Why bother with a negotiating process?
Your world is changing, and changing fast: characterised by turbulence; shifting regulations, evolving technology, economic uncertainty, and competitor movement and changing customer needs. These fast changes mean that you and your negotiation team needs to be more agile in response to these drivers.
As we continually say in our books and blogs, competitors are becoming more aggressive – favourite weapon of choice price. Customers are becoming more demanding, and shareholders are demanding increasing profits: so companies must either increase revenue or increase productivity. However, increasing revenue and productivity is getting harder.
The success of a negotiation depends on the planning and preparation done beforehand for each of the four distinct phases of the negotiation process:
- Investigative Phase
- Presentation Phase
- Bargaining Phase
- Agreement Phase
You may not be involved in all of these phases but you need to make sure that you have a good overview of the total picture.
The Investigative Phase
It would not be too fanciful to say that the investigative phase is where careers can be made or destroyed. It is, without a doubt, the most important phase of the whole negotiation process.
It’s easy to see why. It is impossible to prepare for the negotiation until you have gathered all relevant information.
A saying I heard years ago has always remained with me because I’ve found it to be very true:
Preparation actually compensates for a lack of talent.
It’s a good motto for you to remember, too. Do your homework. Find out what the other side needs, what they want, and what they can afford. How much preparation do you do before a negotiation?
Once prepared, it’s time for the presentation phase to begin. In this phase, you need to present your ideas to the other side in a logical manner, based on information and facts gathered, not on just emotion – combine both.
The Presentation Phase
The presentation is a key part of the negotiation. It’s creative. It’s a challenge. It’s a chance to be innovative and create an environment where the other side wants to do business with you and come up with a better outcome than they had initially planned.
What do you have to look out for in the presentation phase?
The good old number one fear in the world:
The fear of speaking before a group.
This nemesis crops up time and time again, either in the form of your trembling limbs and pounding heart or in the eyes and gestures of someone across the table. Many negotiators let their fear of public speaking get in the way of a good deal. If it is a team negotiation, select the best talent in your team for this phase – present value, seek agreement.
Meanwhile, in this presentation phase, thorough preparation will aid you more than anything else. You will find nervousness declines in proportion to the amount of preparation you’ve done. It’s easier to speak persuasively with all the facts at your fingertips. How do you settle your nerves before a negotiation starts? Practice, Practice, Practice!
Key to this phase is presenting your value proposition and ensuring that you balance your value proposition assertions with evidence. If you can’t prove it, it is not a value proposition, just a wish list and you will appear the same as your competitors.
If you have prepared conscientiously and know your material, the most important thing you can do is to maintain a positive attitude. Assuming that the other side is genuine in their desire to do business, an effective presentation will allow you to move smoothly into the bargaining phase.
The Bargaining Phase
The bargaining phase is where stomachs knot up; knuckles whiten, and people breathe harder. The ‘fight, freeze or flight’ syndrome takes over! Emotions run wild. People may yell, scream, or walk out of the negotiation.
Don’t follow suit! Stay in control.
The negotiator’s tools are discipline and control.
Strangely enough, this phase allows the whole deal to take on a feeling of legitimacy. After all, you’ve keyed yourself up for this. Think about it for a moment: if you were to walk into a room and make an opening offer and it was accepted, what would your reaction be?
Be honest, now! You would feel a tiny bit flat, wouldn’t you? You’d probably feel almost cheated – your reasoning would say ‘I could have got a better deal!’ In the bargaining phase, you need to give careful consideration to the style you will use.
The Agreement Phase
Here you are at last – ready for all the final details of the deal to be put together and wrapped up. But don’t let your guard down – it’s not over yet. Even though this may appear to be the area where everyone can settle down, it’s not.
Both sides need to feel that:
- All of the points were recorded correctly along the way
- All substantive issues are agreed
- All the value agreed upon in the negotiation becomes a key part of the final agreement.
Like our tattoo artist, doing her version of the tattoo through the lens of price, if you want success manage all the phases of the negotiation and don’t just rush to do a quick deal. Each phase is outlined clearly in my book The Creative Negotiator.
Next time you negotiate, make sure you are prepared, stay calm and stay in control. What can you do to make your next negotiation a success?