With a few solutions left in front of you, it’s time to move toward a final agreement. Do this by applying your alternative and making sure what’s on the table is better. Then make commitments carefully so that the agreement is workable for all parties.
It’s possible, maybe even inevitable, that you and your counterpart will have already stumbled on a discussion of alternatives by this point. As with all of the elements, consider addressing them as they come up in the conversation. But if that hasn’t happened yet, now is the time.
As we’ve already discussed, you want a solution that’s better than your best alternative. Measure the remaining solutions against this alternative. If one of them passes, you’re in good shape. In many negotiations, you never need to share your alternatives with the other party; you silently measure the solution against your best one.
If the options left after applying fair standards are not better than your best alternative, use that fact to push you—and your counterpart—to come up with better options.
For example, you could say, “Right now, the options on the table are good, but not nearly as good as what I can do on my own. Is the same true for you?” Or you might say, “For us to reach an agreement, we need to work harder to come up with something better than my team could do elsewhere. Right now I believe I could get 10% more value by going with another vendor, and perhaps as much if we simply used what’s left in inventory of your old product.”
Be sure to frame the discussion as an effort to do better than your alternative, not as a threat. You might have said, “If you can’t do better than what’s on the table, I’m going to go with a different vendor,” but while threats like these sometimes get the other party to pay attention, most often they derail the negotiation. Your counterpart will likely make her own threat and you’ll get stuck in a back-and-forth.
If your alternatives are weak to begin with, you likely will not want to reveal them, no matter the message. In this case, focus all the more on getting creative with your options.
Remember that even if your own alternatives are weak, the other party’s may not be any better. Throughout the negotiation, look for signals of how good your counterpart believes his alternatives to be. You took an educated guess during your prep work, but listen to what he actually says in the negotiation. Watch for clues about what he would do if he had to walk away.
Keep in mind that your counterpart might exaggerate how good his alternatives are. If you suspect that’s the case, do some research or even ask some questions to find out how realistic what he’s told you is. Does his organization really have other vendors who provide a similar service? Might they truly be able to do it on their own? Can they really wait you out a few quarters until you do what they want?
Furthermore, just because some of these things are possible doesn’t mean your counterpart actually wants to see them come to pass. Ask questions that challenge how attractive his alternative is. Can the other vendor his company is considering really meet its volume needs and deliver the same quality you can? What costs would the other party’s organization incur doing it themselves? You’re not just testing the strength of the other party’s alternatives here; you’re also making your counterpart see his weaknesses. Educate him: “It can take months to transfer to a new provider when you take into account all of the equipment that needs to be replaced.” “The operating life of our competitors’ products is two years with no guarantee. Ours, while slightly more expensive, have an operating life of twice that, and we are the only ones who provide a two-year guarantee.” This may not change your counterpart’s view right away, but it will give him food for thought.
If you still aren’t able to identify an option that’s better than your best alternative, then you may need to resort to that alternative. That’s OK: It’s not a failure to walk away if you can’t negotiate an agreement that’s better. Never negotiate just to agree. Instead of walking away, you may also be able to wait it out until you can develop a stronger alternative or until the other party’s weakens. Perhaps you can negotiate with others in your counterpart’s organization or find other companies that can meet your needs.
However, if you have successfully come up with solutions that surpass your best alternative, it’s time to think about commitments.
Now that you have a few strong options left on the table, assess them against the following three criteria to narrow them down further and make sure you should commit.
You can apply these three criteria during the discussion silently, or you might need to step away from the table and talk to others before making a commitment. Either way, devote careful attention to this step. You want to see through what you’ve agreed to and be sure the other party can do the same.
Leave committing to any options until the very end. Even if you seem to have found options that meet all the criteria, force yourself to stay in the circle a bit longer, inventing and refining, to make sure you’ve come up with the best possible arrangement. Do this whether your negotiation is a five-minute hallway discussion or a months-long formal process. In the same way that you want to start preparing for a negotiation as early as possible, you also want to commit to its outcome as late as you can. As you do, make sure you’ve avoided the common mistakes in the box “Watch Out for Common Mistakes.”
At this point, if all has gone well, you should have a final agreement that meets the seven elements of success.
Of course, not every negotiation goes this smoothly. Every negotiator faces obstacles and struggles, and even in the circle of value, there may be contention. In the next chapter, I’ll talk about how to adjust to realities in the room; in the next section, I’ll talk about problems people most often encounter and how to handle them.
There are a few places where many negotiators get tripped up when using the circle of value approach. Here are the most common ones to watch out for and avoid: