critical to achieving business results: effective negotiation
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Critical to achieving results in today’s fast-paced, complex business world is the ability to negotiate effectively. Every day we negotiate with our internal colleagues and/or external counterparts over priorities, strategies, resources, responsibilities, budgets and contracts. Typically, these negotiations are not one-off transactions; they occur with counterparts with whom we have negotiated previously, and will again. Yet even the most experienced negotiators often assume that there is a tradeoff: either pursue the best outcome for me, or make concessions to build or preserve a good relationship. This tradeoff is false, and is just one of many common disempowering assumptions that lead people to behave, with both internal and external counterparts, in ways that impede negotiation effectiveness and sub-optimize the outcomes. This webinar, based on the bestselling book "Getting to YES: Negotiating Agreement Without Giving In" and 30 years of training and consulting to corporations about the world, will focus on: Surfacing and replacing the common disempowering assumptions in our thinking about negotiation that drive what we do at the table and produce suboptimal result. Introducing a systematic and strategic approach to negotiation that enables negotiators to assertively and effectively pursue their business objectives while simultaneously building and maintaining positive working relationships. Sharing best practices for making negotiation an organizational capability — not just an individual competency.TRANSCRIPT
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Critical to Achieving Business Results: Effective Negotiation
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Speaker: Elizabeth Rayer Partner Vantage Partners
Brian Blancke Ph.D. Content consultant and trainer in negotiation Vantage Partners
Moderator: Max Mihelich
Associate Editor Chief Learning Officer magazine
Critical to Achieving Business Results: Effective Negotiation
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Max Mihelich Associate Editor Chief Learning Officer magazine
Cri6cal to Achieving Business Results: Effec6ve Nego6a6on
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Elizabeth Rayer Partner Vantage Partners Brian Blancke Ph.D. Content consultant and trainer in negotiation Vantage Partners
Cri6cal to Achieving Business Results: Effec6ve Nego6a6on
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Brighton Landing West 10 Guest Street Boston, MA USA 02135 www.vantagepartners.com This publicaCon may not be reproduced, stored in a retrieval system, or transmiGed in whole or in part, or in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior wriGen permission. Copyright © 2013 by Vantage Partners, LLC. All rights reserved. All rights reserved.
Cri6cal to Achieving Business Results: Effec6ve Nego6a6on
Elizabeth Rayer, Ph.D. Brian Blancke, Ph.D.
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About Vantage Partners
n Mission: Drive measurable business results by transforming the way companies negoCate with, and manage relaConships with, key business partners
n PracCce Areas: Sourcing and Supplier Management, Sales and Key Account Management, Alliance Strategy and Management
n Spin-‐off of the Harvard NegoCaCon Project
n Faculty at Harvard University, the Tuck School of Business at Dartmouth, and the US Military Academy at West Point
n Leaders in internaConal conflict resoluCon through CMG (now part of Mercy Corps) u Arias Peace Accords, u Post-‐apartheid South African consCtuCon
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Vantage Partners publica6ons
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Webinar purposes
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n Surfacing and replacing the common disempowering assumpCons in our thinking around negoCaCon that, wibngly or not, drive what we do at the table and produce subopCmal results
n Introducing a systemaCc and strategic approach to negoCaCon that enables negoCators to asserCvely and effecCvely pursue their business objecCves while simultaneously building and maintaining posiCve working relaConships
n Sharing best pracCces for making negoCaCon an organizaConal capability
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Poll ques6on: How oWen do you nego6ate?
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n Rarely
n 1 or 2 Cmes per month
n A few Cmes per week
n Every day
n MulCple Cmes per day
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What words come to mind
when you think of nego6a6on?
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Surfacing mental assump6ons
16 Copyright © 2014 by Vantage Partners, LLC.
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Assump6ons drive results
Assump6ons, Stories, Values
Adapted from Diana McLain Smith’s “Learning Pathways.” Copyright AcCon Design. All rights reserved. Used with permission.
Results Ac6ons
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Assump6ons that drive different strategies and ac6ons
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Debilita6ng Our interests are opposed; we can’t both get what we want This is a zero-‐sum game; the pie is fixed
We need to compromise between conflicCng posiCons I have to choose between a good rela6onship and good substance Best to see what they do first
Poor communica6on is their problem
They make poor decisions because they are ignorant or misguided I should behave as badly as I think they are
We have no choice
Empowering While some interests conflict, others are shared or just different We can always shrink the pie, and usually find ways to expand it We can find creaCve ways to meet both of our interests We can build a good rela6onship even as we disagree Their tendency to follow is an opportunity to lead Good communica6on is my problem
People do what they believe is in their best interest I should do what will move us toward where I want to go Nothing happens unless I agree
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Nego6a6on
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Nego6a6on as bargaining
Walk Away No Deal
“A reasonable price of . . .”
“That’s my bobom line”
“Just for you…”
Extreme Opening Posi6on
Fallback (Minor Concession)
“Take it or leave it”
“Last” Final Offer
Split-‐the-‐difference compromise
Threat
Counter-‐ Threat
Walk Out (Temporarily)
“Final” Offer Walk Away No Deal
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A fundamental tension?
