As with any process, the first step is to develop a clear vision of where you're aiming to go: your Goals. What, at bottom, do you hope to achieve through this negotiation? What risks or negative outcomes do you want to avoid? Where would you like this agreement to lead beyond the immediate deal? Which of these goals are most important to you and which are merely "nice to haves"?

Figure 7.1. The GRASP Negotiation Method

It is vital, if not always easy, to resist the impulse to leap over this stage in a rush to compile a shopping list of specific terms you will push for, because only by first focusing on the big picture—that is, everything you're trying to achieve through the negotiation—can you correctly identify what terms would most help you to reach those goals. Otherwise, you may find yourself going off course, pushing for terms that are of no immediate value and that may even get in the way of achieving a mutually advantageous agreement. Or you might come across as being pointlessly demanding and selfish and damage the working relationship you are trying to build by asking for things that you can't explain or justify. The way to avoid this pitfall is to understand the full range of your goals and to keep your attention relentlessly on them by continually asking yourself "Why?"

Why, for example, do you want a specific clause in a contract? The only sensible answer is that it will help you achieve one or more of your goals (either bringing positive benefits or reducing the likelihood of problems arising that might materially harm you later). Yet, how many times have you heard negotiators explain that they want this or that because "those are our standard terms"? This can be translated as, "I have no idea why I'm demanding it or if it serves any purpose whatever, but I insist on it because it makes my life easier or I want to win this point." Admittedly, the "standard terms" approach has the advantage of being easy—a genuine no-brainer—but it is not likely to lead to honest acceptance, much less a value-creating negotiation or a positive relationship. The only way to achieve sincere agreement on the inclusion of the clause, or if the language is unacceptable to the other party, to amend it in a way that preserves your interests, is for you to know and be able to explain why it is important to you.

Keeping your eye on your goals also allows you to find solutions where others see only impasse. Let's look at a simple illustration. Suppose that you order four cases of fifty white binders from your regular stationery supplier. You tell the supplier you need the binders delivered by Monday. He replies that unfortunately he can't get them to you until Friday. If you are fixated on getting your terms, you will keep demanding a Monday delivery. You might cajole or plead, but if the supplier truly doesn't have two hundred white binders in stock, you will eventually be forced to accept defeat. You could take a harder line, threatening to find a new vendor and withdraw your business if he's not more forthcoming. But do you really want to spend time sourcing out another stationery supplier? You might settle for a "split down the middle" agreement: delivery on Wednesday. Unfortunately, you need the covers on Monday—and the stationer knows full well that he can't get them to you on Wednesday anyway, despite what you've pressured him into saying.

This is a standard win-lose problem, which is caused by confusing positions (the terms you ask for) with goals (why you want them). The impasse can be broken profitably only by going back to your goals. Why do you want four cases of white binders delivered by Monday? The answer might be that you need covers for the materials to be used in a series of internal training sessions you are running. The first session, for eighteen people, will be on Tuesday. In the past you've used white covers for your in-house training, and you'd like to keep a consistent look. Finally, you want four cases so that you have stock on hand for future trainings and also because you get a 15 percent discount when you order a single delivery above a certain volume.

If you were to prioritize these goals, they would be

By thinking of goals as opposed to positions and by considering which are top priorities and which are of less value to you, you can begin to devise a mutually workable solution. The stationer might have eighteen white binders in stock now and could deliver the remainder of the four cases on Friday. You could negotiate to get the volume discount even though you are splitting the delivery. If you would rather get everything at once, he might be able to supply you immediately with four cases of binders in off-white or another acceptable color. Every one of these outcomes would satisfy your priorities, as well as meeting the stationer's goal of keeping your business. But if you remain stuck on your original terms ("I need four cases of white binders delivered Monday"), there is no good solution.

