Art of Negotiation

I think all we know what negotiation is. Negotiation is a process where two or more parties, with different needs
and goals, discuss an issue to find a mutually acceptable solution.
Negotiation is very important in our day to day life and most importantly in business; for example sales, purchase,
lease and legal contracts.
I was hired as an engineer and now the direction is going towards management, leadership, business development,
supply chain, because I want to grow. My internal grit is directing me that way. I can feel without developing
these skills it is impossible to grow your career further.
At the beginning I was thinking that I’m not good at it, let it go. But now it is kind of situation that I can’t avoid
this skill, neither in personal life nor in my professional life.
I will share some experiences so that you all can be benefitted.
Now let’s discuss some points –
 Establish the relationship – Though often ignored, feeling itself is an essential part of negotiation.
Honesty, integrity, dignity are the foundation. You are in best positioned when other party respects you.

 Preparation is Key – Demonstrate your knowledge and expertise, know the product, know the person you
are dealing with, know their negotiation styles.

 Embody your inner adult- Don’t go out of balance, don’t start thinking childish, be the stable anchor.
Don’t argue instead understand.

 Have a Strategy – First offer bold and aggressive. You will never get what you don’t ask for. Don’t worry
about insulting other party as long as your demand is not ridiculous.

 Find the Leverage – If you are buyer in depressed economy, you normally have the advantage of too
much supply and lower demand. Find the leverage.
Story 1.

 Go For a Win-Win Solution- Understand other party’s priority and your own. Figure out a win-win
situation.

 Closing the Deal – Always have the endgame in mind. If an agreement can’t be reached, agree to part as
friends. Never under any circumstances burn your bridges.
Story No – 2
If possible back off and find alternate. If there is no alternate, accept it and try to make it better in relation so that
negotiation mess up doesn’t damage your goal.
 Consider mediation – If you need third party to be involved in a disruptive negotiation, do it.

There is a book name Outliers by Malcolm Gladwell. In that book the author mentioned, if you practice a
skill for 5 years, you will master that skill. It can be any skill. So let’s master negotiation skills in next 5
year!

Grit: In psychology, grit is a positive trait based on an individual's perseverance of effort combined with
the passion for a particular long-term goal or end state.
 Art of Negotiation

Establish the relationship

The wise negotiator establishes the relationship before proceeding further. Doing so allows you to get a feeling
for the person with whom you are dealing, and vice versa. Though often ignored, "feeling" itself is an essential
part of negotiation. So, always be open and sincere. Honesty, integrity and dignity are palpable qualities, and the
foundation upon which constructive negotiations are built.
You are best positioned to negotiate when the other party respects you, not only as a businessperson, but as a
human being. Trust, which is gained through that respect, is the key to successful negotiation.
Embody your inner adult.
Never forget that everyone has an inner adult and an inner child. It is remarkable to witness how even high-level
business deals break down because someone at the table starts thinking childishly, instigating that behavior in
others. When you see this happening, keep in mind that everyone goes out of balance.
Be the stable anchor, the respectful adult at the table. Helping people come back into balance is often best done by
example. Take the high road, embodying your inner adult. Don’t argue; instead, understand.
Preparation is Key
Establish a strong foundation early in the process by demonstrating your knowledge and expertise of the
negotiation subject matter.

Know about the party you're negotiating with so you can capitalize on your strengths and the party's weaknesses.
If the other party is very experienced, that means he also has a history that could contain useful information. If
possible, talk to business associates who have dealt with this person before. Many negotiators develop patterns
and certain styles that you may be able to use to your advantage.

If you are a buyer, make sure you are thoroughly familiar with the product or service that will be the subject of the
negotiation. If the other party senses you are weak on such details, you may be a prime target for a bluff or
another technique designed to create anxiety and uncertainty. Psychology plays a crucial role in your ability to
make the most of the other party's lack of preparation and anticipate their next move.

Most negotiators have a price target or goal in mind before they start. It should be based on realistic expectations
considering all the constraints that will undoubtedly surface. These may include budget limits, direction from
management, pressure to make sales goals, and a myriad of other external forces. During the course of the
negotiation, the goal may change based on changes in scope and other unforeseen actions by either party. While
your ultimate goal should be realistic, this should not constrain your first offer or counteroffer.

Have a Strategy
There are basic principles that apply to every negotiation. The first offer is usually the most important and the
benchmark by which all subsequent offers will be judged and compared. You'll never get what you don't ask for,
so make your first offer bold and aggressive. The asking price is just that, and will typically include a pad or
margin to give away during negotiations. You want to take all of that and hopefully more, so start lower than the
seller expects. Don't worry about insulting the other party. As long as your offer is not ridiculous, the other side
will continue the negotiations in hopes of settling at a better number.

Grit: In psychology, grit is a positive trait based on an individual's perseverance of effort combined with
the passion for a particular long-term goal or end state.
 Art of Negotiation

As a buyer, do not disclose your budget or other limitations in your negotiating position. A favorite ploy of
salesmen is to reshuffle the product specifications, schedule and other parameters in order to sell you an inferior
product to fit your budget. You want the best product you can get for the money you have to spend, so employ an
approach that maintains the possibility of spending less than you had originally planned.

Find the Leverage

If you are the buyer in a depressed economy, you normally have the advantage of too much supply and lower
demand. Current steel price in oil and gas industry is a classic example. Not too much demand for steel pipe but
lot of international mills are supplying steels to US market. When supply vastly outweighs the demand and
market prices fall dramatically.
Go For a Win-Win Solution
Negotiating requires give and take. You should aim to create a courteous and constructive interaction that is a
win-win for both parties. Ideally a successful negotiation is where you can make concessions that mean little to
you, while giving something to the other party that means a lot to them. Your approach should foster goodwill,
regardless of the differences in party interests. A good negotiation leaves each party satisfied and ready to do
business with each other again.

Throughout the negotiation, try to determine what you believe to be an acceptable outcome for the other party. It
may be a combination of different things that aren't necessarily tied solely to price. For example, the delivery date
may be the most important thing to the other party, while product quality may be your primary driver..
Closing the Deal:
Once the negotiation is completed, you want to be able to work effectively with those in the other party during
contract performance. If they are threatened and pounded into submission, they probably won't negotiate with you
again, possibly cutting off any future business. While heated confrontation is a common occurrence during
negotiations, at some point collaboration and compromise are needed to get a deal.

Successful negotiation is like horse-trading in that it requires a sense of timing, creativity, keen awareness and the
ability to anticipate the other party's next move. Negotiation is also like chess in that each move should be
designed to set up not only your next move, but several moves down the line. Generally, your moves should get
progressively smaller, and you can expect the same from the other party.

Always have the endgame in mind as you plot your strategy, and be prepared at some point to split the remaining
difference. It's almost inevitable when the parties are close but can't seem to make that last leap to a single
number. It's completely arbitrary, but it gets the job done. That's why all the offers leading up to that point are so
important: they will set the stage for the final handshake.

Finally, if an agreement can't be reached, agree to part as friends. Never, under any circumstances, burn your
bridges.
Consider mediation

Grit: In psychology, grit is a positive trait based on an individual's perseverance of effort combined with
the passion for a particular long-term goal or end state.
 Art of Negotiation

If negotiations are unsuccessful, be prepared to consider dispute resolution. Third-party mediation can establish a
constructive environment for negotiation that requires both parties to discuss, propose and resolve issues fairly
and objectively.

Grit: In psychology, grit is a positive trait based on an individual's perseverance of effort combined with
the passion for a particular long-term goal or end state.