What Every CEO Knows About Negotiating

There are as many approaches to negotiation as there are self help titles on the shelves of a discount bookstore.

Fearless Negotiation, Win - Win Negotiation, How to Win at Negotiation, Getting to Yes, and Getting past No are just a few examples.

One theme that seems to run through almost any guide to negotiating is preparing a script ahead of time, where the ideal result is defined, the likely points of negotiation are anticipated, potential objections anticipated, and tactics and strategies are planned.

Identifying your ideal result should be the product of you and your team defining not only the optimum sweet deal, but setting the limit on the minimal that you will accept.

Strategy #1 Establish the initiative.

Think of a chess match where the less experienced party has to respond to the master’s moves, instead of the reverse. Even experienced players find it very difficult to regain initiative once they are in a responsive mode. Similarly, by framing the discussion, you can maintain initiative and therefore require the other party to accept (or reject) your version of reality. You should lay out the points of negotiation, either by revealing them one at a time or by creating an agenda. Either way, it helps to have a printed agenda or talking points with you to provide to the other party. Use your sense and don’t reveal too much.

It is also important that you don’t allow social niceties to inadvertently squander your initiative. One of the famous ones is the open- ended invitation “Tell me what’s on your mind.” This polite invitation for the other to go first usually sets up a conversation that is managed by the other party.

Strategy #2 Script the negotiation.

Create your script in a way that you

1. require the other person to negotiate with themselves. An example: “Wow—that’s much higher than I had anticipated.” or “That is not as competitive as other rates I have seen.”) Give them multiple changes to lower their price before you suggest a lower number. You will find that they sometimes offer even more than you would have asked for. It will also prevent you from starting your bargaining bracket below too far above or below their limits.
2. get or give some freebees. It never hurts to ask (“Can you throw in a one time mailing to your customer list?” or “What can you add to that?”). The interaction might include some offers of value-ads that the other party had not anticipated. A skilled negotiator must have the mental flexibility to perceive when one of these unanticipated items is worth a concession against the optimum deal, or even can tip the scale past the minimal deal.
3. use silence as leverage. Most people are uncomfortable with silence. 30 seconds is along time for someone to squirm. Decide how long you will let something sit. People will often fill in the silence in a way that works to your advantage.

I’ll tackle #3 Anticipating and Overcoming objections and #4 Tactics next week.

One last thought: there exist all sorts of Jedi Master and jujitsu approaches to negotiating that can win concessions in the short run. When building long terms relationships, both parties need to feel they have done well. This philosophy is the underpinning of win-win negotiating style. Concluding that your partner drives a hard bargain is quite different than deciding that you have been outwitted or arm-twisted into a bad deal.

-Dave