And the winner is?

Negotiation strategies

Remember the coloured words in our previous blog? The Relationship, principled communication, win-win… Different negotiation strategies can be attached to them. Building a highway for the use of adequate negotiation tactics.

The terminology…

By combining few dictionaries: A strategy is “a careful plan or method or series of maneuvers, for obtaining a specific goal or result”. Whereas the use of Tactics refers to “the skill of using available means” to reach those results (The Merriam-Webster Dictionary, 1994. Merriam-Webster, Incorporated. Also: Random House Dictionary).

Map your strategy

Access present relationship with the opposite negotiation party. Decide in which direction you would like to build this relationship. Ask yourself what is the main subject of relationship and, therefore, also of the negotiation? Is it potential conflict? In which stage of development is the subject? Is your relationship highly integrated? Where do you want to go with it?

By such simple mapping you should draw your relationship onto map as either basic pure transactional competition or more advanced not-declared cooperation. By them, you compete to solve the problem, and, by avoiding conflicts, you gradually increase accommodation to the opposite party, ending with both parties seeking for compromises. By further development of the relationship, you elevate level of integration by collaboration combing both, the competition and cooperation in tactical coopetition. Ultimately reaching for problem solving based on mutual interests involving a partnership relations.

Map your strategy towards opposite negotiation party based on several Q&A arising from your everyday coopetition with him. If you are to negotiate with a supplier that provides your business and you don’t know which strategy would work best, you should ask yourself several questions that would help you map your relation and select right negotiation strategy.

Basic questions should do the trick!

Questioner, that you design upon specifics of industry of your company, relation with the counterparty, level of cooperation… all those (a)live issues concerning the quality (and quantity) of relationship with the counterparty in negotiation. For example:

• do you have one or two and even more suppliers? Well, two, since we have a redundancy policy of decreasing risk in procurement. But we are increasing scale of cooperation with the supplier constantly – he supplies over 80% of this particular item!
• do you keep distance to supplier or do you invite the supplier to cooperate? We cooperate!
• do you identify a need to change presently agreed cooperation and subsequently send a RFx to the supplier or you invite the supplier to cooperation with intention to design the change together? Yes, we are cooperating before RFI is required!
• do you always negotiate with the supplier by hiding certain data and information, therefore creating the information asymmetry or are you ultimately transparent (not necessarily “open-book”) in negotiation? We are totally open with the supplier!
• are you each in its own bank or are you partners? We cooperate, not compete!
• do you have short- or long-term contract and agreements? Long-term, for sure!
• are your individual orders large or do you do same quantity several times by small orders? No, we are increasing the scale of order constantly!
• do you control the supplier or you trust him? We know each other well, there is high degree of trust and understanding in our cooperation!
•  is your cooperation limited between you or does the supplier allows you to discuss the relation towards his supplier – you sub-supplier? We cooperate in optimization of quite a portion of a supply chain
• while negotiating, do you seek for problems or you solve the problems? With each meeting we create value!
• In negotiation, do you use the bargaining power or you share goals? We are goal oriented!
• do you share common goal(s)? I.e. reducing costs by increasing efficiency and productivity? Or mutual innovation in R&D? Or even sharing risk & result? Yes!

Don’t forget, communication is (almost) everything!

Negotiation is only possible through effective communication to mediate right message to the opposite party. Conducting proper communication is a right way to involve negotiation parties into the process, prevent from conflict to escalate and deadlock to happen.

Communication adapts to different negotiation strategies and, moreover, to the tactics used in negotiation accordingly. If for the win-win communication in principled negotiation stresses the importance of sharing information as a means of uncovering interests and of helping parties to explore common problems or threats, we can observe even more intensified revealing of the data and information as well as highest level of cooperating communication in partnership relations

What about your communication with the supplier? Are you defining it more partnership or “just” cooperation, coopetition:

•  is integration of your business on level of “best bid” communication, or are you partners, truly knowing your mutual needs and requirements?
• is communication based on RFx or involves joint planning and performance monitoring?
• is cooperation development of your relationship at the moment on level of correct communication or do you approach each other by cooperating on workshops, joint research & development, systematic troubleshooting?

