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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
The tools you need to maximize success in any negotiation, at any level With Negotiate Without Fear: Strategies and Tools to Maximize Your Outcomes, master negotiator, Kellogg professor, and accomplished CEO Victoria Medvec delivers an authoritative and practical resource for eliminating the fear that impedes success in negotiation. In this book, readers will discover unique and proprietary negotiation strategies honed over decades advising Fortune 500 clients on high-stakes, complex negotiations. Negotiate Without Fear provides readers at all levels of negotiation skill the ability to increase their negotiating confidence and maximize their negotiation success. You'll learn how to: * Put the right issues on the table by defining your objectives for the negotiation * Analyze the issues being negotiated with an Issue Matrix to ensure you have the right issues to secure what you want * Establish ambitious goals using a proprietary tool to identify the weaknesses in the other side's best outside alternative (BATNA) * Leverage a unique architecture for creating and delivering Multiple Equivalent Simultaneous Offers (MESOs) Negotiate Without Fear belongs on the bookshelves of executives and all the dealmakers who work for them. Additionally, specific advice is provided in every chapter for individuals who are negotiating for themselves and in the everyday world. This book is an invaluable guide for anyone who hopes to sharpen their negotiating skills and achieve success in any arena.
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Veröffentlichungsjahr: 2021
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Table of Contents
Cover
Title Page
Copyright
Dedication
1 Take the Fear Out of Negotiation
2 Put the Right Issues on the Table
Generating the Issues
Developing Your Objectives and Negotiable Issues for a Customer Negotiation
Build the Relationship
Differentiate Your Company, Product, or Service
Highlight Your Company's Expertise
Expand Your Footprint Within the Customer's Business
Maximizing Margin
Issue Matrix
Summary
3 Build Your BATNA
Build Your BATNA Simultaneously
RFPs and RFQs
Generating BATNA in Our Everyday Lives
Summary
4 Define Your Reservation Point
Your BATNA vs. Your Reservation Point
The Importance of Knowing Your Reservation Point
An Individual's Reservation Point vs. the Company's Reservation Point
Determining Your Reservation Point Across All Issues
Scoring Tools
Summary
5 Establish an Ambitious Goal
The Importance of the Goal
Why People Do Not Establish Ambitious Goals
The Bargaining Zone
Are You Rewarding People Who Establish Ambitious Goals?
Goals Should Be Based on the Weakness of the Other Side's BATNA
A BATNA Analysis Tool
Setting Goals in Everyday Negotiations
Power Analysis
Summary
6 Make the First Offer and Craft a Compelling Message
Why You Should Lead
Advantages of Making the First Offer
Why Do People Want to Let the Other Side Lead?
An Information Asymmetry Between Buyers and Sellers
How Aggressive Should My Offer Be?
Craft a Compelling Message
Summary
7 Reinforce Your Message with a Multiple Offer
What Is a MESO?
Why Three Offers Rather Than One?
Make an Offer More Rapidly
How to Structure Multiple Offers to Communicate the Strongest Message
The Elbow Issue
Enhancing Your Story with a Contingent Agreement
Deploying MESOs to Win in Competitive Bidding Situations
Summary
8 Say It, Don't Send It
Negotiate in a Synchronous Channel
How to Be Synchronous in a World Where We Cannot Be in Person
What to Do When You Are Forced into an Asynchronous Channel
What to Say
Summary
9 Leave Yourself Room to Concede to Close the Deal
The Importance of Concessions
Package Deals
What If the Other Side Goes First?
Conceding When You Have Multiple Offers on the Table
Overcoming Objections
Knowing Your Reservation Point
Summary
10 The Five F's to Ensure You Are a Fearless Negotiator
Bibliography
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Acknowledgments
About the Author
Index
End User License Agreement
List of Tables
Chapter 4
Table 4.1: Objectives and Issues in My Nanny Negotiation
Chapter 7
Table 7.1: Your MESO Architecture
Table 7.2: Offer to Nanny
Table 7.1: Your MESO Architecture
Table 7.3: The Box Company MESO
Table 7.4: Medvec & Associates MESO
Table 7.5: Employment Negotiation MESO
Chapter 8
Table 8.1: The Box Company MESO
List of Illustrations
Chapter 2
Figure 2.1: Typical Objectives and Issues in Customer Negotiations
Figure 2.2: Typical Objectives and Issues in Customer Negotiations
Figure 2.3: Promotional Sales Company Differentiators
Figure 2.4: Food Supplier Differentiators
Figure 2.5: Medvec & Associates' Differentiators
Figure 2.6: Typical Objectives and Issues in Customer Negotiations
Figure 2.7: Typical Objectives and Issues in Customer Negotiations
Figure 2.8: Multiple Volume Thresholds
Figure 2.9: Typical Objectives and Issues in Customer Negotiations
Figure 2.10: Typical Objectives and Issues in Customer Negotiations
Figure 2.11: Issue Matrix
Figure 2.12: Issue Matrix for Example of Negotiating for Yourself
Chapter 5
Figure 5.1: Bargaining Zone
Figure 5.2: BATNA Analysis Tool: Customer Negotiations
Figure 5.3: BATNA Analysis Tool: Supplier Negotiations
Figure 5.4: BATNA Analysis Tool: Negotiating for Yourself
Chapter 6
Figure 6.1: Three Levels of Discussion
Chapter 7
Figure 7.1: The Box Company Differentiators
Figure 7.2: The Box Company Issue Matrix
Figure 7.3: Medvec & Associates Differentiators
Figure 7.4: Medvec & Associates Issue Matrix
Guide
Cover Page
Table of Contents
Begin Reading
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Praise for Negotiate Without Fear
“My life's work has been to empower women by helping them tell their stories and giving them a voice on the Oprah Winfrey Show, the OWN Network and Apple TV+. The pattern I've seen is women not knowing their inherent worth and conducting negotiations—at home and at work—out of fear. From the first chapter to the last, Vicki will guide you step by step, with tangible tools, that will help anyone break their old patterns and start negotiating from a place of confidence and strength. Vicki is one of the smartest and most remarkable women I know, this book is like having this wise and brilliant advisor right on your shoulder.”
