I will shortly be entering into a critical business negotiation with a major impact on my company’s success — and it will be with several individuals with whom I have long-standing and productive business relationships.
This situation — negotiating with long-term business colleagues and partners — presents sometimes unique challenges and often requires specialized strategies. What should you do in these situations to improve the likelihood of achieving your goals?
1. Prepare as strategically as ever.
Do not wing it just because you know, like and often work with your counterparts. In fact, this situation requires that you be as strategic as ever, in part because the stakes are so high. On the table, explicitly or not, will be the substantive issues in the negotiation plus your ongoing relationships with these individuals.
In other words, you could possibly “win” the negotiation in terms of the substance and “lose” it if your tactics cause the relationships to go sour.
So be especially strategic about what you do and how you negotiate in these contexts. Do your substantive and strategic homework.
2. Share information openly and liberally.
Do not hide the ball in these negotiations. Instead, take a more open-book approach. Share your goals and ask your counterparts to do the same. Get the issues and everyone’s interests (why the parties want the deal) out in the open.
Of course, there will be some things you will not want to share. But share more, not less.
Also, explicitly recognize the value of the relationships. And don’t just say this — make sure your actions reflect it. How? Take concrete steps to strengthen the relationship, perhaps by taking your counterparts out to lunch after a session or to a sporting event you both like.
Here also is a list of things not to do: Don’t play games like fake walkouts, don’t explicitly shop your counterparts to their competitors, and don’t be too aggressive with your offers and concessions. These tactics send the message that you don’t care much about the relationship.
3. Aggressively and creatively explore value-creating options.
Negotiations with business partners and those with whom we have long-standing relationships present unique opportunities that do not exist to the same extent in more adversarial negotiation environments. But you likely will have to work at it to get the fullest benefit.
For example, sometimes business partners will agree to their counterparts’ first offer in the mistaken belief that making a counteroffer or even discussing it may be perceived as harming the relationship. Even making a counter creates a conflict, right? Not necessarily.
In these situations, sit down with your counterparts and brainstorm creative ways that you might satisfy your interests and theirs. Discuss a wide variety of options — in addition to the offer suggested by your counterparts — that might work. It will take some time and effort, but it will often pay off in the end in better agreements for all the parties.
4. Find fair objective criteria.
Of course, some conflicting interests cannot be resolved by creatively exploring options. If and when this occurs, and it is common to have some conflicting interests (especially where zero sum issues exist — where more for one side is necessarily less for the other), find and use an independent standard or procedure that both sides perceive as fair.
Let’s say you wish to buy out your long-time partner’s 50 percent interest in some commercial property and she wants to retire and dissolve the partnership. One solution might be to hire an independent expert to value or appraise the commercial property and for both parties to agree to be bound by that valuation.
5. Confirm your leverage.
Finally, don’t get too complacent and ignore the possibility that your business partner may not value the relationship to the same degree as you and may try to take advantage of you.
How can you protect yourself from this? Every so often, confirm your leverage by exploring your alternatives to continuing the business relationship with your counterpart.
Let’s say you have been purchasing and using specialized business software from Company A for 10 years, and you have developed a very good business relationship with its vice president of business development. Assume Company A has regularly increased its price by 10 percent at the conclusion of each contract, accurately figuring it would be very costly for you to switch.
Every so often, contact other business software vendors and comparison shop. Make sure Company A is providing you with a fair and reasonable price relative to its competitors.
And if you find Company A is well above the market in terms of pricing and services, sit down with your “friend” and explore the reasons why and what you have found.
Success with all these strategies requires that your counterparts relatively equally value the relationship. Here, it may be time to take a more aggressive approach and open up the bidding process for your services.
That, of course, is a very different negotiation strategy.
Published July 8, 2005 The Business Journal