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Creating and Claiming Value in Negotiations

March 24, 2013

Work place or life in general is full of negotiating opportunities – be it with your supervisor, spouse, customers or peddler in Egyptian bazaar! Let’s talk about customers here.

You are an effective negotiator if you can convince the customer to willingly say yes, and mean it, to a proposal that also meets all your real interests.  And, why would the customer say yes?  Because the deal meets the customer’s real interests better than customer’s best no-deal option.

So, your challenge is to structure customer’s perceived choice, of deal  versus no-deal, so that what the customer chooses in his or her interest is also what you want – - -  “letting them have your way (for their reasons).”

This offers key to jointly creating and claiming value in a sustainable way.

First, while the overall economics of a deal are generally necessary, they are often not sufficient. Assess the full set of interests at stake, yours and that of customer’s. This includes relationships, the process itself and the “social contract.”

Most of the times, negotiations address tangible factors such as price, timing and specifications. Most deals are 50 percent emotion and 50 percent economics. Crucial interests are often intangible and subjective: the character of the negotiating process, the effect on trust and company reputation, and so on. For example, when working out longer-term arrangements, relationships, rather than transactions, can be the predominant negotiating interests in much of Latin America and South Asia.

Second, map potentially influential internal players; what is “rational” for the whole may not be so for the parts!

Map the full set of involved parties – - It is crucial to map all parties in the context of their decision process. And, do not forget to include influential players in your own internal negotiations.

Draw a deal diagram. While there may be a single negotiator, you need to be alert for internal factions with different interests. They may be deal blockers or internal champions of your proposal. For example, in some European countries many times, the unexpected importance of the management board as well as the supervisory board and unions under the policy of ‘co-determination’ often stymie large contracts.

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