I was sitting in a DFW terminal during a recent trip layover. A businessman behind me was talking on the phone to a teammate. They were strategizing for an upcoming and seemingly crucial negotiation later that day. The terminal was quiet, and I couldn't help but overhear his conversation.
After a couple of minutes, I quickly picked up the following facts from the conversation regarding his situation: he worked for a construction management software company. They were meeting with the CFO of a large construction company for the second time. During their initial talks, subsequent correspondence, and first in-person meeting, the CFO did not see the value in the construction software. Essentially, the CFO saw the software as too expensive for what it did. He could not justify spending the money to purchase this product and declined to move forward with the sales team.
The conversation developed from there. The two salespeople discussed how they attempted to "sell" the CFO on the option before and how they will sell to him this time. An actual selling strategy was unfolding in front of me. They would focus on the value of their product, armed with long lists of how great the product was. They would go back and forth with each other, using varying approaches for peppering the CFO with value-heavy features. They would pique his interest by referencing success stories of current clients. They would get the CFO to offer small yes statements, working up to bigger yeses (this is 'Momentum Selling'). It was the perfect plan. How could it fail?
I don't want to be a pessimist, but I'd be willing to bet their upcoming conversation didn't end how they wanted it to end. Their strategy painted them into a corner. The CFO had anchored on price (not enough value is code for too expensive). With price being the main objection, this has devolved into a distributive negotiation. Who can get the largest piece of the pie? The CFO wants to pay less; the Software sales team wants the CFO to spend as much as possible. This is the classic showdown in an outdated and all too common perspective.
What's missing? They were, after all, spending their time planning for an important negotiation. The planning phase is the essential phase of any negotiation. The first part of planning should establish the foundational elements of the talks that will: help (a) create & increase the ZOPA, (b) reduce the barriers to deal-making, and (c) increase leverage. Ignoring these elements can make at-the-table actions/tactics ineffective or even irrelevant.
With a well-thought-out plan, negotiators can anticipate potential objections, suppress the urge to react or make preemptive moves based on fears about the other side's intentions, identify their wants and needs from possible outcomes, and set a roadmap for the upcoming conversation. They'll be able to prepare for the worst but not trigger it—and to identify the actions most likely to have a significant impact on deal outcomes.
Their major pitfall is underestimating the power of asking questions. The main problem was relying on tactics and selling to the CFO rather than asking calibrated questions and framing the process.
In the article "Enhancing Your Effectiveness as a Negotiator," professor Robert Wilkinson, Lecturer in Public Policy and Leadership at the Harvard Kennedy School of Government writes: "[people] have a natural tendency of telling the other side what they think the right answer is...The problem is, advocacy is often the least influential path to persuasion. The research on this is overwhelmingly clear. Instead, start a negotiation by trying to understand the other party's perspective first. Ask lots of questions — and listen to the answers. Be curious. The person or people you are negotiating with will be more open to hearing what's driving you if you authentically care about what's driving them."
Expert negotiators ask questions at a 3:1 ratio to advocating for their position. Asking more questions has undoubtedly improved the effectiveness of your conversations if you have already gotten into the habit of doing so. But how do questions improve our negotiation efforts?
Recent research at Harvard confirms how important asking questions can be. In It Doesn't Hurt to Ask: Question-Asking Encourages Self-Disclosure and Increases Liking (http://nrs.harvard.edu/urn-3:HUL.InstRepos:35647952), researchers found that asking questions helps us accomplish two major goals: information exchange (learning) and impression management (Liking). The researchers told some people to ask many questions (at least nine in 15 minutes) and others to ask very few (no more than four in 15 minutes). In the online chats, the people who were randomly assigned to ask many questions were better liked by their conversation partners and learned more about their partners' interests.
In a recent Harvard Negotiation Master Class session, Harvard Business School professor, Deepak Malhotra, spoke about the need for proper planning. And the correct use of strategy. Effective negotiation requires a preparedness to adapt. Not your willingness to adapt. If you don't prepare to adapt, you might not be able to, no matter how willing you are. Take the case of the salesman I overheard in the airport: They did not prepare to adapt. The strategy remained the same and it will become harder - if not impossible- for them to adapt even if they are willing to do so.
The key is not to learn or use a lot of negotiation tactics. There are an infinite number of tactics. What's much more limited are the principles- these are the most important aspects of guiding the negotiation where it needs to go.
When you're thinking about strategy, you need to embrace that you won't use all your good ideas (in fact, you won't have all your good ideas yet before asking great questions). You have to use a subset of good ideas. Your best ideas will come from asking calculated questions, being genuinely curious, and being strategic about how your questions will advance your process. Preparedness equals foresight plus an investment of time and planning. Strategize the process. The process involves when you will be implementing various parts of your strategy. If you find yourself talking too much, be quiet! Begin asking questions with real curiosity. Stay true to the belief that the magic of a conversation will produce a whole that is greater than the sum of its parts.