A key concept introduced in the workshop was the concept of “Wish, Want, Walk”. Before any negotiation, have these 3 things ready. The ‘wish’ is your dream goal or result. The ‘want’ is where you think the negotiation will end based on external market forces. This is where a majority of negotiations are closed. The ‘walk’ is the point at which it is better for you to leave the table. In other words, you are losing too much money, pride, status, etc. and are simply not worth it.
It is important to frame an offer before actually making one. By framing, I mean creating a positive atmosphere and building attraction towards the offer. It can be viewed as the momentum building phase that leads to the offer. An example from daily life is the rousing speech given by a presenter just before the big comedian, singer, etc. comes on stage.
Contrary to what most people think, your first offer should be well above your ‘wish’ point. For example, if your dream result is to sell your company for $1 million, your first offer should be well above this point (e.g. $1.5 or $2 million). Studies have shown that when one side throws out a number that is higher or lower than expected, the other party has a tendency to move their opening position closer to the opening offer.
Never make the first offer if you are unprepared. You may be setting yourself up for a big loss. Conversely, your opponent might call your bluff and ask you for your rationale, which will reveal your inexperience and lack of preparation. The most advantageous situation is to make the first offer (above ‘wish’ point) and being prepared at the same time. After you make your first offer, it is important not to say anything. You already framed your offer and elaborated your points. There is no further need to justify yourself. It’s now up to the other side to make the next move. This also applies for any counter offer you make.
As you progress through the negotiation process, don’t forget your ‘wish, want, walk’ list. As well, be sure to really listen to what the other side has to say. If things heat up, you can always leave the negotiation table and take a break. When things cool down, you can resume talks. A key thing to remember is that you should never get emotional or take things personally. Negotiation is an everyday process and you should view it as such. Furthermore, if you are well prepared, an offer you consider outrageous or ridiculous will be very easy to ‘deconstruct’.
Secondly, the negotiation process will go a lot smoother if parties adopt a ‘win win’ attitude. It is always better when both parties leave the negotiation table content with the settlement. They may not have won on every point, but they don’t feel cheated. An exception to this is when one party has a clear need for the deal. Naturally, the ‘needy’ side will have to compromise a lot more than the ‘less needy’ side. For example, in the recent $4.75 billion purchase of NB Power by Hydro Quebec, many people were shocked at the thought of giving up energy sovereignty to an outside province. However, the ‘needy side’, in this case, NB Power, had been crippled by financial debt and was a financial disaster in the making for many years. One side clearly needed the deal to be done. The process described in this post is more applicable when two parties are on more ‘equal terms’.
Keep all these principles in mind the next time you are negotiating with a supplier for lower prices or an employee wanting a big raise. It will increase your chances of success and make the overall process a lot less stressful.
