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with about the same zest as they do a root canal at their friendly
dentist. The stakes are always high. Negotiate too hard and the
deal is lost. Be too timid and you will leave money on the table,
which in today's economy is nearly as bad as losing. Having been
a strategic negotiator for many years, I know that successful
negotiation is an art, rather than a science. However, behind the
skills that come from years of senior executive level negotiations
are a few basic principles that I call the "THE GAMBLER"
PRINCIPLES,
after the song immortalized by Kenny Rogers. Lest you form the wrong
idea, I do not want to infer that negotiating and gambling are
synonymous, or even remotely associated. In fact, following my
counsel will effectively insulate you from taking ill-advised and
unnecessary risks in a moment of desperation. Now, on to Kenny's
famous words:
You got to know when to hold 'em
Know when to fold 'em
Know when to walk away
Know when to run
You never count your money
When you're sittin' at the table
Ther'll be time enough for countin'
When the dealin's done
The three most important concerns in any negotiation are first,
relationship, then risk and lastly, value. These concerns are the
real decision criteria that underlie any business transaction leading
forward into the future. My starting goal is always to seek a win-
win outcome. This is usually possible, but there are those unusual
cases where win-lose or walk/run away becomes the only viable
outcome. It should only be the other party's intransigence that
necessitates the latter results.
First however, in order to have a successful negotiation, there are
three essential mental bridges that must be crossed well before you
enter the room to negotiate. These are:
·Clarify the Relationship – Simply put, what is the current
real and perceived business and personal relationship and its true
value to your organization's future. Far too often we hold on to
the
past, not realizing that frequently we must be willing to let go of
what we have in hand, if we are to be free to reach out for something
better. We must carefully consider what could be lost in this
negotiation, but alternately also what new doors may be opened to us,
given the new found freedom we would gain without the existing
relationship. As business leaders, far too often we continue
pursuing existing relationships beyond their prime, simply because it
is easier and more comfortable than striking out to develop a new
relationship that better suits our organization's future. Thus
we must place a well thought through value on continuing the
relationship, in view of the pending negotiations.
·Clearly Structure the Outcome Desired by Both Parties – I
often find that parties will enter a negotiation with the drive to
win or even win-win, but never having committed to paper beforehand
precisely what that means. Oh yes, they have a general idea, i.e.,
to place the contract at the best price or cost. However, they have
not defined what is the optimal combination of price/cost and all
other terms that reflects both parties' best long term interests.
What is that magic package that allows everyone involved to believe
they have been dealt with fairly and therefore, the relationship
blossoms? I like to begin by preparing a written scenario that
outlines what each party should view as a "great deal". This
is the
optimum "win-win" agreement.
·Determine Your "Walk-Away" Point – This is sometimes
the hardest, but always the most important pre-negotiation decision
you must reach. It is not a decision to be considered later, in the
heat of the negotiation. It must be approached calmly and with the
prior two points in mind, for we truly need to understand what each
side requires to make it a "great win-win" agreement. Then if
the
other side becomes unreasonable and prevents it from happening, we
must weigh the predetermined value we placed on the relationship as
well as ask the question, do we really have a mutual relationship or
merely one party taking undue advantage of the other?
With the answers to these three questions firmly in mind, we are
prepared to begin negotiating. I am not a believer in much of the
posturing that some negotiators put great stock into, such as who
opens first and how, etc. What I do believe in is TRUTH when
negotiating, as in all interpersonal affairs. Truth and candor are
of paramount importance in building trust between the parties. This
does not mean however, that you should, returning to Kenny
Roger's song, necessarily show all your cards at once. After
all,
negotiating is merely a more formalized variation of common
marketplace bartering. It is all about give and take and each
party's perceptions of value. You offer they counter. You respond
and so it goes. This is why it is so important that before the play
begins, you clearly understand the structure of what that "great
deal" looks like from both perspectives. But what if there are
mutually exclusive components to achieving that "great deal"
for both parties? You will have already considered this in your
earlier analysis and concluded what give-and-take is required on both
sides to arrive at the best possible compromise, something slightly
less than a "great deal," now maybe only a "good
deal".