—Tara Montgomery, Executive Producer, OWN / Apple TV+
“Vicki's strategies have helped me succeed in some of the most complex negotiations I have encountered across my career. Her focus on addressing the needs of the other side makes her strategies particularly powerful.”
—Matthew Shattock, Former CEO of BeamSuntory, Non-Executive Director of the Clorox company, Non-Executive Director of the VF Corporation, Chairman of Domino's Pizza Group p/c Board
“When I met Vicki, I thought I knew a lot about how to negotiate. As a leader at Microsoft and IBM, I negotiated all the time. Vicki taught me strategies I never even knew existed and highlighted the traps that expert negotiators encounter. I have consistently brought her into my organizations to raise the capabilities of my teams and increase our success.”
—Gerri Elliott, Executive Vice President, Chief Sales & Marketing Officer for Cisco
“I invited Vicki to teach negotiations to the leaders from my private equity firm and portfolio companies. Once I heard her, I asked her to join the board for one of our companies, recognizing immediately that her insights would add tremendous value in our many negotiations. She is a rockstar!”
—Justin Ishbia, CEO, Shore Capital Partners
“I wanted a world-class negotiator to teach the best techniques and create a cultural change in our sales team at Nextdoor. Healthy communities are built on trust and healthy client relationships are no different. I asked my former colleagues at Goldman Sachs and Vicki Medvec was the top choice and the results of the training underscored why. I have since recommended Vicki to other companies, such as Walmart. Nextdoor, and the neighborhoods we serve, thrive on the power of connections from trusted sources. Vicki Medvec is one of my trusted sources.”
—Sarah Friar, CEO, Nextdoor, Director, Walmart
“I have worked with Vicki in many capacities and have personally observed the impact her work has had on large enterprises such as McDonald's, Google, and Discover. I am a big fan of her strategies, such as offering multiple simultaneous offers to communicate a powerful message.”
—Margo Georgiadis, Former CEO, Ancestry, Former CEO, Mattel, Director, McDonald's
“'WWVD?’—What Would Vicki Do?—is what I consistently ask myself every time I face a challenging negotiation in work or in life. I was very fortunate to meet Vicki twelve years ago when I was a Partner at Goldman Sachs. She conducted many programs for the Partners, Managing Directors and important clients, that people still talk about to this day. I'm excited that Vicki has gathered her actionable insights and terrific advice in Negotiate Without Fear. A must-read.”
—Lisa Shalett, Former Partner, Goldman Sachs, Founder, Extraordinary Women On Boards, Board member, Accuweather, PennyMac Financial Services, Bully Pulpit Interactive
“If I had read this book at the beginning of my career, instead of at the end, I would have been a more successful consultant, commanded higher fees and would have been a better professor and academic administrator, because the concepts in this book are so powerful and so very useful. The many war stores bring the concepts into clear focus and give the reader the competence and confidence to negotiate with great success. Every business-to-business seller and marketer should read this book. It provides the best, the most complete, and rigorous approach to managing complex account management of which I am aware. It is an extraordinary book about negotiation, but it covers all aspects of relationship building, pricing and selling.”
—Benson P. Shapiro, Malcom P. McNair Professor of Marketing, Emeritus, Harvard Business School
“Vicki has advised me on many of my most difficult negotiations. Even as I have over 30 years of experience in high-stakes negotiations, having her voice in my mind always leads to a better outcome—for both sides. Go first … Offer multiple options … Make it about them, not you. Vicki's timeless touchstones have become the foundation of my negotiation approach.”
—Michelle Seitz, Chairman and CEO, Russell Investments, Director, Sana Biotechnology
“American Securities has come to rely upon Vicki for many years both to teach negotiation strategies and guide our portfolio companies through some of their most challenging negotiations. Our relationship started when she spoke to the CEOs of our portfolio companies at a CEO Retreat and due to her unique and differentiated approach, they insisted on having her instruct their teams. As a private equity firm, my partners and I have a great deal of experience negotiating, but Vicki makes us aware of the traps that snare experts and helps us to avoid these pitfalls. In her book, she shares the best ideas that expert negotiators employ and gives you confidence and examples to use these tools to your advantage. Even the most experienced negotiators will gain an edge from reading this book.”
