In today’s global marketplace, Ben Franklin’s observation that “time is money” is as true now as ever. Companies (large and small) feel tremendous pressure to quickly line up and close deals – whether to bring in revenue, meet internal project deadlines, or to free up resources to tackle the next opportunity. Moving quickly can drive a deal forward, but speed has its price, and in many situations, slowing down may actually work to your benefit. Understanding and managing the impact of time on a negotiation can be a valuable tool. Here are some tips to make time work in your favor.
Slow Down to Create Leverage
Time, and the ability to control the pace of a negotiation, can be a powerful source of leverage in a negotiation. Customers and service providers alike can gain an advantage in a negotiation by understanding and leveraging the time pressures facing the other side. As year-end approaches, for example, many service providers are under increased pressure to get deals closed, which can give customers with time to space increased leverage to secure favorable pricing and terms. Likewise, vendors may have increased leverage in negotiations with customers who are in a pinch (perhaps due to a failing relationship with a current service provider) or are under internal pressure to hit a project deadline. If you perform a careful study of the time pressures facing the other side, you can speed up or slow down a negotiation to shift leverage to your side of the table, particularly in the later stages of a negotiation when the issues are often focused on key terms and deal fatigue may have set in.
Check Your Internal Time Pressures at the Door
Although it is important to understand the time pressures facing the folks across the table and their potential to create leverage, it is equally important to manage your own timing for your approach to the negotiations to avoid giving away your leverage or – worse yet – giving the other side a stronger position.
Consider the following: A large company and a software vendor were recently negotiating a license agreement. The large company had set internal deadlines for getting the deal done which were designed to reassure key stakeholders that the contract process would not get bogged down. Somewhere along the line, the company’s business team shared its internal deadlines with the vendor. When the negotiation hit an impasse on several large issues, the vendor dug in and knowing the company was on the hook with its leadership to close the deal on schedule, and dragged out the process to use the company’s own deadlines against it.
There are several lessons to learn here: