5 Simple Rules for Negotiating Successfully

Image courtesy of stockimages at FreeDigitalPhotos.net

Image courtesy of stockimages at FreeDigitalPhotos.netWhen I was a young Product Manager at Mattel, I was tasked with negotiating an important promotional deal. It was really my first meaningful negotiation assignment and involved confronting an eclectic artist/designer whose external eccentricities actually belied his business savvy. I recall vividly sitting in my boss’s office with my “adversary” and stumbling my way to a deal that, in retrospect, wasn’t great. I was inexperienced, awkward, and paid the price in real dollars. I figure I paid a premium of at least 25% for making that deal.

No regrets here. We all live and learn. And that experience – once I was able to process and reflect on what had happened – provided some valuable lessons to build on. I don’t claim to be the expert on negotiation. There are plenty of them and their respective books, but I’ve had many successful negotiations since my aforementioned initiation and (fortunately) none that painfully stand out like that first one.

Over time, I realized that my own negotiation checklist of simple rules had evolved and became somewhat engrained. They became my discipline as I entered into any negotiation, small or big. I should also say upfront that I am a supporter of the philosophy that the best negotiations are fair, ethical, and aren’t a zero sum game of gladiator winners and losers. (Yes, one obvious implication is to be selective with whom one does business in the first place.)

Every negotiation is a somewhat unique challenge and I can’t guarantee success – nor can the many books and other articles that may claim to do so. Nor can I claim that you may not have heard these rules before in one form or another. But I do believe that if you follow this simple list, your odds of a less stressful and successful result will increase significantly:

1. Know what you want and stick to it

When I walked into that first negotiation at Mattel, I didn’t take the time to think about what I really wanted and what my best and worst cases would be. This may seem like pretty basic stuff, but I’ve been surprised on many occasions to find that party with whom I’m negotiating hasn’t really thought about what they really want and what their parameters are. When you do and they don’t, it’s like a race where you are allowed a substantial lead at the start.

But, here’s the thing. You’ve got to stick to the parameters you’ve set. For example, If the “ask” is more than you decided in advance to give, and you agree, then you are either going to do an sub-par deal, or, you didn’t really go through the upfront diligence required to enter the negotiation. Sure, negotiations are fluid, and it is appropriate, given the time to adjourn and give proper reconsideration, to update your parameters in light of new or unexpected information that may emerge – particularly in complex negotiations. I’m suggesting one not do that on the fly. “On the fly” thinking is better suited to deciding whether to ask for a bit more – chase the upside, if you will – once you’ve been offered a deal within your pre-determined parameters.

2. Rehearse and expect the unexpected

I’ve made money (not much) in my past life as a musician. It is good to know the music and lyrics before going on stage. Negotiations are no different, but this simple rule can often get lost in the shuffle. For the most part, the real issue here, as in the case of musicians or other performers, is under-rehearsing. This process can be time consuming and therein lies the rub and the temptation to ignore or under-rehearse.

This is especially critical in team negotiations, where all concerned need to be on the same page and sing from the same hymnal. Take the time to understand the issues at hand in detail, anticipate as many of the other party’s responses as possible and how you will react. Do a bit of role-playing. If you want to play the “good cop/bad copy” tactic, then this is the time to agree roles. Again, this is not something that should emerge on the fly when negotiations begin. And take the time to brainstorm as many of the unexpected scenarios that could occur.

If you are the solo negotiator, this is when it is easiest to short sell this process. I found it often helps to engage someone familiar with the issues at hand with whom to practice. Or, if you are going to do this yourself, do it in writing. Doing the exercise in writing enforces a certain level of diligence to the process and gives you a guide to study close to the start of the meeting.

Whether acting as solo player or in leading a team, the litmus test of this basic process will ultimately be the absence of surprises once negotiations begin and, of course, the final result. I have found that the absence of surprises correlates highly with success.

