Transcript

Nolan Martin : Welcome, to another episode of the NegotiateX podcast, I am your co-host, Nolan Martin and with me today is my good friend, Aram, as usual. How are you doing, sir?

Aram Donigion : I'm great, weather's great here in lovely New Hampshire, we've had tons of rain, which I know some of our listeners out West would probably love to have, and I wish I could send some of that to you. Things are green. The weather's good. The kids are good. The dogs are good. And everything's good.

NM : Yeah, we took a trip to Lake George in New York and if you've never been, it is absolutely gorgeous, kind of a hidden gem there, around the Albany area. So definitely had a blast, if you're ever in that area, you should probably check it out!

AD : Yeah, I like that area too. Uh, we've gone – maybe not quite as far as Albany, but like Fort Ticonderoga and Lake Champlain areas – it's pretty – we've been more on the Burlington side and the Vermont side, so very pretty.

Compromise Now For A Better Result In The Future? [2:08]

NM : All right. So I'm excited about today's episode. One, because we got to hear from a listener and it's a question as to: Is it feasible or good for you to reach an outcome for the purpose of hopefully getting something better on down the road? So in this person's example, they agreed to something upfront that may not have been as beneficial as they would’ve liked because they think that in the future, they are going to get that desired outcome. Is this a good negotiation strategy, Aram?

AD : My Initial answer is no, my sympathetic maybe response is that it happens a lot. So I think that people often do this, whether it's in business negotiations or it's even in personal relationship sort of negotiations, and we will kick an issue, another issue that's really important to us down the road, because we say, “well, if we can get in now, we can make them happy now, if we can get to some sort of operational kind of happenings or understanding, now we're going to make it up later” – and my experience is that, oftentimes does not happen and so you absorb the loss and you also do some other things that we can get into, that are really negative for the negotiation partnership long term.

NM : Another reason I'm very excited about this question is that I may or may not have made the similar mistake recently. So obviously I had a client who asked me if I could basically do them a favor, and it was tied to other accounts. So the idea was: “hey give me a discount now and that in six months I'll probably pay you what you should be getting and maybe you'll get these other accounts” – and as we continue to work together, I'm starting to realize that maybe that's not going to happen, I hope it does, but so [I’m] very, very interested in helping everyone out there in the NegotiateX nation, avoid this mistake. [Laughs]

AD : Yeah. [Chuckles] So, I mean, you used the word mistake two times there – I may not call them a stake.  I think it's a common strategy people follow and the truth is, is that we will teach, if you understand people's interests and we talk about brainstorming creative options, well, one part of brainstorming options is finding places where we have different preferences, whether it's around risk or time or any number of things that can be different and so there's difference. We think about different ways to make creative trade-offs and create value long-term, between, you know, what you can do for me now today, and I can do for you over time. So we don't want to miss the point that that is, that's not a bad thing to do, I think we just have to be real careful when it's: ‘I commit now’ and ‘you commit later maybe’ – and that's the trap that we want to guard against. It’s kind of the management of our commitments and their commitments both now and in the future.

NM : All right. So how can we provide some value to this question?

The Trap Of Making A Commitment Without A Guarantee From Your Counterpart [5:11]

AD : Yeah. So let me, so maybe it's more, you know, giving a little more context here too. So recently I was working with a client who, you know, is starting their own business, having tremendous success, and in the early days, as they were trying to get the capital, you know, and find different investors, trying to scrutinize their investors, trying to find investors who shared their values and their views for the future of what this idea could be like – and that's always a hard thing to do, I think, because they're always in such need for, you know, for those funds and for having partners that they can move forward with. Anyways, I mean, so long story short, here they are now a couple of years down the road – they have one of their original investors who has become somewhat problematic and trying to, you know, extradite themselves from this difficult situation –it's a partnership that's no longer helpful and may actually affect the company and prevent the company from growing. And so the question is, should I have seen this in advance? What do I do now that I'm in a bad, you know, partnership, I've made a bad agreement? How do I get out? And that's, so that's kind of maybe, you know, what do you think of that context? Does that help maybe frame up some of what we're talking about?

NM : Yeah, I think that's perfect. So how do you get out of the negotiation? So obviously ignoring all the legalities here – neither Aram nor I have spent the time to go through law school. But how should we approach this as two individuals in disagreement and try to work towards some sort of, you know, solution or conclusion to this problem?

AD : My advice to this person was really just – we just kind of walked through each of the seven elements and thought about what are they telling us. And I think the challenge, upfront, is in this case – we have to get some alignment with the counterpart, that there's a problem, and if this investor is refusing to say, “yeah, I see the same problem and are continuing to work together, is it going to be good for either one of us?” That's really difficult. If we can at least acknowledge that there's a problem we're trying to solve and to see if they're both open to solving it, now we can get we're both at the table, right? So that's, that's kind of the first hurdle to get over.

NM : It's definitely valuable there and I'm willing to bet that's probably going to be your biggest challenge is definitely just, you know, owning it and addressing it. I feel like I said, it's going to be the biggest challenge – what do you think?

AD : Yeah, it is, it is. And we talked through ways to handle this, one is that I would leverage any relationship in the past, I would definitely show appreciation for the work we've done in the past together, I think I would frame it in terms of challenges that are occurring right now, both in the relationship, but also kind of the operational nature of us continuing to work together – and therefore, you know, does it make sense for us to continue in the future for either one of us or is there potential that these problems are going to become bigger and getting out of the situation now is actually kind of a better solution for both of us? Which starts to get to what are our interests with, you know, staying in or, or breaking apart, thinking about the ways we might do that, then maybe some creative ways, so if the other person in this case doesn't want to cash out immediately, what are some other ways we can create value for them long term? So maybe they become more of a silent investor/silent partner, and their name is not associated with it, if their name is going to cause us some damage and an inability to get other investors? One other thing would be, you know, the kind of understanding of legitimately and fairly valuing that – trying to find a fair value if we're trying to get them to cash out or leave, what would be fair and reasonable to consider as we go down that path?

