Planning is bringing the future into the present so that you can do something about it now.
Negotiations rarely fall down at the strategic planning stage. They fail because we have not considered all possible outcomes, because not all of the players in the negotiating team understand how it is designed to play out, or because we have failed to sequence our actions effectively. If we plan for every eventuality, then the decisions we make are considered and unemotional, contingency actions are understood and problems can be mitigated.
Confidence affects the execution of negotiation and planning builds confidence. Working through and developing solutions to the smaller concerns as well as the more strategic goals develops understanding throughout the team.
Building detailed plans, in which every action has an owner, a timing and a success measure means that complex, multi-party negotiations can progress in concert, mitigating risk and making reporting simpler.
Tactical planning in practice
We were advising a client on their trade union negotiation, and had together drawn up a very detailed action plan which considered and dealt with every possible scenario that could arise. The client called us up when they heard the concerning news that strike action had started, which was making the headlines. They wanted our counsel on what they should do. We asked them, “What does it say in the plan?” “Do nothing”, replied the client. We advised that in that case they should indeed do nothing.
A major energy company needed to manage the sale of a key asset in their portfolio. The sale had become necessary following a shift in investment strategy and the deal that would result was complex, involving multi-party negotiations within a compressed timeframe. A less than optimum result would potentially affect their share price.
The objective was clear: to close the transaction on acceptable terms to their leadership team by the end of the calendar year. The question was how to do it. The lead commercial contract negotiator organized a planning session. He was an advocate of strategic planning and wanted to apply it to structure his team’s thinking. The aim was to develop a consolidated and robust plan to take back to the leadership team.
Managing complex relationships
Working with representatives from head office and the geographic region, they set the agenda. First, it was vital to clarify the internal objective and outcome. When there was a clear alignment in place, they moved forward to defi ne the strategy.
Managing complex relationships
They developed two strategies: one for the relationship with the buyer – another major energy company – which proved to be relatively straightforward. The other was for the relationship with senior politicians. This was more complicated.
What quickly became obvious was that governments do not behave with a purely commercial mindset; they are also motivated by political and diplomatic forces, introducing even more complexity into the negotiation. As such, they developed five options, each with a clear tactical direction. The first was to let the buyer declare their initial position. They then introduced some suggestions to create mutual value, with options ready to execute dependent upon how the government responded to the first.
There were several complications to work through during the project. The first was the requirement to plan and prepare for an imminent and pivotal meeting between the oil minister of the government and senior executives from our client. This additional time pressure reinforced to everyone the need for effective and efficient preparation. As well as internal stakeholders, there were external stakeholders to manage, so they had to carefully craft external messaging to allay market fears of the company’s capabilities and commitments.
One of the main risks to the negotiation was that the buyer would insist on an asset swap, rather than agree to a cash transaction. Although our client was still marketing the asset to other potential buyers, this could have led to further complications and unwanted delays in the sale.
Sticking to the plan
They worked to reevaluate some of their preconceptions about the balance of power between the negotiation parties and concluded that the power that they held had, in fact, been underestimated, enabling them to have confidence in taking a different approach.
At the end of the project, they had developed a clearly aligned strategy, set relationship goals and tactical responses for the buyer and the government, and created an external communication plan with key positioning statements for the market. The leadership team bought into this strategy without question. They remained close to the transaction even after the initial negotiation had concluded. They were delighted that, despite the complexity of this negotiation with multiple parties, the transaction ran precisely to the plan created at the outset.
Setting a precedent
Later the same year, they closed the deal, with a signed share purchase agreement to sell the asset for the asking price to the buyer.
There are many trite phrases which are trotted out when it comes to planning – “failing to plan is planning to fail” – but the commercial risk associated with poorly detailed planning is too great to ignore. “Just do it” may work for Nike, but it is not a recommended approach in negotiation. Complex negotiations rely on everyone understanding the whole of the plan and their part in making it successful.
Being prepared to work through the detail with more junior members of the team increases their sense of value and enhances the contribution that they can make to the success of the negotiation. Demonstrating that all bases have been covered will increase leadership confidence and increase team empowerment.
Article written with the help of Hrvoje Zaric a Negotiation Consultant at The Gap Partnership