At a time when businesses everywhere – from small entrepreneurial start-ups to multi-national corporations – are trying to keep costs to a minimum, negotiation is becoming an increasingly valuable business skill. And the good news, according to Karim Davezac of the Gap Partnership, a specialist consultancy, is that almost every aspect of business is negotiable: terms of business, contracts, margins, costs, time, cash, risk, investment... So by thinking creatively about the terms involved in a negotiation and developing their employees to do the same, he says, business owners will be able to create more value across all aspects of their company. MT asked him for his top ten tips.
1. Understand the balance of power
This is one of the most important factors in any negotiation. Knowledge is power: by carefully questioning the other party, you will be able to derive information about their timings, their intent and their pricing, which will help you increase your perceived level of power.
2. Plan carefully
From undertaking research to defining your strategy, planning is critical to your success. You should spend 90% of your time planning your strategy and its likely permutations, and only 10% of your time negotiating the specific contents of a deal. To define your strategy, you will need to proactively decide whether the negotiation is co-operative or competitive. Your strategy will then influence your approach: do you want to take, share or give value?
3. Set your break-point in advance
Set your break-point in the cold light of day away from the pressure of the interaction. Once you have, try to get inside the other party’s head to figure out the break-point they’re working from. Landing as close to their break-point as possible at the end of the deal should be your primary objective.
4. Manage expectations
Preconditioning can form a vital component of the planning process. This can be done formally using PR to release information, or more informally in a face-to-face meeting, as part of an ‘off the record’ exchange.
5. Get your position on the table first
At the negotiation table, you should aim to get your opening position on the table first. This will make sure the subsequent interaction is anchored around your figures, and your proposals. Talk about your numbers to get the other party to move to you.
6. Open extreme, but realistically
Your first position should also be realistic, but extreme. By moving away from your opening offer, you can give the other party the satisfaction of winning. This helps them become more agreeable. However, this will only work if the negotiation itself is founded on trust: unrealistic positions damage relationships.
7. Exercise self-control
Remember, knowledge is power. By carefully listening to every exchange you can glean new information, which if you are lucky could improve your overall bargaining positioning. It is important to exercise self-control. By keeping quiet, asking open questions and listening carefully, you can prompt the other party to talk and reveal potentially valuable information.
8. Make the other party feel like they are winning
Your own individual ego can also impact the perceived balance of power. By exercising humility and restraining your ego, you can swing the power stakes into your favour by making the other party feel like they are winning. Successful negotiation is the art of ‘letting them have your way’.
9. Don’t give things away unconditionally
While it’s important to make the other party feel like they are winning, don’t be too generous by giving things away unconditionally. They may not reciprocate. Generosity can engender greed, and ultimately, the more you give, the more the other party will want. Instead, only make ‘conditional’ offers to make sure that you get what you want when you do give things away.
10. Get creative
Go beyond the normal trading boundaries of negotiation – usually focused on price – to pinpoint other contract variables to trade as low-cost, high-value concessions. Price is an important negotiating point, but it is not the only one. By working with the other party, you should examine other variables such as risk, contract length, volume, promotional investment and technical specification to unearth new areas of value. Don’t think ‘no’. Think ‘how can I help them to help me’?
Karim Davezac is a Partner at The Gap Partnership - a consultancy that specialises in nothing but negotiation, a vital skill that helps businesses do deals better and enhance value. The Gap Partnership not only teaches its clients how to negotiate, but also helps them to plan for their negotiations and can even negotiate on their behalf. It has offices in London, New York, Los Angeles, Johannesburg and Dusseldorf, with a further base in Hong Kong scheduled to open this year. With more than 12 years of experience, The Gap Partnership has over 300 clients, including a range of FTSE 250 and Fortune 500 companies.