Negotiation Skills — Part V (End)

Weakness VS Strength

NEGOTIATION IN A POSITION OF WEAKNESS

One of the questions that we hear most often sounds something like this: “The framework and strategies you have presented is great. They have helped us a lot. But what can you do when you have no power in the negotiation? Can you get a great deal when the other side is holding all the cards?”. Weakness in negotiation results when the other side’s BATNA is relatively strong and your BATNA is relatively weak. Most people in such situations either panic or quickly accept the futility of trying to negotiate away their misfortune. Unfortunately, this anxiety can cause you to give up the hope of creating or claiming value and to lose sight of the need to prepare and execute negotiations carefully and systematically. Instead, you begin to focus on getting a deal done at any cost. While it would be unfair for us to suggest that there is no reason to be concerned in such situations, it would also be unfair — and wildly inaccurate — to suggest that there is little you can do to improve your prospects. Consider the following strategies:

1. Don’t reveal your weakness, having a weak BATNA is not problematic if the other side does not know that your BATNA is weak. If you have a weak BATNA, don’t advertise it! Surprisingly enough, many people do not heed this advice; in fact, they often make their bad situation worse by unwittingly revealing the weakness of their BATNA. You do this whenever you tell your customer that “time is of the essence” or that “we can meet with you whenever you have the time.” Often, it is important to convey that you are facing time constraints or that you have a flexible schedule. But you can send the same messages without making your desperation transparent.
2. Overcome your weakness by leveraging their weakness, if their BATNA is weak, that means that you bring a lot of value to the deal — and you should be able to claim some (or much) of that value. In other words, having a weak BATNA is not particularly problematic if the other side’s BATNA is weak as well.
3. Identify and leverage your distinct value proposition, how can you create and claim the value when your counterpart (typically, your customer) is only interested in discussing price? In many such situations, you can improve your prospects by changing the game you are being forced to play. Consider that, in negotiation, your ability to legitimately claim value is a function of your ability to create value. The good news is that, very often, you do bring something to the table that distinguishes you from your competitors. This is your distinct value proposition (DVP), and it need not be a lower price. You may have a better product, a higher-quality service, a good reputation, a strong brand, or a host of other assets that your customer values and that you can provide more effectively or cheaply than your competitors. Keep in mind that your DVP is not just something you think your customer should value, but something they value. To avoid a loss in a tender, try to submit multiple proposals, one to fit the price constraint and the other one to satisfy your value creation. This technique might help you to pass the first stage of the tender, thus you can continue to discuss the value you try to create with your client.
4. If your position is very weak, consider relinquishing what little power you have. Sometimes you need to point out the power you have to gain a better offer. The result doesn’t have to be instant, but at least the other party know the power you have and might consider giving more to you based on the power you pointed out.
5. Strategize based on your entire negotiation portfolio, the key is to audit the implicit assumptions you make when formulating your negotiation strategy. You may perceive yourself as being “weak” if you measure strength only as of the ability to push hard in any given negotiation without losing the deal. But you may discover that you are quite “strong” once you begin to think about your ability to withstand losing some deals because you are maximizing the value of your entire negotiation portfolio. When you consider your entire portfolio, it is far easier to imagine taking bigger risks, keeping the clients for whom you can add the most value, and becoming more profitable.

Weakness is always frustrating, but perhaps never more so than when the other side acknowledges the value you create, but still pushes you around — simply because they are bigger and stronger and can do whatever they want. Some negotiations require us not to improve our ability to play the game as it has been defined but to change the nature of the game itself.

The following strategies will help you turn the tables on would-be bullies and achieve outcomes far superior to those you might otherwise expect.