What is your model of (solving the) conflict?

In all coopetition and therefore in arising negotiation, you can determine a certain extent of conflict. Do you promote compromise, even searching for a consent is combination of the supplier’s assertiveness and cooperation leading towards collaboration or competition or even by imposing his need over yours. Or, on other side, does he avoids the negotiation.

The subject of cooperation is vital in describing the status of opposite negotiation party

How important is the subject of your cooperation? Strategic? Standard, universal, routine commodity? Critical, bottleneck? Leveraging? Define it step-by-step in the transitional matrix:

• what is scale of cooperation? Big – small?
• what are risks associated? High – low?
• does your cooperation exhibits high or low level of potential further development towards partnership?
• what is negotiation power? High – low?

By combining the answers of all the above mentioned Q&A, you can prove qualitatively in your head and also quantitatively (yes, you can measure it!) on the paper, either your supplier or any other opposite party in negotiation matters to you in a strategic or on “standard” manner… And select a corresponding one of three negotiation strategies that should later on imply for negotiation tactics recommended to be used during negotiation in order to get the best result out of it.

To preserve “your face” use and combine just few negotiation strategies!

As we said before, there is no real reason why slotting your negotiation opponents with more than three basics strategies:

How to approach the opponent?	The strategy	Targeted outcome
Tactical	Theory of game	·     seldom W/W, mostly W/L ·     therefore, on long term – if exists -  always L/L
	Main features
	·     focus on means & ends, positions led by rationality. Controlling ·     always weights among the power, risk, position of the opponent in the transition matrix and scope & scale of cooperation with the opponent ·     bargaining power in main lever of the negotiation, therefore explicit action-reaction duel ·     extensive use of different negotiation tactics following different targeted outcomes ·     searching for optimal solution “for me” ·     EQ over IQ? Often combines behavioral approach involving personality traits which defines corresponding negotiation tactic (aggressive, even rude, diplomatic, …) to manipulate perceptions and expectations involved ·     is it just feeling of adopting a bit of Machiavellism where “the end justifies the means”? ·     also avoiding negotiation to buy time…
	Playground
	·     often competition ·     use of different tactic prevent lock-out due to overuse of the bargaining power, therefore enhancing probability of opportunity to reach for W/W outcome ·     concessions may be way out for treats of being stuck at starting positions ·     negotiations are less predictive - a component of discomfort or even fear is present
Integrative	Principled negotiation	·     W/W
	Main features
	·     integrative approach, combining techniques and positive practice approaches to gain the W/W solutions ·     problem solving and creating value - both parties committing to examining and   discussing issues closely when entering into long-term relationship that warrant careful scrutiny ·     joint exploration of key issues of importance ·     extensive communication, willing engagement free from coercion or intimidation ·     separating people from challenge. Less EQ, more rationality ·     not seldom compromising: not searching for optimal outcome for either side. Negotiation parties forgoing their ideal outcomes, settling for an outcome that is moderately satisfactory to each participant ·     rather making (smaller) concessions to smooth the way towards solution, i.e. conceding a point that is not vital to you but is important to the other party. Valuable in ongoing negotiations
	Playground
	·     collabortion. Coopetition is performing, use of the negotiation power is in backstage ·     since transition matrix is only one of many tools of differentiating the opponents, it makes differentiation less important ·     high degree of predictability, but both sides should expect escapes into non-principled negotiation tactics ·     time consuming
Strategic	Partnership	·     common benefits in outcome solution ·     small step dance
	Main features
	·     focus on starting point rather than on position ·     open book (really?)
	Playground
	·     Cooperation, searching for consensus rather than compromise. Not seldom to a point of accommodating the opposite party ·     use of the negotiation power is consciously limited on argumentative differences as defined by (mainly) qualitative, sustainable advantages in partnership ·     predictable process of negotiation, no big surprises ·     small steps or just spending (too much) time in the comfort zone?

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