Challenge Your Assumptions: Have a Go At Value.
No matter what deal you are negotiating or how closed the options seem to be there is always room for some extra value. All it takes is a desire to seek extra value, and believe me extra can come from the most unexpected areas. The first and most important thing to consider is your own mind set, are you making assumptions or are you really open about the possibility of increasing value in your deals.
So what do I mean about extra value, well simply put we use all the available resources to create a deal that makes the most of the opportunity to make both parties better off, or at least to benefit one without adversely affecting the co-party. It is about generating options within the deal which provide value on important interests, it is not all about getting a better price. Why bother fighting over a share of a pie when you can simply make the pie bigger, “Expand The Pie” and then share it out. This is very different from the traditional mind set of winning the deal, or beating the opposition in the negotiation. That is the traditional, and I would argue, poor model of negotiations that most people try to achieve because they assume it’s the expected path to follow. What I recommend is something completely different, learn that good negotiators don’t win, they achieve, and they succeed. They set their goals and then behave in a manner to achieve the outcome. Become a problem solver. Identify the deal as a joint problem that you will solve together, rather than an instrument to beat each other up with.
Key Steps to Value:
First of all be ready for creation of value, be imaginative. Ask brilliant questions, ask questions that seek to gain an understanding of your co-party’s interests and needs. Don’t waste time asking questions you already know the answer to, but equally so don’t assume you know the answers. So if you ask brilliant questions you need to become a brilliant listener as well. This is about balancing advocacy with inquiry. It doesn’t stop you advocating strongly for you needs, it means that whilst you do that you also balance it by asking about what the other party needs or feels about your options. It is not a sign of weakness to inquire, in fact it is a sign of smartness and strength.
One of the great ways to do this is to present your options in 3s. The extent to which the options are accepted or rejected will teach you far more about how your counterpart is thinking than she may be willing to express in open questioning. It is part of the human condition that we react to stimulus and we react to how good or bad that stimulus makes us feel, we can’t hide the difference.
If I’m buying a car and the seller wants €40,000 and I’ve done some of the ground work to find out his interests. I might know that he really needs to change his car from the sports model to a costly family car due to changes in personal circumstances. I might know he has another car to buy and he has an offer accepted but he needs to sell his car quickly. So what might be 3 options I could provide? I could offer a figure close to the asking price but with a delay in payment, I may have a car of my own to sell. I might offer to pay somewhat less but pay today, addressing the time aspect of his interests. I may offer a price but agree to let him keep the car until delivery of his new car has been made. These are only some of the options and I came up with them in 30 seconds, the issue in negotiating a deal is that it is the manner in which my counterpart rejects each of the options will allow us to identify his real needs. This is an incredibly powerful tool in moving negotiations forward.
Assumption Blocks To Value:
Some of the more common mistakes negotiators make are in their assumptions. So below is a few examples of the more common assumptive mistakes and a challenge to each one.
“We both saw the value straight away, after that is became about distribution.” Change that assumption to “if we saw the obvious extra value early on, did we see it all, was there maybe extra value we didn’t immediately identify?”
“They’re not here to create value, they are here to win” This might be true, but why should they dictate your behaviour. How about you say “Well my behaviour is up to me, I can change the game we are playing and be the creator of value”
“Creating value is a sign of weakness”. This is one of the most difficult assumptions to overcome because it is premised on a lack of trust and a fear of being manipulated. A better assumption is “Creating makes me look smart”. The next time you have to do business together and you bring the reputation of being fair and an expansive thinker who makes better deals, you will be treated in a different manner and your deals will be much smoother.
Advantages of Value:
Increasing value and improving the deal makes it much easier to sell the difficult parts of the deal, especially when you can provide a value that is important to your counterpart but not a great cost to you. It saves you time and money, especially in repeated business, because it means further deals become less attrition based. Building value builds trust between the negotiators and builds on the relationship. Remember the 3 spheres in negotiations, substance, process and relationship. I’ve dealt with these in other articles.