Mar 21, 2014

The Art of Negotiation

One of the lectures that I really enjoyed when I participated at the Executive Education Programme at INSEAD in 2012 was, indeed, of Nuno Delicado. In a nutshell, it's about the art of negotiation.

I got some takeaways that I'd love to share, but since experience has taught me (the hard way) that a full 75%, if not more, of work happens before the negotiation ever starts, I'll just be focusing on sharing things that we should acknowledge before we start any negotiations in particular.

At his class, Nuno shared an interesting story of two sisters who fight over an orange. Their mother then comes to solve the problem by cutting the orange into two halves and give one half to each daughter, which seems to give the story a happy ending. Alas, not really. Because the next thing she notices is that the first daughter takes her half of orange, peels it, and eats it; while the other daughter takes it, peels it, and throws the inner part away (she only uses the orange skin for the cake she wants to make).

We might not share similar sentiment about the orange, but in one way or another, the case relates very well with some point in our life. It is when the solution we take doesn't give a win-win result for everyone involved.

And in the story itself there lays the very first lesson. Disagreement may happen in a mere casual manner; between sisters, a husband and a wife; or in a more formal situation; between an employee and an employer, or in other case, an entrepreneur and an investor; you name it. And the truth is that there's nothing wrong with having a disagreement. In fact, it is actually a good healthy sign (as opposed to a disagreement which happens under the radar). What's important is to understand how to settle the differences. And that's when a negotiation plays its role.

From what I've learned both in Nuno's class and by experience, there are three key points we need to acknowledge in getting ourselves prepared for a negotiation.

#1 Understand our goal AND how our counterpart can help us to achieve it

It really is a big of a deal to understand what our goal is clearly. I'll even say, the more precisely we can describe it, the better.

Furthermore, it also helps us to distinguish which negotiation worth our time. If our counterpart can't help us, particularly, in achieving our goal, then there's no point to have him/her to negotiate with.

#2 Understand our counterpart's goal AND how we can help them

Of course, the most logical reason why we want to start a negotiation is because it benefits us. Then, acknowledge, so does our counterpart. If we want a negotiation works for us in achieving our goal, do acknowledge, so does our counterpart.

#3 Plan B Understand our limit

Once we have figured out what we and our counterpart want and how we can help each other, basically we're ready for the negotiation. Unfortunately, in real life, things don't always go as planned. Some people may suggest to have a plan B (or even a plan Z) if, God forbid, our first ultimate scenario doesn't work.

But just to be clear, it's a matter of preference. I don't believe in plan B's simply because, I think, they're distracting me from my plan A's. Hence, I, personally, rather suggest to understand our limit and when the time to walk away when things don't go as planned.

From my experience, it's very helpful to answer all questions below before the negotiation starts:
- What is the best scenario we want to get out of the negotiation?
- What is the least thing we want to get out of the negotiation?
- What can we offer to our counterpart?
- What can't we offer to our counterpart?
- What is our deal-breaker?

Those questions matter because sometimes people confuse the deal of a negotiation as the goal, instead of the means. We need to remember that the goal is the goal, and the negotiation and the deal are just means. That being said, if our counterpart doesn't serve the very least thing we want out of the negotiation and/or propose the idea that hits our deal-breaker, then it is a sign for us to walk away.

Lastly, do note that one thing we need to keep in mind is that the negotiation is a success if it benefits both parties by creating a win-win solution. In other words, if one negotiates in order to get a win/lose deal, then he/she is completely missing the point.