Great Small Business Ideas to Start: Intelligent negotiating
By learning where the pitfalls lie in negotiations, it is possible to sidestep them and ensure satisfying results that last for all involved.
The idea
Harvard Business School (HBS) professor James Sebenius specializes in the field of complex negotiations. In 1993, HBS made negotiation a required course in its MBA program, and created a negotiation department within the school.
Sebenius identified six mistakes responsible for the failure of many negotiations. By avoiding them you can negotiate your way to success.
These pitfalls, outlined in Harvard Business Review, are:
- Neglecting the other side’s problems. If you do not understand the problems your negotiation partner is trying to overcome, you will not be able to offer the best solution.
- Letting price bulldoze other interests. It is easy to focus exclusively on price. Make sure you do not ignore other important factors— such as creating a positive working relationship, goodwill, a social contract between both sides, and a deal-making process that is respectful and fair to everyone.
- Letting positions drive out interests. Despite the existence of opposing positions, there may be compatible interests. Rather than trying to persuade someone to abandon a particular position, it can be more productive to develop a deal that satisfies a diverse range of interests.
- Searching too hard for common ground. Common ground can help negotiations, but different interests can allow both sides to get something out of the deal.
- Neglecting BATNA. This refers to the “best alternative to a negotiated agreement”: the options you will be faced with if the deal falls through. By analyzing your prospects—and your partner’s prospects—you can decide what to offer in the negotiation and when to offer it.
- Failing to correct for skewed vision. Two types of bias can affect negotiations—role bias and partisan perceptions. Role bias (the confirming evidence trap) is the tendency to interpret information in self-serving ways, overestimating your chances of success, while partisan perceptions (the over-confidence trap) is the propensity to glorify your own position while vilifying opponents. You can overcome these biases by placing yourself in the position of your “opponent.”
In practice
- An understanding of others’ desires and perspective is crucial to being able to persuade them why they should agree to your proposal. Explore their position with them.
- Research an individual or company before negotiation. Do not limit research to information immediately relevant to the deal—a broad knowledge of the industry, company goals, and market conditions the organization faces will give you extra weight in negotiations.
- Do not feel the need to be overly aggressive. Show that you are a firm negotiator, but remember that mutual understanding and establishing rapport will yield large rewards.
- Conduct a full analysis of potential agreements that allow both sides to win, without either party having to accept a loss.