Formal research into business negotiations found that the biggest challenges faced by organisations and individuals are (a) the price/value trade off and (b) creating alternatives/generating options, respectively. A recent Fortune Magazine review in affiliation with Miller Heiman (the complex selling methodology gurus) found that sales resources quoted price as the number one reason they did not close transactions.
There has been much talk in the IT industry on both the buy- & sell side about 'partnering' to produce solutions. The supporting data shows, it is questionable 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 landscape. 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 tells us that one of the main 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 restricted to the design & engineering departments. One of the strongest drivers of human conduct is the tendency to avoid potential losses. When contemplating information about the future, managers are more interested in avoiding possible deficits than realising the same gains. This means that during negotiations that support complex and high value IT transactions, the focus is more often on managing risk to avoid potential losses, rather than on finding innovative and creative ways to create additional value for all parties.
The more complex the agreement, the more vital it becomes to control risk. Rather than just trying to avoid losses, we should concentrate on ways to invent options for common gain 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 interests of all the stakeholders to the transaction that will be satisfied by reaching a settlement?
b. How critical will it be for each party to the transaction to perform in a partnership mode?
2. Value
a. What are the key 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 validate 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 a similar requirement 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 to be creative. Being innovative is not something that comes naturally to most 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 approach that delivers optimal value, you should waste no time at all in getting the creative juices flowing.
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