In training negotiators, I am struck by how many, when preparing for a negotiation, throw together a list of perfunctory demands, then put all of their remaining energy into devising feints and strategies in hopes of outmaneuvering the other side, rather than into focusing on what they need and want to get out of the deal, how their goals might dovetail with their counterpart's, and what kind of relationship, if any, they hope to develop moving forward. Invariably, once these negotiators are in the thick of the negotiation, they become overwhelmed and confused, miss critical opportunities to create gains, and may even kill an otherwise advantageous deal by getting into a battle or going to the brink over a matter of little real importance. Rather than keeping their eye on their goals, they get trapped in a game of blindman's bluff. No wonder most people find negotiation so stressful!

To show how easy it is to lose sight of goals, I often have participants in my MBA classes and executive training programs play a decision-making game. In the game, the players are told that they have been cast away in a dangerous and unfamiliar setting—a forest, jungle, or desert—and have only a dozen or so scavenged items at their disposal. Their task, first as individuals and then in groups of four or five, is to rank each item according to its importance to their survival. The players are given only five minutes to make their initial, individual rankings—and are hectored throughout that time to "hurry up; don't worry so much; just put something down." (My hidden goal in pushing them to go faster is to have them make impulsive, relatively thoughtless choices.)

Once their initial lists are made, the participants are divided into groups of four or five and are given forty-five minutes to come up with a single consensus list. Logically speaking, they would enter this second phase with relatively open minds, considering the choices carefully now that they have more time and a broader knowledge base. Their first question should be "What are our goals?" followed by "What will most help us achieve those goals?" But that is almost never what happens. In the hundreds of these games I have observed over the years, nearly all players approach the group decision-making process in a mad rush, clinging to their initial lists as if they were the Ten Commandments and always starting with the same question: "What did you put as number one?"

Once the various teams confront the inevitable problem that their members have ranked the items differently, most immediately launch into bartering, leading into one of three traps.

Let's look at a real example. Lynne wanted to negotiate a partnership agreement. For the past few years she had been giving occasional weekend classes for a project-management training company that was solely owned and operated by the original content developer. Now she felt that she would like to make a career move into conducting trainings full-time and taking an ownership role in the business. So she decided to approach the owner to negotiate a partnership in the company. She sought my help in setting out the terms she would ask for and preparing a strategy for persuading the developer to accept the deal.

Instead of starting with the terms, however, I asked Lynne what her underlying goals were. Why did she want this partnership? What was she hoping to achieve through it?

Lynne explained that she had been working for the past ten years as a project manager for an aerospace company. Recently, though, she had had a baby and had grown tired of the demanding hours, industrial environment, heavy responsibility, and high pressure of her regular job. She found she enjoyed training and the friendly, easy interaction with students; she liked "having fun" at work. She also wanted a job that gave her more personal control over what she did and when she did it. Most of all, she wanted a sense of ownership. After managing projects for others for a decade, she wanted to run her own shop, to be responsible for her own future, and to see what she was capable of achieving without the constraints of having to wait for a boss's okay.

Next I asked her to tell me about Paulo, the training company's developer and owner, the man she would be negotiating with and, more important, who would be her business partner if she succeeded. What was he like? How did he run the business? What were his goals? At this point, worry lines crossed Lynne's face. It was complicated, she said. On the one hand, she truly admired Paulo and the training program, software, and materials he had developed. On the other, she felt he was a domineering and temperamental "control freak." Although he had spoken highly of her training ability and had even footed the bill for her to take an advanced trainer's course, he had refused to let her into any other part of the business. He had waved off her earlier offers to help with marketing or attend conferences on the company's behalf, and he would not share any information with her beyond what he felt she needed to do her training job. When she had pressed him to give her more responsibility, he had grown visibly angry, telling her that the company was "his baby," he had developed the concepts and software, and he would decide how the business was to be run. Later he had apologized for his outburst, but he made no mention of her concerns.

After this recitation, Lynne conceded that she knew it was going to be a difficult sell. But, she insisted, all she needed was a strategy to overcome his objections. That was why she had come to me for professional help, she said. She wanted me to help her come up with the best terms, to give her the arguments to support those positions, and persuade Paulo that her vision was the right one.

