Driving Transactions
Wednesday, July 24, 2024


kristen carroll negotiations Sun Tzu’s The Art of War is referenced in more negotiation strategy discussions than any other written work, even though it dates back to the fifth century B.C. While the world has changed immeasurably since then, strategy and negotiation techniques have remained both critical and timeless—largely because they are so closely tied with human instincts to ensure our safety, security, and self-preservation. The text itself covers military strategies and tactics, but modern-day business dealings bear striking parallels with ancient warfare.

We negotiate constantly. From the most trivial choices to the most significant decisions, in both the business world and in our personal life, we are constantly faced with the need to lobby for our own best interests. Whether our default is preservation of either our own self-interest or the greater good, the best negotiating strategies are the same.

As business owners and leaders, all too often we mistake rigidity, force, and might for business savvy and acumen. The ego, which often drives these behaviors, is the greatest obstacle to bargaining success.

The second greatest obstacle is the heart.

My wife and I have been in the market recently for a new property in Key West, and we fell madly head over heels in love with a Frank Lloyd Wright-inspired home that was an absolute delight to us as artists. The property didn’t meet our original criteria, but we made allowances because we were blindly in love.

Long past our initial accord, the seller kept adding restrictions and changing the terms. Love-struck, we agreed to every change—all of which made the deal worse for us. We finally reached an agreement with the seller. We had told our close friends, mentally moved in, visualized the furnishings, and fully settled on this property as our new home in the Keys.

Sensing our hunger, the changes kept coming—that house, though. We couldn’t help ourselves. We work so hard, we felt that we deserved it. We were going to retire there. In the end, it would all work out. But with each iteration, the deal became more foolish. Finally, we returned to our senses.

"As business owners and leaders, all too often we mistake rigidity, force, and might for business savvy and acumen."

We hired an attorney to complete the negotiations on our behalf, mostly because we needed a neutral third party not emotionally involved to tell us how ridiculous the deal had become. Ultimately, we knew we couldn’t make such a life-changing decision with our hearts: We had to use our heads. Once we removed our rose-colored glasses, we saw that the seemingly innocuous changes had turned this into a terrible deal, and we walked away. In hindsight, it became startling obvious how we had made several of the most common negotiation errors.

Spending more time thinking about your priorities than your opponents’ objectives.
The easiest way to lose a negotiation is to consider only your objectives and then doggedly pursue them at all costs. The first rule of any negotiation is to determine what each party wants from the deal so that each party walks away feeling successful. If you only focus on your needs and priorities, you will be oblivious to the glaring selling points that will help close this deal for the opposing party.

Making decisions with the heart, not the head.
Have you heard the common advice that the first person willing to walk away from the negotiation is going to win? There’s a reason for that: If you’re willing to walk away before the negotiation has even started, it means that in your own mind, you have nothing to lose. As a result, you are going to keep a clear head in the game and your heart will stay out of it. Don’t get me wrong: Your heart is good for a lot of things—even in business—but not when it comes to keeping your emotions in check.

Missing the signs.
Sometimes, no matter how much you want it or how great it seems, it’s just not meant to be. I have seen many businesspeople push deals through at a great cost to their companies, as well as their wallets, just because they wanted it, despite all the signs telling them to stop or wait. If you are a person of faith, pray. If you make decisions with a loved one, talk each one through thoroughly. If you look for signs to help guide you, read them. If every door seems to be slamming in your face, by all means, look for a different path.

There are messages out there, and wise negotiators not only look for them but also listen to them. If something seems just too difficult to push through, it’s often because it’s not the right fit. Save your dogged pursuits for things clearly aligned with the grand scheme of your vision and purpose instead of one-off transactions that can end up causing far more damage than the benefit they offer.

Trying to seem tough.
We are often told to act “as if.” If you don’t have a large company, act as if you do and you someday will; if you don’t have the confidence to accomplish a task, act as if you do, and suddenly you will accomplish it. There’s a lot of truth to that concept and it’s one I’ve personally used earlier in my career. However, when you find yourself in negotiations, silence your ego and become a quiet observer. The negotiator filled with hot air is almost always without exception the easiest to pop. Do not resort to pomp and circumstance. Do not bite off more than you can chew. Be humble, speak less, and be wise. Mastering negotiations is an act of self-discipline and wisdom, not of ego or primordial strength.

Refusing to compromise.
My high school U.S. History teacher emphatically stressed the importance of both negotiation and, ultimately, concession during the drafting of the United States Constitution: “Compromise saved the union,” Mrs. Dumais reminded us again and again. I think it was the sheer frequency of times I heard her repeat those words that helped them make such an impression on my often bullish and strong-willed younger self.

As it turns out, the lesson of compromise was one I took with me from high school into adult life and it proved to always be a great starting point, if not lead to a solid end result. While some will advise you to stand your ground and never back down, I’ve found that a better strategy is to identify a starting point or an ask that includes the very best-case scenario for you; from there, a willingness to settle somewhere around the core essentials of the transaction is what really matters. For example, you may want to use a valuation for your company that is at the top of the scale, but in reality, you may be well-advised to take an offer at the median that better reflects the true value to the buyer. Start high and whittle down to what you are willing to do, without sacrificing your value or principles. That is essentially what compromise is all about.

Not doing enough research.
Despite my years of involvement in countless major negotiations, I am still shocked when a major decision is made on a whim or an impulse. Don’t get me wrong, I am as decisive as anyone is, and if you want to talk gut instinct, I have it in spades. But that skill set is meant to be a complement to research and due diligence, not a substitute. Remember the old saying: Pray as if it all depended on God and work as if it all depended on you. Similarly, in the world of negotiations, we must leap as though our instinct will never lead us wrong but research as though we have no instinct at all.

Lacking a clearly defined vision.
It is hard to pass up a good opportunity, but the only thing worse than missing out is grabbing hold of something that will ultimately set you back. Not every opportunity is a good choice for you. You may come across the deal of a lifetime but if it takes your focus off your true path, a seemingly great opportunity could turn into a death spiral.

Approaching negotiations is like any major decision in life. It’s best to be sober in your thinking, present in your mind, centered in your spirit, and humble in your approach. [CD0517]

Kristen Carroll is the cofounder of The LMC Group. She can be reached at kristen@lmc.group.