Negotiating the System, Not Just the Deal

When you walk into a negotiation, it might look like two individuals sitting across from each other, but in reality it is two systems negotiating through human agents.

Your negotiation counterpart is backed — and bound — by their organization. They serve internal con­sti­tuents, follow incentives, and face constraints that may never be fully disclosed. And you, whether you realize it or not, do the same.

Yet most people prepare for negotiations as if it were just about them and the other person. That is a costly mistake.

Why Rational Deals Fall Apart

Plenty of deals make perfect sense — and still col­lapse. Why?

Because people don’t negotiate in a vacuum. There’s a difference between negotiating on your own behalf — say, when you sell your car or buy a house — and a B2B negotiation. The latter is a negotiation within a system of pressures, biases and internal politics.

Consider this:

• Even if your counterpart knows the deal makes sense for both sides, they may still need to convince others internally. Sometimes, deci­sion-makers are too far removed to see the value. Other times, internal stakeholders block the deal because they feel threatened in their position.
• They may be optimizing for their own KPIs, fo­cusing on what helps them personally, not what’s best for the deal. Depending on the pre­vailing company culture, self-interest can quickly over­ride the greater good for the com­pany.
• Or they may be pushed to chase short-term wins, which aligns with the short-termism in­side their organization, but undermines long-term value for both sides. Who hasn’t seen this happen?

And let’s be honest: Your side faces the same exigen­cies. Let’s explore each of these issues in turn:

1. The internal maze behind every “yes” or “no”

Negotiators are never alone at the table. Behind every person you face is a web of interests, approvals and internal politics. Even if they see the value and want to agree, they have to navigate their own system — con­vincing their constituents who may not share their view or who fear losing influence over this par­ticular deal. If you ignore that, you risk pushing for a deal they simply can’t take home.

You, in turn, might feel the same pressure. You also have stakeholders you need to please: bosses, col­leagues, teams, boards. You have your own KPIs to meet and you are likely bound by constraints and rules that sometimes limit what you can propose or accept. Even your internal reputation may hinge on “winning” this deal or avoiding certain concessions.

2. Personal agendas colliding with company in­ter­ests

Many negotiators are caught between personal in­centives (what’s best for them) and company interests (what’s best for the deal). Their performance reviews, bonuses and next promotion may depend on hitting certain KPIs, even if that means forcing a suboptimal deal or one they know they can’t honor. Their inter­nal reputation may hinge on adopting a certain nego­tiation stance, whether that means pushing for a win, holding the line, playing hardball or rejecting a deal altogether to maintain a certain internal image. If you don’t recognize these personal agendas, you’ll mis­read what’s driving the negotiation and why good pro­posals sometimes get rejected.

Flipping the perspective back onto your side, you may realize that the negotiation team you are deploy­ing to secure a certain outcome would be hurting them­selves under the current incentive schemes. In complex negotiations, you may want to concede in one area in return for a bigger win in another. But if that involves a key accounter losing their claim to a bonus, this could threaten the deal unless you find ways to compensate or adjust for this bias.

3. The distortive force of short-term wins

In some instances, companies reward immediate re­sults over lasting value. In these cases, your counter­part may be under pressure to “score” a quick victory, even if that means undermining future potential. Un­less you address this, you risk signing a deal that un­ravels later — or a deal that fails to capture most of the value that would be possible.

Again, the same can be true for your own side of the table. If your own organization pushes for fast re­sults and you can’t find strong advocates internally for a more sustainable deal, you may be forced to ac­cept terms you know are flawed.

That’s why preparing for high-stakes negotiations isn’t just about what you say at the table — it’s about understanding the system behind the people you’re negotiating with.

When a B2B negotiation gets stuck, it’s rarely just about “the deal”. It’s usually about the people and the organizational intricacies behind them — on both sides of the table. If you’re not prepared to negotiate with both the person and their system, you’re not fully prepared.

Systems and Functional Stupidity: Why Organi­zations Negotiate Poorly

If negotiations were just about logic and mutual gain, many deals would come together much faster. But or­ganizations are complex systems, and com­plex­ity of­ten breeds dysfunction.

People in organizations don’t act as free agents. They act within a system that shapes and limits their choi­ces — a system of internal politics, incentives and unspoken rules. And that system doesn’t always re­ward what’s best for the company. It rewards what’s safe, familiar or politically expedient.

Sometimes, saying “no” is safer than saying “yes” — even when a deal makes perfect sense. Or some inter­nal stakeholder is blocking a deal to protect their turf, even if the company loses out. And sometimes, nego­tiators are so focused on avoiding personal risk that they can’t recognize a good deal when it’s in front of them.

Psychologists and sociologists have a name for this: functional stupidity. This is when organizations sys­tematically discourage critical thinking because it might challenge the way things are done. People stop asking hard questions, lose sight of the bigger picture and play it safe. The result? Good deals fall apart.

And here’s the uncomfortable truth: this happens on both sides of the table. If you don’t recognize these dy­namics — in their system and yours — you’re likely ne­go­tia­ting with a distorted view of reality.

Because even smart, well-intentioned people pro­duce dysfunctional outcomes when the system around them rewards risk-aversion, short-term wins or self-preservation over what’s right for the business. And if you don’t understand that dynamic — you’ll misread the entire negotiation.

Negotiating the System, Not Just the Deal

This is why negotiation expertise alone isn’t enough. You need an understanding of organizational dynam­ics — yours and theirs. You need to map the forces that shape what’s possible, what’s likely and what could block a deal.

