Examine how a poorly implemented win-win negotiation style can fail to deliver business goals and leaves gold on the table.
by Steve RobertsEver heard someone say that they “gave away the farm?” Despite our best intentions, we sometimes negotiate too much value away to arrive at an agreement. Even when we enter our talks with high motivations and with a cheery spirit of cooperation, we have to be wary. It’s wise to dip our toes cautiously into the waters to make sure we aren’t about to be devoured by a grinning, hungry shark.
Today, many of us hear that win-win negotiations are all the rage. Academia has in more recent times married win-win to principled negotiation. Yet, it is all too common that most fail to understand that this term represents our achieving a mutually satisfying value-maximizing win-win settlement.
Yes, win-win negotiation is less about the process, less about the “how” of getting there, and more about the destination. That said, this article focuses on how best to get you a win-win outcome whilst keeping your eyes fixed on the elusive win-win negotiation outcome or goal. We are careful to share with you the contexts in which a win-win approach can lose you value in our negotiation training courses.
The true meaning of a win-win negotiated settlement is where the agreement reached cannot be improved by any further discussions. So, your outcome cannot be improved for your benefit. Similarly, the agreement for the other side cannot be improved further for their benefit, either. By definition, there is no, or very little, value left on the table, and all creative options have been thoroughly explored and exploited.
Many negotiators delude themselves into believing they follow a win-win approach and settlement when these negotiators adopt many of the strategies described below. However, putting their agreement under our microscope and look closer, these negotiators would be dismayed to discover that they squandered money and wasted resources.
Positional and tactical negotiators love less experienced negotiators who do not yet sufficiently understand “win-win.” Why? Inexperienced negotiators make for easy targets that are easy to take advantage of. This is simply due to a lack of understanding of the win-win concept on the part of the inexperienced negotiator. Crafty, competitive negotiators employing negotiation tactics all too often strip value from the untrained win-win negotiator.
So, what pitfalls can lead your company or team to miss the rich rewards promised by a win-win settlement?
It’s fine to have a positive mindset when entering talks, but it pays to be realistic. We should avoid getting bogged down into a mentality of “the end justifies the means” by sacrificing resources or funds to secure that agreement. The Negotiation Experts does not advocate win-win in all situations. Some examples where win-win would not be an appropriate commercial strategy to employ would include:
Many people falsely believe that compromise is a positive approach to gain a win-win deal. This is plainly incorrect. If you look at the definition of the word “compromise,” it means: “A settlement of a dispute in which two or more parties agree to accept something less than they originally wanted.” If one or both sides agree to lower their aspirations, this is hardly a win-win outcome, is it? (Note: Overambition in aspiration due to lack of experience or research is the subject of another article.)
Possessing the desire to create a durable relationship in a negotiation is admirable. However, this admirable trait does not guarantee that you will walk out of talks with a win-win agreement to hand. Mutual relationships are the ideal, with each side creating value for their organization and for the other’s organization.
If you find that you’re getting the short end of the stick over and over again, then think through how the other side perceives you and the negotiation frame that’s been set. Almost everyone agrees that it’s important to have good relations with your business partners. However, few will agree with what “good” really means. It’s best you explore this separately as a company and or team, as assumptions are dangerous.
Many people are under the impression that if they take extra time to negotiate, a win-win settlement is more likely to be achieved. The truth is that many studies on this very subject have revealed that extra time does not make much difference to the quality of the negotiated agreements.
When we enter talks prepared, it is most likely that we’ll only have an educated guess as to the other side’s intentions, interests, and priorities. It is a sad truth that in reality, many negotiators do not ask questions to gain a better understanding of the ambitions that lie beneath the other side’s position.
We need to determine whether we can connect our goals to the goals of the other side. The more we know about the other team’s aims, the more we will be able to put together settlement packages that better address the business goals and priorities of both teams. When we know what’s important to the other side, we can build a beneficial and productive agreement that:
What do we tell the other side about our goals and interests? Reciprocation is essential in negotiations. We have to reveal our goals and interests to provide a better understanding of how the other side might not only meet their needs but ours as well.
It’s best that we begin at the outset by setting the frame of a cooperative mood to increase mutual interaction. Only then should we progress into fact-finding and option generation. The other side will usually mirror our behavior, the virtuous and less than virtuous.
If we start by openly offering information, others will normally reciprocate in kind. Our initiating the volunteering of goals and interests does not necessarily put us at a strategic disadvantage. Provided we set the frame of reciprocation and gain agreement at the outset, and provided we don’t put all our cards on the table (better to trade cards, one for one), reciprocation will likely prevail.
Of course, if the other side refuses to reciprocate at any point, and refuses to give a valid reason, this should be our red flag to stop.
Tip: It’s a bad idea to reveal your BATNA at the outset.
The best win-win agreements often spring from presenting multiple offers rather than a single offer or proposal. The reason is that a single offer or proposal often has an anchoring effect. In contrast, multiple offers tend to stimulate communication.
Multiple offers will often prompt or nudge the other side into providing vital information about their objectives and the true nature of their business ambitions. Negotiating will be more energetic and productive. This is because several options will likely enhance the possibility of finding even more creative solutions than would otherwise have been possible.
Another innovative strategy to maximize your resources effectively is to use a neutral third party to help both sides tease out all goals and interests. In addition, you can ask this third party to suggest an agreement, or for ways in which to improve your existing agreement. Each side should, of course, have the option to veto the third party’s proposals if they uncover better alternatives. A third-party proposal can bring a number of benefits:
We should appreciate that not just any agreement leads to a win-win scenario or outcome in negotiations. In reality, very few negotiations reach this aspirational and theoretical ideal. Time constraints all too often straight-jacket how long and far we can explore. Attitudes, positions, and skills set invisible boundaries that constrain what we see as possible.
Win-win deals are more likely when set up correctly through effective use of framing, research, and building relationships at the right levels. If a win-win approach is appropriate, it’s essential that we remember to pursue a win-win agreement for both sides.
Resource: Our win-win negotiation case study illustrates many of the above points.
