This article references the book Creating the ZONE: Deal Design & Management by Daniel Weiser.
You can find more articles on negotiations at the end.
I once met with a CEO of a big organization we very much wanted to work with. From the beginning I looked at him with an encouraging smile. He answered in the same optimistic spirit.
We grabbed a cup of coffee and settled in the meeting room, opening with some small talk. He mentioned he likes to listen to a certain radio program, of which I am also a frequent listener, and shared his opinions of it, with which I agreed.
Agreeing in this small inconsequential way created a shared basis and strengthened the already positive atmosphere.
We then moved to the more formal introductory phase. This CEO's personal history was very interesting, as was the way he presented his organization.
We enjoyed listening to him and gave him all the time he needed, while asking various questions.
We were very impressed and complemented the CEO.
The meeting was scheduled to last an hour, and ended up taking over an hour and a half. Its results were beneficial for both sides.
What Made This Meeting So Successful
Here is a list of the main factors which made this meeting successful. I elaborate below. Trust, optimism and a positive atmosphere, finding common ground, time division and time spent on small talk, proactive listening, no cell phones, appreciation, honesty, understanding our goals, and concluding with actionable tasks.
- The first foundation of business is trust between partners. In the best case scenario, trust already exists thanks to a prior acquaintance. When that's the case, you're in a great place. But I think it's fair to say that's not usually what happens. Often you need to build trust during the first meeting, and if you've failed to do so right off the bat, and suspicion develops, you're in a place of weakness. In the above example, trust was created when I made eye contact while smiling. I didn't look threatening or forceful, but optimistic. During the meeting we sat facing each other, and our hands were open and on the table. We didn't display "closed" body language nor "hid" our hands under the table. The way we hold our hands has a significant effect on other people's subconscious. Maybe it's to do with a primordial fear that the other person is hiding a knife under the table, maybe it's something else. Either way, this aspect of our body language has an important effect.
- Optimism and a positive attitude. We all find it more pleasant to be in a positive and optimistic atmosphere. If we smile and radiate optimism, we contribute to the positive atmosphere and improve our chances in the negotiation. Of course, those smiles must be sincere, or they'll create the opposite effect - making us look insincere and dishonest. Smile warmly and openly even if that's not how you feel inside. If you practice you can make it work. Remember, our personal troubles are of no interest to our potential business partners. They have their own troubles. But they'll gladly receive smiles and optimism.
- Finding common ground. In the above example the CEO mentioned his favorite radio program, which enabled me to build a rapport with him, as I too am an avid listener. This common ground came about organically and without effort. But if this hadn't been the case I would have found another way to create it. As long as we keep in mind the need to find similarities and connect - we'll quickly establish common ground.
- Time division and small talk. Personal experience as well as reading about the subject has taught me that the more small talk we have, the better are our chance in negotiations. Small talk enhances what I wrote above: creating familiarity and trust, identifying similarities and fostering positivity and optimism. I once read that you should spend half the meeting time on small talk. I'm not sure I get to such a substantial time, but I try. I've never regretted spending time on small talk. But make sure your focus in such conversations is the other person and not yourself.
- Proactive listening. Everyone likes to be listened to. It's personally important to us. But in order to achieve our goals we need to put aside our desire to be the center of attention, and focus on listening to others. Better yet, listen proactively. That is, it's not enough to be quiet and let your thoughts wander - ask questions and show real interest. If our conversation partner also seems to want to listen proactively, we'll share speaking and listening time. In any case, try to talk less and listen more. The more you listen the better your chances of success.
- Cell phones. After everything I wrote above, leaving your cell phone on, is a sin. Proactive listening, focusing on the client, and showing respect - don't go together with getting a call during a meeting or countless incoming message alerts. Especially in first meetings, I don't simply silence my phone, I keep it in my bag away from me.
- Appreciation and honesty. Like being listened to, we all want to be appreciated. Here too you should focus on your client. Just as it's good practice to appreciate and build up employees, it's good practice to do the same with clients. But never fake it. Like smiles, this should come from the heart and with honesty. You can always find something to compliment. Just do it where it's deserved. In my opening example, I was very impressed with what the CEO presented to us. I simply had to express it honestly.
- Understanding our goals. I mention goals towards the end of the list, but they are of course the beginning. Before arriving at the meeting, define the goals you want to achieve. After concluding the important part of small talk, steer the conversation in the direction of your goals. Managing the meeting and directing it, while showing respect and appreciation for the other side, without coming across as aggressive, is an art form. If you define your goals ahead of time, what you want to achieve in the meeting, you could more easily lead the conversation where you want it to go.
