In addition to Information Security, I have negotiated hundreds of contracts over the last 20 years totalling in the billions of dollars.
There are many schools teaching different “techniques” but the worst of the worst are those that have a win/lose strategy. These dinosaurs negotiations models believe in “winning at all costs” and are very easy to spot in the wild.
Techniques of the stupid negotiator
The win/lose strategy negotiators are the stupidest of the bunch. As previously mentioned, the techniques are easy to spot and I wanted to share some of them with you here:
lowballing They typically start the negotiations with unreasonably low bids and then never make significant concessions. They make small insignificant moves. Any flexibility on your part is seen as a sign of weakness and will fuel their “cheapness”.
no authority negotiators They typically send low-level henchmen into the negotiations and do not give them any authority to make concessions. This means every request has to be sent back to the home base for analysis making the process painfully slow.
Emotional attacks They typically see emotions as a weakness and will use it against you. This means they may try to bully you. Walk out of the talks at various points in the negotiations infuriated by something you requested. In extreme cases they may use someone of the opposite sex who will break down (often crying) during the negotiations to “win” the negotiations.
Now that you know some of their tactics, you will quickly realize you are negotiating with the “stupid” negotiator and typically you may want to simply walk away and find other options. If other options are not available, ensure you clearly set your negotiation parameters ahead of time (minimum price, volume, important terms, etc.) and ensure you stick to them. Don’t allow yourself to be played.
There is no pie
In this 1980’s style of negotiation (the stupid win/lose style), participants believe that there is a finite amount of pie and that you must fight to win the biggest piece.
The problem is that with this style of negotiations, both parties typically end up with sub-optimal results regardless of who actually “won” the negotiations.
The modern negotiator understands that the best outcome is a win/win scenario where the needs of each party are met as much as possible. A good healthy negotiation means everyone wins and everyone is optimally satisfied.
Let’s say you need to acquire outsource IT services and you manage to beat a vendor over the head and “convince” them to accept an unreasonably low rate. You may think you won because you got a “good price” but the reality the vendor will now do everything to cut corners to control costs. This means they will spend all their energy cutting, negotiating and arguing instead of figuring out how to help optimize service delivery.
The secret to modern negotiation
There is one undeniable secret weapon in the modern negotiators arsenal : trust. Without trust, there cannot be a win/win negotiation.
This means that even before you start “negotiating”, it is important to build a relationship with the other party. Spend the time to learn about each participants goals and needs. Figure out what brings them to the table and what the ideal outcome would be for them. You need to trust them and they need to trust you.
Let’s get back to stupid
I want to share with you some of the most used techniques by these badly trained old age stupid negotiators. My hope is by knowing their techniques, you will be better able to react and ultimately win.
Power of the negotiator
Every participant has different sources of power available to them during the negotiation.
In your office life, when negotiating with your boss, he/she has the power to reward or punish you. But often the levers of power are much more subtle and not always known (there is rarely perfect information).
Power can come from desperation, power of precedents (knowing someone else that got a specific deal), power of expertise, power of credentials, etc.
The message here is that you should ensure you have prepared all possible power sources. Additionally it is important to remember that power is perceived power and not absolute. You may think you are entitled to the same deal as another similar company (power of precedents) but may not realize they bought twice as much as you or that they brought another deal to the table.
Get the other party to invest
Every economics student learns about the concept of sunk costs. Wikipedia defines it as “In economics and business decision-making, a sunk cost is a cost that has already been incurred and cannot be recovered.” In Economics 101 we learn that sunk costs should not impact our analysis of continuing or killing a project.
Unprepared investors often make this mistake. They sink thousands into a stock whose price keeps dropping. Instead of limiting their losses and “getting out”, they keep adding to their losing position hoping it will turn around. They are using the sunk cost (all the investments up to this point) as a major deciding factor, whereas they should make a clear analytical decision on the chances the stock will actually appreciate from this point on regardless of these sunk costs.
One technique is to get the other party to invest heavily in the negotiations process. When buying a car, this could be “forcing” the sales rep to show you every car in the dealership, then test drive everyone, give you a detailed walk-through of every car, etc. When you finally are ready to make a decision a couple of days later, he will likely bend over backwards because of all the time he has already invested.
In a corporate environment, if you extend the negotiation process and the sales team has flown in from out of town, they may be more inclined to be “flexible” because they don’t want to walk away empty-handed.
This means that before you start the negotiations, you have an honest discussion with all stakeholders in your company and you agree on a common set of goals before ever walking into that boardroom. Know exactly what you want, what you are willing to invest, what you are willing to concede and agree that you will walk away if those conditions can’t be met.
Chance favours the prepared
The negotiation process starts much earlier than your first face to face meeting. Know the situation of your counterpart (aka do your homework). The more you know the better the outcome will be.
When negotiating a salary increase with your boss, the negotiation starts much earlier than the meeting where you ask for more money. It starts weeks before where you try to determine next year’s budget. You try to figure out how the company is doing and how that performance will exert pressure (if any) on your boss. You should check out the salary range for others doing your job in similar companies. You should figure out when your boss is more likely to be “happy and agreeable”. etc.. etc.. etc…
In a corporate negotiation scenario, some of this information collection may happen during the formal meetings. You should determine how much information you are willing to divulge, at what rate, when, how and to whom. Typically the counter-party will divulge some information but will then expect you to reciprocate accordingly. Are you willing to play ball? Make sure you determine this with your team before the counter-party ever shows up.
Time may be your friend
Any deadlines your counter-party may have could be used as an advantage. If you are negotiating with a supplier and know their end of quarter/end of year is in 2 weeks, but you have no such deadline, you come from a position of power. They may be willing to negotiate much more to ensure a deal closes within that window.
On the other hand, you may have a subscription licence with a fixed expiry date for a product critical to your business. If you wait too long and negotiate too close to that deadline, the OEM may not be flexible because they know you are working against the clock. And because time is tight, they may also assume alternatives are out of the question.
If you are working against a fixed deadline, start the negotiation as early as possible to ensure you are not bullied into a bad deal. If possible, prepare a plan B (alternative solution) that can be implemented if a reasonable deal cannot be reached. If the alternative is reasonable then the counter-party loses their position of authority and will likely be fairer.
Make it personal
Good negotiators know that making it personal generally helps your cause. Making it personal means being friendly and likeable. Make sure the counter-party sees you as human and not a big unfriendly grey corporation.
In extreme American jury based court cases, defendants have been declared not guilty, even though there is enough evidence to clearly assign blame. In these cases the jury sometimes sees the prosecutor as arrogant, mean, vindictive and “on a mission”.
Don’t be a prick. Always be kind and caring. Remain cool, calm and in control.