Furthermore, if your counterpart has not reached this determination
beforehand, you can slowly educate them to this conclusion through
the bartering process. Knowledge is indeed power. Most importantly,
you clearly know when you are approaching the point of no return,
that point where you have already concluded in the calm, quiet
preceding the storm of collapsing negotiations, when you will walk-
away. Thus, you have the opportunity to steer the negotiations away
from falling unnecessarily into a lose-lose downward spiral where
relationships deteriorate and from which it is often impossible for
the parties to recover.
Now for the song:
You got to know when to hold 'em:
Negotiation requires that you have the patience and confidence to be
still. If the other party precipitates a long silence, wait, that's
right, just simply w-a-i-t. Let them break the silence. If it is
truly a relationship, they will. Remain steadfast, solemn, but not
sullen and wait. Hold out firmly for your high priority/risk issues.
Know when to fold 'em:
Holding out for a lost cause is not only against your best interest,
but it also makes you appear stubborn and foolish. Know when to give
in on a point. If it is not a "walk-away" issue, then
concede
graciously and negotiate onward.
Know when to walk away:
If the deal cannot be had without violating your prior walk-away
decision, then walk away, but just walk. Clearly articulate your
position and reasons, then leave courteously, letting the other party
know that you mean what you say, but still leaving the door open for
them to reopen the discussion after conceding to your walk-away issue
(s). Never, never reevaluate your "walk-away" position while
sitting at the table. I have seen this done too many times under the
guise of "new information", a code phrase for "giving in". If
indeed completely new facts have come to light, then take the time to
recess, get away, preferably for several days or at a minimum
overnight. It is too easy to convince oneself that you should alter
your "walk-away" position when you see the negotiation going
down in flames. Remember, the whole reason for developing your
"walk-away" positions well in advance of the negotiation, was
to
prevent being pressured into giving up ground on these critical
issues an inch at a time. This is an instance where unless the other
party reconsiders, you will be far better served strategically in the
future by building a new relationship or finding another way of
accomplishing your goal, despite the momentary discomfort. Face the
fact today that the relationship is no longer mutually beneficial and
move on.
Know when to run:
Run? Yes run, when the other party demonstrates bad faith or a lack
of regard for the truth. No business relationship is worth the risk
and inevitable pain that results from dealing with dishonorable
people and organizations. After all, would you continue playing
cards with someone after you learned that they were using a marked
deck? Run, do not walk and do not leave the door open behind you.
Let them know that you have no time or interest in doing business
with those who do not understand the meaning of the words TRUTH and
INTEGRITY.
You never count your money
When you're sittin' at the table
Ther'll be time enough for countin'
When the dealin's done
Never talk openly about how much you or your company will profit from
the deal and never, never gloat over the terms of the agreement
afterward. Both are evidences of bad taste and a severe lack of
personal discretion. Also, news like that has a habit of getting
around. I have seen successful negotiations sour after the fact,
because someone with loose lips later let slip an indiscreet comment,
that led the other party to believe they had been taken advantage of
or mislead. On the positive side, do celebrate the outcome together
with the other party at the conclusion of the deal. Go out together
to lunch, dinner or whatever. In doing so you celebrate the success
of everyone involved and thereby further reinforce the relationship
for the future!
Although gambling and negotiating are not the same, we can learn a
great deal from Kenny's straight faced poker player.
About the Author
John Di Frances is the Managing Partner of DI FRANCES & ASSOCIATES,
LLC founded in 1983.
Phone:1-262-968-9850
Fax:1-262-968-9854
208 E Oak Crest Drive
Wales, WI 53183
www.difrances.com
synergy@difrances.com
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