英文原声 What’s Your Negotiation Strategy?（2/2）

Thinking in binary terms is almost always counterproductive.

00：10 By researching the business models and strategies of the electronics companies, the team was able to pinpoint which of its firm’s patented technologies were complementary to important initiatives at each target licensee. Working with the firm’s tech and sales departments, the team then defined value propositions showing each target licensee how it could use the firm’s IP to generate new products or revenue streams. One electronics company, for example, could leverage the tech firm’s sound and imaging IP in elder-care offerings, and another could enhance its device with the firm’s virtual reality expertise. Those opportunities made it worthwhile for the electronics companies to engage in meaningful negotiations with the team. Though this strategy required a lot of time and effort, the payoff was worth it.

Look for Links Across Negotiations

01：05 Most negotiators focus exclusively on maximizing the value of the deal at hand. In doing so, they often undermine the success of future negotiations—their own and those of their colleagues. A strategic approach requires considering success beyond the current deal and, in particular, how the precedents it sets will create anchors and shape dynamics in future negotiations. After all, except with pure sales and purchases of assets, most high-stakes business negotiations are repeat transactions undertaken in the context of long-term relationships.

01：52 Analyzing links across multiple negotiations can unearth hidden forms of leverage. Consider the case of a global semiconductor company that felt continually squeezed by unreasonable price increases from OEM component suppliers. A major problem was that negotiations over initial licensing or codevelopment of technology for new products were conducted by one group, whereas subsequent contract negotiations (with the same suppliers, but occurring years later) were handled by another group, with relatively little coordination between the two. Meanwhile, negotiations with those suppliers and other third parties for maintenance and repair services and spare parts were handled by yet another group, and all three kinds of negotiations occurred on different timetables.

02：45 By looking at these separate but related negotiations holistically, the semiconductor company was able to alter the power dynamics. Teams negotiating supply agreements acknowledged that they had little choice but to accept an incumbent supplier’s pricing and terms but were able to point to upcoming product introductions and warn that unreasonable positions held now would most likely exclude suppliers from being considered for next-generation products—and all associated downstream revenue. They also shared data about maintenance and repair revenue streams and their growing ability to redirect such business to partners who demonstrated reasonableness and good faith.

03：30 Threats and promises about future business had been made in the past by the company’s negotiators, but they weren’t specific and lacked credibility. Now the benefits of increased cooperation and the potential loss of opportunities were tangible to suppliers—and hence persuasive.

Consider the Impact of Timing and Sequencing

03：49 Many people seek to speed up or slow down negotiations to put pressure on the other side and extract concessions. But pressure tactics often backfire. Careful consideration of how the other side is likely to respond should guide when to accelerate, slow down, or pause a negotiation.

04：19 Several years ago a small technology company was in negotiations to renew a critical deal with an internet behemoth. The small company depended a lot on the revenue the deal produced, and the thought of going without it for even a short time was frightening. Seeking to pressure the small firm, the behemoth showed little urgency to complete the deal and signaled that it wasn’t sure the contract was worth renewing.

04：45 That turned out to be a major miscalculation. Recognizing that it could do little to get the other side to go faster, the small company’s negotiation team decided to make use of the time to build support within the firm’s ecosystem of customers and business partners for the possibility of partnering with one of the behemoth’s giant competitors instead. That time was well spent. As such an alternative went from unimaginable to conceivable to plausible, the smaller firm’s leverage grew. In the end the contract with the behemoth was renewed for a nine-figure value that represented a nearly five-fold increase over the expiring deal. While the passage of time did make the small firm nervous about its dwindling cash reserves, it also gave it the opportunity to substantially alter the landscape in which the negotiation took place.

05：46 Choreographing the sequence in which you address issues or engage different players is also important. Resolving some issues may reset the stakes or reframe the remainder of the negotiation.

