Preparing well for negotiations can be hard work. It is no surprise then that less experienced negotiators are tempted to cut corners to save time and effort. Understandable as it is, not preparing well can proof to be expensive. One of the most common type of shortcuts is to make assumptions – these can be dangerous.
Experienced negotiators will spend an inordinate amount of time and effort preparing for a negotiation. It is said that some negotiators will spend as much as 60% of the total time invested in a negotiation preparing. Only 40% is actually spent communicating with the other side. Gathering information, especially about the counterparty is key.
A broad range of information about a counterpart is needed. This includes information about the counterparty’s key objectives, their needs and their alternatives. Other helpful information may include the resources put at their disposal, any performance incentives associated with the outcome of a negotiation, their criteria for judging success and other related factors such as potential deadlines. Having a good understanding of your counterpart’s perspectives is critical.
Getting reliable information about a counterparty can be hard work, especially if the counterparty makes efforts to hold sensitive information back. Given the challenges and difficulties this can present it is no surprise that less experienced negotiators will be tempted to substitute assumptions for real information, particularly when under pressure. Worse still, assumptions often slip in inadvertently.
One example that I often encounter is an assumption about the objective of a fee negotiation. Inexperienced service providers will often assume that their counterparty’s sole objectives is to get the lowest possible price. However I have come across many situations where in fact a buyer is more concerned with budget certainty, quality or speed of delivery rather than with the absolute quantum of the fee. I have even come across a number of instances where potential clients only cared about the size of the discount but not about the starting point from which the discount would be calculated. This obviously makes a big difference to how a negotiation could be conducted. Making the wrong assumption will lead to unnecessary or wasteful concessions.
Sure, when given a choice it would be great to get all of the above and the lowest possible price – but why give them that choice? It is better negotiation technique to present the other side with trade-offs, e.g. price vs. speed or price vs. certainty.
In the absence of available information we have to make assumptions. Often these are however influenced by our own perspectives and perceptions rather than a calm and detached analysis of available data. When negotiators have to work with assumptions good negotiators will be clear about which assumptions they had to mak. They will then use the information exchange phase to get an insight into how accurate their assumptions were. It is the hallmark of good negotiators that they know which questions to ask and how to put these so as to get the most informative answers. They are also always on the lookout for additional informational clues during the process of a negotiation to support their data gathering.
The best way to manage the use of assumptions is to create a list of key information requirements used to provide a quote and prepare for the negotiation and likely flow of concessions. Include in that a column for the source of this information. If you don’t have hard evidence or data than the information is an assumption – to be tested in the course of the negotiation.
It is almost impossible to avoid using assumptions – but the harder you try and the more you look to test these – the less they are going to cost you.
