Consult multiple stakeholders in your organization to list and prioritize your own Wish List.
Push yourself hard to generate ideas for trades beyond the main item in the negotiation.
Look for creative trades to broaden the negotiation beyond what’s on the table now. Look for the floorboards!
Determine the value of items the customer sees as “free” or needed just to be
Trying to trade something without measuring it. Find a metric for each trade, such as people, dollars, percentages, days, and the like. If you can’t measure it, you can’t trade it.
Thinking of “quality” or other similar elements as something you can trade. Quality is a Consequences of No Agreement issue, not a Wish List one.
Overlooking the ranking of Wish List items for both sides. It’s the gap between rankings on the two sides that creates opportunities for trades.
You have now taken the first step toward blueprinting your business deal by developing a goal to “create joint value and divide it given concerns for fairness in the ongoing relationship” and conducting Consequences of No Agreement and Wish List Estimations for both sides in the negotiation. In the
Now that you’ve completed the estimating step of blueprinting your negotiation, it’s time to go on to Step Two: Validating the Estimation.
The estimation you made in the first step was based on your own knowledge—of yourself and of your customer. That estimation
The single most important element in any negotiation is
so it’s essential to have as much data—and accurate data—as possible. At the same time, I recognize that going through the estimation and validation steps can seem to be very time consuming. In fact, some of our
For example, I once received a lengthy request for proposal (RFP) from a major U.S. airline. After reading through it, I did a quick estimation (the first step of the process), then phoned the client to ask a few validation questions. Once I got my answers (the second step), I was about to hang up when the client abruptly asked me for my proposal, right then, on the phone. After I caught my
Taking the time to validate the Consequences of No Agreement (CNA) and Wish List Estimations serves several purposes. The most important of these is that it enables you to organize the negotiation both for yourself and for your customer so that you can proactively manage the process rather than
Another benefit of validating your estimations is that it helps you to be objective and rational in conducting the negotiation. That’s because the more accurate data you have, the easier it is to maintain objectivity. And, of course, the more objective you are, the less likely you are to let your emotions get the better of you and the more successful your negotiations will be.
Finally, having that accurate data makes you better able to prepare value-creating offers that are likely to meet with positive responses from your customers. Remember, it’s ultimately trading those items that are valued more than they cost that enables you to create true business value. And the only way to get all those items on the table and trade them is by validating both sides’ CNA and Wish List Estimations. It’s these steps that enable you to go beyond a simple “win-win” solution and help you establish a solid,
Just in case you have any
Having done the CNA Estimation for my side, I then did the analysis for the seller. Although I knew that his CNA would be either to sell the truck to someone else or to keep it, it seemed more likely to me that he would sell it to someone else. So my
While I was speaking to the broker and asking questions to validate my estimation, I learned two key pieces of information that would help me
At this point I had both estimated the seller’s CNA and
Given what I knew about the owner, I wasn’t at all surprised when the broker asked me if I was crazy when I finally made an offer of $11,500 for the truck, as he had already turned down an offer of $12,500. But when I showed him the printout from the Web showing what the same truck was selling for elsewhere, he had to agree that it was a fair price. Eventually, the owner did accept my offer, although only after the broker showed him the printout. After the negotiation, the broker told me that the information I’d provided was the key to making the deal.
The point of all this is that estimating the CNA and validating it,
Here’s what this deal looks like in terms of the Agreement Zone. As you can see, based on another buyer’s offer of $12,500 and the owner’s asking price of $13,500, the owner thought the Agreement Zone was somewhere between those two figures, so my offer of $11,500 wasn’t even in the zone. But by diagnosing the zone, finding out what the owner thought it was, and using the data to adjust his thinking, I was able to make the deal.
Seller’s Irrational Agreement Zone Based on Misdiagnosed CNA
To be honest, this process doesn’t always work in the end because you can’t always count on the other side’s
Before I go on to show you how this step works, there’s one other point you should bear in mind. Although you will have already determined in the previous step what information you’re guessing at and what you don’t know, it’s advisable to review all that information before you go on to validate it. This time, though, be really hard on yourself. We are typically rewarded for showing others how well we know something, but at this stage you should be rewarded for “blowing holes” in your own earlier estimations. The harder you are on yourself, the better data you’ll have and the higher the probability that you’ll do well in the face-to-face phases of the negotiation. Again, the other side probably won’t spend much time analyzing what it doesn’t know, much less analyzing the deal from your perspective; but if used properly, this can be to your advantage.
To reiterate, the validation step