1. Increase your strength by building coalitions with other weak parties, you can use the same strategy — building coalitions with other weak parties — in your negotiations. Consider that, when your customer has many other companies from whom he can purchase, you are in a weak position, but so is each of your competitors. When your boss has the option of hiring or firing you, you are in a weak position, but so is each of your coworkers. And when your country is small and has little voice in international negotiations, your country is in a weak position, but so are many other small countries. Fortunately for those who have little power in their negotiations, it is sometimes possible to shift the balance of power by aligning with these other weak entities.
2. Leverage the power of your extreme weakness, if you create value for others, you gain at least some power to claim value for yourself — regardless of whether the other side wishes to reward you for what you bring to the table. In extreme cases, when they push too hard, they potentially hurt themselves. They may not recognize this, however, which is why it is worth reminding them that strength is not simply measured by “what you can force others to do” or “how easily you can make someone’s life miserable” rather, it may be better measured by “what value you can create for others.”
3. Understand and attack their source of power, “it is not enough that you recognize the strengths and weaknesses of each side. It is also critical that you understand the source of each side’s strengths and weaknesses. If you are afraid to confront your powerful salesperson or are wary of denying his request for yet another exorbitant raise, consider the source of the salesperson’s power. In this case, it may be that the salesperson has stronger relationships with your customers than you do. Knowing this, how might you strategize? In the weeks and months ahead, begin building relationships with each of your key customers. You might even lock them in with attractive multiyear contracts. Then, when you stand up to your salesperson’s demands, there is little with which he can threaten you. He may choose to leave the firm and go to a competitor, but his ability to take your customers with him will be significantly weakened.

What if your counterpart gives you threat for what have you done? The following strategies give you advice on how to deal with threats:

1. Ignore the threats, more generally, it is possible to ignore the other side’s ultimatum even when it includes no soft message. Consider the following ultimatum: “This is our final offer: take it or leave it.” How might you respond to this statement while still ignoring the ultimatum? Consider the following viable responses:

“It seems pretty clear that you find it difficult to make further concessions on the issues we’ve been discussing. I suggest we focus on other aspects of the deal and come back to this point once all other elements are on the table.”

“I can see that you fully believe that you have already conceded as much as should be necessary to close the deal. As it turns out, we feel the same way regarding our concessions. Hopefully, this means that we are close to reaching an agreement. So let’s keep working.”

“I can understand your frustration. We both know there is a deal to be made, and yet we can’t seem to find it. Can you help me better understand your perspective? Why do you think we’re not there yet?”

Notice that each of these responses ignores the “take it or leave it” demand. Instead, the responses are aimed at softening the other side’s statement so that it will not be a barrier in the future if, in fact, they can make further concessions.

2. Neutralize any additional threats they might be tempted to make, pre-empting the other side’s aggression is also a useful tactic when you are dealing not with threats, but with their legitimate complaints or concerns. In such instances, you can make your own position stronger if you can voice the other side’s legitimate complaints or concerns for them, rather than waiting for them to raise these issues. For example, you might say: “We understand that corporate politics and other institutional hurdles sometimes make it difficult to make even reasonable changes to a deal this late in the game. But we would like to work with you to figure out ways to make this happen. We also feel — and hope that you agree — that the most important issue continues to be reaching an agreement that is consistent with prevailing market rates.

3. If you don’t find the threat to be credible, let them know. Make it clear to the director that you do not perceive his threat (whether veiled or explicit) to be credible.

As a negotiator, you should know when the negotiation isn’t going to result in a benefit or might harm your position. Negotiation may not be the best option: when the costs of negotiation exceed the amount you stand to gain, when your BATNA stinks (and everyone knows it), when negotiation would send the wrong signal to the other party when the potential harm to the relationship exceeds the expected value from the negotiation when negotiating is culturally inappropriate, or when your BATNA beats the other side’s best possible offer. In particular, when your BATNA stinks, their BATNA is fine, and all of this information is common knowledge, you may want to simply say yes in the negotiation and then change the game.

As we have stressed throughout this negotiation book, more often than not, negotiating allows you to create value above and beyond your alternatives to reaching an agreement. But it is worth keeping in mind that not every aspect of life is a negotiation. By considering the context of the negotiation, the relationships involved, and your alternatives away from the table, you will become adept at identifying when to negotiate, when to accept a deal without negotiating, and when to simply walk away. Some negotiation “experts” will tell you that “you can negotiate anything.” Perhaps you can — but that does not mean you should. Often, there are better things to do than negotiate. Negotiation geniuses can recognize and leverage these alternatives.