How To Use Negotiation Skills To Ensure Complex IT Transactions Do Not Fail To Achieve Optimal 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 people quoted price as the number one cause why they lost deals.There has been much talk in the IT industry on both the buy- & sell side about 'partnering' to deliver solutions. Looking at the supporting data, it is doubtful whether this talk has converted into action.
Whilst most businesses would like to think that they are interacting with both clients & suppliers in a 'solution based' format, the role of price still governs the process. This is due in large part to the inability of individuals to see the 'big picture' or to engage in creative thinking. Our research & experience demonstrates that one of the critical characteristics of successful business negotiators is the ability to be creative & flexible.
Whilst many IT businesses have built their reputations on the back of their market leading and creative technologies, it would seem that creativity is often limited to the design & engineering departments. One of the strongest drivers of human behaviour is the tendency to avoid potential deficits. When assessing information about the future, managers are more interested in avoiding potential losses than achieving the 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 losses, rather than on discovering innovative and creative ways to create additional value for all stakeholders.
The more complex the transaction, the more important it becomes to manage risk. Rather than just trying to avoid deficits, we should concentrate on methods to create options for mutual 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 key motivators of all the parties to the deal that will be satisfied by reaching an agreement?
b. How important will it be for each party to the transaction to act in a mutually beneficial mode?
2. Value
a. What are the specific purposes of all the parties to the transaction?
b. What are the boundaries associated with each of the objectives for all parties?
3. Process
a. What suppositions 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 the same desire for a long term 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 covered these simple elements of preparation you will have time left to be creative. Being creative is not something that comes easily to all of us but it is an essential 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 options.
If you want to really embrace a partnership method that delivers optimal value, you should waste no time at all in getting the creative juices flowing.
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