Negotiation Insights: Creating Value in a Divided Landscape

Posted on 7 February, 2025

The Challenge of Modern Negotiation

Today, negotiators operate in a challenging environment where division and adversarial positions dominate political and commercial landscapes. Trade wars loom, tariffs are imposed, and collaboration is often replaced with competition. Political parties see each other as opponents rather than colleagues with differing viewpoints, making compromise seem like a sign of weakness rather than a strategic advantage.

Successful negotiators must remain flexible and focus on value creation in this climate. The traditional approach of dividing a fixed total—where one party’s gain is another’s loss—is no longer sustainable. Instead, negotiators should look for ways to expand the overall value, ensuring both sides benefit.

For instance, in relational contracting, it is often far more advantageous to share a total that is 150% larger than initially anticipated rather than rigidly sticking to a strict 100% split. This approach fosters stronger partnerships and leads to better long-term outcomes.

A Practical Approach to Negotiation

When assessing a bid, my first step is always a detailed review to identify key issues, risks, and the individuals within my organization who will be affected. Engaging with them early allows me to understand how specific clauses might impact service delivery and whether certain responsibilities could be passed to a supplier.

During these discussions, I categorize elements into three groups:

• Red Items – Non-negotiable terms that we cannot concede.
• Amber Items – Contentious points we would prefer not to concede but might under the right circumstances.
• Green Items – Elements we can easily relinquish without significant cost.

I also ask my colleagues to assign a cost to each item. This is a crucial step in negotiation, allowing me to frame discussions around trade-offs rather than outright refusals. For instance, if a client insists on a particular term (X), I can respond with:

“We can accommodate X, but it will increase the cost by Y. Is this a priority for you?”

By doing so, I shift the decision to the client. Rather than saying no, I present them with a clear choice: Is X worth the additional cost? If it is critical to them, I gain insight into their priorities. In some cases, I may even absorb the cost of X if it allows me to negotiate for something more valuable in return.

This approach also enhances the client’s perception of our organization. They see that we have scrutinized their bid in detail, reinforcing confidence in our commitment and professionalism. Additionally, the client may challenge other bidders on whether X is included in their pricing. If competitors have not accounted for it, we leave an impression that may work in our favor.

Understanding the Client’s Perspective

Beyond assessing our position, it is equally important to understand the client’s motivations and constraints. Before presenting my negotiation plan to the board, I always consider:

• What do they want?
• Why do they want it?
• Who are the decision-makers?
• What is their timeline?
• What influence do we have?
• Who are the competitors?
• What is the competition likely offering?

By anticipating these and other factors, I can better position our proposal and identify opportunities and risks to expand the deal's value. This might involve offering additional services, structuring the contract differently, or identifying synergies that benefit both parties.

Negotiating from the Issuer’s Perspective

When I am the one issuing a bid, I take the same rigorous approach to reviewing each clause, analyzing how bidders will likely respond and where negotiations may be necessary. I assess:

• Which elements are likely to face pushback?
• What can I offer in exchange for their concessions?
• Is there an opportunity to create a more significant benefit for both sides?
• Who in my organization needs to be involved in these discussions?

By anticipating potential challenges, I can avoid value destruction. Approaching a requirement in isolation—without considering its impact on the broader organization or existing contracts—risks limiting opportunities for collaboration and innovation. Instead, a holistic view allows me to explore synergies with other suppliers and create additional value across the organization.

Conclusion: A Strategic Mindset for Negotiation

Negotiation is no longer about winning or losing but about creating value. By focusing on trade-offs, understanding client priorities, and identifying expansion opportunities, negotiators can move beyond a zero-sum mindset. Whether responding to a bid or issuing one, a structured and strategic approach ensures stronger relationships, better commercial outcomes, and sustainable long-term success.