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Negotiation 101

Four rules to help you become a better negotiator

by Malcolm Mills

So, if "negotiation" is an art, are you a sculptor, a mime or what? That's rhetorical of course; we're all negotiators of sorts and we all negotiate according to our strengths, differences and attributes. The mime mindset might be a little difficult, however.

But there's more to it than that. There are good, great, successful and fantastic techniques out there to be learned and applied. Alternatively there must be just downright bad methods to negotiate also. I, for one, confess I've portrayed all levels at one time or another. You live and grow, right?

Do you know where you fit on the negotiation efficiency scale? If you're doubtful, there's a ton of information on the Internet or in courses about negotiating (as there is for everything else) so there's no really sound excuse for not knowing the basics even if you don't practice them well. Take a minute and look them up or keep reading and I'll cover at least a portion of what may be useful in negotiating your next win.

Let's begin by reviewing a few tried-and-tested examples just to sharpen your mind and see if you're actually paying attention. I've captured a few words of exceptional wisdom from world famous experts who actually made very successful careers negotiating in
some capacity or other.

For instance:

• "You can get much further with a kind word and a gun than simply the kind word." Al Capone (Am I right, Bugsy? Eh? Am I?)
• "If you can go around it, over it or through it . . . you'd better negotiate with it." Ashleigh Brilliant
• "When a man says that he approves something in principle, it means he hasn't the slightest intention of putting it in practice." Otto Van Bismarck

Did you ever wonder when exactly you learned about negotiating tactics? Does this ring a bell?

Picture this scenario: Either you or someone with you has used these words "ONE for you and TWO for me. One for you, two for me . . .," as someone doled out or divvied up whatever it was to be shared.

So what were you? The "divvier" or the "divviee?"

You're older now, so at this stage of the game you're competing with the big boys as to who divvies and who gets divvied to. But are you ready for this? One of my favorite quotes is from John F. Kennedy: "Let us never negotiate out of fear. But, let us never fear to negotiate."

Do you fear to negotiate? Do you dislike it due to your nature or because you just aren't good at it? Don't be intimidated – educate yourself and grow powerful. You may still be (or work for) a small company but you can definitely lose your fear of negotiating with the big boys in larger companies. It takes guts and average brains, so don't worry. Suck it up, learn the rules, add your artistic flair and don't let the same people "divvy" all the time.

True, they may have huge bargaining power due to their size but think positive. Is there a chink in that armor? What if the sputtering economy is knocking the stuffing out of them badly? Think about it. All those employees, all that inventory. Once you allow yourself to be intimidated, you've already lost ground in the negotiation. Approach the negotiation opportunity as an equal, confident in your ability to achieve a good deal for your company
and for them.

No. 1: Find it and use it; just don't abuse it
I like the way Jens Thang puts it. He says, "The single biggest danger in negotiation is not failure (itself) but to be successful without knowing why you are successful."

There are both buyers and sales folk who have been pretty successful over the years without a solid clue how they've accomplished it. Maybe they've never had to negotiate during a recession, and perhaps they really weren't even successful at all, they only thought they were because the company made profit every year in spite of them.

The world is a changin' my friend. You soon had better know as much or more than you ever did before. You should know not only as much or more than your suppliers but you better know more than the bright young face fresh from Uncle Neddy's School of Negotiation. No one sails on yesterday's wind these days.

So what are some of the things we need to know?

Try this for starters. How many times have you heard the word "negotiate" used incorrectly by a buyer or customer?

If you are going to do this thing, let's do it right all the way. It's important to keep in mind that there is a world of difference between 1) submitting a "Price Quotation" and 2) being asked to sit down and actually negotiate terms and condition, price and delivery, etc., around a contract or similar agreement.

In the first instance, you (as a supplier) simply do number crunching, check availability and determine if you can meet the simple conditions on the RFQ; you quote a number and date. Many a fine distributor has been known to lose large portions of their sanity over the process, but the company quickly hires another freshman and off they go again.

In the second instance, you are in the bigger leagues and have to expect to have a lot more fun.

Whoa, did I say fun? Is anything so serious, straight-laced and sacred as making cartloads of money for your employer permitted to ascend into the lofty arena some folks refer to as "fun?" Isn't that some kind of industrial/commercial blasphemy? Am I about to be struck by lightning for even reading this? Is Industrial Supply magazine walking a razor edge, dancing on the rim around the dreaded Volcano of Profit? Will the great and powerful Profit Gods be angry? Will they really reach in my office, consume me with fire as a sacrifice as I read my new magazine while munching on my daily Twinkie?

OK, calm down. It's perfectly legal. You can breathe now. Rich Vurva says it's definitely OK to have fun while you negotiate and he knows. He's very powerful and lives with the Fire Gods in the volcano. He once sacrificed a giraffe to the Fire Gods in order to get water and it worked. Well, actually it didn't work but he is powerful, really. Negotiations can be fun. No kidding.

