We all want to be Win:Win negotiators, don’t we? We all want nice, friendly relationships where we win, and our counterparts walk away winners too, don’t we? But what happens if they don’t want you to win? What happens if they don’t think like you or don’t have the same values as you? What happens if they have been better trained and use a tool to analyse how best to approach the negotiation to ensure they maximise the deal?
In our experience the majority of our clients, before training, mis-analyse where they or their counterparts are prior to, during and post negotiations. Because of this they fail to appreciate the art and science of negotiation. They wing it. They rely on ingrained learned behaviours, argument, force of will, and / or base instinct. None of which are appropriate to successful negotiations.
They had been leaving value on the table as they winged it, hoping everything would be OK and that just by being nice they would get a deal done. Yes, they had had Sales training, yes, they had been getting a deal but could it (the deal) have been better? Could they have achieved more? And, had they just got played? A savvy well trained counterpart will know that negotiation is the art of letting “you” have “their” way.
Every good negotiator has a tool. There is no winging it in negotiation because I can assure you, nothing ever happens by accident. This is our tool for navigating negotiations, The Kahvay Negotiation Compass©.
What is the Kahvay Negotiation Compass?
The compass provides a framework for a negotiator to analyse a negotiation based on measurable circumstances. With a simple analysis of P.L.A.N.T the user is guided towards a decision and where on the compass they should negotiate to maximise their deal. We define P.L.A.N.T as:
- P – Power: this is an overrider element… whomever has power has options!
- L – Longevity: how long term is your relationship and how long term do you want that relationship to be?
- A – Advanced: how many issues, also known as variables, are you negotiating over? How many more, with a bit of creativity, could you add to the negotiation? Do you need to? How advanced is your counterpart? How senior are they?
- N – Need: how much do you need them? How much do they need you? How much do you need their stuff? How much do they need your stuff?
- T – Trust: how much do you trust them and how much do they trust you. In fact, do you even need to trust each other?
We also use the Negotiation Compass© to better understand ‘where’ on the compass your counterpart might negotiate and therefore ‘how’ they could negotiate; which is useful in determining the stance, tactics or positioning of your counterpart when you are preparing for your negotiation.
“Forewarned is Forearmed. Information is power. Advance knowledge enables the Compass user to be more prepared and preparation increases your power”. This, not only, gives you the opportunity to analyse your negotiations before you enter negotiations but also enables you to factor in any changes in circumstances when you are in negotiation.
This multi dimensional approach to negotiation creates more considered and thought out decisions that deliver better outcomes. Evidence of this can be seen with the reported + x10 return of investment for our delegates who attend our 360° Negotiator Programme.
When P.L.A.N.T. is calculated, the answer guides your ‘Compass Bearing’ to one of the four personae;
- The Haggler;
- The Dealer;
- The Engineer;
- The Diplomat.
Each one has a different set of behaviours, tactics, planning tools and processes to aide your navigation of the deal.
We advise that once you’ve chosen a particular persona not to ignore the other personae, but recognise which would be inappropriate given your specific circumstances. This goes both ways, so continue to monitor the compass bearing of your counterpart to ensure you are alert to any of their changes. As circumstances change, so will the balance of Power, the overrider! Constant awareness and high levels of emotional intelligence will help to inform any changes in compass bearing which will govern your decisions.
The compass is split North to South; there is the Eastern side where its cold, hard and tough (blue) and there is the Western side where its warm, flexible, pleasant (red). This has nothing to do with culture or country, which is a subject we touch upon here.
The Eastern side; cold, hard, tough and even arrogant can be described as competitive, distributive or Win:Lose, where what I win you lose and what you win, I lose. There is no or very little opportunity for value creation or mutual gain.
When navigating this type of negotiation there might be little to no need or dependency, trust and / or longevity at all. Complexity is usually low, and Power can be used arrogantly to override the value scales, because it doesn’t matter if you harm the relationship. You wouldn’t do that would you? No? Would they do that to you? Have they been doing it to you all this time? What do you think the “Request For” (RFX) process is?
Let’s consider a very simplistic story line.. and let me emphasise, it’s simple and may not be a true reflection on your circumstances but it’s just an example. We will also keep it simple and only analyse four areas Longevity, Advanced, Need and Trust leaving Power for another time.
Let’s say you’re a professional services firm. You are seeking a commercial relationship with a new client. You are asked to complete the RFX process. Your new client stakeholders have now gone quiet as procurement takes over.
Let’s analyse this;
- L – Longevity, how long term is your relationship and how long term do you want that relationship to continue? It’s a new relationship.. there is no past, there is only a future possibility.. so ‘Low’;
- A – Advanced, how advanced is this. How complex is this. How advanced is your counterpart? How many issues, also known as variables, are you negotiating over or how many more could, with a bit of creativity, you add to the negotiation? Do you need to? Well this could be quite complex but… much of this will come down to the beauty parade and price will focus heavily. So ‘Low’.
- N – Need, how much do you need them. How much do they need you? It’s a new client so it could be ‘Low’.. they have BATNA’s and so should you (BATNA – best alternative to a negotiated agreement – a term from Harvard PON)
- T – Trust, how much do you trust them and how much do they trust you. In fact, do you need to trust each other? Well, you may have built up a sales relationship with the client stakeholder but how about with procurement? Do you trust them, do they trust you? So ‘Low’;
All factors being low would suggest you could behave in a way that showed coldness, hardness even arrogant behaviours. ‘The Haggler’ persona, but would this be appropriate?
