Critical Skills for Excellent CEOs
Part 2: 10 steps for strong negotiations
As a young entrepreneur and CEO, we are certain that you are always looking for practical tips and advice to better lead your team. For this, Ye! has got you covered! In this series- Critical Skills for Excellent CEOs, we will take a deeper look at five skills that every young founder can (and should) master, to become a top notch CEO and strong leader.
In the second part of the series- Critical Skills for Excellent CEOs, we will learn from some of the best deal makers and experts in business about how to better negotiate, in order to ensure you get the best deal for you and your company.
Negotiation, a word seemingly quite straightforward according to the dictionary definition: “discussion aimed at reaching an agreement.” However, negotiation is a more complex process in practice. In your day-to-day activities, you might negotiate in situations ranging from speaking with external suppliers, partners, clients or even within your own team. For entrepreneurs and CEOs, it means having the ability to come to the best decision, one that benefits both sides. Negotiation is one of the most valuable skills you can learn as it can be used in myriad situations to give you and others the best possible outcome from an array of possible outcomes.
But we stress, negotiation skill is not something you are born with, it is learned and takes time and dedication to employ to the best of your abilities. So let’s take a first look at how you can learn to become a stronger negotiator. Here are 10 steps to guide you in the process. These steps are broke down by category:
- Preparation and planning
- During the negotiation
- And finally, become a ‘natural’ negotiator by incorporating this last behavioral tip
Category 1: Preparation & Planning
It is always best to come prepared. Check out these below steps for proper planning to get the most out of your negotiations.
(1) Be crystal clear about your expectations. As Benjamin Franklin said,“By failing to prepare, you are preparing to fail.”Before embarking on any negotiation, you should be fully prepared. This should include, what you want to receive, what you are unwilling to give up, and where there is some room for compromise. By including potential compromises you are willing to offer, you make space for areas of negotiation and a middle ground between two distinct demands. In offering certain concessions, you are able to push for what you really want. Don’t forget to develop a fallback plan that describes what you will do if this particular negotiation fails entirely.
(2) Visualize possible scenarios and outcomes. What does this mean in practice? It is important to identify as many negotiable items as possible, and prepare lots of smart questions to probe the other side’s stance. Then prioritize these items and develop a negotiable range for each with an estimated cost.
(3) Understand your negotiation leverage and identify the common ground. In reality, this often requires rethinking and digging deeper into your demands and that of the counterpart. For instance, as a small business owner, at first sight you might feel like you are in a less powerful position when negotiating with a larger cooperate. However, a closer look into some essential information before your meeting may reveal that you provide a critical service that the corporation needs to execute part of their operations more effectively or efficiently. Understanding some of the larger companies pain points or short comings can provide a critical leverage in your negotiations. Just because you are small does not mean you aren’t mighty! These results could make a big difference and turn the table in your favor!
(4) Role-play responses you anticipate. This can include potential objections and counter- asks. By putting yourself in the counter-parties shoes, you are better able to predict their responses and craft sufficient counter responses. In addition, role-playing allows you to plan when you will play your extra asks and concessions, so the other side feels they are getting something from you.
Category 2: During the negotiation
You might get nervous, you might be sweaty, but if you have planned and prepared then you are already on the right track. Below we highlight what you need to do and consider during the negotiation process to get the most out of it.
(5) Let the other person do the talking. By listening and letting other talk you can better identify the other side's ‘wants’ and their stance more easily and quickly. Listen more than you talk can allow you to have a competitive advantage that you can use to create a fair deal for everyone.
(6) Never concede, always trade. Negotiation is like a dance, and ‘balance’ is what matters in the process. Don’t be afraid to give a little to get a little, but avoid ‘giving’ something without ‘getting’ something in return. This is particularly important towards the end of the conversation, when you would want to phrase the possibility you might give a little as, “I might be able to move on X, if you are prepared to move on Y.”
(7) Focus on long-term profit. Often, the parties negotiating tend to be too hung up on immediate issues and the trade-offs at hand, and fail to see how the current deal may create opportunities or hooks for future partnerships and negotiations.
Here, when we refer to profit, we are not just speaking in financial terms, as profiting can be applicable in the investment of ‘emotion’. For example, when negotiating a deal with your clients, they may get caught up on price as the critical negotiating point. It is still possible to reach an agreement, in regards to your desired price, especially when you get them to focus on what the long-term prospects of them sealing the deal is and all the positive doors that may be opened because of this deal. Getting them to focus on positive long-term profit and turning negative emotional responses, i.e. all the new business deals that will come about because of this deal, is the way to seal the deal.
(8) Rethink the scope of the deal and grow the pie. Rather than thinking about how to ‘eat off’ the cut of the other side, skilled negotiators will look into how to make the pie bigger to achieve better results. This involves generating a wide range of creative options in settling the issues, as well as looking ‘outside the deal’ for extra resources and interest, which can deliver more values to both parties.
(9) Win-win is not 50-50. Although we are all aiming to achieve a win-win situation through negotiation, this does not necessarily mean an ‘equal’ share on the surface for both parties. Skilled negotiation can manage to secure the best possible deal for you, while still allowing a win for the other side. On the other hand, you must also understand the best outcome for you, which may not always mean the best price for you (but is one where you gain advantage in other aspects, i.e. save your time, puts you ahead of your competitors, expands your portfolio of services, etc.)
Category 3: Become a natural
As with most things in life, negotiation takes practice. It is inevitable you may not have a smooth start, but with time and practice, you are sure to improve. Learning is an ongoing process that never ends. So, whenever you think you have achieved a new milestone in your negotiating process, keep pushing! Below we outline how you can continue to work on your behavior to come out of your negotiations like a pro!
(10) Continue to build you behavioral skills. When we talk about behavior in negotiating we mean your poker face. It’s important to stay cool, calm, and collected, in order to ensure you don’t give away your position and thus, your bargaining power. Be sure to adjust your tones and gestures when negotiating. Include in your planning, how you will act and respond with your behavior to different answers or responses from the opposite party. Take every opportunity with your staff and your business partner as a good practice situation for negotiation. Remember, as the world-renowned expert in negotiation, Dr. Chester Karrass, once said, “In business as in life, you don't get what you deserve, you get what you negotiate.”
To learn more on negotiation, we hand-picked the following articles:
- 11 entrepreneurs and CEOs reveal the best tips for negotiating virtually anything
- The 10 Commandments Of Negotiation For CEOs
- What’s Your Negotiation Strategy?
If you are interested to learn more skills in entrepreneurship, check out the learning courses that ITC SME Trade Academy offer to you! The courses are free of charge and open to all.