Negotiating-It’s all about power

by | Jun 26, 2009 | Negotiating

Negotiation is power perceived but not necessarily used. Negotiating is all about assessing where the power lies. With negotiation, advantage comes of either convincing others of your power or properly reacting to power on the other side of the negotiation. Negotiation requires determination and skills. One of those skills is understanding “where power lies and what to do about it.”

Whether it’s buying a multi-million dollar software solution or buying a house, understanding where the power lies and who holds it is crucial. Who has the power in the negotiating parties? Your perception of where the power lies will determine how you react in the negotiation.

Establishing a perception of power is itself a negotiating tactic. As an example, if I walked down the street of a dangerous neighborhood I would certainly be in jeopardy of being attacked. If I walked down the same street wearing a Karate gi with a black belt I would significantly reduce my chances of getting harmed based on the perception that any attacker would think I am more than capable of defending myself. What the other party perceives is their reality.

What the other party perceives from your actions and image is their reality. When they feel you have a better bargaining position, their negotiating position is perceived by them as weaker than yours. In this case, perception determines reality.

In other cases, need determines the reality of power. Who has the power is inversely related to “who has the greater need”? Greater need equals less power. Do you have a greater need to sell your products/services or does the customer have an issue that must be solved immediately and your product is key to their solution? One way need is expressed is “who has the greater sense of urgency?” Remember back to the last time you went shopping for a car. Who had the greater need to make a deal that day, you or the car sales person? How quickly did you need to buy the car: your old lease was coming due next month vs. your old car had thrown a rod? Conversely, how badly did the sales person need to sell the car: for example, in order to make their monthly quota? So how do we assess who has the greater need to take action, the seller or the buyer? The relative balance of urgency vs. patience: sometimes this is obvious. Sometimes personalities add extraneous influences that shift the perception of need. And as we said, perception is reality in negotiation.

Urgency: Both parties must have a need to enter into a transaction in the first place. The party with the most urgent need is the less powerful party in the negotiation. Let’s look at supply and demand. The greater the demand for your product and service, and the fewer avenues for supply, the greater your power in the negotiation. A perfect example of this was the Toyota Prius when the price of gas hit $4.00 a gallon. Everyone wanted the Prius (high demand) and there was a three month backlog (low supply). Did buyers get to negotiate on the price? I don’t think so. Having a vehicle that gets over 40 miles per gallon at a time when the price of gas jumped gave Toyota dealers the power to stand by the price of the Prius, or even add on surcharges. Buyers, reacting to escalating gas prices, wished to get the Prius as soon as possible; they perceived an urgency to react to events and therefore enter into the transaction.

Personality plays a role in the perception of urgency and also in ones reaction to urgent situations. Blue and Green personality types, being intuitive, are more concerned with the process (Greens) or experience (Blues) than in the results. There is no driving need to bring a negotiation to closure, so these personality types will not have the urgency of Golds and Oranges. Golds usually start the negotiation with a preexisting timeline of when things should be checked off; it is in their nature to schedule things and put time-frames in place. They will be procedural in a negotiation. Find if their timeline requires your product now, if so, there will be urgency on the part of the Gold to tick off this box. On the other hand, Oranges will shoot from the hip and like to score points and win. Oranges are naturally urgent (“gotta win”) I need it now.

Patience: Who can wait the longest? Marketing is all about generating urgency, convincing the public that “they want it now”. Think of this when you next look at TV commercials. A great historical example of this is the Paris Peace Accords with North and South Vietnam in the early 70’s. First the Vietnamese argued over the shape of the table: round or rectangle. You can see how this negotiation would shape up. But the clearest indicator was when the US team checked into some hotel rooms in Paris and the North Vietnam team placed a 2 ½ year lease on a villa! Who was in a hurry? The party with the most patience has the power.

So in a negotiation (1) determine the perceived ratio of patience to urgency and (2) who has the greater real or perceived need – the buyer or the seller. These will allow you to see where the power in the negotiation will lie. Yet a special negotiating skill comes from understanding how different personality styles will react to pressure and urgency and what each color perceives as a need. Using the color personality tool by Insight Learning we have the advantage of knowing that:

– Oranges are natural negotiators since they look at everything as a competition.
– Golds will always negotiate for the best financial deal based on their comparison study.
– Greens will look at every possible alternative and negotiate the best price based on quality and capability.
– Blues will leverage the relationship they have with you to get a concession.

Remember that when it comes to negotiating you have a choice as to whether or not you want to enter in to the negotiation. You are much better off assessing where the power lies before you engage!