NEGOTIATE YOUR NEXT DEAL LIKE A SUPERHERO (PART TWO)
Patrick Bohnenkamp
Chief Executive Officer
In part one of this series we learned that not all superheroes wear capes with the introduction of “POWW”, an acronym representing the three fundamental tenets of best practice negotiating. It also happens to be a bit of a tribute model to Adam West’s Batman TV show where he’d often throw a punch and suddenly the cartoon layovers of “POW!” and “BAM!” would flash across the screen. Oh, the memories.
We also covered the four cornerstones of the P in POWW: Preparation. Also included for your reading pleasure were a couple cautionary tales of not-so-superheroic proportions. If you didn’t get a chance to read part one, check it out here.
TODAY’S POST FOCUSES ON THE O IN POWW: OBJECTIVITY.
Let’s create some context with a story. A little while ago, we were involved in two negotiations for two different Clients who happened to be interested in purchasing the same product from the same vendor around the same time. Makes sense that we should get about the same deal for both, right? Not so much. One Client’s project team (let’s call them Client A) followed the recommended approach, allowing us to lead the negotiations as an objective 3rd party (and, thus, maintaining their own objectivity), while the other did not (let’s call them Client B). The key difference was that, although each Client preferred the same vendor, Client A, while enjoying a good relationship with the vendor, was willing to remain objective, consider alternatives, and use competition as motivation. Client B, on the other hand, was uncomfortable introducing competition, because they thought it would hurt their relationship with the vendor, and unwilling to consider legitimate alternatives, because they had their heart set on this other product. Yes, Client B was being driven by only their ‘wants’, rather than their pre-defined set of priorities.
In the final negotiations, objective Client A closed a deal in which they paid ½ the total price for twice the total number of perpetual licenses compared to Client B.
Subjective Client B, on the other hand, consistently circumvented the defined communication channel by speaking directly to the vendor, in direct contravention to Seprio’s recommendations and, by the end, pleading that they allow us to handle the communications. The result was that the Client B team inadvertently leaked information which undermined the process and allowed the vendor to unduly influence and, ultimately, control the negotiations. Not only did Client B pay double the price for half the volume, they only received a 6-year license (rather than the perpetual license Client A negotiated). So, Client B is going to be going through this same process in 6 years, with almost no leverage because both they and the vendor know it will be very difficult to replace such a critical and integrated system.
The lesson? Client A embraced the value of objectivity. Client B did not. Objectivity is a choice. Choose wisely!
HOLY HERE WE GO AGAIN, BATMAN! WHAT DOES IT MEAN TO BE OBJECTIVE AND HOW DO YOU DO IT?
OBJECTIVITY IS REALLY REALLY REALLY DIFFICULT. THAT’S 3 REALLYS.
It’s human nature to have strong opinions about that which affects us personally and professionally. So it’s very difficult to achieve objectivity when buying something that falls within your area of responsibility, or otherwise impacts you or your job. And if you add in the relationships that we frequently develop with suppliers and their people, objectivity becomes even more challenging.
There are times when even Seprio negotiators have other Seprio team members negotiate for them when they buy cars or make large purchases in their personal life, because sometimes you can’t just be entirely objective when the outcome affects you directly. If you're affected by what you're buying, you're going to be emotionally invested in it. Period.
However, without objectivity your negotiation can go off the rails with respect to any of the other POWW tenets…in each case likely resulting in a failed negotiation. If a team lacks objectivity, it may establish priorities in a way that compromises the integrity of the process (i.e. ‘fixing’ the priorities so that a particular supplier is the clear favorite). Without objectivity, maintaining leverage is very difficult because there is no real willingness to consider options, and reaching a win-win conclusion can be challenging because a lack of objective perspective can make it very difficult to judge what is a ‘win’ at all. Think back to the two companies from our opening story…The Client that allowed the vendor to go around the objective negotiator gave up their leverage, compromised on their own priorities, and ultimately “lost” the negotiation and got a much less advantageous deal.
One way to achieve a level of objectivity is to have a well-designed project team with diverse perspectives. Assuming you’ve taken the steps outlined in my previous post on preparation, this team represents all the stakeholders involved as well as some that may not have any “skin in the game” beyond a budgetary or legal standpoint. If you’ve also determined, and written down, your priorities, this can also help you remain objective throughout the process and serve as a guidepost in decision-making.
One of the best ways to achieve objectivity is to select a qualified third party to lead your negotiations. Whether that third party is your organization’s procurement team, or a third-party expert like Seprio, it frees you up to focus on your priorities and maintain clarity on the big picture, while they handle the details, play tough cop (if necessary) and position you as the hero in achieving the optimal outcome. After all, when your decision to leverage an objective third party leads to the best results, you are in fact a superhero.
POWW! HOLY HOLE IN A DONUT, BATMAN! WHAT’S NEXT?
WW for Win-Win is next...the third and final installment in this three-part series on the tenets of best practice negotiating. It may seem cliché, but if your vendor partners don’t at least feel like they’ve won something, that can spell trouble for you. So, stay tuned for the release of this third installment!
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