3 Keys to Better Business Negotiating

People negotiate all the time. This happens in business, personal lives, and just about everything else involving two or more human beings trying to get something that they need, want or is meaningful to them.

It’s virtually impossible for a business owner to go a day without negotiating. This goes on with employees, customers, prospects, suppliers, bankers, advertising sources, advisers and board members.

There are many myths and stories about being a “tough negotiator” and wringing the last possible concession from your “adversary.”

But great negotiators know that there’s a better choice. Let’s explore that other choice and path to more effective business negotiating.

Key #1 – Understand the Negotiating Context

There are two types of negotiating contexts: relational and transactional. Each requires different strategies, objectives and tactics.

Relational Negotiating

This is a negotiation that occurs within the context of an existing or anticipated longer-term relationship with the other party. It is understood that the fulfillment of the negotiated agreement will take place in an ongoing relationship with the other party. That means the relationship is an integral part of and stake in the negotiation.

Most business-to-business negotiations are relational. They must be conducted with the clear understanding of maintaining and strengthening the relationship in addition to whatever else is being negotiated.

Unfortunately, too many people in relational negotiating act as though the relationship between the parties is suspended during the negotiation. This mistake often creates a counterproductive outcome: where the negotiation is a “success” but the relationship was damaged—sometimes fatally—in the process.

Transactional Negotiating

This is a negotiation that takes place in the context of a single transaction where the parties have come together solely for the purpose of completing a transaction for a specific objective. There is no consideration of a long-term relationship between the negotiating parties and there is no need for an ongoing relationship of the parties to fulfill the purpose of the negotiation once the transaction is closed.

Here are a few examples of transactional negotiating:

  • Residential and commercial real estate sales
  • Automobile sales
  • Computer system purchases
  • Buying and selling many trade and business services

Much of the training and literature about negotiating is based on transactional situations. But those tactics can be destructive to keeping existing or developing healthy new relationships. If nothing else, this approach creates tension, anxiety, frustration and anger between the parties.

Be clear about the context of every negotiation.

Key #2 – Understand and Negotiate Interests, Not Positions

In Getting To Yes: Negotiating Agreement Without Giving In, William Ury and Roger Fisher make this pivotal distinction:

“Your position is something you have decided upon. Your interests are what caused you to so decide.”

They give this everyday illustration of negotiating an interest-based solution:

Two men are arguing in a library. One wants the window open and the other wants it closed. They go back and forth insisting on their respective positions about how much to leave the window open: a crack, halfway, three quarters of the way. No solution satisfied them both. Enter the librarian. She asks one why he wants the window open. He answers:

“To get some fresh air.”  She asks the other why he wants it closed: “To avoid the draft.” After thinking a moment she opens wide a window in the next room, bringing in fresh air without a draft.

You can see the critical distinction between positions and interests in a mutually satisfactory agreement.

The men’s positions were the open or closed window in the library room.

Their interests were very different. One man wanted fresh air and the other wished to avoid a draft.

The librarian cracked the stalemate simply by asking each “why” he wanted what he wanted! Their answers created new opportunities for a solution to successfully achieve and satisfy each man’s interest.

Without the smart librarian, two scenarios were possible. First, one man got what he wanted at the expense of the other’s wishes. Second, neither of them got his way, so both would have been angry, frustrated and dissatisfied.

This is the magic of negotiating interests: not getting stuck in seemingly intransigent positions. Interests open up greater creative approaches to each party getting what it really wants. Positions—which are often stated in a negotiation as life or death—offer very few creative options

Having this perspective can help you overcome seemingly impossible obstacles, often making the difference in a successful negotiation.

Key #3 – “No” Is Always an Option

If you can’t walk away from a negotiation, you aren’t negotiating: you’re trying to survive and minimize your losses. Good luck!

There are stories of heroic protagonists who negotiate with steely-eyed righteousness with the evil antagonist and, against all odds, win the day. This makes for entertaining fiction, but it’s nonsense—and even dangerous—in real-life negotiating!  Those who believe if they stay in the negotiation to the end that “right” will prevail have already lost before they began.

In his book Start With No, Jim Camp said:

“A negotiation is an agreement between two or more parties, with all parties having the right to veto.”

This is another way of saying that everyone has the right to say “no” at any time.

“No” is a powerful negotiating tool. Yet most are afraid to say it for fear of angering the other side.

However, when used with respect and courtesy, “no” can move the process past inevitable sticking points and stalemates.

But don’t overuse it. Otherwise this can quickly become a nuisance, impediment and fatal disruption to the negotiation process.

Key Points

  1. Know whether the basic context of a negotiation is relational or transactional, so you can choose the right strategies and tactics.
  2. Do not mix and intermingle the strategies and tactics of relational and transactional negotiating contexts. It is a volatile and dangerous mix.
  3. Pay attention to the difference between positions and interests. Focus creatively always on interests.
  4. Become a master of discovering and uncovering the negotiating interests of the other party. Ask “why?” when confronted with apparently hard and fast positions.
  5. Don’t be afraid to respectfully use “no” to get to the real decision issues. But use this powerful tool wisely.
  6. The Ury and Fisher, and Camp books are two of the best resources on effective negotiating. Read and refer often to them.