In the final article in this series, I consider how our stakeholders outside of the procurement function consider negotiation. After all, everyone can negotiate, right…?
As seasoned buyers many of us will have been asked the question; “Can I join your next negotiation?”
Nearly always the request is well meaning and indicative of a willingness to learn the art which is core to our profession (despite my belief that buyers fall back on the perception of their own negotiation skills too easily). It is also, I feel, always unintentionally dismissive of the skill itself.
Unwritten within the question is the inference that the invitee assumes learning to negotiate can be done within a few hours, and perhaps even in a single sitting. “I’ve attended the training course, now I need to take the test”, is the secondary call. Those of us practising negotiation for all of our careers know all too well that during every negotiation, even the most experienced and skilled of us make mistakes, and value egresses to the other party outside of our control and planning.
Of course, being the type of individual who is passionate about developing people, particularly in the area of procurement and business management, I seldom refuse a request and attempt to install the observer in to the next appropriate negotiation. Many readers will also recognise that this often means waiting several weeks or months as “good, old fashioned, round-the-table, face-to-face” negotiation happens less and less in today’s technology driven world.
Without question, we are “negotiating” during every email, phone call or meeting that we have with our negotiating counterparties – or “conditioning” as we like to call it. We negotiate by requesting our leaders to set out our message to their senior counterparties.
We set out and plan our negotiation, conduct detailed cost and market analyses, plan the room layout, the attendees, the tone of the questions and who will ask them, our critical requirements and our tradeables, and lots more besides. And after all this work, unseen by the requestor, we execute the negotiation, hopefully in the allotted time. However, I contend that the single most critical success factor in any negotiation is ensuring you are negotiating with the correct party. Note: I say party, not person.
Having the correct person in the room is important, too. Most of us will have learned a valuable lesson at some point in our careers by experiencing frustration and delay at a counterparties repeated requirement to refer to more senior colleagues. “Surely you expected that question and prepared a response?!” is our, often silent, cry.
But, my point is not about having the correct person in the room, it’s about negotiating with the correct party. Negotiating is tough enough with a counterparty that is willing and hungry to reach a resolution. Negotiating with a party who simply does not have to negotiate; a party who does not need to concede and does not believe he will lose is the toughest of all. And this, invisible to the prospective negotiation observer, is where the high performing buyer excels.
This type of negotiation started a long time; ago often months and sometimes years ago. Recognising a growing dominance or complacency of any given counterparty, the skilled negotiator develops hunger. A hungry competitor who may or may not force the complacent of dominant supplier to move position and concede value. It actually doesn’t matter whether the incumbent moves position or not, the high performing buyer now has options.
Do not misunderstand my point here. I am not describing the time-served tactic of “play one off against the other“. At the start of this negotiation there simply were not two parties to play off against each other. Success in this negotiation is the culmination of hard fought manoeuvring, which ultimately makes the dominance of the incumbent supplier irrelevant.
Manoeuvring which creates a credible threat to the incumbent where previously there was none. All of a sudden the negotiator has options. All of a sudden the BATNA (Best Alternative to Negotiated Agreement) just got a whole lot better and a positive result will ultimately be obtained.
I am also conscious that my use of the word manoeuvring may be perceived negatively. It is not meant to be so. In the world of complex, multi-national negotiations with poor market dynamics, limited competition and high switching costs, I use the word merely to explain what is necessary to extricate an organisation from contracts with under-performing suppliers.
In this sense manoeuvring is meant only in a positive and necessary sense and it may occur for years before tangible results. But as high performing buyers, manoeuvre we must, unless of course, we are content with negotiating brilliantly with the wrong party.
Jim Willshaw (MBA, MCIPS, MIIAPS) is an experienced procurement professional acting as a consultant, speaker, coach and trainer to leading organisations all over the globe.