The Walk-Away Option

Many years ago I took a course on negotiations, one that over the years has served me very well.  We spent quite a bit of time talking about a very popular style of negotiation known as the win-win type.  Win-win is an attractive option for discovering clever ways to increase the overall value of the deal.  It also instructs the negotiator how to avoid limiting chances for reaching agreement by building “fortresses” around principle-based positions.

 Cover of my latest novel:  Pursuing Other Opportunities

Cover of my latest novel:  Pursuing Other Opportunities

When it works, it is a great way to go.

In practice, however, I’ve run into many more “winner-takes-all” types of negotiations.  This style of negotiation takes a different mindset and a different approach than win-win.

And unfortunately, I’ve learned the hard way that when “win-win” meets “winner-takes-all” in a negotiation, the latter almost always ends up doing better.

A different set of tools

Winner-takes-all negotiating is hardcore.  Unlike win-win, which relies on flexibility, creativity, and the ability to come up with trade-offs that increase the size of the pie, winner-takes-all is about figuring out how to effectively push for what you want by taking it from the other party.

The first step in any negotiation is to figure out what kind of discussion you are having.  While many negotiations could be handled as win-win, both sides have to be willing to go that direction for it to work.  As soon as one party starts down the path of winner-takes-all, you’re most likely going keep going in that direction.

To handle winner-takes-all negotiations effectively, here are a few of the tactics I’ve seen work well over the years.

  1. Keep your cards close to the chest.  When the other side knows what you value, they are likely to try to extract a higher price when giving it to you (this is exactly the opposite of how win-win works.)
  2. Do your homework.  While you should try to hide how you value the elements of the deal, you need to understand and expose the values to the other party.  In a winner-takes-all negotiation, information is power, and you want the power scales tipped in your favor.
  3. Know your bottom line.  What is the your walk-away position, where it is better for you to have no deal than the one on the table.  Have contingency plans that are ready to roll if talks break down or don’t achieve your minimum acceptable outcome.  At a minimum this will give you negotiating leverage, and in the worst case you have a workable alternative to a negotiated settlement.
  4. Use time to your advantage.  The person in the greatest hurry usually ends up with the worst deal.  Be prepared to temporarily suspend the discussions if things aren’t going your way.
  5. Employ a proxy negotiator and DON’T let him know your bottom line.  You’re likely to get a better deal when the person negotiating for you keeps pushing because they don’t know where your goal line is located.
  6. Make yourself scarce.  A corollary to rule 5 – the harder it is to get your reaction and concession, the more likely you are to claim concessions from the other side.
  7. Argue strongly, pontificate, even threaten, but try to avoid taking entrenched positions (of the “I’ll never give in on this” type.)  This is also needed for successful win-win negotiating.  Building a fortress around a position often leads to a walk-away, even when both sides could have been satisfied by a compromise.
  8. Consider the long term, but keep your eye on the short term.  If you will have an ongoing relationship with the other side of the negotiation, you might want to temper your tactics a bit, but generally if you are in a winner-takes-all discussion, you need to focus on winning.

Example #1

I learned the value of using proxies a number of years ago in a negotiation for an acquisition – one that failed to positively conclude.  I was the lead negotiator in discussions for an international JV, one which would involve a very complex deal with an Israeli firm.  After several tough visits and negotiating sessions, I had what I thought would be a killer deal.  I took it to my boss, and he roundly rejected it, critiquing several of the deal elements.

While I’m not sure my boss actually knew his bottom line, I was positive I didn’t know it.  In response to his rejection, I went back to the other side, and – low and behold – I was able to extract additional concessions.  Up until that moment, I had been under the impression that the Israeli firm was stretched to the limit when proposing the original deal.  I was wrong.

Unfortunately, the revised deal was again rejected by my boss.  After that, the deal fell apart.  This points out a pitfall to be avoided in winner-takes-all negotiations – going back to the well too many times and thus wearing out the other side’s patience.  While making time an ally and going into “delay mode” might have allowed me to squeeze out a few more concessions, the outright refusal by my boss frustrated the other side to the point that they decided to simply walk away from the project.

Example #2

In a labor union negotiation, my chief objective was to get the union on the same medical plan that my other, non-union plants.  We decided to keep this objective secret from the other side, and instead focus discussions as much as possible on other issues.  At the same time, our investigation into the union’s priorities told us the most important objective for the other side was the establishment of a 401K.  Another secret from my side was we were about to agree to provide this benefit to all of our facilities.

During negotiations, we traded the 401K for the medical concession we needed, and managed to wrangle a smaller than expected wage increase, as well.  In a win-win negotiation (which, in my experience, union contract negotiations rarely are) I’m certain we would have gotten less for our concession.

Of course, our position was helped considerably by having a contingency plan should the negotiations not achieve our walk-away position.  We let those plans leak to the union so they knew we were prepared to meet any threatened strike with an alternative.

Conclusion

While win-win negotiating is a valuable technique, and one you should have in your skill set, winner-takes-all is more common in business and the style of negotiating you should focus on the most.  Preparation is the key to successfully winning such negotiations, and skills and techniques make a considerable difference in the quality of the outcome.  In an important negotiation, make sure to be ready to employ all the tools at tactics at your disposal.  28.3


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Below is a montage of my published books.  The four to the left are Novels, all in the "Corporate Thriller" genre.  The book on the right is a non-fiction work which provides a framework that managers and executives can use to think about and utilize corporate politics.

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