It was becoming increasingly clear that Lynne had missed the forest for the trees. Instead of taking a hard look at her goals and what would best help her achieve them, she had concentrated all of her attention on specific contract terms and negotiation strategies. Yet there were a number of serious problems with the partnership idea. If the only stumbling block had been Paulo's reluctance to share his business, that could possibly be negotiated away through offering him incentives or guarantees. But the larger truth was that even if he said yes to Lynne's offer, she still would achieve almost none of her other goals.

Lynne had prioritized her goals:

Lynne's stated negotiation objective—forming a partnership with a secretive and hot-tempered control freak who saw the company as his "baby"—flopped in virtually every category. The only exception was that it would allow her to work full-time as a trainer, which she could easily do without the partnership: Paulo was quite open to her extending her training responsibilities within their current employment arrangement. As for her other goals, there were also ways of achieving those, but a partnership was neither a satisfactory nor a sustainable option.

It was hard for Lynne to let go of her original assumption that a partnership was the way to go. But doing so opened her thinking to a possible solution that would fulfill her top-priority goals while also benefiting Paulo. After much consideration of both parties' goals, Lynne came up with and successfully negotiated a franchise-type plan, in which she would own the rights to market and run the training business exclusively in the aviation industry. For Paulo, this was attractive because it expanded his company's reach into an industry he knew little about and was unable to penetrate on his own, yet it didn't impinge on his overall ownership or control over intellectual property development. Meanwhile, Lynne got the autonomy, the work, and the sense of ownership that she sought, entirely supported by the developer's software, training materials, and methodology, while sparing herself the headache of having to work on a daily basis with a temperamental and controlling partner. Win-win.

It seems an obvious solution in retrospect. But it begs the question of why, when there were far better ways of achieving her goals, had Lynne initially been so determined to negotiate a partnership? The answer is that once she came up with the idea of partnering she gave all her attention to how she would convince Paulo to agree. Like so many negotiators, Lynne had focused on how to persuade the other side to accept her positions rather than on what she was trying to achieve and why that was important to her.

Lynne's approach to negotiation is not unusual. Around half of those who have come to me for help in negotiating a sale, a new position, or the resolution to a dispute have started off by insisting, "My only goal is to get the highest price" (or some variation on that theme).

This was essentially what I was told by a CEO who had founded and built his IT company into a multimillion-dollar enterprise and now said he wanted to sell it to whoever would offer the most money. "So," I confirmed, "you're saying that if Buyer A is willing to pay $1 more for your business than Buyer B, even though Buyer A's intention is to shut down your company and sell off the assets, you still want to sell to Buyer A?"

"No, no, no, no," he urgently reconsidered. "I want a buyer who will manage the company responsibly and build on what I have developed." After widening his vision, he was then able to identify quite a few other goals he felt were important, and we had the beginnings of a negotiation strategy.

Then there are those whose only conscious goal is to "get the deal." Never mind the cost or price; they've just got to get the contract. Frankly, such people might just as well wear a sign around their necks that reads, "I'm desperate. Name your terms." As should be clear by now, a deal or a sale or a contract are means to an end, not ends in themselves. Their value lies only in what they will bring you once they are implemented.

Therefore, the key starting point is to bring the full range of your goals into the forefront of your mind by repeatedly examining what you want and why you want it. What do you feel you must get out of the agreement? Why do you need or want that? What additionally would you like to achieve? Immediately? Down the road? What outcomes do you want to avoid? Do any of your desires potentially conflict with your concerns? In that case, which is more important to you?

You need to keep asking questions and challenging your assumptions until you have a full understanding of your objectives. Perhaps your reason for wanting to get the deal at all costs is that your boss told you to get it—and your goals are to please your boss, protect your job, and ideally get a bonus or raise. Fair enough. But if those are your goals, you'd better find out your boss's objectives for the deal, because it's a safe bet that it won't please the boss or earn you a raise if you come back with a lousy deal that hurts the business or makes your boss look bad to his or her boss.