—Bill Fry, Managing Director, American Securities
“I wish I had had access to this book when I was running a company. The strategies Vicki presents would have helped me every day as I negotiated with customers, unions, government leaders, business partners, and community stakeholders. I would also have been able to use these ideas to guide the many highly successful women I have mentored across my career. Vicki includes an insightful section in each chapter on how to effectively negotiate for yourself. This book should be in the hands of every senior leader and, in fact, should be in everybody's hands.”
—Georgia Nelson, Director, Cummins, Director, Ball Corporation, Director, Simms, Ltd., Director, Custom Truck One Source, Former President, Midwest Generation
“When you learn negotiation strategy from Vicki, you walk away with a full arsenal of tools that you can apply immediately and that will yield tangible results. I have been learning from Vicki for over a decade, and yet I still gain new skills every time I have a chance to participate in a seminar or a session. I have been a student, a customer, and a reference for the capabilities Vicki builds numerous times and she has exceeded expectations every single time. You will be challenged, you will grow your skills and your confidence, and you will be a better businessperson after spending some time with Vicki's words of wisdom.”
—Trish Lukasik, Operating partner, Atlantic Street Capital, Director, Sargento Food, Director, The Gorilla Glue Company
“I have been negotiating for a living, both in government and the private sector, for almost 40 years and have studied with many experts. Vicki's thoughtful approach delivers the practicality and results beyond any other guidance. She provides actionable strategies that drive measurable success. Her ability to dissect the complexities in each negotiation and skillfully apply the strategies is an effective combination that truly sets her apart. The stories she shares in the book reveal the secrets to her techniques.”
—John Howard, Senior Vice President and General Counsel, W. W. Grainger, Inc.
“I work with physicians every day and understand the power of unique knowledge. Vicki possesses unparalleled expertise in negotiations. She has trained my team on multiple occasions as our company has rapidly grown. Every single session has produced results for our business. In Negotiate Without Fear, she reveals the strategies she has taught to my team. Trust me when I say they work!”
—Dr. John Di Capua, CEO, North American Partners in Anesthesia
“Vicki Medvec has worked closely with my team at McDonald’s. She has taught us how to differentiate ourselves and translate our differentiators into negotiable issues. She also encourages us to craft a message that conveys how our differentiators address the other side’s pressing business needs. These strategies have completely changed our conversations and dramatically increased our success rate. And, we have been building stronger relationships at the same time. Her book will give you the skills to do this. Pay careful attention to the material on differentiating yourself. This is a critical capability both when you are negotiating for yourself and for your organization.”
—Morgan Flatley, Chief Marketing Officer and Digital Customer Experience Officer, McDonald’s USA
Dr. Victoria H. Medvec
NEGOTIATE WITHOUT FEAR
Strategies and Tools to Maximize Your Outcomes
Copyright © 2021 John Wiley & Sons. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Library of Congress Cataloging-in-Publication Data:
Names: Medvec, Victoria H., author.
Title: Negotiate without fear : strategies and tools to maximize your outcomes / Victoria H. Medvec.
Description: Hoboken, New Jersey : Wiley, [2021] | Includes index.
Identifiers: LCCN 2021008518 (print) | LCCN 2021008519 (ebook) | ISBN 9781119719090 (hardback) | ISBN 9781119719137 (adobe pdf) | ISBN 9781119719113 (epub)
Subjects: LCSH: Negotiation.
Classification: LCC BF637.N4 M433 2021 (print) | LCC BF637.N4 (ebook) | DDC 158/.5—dc23
LC record available at https://lccn.loc.gov/2021008518
LC ebook record available at https://lccn.loc.gov/2021008519
Cover image: Elephant and Mouse © urfinguss / iStock / Getty Images Plus
Cover design: C. Wallace
This book is dedicated to my mom, Margery Husted, who has always provided me with loving inspiration, and my sons, Barrett and Tyler, who have provided me with incredible motivation.
1Take the Fear Out of Negotiation
Fear impedes people's ability to negotiate. Fear is not just a factor for amateurs who negotiate infrequently. Fear affects people who negotiate every day. For the past 20 years, I have advised clients on many high-stakes negotiations. I have consulted on mergers, acquisitions, large customer contracts, commercial real estate deals, partnership agreements, and supplier contracts. I have also taught negotiation strategies to thousands of executives around the world—from CEOs, to senior vice presidents of business development, to sales executives. I have taught those who negotiate every day, such as investment bankers, private equity partners, and commercial real estate investors, as well as those who are intimidated by the negotiation process. Google, McDonald's, IBM, McKesson, Cisco, and many other Fortune 500 companies are my clients, along with many smaller, growth-oriented businesses.
I frequently ask the senior executives that I am advising if they feel that fear impedes their own negotiations and the negotiations that their teams complete. They resoundingly agree that fear is a significant factor in these negotiations. Likewise, when I am teaching a negotiation course for a company, I often ask the participants if fear plays a role in their negotiations, and more than 80% of the attendees will raise their hands to say that fear limits their success.
