The Art of the Deal
Ah, the sweet art of negotiating. When I was in my MBA program at Northeastern University, I had a decision to make about finishing my degree. On one hand, I had the opportunity to study at Oxford. On the other hand, I had the opportunity to take the negotiations course at NU, the program I was currently in. Tough call for many reasons. First, who could pass up Oxford? But, being newly married, I weighed the value of being away from home plus the associated costs. The negotiations course was considered to be one of the best courses (a marketing elective) in the MBA program. I had trouble believing it as the professor who taught it also taught the managerial economics course...a challenging course in the program to say the least.
Suffice to say, I opted for the negotiations course. Although I'll always wonder about the trip to England, the course was well worth it. And, over the years, I have definitely received my money back plus 100x by using negotiating techniques. So, when I see stories about negotiating I am always interested in the material.
A recent article in Harvard Business Review, March 22, 2010 discussed this. I will add a few more thoughts to the story.
Pre-negotiation homework requires that you understand the interests and positions of the opposing side. Just as critical is understanding and quantifying your side's</em> position. Here are six steps for pairing data with the negotiation points you are trying win:
Understand the big picture number you are trying to achieve.
Set low and high values for each quantifiable negotiation point.
Develop likely and unlikely scenarios to reality check your assumptions.
Re-prioritize negotiation points based on the scenarios.
Total quantifiable points to see how they compare to the big picture.
Make adjustments that will help you win in the aggregate, not just on a specific point.
These are all good points. And, I could blog about negotiating for the long-term. A few other insights would be as follows:
1) Do as much research as possible up front. Know the people, the picture, the numbers. Information (knowledge) is power...so true in negotiating.
2) It's not about winning. It's about building the ol' win/win model so that both parties are satisfied. You simply want to lower or increase the price point (and other items) so that you are hitting the threshold desirable to the other party. Trying to win and take advantage can backfire as they may back out of the deal or never do business again.
3) Be creative. Always look for other items to tie into the negotiation other than price.
4) Deal on a positive platform. Keep telling the other party you know this deal can get done, it's just a matter of finding the right equation.
5) Don't deal from weakness. If you ever throw out comments about how good the other product/service is, the other party starts to think about a higher price rather than a lower one. Keep your aspirations and adulation to yourself.