- Actionable tasks. At the end of the meeting decide what your next step will be, as well as the other party's next step. Which actions you each need to take and what the schedule is. I recommend you write a summary of the agreed upon decisions and actions, and send it to the other party too. If that's not a possibility, then at least agree among your party who is responsible for which task.
In his book Creating the ZONE: Deal Design & Management, Daniel Weiser writes about the personal needs of the other party in negotiations. Alongside business interests, negotiations must also answer personal needs – namely, letting the other party feel that we respect them and that we're trustworthy. It's not enough to address the business interests, no matter how fully - if the personal needs aren't fulfilled, the negotiation will surely fail.
I represent in Israel a foreign company, and was once approached by a company's operations team wanting to purchase the product I market. They wanted an offer, and after a short negotiation we agreed on a price that was good for them and good for us. The price we offered was lower, and our product better suited to their needs, than what competitors could offer. The operations manager directed purchasing to finalize an order. He told me I should have an official order in a day or two. But no order came. The operations manager asked me to contact the purchasing manager. The latter didn't like being told what to do by the operations department. He wanted to show that he's good at his job and valuable to the company. He of course looked after the company's interests, but also after his own, legitimate, interests. He was responsible for, and was likely accountable for and measured on, the money he saved the company.
Regrettably, I couldn't meet with him face-to-face, and our phone conversation started with objections. Eventually I was able to solve his personal objection, and direct the conversation to business matters. Together we defined which of the purchasing manager's requests we could fulfill.
We need to remember that every purchasing deal is multifaceted and doesn't only include the price. So I could fulfill some of the purchasing manager's requests in other aspects of the deal. I made sure to say I make no promises, but that I'll try.
I wrote to the CEO of the company I represent, saying that even though our offer was better than the competition's, it's a good idea to also address the purchasing manager's personal needs. Again, I emphasize that these were legitimate needs and with the good of his company in mind. On no account were these under the table dealings. This I never do.
The CEO approved the offer I gave, and the deal progressed.
Another Example of a Negotiation that Started Badly
I once received a small order from one of the bigger companies in Israel. The order was small, the company was (very) big, and Benny, the technical purchasing manager, sent me terms I couldn't agree to.
Benny knew he represented a large company, and thought everyone should bow to them in gratitude.
I knew they badly needed the product I offered, and maybe even didn't have an alternative.
This could be a recipe for a standoff that will make a deal completely impossible. It was clear to me that for there to be any chance of success, we had to meet face to face.
It took a while, but persistence pays.
Meeting face to face created trust, and a personal connection. I made sure, of course, to be optimistic and positive. I smiled and looked Benny in the eye. We clicked. I transformed from "just another supplier" to a person with a name. During our meeting another supplier called, and I had the "privilege" of hearing the same conversation we had, only this time he was having it with another supplier.
That deal was successful.
Later I received a second small order from them. Again, the terms were impossible.
I called Benny's personal number, that he had given me when we met the year before. He recognized me, and in just a few words we finished negotiations with a win-win result.
Personal connection and trust are two very important components of any negotiation. Even when one side represents a large company, and the other is "just another supplier".
Winning Deals and Zero Sum Deals
Weiser describes a zero sum deal as, for example, selling a used car - when the two sides are unlikely to ever speak again. In such negotiations, when you'll probably never see the other person again, you'll do whatever you can to drive the price up, while the buyer will try to do the opposite.
A winning deal, on the other hand, is one where both parties have a shared interest in achieving results they'll both be happy with long term. One where they'll be happy to work together again. In other words, winning deals are built on cooperation and working together.
The deals I discussed above were all winning deals. Zero sum negotiations are also important, but in the business world, most negotiations are of the winning kind.
Summary and Recommendations
Weiser quotes in his book Elbit’s past CEO Yossi Akerman, who noted that while many salespeople enter negotiations believing that the other party wants to buy their product, they are actually interested in selling their own product. That’s why his negotiation tactic has been to find ways to help clients increase their own sales.
In order to achieve our goals in negotiation, we need to understand the other party’s goals. What matters to them. Once we understand that we can figure out a way to achieve our own goals. The most important components in any negotiation are: trust, optimism and positivity, finding common ground, time division and time spent on small talk, proactive listening, cell phones turned off and put away, appreciation, honesty, understanding our goals, and ending with actionable tasks.