What do people fear the most in negotiations? My extensive conversations with executives reveal that the biggest sources of apprehension are a fear of losing the deal and a fear of damaging the relationship. Other fears also include leaving money on the table, having a contentious discussion, experiencing conflict, allowing the other side to take advantage of you, and securing a poor outcome for yourself.
All of these concerns are reasonable, but the right strategies and tools can maximize your outcomes and take the fear out of negotiation. This book is designed to teach you these strategies and provide explicit tools that will allow you to Negotiate Without Fear and maximize your success.
The timing for this book could not be better. The COVID-19 pandemic has created an environment where many companies are faced with challenging negotiations with customers, suppliers, partners, and sources of financial support. Likewise, many individuals need to negotiate to save their small businesses, protect their homes, and secure essential resources. Many individuals' jobs have been threatened by the economic crisis that has accompanied the pandemic and have an urgent need to negotiate for themselves. This book will help with all of these situations, whether you are a large industrial company negotiating to secure the equipment needed to operate your plants, a sales executive negotiating with new customers who need your technology services to help them excel in the new virtual world, a small business negotiating with your landlord for rent abatement, or an individual negotiating to secure a new role. The negotiation strategies presented in the book will also help you excel in the many negotiations you will encounter in the future, both at work and in your personal life. In addition, these strategies will enable you to effectively negotiate for yourself across the rest of your career.
People are often very afraid to negotiate for themselves. Research reveals that women are less likely than men to negotiate for themselves. In a famous study of graduating MBA students at Carnegie Mellon University, 93% of women did not attempt to negotiate higher salaries for themselves, while 43% of the men did not attempt to negotiate either (Babcock & Laschever, 2007). Even expert negotiators, who fiercely negotiate on behalf of their organizations, often fear negotiating for themselves. Because of this, in each chapter of the book, there is a special section included on applying the tactics to help you negotiate effectively for yourself and reduce your fear.
Each chapter will present specific strategies and proprietary tools to help you to take the fear out of every negotiation that you face. The book will include many real-world examples to highlight how to use the tactics being discussed. Some of the examples will relate to negotiating in the everyday world, such as buying a car or purchasing a house. Others will focus on high-stakes negotiations with customers, suppliers, and business partners. Still others will focus on negotiating for yourself. The strategies and tools we will discuss will give you an advantage in all these situations.
Chapter 2 will highlight how you can eliminate fear by putting the right issues on the table. Purposefully including issues in the negotiation that are important to the other side and easy for you to offer will allow you to focus the rationale on the other side and get more of what you want. Chapter 2 will also discuss common objectives that should drive the issues that you include in a negotiation; it also presents a unique Issue Matrix that can be used to assess the issues you are putting on the table before you open your mouth. Having the right issues on the table eliminates the fear of having an emotionally charged, contentious, single-issue discussion and ensures that you negotiate the right deal.
People are also afraid to negotiate because they fear that the other side will walk away and they will lose the deal. This is particularly concerning when a negotiator does not have strong outside options. Chapter 3 discusses the importance of building your options. This chapter highlights that your Best Alternative to Negotiated Agreement (BATNA) is your biggest source of power in any negotiation. Because increasing your power will reduce your fear, building your BATNA is essential.
Your BATNA is your biggest source of power, and it is also the most significant determinant of your bottom line; that is, your Reservation Point. Chapter 4 highlights the importance of knowing your Reservation Point and discusses building a Scoring Tool to assess your Reservation Point. A Scoring Tool helps to ensure that you do not become fixated on a single quantified issue and that you pay attention to the entire package of issues, establishing your Reservation Point across the bundle of issues. Knowing your bottom line provides clarity and reduces the fear that you will take a deal that is worse for you than walking away would be.
While you need to know your bottom line, you need to focus on your goal. Establishing an ambitious goal will help to reduce the fear that you will leave money on the table with a poor outcome for yourself. In Chapter 5, you will learn that your goal should be based on the weakness of the other side's options; that is, the weakness of their BATNA. The more you know about the fragility of the other party's BATNA, the more accurately you can estimate their reservation point. This chapter discusses a proprietary BATNA Analysis Tool to assess the weakness of the other side's BATNA and establish an appropriate goal. The BATNA Analysis Tool will also help you identify issues that you should add to the table to educate the other side on what is lacking in their alternatives. In addition, this tool will help you to uncover the best opportunities to reduce the other side's BATNA over time. Companies lose millions of dollars a year because their negotiators do not establish ambitious goals. The material in Chapter 5 will help to mitigate this risk and decrease your fear of leaving money on the table.
Once you have the right issues on the table and have completed an analysis of your goal, your BATNA, your Reservation Point and the other side's BATNA and Reservation Point, you are ready to begin the negotiation. Chapter 6 discusses the importance of making the first offer and connecting your offer to a compelling message that highlights how your differentiators address the other side's pressing needs and challenges. People are often afraid to lead in the negotiation and prefer to let the other side go first; however, this chapter presents extensive evidence that making the first offer allows you to anchor the starting point, frame the discussion, put the right issues on the table, and secure the relationship-enhancing position. Leading with the first offer provides you with advantages that set the stage for better outcomes, and it allows you to build a rationale that focuses on the other side to build the relationship at the same time. The strategies presented in Chapter 6 will take the fear out of making the first offer.
