Business Negotiations: Initial Discussions

Placing an outsourcing contract, scoping a fixed bid development project, making a substantial change in the engagement scope, resolving conflict on quality of service or project deliverables… all these activities require negotiations, sometimes rather involved and lengthy. One of the first steps in business negotiations, the one that often sets the tone of the negotiation is initial discussions.

Even small scope negotiations can benefit from initial discussions being a stand-alone step. I view it critically important in many regards, one of the most important being assuring that you “do not react but respond” – deal with the issue in the most constructive manner.

Let’s consider a situation when your offshore partner just announced that a key employee is leaving the team. Instead of hitting the roof and screaming in a phone that this just the final straw and heads will roll you may want to hear what the vendor has in mind in dealing with the situation, chances are they may have a plan.

The main purpose of the initial discussion is just that – hear out your opponent. Specifically that means:

  • Listen attentively and take detailed notes.
  • Separate people from the problems.
  • Focus on interests not positions.

Let’s slightly change the situation – the vendor presented you the problem (say it was a quick call or email) and you had a chance to digest it to some degree. Next discussion is likely to require you to present your side:

  • Position (now you can say that you can’t take it anymore).
  • Expected outcomes.
  • Selected constraints. Your true situation might have more complex structure and constraints from what you are prepared to share with you opponent.
  • Introduce negotiation team. That is typical for more formal / complex business negotiations.
  • Confirm negotiation authority. That is not a bad thing to do even for small negotiations; it is required for comprehensive / formal ones.

While initial discussion is a step forward to the negotiating table in a large degree you are still in continue with information gathering. Initial discussion(s) offer yet another opportunity to learn about the situation and balance of power, in particular you typically get a window into:

  • People involved in the negotiations, their style and skills.
  • Your opponent situation and perceptions.
  • Interests, goals and objectives behind their position.

Additionally, initial discussion will give you a chance to establish rapport with the members of your opponent’s negotiating team. This is critical success factor of any negotiation, as a matter of fact the more complex and more confrontational is the negotiation the import important is to establish rapport. It is in particular important for cross cultural negotiations.

And finally a few simple tips:

  • Listen twice as much as you talk. A lot is written about active listening and it is still one of the most underappreciated skills.
  • Stay with the game plan.
  • Avid confrontation… unless it’s the game plan.
  • Avoid commitments.
  • Don’t spill the beans.

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