Competition can kill a negotiation

In competitive hard-bargaining negotiations, the goal often seems singular: to win. One party aims to come out ahead, even at the expense of the other. While competition can be effective in certain situations, such as when resources are limited or when there's a clear winner-takes-all scenario, it’s not without its drawbacks. Before diving headfirst into competitive tactics, it's essential to understand the potential risks and limitations this strategy can bring to the negotiation table.

Damaged Relationships

Competition can quickly erode trust and damage relationships between negotiating parties. When one side pushes too hard to secure a win, the other side may feel exploited, manipulated, or taken advantage of. This often results in resentment and bad feelings, which can carry over into future interactions.

Negotiations that leave one party feeling defeated are unlikely to build lasting partnerships. A "win at all costs" approach can close the door on future opportunities for collaboration, making it difficult for both sides to work together again.

Example:

Imagine you're negotiating a contract renewal with a long-time supplier, and you push aggressively to reduce costs. The supplier, feeling cornered, agrees but leaves the negotiation feeling bitter and devalued. While you may have won in the short term by securing a lower price, the relationship is likely damaged. This could lead to lower-quality service, delayed delivery times, or, eventually, the supplier seeking business elsewhere.

Limited Options

Competitive strategies tend to narrow the focus of the negotiation to a zero-sum game—meaning one side wins, and the other loses. This rigid approach limits creativity and reduces the likelihood of finding mutually beneficial solutions. When both sides are singularly focused on getting the upper hand, it becomes challenging to explore alternative outcomes that could satisfy both parties.

Example:

In a real estate negotiation, a buyer might focus solely on driving the price down, while the seller becomes fixated on maintaining the highest possible sale value. In doing so, they may overlook alternative solutions like flexible payment terms or additional services that could benefit both sides. A focus on competition can make negotiators miss out on creative opportunities.

Missed Opportunities for Collaboration

Negotiations don't always have to be a tug-of-war. In fact, many successful negotiations involve collaboration and problem-solving to reach a solution that benefits both parties. However, a competitive mindset can block negotiators from seeing opportunities for compromise or collaboration, preventing them from identifying areas of mutual interest.

Example:

If two businesses are negotiating a partnership, and one party insists on securing all the favorable terms, they may miss the chance to build a more integrated, mutually beneficial relationship. Collaboration could lead to innovative joint ventures or new business strategies, but an overly competitive approach prevents such opportunities from even being discussed.

Increased Risk of Impasse

One of the biggest dangers of a competitive strategy is the potential for deadlock or impasse. If both parties are focused on winning and refuse to give ground, the negotiation can stall. This not only wastes time but can also prevent any deal from being reached at all.

Example:

Consider a salary negotiation where an employee refuses to accept anything below a 20% raise, and the employer is unwilling to go above a 10% increase. With both sides entrenched in their positions, the negotiation could easily reach a standstill, leaving both parties frustrated and potentially losing a valuable employee.

Short-Term Thinking

When competition takes center stage, negotiators often focus on immediate gains at the expense of long-term benefits. This short-sightedness can lead to decisions that seem advantageous in the moment but have negative consequences down the road. A deal won today may come with hidden costs tomorrow.

Example:

In a procurement negotiation, a company might secure a rock-bottom price from a supplier by leveraging their buying power. While this might seem like a victory in the short term, the supplier may cut corners on quality or service to compensate for the lower profit margin. In the long run, this could lead to product defects, delays, or the need to switch suppliers, ultimately costing the company more than the original savings.

Finding a Balanced Approach

While competition can sometimes be an effective tactic, it's important to balance it with other negotiation strategies that prioritize long-term relationships and creative problem-solving. Instead of focusing solely on winning, consider exploring options for collaboration, understanding the needs of the other party, and finding ways to create value for both sides.

In some cases, it’s worth blending competition with collaboration—picking key issues to hold firm on while remaining open to compromise on other areas. This type of negotiation strategy, often referred to as integrative or cooperative bargaining, allows both parties to achieve meaningful gains without destroying relationships or missing opportunities for future partnerships.

Know When You're in a Competition—and When You Are Not.

While competitive tactics can sometimes lead to short-term wins, the potential downsides—damaged relationships, limited creativity, missed opportunities, increased risk of impasse, and short-term thinking—can outweigh the benefits in the long run. Before adopting a competitive approach in negotiation, carefully assess the context and consider whether collaboration or a more flexible strategy might yield better results.

Ultimately, balancing competition with collaboration can open doors to better outcomes that benefit both sides while preserving relationships for future success.