Chapter 7 highlights how your fear of making the first offer and your fear that the other side will walk away can be mitigated by making multiple offers simultaneously rather than providing a single offer. There are many advantages to delivering multiple equivalent simultaneous offers (MESOs) rather than single offers. MESOs pull the other side into a discussion and change the frame of the conversation from “whether we will work together” to “how we can work together.” This reframing jettisons a sense of conflict and replaces this with a feeling of problem solving. MESOs also allow you to anchor an attractive starting point more effectively than a single offer does. In addition, a multiple offer makes your first offer seem more reasonable, decreasing the chances that an ambitious MESO will lead to an aggressive counteroffer or the other side walking away. Moreover, a MESO allows you to uncover more information from the other side and surface deeper levels of intelligence revealing not just what the other side wants but what it is worth to the other side to get what they say that they want. While you are securing anchoring and information advantages, a MESO makes you look more flexible and cooperative and allows you to persist longer on the issues that are important to you. Research reveals that harnessing a MESO will allow you to maximize your outcome and build your relationship with the other side so you can be more fearless when you put a MESO on the table. Chapter 7 not only discusses the advantages of using multiple offers, but it also highlights how to design the MESO to reinforce your message and make your offer a storyboard that emphasizes how your differentiators address the other side's pressing needs.
Chapter 8 highlights how fear can be further reduced by delivering your offer in the correct communication channel. This chapter stresses that you should “say it, don't send it,” by delivering your offer in a synchronous communication channel. Although face-to-face in person is the best way to negotiate, the COVID-19 pandemic has made this difficult to do. When you cannot meet in person, you should use a virtual video platform such as Zoom, WebEx, Microsoft Teams, or Google Meet to deliver your offer face-to-face on screen. When you deliver your offer in a synchronous channel with visual cues, you can immediately see the other side's reaction, frame your message, modify your offer, and make appropriate concessions. When you negotiate in a synchronous channel, you are able to ask for more without the fear of losing the deal so I would encourage you to “say it, don’t send it and see them when you say it.” Chapter 8 also illustrates how to deliver your MESO effectively in order to communicate a compelling message to the other side.
You want your first offer to focus on how your differentiators address the other side's pressing needs and highlight the other side's interests. In addition, you want to ensure that you are leaving yourself room to concede. People often fear that the interaction in the negotiation will be emotionally charged and conflict laden; you can manage this by leaving yourself room to make concessions. When you concede, the other side feels like they are winning, and this increases the other side's satisfaction with the deal. You also want to concede because if the other side takes your first offer, it suggests you should have asked for more. Chapter 9 underscores that you want to approach the negotiation with an intent to concede and a plan for how you will do this. In this chapter, we also discuss other closing tactics such as using ratification and trigger strategies to close the deal.
Chapter 10 summarizes the critical strategies to make negotiators fearless. It stresses that, in order to take the fear out of negotiations, you need to prepare well and then you need to go first, focus on the other side, frame the offer correctly, be flexible, and make no feeble offers.
The chapters in this book reveal the negotiation strategies I have been sharing with my clients for the past two decades. Every strategy discussed is based on academic research but has also been tested in many real-world situations. These strategies have helped generate billions of dollars for my clients, and as I share them, I will include stories of times when these tactics have been successfully deployed. I am confident that these strategies will help you become a fearless negotiator and achieve great success in the many different negotiations that you will encounter. In short, you will learn to Negotiate Without Fear.
2Put the Right Issues on the Table
Many people fear negotiation. They fear they will lose the deal, that the other side will walk away, or that the conversation will become contentious. These fears are rooted in the fact that many people have a narrow view of the negotiation. They may be focused on discussing a single issue with the other side, such as price, and recognize that on this single issue, the two sides will have completely opposing preferences; no wonder they worry the discussion will become contentious, conflict laden, and may result in an impasse. The key to eliminating these fears is to think about the negotiation more broadly and to become well prepared for the discussion. This chapter will provide you with the tools to prepare, help you put the right issues on the table, and reduce your fear of the interaction.
The better prepared negotiator always does better. You actually add power to your side when you prepare appropriately. Information is a significant source of power in any negotiation; the more you know about the other side's interests, objectives, and options, the more power you have. Likewise, the more information you have about your own interests, options, and priorities, the more power you have in the negotiation. Information is not the biggest source of power in a negotiation, but it is the source of power over which you have the most control. You decide how well prepared you will be and how much information you will secure, and when you do this, you control, to some extent, how powerful you will be in the negotiation.
It is easy to say you should be well prepared, but what does it really look like to prepare well for a negotiation? There are three key steps to get ready to negotiate:
Put the right issues on the table
Analyze your goal, best outside option, and bottom line
Have a plan for the discussion
This chapter will focus on putting the right issues on the table. Putting the right issues on the table is the first step in taking fear out of the negotiation.
Generating the Issues
I teach a course for expert negotiators on the traps that experts encounter in negotiations. The first trap I discuss is that many experts negotiate the entirely wrong deal. Many experts negotiate the standard or typical issues rather than ensuring they are discussing the right issues with the other side.
