This is a question I am often asked when I teach negotiations. Do you start out naughty (as an adversary) or nice (as a collaborator)? I was personally taught negotiations in the mid ‘90s when Strategic Sourcing was in its infancy. At the time, the strategic consulting firms were all telling us, on the buy side, the same thing – control the conversation, provide limited information, always have a “bad cop”, whatever price you are given is never good enough and try to squeeze every last dime out of the supplier. To be honest, that approach can work. You may walk away with the lowest price BUT you won’t:
- be a “customer of choice”
- have a sustainable relationship;
- get the best resources; or
- have met all your other Value Drivers
As I moved into consulting in 2000 my perspective changed for many reasons. First, I was on the sell side and coming up against Sourcing organizations that were out to prove that naughty worked (it didn’t). Second, early success stories like Walmart (and their negotiation tactics) were slowly but surely turning into horror stories (e.g. driving suppliers out of business). Third, we had many clients where price was not their main objective – now what? Fourth, it amazed me that prospective clients were nasty throughout negotiations but expected a nice (collaborative) relationship after the contract was signed – how does that make sense? Can you have it both ways – get through a tough negotiation process AND have a strong relationship post contract?
Here are a few things to think about:
Buyers traditionally exercise their leverage up to signing the contract:
- pressure suppliers
- focus on obtaining the best deal
- push risk onto the supplier
Suppliers traditionally exercise their leverage after the contract is signed (the leverage does shift at this point):
- they do what they have to do to make themselves whole
- they are more interested in avoiding negative contract consequences than in contributing to long term value creation
The real goal should be to create “mutuality of interest”. Keep the end game in mind and achieve balance. The best way to achieve this is to think about the kind of relationship you want at the end and act accordingly before and after the contract is signed. 9 times out of 10 “nice” is the way to go.
An article in HBR “How to Negotiate Nicely Without Being a Pushover” says you can have it all. BUT naughty is NOT the way to go about it. “A negotiation is a courtship, a dance,” says Michael Wheeler, a professor at Harvard Business School. The article suggests some techniques that have proved to be successful:
- Make small talk – take a little time to get to know people because this chitchat can provide useful information about the other side’s interests
- Don’t try to buy love – caving in to avoid confrontation can result in a losing scenario for both sides. Pushing back in a professional and respectful way is OK
- Be creative – explore one another’s interests and identify possible options to satisfy both
- Stress “we” over “I” – this can signal that you envision a future relationship
- Ask questions . . and listen – this my number one technique. Always listen more than talk; you never know what you can learn
- Walk in the other persons shoes – this is another one that hits home for me that many negotiators don’t do.
If your objective is to build a sustainable, mutually satisfying relationship then “nice” is the way to go. Nasty usually results in short term gains with potential payback scenarios. Whether you are a buyer or seller, think about the kind of people you like to work with and let that guide your behavior. Building a solid relationship from the beginning can pay huge dividends for many years to come.
Let us know what you think and join in the conversation…..
Latest posts by Anne Kohler (see all)
- CPOs Discuss “Procurement Technology In the Age of Blockchain, RPA and AI – Do you Have a Roadmap to Help You Navigate?” - May 16, 2019
- Do You Know the Difference Between Strategic Sourcing & Category Management – Effective Governance is Key! - April 25, 2019
- Is “Speed” the Fix for Fashion Retail? - April 11, 2019