400 / CONDUCTING NEGOTIATIONS
Negotiating with power
INFORMATION
BATNA
RESOURCES
NEEDING
THE DEAL
TIME
SUNK COSTS
SKILLS
Power is a central factor in determining the outcomes of the negotiation
process. Effective negotiators understand that power is not static and
thus engage in continuously assessing and enhancing it. It is, however,
equally important to know how to negotiate when you do not have power.
Understanding power sources
Having an attractive
alternative to a
negotiated agreement
gives you the power
to say “no” to a bad
deal and walk away
from it.
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NEGOTIATING WITH POWER / 401
The fewer deadlines you are
pressed with, the more power
you have to wait and explore
opportunities for better deals.
The more skilled you are in the
art of negotiation, the more
power you have to produce
better joint outcomes.
Being well informed enables
you to support your arguments
and also to challenge the other
party’s arguments.
The party that has more resources—financial,
technological, or human—has more power.
The less badly you need the
deal, the more power you have
not to settle for it.
The more willing you are
to let go of your sunk costs
(such as financial and
emotional expenses), the
more power you have.
RECOGNIZE YOUR
TRUE POWER
Weak parties often
underestimate their own
power and overestimate
that of powerful parties,
so try to make an objective
assessment of the amount
of power you have.
Tip
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402 / CONDUCTING NEGOTIATIONS
Negotiating from a
weak position
If your position is weak, never share this
information with the other party. New
opportunities or information may arise
at any point, which may strengthen your
BATNA and your negotiating position.
Even if your position is weak overall,
try to identify any areas of strength you
have and use them as leverage. Even
the most powerful party will have some
weaknesses, so try to discover these
and target them.
Never make “all or nothing” deals
from a weak position—you may miss
out on opportunities that would have
arisen as the value of what you are
bringing to the table increases during
the negotiation process. Instead, make
deals sequentially and in small chunks,
to ensure that the other party will be
more likely to recognize the added value
that you bring to the table.
Case study
CREATING POWER
When Thomas Stemberg, the
founder of office products retailer
Staples, needed a new round of
capital to expand his business, he
went back to the venture capitalists
who had already financed the
company. This time, however, they
closed ranks and demanded a
higher equity share than Stemberg
was willing to provide. Determined
to break the venture capitalists’
cartel, Stemberg sought alternative
sources of funding—the pension
funds, the insurance companies,
and high net worth individuals—
with which he could negotiate
from a more powerful position.
Even if your position is weak
overall, try to identify any
areas of strength you have
and use them as leverage
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NEGOTIATING WITH POWER / 403
USE LIKEABILITY AND INTEGRITY
When in a weak position, do not
underestimate the power of personal
likeability. People do business with
people they like and whom they can
trust to keep their promises and
deliver good value.
Tip
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