In our coaching engagements we often meet executives and entrepreneurs who have made several of the following 10 major mistakes when negotiating international business deals, creating huge opportunity costs for their organizations as a consequence.
What are these mistakes – and how can you avoid them?
Mistake # 1: Lack of effective scenario planning & 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 & 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.
We are 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.
Experience 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 we work with procurement specialists, they often tell us 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.
Check out our Elegant Negotiation System to learn more about how to avoid these major mistakes in your sales and business negotiations!