Negotiations never come down to price

In courses we frequently get questions along the lines of “What do you do in negotiations where it just comes down to price?”

The answer is that negotiations never come down to price.

Today’s blog is available at INSEAD Knowledge.

Negotiations never involve just two parties

(This is a repost from Filip’s original blog)

A common misconception about negotiation is that there are only two relevant parties to most negotiations; “us” and “them”. In reality this is never the case. Whether we consider contract negotiations between companies, relationship negotiations between romantic partners, second hand car purchases, or crisis negotiations between law enforcement and perpetrators, there arealways additional stakeholders who either:

  • Can influence the outcome
  • Are affected by the outcome

One of the cruellest lectures I give (and I always apologise for this ☺) is the one on advanced stakeholder analysis in negotiation. In one hour I reveal how tremendously complex it becomes to manage the negotiation process once we begin to understand the real dynamics in the system. It is cruel because participants have usually enjoyed the topic of negotiation up to this point, and now they suddenly realize that negotiation is challenging, and requires a lot of work if we want to increase our influence over outcomes.

In one hour I only have time to cover the first 20 or so stakeholders that we wish to consider for most negotiations between organisations. Not only does this map include many stakeholders, but we also wish to understand about one hundred things about each stakeholder, e.g.:

  • What does each party want?
  • What does each individual want?
  • Who sides with whom? What sub-coalitions can we see? And how do these coalitions change based on the options on the table?
  • Who communicates with whom? Who listens to whom?
  • Who likes whom? Who trusts whom? Who might seek revenge with whom?
  • Which parties are dependent on others? Which parties are replaceable?
  • And much, much more!

And we haven’t even reached the cruel part yet. Where my participants’ collective spirit is usually crushed is just after I ask the question: “Is this map static?” The answer is of course “no”. Any change in the negotiation can drastically change the stakeholder map. Even discussing two separate options/solutions may require two completely separate stakeholder maps!

Ramsay Taum, an expert on sustainability in Hawaii, gave one of the best presentations I have ever attended. In passing he mentioned that the local tradition is to always include empty chairs in meetings, because these chairs help remind those present of the relevant stakeholders that aren’t present in the meeting. I strongly recommend making this practice tradition for all our negotiations as well.