Negotiation Skills - PMI Cyprus · Andreas Solomou 1 PMI Cyprus Chapter Mar-17 Negotiation Skills...

Andreas Solomou 1

PMI Cyprus ChapterMar-17

Negotiation Skills

Andreas Solomou PMP®

Definition

the act or practice (between sides) where each side is giving up something in order to reach an agreement

Merriam Webster’s Thesaurus

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Why Negotiation skills?

Its imperative due to the volatile environment

Take control of the relationship you have with your counterpart

Historical Review

We have survived and thrived as a species largely because of the ability to negotiate

Human “negotiative” behaviours, rituals, approaches…

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World War II

The spectre of nuclear war impelled the development of more “scientific” method of negotiations’ management

Negotiation and mediation were re-invented into a more “rational” and acceptable form

Negotiations & Game Theory

The Maximin/MiniMax StrategyPick the strategy where the maximum advantage of your opponent is minimized

The MiniMax Strategy it’s problematic partly because it assumes perfect information

We are rarely limited to 2 strategies

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Strategy 1

Strategy 2

Strategy 1 Strategy 2

6, -4 -6, 4

6, -4-6, 4

ME

COUNTERPART

20 0

62

2 5

200

0 0

25

4 2

2020

S1

S1

S2

S3

S4

S3S2 S4

ME

COUNTERPART

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Nash equilibrium

A solution concept of a non-cooperative game involving two or more players in which each player is assumed to know the options (equilibrium strategies) of the other players, and no player has anything to gain by changing only his or her own strategy

You cannot predict the outcome analysing decisions in isolation but you need to take into account the decision making of others

Negotiations can go in any direction

Reducing variables for yourself by minimising your counterparties options is almost always a good idea

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Where to begin from?

What should be my targeted outcome?

What kind of system to use?

What to ask?

How to manage confrontation?

Strategy

Helps you Identify your counterparty

Set your Strategic Range

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Strategic Plan (Internal)

Where am I now?What is my best alternative?

Where would I like to be?What is my ultimate goal?

Tactics

How you will realise your strategy and reach your goals

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Negotiation Style

Negotiation Style will determine business relationship

Why Strategy, Tactics & Style

Don’t allow the counterpart to “call the shots” - Setup the “scene”

You can’t think and talk at the same time

Negotiators dilemma (Partnership or Transaction)

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Step 1 - Make a decision on the context

My story against your storyValue from the transaction (short term benefits)

Value from the relationship

Analyse

Where are we now (is this our best alternative?)

Where do we want to be?

Find the variables that will bridge the gap

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Step 2 - Negotiating Agenda

Even great and nice persons have their own agendas

Find your MoSCoW and prepare for “confrontation”(in the good meaning)

Tactics purpose

Influence your counter party

A means to align the counterparty’s agenda

AgendaList of variables

Process (who, where, when, how)

Relationship

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Step 3 - Relationship

Decide on the negotiation style

CONSIDER COUNTERPARTY'S INTERESTS

CONSIDER OWN INTERESTS ONLY

CONCESSION COLLABORATION COMPETITION

Strategy

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Have a proposition!

STUDY WELL!

Don’t go without a solid proposition

Don’t be influenced by the other side

Be Proactive

Don’t let the counterparty decide:Set the scene

Analyse

Generate Alternatives

Amend as you go (your BATNA)

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Goals

Goals are (should be) the directing force of your negotiation

They will help you organise your mind and help you navigate the complexity of the negotiation*

Goals

Be clear on them AND their tolerances

Be ready deliver a great pitch

Its what will drive the negotiation

Don’t loose sight of them

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Prepare your Negotiations Strategy

Be descriptive and qualitativeUPPER Limit: Business Goals

LOWER Limit: Best Alternative

Objectives/Variables/Deal Points

All together form the Ultimate Goal of your negotiation

Form the scope of the deal

This is where you will base your Question(ing)

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Scope of the Negotiation includes

How big is the deal?

How long will it last?

How close will we be?

These questions will be specified and quantified by your objectives

Objectives/Variables/Deal Points

Make them specific so that you can measure and price them

They will help you build the puzzle while going through the negotiation

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Typical Variables

Generic

Price/cost

Time frames

Quality

Quantity

Skills

Support

Warranty

Internal to Projects

Authorities

Roles and Responsibilities

Skills and Knowledge

Specific suppliers

Prioritise your Variables

Is it cash?

Is it ……

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Reality Check

BATNACalculate it well – Think of what is best for you (your organisation)

NOT your starting point

Prepare an Action Plan

Steps for calculating BATNA

Analysis

Alternative

Amendment

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Tactics

The need of a Negotiating Agenda

It’s the strategic gap between your Ultimate Goal and your BATNA

Quantify the Gap

𝐺𝑜𝑎𝑙𝑠 − 𝐵𝐴𝑇𝑁𝐴 = 𝑁𝑒𝑔𝑜𝑡𝑖𝑎𝑡𝑖𝑜𝑛 𝐴𝑔𝑒𝑛𝑑𝑎

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Tactics need numbers

PRICE LOCATION FINANCE

DEAL

CONSENT

NO DEAL (BATNA)

As high (demand) as it gets without scaring them away

Benchmark (Usually the one that sets the benchmarks wins the negotiation.

Walk away

Benchmarks (Consent)

Should be self-validating

Most defensible position – your alibiFind an external source

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How to Set up your Agenda?

