Value Creation in Negotiation

Sales MeetingMarch 9, 2011

Value negotiation “is our undeniable focus on value and away from power. We try to then draw a straight line towards value because going towards power doesn’t

guarantee you value.” Horacio Falcao

VIDEO

Getting What You WantMSNBC Interview featuring William Ury

Negotiation Techniques – Determining NeedsFeaturing Marty Latz

WHY CREATE VALUE

• Inventing solutions that are advantageous to both sides so as to expand the scope of mutually beneficial options available to the negotiating parties.

• Conventional Wisdom directs you to: – Take and hold on to extreme position, – Withhold information about you interests, – Make the other party uncomfortable, – Make few concessions;

• Avoids collaboration and eliminates the potential for expanding gains for both parties

PREPARE TO CREATE VALUE

• When preparing to negotiate, always take time to consider these important questions:– What's my BATNA (Best

Alternative To a Negotiated Agreement) - my walk-away option if the deal fails?

– What are my most important interests, in ranked order?

– What is the other side's BATNA, and what are his interests?

Preparation is the biggest factor in a successful negotiation.

EXPLORE INTERESTS

• At the bargaining table, what's the best way to uncover your negotiation counterpart's hidden interests?

• Ask questions, then listen carefully. – Even if you've decided to make the first offer and are

ready with a number of alternatives, always open by asking and listening to assess interests.

• Share Your Interests: Understand the reason; Negotiating partners can help you meet your interest if they are informed about those interests

PLAY THE GAME OF “WHAT IF”

• The practice of value creation almost always means playing the game of "What if?" To test whether a trade genuinely creates value, try it out on the other side.

• Invent options without committing:– More options = More likely

to find something that works

EXPLORE INTERESTS

• Find out why he wants what he wants and use that information to construct what if scenarios, “What if we tried a different option that could work for me and if my understanding of your interest are correct, could also work for you?”– Staff Members position: My responsibilities should include

managing a project that is currently assigned to someone else– Your Task: Ask him why he wants the responsibility– You realize: Staff members main interest is greater management

responsibility; managing that specific project is of interest due to prior experience

– You propose: To give him management responsibility for new project on similar topic

BRING NEW PARTIES TO THE TABLE

• There comes a time in every negotiation when the value you've created must be divided or distributed.

• What should you do when little or no trust exists between negotiators?– Consider recruiting an

intermediary, trusted by both sides, to serve as a go-between focused on creating value.

TIPS

• Don’t let them see you sweat• Don’t react.• Don’t let their problems become yours.• Offer – Concession Strategy:– Have HIGH Realistic Expectations, then make

tapering concessions.• Determine the value of the future relationship• Be able to recognize and understand your

counterparts personal interests and incentives

QUESTIONS/COMMENTS