No. 2: Have confidence
The amount of true enjoyment you receive from a negotiating session will be directly related to your confidence level.

Don't put up your hand unless you really want to but does anyone remember Winston Churchill? He once said, "I do not hold that we should re-arm in order to fight. I hold that we should re-arm in order to parley."

Most agree – preparation is key. Arm yourself. Knowledge truly is power. Eighty percent of negotiation is preparation.

A first step in arming yourself is to evaluate or consider the battlefield conditions. To continue the war analogy, evaluating the players plus the battlefield helps you evaluate the relationship you have or are considering with the target. What are the stakes? What does the other party want? Is there known conflict or are there sensitive points? What about past tactics? What are these folk like personally? What character traits do they possess? Find out.

Come on, get in the game. It's not real war, it's playing with strategy and weapons of mass "smarts" and positioning in order to defeat the opposing side (who likely have their own strategy plan).

This is semi-cerebral stuff, so some of you will have to be foot soldiers. That's OK, find a general and map out a strategy, write it down, draw it up, have fun with it. "If THEY do this, WE'LL come back with that." Get in the game.

No. 3: Maintain decorum
Always respect the other party, keep your word, behave well and stick to the rules.

Canada and the United States have the longest unprotected border in the world. According to Robert Estabrook, "He who has learned to disagree without being disagreeable has discovered the most valuable secret of a diplomat."

In business, some folks call this the process of creating alignment and it begins by determining what are the commonalities of all parties. Rather than shoot first, our primary goal should be to align ourselves with the opposition by cooperating to co-create a shared vision of success. Alignment smoothes the way to avoid conflict and tension. Identify your mutual goals, your common problems, your potential opportunities.

One of the ways you can align yourself and also establish your value is to be prepared to initiate a strong foundation early in the process. Do it by demonstrating your knowledge and expertise of the negotiation subject matter and how it pertains or affects you both. Steer the process in the direction you want it to go whenever opportunity affords itself.

The customer/buyer will often take the lead but when you can bring out your "awareness" arsenal, bring it out. Just don't shoot yourself in the foot as you do it.

Remember that you want to be so prepared for any response of your opponent that there won't be an opportunity to object logically. As Estabrook opined, diplomacy is disagreeing without being disagreeable. You do this by knowing your stuff and presenting it peacefully without offense.

We talked earlier about intimidation. There is little cause for intimidation when you know your adversary as well as he/she/it does.

When your confidence is up, so is your spirit.

No. 4: Understand your relationship
If you understand your relationship, along with your opponent's personal characteristics, you'll almost always identify their bargaining process and method. Exploit unity.

Never underestimate your opponent.

While it's true that many a procurement professional is hard-pressed for time and often forced to be less prepared than they wished to be in a meeting, this doesn't mean they don't have at least a general idea of what they need to achieve as a bottom line and what your past performance has been with them.

Purchasers rarely use red herrings to throw their opponents off the scent of where your true profit lies or ambush tactics to cloud specs and deliverables in a BOM. There are dozens of tricks and tactics of the trade and your opponents know most of them.

Don't get me wrong, buyers use tactics too. They will embellish the amount they've been instructed to cut costs by or the amount they intend to buy. They'll tell you that other bidders are considerably lower in price or offer more value.

Just remember this. It's fun to strategize and it's thrilling to win. It's euphoric to trump your opponent repeatedly but, at the end of the day, what have you won and what have you lost? There must always be a balance.

Listen to these sage words from Al Capone opposites:

"You must never try to make all the money that's in a deal. Let the other fellow make some money too, because if you have a reputation for always making all the money, you won't have many deals." Dwight D. Eisenhower

There is a great deal more to talk about in the arena of negotiating but, at the end of the day, there are certain things which must be respected.

1) Have fun with your negotiation opportunity. It is a test of your own skills and a boon to your company when you are successful. You have a duty to your employer but also to your principles.

2) If you are going to do anything, do it well and to the best of your ability. There is no shame in winning big if you can still look at yourself in the mirror afterwards.

3) Determine what kind of relationship you wish to have with your opponent at the end of your contract. Will they still want to conduct business with you or will they be holding the door open for you a month earlier than the agreement ends?

4) Rely on the wisdom of others even after you are smart and feeling powerful.

Summary:
In business, a reputation for keeping absolutely to the letter and spirit of an agreement, even when it is unfavorable, is the most precious of assets, although it is not entered in the balance sheet. Lord Chandos

 

Malcolm Mills is a 25-year veteran of the purchasing and procurement field and author of "It's a Tough World Out There-25 Ways to Lose a Customer 25 Ways to Fix It." The book is available by contacting Malcolm at toughworld@eastlink.ca.

 

This article originally appeared in the Sept.Oct. 2010 issue of Industrial Supply magazine. Copyright 2010, Direct Business Media.

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