Tuesday, March 21, 2017

The Top 10 International Business Negotiation Mistakes - And How To Avoid Them!


 
 
In our coaching practice I often meet executives and entrepreneurs who have made several of the following 10 mistakes when negotiating international business deals, creating huge opportunity costs for their organizations as a consequence.

In this short post, we will take a closer look at these mistakes and present proven, pragmatic ways to avoid them.
 

Mistake # 1: Lack of effective scenario planning and preparation

Too many negotiators default to their personally preferred standard procedure in negotiating deals, because this approach has enabled them to succeed in the past.

If you find yourself getting involved in complex, international or intercultural deals, your default home-country way of doing things may backfire. In such situations, robust planning and preparation is required, in which you take into account all of the interdependencies and cultural factors influencing the deal, develop multiple scenarios both at the strategic and the tactical level, and recalibrate or refine your negotiation plan on an on-going basis during the actual negotiation, based on the cultural and interpersonal patterns you observe.

Experience shows that the best negotiators prepare their interactions meticulously, which allows them to be more present, agile, powerful and effective during the actual negotiations.

Mistake # 2: Not setting the scene properly

The best negotiators we have met over the years seem to initially spend a lot of their negotiation time setting the scene, priming their counterpart, framing their position, and anchoring the value their product or solution offers.

If there is ONE thing which seems to separate the experts from the amateurs in negotiation, it must be the quality of the priming, framing and anchoring applied.

This is especially true for international, intercultural negotiations, where framing provides a means of maintaining a clear focus throughout the business conversations.

As the saying goes – frame or be framed!

Mistake # 3: Unclear team roles and responsibilities

Most negotiation teams we work with seem to fare relatively well when it comes to appointing the lead negotiator and expert roles.

However, we often find that despite all of the power-mapping negotiation teams seem to go through during the preparation phase, in order to better understand the power-distribution and interdependencies of their opposing team, they relatively rarely map out who on their team will be developing what type of relationship with which person on the other side. They also rarely seem to consciously plan who will be making which concession at what point in time to which person on the opposing team.
 
In addition, experience shows that it is important to have at least one person on your team charged with managing the agenda, timelines, milestones and deliverables, as well as observing and interpreting the potential changes in team-dynamics, roles, body-language cues and priorities in the opposing team.

I am often amazed to see even highly experienced, seasoned negotiators totally ignoring the obvious body-language cues their counterparts share during the negotiations. The danger here is that we get so involved in the conversation, especially when the tension and complexity levels increase, that we no longer consciously see what is really happening right before our eyes.

Mistake # 4: Lack of constructive conflict

Many business leaders and sales people seem to dislike the conflict, tension and emotional stress, which are simply a natural ingredient of most negotiations. Most professional purchasers and sourcing specialists know this fact intuitively, leveraging tension as a strategic tool during their negotiations, in order to destabilize the sales people.

The best sales negotiators we know have learned to reframe such tension and use it as an opportunity to create innovative solutions with their clients.

In the context of intercultural negotiations, it is important to note that the amount, timing and the way in which trades are made can differ significantly. Not using a culturally appropriate trading-style is one of the main reasons why intercultural negotiations frequently stall or become totally blocked. 

By managing conflict, tension and concessions strategies in a psychologically and culturally appropriate way, we can develop stronger bonds with our counterpart and get them to invest in a solution we jointly own!

Mistake # 5: Ineffective management of complexity

When negotiations get too complex, the tension level tends to increase fast, and the resulting sense of frustration can quickly lead to dangerous black-or-white solutions, which usually don’t satisfy the underlying needs of any of the parties involved.

Managing complexity usually requires us to limit the number of negotiables we focus on at any one point in time. Experience shows us that a range of 6 – 8 negotiables provides a manageable level of complexity which most negotiators seem to be able to work with effectively.

However, experience also tells us that having too few negotiables is just as bad as having too many. In both cases most negotiators tend to focus on the obvious, quantitative negotiables more, which usually leads to a discussion purely around price, rather than value.

