How To Use Negotiation Skills To Ensure Complex IT Deals Don't Fail To Achieve Optimal Value
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Formal research into business negotiations discovered that the top 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 staff cited price as the number one cause why they lost deals.
There has been much talk in the IT sector on both the buy- & sell side about 'partnering' to deliver solutions. Looking at the supporting data, it is doubtful 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 dominates the landscape. 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 shows that one of the key features of successful business negotiators is the skill to be creative & flexible.
Whilst many IT organisations have built their standing on the back of their innovative 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 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 transactions, the focus is more often on managing risk to avoid potential losses, rather than on creating innovative and creative ways to create additional value for all parties.
The more complex the agreement, the more important it becomes to control risk. Rather than just trying to avoid deficits, we should actively focus on methods to create 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 motivators of all the parties to the transaction that will be satisfied by achieving an agreement?
b. How important will it be for each party to the deal to perform in a mutually beneficial mode?
2. Value
a. What are the specific objectives of all the parties to the transaction?
b. What are the limits 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 support a collaborative, partnership based approach rather than a price centred negotiation?
4. Relationships
a. Do all parties have a similar requirement for a lasting relationship?
b. How can you influence the 'climate' of the negotiation so as to support 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 to be creative. Being innovative is not something that comes easily to most of us but it is an essential negotiation skill. Use one of the recognised creativity methodologies such as De Bono's Six Thinking Hats, or the Disney Creativity Model to help you create alternatives.
If you want to truly embrace a partnership approach that delivers optimal value, you should waste no time at all in getting the creative juices flowing.