Pick your objectives/variables

Balance

Prioritise

Integrate

Tailor

Anchor

Pick the right variables

Don’t let your counterparty hijack your agenda

Block variables you don’t want to discuss/provide to your counterparty

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Quantify Objectives/Variables

Quantify the components that you will negotiate upon and prioritise them

Money

Quantity

Timeframes

Payment Terms

After Sales services

…

Balance

One deal point and you are limiting your tactical movements

To many deal points and you might go off track

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Prioritise

What are the hard ones?

What are the softer ones?

Integrate

Don’t present them in a sequence but integrate them

Find connections between them

It will give a better negotiating position

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Tailor

Don’t forgetThe counterparty has variables as well!

If you misidentified one of the counterparties variables your position is debilitated

Think before you speak – buy time –Ask questions about it

Tailor

Its all about matching variables

Tactics are determined by the “walk away” options

LEAST DESIRE = MOST POWER

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Tailor

Analyse the counterparty

What is the driver:Hope of gains or Fear of loss

How To?Try to find out their BATNA

Low BATNA = Fear

High BATNA = Hope

Anchor

Don’t keep your ultimate goal secret

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Identify tacticsHow to…?

Hope for Gain (Relationships)

What does the counterparty sees as a WIN?

Identify your low cost variables and much them to their high value variables

Do you have a low cost offering (for you) that will offer high value to the counterparty?

Collaborative/cooperative

Emphasise on the counterparties WIN (winnings)Reputation

Access to other networks

Repeated business

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Fear of Loss (Be wise)

Look for the counterparties Constraints

Identify those variables on which you can exert power

Tactics: The 2 Extremities

Power Tactics

Influence Tactics

Each of the two parties is inclining to either position (hope or fear)

Identify your own position and decide on the tactics to use

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Plan your tactics

PowerConstraints (of your counterparty)

InfluenceWhen alternatives exist (for your counterparty)

Counter (Redirect) Tactics

Listen Actively

Withdraw Passively

STICK TO YOUR BATNA

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Don’t negotiate underwater

Make a partial deal if necessary(fulfil some of your objectives and may be leave the rest for the future when thins may be more favourable)

Walk away in a professional manner

Over/Under-estimate

Do not overestimate your powerThey don’t have an option

Don’t underestimate your optionsWe want find it elsewhere

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Use numbers to Plan Tactics

BATNA = Best Alternative to a Negotiated Agreement

ZOPA = Zone of Possible Agreement

MFP = Most Favourable Position

RTP = Realistic Target Position

WAP = Walk Away Price

TRIGGERS:

ZOPA

Sellers BATNA

My BATNA

Desirable outcome for Buyer

Desirable outcome for Seller

ZOPA

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Tools and Techniques

Time TacticsDeadline, now or never, take a break

Value ManipulatorsAnchor

Emotional Trackers

Relationship Tactics

Information Tactics

Counter Tactics

Negotiation Style

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Negotiating style

Determines the future relationship so better first decide on the relationship you wan to have and then choose style

3 major types of relationships

Strategic Relationship

Ad-Hoc (string of transactions)

One-off transaction

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What determines style

Goals

Hope of Gains or Fear of

Loss

Style

The standard Negotiating Styles

Competitive

Collaborative

Accommodating

Avoiding

Compromising

CONSIDER COUNTERPARTY'S INTERESTS

CONSIDER OWN INTERESTS ONLY

CONCESSION COLLABORATION COMPETITION

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Evaluate the relationship

How important are my interests?

How important TO ME are the interests of the counterparty?

Competitive

Win-Loose

High BATNA

Aggressive Tactics

Watch the Relationship

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Accommodate

Win-Loose

Low BATNA

Variable Relationship

Tactics: Influence

Collaborate

Win-Win

High BATNA

Relationship: Growth (maximising relationship)

Tactics: Assume Leadership

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Avoider

Loose-Loose

High BATNA

Relationship: Troubled

Tactics: Avoidance

Compromise

Loose-Loose

Any BATNA type

Relationship: Troubled – ad-Hoc – sting of transactions (rolling wave)

Tactics: Back and forth

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Car

e fo

r O

wn

Inte

rest

s

Care for Counterparties Interests

CompetitiveCollaborative

AccommodatingAvoidingLeast

Interested in Deal

How to determine Style?

PRICE LOCATION FINANCE

DEAL 800 K CENTRAL1 YEAR INSTALMENTS

CONSENT 1 M CENTRAL6 MONTHS INSTALMENTS

NO DEAL >1.01 M CENTRAL <4 INSTALMENTS

Competitive

Benchmark/Collaborate or Compromise

Avoid

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The Style Shifting

Styles change the more concessions you make

Plan your Negotiation Style

Opening Style

Terminal style

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Style shift

The Terminal Style should much your Goal

Use an Opening Style that will keep the negotiation open and help you achieve your goal

Concessions you choose should lead from one style to the other

If your starting Competitive…

What happens if you decide to start competitive and as soon as the other side hears your proposition want’s to walk away?

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Books

• Negotiation (Harvard Business Essentials Series), 2003

• Michael Wheeler

• Getting to Yes: William Ury, Roger Fisher, Bruce Patton 2011

• Getting Past No: Negotiating in Difficult Situations: William Ury, 1993

• Beyond Reason: Using Emotions as You Negotiate, Roger Fisher and Daniel Shapiro, 2006

• 3D Negotiations: David A. Lax, James K. Sebenious 1992

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Negotiation Skills - PMI Cyprus · Andreas Solomou 1 PMI Cyprus Chapter Mar-17 Negotiation Skills...

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