confidentiality that follows. However, great negotiators – and maybe you – recognize that the return on time invested is dramatic, perhaps in relationships, time saved, risk reduced, profit made, or even dilemmas resolved. No other skill offers so much value in return for competent performance.
This second edition is aimed at providing a modern, up-to-date guide to how to negotiate in today's world. I have set out to provide you with an insight into negotiation from a practitioner's perspective. It is not prescriptive, but aims to help you to get better deals by being aware that it is you who are responsible for making decisions based on your own judgement. The amount of time people actually spend negotiating is very small in the context of their whole job and yet the consequences of their performance during negotiations will often distinguish how successful they are. The art and science of negotiation is an interactivity that is influenced by culture, ever-changing circumstances, expectation, capability, and personal chemistry. The Complete Skilled Negotiator is an individual who has both the skills and mindset to do that which is appropriate to their circumstances and the ability to maximize opportunity during each and every negotiation.
So why this second edition? Well, over the past decade there is not much that has changed about how people and companies negotiate. There has, however, been a rapid change around what they are negotiating over and the value attributed to time, risk, convenience, and information as the benefits of technology are realized in all our lives. I've taken a fresh look at some of these agreements and how, in some industries, information access has become as valuable as payment terms, or response service times as important as contract length. Technology is changing what is possible, what is expected, and what is traded, which is providing a new mix of variables featuring in all types of agreements. More negotiations are being conducted through multiple forms of communication. What used to be face-to-face, telephone, and email negotiations can now include video conferencing from your telephone, meeting rooms from anywhere round the world, online data rooms, online auctions, and the list goes on.
The abilities of the Complete Skilled Negotiator, however, remain the same. They are balanced in their thinking, have their ego in check and are focused on understanding the interests and priorities of the other party. They are chameleon like in their approach, in that they know how to be what they need to be depending on their circumstances, and are not burdened by personal values that wear away at their consciousness. Their ability to read situations, take the time to prepare, and have the capacity to think around the issues, as well as deal with the relationship dynamics at the same time, helps them perform in a confident manner. Most of all, they focus on the potential of the deal rather than trying to win, understanding that being competitive will only serve to attract friction, which is generally counterproductive (unless used for a specific purpose).
It can be the most rewarding of skills to exercise and the most nerve wracking. Is it any wonder that to provide a standard that helps everyone to negotiate more effectively has proved such a challenge to so many in the past? Yet simple disciplines, proactive planning, and a clear, conscious state of mind can provide a significant uplift in what you can achieve.
So what do I mean by a standard? The Negotiation Book covers the traits and behaviors associated with the Complete Skilled Negotiator. I use the word complete rather than successful because who are we to judge if your performances are as successful as they might be? We will never know. The standard also refers to a clock face model that provides a way of differentiating the range of ways we negotiate in a dynamic, capitalist market. Importantly it also recognizes that, although the concepts of power, process, and behavior have much to do with performance, so do the psychology, self-discipline, and human interaction that make up the framework. The standard is not here to restrict but to empower you as a Complete Skilled Negotiator to negotiate that which is possible … given those opportunities you are presented with.
The experience I have gained from practical hands-on involvement in having negotiated with some of the largest corporations on the planet, including P&G, Walmart, Morgan Stanley, Nestlé, GE, and Vodafone, has helped me to provide this account of the standard that has been adopted in the business world. I have also been privileged to work with dozens of highly skilled negotiation practitioners at The Gap Partnership who have negotiated with, advised, and developed hundreds of such organizations globally. It is this experience that has helped us to crystallize what our clients have come to call “the standard” for negotiating.
I am about to share with you a way of thinking, behaving, and performing, together with a standard for doing so. There is no magic formula or magic wand, but there are principles that will help you to secure agreements with others who may not always see the world the way you do. This book is about you gaining more value from every agreement you're involved in, understanding what to do, when to do it and, most importantly, providing you with the inspiration to do it.
CHAPTER 1
So You Think You Can Negotiate?
“It is what we know already that often prevents us from learning.”
SO WHAT IS NEGOTIATION?
Negotiation is a necessity, a process, and an art. It evokes complex feelings that many seek to avoid and yet it is fundamental to how business gets done and takes place millions of times a day around the world. If you can take control of yourself, your values and prejudices, your need for fairness, and your ego, you may start to realize the best possible outcomes in your negotiations. The biggest challenge here is not in educating you in how to be a better negotiator, but motivating you to change the way you think about negotiations and yourself. Of the many thousands of negotiation workshops I have provided at The Gap Partnership, the greatest change I see clients make is that of self-awareness. Learning about negotiation is an exercise in self-awareness because understanding yourself and what effect a negotiation can have on you, enables you to accommodate the pressures, dilemmas, and stresses that go with it. Self-awareness helps us to recognize why we do the things we do and the effect this has on our results. It also helps us adapt our approach and our behavior to suit each negotiation rather than trying to make one approach fit every situation, simply because it suits our personal style.
Why bother negotiating?
Just because everything is negotiable doesn’t mean that everything has to be negotiated. The value of your time versus the potential benefit that can be achieved by negotiating is always a consideration. Why spend ten minutes negotiating over the price of a $10 notebook when you normally make $100 an hour? So you may save $2 – that’s 20 cents a minute! However, if it is your next car and a 5 % saving could equate to $1500, the time is probably worth investing.
There will be situations involving more important decisions where you are mutually dependent and yet hold different views. When an agreement needs working through, effective negotiation can help provide not only a solution but potentially a solution that both of you are motivated to carry through.
There is no other skill set that can have such an immediate and measurable level of impact on your bottom line than negotiation. A small adjustment to the payment terms, the specification, the volume threshold, or even the delivery date will all impact on the value or profitability of the agreement. Understanding the effects of these moves, and the values they represent to you from the outset, is why planning is fundamental to effective negotiation. The skill in building enhanced agreements through trading off against different interests, values, and priorities is negotiation. In the business context it is known as the skill of profit maximization.
volume threshold
This term is used to determine a level at which benefits such as pricing, discounts, delivery, or other services become applicable.
So, effective negotiation provides the opportunity to build or dissolve value – but what does value really mean? It can be too easy and is too often a focus on price. The question of “how much?” is one, transparent, measurable issue and, because of this, is also the most contentious issue in the majority of negotiations.
Yet price is but one variable you can negotiate over. It is possible to get a great price and feel as though you have won and