This post recaptures what I have learned from a negotation course at university
This week I had a seminar about negotiations, presented by Dr. Manfred Hueckel, ex Chief Commercial Officer and Board Member of Red Bull. I honestly loved the lecture design of intense three days and I feel liked I was able to learn much more than in courses which stretch over a couple of weeks.
In the following I will walk you through my learnings of the negotiation course, structured along the three phases of negotiation – preparation, value creation and value claiming.
The majority of negotiations are decided in the preparation phase
Manfred stressed the fact that negotiations are decided way before the two (or more) parties meet and start talking. The party which is best prepared is also most likely to be able to influence the negotiation in their favor. So how to prepare? Here, we learned to ask and answer three questions.
- What do you/ the other parties want to achieve in the negotiation?
- Why do you/ the other parties want to achieve that in the negotiation?
- What is your/ the other parties’ best alternative to the achieved agreement?
I’ll give you an example. Company A and company B are negotiating a deal to distribute company A’s product in the domestic market of company B.
- Company A wants to use company B’s sophisticated distribution channels to sell their products in a new market. Company B wants to publicly communicate the cooperation and build a strong partnership.
- Company A invests in their production capacities and wants to sell as many products as possible in B’s market to cover their investment costs. Company B wants to use A’s well-known brand and draw new customers to its own offerings by extensively marketing the cooperation.
- Company A could find other companies but would have to compromise on less sophisticated distribution channels. Company B could enter in partnerships with less known brands but would have to compromise on customer acquisition.
The benefit of answering those three questions is that you think about your own and the other parties’ positions, their purpose behind their positions and that you can get a feeling of how much you can give in to the other parties until it makes more sense to go with your best alternative and vice versa.
Value is created through win-win situations
Even before negotiating you might be able to make assumptions of where you and the other parties have different interests. During the negotiation, this is exactly where you might want to focus on. Differences in interests create value in the sense that you are able to find trade-offs to satisfy your own and the other parties’ interests. A win-win situation is both beneficial in the short term and in the long term, considering that you might want to negotiate with the same parties again in the future.
Back to our example. Negotiators of company A might realize that company B’s utmost concern is marketing. Thus, company A could actively offer to help with B’s marketing efforts and in return claim a higher share of B’s salesforce for the distribution of A’s product.
There are several tactics to claim value in your favor
As outlined before, you want to achieve a situation in which all the parties are satisfied and ‘win’. However, you might want to consider tactics to claim more value for yourself while reaching a win-win situation. Among common tactics like anchoring (stating a higher position first to be able to ‘give in’ afterwards and end up in an actually desired position), Manfred stressed the importance to listen on what the other parties actually say. During our course’s practice sessions, it was interesting how much information the other parties were willing to share if you just keep silent and listen carefully. This way, you are able to maximize your preparation effort by combining the prepared counterpart information with the actually stated positions, purposes and alternatives.
So my next negotiation is going to be different
My main takeaway from the course is the following: In my next negotiation, I’ll aim for a win-win situation, trading off different interests and thereby satisfying multiple parties, not just myself. Also, I will try to listen more carefully (I think I will write a post about academic work on listening properly in the future) and frame the situation in terms of positions, purposes and best alternatives. Thank you Manfred for very interesting and engaging three days.