Experienced negotiators know they do not want to focus on solely one issue. Single-issue negotiations become very contentious, and they are particularly dangerous if you are interested in building or maintaining a relationship with the other side. If you are negotiating only one thing, it is very likely that you will either damage the relationship or secure a poor outcome for yourself.
Consider a situation where you are selling something and only negotiating on price. The buyer wants the price to be low, while the seller wants the price to be high; every dollar the seller claims is a dollar out of the buyer's pocket. Negotiating a single issue creates a hostile environment and a win-lose mentality.
When you care about your relationship with the other side, you want to maximize the outcome for yourself while simultaneously maintaining or building your relationship with the other side, so you want to negotiate multiple issues rather than a single issue. When there are multiple issues on the table, you can uncover differences in each side's preferences—one thing may be important to you, while something else is more important to the other side—and you can identify tradeoffs.
Although experts may recognize that they want to negotiate multiple issues, they unfortunately often negotiate the wrong ones. Because experts negotiate frequently, they may have a tendency to negotiate what is standard in this type of deal, or what is typically negotiated, rather than ensuring that they are putting the right issues on the table. How can you ensure that you are putting the right issues on the table?
TRAPS EXPERT NEGOTIATORS ENCOUNTER
Even expert negotiators get trapped.
Negotiating the wrong deal—negotiating what is standard or typical rather than putting the right issues on the table.
Objectives Drive Issues
In order to develop the list of the issues to include in any negotiation, you need to begin by thinking about your objectives. Your objectives reveal what you want to accomplish with the other party in the negotiation, in both the short and long term. Make a thorough list of these objectives. Once you have completed the list, you should develop one or more negotiable issues for every single objective that you have identified.
Negotiable issues are items that you will discuss and negotiate with the other side; you might or might not agree on these issues, but you will definitely discuss each of them with the other party.
I want to distinguish negotiable issues from another term that we frequently use in negotiation, which is rationale. Rationale is the storyline or explanation for your offer. Rationale is incredibly important, but it does not substitute for negotiable issues. Often, negotiators have a lot of rationale but only one or two negotiable issues. For example, negotiators often have a lot of rationale for the single issue of price. I want you to have a great rationale, but it is also critical to have many negotiable issues that you will actually negotiate with the other side. Your objectives should drive your negotiable issues in all types of negotiations.
In the following pages, I will show you how your objectives should drive your negotiable issues in a customer negotiation, then I will highlight the three objectives that should drive negotiable issues in every negotiation we conduct where we care about our relationship with the other side. Finally, I will end this section by applying all of this to a negotiation at the top of many of our minds, showing you how to put the right issues on the table when you are negotiating for yourself in an employment situation.
Developing Your Objectives and Negotiable Issues for a Customer Negotiation
Let's consider a typical negotiation with a customer. As you approach a negotiation with a customer, you probably have many different objectives. The first one that comes to mind may be to get the best price possible. However, you would not want to go into a customer negotiation and negotiate only price. If you focused only on price, you would create the type of win-lose, distributive negotiation environment (Raiffa, 1982; Harnett & Cummings, 1980) that I described earlier, where you are very likely to damage the relationship with your customer or secure a poor outcome for yourself. Instead, you want to add more issues to the table to unlock the integrative potential of identifying differences in the two parties' preferences (Raiffa, 1982). To do this, you need to begin by making a list of your objectives for your short- and long-term interactions with this customer and connecting at least one negotiable issue to each of these objectives.
Address the Customer's Pressing Business Needs
While one objective may be to maximize price, in every customer negotiation the first objective should be to address the customer's pressing business needs. It is shocking to me how many sales executives do not explicitly consider this to be one of their key objectives. A lot of sales executives are focused on what they want to accomplish in the negotiation—the product they want to sell or the growth they want to achieve—but are not focused on meeting the customer's needs. I always argue that you are more likely to get what you want in a negotiation if you focus on addressing the other side's pressing business needs.
In order to achieve this objective, you need to know what the customer's most pressing business needs are. When I ask sales executives how they can learn about such needs, they often suggest asking the customer. This is a reasonable idea, but the problem with doing only this is that you are likely to hear about the needs of the individual you are asking rather than the company's business needs. For example, if you speak to the head of procurement, you are likely to hear about procurement's needs, whereas if you talk to a plant manager, you are most likely going to hear about the needs at that one facility.
What you really want to know, though, is what are the company's most pressing business needs. What is keeping the CEO up at night?
To gather this information, you need to begin by doing some research. If your customer is a publicly traded company, I would start by reviewing three to four quarters of earnings calls with analysts. You generally can access these from the company's investor-relations pages on their website, or you can use a service such as Seeking Alpha (https://seekingalpha.com/). I like to scan three to four quarters of earnings calls at a time, paying particular attention to the Q&A section at the end of each call. The beginning of the call can help you learn about the company's initiatives, the metrics on which they are focused, and the language that the company tends to use. These pieces of knowledge will be valuable to you, but the questions and answers at the end of the call are a gold mine of information.
