A recent study into business negotiations discovered that the top challenges faced by businesses and individuals are (a) the price/value trade off and (b) creating alternatives/generating options, respectively. A recent Fortune Magazine survey in affiliation with Miller Heiman (the complex selling methodology gurus) found that sales people quoted price as the number one cause why they lost deals.
There has been much talk in the IT sector on both the buy- & sell side about 'partnering' to deliver solutions. Looking at the supporting data, it is questionable whether this talk has converted into action.
Whilst most organisations would like to think that they are interacting with both clients & suppliers in a 'solution based' format, the role of price still governs the process. This is due in large part to the failure of individuals to see the 'big picture' or to engage in creative thinking. Our research & experience demonstrates that one of the main characteristics of successful business negotiators is the skill to be creative & flexible.
Whilst many IT businesses have built their reputations on the back of their market leading and creative technologies, it would seem that creativity is often limited to the design & engineering departments. One of the main drivers of human behaviour is the tendency to avoid potential deficits. When contemplating information about the future, managers are more interested in avoiding potential deficits than achieving the same gains. This means that during negotiations that support difficult and high value IT agreements, the focus is more often on managing risk to avoid potential deficits, rather than on finding innovative and creative ways to create additional value for all stakeholders.
The more complex the agreement, the more important it becomes to control risk. Rather than just trying to avoid deficits, we should concentrate on methods to create alternatives for mutual 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 main motivators of all the stakeholders to the deal that will be satisfied by reaching an agreement?
b. How important will it be for each party to the deal to act in a mutually beneficial mode?
2. Value
a. What are the key purposes of all the parties to the deal?
b. What are the boundaries associated with each of the objectives for all parties?
3. Process
a. What suppositions have you made that you could confirm through questioning during disucssions?
b. How can you frame the negotiation so as to support a collaborative, partnership based approach rather than a price centred negotiation?
4. Relationships
a. Do all parties have the same requirement for a long term relationship?
b. How can you impact the 'climate' of the negotiation so as to assist in the achievement of a collaborative approach? ('Climate' pertains to non-verbal, physical and cultural aspects.)
Once you have covered these simple elements of preparation you will have time left to be initiative. Being creative is not something that comes easily to most of us but it is an essential 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 create options.
If you want to really embrace a partnership method that delivers optimal value, you should waste no time in getting the creative juices flowing.
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