When contemplating a business negotiation, the immediate focus for many falls squarely on the substance – the price, the terms, the deliverables, or the legal clauses. We meticulously prepare our positions, our bottom lines and our opening offers. Yet, leading research and practical experience reveal a powerful, often underestimated factor for success: the strategic process by which the negotiation unfolds.
This article aims to shift your perspective from solely focusing on the “what” of negotiation to strategically planning the “how.” It will outline the critical role of proactive process planning, explore seven key questions to discuss with your counterparts before substantive talks begin and highlight how this strategic focus enhances negotiation outcomes, participant satisfaction and the building of strong working relationships.
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This shift in perspective, emphasizing the deliberate and strategic planning of the negotiation process itself, is advocated by leading institutions in negotiation research, such as the Program on Negotiation at Harvard Law School. By prioritizing how the negotiation will be conducted, parties can lay a foundation for mutual understanding, reduce friction and increase the likelihood of reaching a durable and satisfactory agreement.
1. Why the Process Matters – Beyond the Outcome
Focusing on the process might seem secondary to the ultimate deal points, but its impact is profound. Research consistently shows that negotiators are more satisfied with the outcome of a negotiation when they think the process has been fair. This perception of “process fairness” builds trust and makes future interactions smoother.
Furthermore, consciously considering and agreeing upon process elements with your counterpart fosters a better working relationship from the outset. It demonstrates a willingness to collaborate not just on the substance, but on the very framework of your interaction. This collaborative approach is crucial for long-term business partnerships.
Conversely, neglecting the process leaves it to chance, potentially leading to misunderstandings, procedural disputes and “unpleasant surprises” that can derail talks or leave parties feeling dissatisfied, even if a deal is struck.
2. Shifting Focus – The Strategic Imperative for Process Planning
Given the significant impact of the process on satisfaction, relationships and overall success, leaving the process of business negotiation up to chance is strategically unwise. Instead, negotiators should make a conscious decision to plan the process and, importantly, engage in a preliminary discussion with their counterparts about key procedural elements before formal substantive negotiations commence.
This “negotiation about the negotiation” is a strategic imperative. It allows both parties to align expectations, surface potential procedural conflicts early and agree upon a roadmap for the talks. This proactive engagement maximizes the potential for a positive and productive negotiation experience for everyone involved.
3. Key Questions to Negotiate About the Process
To guide this crucial preliminary discussion, the following seven questions serve as strategic pillars. Addressing these proactively lays a strong foundation for the entire negotiation.
– Who Will Negotiate?
It is strategically important to discuss and agree upon the composition of the negotiating teams. Knowing who will be present, what their roles are and what level of authority they possess avoids “unpleasant surprises” such as key decision-makers being absent or individuals without authority dominating discussions. Jointly deciding on participant roles ensures that the right people are in the room.
– Where Will You Negotiate?
The location of the negotiation can have subtle but significant strategic implications. Negotiating at your own office allows you to control the environment and feel at ease, providing strategic comfort. However, traveling to the other party’s turf can communicate your seriousness and commitment and also offers opportunities to observe your counterparts in their natural surroundings, potentially revealing useful insights.
Neutral ground or virtual settings each offer different advantages and disadvantages regarding logistics, power dynamics and cost. Discussing this allows both parties to weigh these factors and find a mutually agreeable solution.
– What Issues Will You Discuss?
Aligning on the scope of the negotiation is critical. You may have a clear idea of your agenda, but your counterpart may have a very different set of topics in mind. For this reason, it is strategic to take time to brainstorm a list of all the issues you might cover and discuss this list to ensure mutual understanding and preparation. While new issues may emerge, a shared initial understanding of the agenda prevents significant disconnects.
– What Approach Will You Use?
Negotiators come with varying styles and preferred approaches (e.g., competitive/positional vs. collaborative/interest-based). Strategically, it is beneficial to discuss and attempt to pick a negotiating strategy that’s acceptable to both sides.
Aiming for a strategy that focuses on both creating value (finding mutually beneficial solutions) and claiming value (distributing that value) is often most productive and leads to more sustainable deals. Agreeing on the general spirit of the negotiation sets a positive tone.
– What Ethical Standards Will Guide You?
Ethical standards can vary and strategic negotiators understand the value of bringing ethical considerations to the surface early. Expressing your intention to behave fairly and honestly throughout the process of business negotiation will highlight these concerns and can inspire all involved to be more vigilant about their manner of decision-making and information sharing. From a legal and reputational standpoint, establishing a shared understanding of ethical boundaries is invaluable.
– How Will We Finalize the Deal?
This question is particularly crucial from a legal perspective. For legal reasons and clarity on commitment, it is wise to discuss in advance how you will seal your eventual deal. Will a verbal agreement be sufficient (rarely advisable in complex business deals)? Or should parties sign on the dotted line to show their legal commitment through a formal written contract? Clarifying the required documentation and the specific individuals or roles with the authority to legally bind their respective organizations prevents confusion and potential disputes later.
