There are three elements to the effective negotiation:
- Preparation
- Discussion
- Assessment
Preparation
Have a negotiation strategy. Negotiation strategy consists of counterparties, leverage, staging, framing, and value sharing. Remember to keep updating it throughout the negotiation.
Define and prioritize what you really want from the negotiation and find out what are the wants and priorities of the counterparty. Don’t speculate about interests of the other party, probe if necessary.
Find your and the counterparties BATNAs, their consequences, risks and costs.
Keep improving your leverage, consider the impact of staging on it, and think how to make counterparty’s BATNA less attractive.
Recognize what are the moving parts of the agreement (e.g. price, volume, timelines, more creative terms). Based on them, set your:
- Aspiration point - optimistic outcome
- Target - realistic outcome
- Reservation point - worst outcome you are willing to accept
Define how you will be making concessions:
- What will you give up for what
- What is the number of concessions and scale of each concessions
Prepare a narrative to back up your rationale and to show that the outcome is fair to both parties, preferably using objective criteria.
Discussion
Come to the discussion with the intention to focus on issues, not people, and seek solutions.
Speak to be understood, listen to understand. Be clear, concise, and direct. Use the narrative prepared. Show that you understand counterparties’ needs and feelings.
Set clear expectations of what you want. Ask the other party for the same. Jointly prioritize interests.
Shield yourself from unreasonable demands by using the fairness narrative that was prepared.
If you cannot reach agreement, decide whether continuation of the negotiation is needed. Be ready to walkaway from the negotiation.
At the end of the negotiation, recognize all implementation issues to be included in the terms of the contract. Plan steps to execute the agreement.
Assessment
Assess whether the agreement reaches your interest, is fair, better than your BATNA, and is implementable.