A recent study into business negotiations found that the biggest challenges faced by businesses and individuals are (a) the price/value trade off and (b) developing alternatives/generating options, respectively. A recent Fortune Magazine review in affiliation with Miller Heiman (the complex selling methodology gurus) found that sales people quoted price as the number one reason why they lost deals.
There has been much talk in the IT industry on both the buy- & sell side about 'partnering' to produce solutions. Looking at the supporting data, it is doubtful whether this talk has translated into action.
Whilst most organisations would like to believe that they are interacting with both clients & suppliers in a 'solution based' format, the role of price still dominates the process. This is due in large part to the inability of individuals to see the 'big picture' or to get involved in creative thinking. Our research & experience shows that one of the critical features of successful business negotiators is the skill to be creative & flexible.
Whilst many IT organisations have built their reputations on the back of their innovative and creative technologies, it would seem that creativity is often limited to the design & engineering departments. One of the strongest drivers of human conduct is the tendency to avoid potential deficits. When assessing information about the future, managers are more interested in avoiding possible deficits than achieving the same gains. This means that during negotiations that support complex and high value IT agreements, the focus is more often on managing risk to avoid potential losses, rather than on creating innovative and creative ways to create additional value for all stakeholders.
The more complex the transaction, the more vital it becomes to control risk. Rather than just trying to avoid losses, we should concentrate on ways to create options for common benefit during negotiations.
To avoid falling into the price trap, ask yourself the following questions ahead of each negotiation and make this part of your negotiation strategy:
1. Vision
a. What are the key interests of all the stakeholders to the transaction that will be satisfied by reaching a settlement?
b. How important will it be for each party to the transaction to perform in a mutually beneficial mode?
2. Value
a. What are the specific objectives of all the parties to the deal?
b. What are the limits associated with each of the objectives for all parties?
3. Process
a. What assumptions have you made that you could confirm through questioning during the negotiation?
b. How can you frame the negotiation so as to contribute to a collaborative, partnership based approach rather than a price centred negotiation?
4. Relationships
a. Do all parties have the same desire for a lasting relationship?
b. How can you impact the 'climate' of the negotiation so as to support a collaborative approach? ('Climate' pertains to non-verbal, physical and cultural aspects.)
Once you have covered these basic elements of preparation you will have time left to be creative. Being innovative is not something that comes easily to all of us but it is an important negotiation skill. Use one of the recognised creativity methodologies such as De Bono's Six Thinking Hats, or the Disney Creativity Model to help you generate options.
If you want to truly embrace a partnership method that delivers optimal value, you should waste no time at all in getting the creative juices flowing.
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