Using Negotiation Skills To Make Sure High Value IT Transactions Do Not Fail To Achieve Maximum Value
A recent study into business negotiations found that the top challenges faced by businesses and individuals are (a) the price/value trade off and (b) developing alternatives/generating options, respectively. A recent Fortune Magazine survey in partnership 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. Looking at the supporting data, it is doubtful whether this talk has converted into action.
Whilst most businesses 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 demonstrates that one of the key characteristics of successful business negotiators is the ability to be creative & flexible.
Whilst many IT organisations have built their reputations on the back of their market leading and creative technologies, it would seem that creativity is often restricted to the design & engineering departments. One of the strongest drivers of human behaviour is the tendency to avoid potential deficits. When considering information about the future, managers are more interested in avoiding possible deficits than attaining the exact 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 discovering 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 methods 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 motivators 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 act in a mutually beneficial mode?
2. Value
a. What are the specific objectives of all the parties to the transaction?
b. What are the limits associated with each of the objectives for all stakeholders?
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 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 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 included these simple elements of preparation you will have time left to be creative. Being innovative is not something that comes naturally 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 truly embrace a partnership approach that delivers optimal value, you should waste no time in getting the creative juices flowing.