Henry Kissinger, the famous American Secretary of State said “Effectiveness at the conference table depends upon overstating one’s demands”.
There are several reasons why it is important for you to start with high aspirations when you engage in negotiations:
1. Research has confirmed that high aspirations will consistently outperform low aspirations. It could be said that if you want to hit the moon, you should aim for the stars. You will be surprised by the effectiveness of something so simple. Many of my clients are delighted when they realise that they can realise more from their negotiations by simply asking for more!
2. Having high aspirations will allow you to ‘anchor’ the negotiation around your aspirations. It is far better ‘anchoring’ negotiations around your aspirational level rather than your minimum acceptable level. Having high aspirations convey confidence and serves to underline the quality of your suggestions.
3. Perhaps most importantly, having high aspirations will allow you the room to be flexible in your negotiations. Research tells us that most people equate their success at the negotiation table with their ability to gain concessions from their counterparty. The reality is that your counterparty will have no incentive to be flexible or to make concessions to you if you are not willing and able to make concessions to them.
Therefore, if you do not allow yourself some ‘room to move’ then you risk coming across to your counterparty as someone who is inflexible and unwilling to make concessions.
Please note that I am NOT suggesting that you open your negotiations with extreme and unrealistic demands. Your opening offer should reflect a level that is realistic and that you are able to justify using a solid, factual argument. It can be high risk using extreme demands and offers as your counterpart may well decide not to negotiate with you at all.
I once worked with a large organisation who used an approach of ‘the price we ask for is the only price we sell at’. As they are a well-established company in the USA, most of their clients have come to know them as the type of organisation that has a conservative approach to business and have learned to live with this approach. However, when using this approach in Eastern Europe, the company realised that they were being perceived as being inflexible by their counterparts because they would never budge on their prices. In Eastern European business culture this approach was not acceptable and they found it exceedingly difficult to conclude agreements in the Eastern European market place.
The simple remedy was for them to ask for a little more than their standard prices so that they could allow clients the opportunity to negotiate with them and to gain some concessions from them. This approach proved to be very successful for them.
Of course, keep in mind that 9 out of 10 times your counterparty’s first offer will be an aspirational goal, not their minimum expected outcome.
This means that you should never accept any first offer that is made – you should always negotiate!