Mistake # 6: Not preparing breakthrough strategies in advance

Handling tactics, power-play, and blocked situations on the spur of the moment often doesn’t provide successful results, unless you happen to have a long track-record and a wealth of relevant experience in business negotiations, or if you are equipped with an unusually strong intuitive guidance system.

We have seen even the most seasoned negotiators getting into totally blocked situations, especially when tension levels increase and their brain goes into fight-or-flight mode. A key breakthrough strategy thus is to monitor and actively manage your personal emotional state, as well as leading your counterparts towards a constructive process of creating common ground and co-creating a mutually beneficial outcome. We suggest brainstorming potential breakthrough strategies with your team in advance, as part of the scenario-planning, and involving a seasoned negotiation coach where needed.

Mistake # 7: Selling and challenging instead of co-creating

Although there clearly are many exceptions to this rule, we find that especially in Europe many business leaders do not like being sold to. They also often don’t respond especially well to having their business strategies, plans and activities challenged by sales-people (the Challenger Sale approach often doesn’t work well in this part of the world). And increasingly, we hear executives state that the win-win approach often produces compromises which aren’t really satisfying.

One of our clients has even coined the term win-win is for losers!

In today’s complex, multinational, multi-option, multi-polar world, we need to go beyond cleverly crafted compromises, and instead orchestrate the context for co-creating more holistic, sustainable, truly satisfying solutions with our counterparts in the business-negotiations we get involved in.

Mistake # 8: Not probing and checking assumptions deeply enough

We often find in our business negotiation coaching assignments that our clients believe they have understood what their counterparts really want – and they usually have already developed a whole host of potential solutions for the perceived problem. It seems that many negotiators enjoy the sense of satisfaction involved in the problem-solving process. So as soon as they see a problem, they immediately start solving it.

This highly transactional problem-solving approach often leads sales teams to present their clients with the perfect solution for the wrong problem!

Even if you provide clients with exactly what they asked you for, you may find that they are still not truly satisfied with what you give them. Especially in complex business negotiations we need to take time to check our assumptions and dig deeper, in order to understand the true underlying personal and business motives, as well as the respective hierarchy of needs driving the dynamics of the negotiation.

Mistake # 9: Not structuring the negotiation process effectively

Our negotiation coaches are often called to intervene and provide support in negotiations that have become blocked – or totally unstuck. One of the first things we do in such situations is to conduct a meta-negotiation with all parties involved, to redefine or recalibrate the rules of engagement, clarify the expectations, define the desired deliverables, develop a common denominator, and agree on mutually acceptable ways to take the negotiation forward.

Such meta-negotiations are especially important and effective in the context of intercultural business negotiations, as they help to create the common ground which is usually required, in order to establish a sense of mutual trust and transparency. Creating such small but significant incremental agreements, and linking them up logically, can provide a quick and effective way to break through blocked situations and to create solutions that satisfy the real needs of all parties involved.

Mistake # 10: Ineffective deal closing and post-deal implementation

Many procurement professionals admit to experiencing what they call purchaser’s remorse after closing a deal, especially if they learn later that they could have got a better deal, if only they had fought longer and harder.

The best sales negotiators seem to help their procurement partners by putting together a sound business case and coherent, relevant business story (that is why relevant storytelling is so important in the sales process), enabling the buyers to make a better case for their purchase within their own organization.

When I work with procurement specialists, they often tell me that this is the most important thing they would like to receive support with from the sales people they meet. And at the same time it is the MAIN thing they usually don’t get.