In coming up with your list of goals, it helps to consider three categories:

Of course, negotiation isn't just about achieving your own goals. Sustainable relationships hinge on all parties feeling that they have benefited from the arrangement enough that they will be willing to carry it out as agreed. In order to achieve that willing cooperation, you have to consider not only what you want but also what you can offer the other parties that will attract and satisfy them.

Try to imagine the world from their perspective. Given their situation, what are their likely goals? What do they need and want from this negotiation? What are they likely to be worried about?

Unfortunately, we think of the other side's goals all too rarely. We are so busy thinking about what we want and how we plan to get it that we have little time left to consider our counterpart's perspective. When it comes to the other side, it is so much quicker and easier just to plop them into a random stereotype:

Let's deal with the miser myth first. I cannot tell you the number of people—even those sitting in richly appointed offices behind six-foot mahogany desks—who have told me with a straight face, "My customers care only about price." It simply defies common sense. Let me assure you, if your customers cared only about price, then you wouldn't have any customers. They would be doing their own investing, sewing their own clothes, buying street-corner watches, and riding the bus instead of buying a car. Your suppliers wouldn't care about winning your long-term business. Does that sound like the world you actually live in?

Your negotiation counterparts may think they care only about price, but that's simply a lack of reflection. What they want is value. It's your job to help them uncover and try to satisfy their additional desires in a way that maximizes the value they feel they get from the arrangement without cutting away from your own.

The enemy myth is that the person sitting across the negotiating table opposes you on every count. Again, common sense makes you wonder, if the other party is your nemesis, why are you trying to negotiate a working relationship with him or her? The fact is that negotiators are rarely so clearly opposed. Instead, virtually every negotiation includes a mixture of

Even in negotiations dominated by tough rhetoric, you wouldn't be sitting down to talk with the other party unless you shared common goals. It's just that the inevitable conflict over opposing goals can sometimes blind us to those commonalities. However, if you buy into that illusion of total opposition, the negotiation will all too easily turn into a sparring match rather than a problem-solving exercise. The rising hostility will lead the parties to hide information or even intentionally misinform one another. Mistrust shuts down each party's willingness to explore distinct goals from which they could begin to generate synergy and create mutual value. If enmity grows strong enough, it may close the door to any deal at all. It is far more effective to go into a negotiation in the belief that, opposing goals aside, you can establish enough common ground to share ideas and create a productive working relationship.

It's only slightly less dangerous to see all people with whom you negotiate as utterly alike. While a clone is certainly a less negative image than a miser or an enemy, it is equally unreal. Given that human beings are unique—from culture to personality to tastes—how could we possibly all be motivated by the same desires? Yet time and again I have heard negotiators insist that "All customers want the same thing" or "That's how you've got to treat vendors."

Just like you, the people with whom you are negotiating have individual needs, desires, aspirations, and priorities. The more you can learn about their goals—either before or during the negotiation—the better able you will be to craft an agreement that satisfies them at relatively low cost to you. The keys are in

How can we find out the goals of the other side in a negotiation? As we saw in the previous chapter, research is tremendously useful. But the simplest and most effective method is the commonsense approach: you ask.

Over this and the following four chapters, I will focus on a contract negotiation I took part in several years ago to show you how each negotiation step can be put into practice. The general manager of a five-star hotel in Singapore, which for confidentiality I'll call the "Empire Hotel," wanted to secure a 32 percent increase in the hotel's most preferred corporate room rates. The management had very good grounds for wanting a rate increase. Three years earlier the SARS epidemic had swept through the region, causing hotel occupancy to plunge and hotels to drop their rates in response. Like most of its competitors, the Empire Hotel had reduced its rates, in its case by nearly 20 percent. However, while its competitors inched back up at an average of 10 percent a year, the Empire had kept the same low price for three years as the management focused on getting occupancy back to its former level.

