The 18th century Anglo-Irish politician Henry Boyle, 1st Baron Carelton, summed up the traditional view of negotiation as the art of compromise when he said: “The most important trip you may take in life is meeting people half way.” In contrast to this, the leading US business guru Dr Chester L Karrass takes a much more hard-headed approach, believing that, “in business, you don’t get what you deserve, you get what you negotiate.”
Many commercial negotiators today would side with Karrass, believing that any attempt at compromise should be approached with caution, avoiding the risk that this could be interpreted as a sign of weakness by the other side. Yet both definitions highlight an essential truth: that negotiation is a process and success is not just about the destination but the journey taken to get there.
Perceptions of value
Karrass’s definition asks a tough question of the seller. If they are to present a compelling case, they must get under the skin of the buyer and find out what they value most. There is no point in simply including additional features which a seller may find compelling but for which the buyer is not prepared to pay a premium.
Instead, value needs to be added through features which are of significant benefit to the user. This might include additional product features, but a more effective approach is to think creatively beyond product.
This is especially important in the context of today’s IT sale. As providers have sought to make their offering more distinctive, they have typically approached this by including professional services as part of a solution-based proposition rather than simply selling hardware or software.
Yet though this may resonate when dealing with a fellow IT specialist, it is likely to prove much harder to sell or negotiate true value to a general buying or procurement team. For example, even when a good day rate is negotiated for IT support, it can be a struggle to secure enough days to ensure the project is implemented effectively.
As well as understanding the buyer better, it is equally important to recognise that you are likely to be dealing with individual purchaser’s own perceptions of value as well as those of the buying organisation as a whole. This is especially true when procurement is involved, as they are often brought into play late in the negotiation and can then struggle to understand where the value lies.
The key is to get to the main players in the purchasing team as early as possible and develop solutions which will help them achieve their individual goals. Getting access is not easy – and some stated procurement processes actively block any attempt to do this – yet direct contact will dramatically improve the chances of securing the business.
At the negotiating table
The results achieved by today’s best-performing IT companies show that the key to success is simple. Without exception, they have restructured their approach to negotiation. Instead of relying on the reputation of a few experts they have corporately developed the behavioural skills of everyone involved in the negotiation process. This is becoming increasingly important as vendors move from just hardware and software to a broader solution sale, typically backed up with consultancy expertise and support.
Whether supplier or customer, successful negotiation is also dependent on understanding how to plan to achieve a win/win outcome. This means creating an environment in which both parties fully understand what is on offer and know the boundaries within which they must operate.
Face-to-face negotiation can be vital to achieving the objectives each party is looking for. At Huthwaite International, we have spent many years researching aspects of strategy, tactics and the behaviours of successful, effective negotiators. From this we have created an evidence-based success model to provide insights and tools that will help develop the attitudes, processes and behaviours of the exceptional IT negotiator. These include:
- Strategic objectives: It can be very tempting when the pressure is on to just get a deal that works in the short-term. Effective negotiators, by contrast, also take time to consider the longer-term impact where relevant, considering all the implications and anticipating the other side’s position
- Power: Recognising where the power balance lies is a key part of both the planning process and the negotiation itself. Many negotiators fail to realise what power they have, use it ineffectively or abuse it. Understanding and managing the power balance for a specific negotiation, including the consideration of tough no-go decisions, is essential to success
- Preparation and planning: Don’t confuse preparation and planning. An average negotiator convinces themselves they have prepared well, by relying heavily on gathering data, proof sources and statistics in the preparation phase, yet fails to plan how to use this information to best advantage. Excellent negotiators explore a much wider range of possible trades and linkages: they also understand how to leverage these and know the cost of possible concessions
- Face-to-face skills: Great negotiators have a wide portfolio of behavioural skills and use a surprisingly consultative style. This is based on understanding needs, maintaining clarity and building trust, at the same time dealing firmly with aggressive or unreasonable behaviour by the other side
Avoiding the don’ts
There are many myths around what makes a successful negotiator. The conditional ‘if you do this, I’ll do that’ trade-off is only one part of a much more complex set of skills needed. Splitting the difference might seem like an attractive move towards bringing the negotiation to a conclusion but there is a real danger that, in the heat of the moment, concessions are made without any real thought being given to the consequences. Skilled negotiators will only make a concession as part of a planned approach to negotiation.
Something else which is likely to have little impact is the emphasis we typically place on talking. Of course we want to make sure that the other person understands our point of view but a skilled negotiator will also be a good listener. They will ask twice as many questions as the average negotiator so that they can identify the other party’s real challenges and needs. Contrary to popular belief, they are not poker-faced, but express feelings or emotions when they want to encourage a climate of trust or indeed, skilfully reject a proposal they cannot accept.
Our educational culture has taught us to present as many arguments as possible to support our case. However, talented negotiators will use one strong argument and repeat it as necessary. They will only introduce a second reason to support their position if the first is undermined.
Benefits for all Inflexible buyers of IT products and services may attempt to reduce everything to a commodity in order to secure the best possible price, but there are very few purchases which cannot benefit from a level of consultancy or support. The clearest distinction between competing vendors is likely to emerge when a proposition meets the needs of all parties within the decision-making unit – including procurement. Employing a wider range of negotiation skills will make sure that all parties on both sides of the table are happy with the negotiated outcome. And this is the only way to achieve a true win/win situation for all.