It’s one thing to be a good negotiator in the business world today. But it’s another to be a smarter negotiator, weaving the fine threads of trust into your dealings. The more trust you earn from your partners, the more likely you are to create a scenario where both sides will leave satisfied.
Such are the teachings of Keld Jensen, a highly sought-after speaker, acclaimed author, professor and advisor. He has helped many top firms to improve their negotiation strategies, including the Danish government, Rolls Royce, and Siemens. In his latest book, The Trust Factor: Negotiating in SMARTnership, Jensen explores the importance of better negotiation, and how it is fueled by trust and cooperation.
Jensen captivated the audience with personal anecdotes and real-life examples of SMARTnership in action in the latest instalment of CGE’s Leadership Series, presented in conjunction with the Ontario provincial government.
According to Jensen, people are always negotiating, whether it’s for business purposes, or even at home with their families. He recalled a personal example where he and his teenaged daughter were negotiating over several things, ranging from her wardrobe to going on vacation to Bulgaria and southern Europe with her friends.
“Before she had left the house that morning, we had more than 23 negotiations,” Jensen said. “I hadn’t even said good morning to my wife yet, and I hadn’t gotten to the office to talk with my employees and my suppliers yet.”
Jensen then revealed an interesting statistic. “People have between 10,000 and 12,000 negotiations annually,” he said. “Divide that by 365 days, and you’ll realize that up to 80 per cent of what we consider as communication is actually negotiation situations.”
The key to a successful negotiation, says Jensen, is based on four core concepts. If they are not executed correctly, it can cause the entire deal-making process to fall apart.
“There is huge potential (for success) up there, but you have to focus on the NegoEconomics, the choice of strategy, the rules of the game, and creating trust,” he says. “If you’re not successful in those four areas, you will not succeed in negotiation.”
When engaging in new business ventures, Jensen indicated that all people are tuned to the same internal radio station, WII-FM, a clever acronym for “What’s in it for me?” Despite being an aspect of every business deal, Jensen explained that there is more to creating strategic partnerships than that alone.
“With SMARTnership, we have to look into communication, being trustworthy, convincing people, and translating a message,” Jensen said. “We have to look into negotiation skills, our values in a negotiation, cross-cultural understanding, how to conduct and lead our team, and our emotional intelligence.”
Jensen also touched on the concept of zero sum, or distributive negotiating, where one side profits while the other loses. He illustrated this concept by comparing it to a poker game.
“In a poker game, you’re basically identical to a zero sum negotiator,” he said. “If you have a really good hand, you don’t open the game by saying, ‘Oh, look at my cards, they’re very good. I’m going to win.’ You’re trying to pretend you’ve got bad cards. You’ll send out a smokescreen, bluff, lie, and do whatever you need to do. On the other hand, if you’ve got really bad cards, you’ll be doing the same thing. This is exactly what happens with zero sum (negotiating).”
Using SMARTnership helps to create a situation where both parties collaborate in order to decrease risk and ensure that both sides gain something positive as a result of the agreement. As Jensen notes, SMARTnership is analogous to a jigsaw puzzle, where both parties hold half the pieces required to complete it.
“When we move into SMARTnership, the parties are focused on how they can help each other reduce cost liabilities and risk,” he said. “So, if zero sum is equal to poker, SMARTnership is equal to a puzzle. When you turn up at a negotiation, you have 50 per cent of the puzzle, and your counterpart has the remaining pieces. Your challenge is that you have to put down your pieces to the puzzle in a timely manner, and you have to convince your counterpart to do the same. You (also) have to make all the pieces compatible to each other.”