I see so many negotiation advisors worldwide straining to improve horse and buggy negotiation techniques by working hard for just a bit more speed and efficiency. But research shows something is wrong. To put it briefly, I have found that up to 42% of the potential in every negotiation is overlooked, not shared, or goes unnoticed.
We lose value, because we negotiate today just as we did in the 1850s with little progress or innovation. True, we’ve introduced some amazing technologies, but they’ve only let us perfect the tired old zero-sum game!
Imagine it -- buyer and supplier working together to secure the greatest values and measurable success for both parties. Many negotiators quite honestly believe that’s what they’re doing without realizing that if they shift their thinking, they could achieve far superior results.
Adjust your thinking
Let’s say you are a buyer. Ask yourself, “Do I know my supplier’s costs when I ask for changes in measurements, strategies or goals like these?
- delivery times
- methods or frequencies
- payment terms
- warranty periods
- installation times
- efficiency levels
- educational actions
- warehousing, etc.
Suppose your honest answer is “No, I and I don’t much care. Their costs are their concern. It’s up to them to meet my requirements...”? If so, you’re suffering from the Latin “non-doctrina” which means lack-of-learning disorder.
If you are a supplier and a procurement officer asks you to speed up delivery by one month, do you immediately ask, “What’s the value for you, if we’re able to do that?” If you do not ask, you would be likely suffering from non-doctrina as well.
When you leave a negotiation, do you know your counterpart’s costs and benefits for all the variables involved in a transaction? Does your counterpart know all of yours? If so, then you’re engaging in value-creating negotiation. This replaces old-time, horse-and-buggy, zero-sum negotiating.
SMARTnership leads negotiating parties to agree on how they’ll proceed, before negotiations begin. Both parties commit to free sharing of information -- most importantly costs and values. This turns negotiation into a team effort toward maximum value for all – an effort that eliminates fighting for advantage and dominance.1
Please allow me to illustrate what zero sum looks like. Let’s say I am the buyer, negotiating with you, the seller. I ask you, the seller, to move the delivery up by three weeks, because doing that will save me $10,000. But a three-week delivery advance will cost you $2,000—a cost you obviously don’t want to bear.
In the zero-sum negotiation, I, the buyer, would try to make you agree anyway by saying to you, “If you want my order, you’ll have to deliver three weeks faster.” You might decide to agree, even though your bottom line would be cut by $2,000. Or you might decide to refuse, sending both of us back to an unhappy and costly square zero.
The same scenario changes dramatically if you use the principles of SMARTnership negotiation.2 We would agree in advance to be open and honest, and to discuss all the variables and values in play. I would tell you it would benefit me financially if you moved up delivery by three weeks. You would reply that a three-week advance was possible, but that it would increase your costs.
If we then laid out the figures involved, we would discover the NegoEconomics of the situation: my $10,000 advantage, minus your $2,000 added cost = $8,000 total NegoEconomic potential.
Now we might agree to a 50/50 split of that $8,000 potential: You agree to the three-week delivery advance but increase your price by $6,000. Each of us would realize a net value increase of $4,000. For me, it comes to $10,000 - $6,000; for you it comes to $6,000 - $2,000.
You get the order you need and want. I get the delivery I need and want, and we both enjoy maximum potential values. Not only are both of us happy with the outcome, but negotiating was made easier, and our mutual trust was increased—a big benefit to our relationship down the road.
- The biggest 1,000 companies could be losing 3.25 Trillion annually – here’s how to avoid that – Forbes article by Keld Jensen
- NegoEconomics, a Vital Corporate Leadership Competency
ABOUT THE AUTHOR
Keld Jensen, the award-winning founder of SMARTnership Negotiation and Trust, is also the founder and CEO of Center for Negotiation, Ltd, a consulting and training organization consulting with private industry and governmental organizations in Europe, Asia, North America, and Africa. A prolific author, Keld has written and published 24 books in 36 countries. His internationally-acclaimed book, Negotiating Partnership: Increase Profits and Reduce Risk, has been translated into four languages and published in more than 28 countries. He also writes feature articles for the national and international news media and appears in broadcast as a highly-regarded commentator on international business issues.
In May 2017 his Latest book Honest Negotiation was released in the US and quickly won the #1 New Release on Amazon award.