The 3-Step Negotiation Strategy Planner
Successful negotiation is all about identifying and bridging your strategic gap - which is simply the difference between your goals and your best alternative. How are you going to cross the space between where you are now and where you want to be? This may seem simple enough, but many negotiations go off the rails because of bad assumptions and faulty analysis. Here's a simple 3-step framework for organizing your negotiating strategy.
Step one: Define your negotiating goals.
The difference between goals and wishes is that goals are SMART.
Pay particular attention to your time horizon and make sure it aligns with your business plans. Depending on the business you're in, you may have to decide how long the negotiation will take, when implementation of the agreement begins and finishes, and how long you expect the relationship to last.
Don't focus on a specific negotiation or counter-party just yet. Instead, consider where you want your business to be at the end of X years. Be ambitious, but not unreasonable. Remember that this is a strategic business goal -- not just a list of what you want from this negotiation or counter-party.
Millennial Note: Younger managers often report that they care about more than just salary or position – but they don’t always know how to incorporate non-cash issues into their strategic planning. If you value things like social relevance, professional development, or leading your own projects then you have to find a way to build them into your goal system.
Step two: Set the floor of your strategic range.
Goals are the ceiling -- what's your floor? How low will you go? The answer to that question is to identify what your other options are.
Your best alternative - more accurately your "least worst" option - is what you're left with if the negotiation ends with a solid & definitive NO. It's an observation -- not an action plan (at least at the beginning).
What are all the alternatives and options in front of you? The better your alternatives, the more negotiating power you have. Your best alternative should be a description of the situation your will find yourself if you can't find a way to bridge the strategic gap.
Your best alternative -- often called BATNA (Best Alternative to No Agreement) is your fall-back option. For some situations, the best alternative analysis will be an inventory of your sources of power as you score a range of attractive options.
For others, however, best alternatives will be a stark reminder of how bleak your situation really is. The lower your BATNA is and the fewer alternatives you have, however, the more important it is that you factor that into your planning. Knowing that your options are limited is disheartening before a negotiation - but catastrophe when you realize it after a potential deal goes off the rails.
Don’t confuse a best alternative with an action plan for improving your position - at least during the early stages of your planning. They’re both part of the same process, but you should start by identifying your sure-thing alternatives. A best alternative analysis can be as simple as checking your credit line at the bank, counting inventory in the warehouse, or resigning yourself to staying in your present situation until you can develop better options. Check your BATNA before every negotiation, because it can change.
Millennial Note: Millennial-era negotiators are notorious for overestimating their own best alternatives – particularly during in-house negotiations (i.e.: salary & performance reviews). Negotiating power comes from having options – not from confidence that you can develop new opportunities.
Step three: Figure how you will close the gap.
This includes setting your variables or deal-points, and screening appropriate counter-parties. How can this counter -party in this specific negotiation address your goals and move your company forward?
Now you are ready to start considering specific counter-parties, deal-points, and proposals. The person across the table from you is important because of the funds, resources, or know-how he can provide to help you move from where you are now (best alternative) to where you want to be (strategic goal). It’s your responsibility to articulate what you want from him, and what you are willing
Good understanding of goals and best alternatives is what makes it possible for you to prepare for a negotiation.
Millennial note: The more proactive and creative you can be here, the better. Negotiation is the process of acquiring resources, capital, and know-how that you need to reach your strategic goal. Good negotiators prepare a plan not only to acquire what they need, but also to assemble the pieces in a way that maximizes their advantage. Millennials tend to be good at spotting gaps and problems -- but a bit passive when it comes to proposing specific effective solutions.