10 October, 20212 minute read

The fundamental rule of negotiation: understand the other party

Anything and everything in this world is negotiable, and even if you don’t actively seek out opportunities to negotiate you will one day end up at the bargaining table either way. Most people aren’t very good at it: my favorite story showcasing this comes from the ‘Engineering and the Profession’ paper during my software engineering degree. The very last assessment of this paper is a negotiation assessment where students are randomly paired up and given a fictitious scenario. In the year I took the paper, an ‘Trongineering’ was attempting to reach a supply deal with ‘ACME Corporation.’ Each party had access to both a common facts sheet, and a confidential fact sheet specific to the party they had been allocated.

It’s easy to get rattled during negotiations—especially in this particular situation, where the negotiation centers around a contrived scenario with a marker sitting only three feet away—but my partner during this assessment wound up agreeing to sell me the components at a price point lower than the minimum allowable price indicated on his confidential fact sheet. While this was only an assignment, this same situation plays out all the time in the real world.

There’s already a lot written about different negotiation styles and how to hone your skills—I’m not going to rehash what can be surfaced easily via a quick Google search. What I do want to contribute, however, is that it is absolutely essential that you truly understand the other party’s position before you agree to anything. It is impossible (or at least, very difficult) to accurately assess the value of a deal otherwise.

If you can’t understand the other party, then it generally means one of two things:

  1. You’re missing a key detail, or the deal is shady in some way.
  2. The deal is bad for the other party.

In the first instance you need to take a step back and reconsider everything from first principles to try and figure out what you’re missing, because whatever it is could have huge implications for you. The second instance may or may not be an issue depending on what your goals are, but in general I’d exercise caution. Is it actually a bad deal for the other party? Or are you actually missing something (see point #1)? And if it is legitiamately a bad deal for the other party, is there a way to restructure the deal such that it becomes mutually beneficial in a way that doesn’t compromise your position?

While it’s important to look out for your own best interests during negotiation, it’s also important to make sure you’re paying attention to the other party so that you aren’t missing critical information.

Don't want to miss out on new posts?

Join 100+ fellow engineers who subscribe for software insights, technical deep-dives, and valuable advice.

Get in touch 👋

If you're working on an innovative web or AI software product, then I'd love to hear about it. If we both see value in working together, we can move forward. And if not—we both had a nice chat and have a new connection.
Send me an email at hello@sophiabits.com