We oken need the skills to negoCate in a way that produces both good substanCve outcomes and a good working relaConship Re
laCo
nship
Substance
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Seven elements of nego6a6on
n Interests
n AlternaCves
n OpCons
n LegiCmacy
n Commitments
n RelaConship
n CommunicaCon
n Defining Success n NegoCaCon PreparaCon n NegoCaCon strategy execuCon and understanding different process choices
n Diagnosing and handling difficult tacCcs
n Organizing insights, tools, and lessons
Useful for
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Nego6a6on as joint problem-‐solving: The Circle of Value
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If “Yes”
Commitment
If “No”
AlternaCves
Interests
OpCons
LegiCmacy
CommunicaCon RelaConship Build a working relaConship. Be respecnul.
Jointly explore opCons for creaCng and
distribuCng value.
Make choices.
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If “Yes”
Commitment
If “No”
Alterna6ves
Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
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Copyright © 2014 by Vantage Partners, LLC.
Rela6onship
The way in which parCes interact, both during the negoCaCon and akerwards, and their percepCons of, and beliefs about, one another (which affect how they interact)
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If “Yes”
Commitment
If “No”
Alterna6ves
Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
25
Copyright © 2014 by Vantage Partners, LLC.
Communica6on
CommunicaCon refers to the messages, acCons, and signals sent during negoCaCon, and the way that these signals are interpreted or received
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If “Yes”
Commitment
If “No”
Alterna6ves
Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
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Copyright © 2014 by Vantage Partners, LLC.
Interests
Interests are what moCvate parCes to negoCate in the first place, and which they seek to saCsfy through a negoCated agreement: their needs, objecCves, risks they want to miCgate, and the like. There are two levels of interests to always keep in mind — organizaConal and personal.
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If “Yes”
Commitment
If “No”
Alterna6ves
Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
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Copyright © 2014 by Vantage Partners, LLC.
Op6ons
OpCons are the possible elements of an agreement. To implement an opCon, all parCes must agree.
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If “Yes”
Commitment
If “No”
Alterna6ves
Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
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Copyright © 2014 by Vantage Partners, LLC.
Legi6macy
LegiCmacy refers to the extent to which an agreement is perceived as fair, appropriate or “on the merits”
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If “Yes”
Commitment
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Alterna6ves
Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
29
Copyright © 2014 by Vantage Partners, LLC.
Alterna6ves
AlternaCves are the ways that each party can saCsfy its interests if an agreement is not reached
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If “Yes”
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Interests
Op6ons
Legi6macy
Communica6on Rela6onship
Circle of Value
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Copyright © 2014 by Vantage Partners, LLC.
Commitments
Commitment are oral or wriGen statements about what a party will or won't do
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Nego6a6on Take 2
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Buy-‐side versus sell-‐side percep6ons of percentage of total contract value realized during implementa6on
Copyright © 2014 by Vantage Partners, LLC. 32
0%
25%
50%
75%
100%
Percen
tage of P
oten
6al V
alue
Realized
66% 54%
Buy-‐side respondents were asked to esCmate the average % of total potenCal contract value realized across all their supplier contracts. Sell-‐side respondents were asked to esCmate the average % of total
potenCal contract value actually delivered by their company to their customers during contract implementaCon. The chart represents the averages of these responses.
Buy-‐side respondents -‐ realized
Sell-‐side respondents -‐ delivered
Average contract value realized in implementa6on
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Nego6a6on as a corporate capability
Copyright © 2014 by Vantage Partners, LLC. 33
CreaCng a NegoCaCon Infrastructure
Broadening the measures of success
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Crea6ng a nego6a6on infrastructure
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n Move from an individual focus to some standardizaCon of processes and tools
n Coordinate and support negoCaCon like any funcCon
n Create a system for sharing successful pracCces
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Broadening the measures of success
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Rela6onship Does the negoCaCon process help build the kind of relaConship that will enable us and our clients to work effecCvely together over the project’s life cycle?
Communica6on Do our negoCaCons help create an environment in which both parCes can engage in construcCve conversaCons aimed at solving problems?
Interests Have we craked a deal that saCsfies our interests well at the same Cme that it saCsfies our client’s interests to at least an acceptable level and the interests of any relevant third parCes (government regulators, environmental groups, and so on) to at least a tolerable level?
Op6ons As part of the negoCaCon process, have we searched for innovaCve, elegant, and efficient soluCons that might offer joint gains?
Legi6macy Aker brainstorming a variety of opCons, have we used objecCve criteria to evaluate and choose an op-‐Con that could be jusCfied by both sides?
BATNA Have we measured the proposed deal against our Best AlternaCve to NegoCated Agreement, and are we confident that it saCsfies our interests beGer than our BATNA does?
Commitment Have we generated a set of well-‐planned, realisCc, and workable commitments that both sides understand and are prepared to implement?
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To achieve op6mal business results through nego6a6on…
Copyright © 2014 by Vantage Partners, LLC. 36
n Change the mindset around negoCaCon to one of joint problem-‐solving
n Implement a robust model for preparing and conducCng negoCaCons that informs strategic and tacCcal choices
n See negoCaCon as a core “funcCon” within the organizaCon versus just an individual capability
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A spin-‐off of the Harvard NegoCaCon Project,
Vantage Partners helps companies achieve breakthrough business results by transforming
the way they negoCate with, and manage relaConships with,
their suppliers, customers, and alliance partners.
Vantage Partners
10 Guest Street Boston, MA 02135 USA T: +1 617.354.6090 F: +1 617.354.4685
www.vantagepartners.com
Copyright © 2014 by Vantage Partners, LLC. 37
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