The reason I am so fascinated by the skills surrounding business negotiation is that there are no rules. No boundaries. No normal. No constant. Just an opportunity to build a bridge toward fulfillment for two parties with mutual interests and contiguous needs. A business negotiation is a meeting of minds that exposes business objectives, expectation gaps and collaborative opportunity.
In modern business, there has been an attempt by the academic and business community to rationalize negotiation into a “four-legged stool” surrounding a discussion of cooperative negotiation concepts and philosophy. The terms we hear very often are Win/Win, Win/Lose and so forth as a vehicle to rationalize the path to closure of smartly crafted business deals.
Experience in business has taught me that when quarterly and year-end bonuses are being paid to sales and procurement professionals to close smart, profitable deals the spectrum of opportunities means something different to everyone around the bargaining table. With this in mind may we now explore the “five-legged stool” of business negotiation philosophy?
1) Win/Win - Also known as “Cooperative Bargaining” hinges on both parties searching for and finding mutual value. Negotiation partners expand opportunities to find a path to positive closure of business negotiations concluding with a resounding “Yes”.
2) Win/Lose - Also known as “Game Theory Bargaining” is based on the concept that in a game we have a winner and a loser concluding the game. In this scenario the intended
Winner will use all the tactics and strategies she/he can to win the game. “Yes” in this case means…Yes! I’ve won!
3) Lose/Win - This negotiation concept could be seen as strategic negotiation. By that I mean as a business we may be willing to actually lose money on a deal today so that we can make money in the future. In buyers markets sellers may use this strategy to lock up much needed market share in hopes of weathering a longer range storm.
4) Lose/Lose - I refer to Lose/Lose as a spoiler position. Meaning, if we can’t win then neither of us will win. You might think this approach is a little small minded but believe me it happens in business more than you might expect. Think of this technique as a blocker approach to a threatening business competitor.
5) Win A Little Extra - This negotiation approach as known as “a bigger piece of the pie”, suggests winning a little more in a negotiation entails creativity and determination while maintaining a solid client relationship.
By shear nature the most influential countries globally are built on entrepreneurial aspiration and competition. Think countries such as Japan, China, South Korea, United States, Germany, Great Britain, Australia and Canada to mention a few. And from a business stand point some of these countries have business strategy and game theory built right into their cultural fabric. Tony Fang author of “Chinese Business Negotiation Style” believes that negotiation stratagems driven by the writings of Sun Tzu and his book “The Art of War” are deeply embedded in most far eastern cultures including China, Japan and South Korea. The net/net is that Chinese business negotiators start every negotiation believing they are going to win!
According to Statistics Canada the average Canadian household earns just under $3,000,000 over the course of 30 years. If this is the case then every single percentage point that we can earn in a lifetime of negotiations for our families is worth about $30,000. This is a significant amount of money. The interesting thing about business is that there are no barriers as to how much money we can make or save in business negotiations. Can you imagine the arithmetic at play when you start applying just a single percentage point to large corporations??!!
The greater opportunity is that the gains can be much larger than a single percentage point. So, this begs the question “How effectively do your sales or buying teams negotiate” for your company?
About the Author
Patrick Tinney is the founder and Managing Partner of Centroid Training and Marketing. Over his 30 year career Patrick has concluded multi-million dollar media sales and negotiation solutions for many of Canada’s largest advertisers.
Disclaimer: The views and opinions expressed in this article are strictly those of the author. CPSA does not endorse any of the companies, products and services mentioned within this article.
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