After countless hours of negotiation and influencing, we asked seven procurement experts to highlight their most important lesson on negotiation.
If you are a young business professional navigating the seas of managing large contracts and are looking to prove yourself, tune in, instead of trying and failing, take to the advice from these experts and you can fast-track your negotiation success.
This article was based on research conducted by Conti Advanced Business Learning (www.cabl.ch), a Swiss training company that specializes in Negotiation & Influencing training.
Easy to say, hard to do but preparation is a MUST
You should always go well prepared in a negotiation. While you should always analyse the objectives and interests of your counterparts, you should always anticipate cultural differences. I was once pulled into a negotiation with an Asian supplier where we did not engage in an exhaustive preparation. After a long lunch and a long negotiation, we finally found out that the supplier actually had no interest at all to work with us. He had a very strong and exclusive cooperation with one of our competitors and had just agreed to the lunch and meeting with us out of pure courtesy, as a lot of suppliers in Asia do. With proper preparation, we could have saved a lot of time and effort for both sides.
Never consider a negotiation to be ‘Done’ or ‘Finished’
The end of a negotiation is never the end. There is always a possibility that the negotiation, built to justify a cost decrease or any other condition, does not materialize as well as planned, and you would need to go back to your supplier. There should never be any “Versailles treaty” in negotiation, as the likelihood to face the supplier again but in a situation where our side has no leverage, always exists. Negotiations are not always a win-win as we would like to believe but should aim for mutually acceptable outcomes.
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Involve relevant business units from the beginning of the negotiation process
Sitting down and negotiating is just the last step of a long journey. When facing the question if we should go sole source for logistics services, the responsible business unit involved procurement from Day 1. Based on this early involvement, we (procurement) were able to analyze the situation properly, develop a strategy and were able to get senior leadership alignment. After extensive preparation and workshops with the various suppliers, we sat down for the negotiations which took less two weeks to complete. Early involvement and solid preparation were the keys to a successful negotiation.
You should always strive to collect the right data and prepare the dialogue
Treat every negotiation as unique
No two negotiation contexts are the same. There are always differences in the power context of the buyer and of that of the seller. These are linked with market share, scarcity of resources, timing, or somehow unrelated (yet fundamental) third-party dimensions. You should always strive to collect the right data and prepare the dialogue. In addition, a subtle mix of empathy and assertiveness are required in the negotiation preparation and process. Last, there is a myth about “signing a great deal.” The value of the negotiation does not materialize at the signature, because a deal whose implementation is not carefully anticipated and monitored is by essence seriously flawed.
Prepare for the unknown
You can never be prepared enough, even when a new update derails your research. Preparation takes time and it never stops even during the negotiation. I remember a time when we started a tough negotiation which was planned over several days. Overnight, a report came out that a supplier was going to merge with one of his key competitors. Our strategy had to be adapted on the fly as we had to secure a long-term deal to best protect our pricing. Lesson learnt was to keep your ears & eyes wide open all the time!
Prior alignment with all functions to set the tone for the negotiation
Cross-functional team alignment on negotiation priorities and your different fall-back positions is critical to success. This can be said for both the company you are working for and the company you are negotiating with. Only once you understand this are you able to you build your BATNA (Best Alternative to a Negotiated Agreement) and map out your leverage positions, strengths, giveaways and walk-away positions. Upon its completion, think carefully about your opening statement – this sets the scene for the negotiation and already pre-conditions the other party.
Helping the other party see value in your proposal
It is powerful to think about what we can do the help the salesperson sell the agreement inside their own organization. When trying to negotiate innovative agreements that aim to deliver high value to my company, I was often confronted with delays and resistance from the sales organization. At the beginning of my career, my reaction was to push the salesperson to get buy-in from their stakeholders. With experience, I learnt it was more valuable to think about how I can help the salesperson to present the agreement as a victory to their stakeholders.
Bringing it all together
As you journey through your professional careers, you will face complex challenges, roadblocks and derailments. They come with the job, however, our responses to these challenges can always be optimised and improved to achieve successful results. Echoing the lessons from the seven Procurement Experts above: preparing well, involving the right stakeholders prior to the negotiation, communicating effectively and staying humble throughout the process will guide you to become better negotiators and influencers.
These answers were collected by Giuseppe Conti, Founder and Managing Partner of Conti Advanced Business Learning (www.cabl.ch), a consulting firm that specialises in negotiation & influencing. This article is part of a series aimed at collecting real-life negotiation experiences from Procurement executives.