What is SWOT Analysis in Negotiations?

SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is widely known as a tool for business strategy, but its application in negotiations can be transformative. By focusing on Strengths and Opportunities, negotiators can embrace what Patrick Tinney calls “positive risk”—the idea of taking calculated chances that may still carry uncertainty but are more likely to lead to value-creation and success. In contrast to the instinctual focus on risk aversion, which is driven by a fear of negative outcomes, using SWOT strategically enables negotiators to unlock hidden value and craft smarter deals.

The Human Tendency Toward Risk Aversion

One of the core challenges in negotiation is our natural inclination toward risk aversion. This is an evolutionary trait that has helped humans survive by avoiding negative outcomes. In negotiations, however, this can often limit our ability to see beyond immediate risks, causing us to overlook opportunities for growth and value creation.

Risk aversion often manifests in negotiations as a desire to minimise uncertainty, stick to familiar processes, or avoid taking chances that might lead to failure. While these behaviours can help avoid negative consequences, they can also prevent negotiators from seizing positive risks—opportunities where taking a calculated chance could lead to mutual gain, enhanced relationships, or innovative solutions.

The Strategic Importance of Strengths and Opportunities

In Episode 17 of The Negotiation Club podcast, Patrick Tinney highlights the importance of focusing on Strengths and Opportunities during negotiation preparation. By identifying what you and your counterpart bring to the table, you can uncover leverage points that create value for both sides.

For example, in a business deal, your strength might be the ability to deliver high-quality goods consistently, while the counterpart’s opportunity lies in expanding their market share. When both sides recognize these elements, a positive risk arises: by increasing the order quantity or co-developing a new product, both parties stand to gain significantly more than from a standard agreement.

The critical takeaway is that positive risk is not about reckless decisions. It’s about recognizing potential opportunities that may still have an element of uncertainty but, if handled correctly, lead to enhanced results. Patrick emphasises that thinking strategically about your strengths and opportunities allows you to take these positive risks with confidence.

Unlocking Value through Positive Risk

When we focus on Strengths and Opportunities in the SWOT framework, we begin to unlock hidden value. Positive risk can take many forms in a negotiation:

• Leveraging strengths to secure better terms: By recognising what your side excels at, you can use that strength to negotiate from a position of power. For example, if your team is known for delivering projects on time, you can use that to negotiate for higher fees or longer contract terms.
• Exploring opportunities for mutual growth: Instead of seeing the deal as a win-lose scenario, consider how you can both benefit. Could a larger order create economies of scale? Could a long-term partnership open up new markets?

Patrick Tinney provides real-life examples of how positive risks, such as exploring new product ideas or making strategic investments, can lead to long-term growth. In his discussion, he mentions that by embracing positive risk, a negotiator not only adds value but also fosters trust and strengthens relationships, which is key to sustaining future collaborations.

Overcoming Risk Aversion: Strategies for Success

While it’s easy to say that we should focus on positive risk, it’s much harder to implement. Our natural tendency is to avoid risk, and it takes deliberate effort to shift our mindset. Here are key approaches to incorporate in your preparation and negotiation process to make SWOT analysis work for you:

1. Preparation: Identify Strengths and Opportunities

Before entering a negotiation, conduct a thorough SWOT analysis on both yourself and the counterpart. List out your strengths—what you or your company do exceptionally well—and think about how you can leverage these in the deal. Then, identify the opportunities. Are there market gaps you can fill? New products you can introduce? Partnerships that could unlock new potential?

2. Maintain an Open Mind

Positive risk requires you to remain open to new ideas, even if they involve some uncertainty. In negotiations, flexibility is key. Don’t enter a discussion with rigid expectations. Instead, be willing to explore avenues that could lead to greater rewards. This mindset shift is essential to seizing opportunities that may otherwise go unnoticed.

3. Practice Patience

Embracing positive risk isn’t about rushing into a deal. It requires patience to thoroughly evaluate the opportunities and understand the implications for both sides. Patience also allows you to see beyond short-term gains and consider the long-term value that could be unlocked.

4. Active Listening

One of the most important negotiation skills is the ability to listen actively to the other party. By listening, you can pick up on cues about their strengths and opportunities that may not be immediately obvious. Patrick emphasizes that sometimes, the buyer or seller may offer insights during the conversation that reveal new possibilities. This is where active listening becomes a crucial tool for uncovering hidden value.