3. Speak last and less

There is likely a psychological basis to this that is beyond my expertise, but I began to observe over time that negotiations usually went better when the other party spoke first – and when I let them do more of the talking. On a practical level, speaking first (which may be a inevitability or requirement in some cases) does put you in a place where you have to show your hand first, allowing the other party to process and react. So, as opposed to tennis, I found that I fared better when I wasn’t serving.

Whether you have to serve first or not, try to talk less. On a practical level, talking more simply provides additional opportunities to say the wrong thing and go off track, while allowing the other party to think and react. I believe there is also a correlation to the lack of upfront prep (see #1 above) and one’s inclination of falling into the trap of talking too much.

Just as you don’t want to fall into the quicksand of getting too chatty, the discipline of not doing so can often encourage the other party to go down that path. In the seemingly endless moments of silence that can occur in an intense negotiation, skip a beat, wait, and listen. It’s generally to your advantage.

4. Find and exploit the level of reasonableness

This rule applies when you have to make the proposal or counter-proposal. You want to have a shot at the optimal result while also giving yourself as much operating room as possible, given the inevitability that there will be additional back and forth negotiating.

In discussing this rule with others, I’ve actually used the word ridiculousness as opposed to reasonableness to make the point. In short, when needing to propose or counter-propose, don’t be afraid to look the other party in the eye and ask for something that is on the border of being unreasonable. You know, the “ask” where if you went any further or higher, they would likely walk out.

This generally works because many negotiators (particularly those newer to the process) tend to ask for too little for fear of blowing up the negotiating process completely. If you’ve done the diligence to find this place on the edge of “reasonableness”, you will either end up with an optimal deal or leave yourself ample room to get a deal well within your parameters. Metaphorically, you expand your playing field.

I had the occasion much later in my career of having to negotiate a new deal with a third-party technology provider. A team member did great work in analyzing the financial costs and potential savings of various options. I suggested we go in at a particular level that, on the surface, seemed a bit risky if not unreasonable. My colleague smiled and asked: “Are you sure?” I said “yes” because I knew the vendor had high margins and valued the steady cash flow our relationship provided. Also, our long tenure as business partners provided us with a level of flexibility. In other words, the worst case would simply be a “no” and a counter proposal. There would be no breakdown of the relationship or negotiation. And we would get some leverage to get a decent deal. The result: The vendor took the deal as proposed.

The lesson of the above story is, quite often in my experience, after analyzing and debating what the desired proposal is that touches the boundary of unreasonableness, you actually find a level of level of reasonableness and end up with a great result.

I know what you’re thinking: “Doesn’t this mean that you could have been more aggressive and gotten even a better deal?” Maybe, but I suppose that might be another rule: If you’ve diligently done #1 and got the deal you wanted, especially if you hit the upper end of your deal parameters, be happy and move on. Life is too short. And you don’t want to find the edge of reasonableness by going beyond it.

5. When you get the desired outcome, close and move on

Maybe you’ve experienced this. You and your team are in an intense lengthy negotiation. You’ve done your diligence, you’re hitting on all cylinders, and then agreement is reached. But someone (hopefully not you) gets talkative, or decides to revisit one of the points in search of something a bit better, further clarification or whatever. Then, more talk ensues. Things unravel. The deal changes (for the worse) or falls apart.

This is a very unpleasant thing, especially if you are under pressure to get the deal done and/or your business is literally depending on it. So, the rule is simple. When you get what you want, close, shake hands, express the appropriate level of professional gratitude, and move on. If you got what you wanted and reached an agreement, extending the meeting and discussion has little upside – but a fair amount of downside.

There are, of course, many nuances and potential complexities to negotiating this piece doesn’t aspire to address. But like competitive sports, my pitch is many games are won and lost on the basic fundamentals and their execution.

By the way, if we should ever meet and engage in a negotiation, you now know my not so secret sauce. No worries. I only ask that you start the discussion…


Image courtesy of stockimages at FreeDigitalPhotos.net