Five mistakes negotiators often make – Mistake 2
Mistake No. 2: Not preparing skillfully
Question: If one party had 60 minutes to prepare and another party the whole day, who will prepare better for a negotiation?
Answer: It depends on who is better skilled at preparation.
Most do not expend sufficient time to prepare for negotiation or do not efficiently.
“Oh, I will prepare while driving to work for 30 minutes,” or something similar to that. Preparation for the negotiation is mostly an afterthought.
Skilled preparation requires knowing what you want and your strategy. You can do this by explicitly stating objectives in “Opening Position or Intend” and “Must-have or Must-avoid” for each issue.
And, what is an issue?
Why are you negotiating? What is it you want? What are the items that require a joint decision? State each item clearly, individually, separately.
If the price of your product or service is too low, clearly state its impact. Are you losing money or just not making sufficient profit? If you are losing money, explicitly say, “We are losing money in supplying this product or service to you.”
What is the priority of each objective? Is it:
An Opening Position or Intend (“want” going into the negotiation),
Must-Have/Must Avoid (walk away from bargaining), or
A Wish (you need this for trading)?
An Opening Position or Intend (“want” going into the negotiation)
What do you ask going into the meeting? What do you want? The statement conveying your Opening Position sets the tone for negotiation. The Opening Position must be defensible and specific. A vague Opening Position will confuse others.
“We expect to get a significant price increase.” Well, what is significant?
Two things are essential in designing your “Opening Position.”
Keep it simple: It needs to be simple to understand and execute. Too many moving parts will make it difficult to comprehend, remember and act.
Keep it flexible: Often, executives lose focus on negotiation and begin confusing Strategy for Objective.
“We have been doing it this way for 100 years.” If only I could count the number of times I have heard that.
Ever notice sheep going to graze? They will follow the same path leading to the greener pasture. Farmers frequently have a gate with no side fence installed on the dirt road. The farmer opens the gate when he wants the sheep to go to the pasture.
Occasionally, some sheep wander off and try to go to the field when the gate is closed. The sheep never try to go around the gate! They will hit their heads against the barrier and then give up and go back.
Similar behavior afflicts many otherwise intelligent executives. They keep on trying the same old strategies, confusing them for objectives.
What do you do if you meet a “gate?” Take an adjournment, a “time-out.” If in negotiation your goals become unrealistic, or if new information has come out, or if your current strategy is now not best suited for moving forward, adjourn. Rethink your objective and strategy.
Must-Have/Must-Avoid (walk away from negotiation)
Pre-determine what it is that you “must have or must avoid.” These are “Walk-away” items (the bottom line under any conditions).
When identifying these items, you must be 100% sure that each one of these is a “Walkaway.” Corroborate indisputable support of internal stakeholders. The other party must believe you. Remember, the other party may have relationships in your firm, industry, or social circle. They may try to validate your position.
All “Walkaways” must be satisfied. If you can live with any single of the “Walkaway” items unmet, then that is not a “Walk away.”
A Wish (you need this for trading)
What is a “wish” in the context of a negotiation?
Imagine you had all the power in a negotiation. What are the things not directly related to the deal you would wish to have? These are items, if acquired, that could prevent you from walking away. You must have a “Wish List” to be able to trade. It has meaningful value for you but is easy and inexpensive for the other party to grant.
Next issue: Mistake Number 3.
