Image Credit: Aftab Uzzaman
Every negotiation that we are involved in has two different components to it. The first is what is called “value creation”. This is, as its name implies, the process by which we attempt to put more issues on the table – we try to make the negotiation become bigger. The other part is called “value claiming” this is when we are involved in a single-issue negotiation and we want to get as much of the pre-existing value on the negotiating table for yourself—and away from the other side. When it comes time to claim value during a negotiation, are you going to know how to do it?
Improve Your BATNA
Hopefully all negotiators know that in a negotiation, your best alternative to a negotiated agreement, or BATNA, is often your strongest source of power. When you have a strong alternative, you know that you can be ready to walk away from any deal that is inferior to your BATNA. Wise negotiators not only assess their BATNA before negotiating but spend a great deal of time working to try to improve it. Make sure that you know what your alternatives to reaching a deal with the other side are.
Understand But Don’t Tell What Your Reservation Point Is
By definition in negotiation, your reservation point is a figure or offer that represents what you need to get at the table that will prevent you from pursuing your BATNA. Because your reservation point, also known as your walkaway point or bottom line, is the least amount you are willing to accept, it is generally wise not to share it or your BATNA with your counterpart across the table, even if you trust and like the other party, lest they take advantage of this information. Keep this value to yourself and evaluate what the other side is willing to offer you. If things are too far apart, then get up and walk away.
Do Your Homework On The Other Side’s BATNA
Before any negotiation starts, you need to take the time and do your homework. As a part of doing this, it’s important not only to determine your own BATNA and reservation point but to estimate the other side’s BATNA and reservation point. Knowing this will help you determine how far you can push the other side. You can make these BATNA estimates by thinking about and researching the other party’s alternatives and resources, such as how much they might have to spend and what other negotiating opportunities outside of your negotiation might arise for them.
Make Sure That You Know What The ZOPA Of The Deal Is
One of the most fundamental questions of any negotiation is what the zone of possible agreement or ZOPA is. When you have a sense of both side’s reservation point, you will be able to evaluate the ZOPA. The ZOPA encompasses the range of all possible deals that both parties would find acceptable. During the negotiation your ZOPA will also help you set an ambitious but realistic targets.
What All Of This Means For You
The goal of any negotiation that we engage in is to secure as much for our side as we can. In order to make that happen, we need to take the time to carefully study both the other side as well as the specifics of the negotiation that we’ll be engaging in. By undertaking this type of analysis, we are well positioned for effective value claiming in our negotiation.
The first thing that we need to do is to take steps to improve our BATNA. If we can do this, then we’ll be better positioned to ask the other side for more during the negotiation. We always have a reservation point during a negotiation – that point that would cause us to not walk away. If we can make sure that we know what this point is, then we’ll be positioned to understand if we’ll be able to get a deal that we can live with. If we want to know how much we can get from the other side, then before the negotiation starts we’re going to have to take the time to determine what their BATNA is. Coupled with this will be our making an effort to determine what the ZOPA of the negotiation is. We always have to make sure that a deal is still possible.
In any negotiation there will come a time where we are facing off against the other side in order to determine who gets how much of a given item. As negotiators, we need to do our homework and prepare to make sure that we are well positioned to get as much of the pie as we can. The good news is that if we take the time and spend it well, we can go into our next negotiation well positioned to emerge with a deal that we can live with.
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™
Question For You: If we determine that the other side has a stronger BATNA than we do, what action should we take?
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What We’ll Be Talking About Next Time
No matter how good of a negotiator you think that you currently are and what negotiation styles and negotiating techniques you use, we all know that we can become better. The struggle that we all have is that too often we don’t know how we can become better. Since we don’t know this, we can delay finding out what we need to do. The good news is that we all have to do basically the same things in order to become better negotiators. Now we just need to make sure that we all understand what those things are.