TLDR: The goal of any negotiation is to reach agreement, but unfortunately the journey there is usually painful.
There are a lot of reasons why a negotiation will suddenly break down. In many situations deal talks run into trouble because the two sides can’t agree on some detail but such situations occur more frequently when you’re not careful about how much time and emotion you’ve invested. Indeed, people tend to waste too much time and energy on things that ultimately don’t matter. It’s easy to get too attached to your original goals and react negatively whenever the trajectory of the negotiation is headed in another direction. To avoid such problems, there are a few things that both parties must understand to help a move a negotiation forward. For example, you must understand the common goal and common interest. The only way a deal will occur is if there is something that both parties want so identifying that and understanding the motivations is key advance a negotiation. The Harvard Business Review continues with more recommendations:
- Be transparent and explain the why of your points. It can be surprising how seldom people explain the why of a position for which they are fighting. Take even the previous example on personal deal compensation. If something is going to impact you personally, it may be better for you to disclose it — at least the other party will understand. So often it is taken for granted that the other side fully appreciates why you are asking for a term or condition when they actually have little clue. Before you can do this, you also need to make sure you fully understand your own why for each of your points!
- Calculate the materiality of each point. Much of the time sink of negotiations is unfortunately spent on elements that don’t really matter — things that will not materialize, or if they do won’t have a major impact. Legal and tax counsel is always critical and highly valuable, but can sometimes also be the tail that wags the dog. Do the math and calculate how material a point is — then determine if it is really worth fighting for in the bigger picture.
- Look for points that have an asymmetry in value. Once you understand the math of a negotiation, look where there may be asymmetry. There are always points where there is a fundamental difference in how each side perceives the value. To be effective in negotiation you need to comprehend the balance of trade on every key point. Basically, look where your currency is worth more. Consider, for example, the purchase of a house. If the eventual price is the most important currency for you, then see where there may be a different lever (a different “currency”) to trade for your desired lower price. Sometimes a seller may care more about the timing or certainty of a closing than the price. Taking out a financial contingency, or letting the close happen on whatever time frame the seller wants, may gain you disproportionate benefit in the price. Remember the bigger context and have the empathy and rationality to think about it from the other side.