05：58 A good example of strategically rethinking sequence in a negotiation comes from the oil and gas industry. As part of a joint venture deal with a national oil company, one large multinational had agreed that if a particular competitor wanted to add itself to the deal later, it could do so by paying its share of the capital plus interest for the time it hadn’t participated. A few years later that second multinational indeed triggered its option and sought to open negotiations on the rate of interest. Instead of discussing how many points above or below LIBOR would be appropriate, the multinational decided to go back to the oil company and negotiate what further terms should apply to the revised deal. The multinational proposed the principle that a later entrant shouldn’t earn a higher rate of return than the original partners, who had taken a greater risk before the project had proved its value. The oil company readily agreed.

07：00 With that matter settled, the multinational turned to the new partner-to-be and demonstrated, using the recently audited books for the joint venture, that the interest owed by an incoming partner would have to be 60% a year, not anything like LIBOR. After some initial shock, the incoming partner agreed.

07：20 Five questions can help negotiators strategically manage timing and sequencing:

What changes in the external marketplace might increase or decrease the value or importance of the deal for each party?

To what extent can we use additional time to strengthen our walkaway alternatives?

To what extent can the other side use additional time to strengthen its walkaway alternatives?

How might deals negotiated with other parties affect the scope of the negotiation or create precedents that influence the way we resolve key issues?

What events or changes in the external marketplace might adversely affect the strength of our walkaway alternatives—and the other side’s—or create mutually beneficial opportunities?

Be Creative About the Process and Framing

08：18 When approaching a high-stakes deal with a powerful counterpart, many negotiators debate whether to start by issuing their own proposal or by asking the other side to do so. They also often wonder whether they should project strength by asking for aggressive terms in their first offer or counteroffer, or signal a desire for a win-win outcome through more-balanced and reasonable terms. But such binary thinking blinds us to the many ways we might shape the negotiation process to reduce risk and increase the likelihood of a great outcome.

09：08 Let’s look at a global health care company that depended on a single supplier to make one of its biggest revenue-generating products. The supplier held numerous patents essential to the manufacturing process, so switching to a different one would have taken years and major investments in redesign. But for many years the supplier had been unwilling to collaborate on improving quality and manufacturing efficiency. As the contract with it neared expiration, the health care company pondered how to open the negotiation for a renewal. Should it demand big price reductions and other improvements? Or should it begin with more-reasonable terms and hope that the supplier responded in kind?

09：53 After much debate about the trade-offs, the health care company developed a third approach. Rather than beginning by sending an initial term sheet, it invited the supplier to a prenegotiation summit—a joint discussion of what had worked well, and what hadn’t, for each side under the prior contract and of how the market and each side’s business objectives had changed. This was deemed a low-risk move. The supplier might well decline the offer, but so what? The health care company’s negotiation team would then simply revert to sending an opening term sheet.

10：33 To the surprise of some on the team, the supplier accepted the invitation. During the summit the health care company’s team shared an analysis of the economics and evolving market position of the company’s product. It showed that unless the product’s price fell significantly, new competitive offerings would take substantial market share away from it. That would reduce not only the health care company’s revenue but also the supplier’s. The analysis triggered an animated discussion focused not on bargaining but on joint problem-solving. That in turn led to thinking about how to creatively restructure the way the companies worked together and to a set of principles for negotiating commercial terms in the new contract, including a framework for sharing risks and rewards. The ultimate deal saved the manufacturer tens of millions of dollars but was viewed by the supplier as more favorable than the earlier contract. Both sides agreed that a traditional “offer-counteroffer” negotiation process would at best have yielded a significantly less valuable deal for both—and could easily have resulted in no deal at all.

CONCLUSION

11：48 High-stakes negotiations tend to produce a lot of anxiety. This leads dealmakers to focus on (perceived) threats rather than identify all possible forms of leverage and think expansively about options. When that happens, negotiators are more likely to make poor tactical choices, either giving in to pressure from the other side or inadvertently causing their own worst fears to come to pass.

12：19 A strategic negotiation approach involves more than choosing a cooperative or competitive posture, and thinking in such binary terms is almost always counterproductive. Assessing connections between one negotiation and others with the same party over time (and even with other parties), taking a hard look at whether they’re negotiating about the right things, and focusing on when and how to most effectively engage with the other side will unlock far more value for dealmakers.