Let’s consider the following scenario:
I have prepared very thoroughly for a negotiation. I determined my objectives with regards to price and my best acceptable outcome is €95 and my worst acceptable outcome is €80. Based on this I decided to open at €100. From management I’ve received a mandate to go as low as €89. 3 months in the negotiations, I have made concessions within my mandate, the other party has countered, but we are still nowhere near a deal. Now the clock is ticking and my deadline is approaching within a couple of days.
What do I do?
Assessment of Power
First thing you do, is you go back to your original power assessment. In that assessment you may have concluded that you had more power because you assessed that they are under more time pressure than you to conclude the deal. At this stage you ask yourself: “has anything shifted to reduce their time pressure?” Did I make a wrong assessment originally? If not, then read no further. Just stick to your plan, based on your assessment and evaluation of the situation, the time pressure should force them to capitulate or concede significantly when the deadline nears. You’re in a good place.
Let’s take another scenario. You went back to your power assessment and this time you determined that you had slightly less power. If this would be the case and you were in the situation where the deadline is approaching fast with no deal in sight you should consider the following:
1. Meeting and Move planner
Determine how many proposals you can realistically make before deadline day to remain credible and that gives the other party time to review the proposal. This does not necessarily coincide with the amount of physical meetings you could actually have as proposals can be done via phone/email or web conference too. Review past negotiations and the actual moves that were made historically (people are creatures of habit and follow similar patterns). You would be surprised to see how many proposals were done on the last day. Let this help you on how to structure your moves in the final stint of the negotiation.
2. Plan moves accordingly
Make sure you get your move plan to fit the reality of what you will be facing. Put yourself in the shoes of the other party, and consider what they will likely propose. With some well-thought out moves, you should be able to bridge the gap quite easily.
3. Conditional Trading
Every move you make should be conditional. If after 3 months of negotiation you all of a sudden start making significant concessions you may lose credibility, this may set a dangerous precedent for the future. So at this stage if you are forced to make significant concessions then do so conditionally on all variables. In very simple terms: every time you concede, make sure you get something of value in return. This way, you remain credible and coherent
So what if you have done all of the above and you have made a proposal that sits at your mandate of €89 and you still haven’t reached a deal? The observant reader would have noticed that the mandate given did not equal the identified worst acceptable outcome (which was €80). As a negotiation consultant we see this situation a lot, being that there is no plan in place moving to the worst acceptable outcome.
That is step one, always make sure you have a last resort move plan developed that will move you to your worst acceptable outcome. So when do you activate it? Doing so to early, would mean leaving money on the table, doing so to late would possible mean the deal is lost.
Triggers
First, make sure you have determined triggers that will initiate the move plan to the worst acceptable outcome. In other words, have specific moments and situations internally agreed that initiates the move plan to the worst acceptable outcome. Such triggers can be time based, behavioral based or based on external factors. Examples of triggers are: 1 day before deadline and we are still 20% apart or they have escalated the conversation to a very high level of hierarchy or, a market report showing a significant downtrend in the economy. Making all these decisions upfront based on scenarios that will trigger us to our worst case scenario will allow us to pro-actively negotiate and make more thought-out decisions instead of being reactive to the situation.
Be credible
So let’s say your trigger has been activated and you have to move towards your worst acceptable outcome which results in you making a significant concession whereas previously you were extremely conservative. This may impact your credibility with the other party. So how to deal with this?
1. First escalate the negotiation to a more senior level
Introducing a sudden move to an alternative plan introduces a new playing field, thus typically more senior decision makers need to be involved.
2. Second, link the large concession to something the other party has done
For instance something the other party has said or made possible. Examples could be: they re-introduced a variable you really wanted to have in the proposal, or they have escalated the conversation or, they allowed access to new distribution channels which you previously did not have. Find something that the other party did that could justify your sudden big move. The added benefit is that it will give them satisfaction as they can take the credit. Just remember you NEED a rationale to move if you make a significant concession.
3. Follow your alternative move plan:
Now you can follow the new alternative move plan and stick to it. Be wary of any emotional reactions happening when senior executives take over a deal. You still need to control the proceedings to make sure the moves are done with coherence. Pressure does funny things, even with the most experienced people.
Capitulating
This subtitle is definitely not the one you were looking for when you started out this negotiation, but it may be a necessary one. Sometimes we need to capitulate which means accepting the counter party’s last proposal. If that falls within our worst acceptable outcome it may be the only option. Just make sure you don’t let ego come into play and make sure you act accordingly. If it is not within your worst acceptable outcome, you make need to make a ” take it or leave it” proposal or consider walking away from the deal. In any case, when in the final stretch of the negotiation make sure you: Make it memorable If we’re giving in to their proposal, we have to make it count. This can’t be just another call or just another meeting. They need to feel it’s a real moment, it has to feel different. Use it to build a relationship Don’t hesitate to show your clear reluctance in giving in, thus allowing for more satisfaction on their side. It’s okay to let them win, but use it to create a better relationship. Use this moment to set the foundation for the future. Don’t capitulate via email do whatever you can to meet them physically or at a minimum by phone as you’re trying to stress how big this moment is. You could even extract a press release or another concession at that moment.
To conclude, if you ever find yourself in a situation where the clock is ticking and you seem to have overstretched on your objectives, have a back-up plan in place. Be clear on when it triggers and find a clear rationale to this sudden move. Then if you find yourself in a situation where you need to capitulate, make it memorable, make it count and let them win.
Martin Pilch 