5. Use Open Questions

Open questions help you uncover more information about the other party’s needs, desires, and opportunities. Asking questions such as, “What challenges are you facing?” or “How do you see this partnership evolving?” invites them to share information that could help you identify leverage points. Open-ended inquiries help both parties move beyond transactional thinking and toward creating value together.

6. Creativity in Problem-Solving

Creativity plays a significant role in identifying opportunities and proposing solutions that create value. Patrick recommends reading creativity-focused books, like Edward De Bono’s "Six Thinking Hats", to enhance your ability to think outside the box. By training yourself to view negotiations from different angles, you can spot innovative solutions that others might miss.

Skills Needed to Maximise Positive Risk in Negotiations: Key Tactics and Approaches

Maximising positive risk in negotiations involves not only having the right mindset but also deploying specific tactics that enhance your ability to capitalise on strengths and opportunities. In addition to the strategic thinking, confidence, and emotional intelligence already mentioned, certain negotiation tactics can amplify your success when embracing positive risk. Below are key tactics drawn from The Negotiation Club that are particularly relevant for this approach:

1. Pause, Consider, Respond

Positive risk-taking requires thoughtfulness, and the ability to slow down your decision-making can be a powerful tool. This tactic encourages negotiators to pause and assess the situation before responding, allowing for a more strategic evaluation of risks and opportunities. By taking a moment to reflect, you can better understand whether a positive risk is worth pursuing.

2. Open Questions

Asking open-ended questions is essential for uncovering hidden opportunities and gaining deeper insights from your counterpart. Questions like, “What are your long-term goals?” or “How do you see this partnership growing?” invite broader conversations and reveal opportunities for positive risk that might not have surfaced through closed questions. This tactic helps shift the focus toward collaborative value creation.

3. Building Relationships

Positive risk is often easier to embrace when there is a foundation of trust. The Building Relationships tactic emphasises rapport-building and creating a connection with your counterpart. Strong relationships enable more open discussions about mutual opportunities and reduce the perception of risk. This trust fosters an environment where both sides feel more comfortable exploring positive risk together.

4. Satisfaction and Mutual Gain

The Satisfaction tactic focuses on ensuring both parties feel satisfied with the outcome, which is key when introducing positive risk. This approach encourages you to look for win-win scenarios where both parties stand to gain something meaningful from the risk taken. It’s about ensuring that your counterpart feels confident in the potential value of the deal, reducing their risk aversion.

5. Anchor

The Anchor tactic can help set the stage for a negotiation that embraces positive risk by anchoring the discussion around high-value propositions. When you anchor the negotiation early with an ambitious yet realistic proposal, you can steer the conversation toward higher-value outcomes, making positive risks more appealing. This tactic helps frame the negotiation in terms of potential, rather than limits.

6. Summarising

Summarising during the negotiation process helps keep track of where both sides stand on various issues, allowing you to clarify mutual benefits and opportunities. This tactic ensures that both parties are aligned and that the focus remains on positive, value-driven risks. Summarising periodically allows you to reinforce the idea that embracing positive risk can lead to greater rewards for both sides.

7. Establishing a Range

Setting a range for variables such as price, delivery times, or contract terms opens up room for flexibility and creative problem-solving. Establishing a range allows negotiators to explore multiple options within a safe boundary, making positive risks more palatable for both sides. This tactic encourages flexibility without sacrificing the safety of a well-prepared strategy.

8. T.E.D. Questions (Tell, Explain, Describe)

These open-ended questions are designed to get your counterpart to reveal more about their needs, priorities, and concerns. By using T.E.D. Questions, you can uncover underlying opportunities for collaboration and positive risk-taking that might not be immediately obvious. This tactic deepens your understanding of the other party’s motivations, making it easier to craft solutions that align with both parties’ strengths and goals.

9. Crescendo Effect

The Crescendo Effect builds momentum in the negotiation by strategically increasing the stakes or scope of the conversation. By starting small and gradually introducing larger, more ambitious ideas, you can guide the negotiation toward positive risks. This tactic allows both sides to grow more comfortable with the idea of taking larger calculated risks as the negotiation progresses, creating a sense of shared progress.

10. Know Thy Name

In any negotiation, it’s crucial to understand the power dynamics at play. The Know Thy Name tactic emphasises knowing your position and reputation within the negotiation, which can provide the confidence to take calculated positive risks. If you know your strengths and understand how your counterpart views you, you’re more likely to take bolder steps toward value creation.