Now a price increase was very much needed. Occupancy was running above 80 percent. The hotel had undergone a significant renovation, rebranding, and staff retraining project. The management needed to find a way to pay for all of that upgrading, to get operations out of the red, and just as important, to position their pricing back into the five-star band. (Their discount price, low even compared to four-star hotels, was beginning to degrade their image in the market.) The 32 percent increase would undoubtedly shock their customers, used to the competition's average 8–10 percent yearly raise, but it would still leave them at the very bottom of the five-star range.

While normally the hotel's account executives would handle contract negotiations without outside assistance, the sales director was quite nervous about the two largest accounts because, in her previous position at another hotel in the chain, she had lost one of those same corporate customers over a price increase. She was now torn between her honest conviction that the hotel needed to raise its rates and her equally heartfelt fear that if she lost either of those two customers this time, it would seriously damage her career. Nervously, she wondered whether the two customers would accept the new rate.

The answer, unfortunately, is never so clear-cut. While the 32 percent increase was undoubtedly justified from a cost standpoint, whether or not either of the customers would accept the higher price would depend on whether they felt they were getting sufficient value in return. To predict that with any confidence, we needed to know what each of the hotel's major customers individually valued. We needed a more specific understanding of their situation, needs, desires, aspirations, and how they viewed the hotel. Only when we had a clear picture of our counterparts' goals could we develop an approach for successfully negotiating the price increases without losing their loyalty. I suggested that we schedule appointments with the procurement heads of the two companies to learn more about what qualities they most wanted from a hotel.

Initially the general manager resisted. He said that they already knew their customers. Both were multinational Fortune 100 companies in the consumer products business. Both booked over a thousand room-nights a year, and also used three or four other hotels in the city. Their employees came on business, rarely bringing their families, and usually stayed two to five nights. Their big concern in every negotiation was price. "Isn't that enough to go on?" he asked.

Not enough to build a winning negotiation strategy. If we hoped to prevent "sticker shock" and convince these companies that the hotel's services were worth 32 percent more than they cost currently, we needed to understand what the buyers individually needed, wanted, and dreamed of that, if satisfied, would make them willing to pay the higher price.

The general manager remained leery. He was worried that it might offend his customers to be asked what they wanted. "Don't you think they would feel that, since they are our top customers, we should already know them?"

His concern was as familiar as it was misplaced. Who would be insulted to have a business partner sincerely seek to understand your desires and aspirations in order to give you better and more individualized service? It is far more normal for customers to feel insulted because their vendors commoditize them, making no effort to satisfy their particular needs. Although we all get irritated by generic, mass-market surveys, it's rare to meet people who don't appreciate being asked about themselves, their opinions, preferences, and desires, especially when the questioner's purpose is to fulfill those desires. Persuaded, the general manager finally approved the customer meetings. Not surprisingly, those conversations immediately revealed strong differences between the two companies in their goals and styles.

The procurement head at Company A was warm and forthcoming. "We are very happy with the Empire Hotel and its service," he said. "No complaints at all." While that was nice to hear, "no complaints" at the hotel's current price did not translate into "and we would have no complaints if you increased the price by one-third." We needed to find a way to make the procurement head feel that the hotel was worth significantly more than its current rate, so that he would willingly accept the increase.

Our questions then became more focused. What would make your employees' stays less stressful and more pleasing? What do you personally look for when you travel on business? What irritates you? What do other hotels offer that you can't find here?

With some prodding, the procurement head began to come up with some tangible goals. All centered on speed and convenience. One goal was having instant internet access on arrival, which was still uncommon in those days. "Our people fly here from all over the world. Often they have been in the air for twenty hours or more, so they're pretty tired by the time they check into the hotel. They want to go straight to their rooms and turn on the computers, check their e-mail, and contact their families. One thing they do complain about is the rigmarole of having to buy an internet card, ask for a cable, wait for the technician to set it up, etc. If they could just have the internet installed and ready to go when they arrive, that would really be great." He added a few other "great to haves," which we dutifully jotted down.

