The Elements of Negotiation

ELEMENT 32Variables

The concept of NegoEconomics, the asymmetric value, arises, as is known, through asymmetric values or costs (for a full description of NegoEconomics, see Element 20). One party has higher costs than the other, which is why the task is placed with the owner of the lowest cost.

A majority of, if not all, negotiations are negotiated on too few variables. “The usual suspects,” as I call them. By limiting ourselves to a few variables, we make an agreement harder to achieve and certainly leave value on the table.

The nonprofit organization World Commerce & Contracting conducts a yearly global survey identifying the most negotiated variables. Every year the top 10 are almost identical:

• Limitation of liability
• Price/charge/price changes
• Indemnities
• Liquidated damages
• Termination
• Scope and goals/specification
• Payment/payment options
• Warranty
• Cybersecurity/data privacy
• Intellectual property and responsibilities of the parties

The scary part is that only two to three of these variables generate NegoEconomics—scope and goals, specification, payment, and warranty.

I often conduct brainstorming tasks where the client's purpose is to think outside the box and “invent” as many new variables as possible. However, there is often a task before the creativity task, and that is to establish the current variables. Ask yourself right now, what variables does your organization negotiate on?

Is it:

• Price
• Delivery time
• Quality
• Inventory
• Payment terms
• Operational efficiency
• Specification ...