Compromise sucks. By definition, compromise means that both parties are losing on something in the deal.
“But I compromise with my significant other all the time!”, you may say out loud.
Uh huh, and how does that make you feel? Did you get what you wanted? Did your significant other? Many people think that negotiation and compromise are the same thing. They’re not. Compromise is popular because it seems fair. And if you mean fair in that both parties lose, then I would agree. How many times have you heard, “Let’s split the difference” or “Let’s meet half way”. How many times have you said these things?
Many people think compromise is a good thing. When in truth, no one wins in a compromise situation. Both parties are forced to make a concession in a compromise. This is usually because many negotiators are lazy. There, I said it. Many negotiators are too lazy to search for something that is mutually beneficial.
Compromise – an agreement or a settlement of a dispute that is reached by each side making concessions.”
– See, doesn’t that just sound like a terrible idea?
Most negotiators go into negotiations thinking that the other party’s interests are going to be completely opposite to theirs. Nine times out of ten, this is not true. It is possible to have both parties win in a negotiation.
But (and you probably could have guessed there was going to be a “but” in there), it means that those negotiators that are interested in pursuing a win/win negotiation learn about each others’ interests. It’s easier not to do the thinking and constructive discussions that interest based negotiations require. When you go through the effort to understand what the interests are of the other party are, you are able to shape the negotiation to help meet the interests of the other party and get yours met at the same time.
What do I mean by this?
Don’t confuse positions with interests.
Positions vs. Interests – There’s a famous negotiation story that tells the story of two people arguing over an egg. One person wants the egg and the other person also wants the egg. In an extreme positional negotiation situation, both parties would argue till the end of time about who gets the egg. But if one person in the negotiation tried to understand why the other party may want the egg (understanding the interests of the other party), they may realize that the other party may wants the egg for use in making a special medicine. And, for that medicine, only the shell is required. And if the party who needed the egg shell tried to understand the interests of the other party who needs the egg, they may realize that the other party only needs the egg yolk for a mayonnaise recipe.
In a compromise situation, each party would have gotten exactly half an egg each and both would have walked away without what they needed. But, as we can see, in searching out the interests of the other party, both parties realize that they are able to negotiate a deal that meets the needs of both parties.
“Okay, I think I get it, but I don’t work with eggs!”
Okay, here’s another example: Pedro is a sales person in a software development company that makes CRM software for the oil and gas industry. Pedro is a decent sales guy and usually gets about $120K for a sale (this $120K is usually made up of a software license fee of $80,000, with an additional annual maintenance and support charge of $40,000). Recently Pedro competed in an RFP for a small oil an gas production company. Pedro made the short list and got to the point of negotiation. When it came to the negotiation, the buyer told Pedro that he needed to sharpen his pencil, as he was only prepared to pay $100K in total. Pedro was not happy and was worried that he wouldn’t be able to close. He couldn’t sell the software without the maintenance and support program, and there was no way that he could provide a that big of a discount. He tried everything to bring up the buyer’s offer. The buyer didn’t go for it. This confused Pedro. This customer had been reasonable to deal with in the past. What was the deal now? Finally, after trying everything, Pedro asked, “Why $100K? What makes that number so special?”
“It’s all I have left in this year’s budget.”, responds the buyer.
Drum roll, please!!!!
The buyer’s issue wasn’t the price!!! It was that year’s budget!!! The buyer’s position was that he would only pay $100K. But, his interest, showed that $100K was all he was could pay in that financial year.
Pedro solved the problem!
Finally, Pedro was able to close the sale by asking the following question: “Can you do a two-year support deal if I structure the payment schedule so you only have to pay $100K this year?”
Negotiation doesn’t have to be a zero sum game and it doesn’t have to be a compromise. Many negotiators don’t realize when they have interests that are consistent with the interest of the other party and they settle for sub-optimal agreements. Put in the work and the effort to determine what the interests of the other party are. Don’t just settle for the easy and unimaginative approach of a compromise. You’ll end up leaving money on the table and walking away displeased.