– What Is Our Timeline?
Setting expectations regarding the negotiation timeline is a strategic move to manage pressure and maintain momentum. Clarifying how much time each party has to hammer out a deal, discussing potential deadlines and perhaps even setting milestones for reaching agreement on certain issues can eliminate stress and confusion once talks officially begin and prevent the negotiation from dragging on indefinitely.
4. The Foundation of Strategy – Deep Preparation
Successfully navigating the strategic process of business negotiation relies heavily on thorough preparation. This “deep preparation” goes beyond merely understanding the substantive issues, market conditions and potential alternatives. It crucially includes preparing for the process discussion itself.
Be prepared to discuss your preferences and rationale for each of the seven key questions. Understand the authority you have to make procedural commitments. While the brief mentions securing the deal quickly as a preparation element, this speed is best achieved within a well-planned and agreed-upon process, not by rushing the process discussion itself.
Effective preparation for the process ensures you can engage constructively in these preliminary talks and advocate for procedural elements that serve your interests while being acceptable to your counterpart.
5. Adapting the Negotiation Process
While the strategic process framework, guided by the seven key questions, provides a robust foundation for planning and executing business negotiations effectively, it’s crucial to recognize that not every negotiation is identical. The depth, formality and focus of your process planning and discussion with counterparts should therefore be adaptable. Applying the framework is not a rigid, one-size-fits-all checklist, but rather a set of critical considerations to be tailored based on the specific context of the negotiation.
Consider the following factors when adapting the strategic process framework and deciding how much emphasis to place on each of the seven pillars
- Deal Complexity – Simple, single-issue negotiations require less formal process discussion than complex deals involving multiple variables, parties and potential future implications.
- Relationship Maturity – With established partners built on trust, process discussions can be more informal and implicit. New or adversarial relationships benefit from explicit, clear agreements on process and ethical standards.
- Stakes and Risk – High-stakes negotiations warrant more detailed planning, particularly regarding who is involved, their authority and how the final agreement will be formalized legally.
- Cultural Context – Different cultures have varying norms regarding formality, directness and decision-making speed, which will influence the approach to discussing process elements.
Timeline Urgency – Highly time-sensitive negotiations may require focusing only on the most critical process elements (e.g., timeline, authority, finalization method) while streamlining discussions on less urgent points.
Conclusion
In conclusion, while the substance of a business deal is undeniably important, mastering the strategic process of negotiation is equally, if not more, critical for achieving satisfactory outcomes, building strong relationships and ensuring the durability of agreements.
By proactively engaging with counterparts to discuss and agree upon the procedural framework – guided by the seven strategic questions outlined – negotiators can create an environment conducive to trust, fairness and efficiency. This deliberate focus on how you negotiate is not just a procedural step; it is a powerful strategic tool that elevates the potential for success in the complex world of business negotiation. Embrace the strategic process and you are likely to find that the outcomes are not only better, but the path to getting there is smoother and more reliable.
LP Legal & Trading Services offers expert Business Negotiation support. Leveraging a strategic, process-driven methodology, informed by our deep legal and trading expertise, we guide clients through complex discussions to achieve favorable, fair and robust agreements. Partner with us to navigate your negotiations effectively and build strong foundations for your business success.
FAQs
Why is focusing on the process so crucial, aren’t the deal terms more important?
- While deal terms are the tangible outcome, the process significantly impacts how satisfied parties are with that outcome, regardless of the terms. A fair process builds trust and strengthens relationships, which is vital for implementation and future dealings.
What if my counterpart is reluctant to discuss the process beforehand?
- Introduce the idea gradually. Explain that a brief discussion about how you’ll talk can save time and prevent misunderstandings later, making the negotiation more efficient for both sides. Frame it in terms of mutual benefit – saving time, clarity and setting a positive tone.
How does discussing ethical standards help the negotiation?
- Discussing ethical standards openly sets a precedent for transparency and honesty. It encourages both parties to be mindful of their behavior and decision-making, reducing the likelihood of deceptive tactics or breaches of trust that can derail talks and have negative legal or reputational consequences.
Is this strategic process approach suitable for all types of business negotiations?
- Yes, the principles are applicable to most business negotiations, though the depth and formality of the process discussion may vary. For complex, long-term deals, a detailed process discussion is highly recommended.
How does ‘Deep Preparation’ relate specifically to the process?
- Deep preparation means preparing not just your substantive positions (price, terms), but also preparing for the process discussion itself. This involves thinking about your preferred answers to the seven key questions (e.g., your ideal location, preferred timeline, list of issues) and understanding why you prefer them, so you can discuss them constructively with your counterpart.