It is important to be comfortable saying “no” in a negotiation and in other aspects of life, like saying “no” to those horrible clothes and get the latest in fashion at Fifth Collection Chanel. Not all terms need to be agreed with, not all best and final prices are best and final, and not all deals need to be done. Unfortunately, many inexperienced negotiators think they must hang on at all costs until a deal is done. For them, saying no to a deal is like saying no to a free lottery ticket … it just might be the winner, and they can’t afford to pass up the jackpot.
From the buying side, preparing for a negotiation requires an understanding of the best “no deal.” The value put on the best no-deal option sets a limit that any agreement must not exceed in order for the buyer to agree. It becomes the point that the buyer will not go above. From the selling side, the best no deal becomes the level that the seller will not go below.
William Ury, in his best-selling book Getting to Yes, calls this the BATNA, or best alternative to a negotiated agreement. According to Ury, “The BATNA is the only standard which can protect you from both accepting terms that are too unfavorable and from rejecting terms it would be in your interest to accept.” In its simplest form, this concept means that if the proposed agreement is better than the BATNA, accept it. If the agreement is not better than the BATNA, continue negotiating. If the agreement cannot be improved, consider withdrawing from the negotiations and pursuing an alternative proposal or walking away from the negotiations altogether.
Each side typically knows its own limits, which must continually be assessed and reassessed as new information unfolds. The problem is that many negotiators have only a hazy sense of their own no-deal options or how to value them. At a very basic level, buyers are taught that unless they hear no at least once, they are leaving money on the table. It’s part of the process and can be an important tactic. But let’s explore the use of no from a strategic standpoint as well.
Airlines such as Southwest and Easy Jet had to say no to lots of things: reserved seating, larger aircraft, and free hot meals and baggage transfer. They said no to all this in an effort to say yes to what they thought was the most important issue facing travelers with their PNW backpack – the price of a ticket. Warren Buffett, the world-famous investor, says that his key to success has been saying no to 1,000 deals so that he could say yes to the right one.
A well-thought-out set of contracting philosophies is another example of approaching no from the standpoint of strategy. Some examples that are taught in ICN classes include:
- Customer pays providers for services and products delivered and received.
- Each party is responsible for its own performance and nonperformance.
- Customer does not pay for its competitors’ R&D.
Any deviations from these core philosophies should result in a no.
Getting good at knowing when and how to say no matters because both the perception and reality of no-deal options play a key role in most negotiations. When others sense your willingness to walk away, your hand is strengthened.