The Fundamentals of Negotiation

Posted On: October 18

A close friend I mentored for five years was looking at expanding his business and buying one of his competitor’s businesses. I sit on the board of directors of his company, and he often comes to me for advice when faced with decisions. He was eager to get some suggestions about negotiating the deal. Here is the memo that I sent to him.

I believe there are only five things you must do to build a strong foundation as a successful negotiator.

1. Be Extremely Well Prepared. 

I am amazed how often people show up to even a colossal negotiation, having done very little homework. Study all the data you can get, anything that will help you make a good decision. Doing this research allows you to take a position based on facts, not guesses.

2. Have lots of ways to win. 

Most people show up to negotiations with only one way to win: their way.

I recommend that you come to every negotiation with multiple different scenarios that you would consider a win for you. For example, if you went to buy a car and there was only one type of car with the specific attributes you wanted. There might be only one that meets your unique specifications at a car dealership lot with several hundred cars, which gives all the power to the car dealership.

On the other hand, if you come with multiple ways to win, several different colors that you’d be happy with, some attributes you’d like to have, a few attributes you must have, and a whole handful of other attributes that are “nice but no big deal.” With that kind of flexibility, there are probably 20 or 30 cars on the lot that would meet your needs. Now you have all the power in the negotiation. At the most fundamental level, I believe that whoever is the best prepared and has the most ways to win usually wins the negotiation.

3. BATNA

Before you get to the negotiation, establish what your BATNA is. BATNA stands for Best Alternative to a Negotiated Agreement; in other words, it’s your walkaway point. It’s the number that you will not go beyond or below. It’s the point where you realize it’s better to get up and walk away than to stay in the negotiation because you will not win. Most people only discover their BATNA after they have crossed the line. So please write it down, get clear on it, and stay unemotional to ensure you do not go beyond your BATNA.

4. Read the Room.

In every negotiation, the person on the other side of the table is negotiating across a continuum of support for a win-win negotiation. At one end of the continuum, the person you’re dealing with is your negotiating “Partner.” They are on your team, going for win-win, open, honest, willing to share information, and willing to be flexible in trying to make sure that everybody leaves the negotiation happy. In the middle of the continuum, they are your negotiating “Counterpart.” They are neither for you or against you—they’re basically looking for a win-win if it is at all possible. At the far end of the continuum is your negotiating “Opponent,” who has no desire whatsoever to help you. They will lie to you, manipulate you, confuse you, and do everything they can to ensure they win and you lose.

Typically, I enter every negotiation hoping, and the other person will be my negotiating partner, but I am not naive about it. As the negotiation progresses, I test them by asking questions to see how forthcoming they are. I also ask the questions that I know the answer to determine if they’re telling me the truth. Suppose they offer all of this information freely. In that case, I treat them as my negotiating partner and share lots of information with them. However, if I ask these questions and realize that they are unwilling to share information with me or give me misleading information, I quickly realize that they are my negotiating opponent and change my tactics accordingly.

5. Anger Is Never the Solution.

Lastly, it is critical never to negotiate with someone who is highly emotional or to continue negotiating if you are getting highly emotional. If this begins to happen, simply ask for a recess, get a soda pop, take a walk around the block, whatever you need to do to let the other person cool down or to cool down yourself. Once you come back and if the other person is still angry and upset, take another break. If you come back again and they are still angry, cancel the negotiation for the day. Never sit at a table and negotiate with someone angry, as you will always lose that negotiation.

I could share many other things with you, but I believe if you do these five things exceedingly well, you will have covered about 80% of what is necessary to be a successful negotiator. 


If you need help developing effective communication skills for a negotiation, do not hesitate to contact me. john@johnspence.com

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