Negotiating is part of being a small business owner.
You negotiate contracts with suppliers. You negotiate employment contracts with your employees. You negotiate sales agreements, you negotiate pay-rises, you negotiate your rent!
More often than not it is a stressful process (if not for you, then certainly for the other party) because the "normal" mindset is that one party loses to some extent, and the other party wins. So, you get ready to do your best when you enter that room, in order to "win".
Once you allow that mindset to establish itself, negotiations become an emotional exercise - we get stressed, as I've already said; we get angry, we get fearful, we feel like celebrating, we feel wronged, we feel tough, we feel weak.
But it doesn't have to be like that.
In fact, it shouldn't be like that because research has found that the results of an adversarial negotiation often end up counter-productive.
Even if you feel you've "won" the outcome is short-lived because having "lost" the other party will be out of there as soon as they can!
This is because emotional negotiations make us take up a position - what we stand for, what we want out of it, what we are defending, what we want to win out of it.
However, if you think about it, the objective of any negotiation is not to win your position but in fact to gain what you are interested in.
Once you understand that negotiations are about Interests Not Positions, you can allow yourself to let go of some details that you originally felt you had to win in order to assert your position - you can agree to a win-win as long as you both attain your interests.
The INP or "Interests Not Positions" Model is based on differentiating your interests as against your positions, and then understanding that you don't have to stick to your position in order to attain your interests.
Here is an example.
Two sisters were in their kitchen negotiating over the use and possession of an orange.
Each sister felt that they must have the orange and any other position was not negotiable, so they settled in for a win-lose negotiation.
One sister kept saying that she must have the orange because she needed it. The other kept saying that she must have the orange because her future career depended on it.
However, the wise mother asked each of the girls why they "must" have the orange.
The older explained that she needed the juice because she was low on Vitamin C, and besides, she loved the taste of the juice, so she must have the orange.
The other sister said that she needed the rind because she was going to cook a pudding for a competition that would make her famous as a cook, so clearly, that was more important.
What each sister explained was her position. But why she took that position was her interest.
In this case, wise mother was able to get them to agree to have one sister get the rind and the other the juice - interests attained in a win-win negotiation.
Why is it important to focus on interests, not positions?
One of the reasons is that as human beings, we characterise "the other side". They are "greedy" or they are "obstinate". This places the other party into a "position" that you must counter.
What happens then is that you take up your own position of being "against" something. If they are "greedy" you negotiate against them getting everything they want. If they are "obstinate" you double down on your position.
On the other hand, the INP model attempts to strip characterisation away.
If someone holds a position ("the juice is in the orange, I must have the whole orange") that is usually caused by their interest ("I want to drink the juice"). Once you understand their interest you can focus on how both your interests can be met at the same time.
The INP Model of negotiations is to take 6 steps:
- Separate the people from the problem
- Distinguish between their interests and their positions
- Consider your best alternative to a negotiated agreement (more of this later)
- Agree that silence is golden
- Agree that you will both pursue fairness
- Agree that only one person can get angry at a time
Step 3 is to consider your best alternative to a negotiated agreement. Why?
If you know this, you can value what you could end up with if you don't get to an agreement, and decide if that is good enough for you.
Ask yourself "If we don't reach an agreement, will that make things worse for me?"
For example, if you are selling your car and you receive an offer $1,000 below your asking price - in that circumstance, what is your best alternative to a negotiated agreement?
If you don't reach an agreement, you can sell it and be down by $1,000.
Or, if you don't reach an agreement, you can refuse the offer and wait for someone else to respond to your advertisement.
Which outcome is your best alternative to a negotiated agreement depends on your interests (let's agree that in this example your position is to get the extra $1,000).
If your interest is to pay off an overdue loan now, then waiting for the next offer that may not even arise may not be your best alternative.
On the other hand, if your interest was to get rid of the car sooner or later, then it may not be your best alternative to accept the low offer.
All business owners have to negotiate something sometime. Life would be a lot easier if everyone could see things our way!
However, life isn't like that, and even if you were the rudest, most aggressive, most focused individual on getting everything that you wanted and hang the consequences, you have to admit that life could be easier if you removed emotions from negotiations.
If you were able to understand each other, especially what the outcome meant to each other's positions, you could agree on pay-rises that reflected the value of the person and additional responsibility; you could agree on a fair price for a sale that gave you a reasonable profit and the customer an affordable product; you could agree on a long-term lease that saw you settled and allowed the landlord peace of mind.
If you want to know more about the 6 steps in the INP Model, don't forget you can get your free copy of our Whitepaper called "The INP Model - Negotiating Interests Not Positions".
We also have other free Whitepapers, Reports and Checklists that you will find useful in your business - you can get our free resources here.
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And that's not the end of it! Give us a comment on what you think - what's your negotiating style and how has it worked for you over the long term?
