Negotiating: 7 Strategy Tips
This is the
first in a series of newsletters on negotiations. This newsletter
discusses negotiation strategy. Future newsletters will discuss
negotiating tactics, mistakes and blind spots, and the art of
The ideas on negotiations that I present below have
developed over the
last 31 years that I have been negotiating the sales of technology
companies. These remarks are also applicable to other types of
negotiations in business and in life.
First let's distinguish between strategy and
tactics. Don’t confuse
strategy and tactics. Strategy requires thought; tactics require
observation. A strategy is not a goal. Strategy is the overall plan to
achieve your goal or solve a problem. Tactics relate directly to the
current negotiating situation and the people and issues that you are
dealing with. Tactics do not exist in a vacuum; tactics are in response
to the other party’s actions or positions.
Let’s explore seven ideas for good negotiating
strategies of the savvy
Keep Strategies Flexible
are dynamic situations—the tone and balance can change dramatically.
The perception of value can change as well. My preference is to have an
open-minded and flexible strategy. That way you can move and adjust
with the flow of the situation. Having a set strategy can get in the
way of flexibility. Think of strategy like planning a road trip—if the
main road does not look promising, take an alternate route.
Get your Priorities Straight
what is most important to your side. You need to have your priorities
straight. Be realistic because you may not be able to achieve every one
of your goals. What is of major importance and what is of minor
importance? If you figure these things out ahead of time, it will make
it easier for you to respond in the heat of negotiations. Know your
Determine your indifference curve. In the sale of a
about what combinations of price and terms shareholders would be
indifferent to. Would the shareholders prefer $8 million in cash or $11
million in stock? This is not about the total amount, but about the
relative preference for different types of deal terms.
You cannot always get everything you want in life,
so priorities are
essential if you are to make good decisions and wise compromises.
3. Learn their Value Framework
Do your homework. Learn as much as possible about
the other party—its strengths and weaknesses, its market segments and
its customers. What problems are they having? Understand how completing
a transaction with your side will solve their problem or benefit them.
Try to understand how the other side views value.
What is their
framework for evaluation? An experienced negotiator can add real value
in this area. He or she will notice things that a less experienced
negotiator will not perceive. An experienced negotiator will have a
good idea of how the other side views value. And if they don't have a
good idea, the negotiator will continue to probe until he does have a
good idea about how the other side perceives value.
Big Things First
first order of business is to agree on the big points, the broad
issues. Then try to reach agreement on the intermediate issues and last
work out the details. Too many people jump right to the details early
on in discussions. This is a mistake because it creates more unresolved
issues before the more important issues have been agreed upon.
Get the order of the negotiation activities right.
Work to reach
agreement on the big points first. If you cannot reach agreement on an
important issue, try breaking it into several smaller issues that can
be more easily negotiated. On a related point, sometimes issues appear
to be linked together; it may be possible to break this link so that
the points can be negotiated separately.
Insight from Trial
Introducing trial proposals can help you gain
insight to the other
side’s thinking. The other party’s response can be illuminating about
their preferences, about their assumptions and about how they view
value. Use trial balloons. Suggest a variety of prices, terms or
Trial proposals allow you to gain good insights; you
may even resolve a
particular issue. You might also uncover a hidden issue that needs to
no-concessions strategy is dangerous, since concessions are usually
expected. Anticipate making concessions and plan a few in advance.
Don’t compromise too early, but have a few in your bag. A smart
negotiator compromises by giving up something in order to get something
The nuances of negotiations are extremely important.
If I am offering
advice in the background, rather than being the lead negotiator, I make
a point to debrief the CEO (or the person leading the negotiations)
after each meeting and often after each phone call.
The negotiation team should discuss each
interaction. What have you
observed? How is the other side reacting?
Perception is more important than analysis in most
negotiations are like high-stakes poker games. Perceiving the players
is a key poker skill. Similarly, perceiving the nuances, reactions and
needs of the other party is a key ability of the savvy negotiator.
Listen. Listen. Listen. Listening is the most
skill. How can you give the other side what it is seeking if you're not
sure about what their true objectives are? Unless you meet their main
objectives a transaction will not occur.
Developing trust between the parties throughout the
is critical for achieving agreement. I try to develop trust in every
single negotiation. Stay true to your word. It will pay dividends
Treat every person with respect. Be polite. Don’t
jerk them around.
Don’t put them off. Sure, the other side might aggravate you from time
to time but don't let it get under your skin. Take the high road. It
will work to your advantage in the long run.
Remember, the price you get is the price you negotiate.
a third party to assist with your negotiations. An
objective party may observe or perceive things that you do not. The
other side may be more approachable with a third party as well.