Negotiating with a partner and it feels like a constant struggle? Stop negotiating, you may need to reset. Think instead about where you want to end up, and work backwards.
It’s easy to be overly focused on the negotiation. On getting the most favorable terms. On winning.
But, isn’t that what you should be focused on? Isn’t it our job to get the best deal? That’s how I saw negotiation earlier in my career, before I realized how much value that leaves on the table.
The “best deal” depends on how you define “best”. If we’re not careful, to paraphrase, we lose sight of the forest for the trees.
If "best" means winning the most points in an agreement, you’re almost certainly optimizing for the wrong thing, for the little picture. You’ll end up with a “great” agreement that’s highly favorable, but achieves nothing, because you’ve squeezed everything out of it. You’ve succeeded in getting more than your fair share of the pie. And you’ve ensured that it’s a small pie.
The big picture is expanding the pie. Engage your partner in your vision, whatever that is – market expansion, a new type of product, solving a new problem - something that’s going to making a big difference in your customer’s lives and businesses, and therefore your business. When you develop enthusiasm and commitment with your partner to achieve something, you can start talking about how to enable that.
I remember a deal years ago, with a hungry startup who were willing to give a lot to work with us. I didn’t expect to get most of my asks, but I did. I let them do it, because I thought it was a great deal for us. But, it left the partner with no slack to work with. They had existential concerns, like cash flow, so it became painful for them, complicating everything. When otherwise normal challenges and obstacles came up, they wanted to renegotiate, and they became increasingly opaque in general, trying to strengthen their hand. It was unproductive to say the least. It just wasn’t worth it – won the battle but lost the war.
Contrast that with a partnership where we focused on how our collaboration would enable us both to reach more customers. There was plenty of incentive for both sides. There was a lot each had to contribute too, giving up rights to work with competitors, investment in joint product development, identifying people to run point on issues, reduced margin to go after new market segments, but both sides were bought into the context of growing the opportunity.
With that context, discussion about all of the specific terms, pricing, discounts, marketing and branding, investment, exclusives, tail rights, escrow and so on, shift from win/lose to win/win. They become more about how to create significant value given the realities and needs of each partner. At some point, it will become tactical, and you may still end up quibbling about a few things, but it will be in the context of shared objectives.
That makes all the difference in the world.
Helping Experienced Business Professionals start their High Revenue Consultant Franchise | Vice President Franchise Development | Executive MBA | Franchisee Management | Certified Franchise Executive
2moWelcome Austin - looking forward to catching up with you at conference next month!