вторник, 5 июня 2012 г.

When negotiation is stuck!

Here's English version of article written by Moty Cristal, our Professor of Professional Practice in Negotiation Dynamics, published on Forbes Russia. The original Russian version you can find here.
Dear readers! If you are with me on this column, I guess that you have read some of my previous ones, and are interested to learn more. And this is communication. Not negotiations. I read your interesting comments and with some I agree and some makes me feel how challenging is providing negotiation tips in a written form, without the depth of the context. In negotiation, the context and the subtext are more important and influential than the text itself. An advice to a woman will be different from an advice to a man. A tip for an experienced salesman will be not be relevant for a guy who negotiates his salary, and a process design for a government official will not necessarily work in private sector.

So, here is my suggestion to you: while posting your comments, try not only to "shoot" but also to "talk". Try to direct me towards what is in your mind, what you are interested to learn about in the field of negotiations. From your comments, I've already picked issues for the next few columns: how to deal with difficult negotiators, how should I start my negotiations, what is the difference between the "art of sales" (which I'm not an expert..) and the art of negotiations, the main differences between a two-party process and multiparty negotiations, and even the need for a good summary of the existing books on negotiations, which 95% of them are written from an American perspective and require a significant adjustment when applied in Russia.

Now, imagine the following scene. They were sitting there, facing one another, and hardly said a word. It was obvious that both of them wanted the deal. It was obvious that the alternative was worse. It was obvious that they ran out of time, and it was clear to them that it will end with a compromise. But still, negotiations were stuck. No one wanted to make the first move. No one wanted to be perceived as the weak side. If you picture yourself in that situation, the first step out is to understand why negotiations are stalled.

We identify three main reasons for a stalled process: (1) There is no "ZOPA"; ("ZOPA" is a common term in the international language of negotiations, and it stands for "Zone Of Possible Agreement". The first time I introduced it in front of Russian speakers Tel Aviv University students, they smilingly explained to me the meaning in Russian!); (2) There is no relationship between the parties, so no one trust each other and (3) Tactical stalemate where each side "awaits" the other to make a concession.

The way out of stalled situation is directly linked to the reason.

If there is no ZOPA, it means that at least one of the parties has a better alternative. In other words, the maximum that A is willing to pay is less than the minimum B is willing to accept. Probably, because B knows that tomorrow a new client will come who will be willing to pay what he requires. To simplify, B has a better alternative. Exploring whether there is or there is no ZOPA should be made at the early stages of the negotiations. It is done by learning the market, gathering information about past deals, or just asking a direct question: What is the range that you are willing the sell? As a negotiation doctor with many clients who asked for an advice for stalled negotiations, we realized that they should not have entered into this process from the beginning because there was no ZOPA there. However, if no one has a better alternative, A must buy from B and B must sell to A, and a ZOPA exists, then probably negotiation are stuck due to a different reason.

Russian negotiation culture is rooted in Russian history. This is why the concept of relations in Russia is different than the concept of relations in the West. In US and Europe, relations are seen as instrumental to the "making money" purpose, and many times a deal will be finalized after a meeting or two. In Russia, this will never happen. In Russia you must build relations, before you start talking about figures and details. And, what if you must make a deal with someone you don't trust? There are two tools which help us overcome stalled negotiations as a result of no trust/relations: (a) Time. If you can afford investing more time in the relations, take the time and re-engage with your counterpart outside the negotiation room: dinner, social event, open conversation about world affair. One of my most precious advises to business people who negotiate with Russians is that every minute and euro you invest in relations will pay off five times in the deal itself; (b) If time will not generate close relations, and a ZOPA exists – try to use a third party intervention. A mediator, a facilitator or a talented lawyer can serve as a "go between" in order to make the deal despite the lack of trust.

Tactical stalemate is, however, the most common situation. Despite the fact that a ZOPA exists, parties know and respect each other, they still find themselves entrenched in their positions, unwilling to make the first move towards a compromise. This situation, in Russian negotiation culture, is even more challenging, as "compromise" in Russia is sometimes interpreted as a weakness, despite the fact that all parties involved know that they will settle, it turns to be a game of "who blinks first".

There are two ways out from this kind of stalemate. First: go first. If you care about the deal more than you care about "not losing face" you should make the first concession, but – not for free. You should say: I'll be willing to compromise and offer you 10% more if…. And here – you can insert whatever condition you choose. That will, probably, take the negotiation forward as your counterpart will be forced to reply or reciprocate. Moreover, by designing and suggesting a smart condition you can keep control over the process, and controlling the process is leading paradigm. Second way out is to change the setting. "The setting" is the overall atmosphere or venue where negotiations are conducted. In the last column ("Negotiation as a play") I emphasized the importance of the "setting": Number of participants, who is in the room, round or rectangle table, food or no food, morning or late night, all these are essential "setting" components. Any time negotiations are stalled – for tactical reasons – the wild joker card is a change of the setting. Bring food, bring your lovely assistant, bring your threatening boss or move to a private café. I can guarantee you that something will move forward, and once you control the process – it will move towards your preferred outcome.

To conclude, if negotiations are stalled, you should diagnose the reason. If there is no ZOPA – you should end negotiation and resort to your alternatives. If there is no trust – use third party intervention, or embark in a longer process of building trust outside the negotiation table. If it is a tactical stalemate – try to move first, and – like in Aikido – lead your counterpart to your desired outcome. If you can't afford making the first concession – just pull out the "setting joker", change the setting and take it from there.

And I'll sign with the famous line from the Scorsese 1976 "Taxi Driver" movie: "Are you talking to me?" Looking forward your comments. I'm here to talk. Tell me more about what you would like to hear.

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