Part of the Six K&R Principles of Negotiations


K&R Negotiation Associates: Our Philosophy

About K&R’s Business Negotiation Philosophy

While some negotiations can be adversarial, negotiations as a defined business activity should be viewed as a positive process. The word itself often creates a lump in the throat if you are automatically inclined to picture tense standoffs, intimidation, manipulation, or a zero-sum game in which one side wins and the other side loses. But the primary facts are:

  • Negotiations are simply interactions between or among parties to bring about agreement. This in itself should be positive rather than adversarial.
  • Negotiations permeate almost everything you do in business and in life. Why spend so much of your life in fear of what should be a positive process?

Those of you who have had the pleasure of negotiating with your spouse or children can certainly attest to the inevitability of negotiation in all facets of life.  It’s also likely that your current position in business is a product of negotiation,as are more mundane items such as times when meetings start or end. 

For those of you in B2B industries, negotiations often seem open-ended: they don’t begin when we first discuss price or end when an agreement is struck. They begin before you get involved, when conventional wisdom within an industry or prior interactions have already set expectations. And they continue during delivery, often being influenced by new factors,technologies and competition. 

Seeing Negotiations as a Cooperative Process

Much has been made over the years about problem solving versus adversarial negotiations or distributive (single issue) versus integrative (multiple issue) negotiations. Behaviorally, we believe it is rarely necessary to be adversarial in the process.  In fact, even if people have short-term interests, cooperative negotiations tend to lead to better results. (One of our practices is the application of “value-based leverage,” which uses proven situational analysis and communication principles to help the other side move more to your way of thinking without the need for subterfuge, games or intimidation.)

This does not mean that there are no adversarial elements to business negotiations. You should expect healthy and passionate debates about issues and items where negotiating parties have opposing interests.  If that is the case, a cooperative approach to prioritization and problem resolution will yield better results. To address this, we created a negotiation tool called the MID™ that helps you map the priorities and goals of all involved to identify points of resistance, neutralizing what might first appear as “deal breakers.” Through this process of prioritization and goal orientation, we often find mutually acceptable solutions.

However, we must never forget our own interests in that process. The same is true for distributive versus integrative negotiations.  While we favor the cooperative approaches of integrative negotiations, we must understand the true interests of parties to determine how they are likely to behave and whether they are interested in long-term relationships versus short-term financial gains.If we do not distinguish between a profitable vendor looking to enter into a five-year agreement versus one who is on the verge of bankruptcy and needs current cash flows, shame on us!  (By the way, you can do business with both, but the terms should be radically different.)

Bottom line, we believe:

  • Whenever possible, we should utilize interest-based negotiations, truly understanding the other side (and our own) to form successful agreements, long-term relationships and efficiencies.
  • Prioritizing issues and activities should be based on those interests.
  • It is important to understand situations when either the other side or our own short-term needs may make interest-based negotiations challenging and when it is necessary to “distribute the pie” using potentially adversarial elements.
  • Ensuring all agreements are implementable/deliverable to match expectation and facilitate long term relationships (this includes focusing on performance and enforcement that is relevant to the business outcomes sought in any agreement).
  • Great governance and validation of negotiated deals fosters future relationships and mutual success. 

K&R’s Six Principles

While the best practices of B2B negotiations are numerous and situational, our decades spent negotiating deals and relationships gave birth to the Six Principles many years ago.  These six pillars should support any business negotiator’s practice.

Our front-line experience, taught us that issues related to the principles apply and need to be addressed in nearly every negotiation process:

These Six Principles reflect the essence of our philosophy in strategic and actionable terms. Whether we’re negotiating a compensation package with a new employer, trying to close a large purchase with a client, or even negotiating as a potential client, the critical process of negotiation touches all of our lives.

Our universal and underlying principles of negotiation serve as a guide for creating winning conditions, regardless of what is being negotiated for, or with whom. If you would like to learn more, this whitepaper outlines K&R’s Six Principles in more detail and why they are important for creating positive outcomes —so all parties can leave the table with their major objectives met and their expectations satisfied based on the value they have received.

License Compliance and the Value of All Terms in Negotiations

Terms in negotiations cost money; someone pays the tab (bill): This is one of the six foundational principles of K&R Negotiations’ Win Wisely™ method. Every term in contracts and negotiations should be of some value, and each term has an associated cost. As a negotiator, knowing the rationale for a term enables you to articulate the value and identify its cost. The value of the total deal is the aggregate impact of all the terms. If you don’t understand the rationale behind the terms, not only is your credibility impacted, but so is your leverage. The following story illustrates this principle in action.

Gene, a sales rep for a technology solution provider, is trying to sell support services for a client’s e-services distribution infrastructure. The client is a multimedia lifestyle content distributor. A new contract for $4M is on the table. Read more

Six Principles Every International Negotiator Should Know: Terms Cost Money; Someone Pays the Tab

This is the ninth post in a series entitled: The Principles of International Negotiation: Finding Universal Value in a Complex World

Every term in contracts and negotiations should be of some value. And each term has an associated cost. As a negotiator, knowing the rationale for a term enables you to articulate the value and identify its cost. The value of the total deal is the aggregate impact of all the terms. If you don’t understand the rationale behind the terms, not only is your credibility impacted, but so is your leverage.

Suppose you are negotiating a private label distribution OEM (original equipment manufacturer) deal, representing the seller. The seller’s standard agreement has a term in the contract that states: “In the event any part fails within the warranty period, the customer may return the part at customer’s expense and supplier will send a replacement part within three business days.” Read more

K&R Success Stories Published

K&R Negotiation Associates has published a few representative success stories on the K&R Web Site.  Here are excerpts and links to more information:

  • K&R’s client turned a $150K annual loss into a $50K annual profit, while at the same time raising their own client’s satisfaction with the service. (more)
  • K&R’s client realized 6.7M€ of revenue in their current fiscal year, and 60.2M€ additional revenue within two years. (more)
  • K&R’s client benefited between $13.5K and $250K. The ultimate buyer saw a clear ROI from the total $837K investment in our Client’s products. Both our client and our client’s client were rewarded through the application of K&R negotiation principles. (more)
  • K&R’s client did not offer expensive guarantees and rebates as part of their services package. This will positively affect profitability as the agreement executes. The result was generated by carefully understanding client needs before offers were made. (more)
  • K&R’s client closed $2M higher than expected, using a few simple K&R principles. (more)
  • K&R’s client benefited by up to $65K, and began the process of breaking a pattern of discounting with their client, which will repeat in every transaction. Our client’s client was satisfied, because they understood the value of what they were buying. (more)
  • K&R’s client closed for $1.6 to 2.1M more than they expected to, using K&R’s value principles. (more)

The Qualcomm and Nokia Patent Agreement

In a previous article we discussed Negotiation Leverage in the long-running, but recently settled Qualcomm/Nokia patent dispute.  Setting leverage aside, let’s look at just one of the reported terms of that agreement as an illustration of one of K&R’s Six Principles of Negotiation.

The principle is this: “Terms Cost Money, Someone Pays the Tab (expense).”

What the principle means is that as you negotiate, you should consider that every term in the final agreement will cost one side or the other money.  You should therefore be careful when altering your terms.  Mistakes can be expensive.

This does not mean, however, that the cost to each party is the same. Read more