How many times in the course of a day do you find yourself negotiating a situation? I would be willing to guess that you encounter both planned and unplanned opportunities for negotiation techniques several times a day, yet more often than not, you may find the act of negotiation difficult. If you push too hard, the deal goes astray. If you're too soft, you become known as a pushover.
The key to sound negotiation techniques is ensuring the appropriate approach to the kind of negotiation to hand. Within the IT environment, there are many kinds of negotiations that take place on an ongoing basis; we are continually involved in negotiations with users, partners, executive management, and staff and, of course, suppliers. As a matter of fact, the environment within which we negotiate has become so specialized that a generic approach to all different kinds of negotiations no longer delivers optimal results.
There are similarities between the approach to best practices in negotiations and that of implementing best practices in the workplace supported by the deployment of IT solutions. To facilitate the achievement of corporate objectives through negotiation techniques, IT departments should consider the creation of an organizational negotiation capability. As in the IT environment, strategy drives process which, in turn, drives implementation and support.
This means that a negotiation strategy should be defined, a supporting negotiation process designed and implemented, and a negotiation supporting infrastructure established to continuously drive the improvement of negotiated outcomes whilst minimizing the losses associated with sub-optimal supplier and end user agreements.
WHAT IS BEST PRACTICE NEGOTIATION?
To avoid the losses associated with sub-optimal agreements, it is necessary to pursue a Whole Brain approach to all negotiations. In addition to negotiating in a Whole Brain manner, IT negotiation practitioners dealing with suppliers should also empower themselves with a basic understanding of purchasing strategy, and the application of different negotiation techniques to suit the negotiation to hand. Lets explore these two concepts in a little more detail.
Whole Brain Negotiations
It has been proven that all humans have preferences for certain categories of activities within the context of understanding, interpreting and engaging in communication and negotiations. The Herrmann Whole Brain Model provides a useful metaphor for understanding ourselves and our negotiation techniques.
Figure 1: The Herrmann Whole Brain Model
We all have preferences for activities contained within each of the 4 quadrants. Interestingly, less than 3% of us have an equal preference for all 4 quadrants. Since more than 1 million people have completed the HBDI (Herrmann Brain Dominance Instrument) profile, we are in a position to monitor the trends that are of particular interest to negotiators in the IT environment. For instance, we know that professional buyers who represent organizations in their negotiations with IT suppliers typically have strong preferences for the A & B quadrants, but less of a focus on the C & D quadrants. This approach often leads to opportunities being missed to extract additional value. It also frequently results in too little focus being expended on understanding the relationship dynamics resulting from different types of negotiation techniques.
On the other hand, we know that sales resources representing IT suppliers typically have a stronger preference for the C & D quadrants. This leads to them often overlooking key risks, and hampers their identification of the real business impact offered by their negotiation techniques.
The best advice for any IT negotiator is to pursue a Whole Brain negotiation model where due attention and focus is given to activities in all four quadrants.
Quadrant A Value
IT negotiators must have an understanding of the facts that underpin any negotiation. Failure to gather and understand the relevant facts that support optimal deal making results in failed negotiations, or negotiation techniques where value is left on the table.
Quadrant B Process
Any negotiation without a robustly defined negotiation process and management infrastructure runs the risk of a less-than-ideal outcome. A framework is required to provide an environment in which risks can be proactively managed. A robust negotiation process ensures positive momentum and provides a reference for avoiding unforeseen complications and risks.
Quadrant C Relationship
Agreements can only be concluded between organizations represented by people. The way we interact with other people is critical in negotiation success. The importance of relationships in negotiation techniques is amplified in an environment where continued partnerships and long-standing relationships result from business interactions.
Quadrant D Vision
Parties to an agreement need a shared vision of the losses and benefits. It is only by having an understanding of all parties respective vision that driving motivators or interests can be determined. A key part of negotiation competency is the ability to generate options that will serve the needs and interests of all involved.
Strategy and Fit for Purpose Negotiation Models
As IT executives acting as custodians of valuable company resources, it is incumbent upon us to ensure the appropriate application of negotiation techniques and tactics to achieve key company objectives. In this context, it is key to understand that there are a number of different negotiation engagement models available to us, depending on the objectives to hand.
Figure 2: Basic IT Purchasing Considerations
It would be unwise for us to engage in collaborative negotiations with a supplier that is providing products or services at a commodity level. Similarly, it would be equally unwise to engage in highly competitive negotiation techniques with suppliers that are providing us with solutions that will have a significant strategic impact on our organization.
We know that in negotiations, as in life, victims have a tendency to become aggressors. It therefore follows that if we are too competitive in our approach to negotiation, we can often leave suppliers feeling that they need to reclaim what they believe is rightfully theirs. We can recognize the symptoms of a deal that was negotiated too competitively by the issues that we pick up subsequent to closing the deal issues with service level agreements, escalations and so forth. If deals are not profitable for our suppliers, they will go to great lengths to cut corners so they can meet their profit objectives often to the detriment of their clients who drove too hard a bargain.
When we enter into negotiations with suppliers providing strategic solutions that have a high value to our organization, it is important that we create a collaborative frame for the negotiations to ensure that we are able to extract maximum value from the proposed partnership.
Figure 3: 'Fit for Purpose' Negotiation Engagement Models
In conclusion, when negotiating in the IT environment, it is critical for practitioners to approach the entire negotiation process (preparation, engagement and debriefing) from a whole brain perspective and to apply the appropriate negotiation strategy in support of our organizational objectives.