Learn about the three principles of strategic planning and how they can focus your efforts.

What is a strategic plan, and why is it important? A strategic plan defines what your organization stands for. It defines the market where you compete and how you compete in that market. It’s the definition of the goals you’re going to pursue and, more importantly, the initiatives you’re going to pursue to achieve those goals. It’s also going to help you allocate your very limited resources to pursue those initiatives and reach those goals.

Why is a strategic plan so important? First, it provides focus for your efforts and your limited investments. It gives your team something to rally around and be excited about. And lastly, it helps you identify the risks and opportunities you’re going to face in the market, and then plan for those risks or exploit those opportunities. There are three principles of strategic planning that you should follow.

First, set a clear direction and stay in your lane, versus meandering and pursuing strategies that change every year.

Second, say no to distractions. It’s very easy to get caught up in the “Wow, that looks like a cool initiative, let’s pursue that.”

The third is making sure you diversify your bets. You have limited pools of money and people and time. Make sure you don’t put all your eggs in one basket and instead pursue initiatives that are spread across different time horizons, different markets, and different products.

If you follow these three principles of strategic planning, you’re going to have a clear direction that you’re able to follow over time and achieve your goals.

Want to learn more about strategic planning? How about taking an entire course on it? Go directly to the course and start learning how plan strategically. The entire course is available at LinkedIn Learning. Enjoy!

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Changing your approach in the middle of a negotiation is a great way to surprise the other party and drive value for your organization.

During a negotiation, you can change your approach. You don’t have to maintain your initial approach or your initial position. You can change it at any time. Your opponent won’t maintain their approach or their position, so throughout the deal, determine your counteroffers and your approach. Think about how these might change and how those changes might benefit your position.

For example, you can become more or less aggressive. You can become cooperative. You might change your anchor. In the initial negotiation, you said the price was here, but you know what? The price just went up or the price went down. You can add negotiating points along the way. Just because you didn’t ask for something right out of the gate, doesn’t mean you can’t add it later on. Beware of getting locked into a single negotiating approach. Your opponent can and will use that against you.

We were involved in a very contentious negotiation at one point. In the beginning, we were very collaborative, but our opponent was very combative. We knew the main points we wanted. They were price and deal structure. We also knew that time was our friend and their enemy. Throughout the negotiations, we continued making concessions and we stayed collaborative the entire time as long as price and structure were acceptable to us. But time passed and the other party changed structure. They got very aggressive at one point. But the thing they missed was that so much time had passed. Our position was going to change because time was now on our side. We turned around and got very aggressive in that negotiation. We pushed very hard for additional concessions related to the structure and pricing of the deal. The other party was caught by surprise by our change in approach and overall, it worked out much better for us. Our willingness to change our approach to be more aggressive drove a lot of value for our organization.

As you’re going through your deal process, think through the approach you’re taking and if there are changes you can make. Think about what the impact of those changes might be. Be willing to change your approach, but only do so when you fully understand the benefits and the risks of doing so.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to negotiate. The entire course is available at LinkedIn Learning. Enjoy!

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By laying out your position before a negotiation, you’ll be more prepared to fight for the things that are important to you. 

Before you even enter into conversations with the other party, you have to define your goals. Consider several things for your side of the negotiation. 

First, who’s involved from your side and who’s ultimately going to make the decision? By getting an understanding of the stakeholders who are going to have an interest in the outcome as well as who the final decision maker is, you’re going to be able to better generate support on your side of things to get a deal done.

Next, think through your must-haves, want-to-haves, and nice-to-haves. By clearly laying out all of those positions in multiple columns on a single page, you’ll have clarity throughout the negotiations on what you’re trying to get and what you’re willing to concede. It’ll make you more successful in each phase of the negotiation.

Next, lay out what’s the desired outcome and what happens if there’s no deal? You have to understand what your alternatives are going to be. Also know when have you achieved success and when do you need to stop negotiating. Once you get to yes, you shouldn’t push things much further because you could ruin the deal.

And lastly, lay out your alternatives to a deal. This isn’t the only deal on the table. Think through the other options you have because that’s also going to inform your negotiating strategy.

One of the acquisitions I was looking at doing involved a leadership team as well as our board of directors. We couldn’t do a deal unless the board finally approved. One of our must-haves was an expandable platform, that was a must. When we bought this company, we needed to be able to grow it. We wanted high-quality operations and techniques, but we could bring our own to the party if those didn’t exist. We also wanted a fair price and wanted control over the operations of the combined company.

