What Information Do You Need for Successful Negotiation?

Negotiators who possess information essential for successfully conducting negotiations are able to create value in negotiations, the zone of possible agreement; otherwise, negotiations will be significantly hindered and will not result in an optimal outcome (if an agreement is reached at all).

Similarly, a party that possesses critical information that the other party does not have has a significant advantage in negotiations, which, depending on the type of negotiation, can be a considerable edge. The key phase in having good information is the preparation phase, whether you gather relevant information at that time or adequately prepare to collect information when you find yourself at the negotiation table with the other party.

However, despite the fact that all of this seems obvious to most negotiators, in role-playing simulations and studying business cases in training, participants often have significant problems with the aspect of identifying and considering relevant information that they need to successfully conduct negotiations. Thus, despite often dismissing this aspect of negotiation (as if we already know everything important), I observe the same problem as a consultant when participating in the preparation for real negotiations.

• The information you will have and how you will use it in negotiations greatly influences the outcome of the negotiations.

Before creating a negotiation plan and before starting negotiations with the other party, it is necessary to consider the areas essential for understanding the relevant negotiation situation and prepare inputs for a good negotiation plan, which should be flexible, as you will receive important information even at the negotiation table (if you have developed skills in asking questions and listening) and because the business situation of the negotiating parties may change even during the negotiations.

We could recently see how changes in the business (and political) situation and the impact of the consequences if no agreement is reached affect the course of negotiations during the takeover of Mercator by Agrokor. Sometimes all these influences and the intertwining of these influences are not so obvious, or they are not as obvious as when considered “post festum.” Therefore, careful consideration of what information we need and its collection is crucial for achieving a good result in negotiations.

Consider possible alternatives and the balance of power It often happens that people start negotiations wanting to reach an agreement, only to begin considering their alternatives after the negotiations stall. This is a classic mistake that can result in accepting an offer worse than their own BATNA or rejecting an offer better than their own BATNA.

The purpose of negotiations is not to reach an agreement at any cost, but to satisfy your interests in the best possible way in the given situation. Therefore, before you even start negotiations, you need to consider your alternatives and the balance of power.

Consider the approach/style of negotiation of the other party (and your own) If we know nothing about the approach (style) of negotiation of the other party, it is easy to see that the results may not be what we would like. It is necessary to create a broader picture of the dominant approach (style) of behavior of the other party, on which they “naturally” rely in various negotiation situations, so that we can adequately respond to their strategies and tactics.

Consider the level of authority of the parties at the negotiation table The question of authority in the negotiation process is very important. If you realize at the end of the negotiations that you have negotiated with someone who does not have the authority to sign the proposed terms of the agreement, or if they express such a stance themselves, and in the meantime, you have “emptied your pockets,” you will regret not having clarified this in advance. Therefore, it is necessary to clarify in advance:

• Who will be involved in the decision-making?
• Do the individuals in the negotiations have any limitations in decision-making?
• Who is the final decision-maker?
• How long will it take to make a decision?
• Is there a specific policy in decision-making?
• …
The level of authority is often a tactical element in negotiations, aimed at obtaining certain concessions from the other party, and you must take this into account. Therefore, sometimes for strategic reasons, it is good to have less authority; however, you must know how to tactically exploit this if necessary.

Consider whether there are any applicable standards and norms There are various applicable standards in certain industries, and knowing them is sometimes a priori necessary, as your requests are unlikely to be met positively if they are outside those frameworks. This is particularly important if you want to achieve a sense of a fair and reasonable agreement, especially if you are counting on long-term business relationships. Therefore, if you want to convince the other party that certain criteria are fair and reasonable, it will be easier to do so if they are part of prevailing standards.

We can conclude: The more questions you have quality answers to, the better prepared you will be for negotiations. Of course, no one expects you to know everything, and therefore the testing of the correctness of the collected information and its supplementation will continue even at the negotiation table. However, for this, you will need developed skills in asking questions and listening (relevant questions, in the right way, in the right order, and at the right time), and these skills are so neglected that it sometimes happens that during role-playing in training (and in real negotiations when I participate as an observer), negotiators do not ask a single question, only argue. And we have said that the other party will agree to an agreement only for their reasons, which must be revealed in order to satisfy their interests.

Once again, it is important to understand the context and character of the negotiation situation, as giving and receiving relevant information is largely determined by what can and cannot be said.

S.M.A.R.T. – WIN Concept of Business Negotiation
Copyright Ivica Katanić, www.pregovaranje.com