Renegotiation is an inevitable fact in commercial life at the moment. Rather than give in to fear, face them with confidence by first getting to know yourself and then brushing up on some key negotiating principles.
You don’t need us to tell you that the world is changing. The global pandemic that has been going on for nearly two years is driving change, and its relative uncertainty, in spades. It’s easy to see how, with this as our new reality, our response to commercial challenges can default to a basic, combative ‘you versus me’. Problems become hostile, barriers rise, and our unconscious response is to slam the shutters.
But that’s understandable, but it won’t deliver optimal value, nor will it lead to the most fruitful and creative long-term partnerships. There is an urgent need, now more than ever, to work together and renegotiate. And so the question we ask our customers is, how do you shift from this mindset from ‘you versus me’ to ‘you and me versus the problem’. The immediate answer is to be aware of the problem. Only then, when we are “consciously competent” (in The Gap Partnership parlance) can we look at a transition of our behavior and approach to a more constructive, mutually beneficial place. But where to start?
The first step is to identify your inherent negotiation archetype – your persona, if you will, that shapes your own unique approach and style.
We identified three negotiation archetypes: The Architect, The Diplomat and The Deal Make
1. The Architect
The architect solves problems by changing the shape of the deal, reframing it and approaching it from a different angle. Expressing your Architect persona means understanding the priorities and analytically evaluating the “value” for both sides of the table.
Architects use creativity and mathematical logic to construct sequence-based proposals that either build value or trade less tangible long-term value with short-term distributive variables to break the deadlock.
Pitfalls to watch out for… a strong architect can:Be anal or over-prepared Getting caught up in dead ends on specific issues Underestimating the importance of the relationship Becoming isolated from the team Complicating the deal
2. The Diplomat
The Diplomat directs the human on the other side of the table. They have a high degree of emotional intelligence and mindfulness and good instincts. They stroke egos and provide the symbols of success by providing large amounts of satisfaction to reach agreement.
Sensitive to the climate, the Diplomat retains heat without being insincere. They have the gift of oiling the wheels of negotiation, and through sophisticated open-ended questions they seamlessly exchange information. They fluently use reciprocity to the point where the other party does not know they are negotiating.
Pitfalls to watch out for… a strong diplomat can:Be too honest Give away too much information and thus power Rather be liked than respected Go native and anchor yourself in the perspective of the other side Be guided by consensus
3. The Deal Maker
The Deal Maker is assertive and tenacious, in control of their thinking and focused on deal potential. They are the master craftsman, a craftsman who understands the effect of proactive anchoring, uses the analytical recipes developed during the planning and formulates proposals that motivate the other side to accept by listening and asking questions about priorities.
They are relentless in seeking agreement and will have prepared many proposals to find their way through lethargy, confusion and deadlock.
Pitfalls to watch out for… a strong Deal Maker can:Say too much Close too quickly Be perceived as manipulative and competitive Have an unhelpful big ego Driven by the need to win
Once you’ve identified which archetype — or a mix of archetypes — best represents your negotiation style, and you’re aware of both its pitfalls and strengths, you’re ready to tackle the commercial, pandemic-driven need for renegotiation.
The principles of renegotiation
Successful renegotiations make use of these many principles.
The first of these is proactive – which means thinking ahead, planning and adjusting behavior accordingly. Look for precedents that may have been set. How did you behave when there was a shift in your favor, and how might that influence your opponent to react when the shoe is on the other side? Be a diplomat and think about the behavior you want to display, keeping in mind the law of reciprocity – and don’t be surprised if your previous approach when the balance of power was in your favor is exactly how your counterpart behaves when the roles turn around.
Second, you need to find the confidence to renegotiate. This has to do with power; when we find ourselves in power, our self-confidence peaks. Since power can be gained from information, the more you know about your counterparty, your contract, your market and the economy, the more powerful a negotiator you will be.
Channel your inner architect and use research to build tenacity and confidence ahead of a renegotiation by gathering information about the circumstances and key stakeholders involved.
3. Dealing with risks
The third principle is about your approach to risk. You can’t prepare for every eventuality, but as a seasoned Deal Maker, you can craft a deal that strikes the right balance between security and flexibility.
Think carefully about the risks that lie within the deal structure and assess whether it has served its purpose. What would you do differently if you could have predicted your current circumstances?
Consider challenging everything: the standards, the process, the approval levels, and the variables considered. Understand that anything can be renegotiated, even if the contract was signed three months ago.
4. Total Value:
Last but not least, the principle underlying any renegotiation is total value. In reality, you’ll probably be back at the table because of one or maybe up to two variables, but the reality is that all variables have the potential to come back into play. The answer to your renegotiation may therefore lie in a separate area of the value proposition, perhaps something that wasn’t even in the original deal.
This is where the architect can shine, going back to the drawing board and introducing new value opportunities as needed.
So, when it comes to the inevitability of renegotiation, resist the urge to back off and recant or dodge and entrench. Instead, get to know your negotiation archetype. Then use it to your advantage — or at least be alert that it becomes a disadvantage — and follow our simple five-principles guide to renegotiating for success.
Change and uncertainty? Apply them. We are ready.
This post Know yourself and renegotiate was original published at “https://www.noobpreneur.com/2022/03/30/know-yourself-and-renegotiate/”