Collaboration vs Negotiation

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Hey, everybody, Roland Fraser here with Business Lunch's snackable content episode. These are the light short episodes that we create for you that go with our longer ones that I do now with Ryan Deiss. So listen to the longer episodes on Wednesday. Listen to these shorter ones on Mondays.

So for today, I wanted to talk.

A little bit about the difference between how some people approach deals versus how most people approach deals. Most people approach any transaction between them and someone else as a negotiation. And negotiation's great. They're great books, written it on. And our friend Chris Voss wrote a fantastic book called Never Split the Difference. But I just want to let you know that I think that a better way than negotiation is collaboration. And here's why. So negotiation, in our mind, we think about negotiation. We think about that there's going to be a winner and there's going to be a loser. There's going to be someone who's trying to get something out of the other person that they want, but at the cost of the other person giving up something that they want. Collaboration's a little different. With collaboration, both people are trying to get to a common goal. Okay, so the first thing is, I think, just framing anything that you are interacting any situation where you're interacting with someone else and you're working towards a goal or an outcome that's desired that you collaborate by identifying a common goal that you desire and you work together to move towards that goal as opposed to your goal is, is to, let's say, buy a business or a car or whatever for X dollars or for the least dollars possible. And the objective of the other party is to sell the thing to you for the most dollars possible. Okay. The difference is if you can have a conversation before you start and you can agree on an outcome that you want. The outcome, let's say in a business sale would be, I want to buy the business, you want to sell the business. So the next thing then that I would talk about is what do you want for the business? What do you want for the business in a negotiation? I might not ask that. I might, if I'm a good negotiator, I'm going to want you to say the first price so that I can then have that as a point of reference to go, go with. But in a collaboration, you're not asking for that. You're not asking for it at that point, hoping that the price is going to be lower than the price you're willing to Pay. You're asking that to say, what is it that would make you happy in this deal? And get an honest answer. Now, if they come crazy, crazy high, your conversation in a negotiation might be, well, there's a whole bunch of reasons that that's not gonna work. I mean, you've got overhead of this much and your profit margins below industry. I think these key customers might be leaving you, et cetera. Or with a car, somebody might walk around it. This is classic used car, right? Well, there's a dent there. And I don't know about that transmission. I think I hear a knock in the back. Those tires are gonna have to be replaced. That's not really fun, right? I hate dealing with things like that. What I don't hate dealing with is we have agreed that you want to sell this car or you want to sell this business, and now we're going to talk about how do we make that happen. Now we're on the same side. And when I sit down to negotiate with somebody, if I'm in a transaction like that, and I said negotiate, I understand. But when I go into an environment where I'm trying to accomplish an outcome that I want, I want to collaborate. And so I will actually physically change the room in a way that allows me to do that. If, for example, if there's chairs on each side of the table, I'll literally pick up the chair, drag it around to the other side, and sit side by side with the person and say, okay, let's work this out and get you what you want within the context of what makes sense. Does that sound good? Now we're collaborating. We're not negotiating. Otherwise, I might sit on the other side of the table and say, all right, what do you want for the business? What do you want for the car? Right? Well, I want this much for it. Okay, well, there's gonna be all kinds of problems with that. Here's why that can't happen. That's not really the most effective way. And it's not gonna leave either of you terribly happy, because both of you are gonna feel like you're giving up something. So I think negotiation is a subtraction game, and collaboration is an addition game. So when you collaborate, you're gonna agree on the outcome. We want this transaction to happen. Now we're gonna talk about what's going to make you happy with it. Okay? As long as the answer that comes back from the person who's on the other side of is within the zone of fairness that you believe applies to this transaction to Pay for whatever it is that you're trying to accomplish, or it doesn't have to be money even. It could be within what you're willing to do, what services you're willing to render, what help you're willing to give. You know, what assistance is there, whatever. When you agree on what has something that's within the zone of fairness, that's identified by the other person that you're having this conversation with. Now, as long as it's within what you feel is fair, your objective as a collaborator is to get them that price or to get them that outcome. As a negotiator, you're focused on a different outcome. You're focused on, okay, now they've given me this point, but I want to be down here. I want to be on this, this end of the zone of fairness. And if, if you go out as a collaborator, then what you end up with typically is negotiating terms, not outcome, right? So let me ask you this. If you could acquire a business that was worth a million dollars and you could acquire it for 500,000, or you could acquire it for a dollar a year for a million years, which deal would you rather have? I'd rather have the dollar a year for a million years because it's going to take me 500,000 years to get there. Now, that's an extreme example, but let's look a little bit differently. Let's say that you're looking to acquire a house, and you can acquire the house now for a million dollars, or you can acquire the house for 800,000, let's say, because that's, that's 20%, might be a reasonable zone of fairness negotiation. But if you can get the seller to be willing to accept because you've agreed on their price, if you can get them to accept terms that are very favorable to you, that maybe even make the deal possible to happen, maybe you didn't have 800,000 cash, but you could actually make the deal happen if the seller was willing to do 200,000 now and 200,000 a year for four years, four more years after that, that's still a million dollars, but it's very, very favorable to you in terms of the terms. So my takeaway that I would like for you to have today is that if you can agree on the desired outcome, the seller is willing or the person you're negotiating or having the conversation or collaboration I prefer with is willing to do something within the zone of fairness, that is within market value, let's just say, then it's going to be about what terms can you agree on that will be acceptable to them, that will allow them to achieve their outcome and allow you to be willing to not haggle with them on the price or whatever the terms are. That's really the takeaway I want you to have. So just think about reframe negotiation to collaboration. I hope you enjoyed this. We'll see you next time. Thanks.

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