Share Interests Expand the Pie
on Tuesday, 13 January 2015.
Many negotiators view the sharing of interests with trepidation, fearing that they will be manipulated if they divulge information to their counterparts, or that sharing interests is somehow soft and negotiations should be about the hard line cut and thrust of the distributive aspect. And to some degree they are correct, there will always need to be distribution of the core assets, and it is enjoyable to get down to the details and play hard ball. Let’s be honest, everyone in business gets some kick out of negotiating a deal and playing tough, the adrenaline flows and the emotional response when you win is great. Definitely offering up interests does lead to the potential to be manipulated and for them to be used against you. However there are huge advantages to sharing interests and there are ways to protect you in the negotiation
Advantages of Interest sharing:
The first is that it is only through interest sharing that you can expand the value of the deal and not leave money on the table. Interest exchange creates options, and these options create increased value for the deal. It’s that simple. Interests can often be different but complimentary, this is a concept of integrating diversity and has huge potential for value creation. The interests shared can be used to create the package for the deal. Instead of competing over the interests, discuss them and find options around them so that they can be used for the advantage of at least one side of the deal. Resource sharing or options around it all come from interest sharing. Try to give “the other side” something of little cost to you but of great value to them, and then demand the same from them. Seek the interests you can help them with without giving away your deal and encourage them to do the same. This collaborative approach is the key to successful negotiations and deal making. Transforming the deal challenge from winning to mutual problem solving.
The second is that it builds trust and builds the relationship between the parties. Remember a good deal should improve, or at least not worsen, a relationship. Sharing interests requires and builds trust and that definitely builds the relationship. It means that not only are you much more likely to do business together again but that it will be easier next time. All negotiators are people and as such we all have emotive response and we all prefer to do business with someone we like, trust and understand. Every networking group I’ve been part of has know, like and trust as core values. It’s no different in deal making. Sharing of interests provides the opportunity to do exactly that.
Protecting Your Interests:
This is the tricky bit, how much information should you give away, will it be used against you and can you trust your counterpart.
The first lesson is to share the nature but not the intensity of the interest. Telling your counterpart what your interests are and why it is important is key, but it is not the same as telling them how important it is to you. Doing it correctly means they get to understand your needs and you theirs so you can build a collaborative deal. But do not give away the extent to how connected you are to the interest and need. Otherwise it can be used against you. In one significant deal I was involved in where a great deal of money was at stake we set ourselves up in a classic format with each team taking separate sides of the board table, hardly able to share the air space let alone make a deal. On my counterparts’ a team, was one individual who was very clear about how important a single piece of information was to him for his statistical charts. In reality it was of zero cost to our side, and had very little to do with the real value of the deal, but because of continued demands for the info it became clear it was the deal maker for him, irrespective of the rest of his team’s needs. To cut a long story short, that single piece of info became the deal, we offered the info, making a play that it was a huge concession, and got all we wanted for our side of the deal. If he had of said he was interested in us providing some stats but not told us how interested he was it would have been a small part of the deal package. Instead it became the only concession he won whilst he gave away the money we were looking for. We left having “won”, the money was in the bag, but we missed the opportunity to create extra value and resolve other outstanding issues.
The second rule is to share reciprocally. Never outline all your interests too early and stop if the other party isn’t sharing too. Remember it is about building trust, relationships and expanding the pie. If both sides don’t share the deal value won’t increase. In fact it may shrink, as in the case above, my counterparts got only one thing they were looking for because of a continuous sharing about one interest, without even asking what ours were. Had we got through some interest sharing we had lots of common goals that could have saved both sides money, creating efficiencies and made future deals easier.