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.

Do better than win/win

It is Tuesday morning, and I complement my negotiation coaching session with the soothing and tranquil soundtrack of a high-powered leaf blower in the background.

I peek outside the window, and see the building maintenance guy vigorously chasing an ever moving mountain of leaves. When I later leave (badum-tish!) for lunch I can’t help but notice how pristinely spotless the property looks. Well done Mr Leafblowerman! Certainly a win/win transaction, right?

Yes, but that’s not good enough. Let me explain.

On Wednesday mornings I again enjoy the soundtrack of a leaf blower, but the relaxing acoustics sound slightly different as they now originate from the building next door. I again glance out the window, and see Mrs Leafblowerwoman standing in a cloud of dust and leaves. She has managed to lift everything off the ground, and is now patiently waiting for it all to settle… on our side of the fence.

HEY WAIT A SECOND!! She is doing exactly what our guy is doing. And if we had a win/win negotiation with him, then surely our neighbours have win/win negotiating with her? But I’m certainly less excited about their deal – particularly as my car is now covered with dust and leaves. How could this possibly be a win/win?

Here’s what’s going on – we are using too simplified labels to describe negotiation. In our book we deal with this by describing four negotiation dynamics.

  • The first one is about dividing value, or transferring value (or problems!) from one party to another. This usually results in win/lose outcomes.
  • The second focuses on ensuring that value is increased for both parties. However, it is important to realise that sometimes this value is not created, but rather transferred from other parties who are not part of our negotiation! Thus a win/win deal between two parties may still be a win/lose deal between this group and other parties!

If value is merely transferred in the system, then value is not created, and therefore our actions are zero-sum – if someone wins, then someone, somewhere, loses.

We can contrast this with a sustainable approach to negotiation, which is focused on creating and maximising value in the system. In the book we refer to this as maximisation, and boy is it powerful. And it doesn’t have to be difficult. In our leaf blower example, if Mr and Mrs Leafblowerperson instead pick up the leaves and put them in the bin, then the leaves (i.e. the problem) would be removed from the system, as opposed to being perpetually passed around.

Power and prevention in negotiation

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

One of the beautiful things with negotiation and influence is that many insights are transferrable and just as applicable in commercial, hostage, and romantic relationship negotiations. And while professional negotiators get excited about the complex, high stakes, international and crisis negotiations, most of us relate better to examples of everyday negotiations. So let me share one.

At the time of posting this entry in the blog, I have connected with 51 negotiators (professional and academics) worldwide. Recently one of the very experienced old school negotiators shared the following tip with me on the importance of balancing power in negotiations.

As an example, when you go to the dentist, the first thing you need to do is to grab him by the ba**s, and then calmly say: “We won’t hurt each other, will we?”

Power negotiation is certainly a valid approach to negotiation, and it is very common in business today. But for some reason it doesn’t sit well with me. Perhaps it is because my dentist is a woman. Or perhaps it is because my dentist is such a kind and caring individual and I know she has my wellbeing in mind?

There is also something else. If we simply frame the negotiation around how much pain will be associated with fixing our ailing tooth, then we don’t actually have much scope to manoeuvre in the negotiation. At one extreme tooth will be fixed and it will be painful. At the other extreme the tooth won’t be fixed. No win/win outcome in sight.

But if we instead take a systems view of the negotiation, then we realize our tooth is aching because we haven’t taken care of it properly. The current situation was thus completely avoidable (i.e. preventable)! By instead viewing our dentist as a collaborator, she can help us ensure that our teeth stay healthy, and every visit will be short and painless.

So at the end of today’s visit I asked her the same question I ask after every visit: “From what you’ve seen today, what are the two specific things that you recommend I change (e.g. diet, behaviour) to ensure that we continue having these pain free visits every 6 months?”

Prevention is much cheaper, easier, more powerful and less painul than intervention. It is also one of the reasons why “professional negotiator”, from one perspective, is one of the most unrewarding jobs on the planet ☺ If we do our job well then the problems never occur, and people don’t realize the disaster we saved them from.