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 staff quoted price as the number one cause they did not close transactions.
There has been much talk in the IT sector 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 businesses would like to believe that they are engaging both clients & suppliers in a 'solution based' format, the role of price still governs 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 demonstrates that one of the vital characteristics of successful business negotiators is the skill to be creative & flexible.
Whilst many IT organisations have built their standing 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 behaviour is the tendency to avoid potential losses. When considering information about the future, managers are more interested in avoiding possible deficits than attaining 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 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 manage risk. Rather than just trying to avoid losses, we should concentrate on methods to invent options for mutual 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 motivators of all the parties to the deal that will be satisfied by reaching a settlement?
b. How critical 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 transaction?
b. What are the boundaries associated with each of the objectives for all parties?
3. Process
a. What assumptions 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 a similar desire for a long term relationship?
b. How can you influence 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 included these simple elements of preparation you will have time left to be initiative. Being innovative is not something that comes easily to most of us but it is an essential negotiation skill. Use one of the well known creativity methodologies such as De Bono's Six Thinking Hats, or the Disney Creativity Model to help you generate 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.