was being discussed, plus, our client wanted to extend the scope of services for 24/7 identity and access management, which they believed the customer could use.

This project was extremely complex, and it was incumbent on our client to express the value delivered to that point. This is extremely important: Nobody owes you recognition of your value. You have to make the case!

Being successful in this situation meant Read more

Negotiation Examples: How Avoiding Unprincipled Concessions Kept the Customer’s Respect (And Won More Revenue)

 

When competition starts putting the pressure on you, it’s natural to look at price-cutting as the primary way to keep the business. But in the long run, this is a mistaken impulse, unless accompanied by a sound business rationale such as a reduction in scope, change in terms or outcome from the deal. One of our engagements with a client that served a European industrial (the customer) with technology solutions definitely illustrated the value of avoiding such “unprincipled concessions!”

Unprincipled concessions are “giveaways” not tied to a credible business rationale. Our research shows that this simple business negotiation mistake costs companies between 9 and 18% of gross revenue and significant profit. (See our infographic on the topic for a more detailed discussion of this vital principle and how it can be applied.) Read more

Communication Credibility: Without It, There’s No Persuasion or Negotiation Leverage

Communication CredibilityShow us a successful negotiator and we’ll show you someone who is highly conscious about how they communicate with others. It’s not about who can talk the fastest or prove that they know more than everybody else in the room—it’s about building credibility. This is crucial because credibility ultimately translates into leverage for getting the right deal done.

There are lots of ways to damage your credibility by communicating irresponsibly:

  • Addressing other people in terms of stereotypes rather than unique individuals. An example is treating an IT leader in the room like a geek who only cares about technology and assuming they won’t care about the strategic business value of your solution.
  • Being dismissive of other people’s contributions, even if you immediately disagree with them. Being gracious when somebody offers an idea you disagree with keeps them engaged and thinking how they could offer more helpful ideas. Rather than “That’s a stupid idea!”, try “Thanks for your thoughts, Ben. I think that will be important to keep in mind going forward.”
  • Using private facts as weapons against the other party. If you use something given to you in confidence as public ammunition, you can expect your ability to get this deal done—and all future deals with this party—to degrade considerably. And you will lose the respect of your own team in the process.
  • Not taking responsibility for what you say. This includes anticipating the effect of your words and taking complete responsibility for your statements. There is nothing more frustrating than trying to close a deal with somebody who has no internal editor or denies and twists their past statements based on a need for perceived temporary advantage.
  • Acting like you know everything. Be the “inquirer,” not the “knower,” and respect both the knowledge of others and the limits of your own knowledge. Those who always lecture tend to sound condescending, which breeds resentment.

These are just some of the behaviors that can damage your credibility. When you are credible, people tend to listen to you. This is critical in negotiations. Think about what happens when you engage in conversation with someone who has no credibility, someone you consider a “b—s— artist.” What do you do” You usually turn off; you stop listening. Well, if you are not listening to someone, what chance do they have of persuading you”

But being credible is only the first step. You must also be persuasive. For example, you can easily present a business case showing why the price you’re charging is competitive in your industry and is consistent with reasonable cost structures. However, to show the other side why they should pay that price—that it will make them more competitive in their business—you must know something about their business. That’s more difficult, because you don’t know as much about their business as you do about your own.

People don’t make decisions because they understand or believe what you are saying. While these first two attributes are important, the main reason someone decides in your favor is the value you provide for them. Dealing with you makes them “better,” however “better” is defined. And, of course, your value argument will usually have more impact if you can quantify “better.”

We wrote a white paper for those of you who have to make credible value arguments from the sales side during negotiations: It explores value-based arguments and selling approaches more deeply. Click here if you would like to give it a look.

K&R CEO Mladen Kresic Discusses Negotiation Know-it-Alls with Knowledge@Wharton Host Dan Loney

K&R CEO Mladen Kresic Discusses Negotiation Know-it-Alls with Knowledge@Wharton Host Dan Loney (Complete Transcript)

On Friday, May 20 K&R CEO Mladen Kresic joined Knowledge@Wharton (Sirius XM Channel 111) host Dan Loney to talk about how negotiators can keep “know-it-alls” from ruining their next big deal. (Kresic wrote on the subject in his 2016 white paper, “Dealing with Negotiation Know-It-Alls: How to Keep Instructors, Intimidators and Impostors from Derailing Your Deal.”

During this segment, Loney and Kresic discussed the three major types of know-it-all (The Instructor, The Intimidator and The Impostor), the threats they represent to successful negotiations, and strategies negotiators can use to mitigate their negative influence and keep their deal discussions on track.

This content reproduced courtesy of Sirius XM and Knowledge@Wharton.

Loney: Have you ever been part of a negotiation and feel like you’re hitting your head on a brick wall because the person on the other side is the “know-it-all”? It can be one of the most frustrating things to deal with, but there may be some hope. Mladen Kresic returns to the show. He’s the president and Chief Executive Officer of K&R Negotiations. He’s recently published a white paper on the problem and how you can handle the situation — and maybe even make it work for you. Mladen, the author of Negotiate Wisely in Business and Technology, is joining us on the show right now. Great to catch up with you, Mladen. How have you been? Read more

Mladen Kresic’s Negotiation Advice for CEOs Featured on Chief Executive

Delineating how and when senior management will take part in negotiations is an important factor in maintaining position and outcome. When a member of senior management’s personal timeline or motivations clash with an already established value argument, money can be left on the table.

K&R Negotiations CEO Mladen Kresic used a deal from the firm’s client case files to illustrate just how this can happen in Negotiation Lessons: When CEO Meddling Degrades the Deal, a contributed article that was featured this October at ChiefExecutive.net.

“It’s easy to become emotionally invested in a deal, especially a complex one that requires a significant time and resource commitment from you and your team. Nobody wants to simply walk away from something they have cultivated for months—even when the value of the deal begins to degrade.”

Mladen offers several takeaways from the case study that serve as good counsel for CEOs whose teams have a big deal on the hook and may or may not need the chief’s “help.” We’d like to thank ChiefExecutive.net for accepting our contribution. We’re honored to be included.

K&R’s Mladen Kresic Contributes to Thomson Reuters’ Legal Solutions Blog

Thomson Reuters’ Legal Solutions Blog recently featured a guest post from K&R Negotiations CEO Mladen Kresic, who penned a piece about the importance of lawyers not getting too lost in legal terms and keeping an eye on their client’s business value:

“When brought on as the legal member of a business negotiation team, it’s natural that we view the process through a legal filter. But sometimes attorneys get lost in the purely legal dimensions of the negotiation process and lose sight of the fact that we are ultimately there to provide business value for our clients.”

The post features an example of a negotiation in which K&R was involved—and in which one lawyer solved a business negotiation impasse by discovering and addressing the business value of the critical term over which the two parties disagreed. The takeaway is this: if there is no business rationale for a legal term in an agreement, chances are it won’t help a lawyer deliver business value to his or her client.

We’d like to thank Thomson Reuters for including us. We hope to contribute again in the future!

Procurement gets a Ferrari

K&R does a lot of work near year-end.  In addition to delivering Negotiation Skills Workshops, we directly consult on sales that are projected (or sometimes just hoped) to close before December 31st.

Having had many of these discussions lately, one thing struck me as a pervasive problem.  Many sellers who consulted with us said something like this: “Procurement told me that they need to reduce costs with us to 10% below last year’s spend.  I have a plan to do it, and with that plan I think I can close this deal by year end.”  To me, this is Procurement asking for a Ferrari (or for any other very hard to obtain item).  Let’s talk about why. Read more