Learn more about how you can improve the results of your international negotiations at

http://www.elegant-success.com/success/index.php/success-coaching/real-deal-coaching.html
 

 

Tuesday, March 14, 2017

The Power Of Priming


 
 
Once upon a time, in the Wild Wild West, when thirsty cowboys would finally find a well where they could draw water for themselves, their horses and their cattle, they would find a flask or bottle of water next to the pump. In those days, the hose which was supposed to transport the water up from the bottom of the well, was often made of leather or a similar type of material, that would get dry and brittle over time, if it was not used frequently. You could work the pump as much as you liked, but it would not draw up any water for you, as long as the hose was dry and brittle. So you needed to gently pour the water from the bottle provided into the dry hose, which would become moist and more supple in the process. And with that, the cowboys could draw up as much water as they wanted.

This process was called priming the pump.

Thus as a thirsty cowboy, you had to first make a key decision when you got to the well:

Would you quench your thirst immediately, with the water provided in the bottle?

Or would you invest the water into priming the pump, deferring the possible immediate gratification of quenching your thirst, but with the realistic expectation of gaining much more of the precious water in return?
 
Using Psychological Priming Techniques In Negotiations

Psychological priming techniques essentially leverage a tendency of our minds to take shortcuts when faced with complex decision-making situations. It seems that our mind can consciously juggle only four to nine bits of information at a time. If we are faced with a vast amount of information and variables we need to take into account when making a decision, we reduce the complex rush of input we receive from the world in and around us into a shorthand version of reality.

Cognitive biases are mental shortcuts we use to solve such data-overload situations. They speed up the processing in our brain, but sometimes these shortcuts lead us to drawing conclusions so fast, that we miss what is really important. We tend to look for information that confirms our beliefs and ignore information that challenges them. When pattern recognition fails, we create patterns of our own – the mind fills in the gaps.

Every person, experience and object we encounter triggers an avalanche of associations in our mind, and most of the resulting thoughts, feelings and impressions are biased, based on the shortcuts and mental maps of the world we have created in the past.

Psychological priming takes advantage of these mental shortcuts, which works best if the person being primed is not aware of it. Let us look at a number of priming techniques which are frequently used by expert negotiators to influence the subconscious decision making patterns of the people they find themselves negotiating with:

-          Affect heuristic:

First impressions focus your thinking and directly affect any decisions you may take

-          Recency bias :

We link what we think and believe to the most recent credible data we have received concerning a topic

-          Status & authority bias :

Data and information provided or supported by a credible authority figure is believed more readily

-          Conformity bias :

Conformity is a strong, subconscious survival instinct, e.g. conforming to norms, majorities, statistics on best practise, market intelligence, what competitors are doing, etc.

-          Availability heuristic :

We believe something to be normal, if we can find an example or a physical representation of it, but don’t believe something exists (or that it is possible), if we have never seen or heard it before. The more available, concrete and credible a piece of information is, the faster you process it and the more you will believe it.

-          Confirmation bias :

We like to be told what we think we somehow already knew – this satisfies our need to right

-          Hindsight bias :

Even when presented with sensational new information, if it is presented in a credible manner, we asume we really already knew what we just learned, and call it common sense

-          Introspection illusion :

We like to believe that we really do understand our true motives, needs and desires, and we like people who help us to maintain this illusion

-          Choice supportive bias :

The more expensive a purchase, the greater our loyalty becomes for it. An emotional connection is created to something we view as being precious. Once they have bought something expensive, people will fight very hard to defend their choice and avoid purchaser’s remorse.

At first sight, each one of these priming techniques may seem to be all too obvious, and easy to detect. As expert negotiators know, the real power of priming comes into play when you start stacking them, by using five, six or more of the techniques simultaneously, swiftly and precisely, so that the conscious thinking processes of the counterpart become overwhelmed. As a result, the priming messages slip right past the conscious filtering process and speak directly to the subconscious mind, where the real decision-making happens.

These techniques are so powerful, that even if you happen to detect several of the priming messages your counterpart may be applying during a negotiation, as long as he or she stacks enough of them, one on top of the other, fast enough, and with precision, your subconscious patterns will still be triggered.

So, whenever you are involved in negotiations, ask yourself :

« Am I still driving, or am I being driven ? »