Should you go first in a negotiation, or wait and counter? It’s an age-old question that generates much debate among negotiation experts and lay people alike. My take? In virtually all cases, I prefer to go first. Here are three reasons why:
This is a concept that is rooted in vast psychological research that teaches us that the first proposal in a deal tends to fix the mind on that proposal, for both sides, for the duration of the negotiation. Studies also show that the more ambitious (read “higher”) the number, the better the outcome for that party. So unless I have inadequate information to make an offer – in which case I seek to learn more – or it is their proposal and one I have little information about, I look to go first to ingrain my proposal.
2. Leadership and control
Absent a dominant bargaining position, and an opposing party whose long-term relationship matters little, there is virtually no opportunity to persuade others through sheer force. In your typical commercial negotiation, your opportunity and job is to influence the other party through persuasion. One of the best ways of influencing others is to lead them through your vision and framework for the deal, from the outset. Your framework will consist of the key objectives and components of the deal, as well as a proposed process and schedule for the negotiation. It also includes your agreement template for “papering” the terms. Demonstrate your confidence and ability to lead, and more often than not, your audience will follow.
3. Risk of not doing so
In a negotiation your preparation and approach will be the most significant variable between winning and losing. And the good news is it is entirely within your control. Among others, good preparation requires that you: define a value exchange and look to expand the value “pie;” know their motivations, wants and weaknesses; and paint a picture of success, for both sides. You simply can’t afford to delegate these accountabilities to your counterpart. It may set in motion a bumpy negotiation that proves difficult, if not impossible, to course-correct as a pride-in-authorship dynamic sets in with the opposing party.
What if they take control and insist on moving first?
This may well happen at the outset and certainly will occur at some point in the negotiation. Don’t panic. Remain composed and return them to your vision and structure for the deal. They may, for example, move first in quickly setting their monetary offer on the table, placing a wildly high number out there. While being sure to acknowledge their initiative in moving things forward, calmly set it aside. Just like you want the benefits of anchoring the economic discussion around your number, you need to prevent them from doing the same. It doesn’t have to be contentious and should not be dismissive; something along the lines of the following may suffice to reframe the conversation around your vision for the deal:
Thanks for sharing your perspective on the economics. I know you’ve put some thought into this. What I’d suggest though is we set that number aside for the time being. Candidly, it represents a very different viewpoint on value assessment than what we have for this deal. Rather than focus on a number, I’d propose that we explore the various standards and methodologies that might be appropriate in setting a range of valuations that we both can get behind. Does that sound reasonable?
From there, you should resume your leadership role in exploring objective standards for valuing economic trade-offs and benefits. The pre-work you’ve done will pay dividends in demonstrating your readiness to lead.
Great athletes often talk about the hunger they have to be the one to “take the last shot” to win a game. Solid preparation in advance of, and during, a negotiation should give you the confidence to “take the first shot” on the path to successfully landing your deal.
I’d love your comments on how you approach negotiations. And if you liked this article, please share it.
[Nick Psyhogeos is the author of Confessions of a Global Negotiator. How I Learned to Close Large Deals and the 5 Rules for Business Development Professionals to Do the Same, which will be published by Authority Publishing in February 2017]