As you scan this section across the quarters, look for common questions the analysts are asking. When analysts are focused on particular questions quarter after quarter, or when two analysts ask a similar question around one subject area, this often reveals something that will impact share price. In my experience, the problems that impact share price are the concerns that keep a CEO up at night. You want to know what these topics are and think about how your product, service, or insight might help the company address these pressing business needs. Unless you are a strategy consulting firm, it is unlikely that you will solve all or even many of the customer's most pressing needs, but you want to find the one or two needs that you can address with a service you offer, a product you sell, or an insight that you possess.
Whenever I work with a client on a customer negotiation, an acquisition, a sale of a company, a commercial real estate deal, a partnership agreement, or a supplier contract, I encourage them to begin by reviewing analyst calls if the other side is a public company. If the other side is a start-up company that is not public, it is helpful to review presentations from investor conferences, paying attention to the questions that the potential investors are asking. (These presentations are often posted on a company's investor relations site under Events.) If the other side is a large private business, I will encourage negotiators to review the analyst calls of the company's competitors and news articles that relate to the organization. If the other side is a not-for-profit organization or a governmental body, news articles can also be a great source of information. It is critical for you to know the customer's most pressing business needs, and I encourage my clients to use all available sources to secure this information. In fact, I argue that failing to review this publicly available information is actually a sign of disrespect to your customer, because there was material available for you to learn about your customer and you chose not to do it.
This advice is not always appreciated by my clients. Often, they look at me as though I am crazy when I suggest this information collection as the starting point. However, my experience has revealed that this first step pays off with tremendous dividends. For example, I was once working with a client who sold tiny wire connection pieces. When I told the company's sales team that we needed to begin our preparation by reviewing the analyst calls for the customer's last four quarters, the team looked at me as though I was from Mars. They had never reviewed analyst calls before, had no idea where to get this information, and saw no need to begin with this activity. I am a stubborn adviser, though, and I persisted in my view that we needed to start with this information. This client's sales team now boldly endorses this approach, having seen for themselves that you sell a lot more tiny wire connectors when you go to the table focused on the customer's need to address the security of their supply chain (something the analysts had been focused on for months) rather than if you go to the table talking only about how your wire connectors compare to your competitor's connectors. You should always have the objective of meeting the customer's pressing business needs, and you have to know what those needs are.
Once you have listed the objective of meeting the customer's pressing business needs, you will want to develop negotiable issues that link to this objective. Remember that you should have at least one negotiable issue for every single objective on your list. You might find that there are components of the product or service that you provide that will meet the customer's pressing business needs. For instance, a customer may have a need for more brand recognition, and your advertising agency could negotiate to create an ad campaign that will improve their brand image.
Another example comes from a client of mine who was working with a large hotel chain under pressure from analysts because their sales were off trend, and the predictability of their sales cycle was becoming an issue. My client was rolling out a technology solution for the hotel's reservation system and was able to identify specific changes that would assist frontline staff in securing customer reservations. This obviously increased the scope of the project, and therefore the price point, but my client was addressing the hotel chain's key pain point by directly improving their customers' experience and driving sales. My client also negotiated a briefing with the hotel chain’s CEO and CFO before the next four analyst calls to prepare for the sales questions that they were likely to be asked and prep sessions before the next four board meetings to get the CEO and CFO ready to address the board's questions as well.
As these examples reveal, beyond the product or service that you can offer, you can also provide insight sessions, updates to senior leaders, briefings before analyst calls, preparation for board meetings, and other services that can address the customer's pressing business needs. For example, you may have insight into the market or relevant changes that are occurring in their industry. These perspectives may be extremely valuable to your customer. So, as you think about negotiable issues to tie to the objective of addressing the customer's pressing business needs, consider items such as insight sessions for senior teams, updates on the industry for the company's leaders, and briefings to the CEO and other senior executives.
I was once working with a client that provided sustainability consulting services, and one of their clients had been getting a lot of pressure from analysts regarding their carbon footprint. Clearly, one issue they would negotiate with their client was the consulting service that they would provide. However, they also negotiated two insight sessions for the client's senior team; one would focus on the sustainability goals different companies in their industry were adopting, and the other would focus on anticipated changes in the regulatory environment. My client also negotiated to provide a 20-minute briefing with the CEO before the next four analyst calls to help him prepare for answering any questions that might arise around sustainability.
Another example comes from a large property management firm. The firm had a marquee, publicly listed tenant who was trying to renegotiate their lease. The tenant was considering building their own property outside of the city instead of renewing the lease. Over the past five earnings calls, the tenant had been facing increasing pressure from analysts regarding their costs and questioning the company's ability to attract and retain millennials to replace their aging workforce. I worked with my client to generate offers for their tenant with payment terms to reduce immediate cost pressure and assistance developing joint press releases highlighting how the tenant was addressing the analysts' specific concerns by saving money staying in their existing space. In the lease renewal discussions, my client also focused on how the downtown location would be advantageous to recruiting young talent. My client supported this rationale by including negotiable issues to highlight the attractiveness of the location to the tenant's targeted millennial workforce; to focus on the desirability of the location, some of the offers included passes for the subway since a convenient stop was next to the building, memberships for the gym in a neighboring building, food coupons for the many local restaurants, and a building-sponsored happy hour on evenings when there was a concert in a nearby park. Happily, the tenant stayed in the space with an increase in the rent.
