Negotiation is an exercise in decision-making

Most people don't view negotiation as an exercise in decision-making. Yet, decision-making is at the heart of negotiation. At the start of any negotiation, each party sets objectives, consciously or unconsciously.  Setting objectives is where you negotiate with yourself, balancing off what you hope to achieve in the negotiation with the realities of what may be achievable.  This balancing stage involves decision-making from the get go.

Once you've set your objectives, you then decide on a strategy to use in the negotiation.  If  you very carefully set definitive objectives that reflect the likely trade-offs you will have to make to achieve the objectives, you will have taken a giant step toward developing a strategy.  Having vague objectives means having a vague strategy and having a vague strategy is a ticket to not achieving your objectives.

Developing a strategy is a major exercise in decision making. Strategy is a high level view of the path you intend to take to achieve your objectives.  However, it is often said that strategy is knowing not the exact path you will take, but knowing the terrain. It is also said that once you "engage the enemy," you will have to change your strategy to reflect the new information you learn upon the engagement.  But, a well thought-out strategy will take this into account with multiple possible paths to achieving your objectives built into your strategy.  So, developing a strategy is deciding among many alternatives given the imperfect information you are working with.

Strategy and tactics are a continuum.  There is no clear line when your plan of action shifts from strategy to tactics.  The difference between strategy and tactics is a matter of granularity.  As strategy shifts to tactics, the decisions become more detailed.  As your opponent reacts to your actions, you must adapt to these reactions. Hopefully, you have already predicted the actions your opponent is likely to take and can easily respond with pre-planned actions.  All of this requires decision-making.

So, much of the preparation for a negotiation involves deciding between many trade-offs right from the start and continues throughout the negotiation.  We should place more emphasis on the process of decision-making when preparing for an important negotiation.  If we consciously consider the decision-making throughout the negotiation process, we will have better outcomes to our negotiations.

The best preparation for negotiation is to have a good alternative

I've posted a blog on my other blog at wgrimm.blogspot.com about the best way to prepare for a major negotiation.

Negotiation and Strategy are Related

One way to view negotiation is the process of getting someone or some entity to do something that the person or entity would not otherwise do voluntarily. One simple way to accomplish this is to pay the other person money. But most business transactions are not purely a matter of paying or receiving money.

Negotiation, by definition, involves another side. Therefore, the other side's behavior will affect the outcome of the negotiation. Negotiation, then, requires you to predict the behavior of the other side when faced with choices that are created, in part, by you (for example, you've offered to pay money if the other person will do something for you). But, there are almost always other choices the other side can make that are in the background, usually unknown to you (for instance, another more attractive offer). Negotiation experts teach various methods to smoke out these other choices so you can react to the other's possible choices. Most of the techniques involve asking questions and putting yourself in the other's shoes to speculate what you would do if you were in the the same situation (always hard to do).

But, you will almost always be operating with imperfect information about the circumstances the other side is facing. Operating with imperfect information is a key characteristic of developing a strategy. If you had perfect information about how another side would behave given specific stimuli, you would develop an action plan to provide the stimuli to achieve the result you are seeking. You wouldn't have to develop a strategy since you know how to cause the outcome you want.

So, negotiation involves dealing with imperfect information about how another will respond to certain stimuli in order to achieve the goal you've set, just as strategy involves dealing with imperfect information to achieve a goal you've set. But, strategy usually doesn't have "another side" who is affecting the outcome. Strategy may have many "other sides" that will react to actions you take. Further, the information on which you base your strategy will be imperfect. So, we usually see probabilities assigned to likely outcomes if you follow a certain strategy and these probabilities are, at best, educated guesses.

In developing a strategy, you use the same thought process as if you were negotiating with each of the "other sides." You will gather information in order to predict the outcome of actions you will take. But, unlike negotiation, you will not have direct feedback from "another side" when you take actions. You will see results over a period of time and not know, with certainty, whether the actions you've taken produced the results. On the other hand, like negotiation, you will have to react to responses you are observing, hoping to understand what these responses are being caused by and changing your strategy or tactics accordingly. Should you react or should you stay the course?

Preparation is the key to successful negotiating. Preparation is the key to developing an effective strategy. Preparation for both of these requires you to set clear, measurable and achievable goals. Setting these goals is usually easier in negotiation because of the focus of the negotiation. But, a common mistake in both negotiation and developing strategy is to give superficial thought to setting the goals resulting in "fuzzy" goals. Having fuzzy goals always results in fuzzy strategy. Fuzzy strategy in negotiation leads to underachieving the goals just as fuzzy strategy in a business context leads to less than desirable results. Consciously forcing yourself to step back and spend more time on setting clear, measurable and achievable goals when preparing for negotiation or developing strategy is the most important use of time for a negotiator or leader.