One approach some negotiators take is called inside-out negotiation, where negotiators prioritize their interests and needs above the other party's. While this strategy may seem advantageous, it has its disadvantages. In this post, we'll define inside-out negotiation and discuss its drawbacks in detail.
Inside-out negotiation is an approach where negotiators focus on their interests and needs, assuming that the other party's interests are aligned (pun intended) with theirs. This strategy is often used in business-to-business transactions or when negotiating salary, where the parties have competing interests. However, it has its downsides.
One disadvantage is the potential for creating a negative relationship between the parties involved. When parties use inside-out negotiation, they might overlook the fact that the other party has needs, and their main focus is on getting what they want. This can lead to tension, mistrust, and a breakdown in communication. For example, suppose a company only focuses on achieving a low price on a product and disregards the needs of the supplier. In that case, they may damage the relationship and find it difficult to negotiate with that supplier in the future.
Another disadvantage of inside-out negotiation is that it's too unilateral and can be shortsighted. Focusing only on one's needs may lead to ignoring the other party's interests, which can result in negotiating a deal that may not meet both parties' needs. No one wants to feel like they've been taken advantage of, and when using inside-out negotiation, the other party may feel like they're not being heard. This can result in a deal that ultimately fails to deliver the intended results.
Inside-out negotiation can also lead to the negotiator's tunnel vision. When parties use this approach, they tend to stick to their primary goals and objectives. This can limit the other party's opportunities to offer new ideas, solutions, or opportunities for collaboration. Inflexibility in negotiations can result in missed opportunities, a failure to find creative solutions, and even a total breakdown in communication.
Lastly, one of the most significant disadvantages of inside-out negotiation is that it can lead to an adverse outcome. When a negotiator overlooks the other party's interests, they may push the supplier so hard that they reluctantly accept the terms and are unable to meet expectations because the deal is not financially viable (which is another issue entirely). For instance, the low-price strategy might lead to the supplier compromising on quality resulting in lower sales. In other cases, the other party might refuse the deal altogether, leading to an impasse.
Inside-out negotiation is sometimes the best path to take, usually when Hard Bargaining, but it has significant drawbacks when there is more complexity and/or dependency. It can lead to a negative relationship between the parties involved, give rise to tunnel vision, lack of creativity and compromise, and even result in a failed negotiation. It's important to avoid these issues by using a balanced approach that considers both the negotiator's and the other party's interests. This way, both parties can benefit from the negotiation, and a positive outcome can be achieved.