I strongly believe partnerships lead to greater success in business, and partner management is something all of us need to think about. I’m also writing today about negotiations, and the reason for that is that I see successful negotiations gravitating more and more towards win-win partnerships, and much less the case of one party dominating or ‘winning’ over the other. My views are often called ‘principled negotiation’, where ego needs to be dialled down, and such negotiation brings longer term, sustainable benefits, I believe.
In the past, when we talked about negotiation techniques, it was often said in a negative tone, - negotiation tactics as a term would make us think of someone hard-nosed, determined to knock the other party down to get the best for themselves, - hence a very macho and ‘us-versus-them’ kind of scenario.
In my career I’ve never observed that kind of negotiation creating a lasting relationship. It would generally be short-term, and leave a bad taste in the mouth, which might well manifest itself somewhere else later, - or, it simply failed in its objectives.
In a number of M & A deals I was involved in in the past, I can think of three where in each case those driving the deal on one or other side were very aggressive and were not in the slightest thinking about creating a win-win situation. Given my particular values set, I wasn’t very admiring of them, although others might feel that their behaviour was appropriate to the situation. In one case, the third party ended up arranging a different deal with someone else, as they didn’t like the aggression shown (which was culturally unacceptable), in another the aggressor went behind the other’s back to do a deal with another party, and in the third case the aggressor successfully bought the business, but had related issues down the line which meant it did not end happily for them. Whether or not a different approach would have ended up better for everyone, I can’t say, but I can vouch for the fact that these negotiations were sub-optimal for all parties, due to what I would call an ‘old-fashioned’ approach to negotiation.
So, what are my recommendations, and what have I seen work in terms of effective negotiations with others, including creating successful partnerships? First of all…
1. Think of negotiation as a skill – this can help to overcome some of the negative connotations, then
2. Remember the motivational states podcast and try to get in The Zone when negotiating – it’s the best place for win-wins and co-creation
3. Listen more than talk – really hear what the other party has to say, and build trust by not saying too much
4. Give something, of yourself, so you start to operate on a more human level – it might be finding a common interest, for example
5. Give something for free – for example if you’ve heard it’s going to rain later, or there are delays on the train line, etc
6. Research the other party before meeting, gathering as much information as to their style and preferences as possible
7. Plan – don’t rush things
8. Understand; step into the shoes of the other party, and try to understand their motivation
9. Ask for what you want – don’t be shy, or unclear
10. Be positive
11. Be prepared to walk away if necessary – this is really important, as your stance on this will be clear to the other party, and if you’re not prepared to walk away you’ve lost any leverage you had
12. And finally: don’t take things personally.
In the ACT’s Advanced Diploma in Treasury Management, we talk about the use of language when negotiating, and reference Janine Driver who explains some perceived blockers which it’s really helpful to understand. She claims that when we hear certain words such as ‘decided’, ‘typically’, ‘normally’ or ‘usually’ we often give up.
However, if someone is to say ‘we’ve decided there will be no IT investment this year’ or ‘normally we don’t allow treasury representation on the board’, these words actually indicate that things are not yet actioned; so, if pushed, there may be a chance of changing the decision, or challenging the norm with a well-thought-through idea. With practice we can identify these words as openings, rather than a door being shut, and that’s really important in a situation of negotiation.
How you understand and use language and communication techniques is a whole area which can offer a positive set of tools for negotiation.
For example, psychologically it’s very much easier to say the word ‘no’ than ‘yes’, but preferable to hear the word ‘yes’. By turning the situation around and phrasing things differently, the outcome you achieve may be better. For instance, saying ‘we really need a new Treasury Management System, as the current situation is dire, so can I get your approval?’, which requires a yes, is going to be less effective than asking ‘we have a significant problem with our existing Treasury Management System: is it acceptable to run the risk of not being able to carry out any transactions?’ With the latter example we make it easy for the other party to say ‘no’, and therefore approve the project.
When entering a negotiation with a range of options, you may have a preferred outcome. This preferred outcome is often positioned first, but sometimes last on the list. Research suggests that third place within a list of options (of any size) is the optimal positioning for successful uptake because:
1. the first option is often not what your target audience expects, hence a disappointment
2. the second option is often considered simply a source of information, and the decision-maker tells themself it’s too early to decide, and
3. the third is the option that they’re now ready to receive.
It’s claimed by psychologists that the human mind can only really process three options at any one time; so, the third option is the best received at that point, for the reasons described, and when more options are brought in, the human mind will rebel and gravitate back to option three anyway. Mentalist and trainer David Meade covers this and other interesting phenomena around decision-making in his talks, and I’d highly recommend you seeing him if you ever get a chance!
An issue in negotiations or potential partnerships can be when emotion gets in the way. When considering how to deal with the risk of an aggressive or overly emotional and ‘personal’ interaction in a negotiation, which naturally delivers a sub-optimal outcome, one suggestion is to clearly separate the people from the problem, and focus on one’s interests rather than taking up ‘positions’. Here we can learn a lot from the art of debate, when you might be asked to argue for something you don’t even believe in. If we adopt this mindset then we remain more objective, and open to win-win situations. Hostage negotiators have a lot of interesting things to say on this; whilst they would never personally argue in support of hostage-taking and threatening violence, they will say that they have, during the act of negotiation, to somehow get themselves into the mindset of the hostage-taker, so that they feel listened to.
All of these thoughts are centred around seeing things from a different point of view, and seeing views as being just views – and de-personalising them. Imagine a view put forward by the political party you support, then the same view given by a party you really don’t like. Research suggests that you will support the view given by your party, but if given by the other party you’ll disagree with it. We tend to like opinions given by people we like and trust – and vice versa. If we remember this fact, and work to de-personalise a negotiation, then it’s likely to have a better outcome for all.
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Author: Caroline Stockmann, former Chief Executive, ACT. Article adapted from the strategic insights podcast