And yet, many people approach B2B negotiations as if it’s only about negotiation strategies or the tac­tics at the table — ignoring the internal constraints, in­cen­tives and political games behind the scenes that shape every move.

Real negotiation work starts long before you enter the room — aligning your own organization, under­stan­ding theirs and finding ways to navigate both sys­tems. Because in high-stakes negotiations, getting the deal right is only half the battle — getting it through the system is where it’s won or lost.

What That Means in Practice

If you want to get the deal and get it through the sys­tem, here’s what you need to do — on both sides of the table.

1. Map the System — Beyond the People in the Room

Most negotiations are shaped by people who aren’t at the table. You need to map who really holds power, influence or veto rights, both in their organi­za­tion and your own. More often than not, it’s actors behind the scenes.

Ask:

• Who needs to say “yes” for this deal to happen?
• Who might block it — openly or quietly?
• Who stands to win or lose (politically or finan­cially) depending on how the deal is shaped?
• What informal power networks (alliances, rival­ries) will shape the outcome?

This is about identifying stakeholders and hidden play­ers — supporters, blockers, silent veto players — so you’re not blindsided later.

2. Surface Hidden Barriers — Constraints, Incen­tives and Risks

Most difficulties in negotiations aren’t about the deal itself — they arise from internal risks, incentives and constraints. Handling them requires under­stand­ing and anticipating internal politics, power struggles and both tangible and intangible reward schemes.

Explore this by asking:

• What KPIs, bonus structures and internal pres­sures shape their (and your) negotiators’ beha­viors?
• What risks (personal or organizational) make people hesitate to proceed?
• What real constraints exist — and which are just positioning tactics?
• Where are internal conflicts and misalignments inside your organization that could derail the ne­go­tiation?

If you don’t surface these forces early, they’ll show up as surprises later — often too late to fix.

3. Align Your Own Side — Before You Sit Down with Theirs

If you’re not aligned internally, you’ll undercut your­self at the table. Many negotiations fall apart not be­cause of what the other side does but because your own organization isn’t aligned on what you’re trying to achieve. Foreseeing different scenarios, including po­ten­tial risks, opportunities and turning points, allows you to settle critical decisions upfront with all rele­vant stakeholders, instead of chasing last-minute align­ment when pressure is highest.

Ask yourself:

• Do we agree on our walkaway points and must-haves? What trade-offs are acceptable? Where are we flexible — and where are we not?
• How do we resolve internal tensions — between sales, procurement, legal, management — before the negotiation?
• Does everyone involved understand the broader strategy, so no one inadvertently undermines it?
• How do we orchestrate our actions? Who is co­ordi­nating information gathering, messaging and other influencing efforts so we work in unison?

Neglecting to align internally is like going into battle with one hand tied behind your back. Internal align­ment is your first, and most critical, negotiation.

4. Engineer a Deal That Works in the Real World

A deal that looks good “on paper” but falls apart in execution is a failed negotiation. And yet, deals that collapse in implementation or fail to deliver the ex­pec­ted returns are an alarmingly frequent occur­rence.

Instead, design the deal with implementation in mind and craft one that survives both organi­za­tions’ systems:

• Can their team implement what’s agreed — or will they hit internal resistance?
• Does your own team have the will and ability to follow through?
• Have you considered operational realities: what will happen when people outside the room need to act on the deal?
• What support will both sides need for implemen­tation? How will you monitor compliance?

If you want a deal that lasts, negotiate for implemen­tation — not just for agreement.

5. Manage the Human Factor — and the Consti­tuents on Both Sides

Even when a deal makes sense, people are reluctant to take risks that could hurt their standing inside their company. They might lack internal sup­port or face conflicting priorities, making it hard for them to support the deal. To help both sides reach an agree­ment that sticks, you need to manage the human side of internal dynamics — on both sides. It’s about help­ing people overcome the risks and constraints iden­ti­fied above.

Consider:

• Have you built trust by demonstrating you under­stand their internal pressures, so agreeing to your proposal doesn’t leave them politically exposed?
• Have you installed processes internally to main­tain your leadership’s trust in your negotiation team, so you’re backed when it’s time to move for­ward?
• Can you give the other side what they need to sell the deal internally? How can you make them look good saying “yes”?
• How do you make it clear to your won people that supporting this deal benefits them, too?

In B2B, losing face or policital capital can be a real deal-stopper, especially then there’s uncertainty about leadership’s stance. You need to rally support internally, both for them and for yourself. Because people say “yes” when they know the deal won’t cost them politically and when they’re confident it has in­ternal support.

Mastering the Hidden Side of Negotiation

High-stakes negotiations don’t just happen when en­gaging with the other party. They happen first within organizations.

Failing to navigate the systems behind the deal, you are at risk of losing before the real negotiation even starts.

Negotiating Organizations — Not Just People

When you prepare a negotiation as if it were just a meeting between two people, you’re leaving massive risks — and opportunities — on the table.

But when you prepare to negotiate the organizations behind the people, you shift the entire game:

• You understand what really drives decisions and an­ticipate roadblocks before they appear.
• You help the other side meet their “behind the table” challenges and set your own organization up to success by creating alignment in thinking and action before you sit down to negotiate.

Because in B2B, you’re not just negotiating a contract — you’re negotiating the system behind it.

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