Maintain Fairness And Look For Alternatives [8:53]

NM : I think as you're kind of navigating this challenge, I think it's important that you still maintain that level of fairness, that level of compassion, even if the other party is not, I think that it's going to help you get the outcome that you're looking for.

AD : Yeah. I agree. I mean, even in the conversation about what's our BATNA, our alternatives, right? So what can we do if we can't reach an agreement here? Which probably looks like some form of arbitration or litigation, as you said, you know, we're not really getting into that, we're not legal experts here; but we certainly would encourage folks to know what your BATNA is, what your walk-away is, and consider what theirs is, and even have a discussion and say: Hey, if we can't reach a place of some sort of peaceful resolution, where we can both part and go separate ways, recognizing that this agreement has kind of run its course, it was good and now it's not. There's going to be some costs to both of us, whether that's just financial or it's time, or it's, you know, our reputations, once things get out into the media. And so maybe our alternative of going one of those more legal routes isn't ideal and so we should, you know, we can have that conversation and while we're having it, to your point Nolan, being able to remain respectful, professional, moving us closer to a goal we want to be regardless of what we're getting from them. You know, you said at the top of this, you said, this is something you've kind of experienced too – and I don't know what you can share from that experience, but what are your thoughts on different ways you would manage your own situation?

NM : Yeah, I think, um, I mean, ultimately at the end of the day, I think that it's an agreement that I'm going to uphold. I don't think -- it's not necessarily detrimental to my company right now to bring it up and risk potentially, you know?

AD : Yeah, disrupting, upsetting a partner, a client that you need, I would guess, right? So it makes sense to kind of maybe go with it now, the cost is fairly manageable.

NM : I think I'm just going to have to bite the bullet and ride it out and see where it goes. We did leave in the period options, so it's like we made an agreement for the next six months, so there is some light at the end of the tunnel, we just gotta ride it out, get to that point and then, all right, I need to become better prepared to the discussion next time and hopefully get the outcome that we're, that, you know, benefits both of us. So that's kind of my situation here.

AD : So it sounds like it's a pill that's swallow-able. Sometimes I think it's important that when we make commitments, we do see them through, I think that's part of our reputation in whatever industry we find ourselves. Then we need to learn, that's the, kind of, that fourth wheel of our, our process of negotiation, we think of – what do we do in preparation, what do we do at the table, what do we do as we assess our success or our outcome? And then this review piece – and that review piece flows back to our preparation next time – so what lessons did I learn? Another situation I heard recently working with another client, who is just trying to say, you know, they're trying to price something competitively and they want to make sure that from the very beginning, from the RFP stage to even initial negotiations, they're kind of in the ballpark – and that's hard, that can be hard to do too. When a company puts in our RFP, you submit that proposal: Am I priced competitively? How do I know? And so this even earlier than, you know, getting to the negotiation table formally or getting into implementation, which are the two other places. But I think this kind of shows up there too: Am I clear on what my interests are? Is that captured in this proposal? Am I clear on, you know, maybe more than just one way to price this? Am I clear on, you know, what's fair and reasonable in terms of both precedent and practice, industry practice, the market standards, you know, that says, this is where we should be priced? I mean those are things you need to talk about as you talk about preparation. We need to be doing so that we can even enter in those early stages of the negotiation in a healthy manner.

NM : Well, today's a quick episode here in NegotiateX podcast, but this is a podcast that is all about delivering massive value to your business and to your life. So Aram, with that, what is the key takeaway, for our audience today?

Actionable Advice For Negotiation Concessions [13:04]

AD : So today, you know, we were just talking briefly about protecting ourselves from bad agreements. And I think we certainly saw that the risk is, you can enter into a bad agreement in several stages – if my preparations lousy, that can affect it; my conduct at the table; if I'm operating on an assumption that I can make it up later; I may make concessions at the table that are going to come back and bite me later, if I don't do a very good job of thinking about how I am really measuring success, that can affect it; if I'm not doing a very good job in my review, I'm not going to learn – now, all of a sudden this becomes a pattern, I make a pattern of poor, you know, negotiated agreements. And I would say, that's where I would encourage you – don't become – my biggest piece of advice is that if you've reached a bad agreement today or you're living with it, okay, got it, you're not alone – let's not let that become a pattern though. And so what are you doing? And my challenge to you would become a real observer of your negotiation behaviors, consider the things that are working well, why they're working well? Behaviors, things you do that you want to repeat in the future? And this is the more difficult one – what are the things that are costing me value, not just in this negotiation, in this situation, but long-term as we implement those contracts? And what do I need to change? What do I need to do differently to be more effective in future negotiations? If you can do that and you can get really good at being able to prescribe advice, just like a doctor would prescribe you medication for, you know, your health, you're going to become a lot more effective and that's going to be the best thing you can do to protect yourself long-term from bad agreements.

NM : I’m not even going to attempt to give a key takeaway, because I think that one was so good, you nailed it right there. So this is a podcast that is about elevating your influence through purposeful negotiations, I hope you enjoyed it today. If you have any questions that you'd like us to cover or any questions to us that you’d like to get Aram’s thought about, shoot it to us at team@negotiatex.com. For anything in this show, any resource, anything like that, you can find it on negotiatex.com/12. And I think that's it. We’ll see you in the next episode.