Multiple megatrends — globalization, technological disruption, instant information exchange and customized solutions versus commoditized inputs — have led to all new types of business transactions. Long-term agreements, exclusivity, strategic relationships, joint ventures and partnerships have evolved, leaving behind old-style competitive-price bidding. The one thing that hasn’t changed, however, is that all negotiations involve conflict. It’s natural to want to avoid it, but the key to successful negotiations is learning how to deal with conflict creatively.
While advice such as, “Don’t split the difference” and “Don’t be the first to concede” will always be a necessary part of the negotiator’s toolkit, these attitudes miss the point of true partnership. It’s time for a more sophisticated, creative approach: the Mobus Negotiating Continuum. This is a valuable classification tool, which delves into three major negotiation areas: bargaining, creative dealmaking and relationship building. Understanding the type of negotiation you’re dealing with and where it lies on the continuum will help you apply the appropriate strategies and tactics to reach a deal.
The first region of the continuum, bargaining, is the domain of the gamesperson. Buying and selling of commodities, of which the buyer usually has tons of options, or one-off sales or purchases are typical examples of transactions that use this kind of negotiation. Here, like in the game of poker, a certain amount of craftiness, bluffing and misdirection goes on. Bargaining can be thought of as a zero-sum contest over one main issue: typically, price. As such, any financial benefits going into one party’s pocket must come out of the other's. Most often, the party with the most leverage wins out.
The next section of the negotiation continuum is creative dealmaking. Here, the goal is to make a deal that benefits both sides, rather than one party coming out ahead, and this is where the trader flourishes. The trader works to discover concessions they can afford to make, which are highly valued by the other side — all while getting back something of even greater value to themselves. Effective traders are able to do this by skillfully expanding the pie so that each side gets a bigger slice. While there’s still conflict, there’s also a sense of collaboration, as people work together to hammer out a mutually beneficial solution. This opportunity for a bigger and better deal is lost if both sides are stuck in bargaining mode.
The final zone is relationship building, which is where lasting partnerships are made. Negotiating in this realm takes on a new perspective: Both parties’ interests are of equal importance. Now, the beauty of a strong business relationship is that it can ensure ongoing successful deals. And the challenge is that relationships do ebb and flow, and change is part of business. As the business landscape evolves, previously negotiated agreements will need to be updated. It may therefore be necessary to renegotiate from time to time. When this happens, just make sure both parties are truly looking out for the best interests of each other. If the balance tips to one side, the relationship will sour, and you’ll eventually be back at the rudimentary bargaining stage.
When you embrace conflict as inevitable, you become a much better negotiator. Well-negotiated deals ultimately make everyone’s work lives easier and help operations run more smoothly. Professionals with the skills to negotiate creative deals, find workable solutions, and build (and rebuild) relationships are invaluable assets who really keep businesses moving.