Unlikely, unless you don’t care for the business in the first place… but more importantly how could procurement negotiate?
Yes, you’re getting the hang of this. Procurement could haggle with you so you could expect cold hard tough and even arrogant behaviours. Forewarned is forearmed!
Let’s continue with this story. Lets suggest you win this business and are offered a short term contract, delivering a small project into one country. You are now negotiating over the price of this project and the time to deliver.
Let’s analyse this;
- L – Longevity, It’s short, so could be Low but we now have the idea of a contract relationship with a delivery requirement so we can set this to ‘medium’;
- A – Advanced, not very complex, just price and time, so, ‘low’.
- N – Need? It’s a new client so it still could be ‘low’ but you’ll want to impress to achieve more business and although they have BATNA’s, others who could do this project they now are needing you to deliver so lets put this at ‘medium’.
- T – Trust, you haven’t delivered yet, you’re in a short term assignment, although you want more business you still don’t know them and they don’t know you, so ‘low’;
All factors being medium and low would suggest exhibit cold and hard behaviours, ‘The Dealer’ persona, but would this be appropriate?
Yes, perhaps! You can be cold, hard and tough inwardly but play a warm exterior.. can’t you. Don’t they? How could procurement and the client stakeholders negotiate? They could haggle over price or they could be the dealer but the price is still king and it’s still a distributive negotiation, win:lose. How will you plan for this? How will you use the art and science of negotiation to ensure you win something?
So that’s the Eastern side of the Compass, ‘The Haggler’ and ‘The Dealer’. Now let’s have a look at the Western side, ‘The Engineer’ and ‘The Diplomat’. The Western side, warm, open and co-operative, can be described as collaborative, integrative or Win:Win. The deals you navigate here have more issues and are more complex. You will be more dependent on each other and with this trust levels increase. More issues mean the possibility for creation through low cost high value conditional trading, more mutual value means longer relationships.
So continuing the story, lets suggest you have successfully delivered the last project and are discussing rolling it out across multiple countries with multiple stakeholders. The scope of the project has widened.
Let’s analyse this;
- L – Longevity, It’s going to take longer to deliver and you could be negotiating over a two or three year contract so lets say this has increased to medium;
- A – Advanced, Price, time, contract length, how many countries, payment terms, rebates, insurance.. we are definitely increasing the complexity so lets say medium;
- N – Need, It’s not now a new client. You have become more dependent on each other but you fear their BATNA’s but you know you have what they want, so lets say medium;
- T – Trust, you now know the procurement team and have built trust. You know one country client stakeholder but you don’t know the others.. this could be medium then;
All factors would suggest ‘The Engineer’ persona and there is a major shift in behaviours needed and how we process this type of negotiation.
We shouldn’t exhibit cold, hard behaviours but warm and cooperative ones because there is a higher need for trust and collaboration. In fact we will have to share information to get this project done, won’t we?. Where do you think the client could be?
Finishing this story. Lets now suggest you have successfully delivered globally and are now managing a client account that is worth multi million Euros in revenue and the client is dependent on your continuity for its own business growth and stability and that multi million revenue is your firm’s whale account, you’d feel it if you lost it!
Let’s analyse this;
- L – Longevity, you have a long past relationship and you are set for a long future one too; so high,
- A – Advanced, so many issues its becoming very difficult to manage but you now have enough trust to be open and share problems, find solutions together and even have an open book policy where margin is agreed up front; so high,
- N – Need? It’s now high.. in fact you have become interdependent;
- T – Trust, trust is high, it’s now key, break trust and this pyramid comes tumbling down
A diplomatic relationship. With that comes higher levels of negotiation planning, processing and behavioral control.. tough on issues, warm on people. Trust is ‘the’ important factor here, it’s a very fine balance! One wrong move and it could land both parties in a lot of difficulty and mutual loss of profit. Here we need ‘The Diplomat’ persona.
Now.. Lets throw a hand grenade into this story.. We have not analysed P for Power. What happens if you had all the ‘power’! What happens if, from the beginning they needed you, they needed you more than you needed them? Would you have negotiated differently? How would the Negotiation Compass have looked to you.. to haggle or not to haggle. Go all out collaborative from the beginning… or not? What happens if right from the beginning you never had any power. What happens if you were just another supplier offering the same service that could be delivered by multiple parties and maybe in fact you were just invited to the RFX to be used. You will always need to analyse power as a major part of the compass analysis.
Or, consider this.. six years into a great relationship and the clients shareholders cry out for strong dividends. Who do the procurement team get told to go after and how? That’s right you and price reductions. From ‘The Engineer’ to ‘The Dealer’, with maybe a swing to ‘The Haggler’ but after.. back to ‘The Engineer’. How are you going to negotiate that appropriately?
How about this one.. and it’s a final thought for now, contact us to discuss in more detail, but recognise that circumstances change all the time. What happens when after ten years the procurement team has changed and a new CPO and CFO get together to test the market. To test if you are delivering best price for service. They suddenly put a strategy in play that could see you in an instant move from ‘The Diplomat’ to ‘The Haggler’, back into the RFX process. What happens now? What if you stay ‘The Diplomat’ to their ‘Haggler’. Who is going to achieve more now? Who is Win:Winning and who is Win:Losing!
In summary, you can’t negotiate effectively without a plan and to plan effectively you need a tool. A Compass that moves with and adapts to the changing circumstances you see, feel and experience. The Kahvay Negotiation Compass©. To learn more contact us.