Just One Thing: How to Negotiate in One Lesson
JSN, my ex-boss/then partner, was, in most ways, a great negotiator. He was aggressive, highly intelligent, and charming. That very rare combination of assets allowed him to get pretty much whatever he wanted out of every deal.
BB, my client/partner, is not considered to be a great – or even good – negotiator. He doesn’t claim to be. He doesn’t like negotiating, but he occasionally does negotiate. And when he does, he proves himself to be equally as charming and intelligent as JSN. But he is not aggressive. In fact, a typical “negotiation” with him might sound something like this:
Him: What do you think it’s worth?
You: Thirty percent.
Him. That seems reasonable.
Him: What do you think it’s worth?
You: Sixty percent.
Him. Oh, I couldn’t afford that.
And that’s it. Done. In the first case, you have a deal. In the second case, you don’t. And don’t try to come back by lowering the “ask.” He isn’t interested.
I sat beside JSN at the negotiating table for 11 years, and beside BB twice that long. I can say that JSN deserved his reputation as a master negotiator – but in the realm BB operates in, he is actually better.
The difference depends on understanding that in business there are two fundamentally different kinds of negotiation: transactional and relational.
JSN looked at almost every deal he made as a transaction. He had something of value to buy or something to sell, and the goal of the negotiation was to somehow come out on top.
BB eschews transactional deals. If they must be done, he appoints someone else to do them. But he does negotiate relational deals. He looks at them as… how shall I put it? As first dates. A negotiation for BB is an opportunity to discover if he and the other person could be good business partners.
In other words, JSN viewed business as a series of individual transactions. Success to him depended on being the winner in as many of these transactions as possible.
BB views business as a complex series of relationships. Success to him is hooking up with the right sort of people.
I learned lots of tricks from JSN that I employ when I am negotiating a one-time transaction, such as buying a car or a painting or a house. But in business, I prefer BB’s approach.
When I negotiate BB’s way, I have a chance to find out if I am compatible with the person on the other side of the table – i.e., if their idea of fairness is the same as mine.
A fair deal in relational negotiation is one that works well for both sides, and not just immediately but also in the future. That means I can’t go into the negotiation with a fixed, pre-determined outcome in mind. I have to be prepared to accept a deal that works not only for me but also for the other person.
There have been many times when the other person was willing to accept a deal that favored me. When that happened, I insisted that we structure a deal that was better for them. Not out of altruism, but because I realized that what matters most is not the immediate transaction but the long-term relationship.
When you are negotiating relationships, you have to think this way. If you don’t, one of two things will happen: The deal will not be made because the other person will feel you are bullying them… or they will accept the deal but later on feel that they were cheated.
In either case, the opportunity to forge a potentially profitable relationship for years to come will have been lost.