Most negotiations pursue getting a good deal, but what if the perspective is changed so negotiations pursue getting a strategic relationship? The deal becomes a long-term productive relationship, creating more value. By Andrew Hale

What if a negotiated deal was a negotiated strategic relationship? The implications are immense. Changing the goal of the negotiations from landing a deal to establishing a strategic relationship creates a win-win outcome for both sides, because a collaborative relationship produces several advantages that a negotiated deal does not offer. For example, the strategic relationship benefits both sides by creating long-term value, because a shared vision and a foundation of trust are established, creating a positive working association in which each partner is looking out for the other into the future. Instead of fighting for “fair for me” the collaborative negotiations process focuses on “fair for we.” This is truly a shift in perspective, but it also removes the power play and replaces it with discussions on how the organizations can negotiate as “we”, to improve competitiveness for both.

Focusing on the Relationship Instead of Me

The principles and process of negotiating for a strategic relationship were proposed in the book Getting to We: Negotiating Agreements for Highly Collaborative Relationships by J. Nyden, K. Vitasek, and D. Frydlinger. The basic principle is that negotiating parties approach the process with the perspective of “what’s in it for we” (WIIFWe) versus “what’s in it for me” (WIIFMe). The relationship becomes the focus, which means the principles of relationship building are applied during the negotiation process, and after the process, the two parties have a common goal they work towards that is based on a solid honest relationship. The six principles are autonomy, reciprocity, equity, honesty, loyalty and integrity. Each negotiating party needs to adhere to certain principles to get to strategic relationship status. For example, loyalty means the buyer does not threaten a supplier by saying the company will find a different supplier if a particular term is not met. In return, the supplier does not withhold information about risks associated with obtaining raw materials, or does not divert the highest quality resources to a different customer.

The WIIFWe perspective alters negotiations in three important ways. One is that a transactional business relationship becomes a strategic relationship. When pursuing a deal, there is an end date negotiated, such as one year or three years, and once the deal is done, the two parties go back to focusing on their businesses. The implicit message is that once the contract ends, the buyer may utilize a different supplier, and the supplier may find another customer. Negotiations to build strategic relationships do not focus on an end date, but rather the long-term relationship.

The second alteration is that both parties adhere to social norms or the six principles which promote cooperative behavior. The third thing that is very important to long-term success is that the negotiators will adhere to the principles each day, and have a governance structure in place to ensure compliance with the principles. The relationship is always strengthening this way, as the supplier and buyer consistently and regularly cooperate to improve outcomes, leading to benefits such as innovation. Should a contract period end, the partners are extremely likely to continue supporting each other. Compare this to fulfilling the requirements of a negotiated contract.

Norms of Form and Structure

The authors of Getting to We propose a five-step process, and each step is essential. First, there is a diagnosis of the current level of trust and compatibility, by using a 360 assessment completed by both parties. The second step is to develop a shared vision, important to move beyond a transactional approach and to have a foundation for the working relationship moving forward. The third step is to agree on the partnership’s guiding principles. The fourth step is determining the mechanisms used to negotiate the details. The traditional negotiating process would focus first on the details of the deal, such as pricing and scope of work, as opposed to focusing on how consensus will be achieved on specifics. The fifth step is to maintain a focus on the shared vision and guiding principles throughout the life of the relationship, by taking actions and measures required to keep it highly collaborative.

The authors call loyalty and equity the social norms of substance and say these should drive how the partners allocate benefits, risks, costs, and opportunities. Loyalty says each side’s interests are given equal weight and value, requiring transparency to reveal the interests. Equity concerns the partners allocating benefits or carrying costs in proportion to the contributions made or costs incurred by the partner. The norms of form are reciprocity, autonomy, and honesty. Reciprocity is the principle of choosing the collaboration path, so the partners receive a return in kind. Autonomy means the partners do not use power to gain benefits when it is at the cost of others. Power is distributed equally between the partners. This may seem difficult when it is a corporate customer and a supplier involved in negotiations, but negotiating for a strategic relationship must adhere to the principles that each partner wants economic success, and wants to take advantage of opportunities that exist because of the collaboration. Honesty means the negotiators always speak the truth about facts and have authentic intentions.

Recognizing that each of the principles could lead to conflict when either partner veers off the collaboration path, the principle of integrity was named. When conflicts do develop, integrity means the negotiators strive to resolve them while adhering to the principles of loyalty, equity, reciprocity, autonomy, and honesty. Conflicts are not opportunities for power grabs.

Giving Up Power for a Relationship with Value

A collaborative negotiation process is quite different from the competitive negotiation process, which is largely based on who has the most power, with each partner trying to get the most concessions without regard for the other. Collaborative negotiators have a common goal, reached by maximizing value that comes from the value in the relationship. Some of the characteristics of a collaborative negotiation are the win-win perspective, fairness, joint problem solving, transparency and trust, and relationship building.

If the collaboration negotiation process seems ideal, it is because the traditional negotiation process is based on competition, in which one side gains more than the other. Developing a strategic relationship means the partnering companies apply the collaboration principles during and after the negotiation process. It is an ongoing relationship, in which a supplier and corporate customer develop a relationship based on trust and continued success.