Connect all the Negotiation Dots

 

Have you ever stopped to consider that the success of one negotiation is often predicated on the outcome of other negotiations. For instance, if you are purchasing a new home, you may be negotiating with the seller over the price, but you may also be negotiating with one or more lenders regarding a favorable loan package, as well as negotiating with a remodeling contractor for a bid to upgrade the kitchen and put in a deck in order to turn this into a dream home worth buying.

In such cases, where one negotiation is contingent upon, or linked with, the outcome of other negotiations, your overall negotiation strategy must include a set of plans for each separate negotiation in the chain, and you must give serious consideration to the timing and sequence involved in shepherding all of these negotiations to a successful conclusion.

There are several categories of linked negotiation scenarios.

Synergistic– takes issues that might be negotiated separately and combines them in ways that create more value.

Example:

Buying a new computer and bundling it with the purchase of a home theater system from the same vendor could produce an extra sale for the vendor and a lower price for the buyer on the total package.

Antagonistic – toxic issues that are irresolvable and have the power to kill a negotiation altogether.

Example:

In planning a family vacation, a wife may want to include a side trip to visit her sister, but her husband is not on good terms with the sister, hasn’t been for years, and would rather cancel the vacation than include a visit to this sister.

Sequential – a preliminary negotiation on one topic influences another negotiation that is coming later, OR concern about a future negotiation influences one that is taking place now.

Example:

Often a buyer and a vendor must agree on the size of an order before they can negotiate the schedule and the rates for shipping the order.

Concurrent – two or more related negotiations are taking place simultaneously or at least overlap in some way.

Example: A COO may be negotiating with a venture capital partner regarding funding for a new product line, and at the same time also be negotiating to hire a new VP of Product Development to oversee the new venture.

Competitive – one party is negotiating with two or more others regarding the same opportunity, but only one of the parties can consummate a deal.

Example:

A manufacturer may be negotiating with two different vendors for the same product, and the final choice will depend on which vendor’s offer is most favorable to the manufacturer’s interest.

Reciprocal – one party is negotiating with several parties at the same time, and all negotiations must be successful for the deal to go forward.

Example:

In order for an employee recruitment company to complete a deal, it must negotiate with an employer to agree on an acceptable wage to offer a potential employee, and it must also reach an agreement with the employee to accept that wage.

In any negotiation, it is important to analyze the entire process in order to determine:

1. At any time, are any of the issues important to me linked to or contingent upon other negotiations or other parties?

2. Could our position be improved in any way by either creating linkages where none presently exist, or by separating issues that appear to be linked at the moment.

If the answer to either question is yes, do not hesitate to restructure linkages or create new ones if it will create an advantage for your side.

 

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November Quick Tip – Act Powerful

A common mistake many negotiators make when they are facing a powerful party across the table is that of letting the party with all the money or lawyers take the lead. Sometimes it is an honest mistake, based on the (killer) assumption that these people are obviously the experts; they have plenty of experience and resources so I will follow their lead and hope for the best. It may be honest, but it is always fatal. One of the most important things to do is take charge of the discussion, ask most of the questions, be the first to put an offer on the table (based on good research, of course), spell out the stages and the agenda for the deal, and even draft the final language yourself instead of relying on their legal staff. Don’t be pushy or aggressive, but don’t hesitate to take charge and be PROACTIVE. It projects confidence, it keeps you in control of the conversation, and it looks POWERFUL.