Goals are strategy — independent of the counterparty. The OBJECTIVE step in GOBLINS is to tailor negotiating plan for the counterparty you are meeting with now. Objective planning involves two steps. 1. Deciding on what’s important — and picking the language and benchmarks you want to use to maximize your value, and 2. Understanding who you are negotiating with (i.e.: your most important negotiation may be internal).
Start with the big-picture assumptions that many negotiators gloss over completely. This simple list will help you focus your thinking. You need to be able to answer all of these questions before you start negoatiating:
CONSTRAINTS — What are the institutional, economic, legal, or corporate limits on you and your counterpart? Start with your own:
- Lack of budget
- Lack of information
- Lack of authority
- Lack of resources
- Lack of power to alter deal terms.
Then do him. Figure out what his constraints are, and build them into your planning. Make guesses where you have to, but use this as a first step to uncovering his BATNA.
Stakeholders can be your biggest constraints…
- Who can say “yes”?
- Who can say “no”?
- Who can say “smaller, cheaper, faster, later”?
What about your counterparty? Does he have more power and resources than you do — or less? What are his constraints.
All negotiators have resources — your job is to understand what yours are, and figure out a way of turning them into deal variables. Cash and finished goods are easy to work with — but services and intangibles like know-how, contacts, and experience are much harder to put a value on. As a result, many negotiators end up donating labor and knowledge to their counterparties.
What are your negotiating resources?
Obviously, budget is your primary resource. Money talks — but sometimes it isn’t loud enough. If your company has a recognizable brand, IP (intellectual property), technical knowhow (or engineers who give the appearance that you have it), a network of connections and service providers, supply chain, distribution channels, QC/QA or process expertise that your counterparty wants then you have bargaining leverage.
Asking is the hard part
If your counterpart may be interested in your technology or brand, then make that part of your early-stage relationship-building conversation. Using your resources effectively is a 3 part process.
Step 1 — Figure out what he wants.
Step 2 — Figure out how to get paid for it.
Step 3 — Get paid for it.
Figuring out what he wants is actually pretty simple — just ask him. Once people start telling you what they want from you they get pretty forthcoming. Ideally, there will be some way to match his “wants” with your own wish list. If you need some kind of technical know-how from him, try swapping it for something else that’s already on his wish-list. You’ll do better with two intangibles rather than trying to get someone to pay cash for service or know-how. (They may agree to cash-for-intangibles in the early stages, and then pressure you to eliminate the case when pressure builds). Make sure you don’t build in a timing weakness when turning your intangible resources into variables. If you have to deliver NOW, but he has to perform & pay you LATER then your deal structure is unstable and works against your interests. (If he gets your technology or IP now and you plan on getting a higher payout later, then you are incentivizing him to wreck the partnership as soon as you deliver your resources).
Did you call him?
Was this arranged by a stakeholder of yours?
Did his stakeholder arrange it.
APPROACH — How did you come to be in this negotiation, and what will happen next? How do you approach your counterpart? Was it arranged by someone else (i.e.: a boss)? Did you pitch to him – or is he selling to you? Have you met the counterpart many times before – and do you plan on working with in the future? Is it internal?
I’m approaching him – cold
I’m approaching him – my idea
I’m approaching him – not my idea
Internal – level or down
Internal – up
He’s approaching me – not his idea
He’s approaching me – his idea
He’s approaching me – cold
- Confirm and clarify the specific deal points you are going to discuss during the negotiation by selecting your key variables. These are the specific deal points that you will be discussing during the negotiation — so it is critical you get on top of this right away. You’ll negotiate each variable three times — 1) to get it on the table, 2) to determine its value, and 3) to decide on a price. Setting variables is where a negotiator’s skill and creativity make a difference. Decide what you want from this negotiation — but now we are chopping up and repackaging our goal system as the counterpart will see it. You’ve spent a lot of time considering what you want from this deal — now you have to package your “list of demands” that you want to get from the other side. The most typical variables are:
Quality or type
Time (delivery date, length of contract, etc)
Good negotiators know how to do 2 things that set them apart from mediocre ones. First, they pick the right variables and figure out how to measure them. It’s easy to do with price or quantity — but tougher to do with projected sales and customer service levels. Second, they know how to manipulate and ______ their variables to give each negotiator more options. Finance is the obvious examples — companies lend money to customers, have variable due dates and payment schedules, manage risk exposure and a wide range of other devices. Negotiators have to know how to turn goals into deal-points. Here is an expanded list of potential deal points.Variables (Deal Points)
- Due dates
- Price breaks
- Length of relationship
- Negotiating process
- Negotiating team (theirs)
- Structure of the negotiation
AGENDA: Variables + Relationship + Time + Process = your negotiating agenda.
Someone sets the agenda in every negotiation — usually the guy who doesn’t lose.
You now have all the pieces to your negotiating agenda. You have a list of variables and a target relationship. Now you can develop a negotiating agenda that acts like the table of contents for your negotiation story. It can be a formalized proposal that gets distributed or it can be a very detailed “to-do” list on word or excel that no one sees but you.
The agenda lays out which items get discussed (i.e.: your choice of deal points) and how the negotiation will proceed. In addition to actual deal points, agenda items include:
- When negotiation begins and when it ends.
- Negotiators (who you are talking to)
- Contract, sales agreement, dispute resolution
- Relationship duration
- Location of meetings
- Binding, interim or informal?
- Plans for next or ongoing meetings.
- Decisions on technology or IP sharing.
- Process details – such as location, duration, formal or informal, binding or non-binding, and other mechanical issues that must be agreed to before negotiation can get started
- Results of the negotiation – a permanent strategic relationship or a one-off transaction.
TIME – It’s worth revisiting time yet again because it impacts on the process so many ways. 3 ways of managing time.
Operationally. The clock’s on the wall. Read it. Know it. Live it. In many cases, this is how you’ll describe the negotiating process — but your counterparty may not agree.
Tactically. We’re the fastest. We charge extra for rush jobs. You’re flight to Chicago leaves in 4 hours — do you want to go home with a deal or not? Someone uses time as a tactic — rushing you, delaying or using deadline pressure to influence your decisions.
Strategically. Growth, new markets, new demographic trends. Everyone has long range goals — and you can’t always ensure that short term realities won’t conflict with longer term strategies.