By Nick Psyhogeos
In any negotiation, your ability to get the best deal possible depends on: (a) your preparation in uncovering the optimal “gets” for your side, and (b) your success at selling the value of the deal to the other side. There are many things you don’t control at the negotiating table—your opponent’s motivations and biases, their behaviors (win at all costs, hide the ball tactics, etc.), or developments outside the conference room that impact or impair the relationship between your company and theirs. What do you control? Your behaviors.
Here is a list of the top 4 things you should do to best position yourself for blowout results in your next deal:
- Learn their wants and needs. You very well may go into a negotiation with a decent idea of what the other side might be looking for in a deal. But that’s an awfully low standard for preparation. Don’t leave money on the table by working with an incomplete, unappealing, or ineffective vision for your deal. Your first step in up-leveling your preparation is to assemble key stakeholders from across your company, or friends or colleagues from within the industry who know about the other side, to help fill in the blanks. A negotiating “consulting team” within your company can consist of a sales group that sells to the company, a product team that is seeking a partner like them for a pilot program, or your business development group that may see strategic value in deeper collaboration with them. Where these resources exist, don’t go it alone. Tap their knowledge and develop a more complete view of desirable benefits. Informing yourself of the broadest possible scope of gives and gets will dramatically enhance your deal’s value potential.
- Find their Achilles heel. The flip side of learning their wants is to uncover their weaknesses, including an Achilles heel. You may be working on a deal with a new supplier. You want to establish a fixed price over a five-year term with no minimum volume commitments. The supplier is looking for minimum commitments with penalties in the form of higher prices in the event of volume shortfalls. You reach impasse.
Your preparation, however, reveals that the supplier is experiencing extreme cash flow pressure. While their cash situation is likely to stabilize by the end of year 1 of the deal, an unanticipated shortfall from a cancelled order puts the supplier’s business in distress. So much so that they might consider paying a premium (i.e., willing to consider otherwise non-negotiable concessions) in exchange for more cash up front. Knowing this gives you the opportunity to structure a deal to your liking by front-loading the year 1 payment, with savings on the back end and no volume commits.
- Paint a picture of success, for the other side. You will often find yourself in the situation where you need to illustrate and sell positive outcomes for the other party. This is particularly true when youare pushing the idea. Doing this effectively can be the difference between successfully persuading your opponent and inviting indifference or inaction. Knowing their motivations and weaknesses is the first step in getting you there. In crafting your message, be specific on the advantages they will gain in doing a deal. Importantly, package it in a way your counterpart can use it to build internal consensus for the deal with key execs within their own organization.
- Make concessions conditional. Extending value—even significant value—to the other side does not equate to weakness, or losing. A colleague of mine once commented that:
“Good deal people get good deals done. And you aren’t close to getting it done until both sides get a little uncomfortable.”
Deals, like the world, are not always tidy. By definition, they are decidedly imperfect, explained by their consummation by “agreement” of the parties. Harnessing and delivering relevant value to your opposite will be necessary in most negotiations. The trick is you should refrain from giving something of value to the other side without gaining something of value for your company in return. In other words, the give should be “conditional.”
Follow these tips and you will increase your confidence and outcomes in negotiations.
Nick Psyhogeos is the Founder and CEO of Global Negotiations, LLC, www.global-negotiations.com, a consultancy dedicated to improving results for corporations and employees in their negotiations. Nick has 25 years of negotiating experience across three continents as a trial lawyer, business leader and most recently as the head of Microsoft’s patent licensing practice where Nick and his team closed more than 200 patent licensing deals with some of the most prominent companies in the IT industry. He’s a regular contributor to Money Inc. and also the author of the recently released book, Confessions of a Global Negotiator: A Quick Guide to the 5 Rules Business Development Professionals Need to Close Great Deals @NPsyhogeos