We now had enough understanding of Company A's goals to lay the groundwork for a good negotiation plan: they valued convenience, ease, and efficiency. Would that mean that Company B shared these same goals? Not necessarily. The only way to know would be to ask Company B.

In fact, Company B, despite its outward resemblance to Company A, had a very different corporate culture and entirely different goals. Known for its hardball, take-no-prisoners negotiating style, this was the company that had earlier canceled its contract with the Empire Hotel in another city over a price increase. True to form, the procurement head of Company B initially came across as hostile. "What do I think of your hotel? I think the price is too high!" she growled.

We asked her why she felt the price was too high. Did the company feel it wasn't getting sufficient value for its money? Was there anything the hotel could do to improve its service in her eyes? "No," she said. "There's nothing particular about your hotel, your value, or your service. It's simply that your price is too high." This was not an auspicious beginning, seeing as the hotel management intended to announce a 32 percent rate increase in the next round of contract negotiations.

As we were getting nowhere asking Company B's procurement head what she found objectionable or lacking in the Empire, we tried a different approach. (If you can't get an answer by knocking on the front door, don't give up. Try the back.) "You work with many hotels and clearly have acquired broad knowledge and high standards. Would you be willing to share an example of a hotel you really like?"

Instantly, she dropped her scowl and grew wistful. "I like the _______," she sighed. "They treat you like a queen." She went on to catalog all the wonderful things the other hotel did to make her feel special, from the doorman who greeted her by name to the handwritten thank-you note the manager sent after each inspection visit. When it was pointed out to her that the hotel she was describing charged $60 a night more than the Empire, she was unmoved. "True," replied the woman, who only minutes before had insisted that the only factor that mattered in her decision making was price, "but it's worth it."

Her response may have seemed contradictory, possibly even a bit silly, but it was neither. In a few short words she had made it clear that although the Empire Hotel may have had much to recommend itself, the management and staff had made this important client feel that she was nothing special to them, a generic customer. Therefore, she had accepted the commodity shopper role, haggling over room rates as if they were cabbages in the market. The other hotel, meanwhile, had treated her like an honored patron—a "queen"—and she had responded with warm, personal feelings, among which price became a far less important priority. This was a problem we needed to fix.

Given the markedly different goals in—and relationships with—Companies A and B, it would be necessary to develop a separate negotiating approach for each customer. Company A, with which the hotel had an open and comfortable relationship, had prioritized convenience and efficiency for its end users as its goals. Company B, on the other hand, put a higher value on having its booking agents treated with honor and appreciation. (The hotel also needed to expend some extra effort to repair the cold relationship that had developed with Company B over the years.)

Despite the obvious differences between the two customers, in both cases we had uncovered distinct goals that opened the door to mutually gainful trade-offs. In-room internet and royal treatment could both be provided at little or no cost to the hotel. We hoped that if we could satisfy these goals, both Companies A and B would be more willing to bear the increased room rate. In the following chapters we will see how that approach worked out.

When I watch participants in training programs prepare for a negotiation role play, I can normally predict who will come out with a more profitable agreement even before the two sides meet. The people who spend their preparation time establishing clear goals and priorities for themselves, then thinking about the goals of the other party, will almost always emerge with better results than their counterparts who focus on negotiation power and developing stratagems and tactics to dislodge the other side. Indeed, the latter often create such resistance that they get no deal at all.

There's much misguided advice out there on how to "win" negotiations through tricks, fakes, and performance artistry. No doubt, such techniques do sometimes work. I am reminded of how, as a child, I once amazed my family while we were fishing in the ocean by reeling in a large crab that had grabbed on to my line. Clearly, that technique can work now and then as well, but it's not a very reliable way to run a profitable crabbing business.

Negotiation is in fact quite straightforward. It's an effort to find a profitable basis for two or more parties to work together to accomplish what they each want insofar as possible. Therefore, the most effective approach is equally straightforward: start by clearly understanding what it is that everyone at the table wants. In the next chapter, we will look at how you find the most profitable Routes for reaching your Goals.