People often ask whether negotiation is a science or an art. I would suggest it's both. People place greater value on the things they find difficult to obtain. We use negotiation to build the value of the outcome to the other party. If we shortcut this process we leave the other party feeling dissatisfied and likely to withdraw.
The first step is a period of pre-conditioning. Precedents will be established and information will be available formally by the media, for example, and informally via the grapevine or industry events.
Following this, a more formal process of information sharing takes place. This will often be during the sales process where both parties build their new proposition, emphasising the value to the other party. This is a key time to listen as often key information is not disclosed readily. Listen to what is not said. Question the areas that appear incomplete or uncertain. Keep notes and read into why they ask the questions they do.
Then the process of negotiation commences with an initial proposal or series of proposals. These often make demands that are unlikely to be achieved. After a period of clarification, discussion and usually rejection, we move into a repackaging phase. This involves bringing new issues to the table. During this phase both parties begin to understand how a deal might be structured. The negotiation then enters its final stage of alignment. Here we reach agreement on the majority of the issues - usually subject to conditions. Remember that someone has to be the last to concede. All too often our ego prevents the deal from happening, or the pressure means we concede unnecessarily at this phase.
The final element is the longevity of the contract. What will go wrong? And how can these risks be mitigated for and what are our contingency plans? People tend to reactively follow this process but the skilled negotiator proactively plans and prepares all stages up front to predict all possible scenarios and outcomes. Predicting the reactions of the other party allows you to manage their expectations effectively. To test these assumptions you need to rely, in part, on your intuition and the other half of the equation - the art of negotiation.
Graham is a partner with The Gap Partnership specialising in commercial negotiation.