The number one key to success at anything in life is preparation. You make fluke some amazing outcomes by winging it or flying by the seat of your pants, but to achieve sustainable, long term success you need to be prepared. Every successful person on the planet got there by being prepared. The ones who pretend they didn’t are lying.
In negotiation, preparation is the most important thing you can do. Doesn’t matter if you’re buying a TV, discussing childcare arrangements with your ex-husband or trying to finalise a peace agreement in a war torn country, you need to be prepared. Real-life negotiations are not scripted by Aaron Sorkin or David E. Kelley. They take time and energy and a lot of considered thought if you want to achieve a certain outcome for yourself.
First, you need to know what you want out of the negotiation. If you can pair that with why you want it, even better. If you don’t know what you want you’ll find yourself getting what the other party gives you and you might not recognise a good deal when you see one. If you don’t know why you want it you may settle too soon for too little. Don’t be afraid to clearly identify what you want because you’re worried that someone may judge you. You’re allowed to want what you want.
Second, you need to try and determine what the other party wants and why. Sure, this is largely a guessing game on your part but you will learn a lot and therefore be able to prepare your case better. Sometimes the objective of the other party is clear and straightforward with the negotiation itself being little more than bartering. Often, it’s not. People don’t want to disclose what they really want for fear that the cost to them will go up. There is a lot of bait and switch in negotiation. Role play the negotiation from the other party’s point of view. Try and understand their motivation. What’s the perceived power balance? What’s the actual power balance? Remember, even if there is a perceived imbalance in power, if Party A didn’t need something from Party B there wouldn’t be a negotiation.
Third, learn everything you can about the subject at hand. Write down your questions about the negotiation and answer the ones you can now and the rest as the negotiation progresses. It is unusual that you will only have a couple of minutes to complete the whole negotiation so you will have opportunities to regroup and re-evaluate the answers to your questions.
Fourth, set your negotiating strategy. This will include your style and tactics. Are you going to be aggressive or unfailingly polite? Are you going for a smoke and mirrors approach? How many lies are you prepared to tell to get what you want? (None is a perfectly okay answer to this question.) Are you going to work collaboratively or is it every person for themselves? Every negotiation will differ. Whilst an aggressive approach can backfire (you catch more flies with honey), sometimes that’s what’s required or else the other party will walk all over you.
Fifth, understand what your negotiation levers are and where you can compromise. What is it that you have that the other party wants and vice versa? This will often include peripheral items or benefits. What is of a lot of value to them but of little value to you? These are the best levers to be able to pull (just don’t let the other party know that these items are of low value to you or else they’ll want more). There is no limit to creativity here.
Sixth, set the negotiation agenda. Take the lead and set the time and place. Write out a list of points to address in the negotiation. You don’t have to share this list, you can keep it private for your own reference. Just know that you don’t have to remember everything and you’re allowed to have your own notes. However, if it’s a complex negotiation with a number of deal points you may choose to prepare a formal agenda and give it to the other party.
Seventh, know what your agreement range is. Your ideal outcome is X but you’d settle for Y. Anything between the two is your agreement range. When you overlap your agreement range with that of the other party you get what is typically called a ZOPA, or zone of possible agreement. You don’t have to settle for the bottom end of your range. Always push for more but if you don’t get it at least you’ll know if you’re happy to settle. It’s like the reserve price on an action. Just because the price hits the reserve doesn’t mean the auction stops, it just means that anything about the reserve is gravy and the auctioneer does their best to get as much gravy as possible.
Eighth, know what your walk away point and BATNA are. Your BATNA is your best alternative to a negotiated agreement, more commonly known as Plan B. If the negotiation isn’t successful, what are your alternatives? How much do you actually have riding on this negotiation? At what point are you willing to walk away from the negotiation and not reach an agreement? Just because you’ve been in a negotiation doesn’t mean you have to do a deal. Sometimes walking away is actually the best deal you can make at the time.
When preparing for a negotiation, the time spent preparing should be significantly more than the time spent actually negotiating. If you’re buying a car then you might find that you can do a couple of hours of research for 30 minutes of talking to the salesperson. If you’re buying a company, you might spend several months doing due diligence for a negotiation that takes a few weeks.
There’s a reasonable chance that things will come up in the negotiation process that you didn’t prepare for, but you’ll have the bandwidth to process these items in real time because you’ve already thought through everything else. Preparation will increase your confidence, reduce your anxiety and hopefully convince your partner that you’re a negotiating force to be reckoned with.
There is no way that you lose from preparing for a negotiation. Even if things go better than expected it’s not wasted effort. You’ve learned a lot that you will find yourself applying to future negotiations.