Business Negotiation is not a single skill.
It is 5 Business Skills...
and you have to master all of them to succeed. Good negotiators understand the mechanics of negotiation – the planning and tactical positioning – but that is just the
beginning. If you want to be a successful negotiator, you also need to master:
- Business analysis & strategic planning
- Critical thinking and problem solving
Skill #1: Business Analysis & PlanningNegotiation is about solutions, and it is impossible to solve problems without a clear and comprehensive understanding of the business situation. Many business negotiators are purely tactical at the bargaining table – they don’t place their deal making into a larger context. Tacticians win battles but you need strategy to win campaigns. You have to decide if you are a haggler or a strategic negotiator. Negotiators know that every word you say and proposal you make must lead to a long-term strategic advantage for your firm.
Tools: STEEPLE framework and a set of SMART goals.
The first is the STEEPLE tool, which comes in a range of varieties, including PESTLE of STEP.
They’re acronyms that organize your research:
Skill #2: Communication
Good negotiators don’t start negotiating about specific numbers and technical issues right away. Instead they start out by talking about general issues and get to know about the counter-party. The more you care about developing a long-term strategic partnership, the more time you should take to learn about your potential partner and to let him know about your business philosophy and approach. Don’t think of the relationship-building process as obligatory but meaningless small talk that you must get out of the way before the “real” negotiation begins. In many cases, the relationship-build is the most significant part of the deal.
Tool: Prepare for “Big Talk” – as in the opposite of meaningless small talk.
- 5 things you want to know about his business,
- 5 things you want HIM to know about YOU,
- 5 things you want him to NOT know.
Skill #3: Management
You have assets and constraints when you sit down with counter-party, and it is the negotiator’s job to manage scarce resources. You are constrained in terms of time, budget, and bandwidth. Be aware of the value of your own resources and the challenges you face, and allocate your time, energy, and assets accordingly.
Tool: 3 time horizons that you have to manage in advance
- a) how long the negotiation will take
- b) when the deal will be implemented
- c) how long your relationship with the counter-party will last.
Skill #4: Creative problem solving / Critical Thinking
Every negotiation is driven by a strategic business need. Creativity resides where goals meet constraints. That’s why it is so important to analyze your own BATNA – or Best Alternative to No Agreement. Don’t let the word best throw you off – this is bad news. It’s better to consider this as your “least worst” option. What is your situation if you can’t reach any agreement at all with your counter-party? Recognizing or developing new alternatives is a creative process – good BATNA analysis is your starting point.
Tool: BATNA Analysis
Good BATNA (Best Alternative to No Agreement) analysis is critical to understanding your own options. Your BATNA analysis should be an orderly process.
- Step 1: What is your No-Deal situation? (Descriptive)
- Step 2: What do you do about it? (New Alternative)
Skill #5: Leadership
If you are negotiating strategically, you will need to exhibit leadership in three areas.
The most important negotiations are almost always internal. You have to champion a solution, and that means taking ownership of a plan – first within your own organization, then with your team, and finally with the counter-party across the table. You have to sell your vision internally – not only within your business unit, but also with legal, finance, operations, marketing, operations, technology… and every other relevant department.
Tool: Stakeholder analysis.
Have a persuasive, direct plan for explaining how your proposal fits in with your firm’s business strategy. What pieces of the puzzle are you going to secure with the deal you are negotiating?