Everything we do at K&R Negotiation is based on our philosophy, honed over several decades of helping the world’s leading companies achieve successful sales and business negotiation outcomes. We last shared this philosophy in late 2018 and it is time for a refresh.
While some negotiations can be adversarial, negotiations as a defined business activity should be viewed as a positive process. The word negotiation 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. Here is a better perspective:
- 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 over what should be a positive process?
Those of you who have had the pleasure of negotiating with your spouse or child can certainly attest to the inevitability of this process in all facets of life. It’s also likely that your current position in business is a product of multiple negotiations, from job interviews to debates over resources and schedules.
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. In fact, 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, competition and general economic factors. As you can read about in our recent Forbes article, the recent volatile economic climate profoundly influences business negotiations as did the pandemic before it.
Viewing 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 business negotiations. 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. This is the real world and 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.
To illustrate the importance of properly identifying interests – if we fail to distinguish between a profitable vendor looking to enter into a five-year agreement versus one who is on the verge of bankruptcy and who is focused on current cash flows, shame on us! While you can certainly do business with both, the terms should be very 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.
- We must ensure that all agreements are implementable/deliverable to match expectations and facilitate long term relationships. This includes focusing on performance and enforcement that is relevant to the business outcomes sought in any agreement.
- Disciplined governance and validation of negotiated deals fosters future relationships and mutual success.
As I mentioned at the start of this article, everything we do for our clients, flows from our underlying philosophy. I hope you find this information helpful as you embark on your important business and sales negotiations.