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Soundview Executive Book SummariesNegotiating is much more complicated than making an offer and fielding a counter-offer. It's a complex process that can affect the future of individuals and organizations. A "breakthrough negotiator" must analyze, plan, sell, organize and motivate. The best negotiators are also leaders. They bring together a team of players and guide them in all-out battle against the opposition. Top negotiators don't obtain their skills by accident — they learn from experience and studying the art of negotiating.
In Breakthrough Business Negotiation, Michael Watkins takes you through the negotiation process, from initial preparation to closing the deal. Watkins, an associate professor of business administration at Harvard Business School, provides step-by-step guidance on winning consistently at the negotiating table.
However complicated a negotiation is, it can be understood by breaking it down into its key parts and actions. Every negotiation has a structure: It involves certain people and issues that produce predictable interactions. More complex negotiation systems can be seen as related sets of negotiations.
On face value, these negotiations have nothing in common. But closer examination shows they all share an underlying structure: All are negotiations that involve more than two parties and no one holds veto power.
Thorough analysis of a situation and its structure is an essential negotiating skill and a hallmark of breakthrough negotiators.
Breakthrough negotiators never treat the structure of a negotiation as preordained or fixed. In other words, the hand can be played as it is dealt, but it can also be changed.
These are four tasks negotiators embark on at and away from the table:
- Diagnosing the situation. Systematically assess the components of the negotiation and identify potential barriers to agreement.
- Shaping the structure. Influence who participates, what the issues are, and what the alternatives are, so you don't end up playing someone else's game.
- Managing the process. Prepare for and conduct face-to-face interactions to build momentum.
- Assessing the results. Set goals and periodically evaluate how you're doing to adjust your plans and manage the process.
The first step in preparing to negotiate from strength is to diagnose the particulars of the situation thoroughly. This means taking a hard-headed look at the seven key structural elements of any negotiation: parties, rules, issues, interests, alternatives, agreements and linkages.
A potent way to shape the game is to influence who plays. One method of doing this is to invite other players into the negotiation. Another way is to try to exclude parties. And sometimes it is advantageous to try to prevent parties from participating or to remove them from the game.
It is crucial to have an impact early, when the agenda for what will and won't be negotiated is being set. This establishes boundaries before momentum builds in the wrong direction, or irreversible commitments are made, or too much time passes. Breakthrough negotiators don't view the agenda as fixed, but as something that can be shaped.
Framing is using argument, analogy and metaphor to define the problem to be solved and the set of potential solutions. Skillful framing reaches the target audience by evoking mental images and emotional reactions that influence their behavior. Efforts to frame (or reframe) often involve coordinated actions at the negotiating table (by means of argument) and away from the table (through use of the media).
Negotiators often compete in a "frame game" in which they try to define the dominant frame for the negotiation.
Power comes to those who control other parties' access to information. Information-control techniques are especially potent when you have private access to valuable information and when negotiations involve multiple parties and shared decision-making.
Managing the process is the third major element of the breakthrough negotiation framework. Whoever controls the process can powerfully influence the substance and results of negotiations.
If agreement is your objective, the basic goals at the table are twofold: to learn about your counterpart's interests, alternatives and bottom lines; and to shape your counterpart's perceptions of what is attainable.
Once a negotiation is under way, you should step back periodically to evaluate how it is going. A natural point to step back is between negotiating sessions, but it can (and should) also be done in the heat of battle. Part of appraising an ongoing negotiation is deciding whether you are meeting the specific goals you set for yourself.
The following principles provide ways that smaller players can shape the structure and manage the process when facing an opponent of greater size or power:
- Principle 1: Never do all-or-nothing deals. The biggest mistake a small player can make is to enter into a single make-or-break negotiation with a larger partner. Doing so just reinforces the larger party's perception of its own strength and inevitably leads to poor deals.
- Principal 2: Make them smaller. Do not treat a larger partner as a single unified entity. The notion of big-company-as-powerful-monolith fails to recognize that large companies are made up of smaller units led by people with their own incentives and interests.
- Principle 3: Make yourself bigger. There is strength in numbers. A smaller player dealing with a larger one should build coalitions to fortify its bargaining power. It is essential to diagnose the situation carefully, identify promising allies, and build alliances with them.
- Principal 4: Build momentum through a sequence of deals. Negotiating the right deals early makes it easier to negotiate subsequent deals at better terms. But early deals with the wrong partners can make everything that follows an uphill battle.
- Principal 5: Harness the power of competition. Spreading the word that you might do a deal with someone else sets the stage for judicious use of competition in negotiating the terms of deals.
- Principal 6: Constrain yourself. By entering into binding prior agreements, smaller negotiators can buttress their bargaining power with larger counterparts.
- Principal 7: Hold the informational high ground. The right information, processed and organized for easy access, is a potent source of strength in negotiations with larger counterparts. It is essential to be better prepared than the larger player and gain and hold the informational high ground.
- Principal 8: Take control of the process. Articulating the reasons that both parties came to the table in the first place establishes a sense of momentum. Flesh out the offer thoroughly and work out the basic structure of the deal before raising the subject of money.
- Principal 9: Negotiate with implementation in mind. Try not to burn your bridges, and try to preserve the strength of your alternatives in case serious problems arise during implementation.
- Principle 10: Build superior organizational capabilities. It is essential to forge relationships with skilled external advisers, such as lawyers and investment bankers.
Teams are valuable because they bring together people with varied expertise. The full cast of participants in an acquisition, including external advisors, can be very large. The goal is to identify and obtain interest from attractive potential partners. The trick is to assemble a critical mass of expertise without creating too large a team: The larger the team, the more difficult and expensive it is to coordinate. Copyright © 2003 Soundview Executive Book Summaries