Figure 2.1: Typical Objectives and Issues in Customer Negotiations
As you can see from these numerous examples, there are many issues you can put on the table to address the customer's pressing business needs, so you do not have to limit yourself to thinking only about the product or service you provide. Many of these additional issues help you not only address the customer's challenges, but also build the relationship with the customer as well. (See Figure 2.1.)
Build the Relationship
Another common objective in a customer negotiation is to build your relationship with the customer. I would argue that this should be an objective in every customer negotiation, and I encourage sales executives to think specifically about with whom they would like to build the relationship and in what time frame. I suggest, for example, that they have a specific goal, such as building relationships with the CEO and the CFO over the next six months or building relationships with the vice president of Procurement and the vice president of Regulatory Affairs over the next three months. This more tangible and specific objective is much more actionable than the general objective of “building relationships.”
I think too often people flippantly talk about building relationships but are not very focused on how they will do it. You need to have an action plan to end up with the relationships that you want to build, and you need to put the right negotiable issues on the table to accomplish this goal. When building a specific relationship is a concrete goal, such as a relationship with the CFO within six months or with the CEO or a board member within one year, you can examine your behavior every day and think about what you are doing, or could be doing, to establish and deepen that connection.
Sometimes, relationship building seems to be the excuse for a poorly negotiated outcome, for instance, saying to your boss, “I know the margin is terrible, but we are building the relationship.” Rather than thinking about relationship building in this post hoc, defensive manner, I encourage my clients to be proactive in thinking about the relationships that they would like to build and in putting specific negotiable issues on the table that will allow them to achieve this goal.
I have a number of clients who are large strategy consulting firms. I was working with the partner at one of these firms on a proposal to win more work from an existing client. The economic buyer for the project was the CFO, who was new to the company and the industry. When my client was considering the objective of addressing the company's pressing business needs, I encouraged him also to think about the pressing needs of the new CFO to learn about the company quickly, establish himself in the industry, prepare for board interactions, and perform well on the company's quarterly calls with analysts. The partner included issues in the negotiation, such as insight sessions for the senior team on changes in the industry and briefings for the CEO and CFO before the next four analyst calls. This savvy partner also included a meeting with the CFO every month to help him navigate his first 100 days in addition to prep sessions before the next eight board meetings. It is clear that the partner was focused on addressing the pressing business needs of the company and the needs of his buyer.
Consider, though, how the insight sessions, industry updates, and briefings for the CEO and CFO before the analyst calls will help meet the customer's business needs and will also link to the objective of building relationships with the CEO and CFO over the next six months; likewise, the coaching sessions and prep before the board meetings will cement the partner's relationship with the CFO even further. Meeting with the CEO and CFO before analyst calls to brief them on issues that they might need to discuss will give the partner the opportunity to provide essential information when they need it the most, creating a dependency on the partner and cementing his relationship as a trusted adviser to the company's leadership team.
People are often focused on trying to get their customers to like them. I always advise my clients that it is nice if your customers like you, but essential that they need you. You want to include negotiable issues that position you to create this type of dependency.
Often, executives will try to build relationships with their customers' senior executives through the products or services that they provide. You might imagine in the previous example that the partner on the project would try to build senior-level relationships by doing good work and briefing the CEO on the project. However, the challenge is that if an employee lower in the organization is responsible for the project being completed, it is unlikely that the work itself will be a pathway to a strong CEO or CFO relationship. The people responsible for the project who “own” this work are not going to want to have the partner speak to their boss about the project, as this might make them look like they are not fulfilling their responsibilities. When you want to build senior-level relationships, you want to create pathways to the C-suite by including negotiable items such as insight sessions for senior teams on an industry trend, briefings for senior leaders on market issues, or prep before analyst calls or board meetings into your offer. These extra services create pathways to building senior-level relationships separate from the direct products or services provided. (See Figure 2.2.)
Figure 2.2: Typical Objectives and Issues in Customer Negotiations
Differentiate Your Company, Product, or Service
Another objective you should include in every customer negotiation is to differentiate your company, product, or service from that of your competition. Whenever I teach a sales team, I always have them all stand up and only allow individuals to sit down after they have given me a specific objective not stated by another member of their team. Frequently, no one states the objective of differentiating the company, the product, or the service. If you are a CEO reading this book, I would encourage you to test this with your sales team. It is striking just how many sales executives fail to focus on differentiation. They will discuss the objectives of maximizing price, obtaining a long-term contract, and winning the work, but often they do not focus on the critical objective to achieve these goals; that is, to differentiate your product, service, or company. If you are not differentiating, you are commoditizing your offering, so the lack of focus on differentiation leads to the commoditization of products and services that CEOs fear and analysts attack. As a CEO, I want my team to be differentiating our services in every customer interaction.
When looking at your company's differentiators, you need to analyze what is unique about your product, service, or company. Keep in mind that a differentiator is only a differentiator if the other side cares about it. If you are a small, privately held company competing against many large, publicly traded companies, you may want to say that your differentiator is your size or ownership structure; the key question, though, is why do your customers care that you are small and privately held? What does this do for them? Does this mean that they will have quicker access to decision makers? Does this mean that you are nimbler because you are able to adapt to their changing needs? You can only differentiate yourself on something that the other side cares about.
