Design of Business

Business, Culture & Entrepreneurship

Tag: Negotiation

Negotiating well in groups

The entire company, probably little over 50 people, was in the room. It was the 9th of December 2005 and we’d gathered to discuss the news that we were seriously considering an offer to sell the company. Nearly twenty people in the room had been with us more than five years – through two major pay cuts and one minor layoff – another 20 with us over the last two years, when it was certain we were no longer going to die. So the topic of the meeting and its consequences were not merely financial or professional but deeply emotional. If we chose to be acquired, our success largely lay in the hands of the folks in that room, in their willing participation and agreement to the decision to sell. Early in the meeting, we posed the question what would be your biggest fear or concern, should we sell the company.

As you can easily imagine when you pose such a question, to a large group of people, none of whom were at a startup because they were shy or retiring, things could easily degenerate into a free-for-all. Also while we had planned to take half a day for the meeting, there was a lot of ground to cover. So the challenge we were posed with was, how do we get the team to not only have their say, but to get them to converge on a few important things, such that the biggest concerns not only get aired, but acknowledged and ideally even addressed in the meeting.

Amazingly the 50+ people were able to converge on their three primary concerns and were unanimous with their first concern – “What would happen to our culture, if we are acquired?” thanks to a technique called Nominal Group Technique. And were able to do it within 15 minutes. This is a technique that I’ve had the opportunity to use repeatedly in groups, as small as 8 people to as big as 55, – to get rapid convergence – often from a standing start – of even what the key problems were that we needed to solve and what are the top 3 or 5 things to do to solve them. The technique requires that I write a whole another blog post dedicated to it to explain the manner in which we’ve used it, adapting it for different groups not just across countries but across age groups, and different socio-economic backgrounds. This morning I read about the a technique called Indaba, that was used at the recent climate conference (COP21) to get nearly 200 nations to sign-off to a binding agreement.

Negotiations are difficult by nature. Managing negotiations between 195 countries in order to arrive at a legally binding agreement, on the other hand, is nearly impossible. This was the problem that United Nations officials faced over two weeks at this month’s climate-change summit in Paris. To solve it, they brought in a unique management strategy.

The trick to getting through an over-complicated negotiation comes from the Zulu and Xhosa people of southern Africa. It’s called an “indaba” (pronounced IN-DAR-BAH), and is used to simplify discussions between many parties. Read the full article here.

If you reckoned negotiating with one party was hard, be it with an employee wanting to leave or customer or partner wanting more for less, negotiating with more than one party is incredibly more complicated. Luckily there are proven techniques that can help you do so successfully. It would be good to get acquainted with them, well before you’ll actually need to use them. Better yet, try ’em out today!

I’ve written about negotiating before here and conflict resolution here.

5 Simple Tips for Successful Negotiations

Negotiation Cartoons: Positions Vs. InterestsAs an entrepreneur, you’ll find yourself having to negotiate almost as much as you have to sell. From landlords, to suppliers, prospective employees, partners and of course customers – you’ll negotiate often without even recognizing that’s what you are doing. While there are entire books written on the subject of negotiation, a few simple rules have served me well over the years.

Be clear about what you want Simple as it sounds, often we get carried away or worse yet upset and take a position or ask for something, which is really not what we want. Sometimes it’s as simple as that we were not clear going into a negotiation as to what it is we want. So when we actually get what we demanded and find that we are not happy, it’s not a good place to be – especially if you’ve burned bridges or needlessly cheesed off folks you’d have to work with. So don’t go into any negotiations without clarity on what you want – be it bringing on board a new employee, signing a new customer, re-working the terms of a loan or selling your company.

Know you walk-away price Be clear when you would not do a deal – this has to be black and white to yourself and can’t have any ifs or buts. And this need not be just about money, could easily be about the other terms. For instance, if you are selling your company and the buyer is not prepared to give the terms that you want for your team (for instance, employment guarantees or restricted stock) — a situation I’ve faced —you need to know are you prepared to walk away. Being clear about this makes the entire negotiation far less stressful.

Never negotiate against yourself This is by far the most common error all of us commit. We’ve all experienced it. Like when you see a jacket you like at a store – you ask for the price and find it too high. So you walk away – the shopkeeper calls after you – saying he’ll knock of 20% – he’s just negotiated against himself (of course he may have marked it up 40% 🙂 Particularly when negotiating a contract with a prospective customer, the temptation is great to lower our price or improve our terms when the customer feels we are not offering a good deal. Instead, it’s always best to ask the customer to counter your offer – let them quote a price that’s agreeable to them or terms that are more palatable. Now you have something to negotiate about – maybe you get nearer their price, but take something off the table (support, warranty, options) or you can counter with a different price for better payment terms. The important thing is that there’s got to be give and take and until the party puts a stake in the ground, don’t move yours.

Bring something to the table that you can concede All of us like a good deal – especially one that is done in a spirit of give and take. Just as we expect the other guy or gal to make concessions be prepared to make some of your own. This requires you not only to know what you want and what your walk away is, but what is NOT important to you. For instance, if you’re trying to close a large deal and having money up front is not critical for you, be prepared to give that up – the important thing is to ask for a thing or two, that you know you are prepared to concede and be clear which those are and which ones are non-negotiable. If everything is non-negotiable you are not going to get too far. And it makes the whole negotiation less than pleasant.

Save your best for the last Despite much advice against it, some folks and entire cultures conduct negotiations on a piecemeal basis – that is one item at a time. You discuss one point, make concessions and then they make their next demand. Refuse to do this politely. And the best way I’ve found to do this is what I term, saving your best for the last. In essence, establish what’s the critical care about for the other party (and yourself). Ask them, if we close on this item (whichever one it is) is there anything else that’s holding the deal back. If the answer is no, close on the other times. If they answer is yes, get down to negotiating to a close. If they pop something else up after this they are not dealing in good faith. Be prepared to walk.

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