According to the World Economic Forum’s 2018 ‘The Future of Jobs Report’, negotiation was ranked in the top ten skills needed by 2020.
What makes this skill so valuable is the resultant ability to strengthen relationships and unlock value. In this issue of Negotiation Insights, we consider how skilled negotiators co-create value by focusing more on understanding the problem the other party needs to solve, rather than the outcome they say they want.
Whether it is in business or our personal lives, it pays to look beyond the other party’s description of the outcome they wish to achieve, and instead to try to understand the problem they are trying to solve.
Imagine a Purchasing Manager informs the Account Manager from a key supplier that, ‘We need a 3% price reduction effective immediately’.
While this is a clear outcome description, it narrows perspective taking and provides no insight into the problem to be solved. In addition, the description is likely to motivate the supplier to adopt a value claiming mindset that will result in lose/lose thinking.
Skilled negotiators minimise this risk by focusing on questions aimed at understanding the problem the other party is trying to solve. For example by asking the Purchasing Manager what problem a 3% price reduction is trying to solve, the supplier’s Account Manager might learn that they have a cashflow problem due to a large customer going into receivership.
By shifting from the description of the outcome to the problem that needs solving, new insights can be gained that increase perspective taking and motivate collaboration and win/win thinking. This means the supplier can now move from focusing on a costly price reduction, to ways that co-create value. Examples could include granting the early and exclusive release of a new product to increase sales, a loan with favourable interest rates, or an audit that looks for cost savings based on a profit-sharing model.
So next time your partner says “I want to go to the movies” and you don't, go beyond the outcome description. Maybe they just want to have fun and spend time together, and if that's the case the possibilities to create a win/win outcome become many and varied.
In our next issue we look at ways organisational leaders mentor and uplift team negotiation skills.
Self-coaching tips
- Surface all problems to widen perspective taking
- Rank problems according to their importance and avoid displaying behaviours that encourage positional bargaining
- Assess whether the right stakeholders are involved and are being sequenced in the right way