In terms of outcomes, we laid out that we desired a deal but we had alternatives. We could buy someone else if this deal fell through. We could also build our own capability if we weren’t able to buy it. The risk of no deal was that they could sell their company to a competitor. By understanding everything we wanted as a company when we went into the negotiations, we were much better prepared to fight for the things that were really important to us and to make concessions that we could easily make. We also had a higher chance of success of bringing back a deal to our approving authority, the board of directors, that was going to satisfy their needs.

By laying out your position, you’re going to be able to go into negotiations knowing what you want and also understand what’s going to get you approval on your side of the deal.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to negotiate. The entire course is available at LinkedIn Learning. Enjoy!

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Understanding the relationship between you and the other party is crucial to your success in a negotiation.

Relationships in any negotiation are critical to understand. You have to step back, look at the players, and really appreciate how important the relationship is to you as well as how valuable the relationship is to your opponent.

Is this a long-term or short-term relationship? You have to look at the past history you’ve had with this individual as well as the future history they want to have with you. By understanding if this is a new relationship or if you’ve got history, it’s going to inform your negotiating approach. Relationships make all the difference. Failing to consider those relationship dynamics can win you the battle in that short-term negotiation, and you may get the deal done. But long-term, you’ve lost the war and the long-term contract. This can make future deals harder to do.

For example, I was conducting an acquisition, and we had a mid-term challenge with the person we were purchasing the business from. We had a relationship with them and that relationship was important to us, but the relationship didn’t matter to our opponent. He was changing industries and completely moving on. But we had a reputation to protect. So the relationship dynamics in this situation were uneven.

We had to approach the negotiation differently than he did. We had to handle this deal very carefully because it was going to impact future acquisitions we were looking to do. This individual would absolutely talk to other people who were trying to sell their business to us, and he would either say nice things or not-so-nice things based on the way this negotiation went. For him, it didn’t matter what the ongoing relationship was because he was getting his money and moving on. The dynamic this situation created was that we were much more willing to make concessions while he was able to take a much more aggressive negotiating approach.

In the end, we made a lot of concessions to keep him happy in the negotiating process versus trying to extract the most value we could from the deal. Ultimately, in the short term, that looks like it wasn’t a great decision because we overpaid for his business. But long-term, that relationship mattered, and he said some great things about doing a deal with us.

As you look at your negotiations you’re entering into, understand who the players are and what the relationship dynamic is. Once you understand it, adjust your negotiating approach appropriately.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to negotiate. The entire course is available at LinkedIn Learning. Enjoy!

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Understanding the strategic environment of a negotiation can help you achieve the outcome you want.

The first step in any negotiating process is defining and understanding the context you’re operating in. You have to understand the strategic environment of the negotiation in order to be successful. There are several elements to defining this context.

First, who is the decision maker, and why are they doing this? The better you understand these players and what they’re trying to get out of the negotiation, the more successfully you’re going to be able to approach them.

Second, define your goals. What are you interested in, and what do you need? By laying out these objective functions, you can focus on achieving them during the negotiation and make sure that you don’t accidentally give them up.

Third, what are the outcomes that are in play? What’s at stake? When you look at the final negotiation, what are those possible end states? What do you risk losing? What do you risk gaining?

Next, define the other options you’re considering. Many negotiations have many different outcomes that you can pursue. By defining what these options are, you’re better able to determine which one you should pursue.

And last, what will it take to close the deal? Trying to get a clear understanding of what’s going to lead the other party to say yes, and what’s going to get approval on your end for the negotiation is critical.

An example of a negotiation I went through where we had to clearly define the context was when we were trying to buy back a franchise operation. The owners were looking to cash out. They wanted to sell their franchise back to us as a corporation. Our goal was to buy access to their market but do so at a reasonable price. So these were the goals of the parties that were involved. Now, the options we had available to us were either a full purchase of their territory or no sale and they would retain it. We couldn’t buy a portion of it, and we couldn’t enter that market without making the purchase. So we had these two options that we had to think through and evaluate. We had to understand that it would take significant cash up front, and we had to look at our ability to pay that as well as what that offer would be worth to the franchise owners. By laying out this complete context to the negotiation, we made our negotiating position much stronger because we understood what we wanted to get out of the deal.

As you look at negotiations you enter, make sure you take the time to define this context and document it so you can go back to it on a regular basis, test your assumptions, and stay on track to achieve your goals.

Want to learn more about strategic negotiation? How about taking an entire course on it? Go directly to the course and start learning how to negotiate. The entire course is available at LinkedIn Learning. Enjoy!

Did you enjoy this post? If so, I highly encourage you to take about 30 seconds to become a regular subscriber to this blog. It’s free, fun, practical, and only a few emails a week (I promise!). SIGN UP HERE to get the thoughtLEADERS blog conveniently delivered right to your inbox!