How Can You Shift an Unfavorable Balance of Power in Your Favor?

You can shift an unfavorable balance of power this by acknowledging three facts.

The Power That Counts Most Is Not Real Power but Perceived Power

In negotiations, each party expresses its power and masks its constraints. You therefore need to distinguish between expressed power and real power. But the power that counts is perceived power.

The buyer’s power: The buyer may have to place an order very quickly and my competitor may not be able to supply the model desired. If I am unaware of this situation, even though the buyer’s position is objectively weak, the outcome of the negotiations will actually be based on the buyer’s power as I perceive it.

The seller’s power: If I am convinced that “there’s nothing I can do,” then I shall do nothing. If I believe “We’re no match for them, so I’ll have to accept a 20% cut,” then we will be no match and will have to accept a cut of at least 20%.

As Henry Ford said, “If you think you can do a thing or think you can’t do a thing, you’re right.”

Power Is a Trap

A buyer who refuses to pay an invoice until a dispute has been settled or a supplier reserving his response to an urgent delivery request is exercising power to create a strong position, and as we all know, you must always negotiate when you are in a strong position. The following example demonstrates this.

A sales engineer working for an engineering and IT firm had spent almost a year negotiating a major contract with an industrial corporation. After much back and forth and tricky negotiations over the price, the buyer informed the sales engineer that his proposal had been accepted. Within a few days he would duly receive a contract produced by the customer’s legal department. The buyer reassured the seller, explaining that this formality would be completed very quickly, as the work was set to start immediately.

The supplier did indeed receive a detailed contract, which he studied closely. He proposed two amendments, which were accepted by the customer. The buyer then sent the seller a final version of the contract, in duplicate, asking the seller to sign the contract so that work could commence with no further delay. The sales engineer arranged for his managing director to sign both copies of the contract and then sent them to the purchaser for signing. The buyer then asked them to start work immediately, as the signing and returning of the contracts was a mere formality.

A few days after work had begun the sales engineer became concerned because the signed contract had not arrived. When contacted by telephone, the buyer seemed extremely uncomfortable: “Yes, you’ll receive the contract. It’s just that there’s a minor problem in that our managing director has demanded that all payments be postponed by 6 months rather than as stipulated in the schedule that we had drawn up.”

The sales engineer was livid. “That’s unacceptable,” he retorted. “You drew up the contract yourself and asked me to sign it, you asked me to start work and now you want to move the goalposts? That’s completely out of order.”

The buyer seemed genuinely troubled. “I completely understand your reaction. Like you, I thought it was a fait accompli.”

“It’s unacceptable,” the seller repeated.

Calmly, the buyer pointed out, “I must inform you that our managing director is adamant. He’s prepared to cancel everything and go back to the drawing board if you don’t accept the payment terms. Please think carefully.”

The sales engineer did indeed agree to “think about it” and hung up in a rage. He analyzed the situation: He had spent almost a year conducting negotiations, had won agreement on all the terms of the contract, had arranged for work to commence based on the buyer’s promises, and was now confronted with a “take it or leave it” situation, no signature on the contract, and no means of negotiating a compromise. After a few minutes, he called the buyer back: “Having given it some thought, I’m prepared to look at your new proposal.”

The buyer expressed relief. The sales engineer went on: “The easiest thing would be for you to send the two signed copies of the contract, incorporating the amendments that you want to make. Either we’ll accept or we’ll inform you otherwise.”

He received the signed contract the very next day. He now had the security of the commitment given by the customer. He phoned the buyer to tell him, “Since you wish to delay the payments by 6 months, we shall delay service delivery by the same.” The buyer protested, “But this is really urgent for us, you can’t do that!”

Game, set, and match to the seller. The sales engineer had tilted the balance of power back in his favor.

A Constraint for One Means Greater Power for the Other

The seven great powers are “cursors” that can be set in favor of the buyer or the seller. Reversing the balance of power involves placing pressure on the other party’s constraints. In the real world, it is rare for all the cursors to be on the same side.

[The Cursors of Power] [Headings above cursors]: Size Choice Information Time Influence Sanction Legitimacy

Lastly, and paradoxically, experience shows that a highly favorable balance of power can become a constraint. First, the “weak” party will often do its utmost to avoid being compelled to sign an agreement that it feels is unfair, even if that means adopting apparently irrational behavior leading to conflict, stalemate, or even a breakdown in relations.

Second, once the agreement is signed, other problems will appear. Indeed, in order to sign a deal, “weak” parties are often constrained to make commitments that they know themselves to be incapable of honoring or to accept skewed transactions that they will then try to change through disputes (or potentially even legal action) or by reinterpreting the contract to their advantage.

Therefore enjoying a favorable balance of power does not exempt you from seeking a win-win agreement to suit both parties. You must be aware of this if you are in a powerful position. You must ensure that the other party is aware of this if you are in a weak position.