Formal research into business negotiations discovered that the biggest challenges faced by businesses and individuals are (a) the price/value trade off and (b) creating alternatives/generating options, respectively. A recent Fortune Magazine review in partnership with Miller Heiman (the complex selling methodology gurus) found that sales people cited 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 questionable whether this talk has translated into action.
Whilst most businesses would like to think that they are engaging both clients & suppliers in a 'solution based' format, the role of price still governs the landscape. This is due in large part to the failure of individuals to see the 'big picture' or to get involved in creative thinking. Our research & experience demonstrates that one of the key features of successful business negotiators is the ability to be creative & flexible.
Whilst many IT businesses have built their standing 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 main drivers of human conduct is the tendency to avoid potential deficits. When considering information about the future, managers are more interested in avoiding possible losses than achieving the exact same gains. This means that during negotiations that support difficult and high value IT transactions, the focus is more often on managing risk to avoid potential deficits, rather than on creating innovative and creative ways to create additional value for all stakeholders.
The more complex the agreement, the more vital it becomes to manage risk. Rather than just trying to avoid deficits, we should actively focus on methods to invent alternatives for common benefit 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 interests of all the parties to the deal that will be satisfied by achieving an agreement?
b. How critical will it be for each party to the deal to perform in a mutually beneficial mode?
2. Value
a. What are the key objectives of all the parties to the transaction?
b. What are the boundaries associated with each of the objectives for all stakeholders?
3. Process
a. What suppositions have you made that you could validate through questioning during disucssions?
b. How can you frame the negotiation so as to contribute to a collaborative, partnership based approach rather than a price centred negotiation?
4. Relationships
a. Do all parties have the same requirement for a lasting 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 to be initiative. Being innovative is not something that comes easily to most of us but it is an important 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 create alternatives.
If you want to really embrace a partnership approach that delivers optimal value, you should waste no time in getting the creative juices flowing.
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