Jointly Creating and Claiming Value in Sustainable Way

In an executive training workshop at a Fortune 100 company, one of the procurement executives claimed himself to be an excellent negotiator. He supported his claim by adding that due to his tough stances and tactics, close to half of his suppliers have gone out of business! I will let you decide about the efficacy and wisdom of his negotiating style.

At the request of several participants at the two days workshop, I am writing about “creating and claiming value in a negotiation.” This is part one of the three-part Knowledge Letter on this topic.

Workplace or life, in general, is full of negotiating opportunities – be it with your supervisor, spouse, customers or peddler in an Indian bazaar! I am primarily talking about customers here.

You are a competent negotiator if you can convince the customer to say “Yes” willingly, and mean it, to a proposal that also meets all your real interests. And, why would the customer say Yes? The customer would agree because the deal matches the customer’s interests better than customer’s best no-deal option.

So, your challenge is to structure customer’s perceived choice, of the deal  versus no-deal, so that what the customer chooses in his or her interest is also what you want – – –  “letting them have your way (for their reasons).” So, how do you do this effectively? Well, the first step is to map the full set of the involved parties.

Mapping the full set of involved parties is the crucial first step. You need to know all the parties in the context of their decision process. These would be champion, internal supporters, and deal blockers. And, do not forget to include the influencers in your organizations. You will need to do this irrespective of whether you are negotiating with an entity external to your company or another organization within your company.

I draw a deal diagram. Even though I may be negotiating with a single person, I need to be alert for other factions with different interests. They may be champions or deal blockers of my proposal. For example, in Germany, the unexpected importance of the management board (Vorstand) as well as the supervisory board and unions under the policy of “co-determination” could stymie large contracts.

So, map the influencers in the organizations of all negotiating entities. Keep in sight their interests or capacity to affect the deal. What is “rational” for the whole may not be so for the parts. While the overall economics of a contract is necessary, they are often not sufficient.

Chew on this. I will talk more about Creating and Claiming Value in a Sustainable Way, in my next issue of the Knowledge Letter.

Please have a great time with your Valentine tomorrow.

Ciao

Satish