The Creative Negotiating

Creative negotiating is a quest for mutual-gain synergies—to match your assets to the other party’s needs, and vice versa. It takes more than a collaborative mindset; it’s an act of imagination. Creative negotiators unlock hidden opportunities to capture more total value in the deal.

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Dealing on the Edge

- Part 3 -

In our last installment, we made the case for negotiating “on the edge of the inside”—the art of looking at both sides of a deal at the same time. When we can see things from the other party’s angle as well as our own, we gain clarity and perspective. The payoff: More creative deals that capture more value for both sides.

But getting to the edge of the inside isn’t easy. We bump up against stubborn barriers, mostly of our own making. In negotiating, it’s only natural to rely on tactics that conform to our mental model, the lens through which we interpret the world. The conventional model is KISS, or Keep It Stupidly Simple, where people come to the table with a big chip on their shoulder: Everybody’s out to screw me, so I’ll get them first. The deal gets reduced to one issue: price. Negotiations deteriorate into power plays, with each side seeking every ounce of leverage while desperately defending their own position. Both parties are isolated in their own self-serving silos. Common ground—much less synergy—never comes into play.

The Kiss of Death

In my early days as a construction contractor, where hardball was the game of choice, I was an all-too-typical KISS negotiator. I dealt with my subcontractors strictly from the “outside,” as opponents. Here’s what I told myself: Those clever, aggressive subs were just lying in the weeds, ready to gobble me up—and I had to beat them to the punch. Using a tactic known as BAFO, I’d deliver the same message to each prospective bidder: “I don’t want to waste time; I really don’t even want to negotiate. Whoever comes in lowest will get the business, so just give me your Best And Final Offer.” After the bids came in, I’d play one sub off against the other to drive their prices down even further.

Did my tactic work? Sure, I got rock-bottom prices. But the quality of the deal suffered—and so did my bottom line. The subs resented my adversarial approach. As a result, they didn’t bother sharing their ideas about how the job might be better structured. They wouldn’t clue me in on something missing in my specs—and boy, did I get walloped by change orders down the road. But I couldn’t blame the subs. After all, they were just trying to even the score.

The guy who changed my outlook took a totally different tack. After submitting a complex proposal on a parking lot job, he said, “Look, I know you want to focus on the bottom line, but everyone’s bid is going to represent something a little different. Why don’t we set some time aside and look at my proposal together, so I can help guide you through what my price really means?”

That was an offer I couldn’t refuse; I knew how hard it was to deconstruct even a simple bid. Besides, this sub had a lot more experience than I did. If he could point out a few landmines, maybe I’d save some money.

Price Vs. Profit

Soon we were poring over his proposal like two old colleagues. Off the bat, the sub advised me to use a different type of earth-moving equipment than I’d specified—it would cost more up front, but save money over the long run by getting the job done faster. After checking my material requirements, he suggested a different mix of crushed rock to cement—not only would I lower my cost, but the end product would be stronger.

By the time we were finished, I’d dramatically changed the scope of the work. And I awarded my new “partner” the job, even though other bidders came in lower. The newfound cost efficiencies increased my profit. Both sides made out.

Looking back, that seasoned subcontractor was ahead of his time. He met my suspicion with open hands; he turned a competition into collaboration. By operating on the edge of the inside, he persuaded me to make a different, more creative deal.

One cautionary note: You can’t assume that everyone will work with you on a two-sided, mutually beneficial basis. When moving to the edge, it’s important to pick your negotiating partners carefully…as we’ll see next time.

Our Mission

At Mobus Creative Negotiating, our mission is to show you how to find more profitable outcomes in deals large and small. We can help you improve your negotiation skills by gauging the other party’s pressures and needs—by turning a transaction into a strategic relationship. To learn more about our Creative Negotiating seminars, visit us at http://www.mobusinc.com.