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Negotiauctions

November 3, 2009

I am looking forward to talking soon with Professor Guhan Subramanian, Joseph Flom Professor of Law and Business and H. Douglas Weaver Professor of Business Law, at Harvard Business School.

Professor Subranamian has been writing about what he terms ‘negotiauctions’ and the challenges of dealing with ever more complex deal-making. He perceives the business world increasingly integrating traditional negotiations with auctions in order to achieve greater value.

His ideas are certainly interesting. As previously reported in this blog and elsewhere, the indiscriminate use of auctions can be extremely damaging to key relationships and business outcomes. Yet traditional negotiation is often inefficient and tends to be more subject to personal relationships and influences. Professor Subranamian is not unaware of the difficulties that face businesses in establishing successful deals. He highlights that it is not simply a matter of agreement between buyer and supplier, but each is also undertaking internal negotiations at the same time.

This challenge of  ‘doing the right thing’ came up again today, when I met with two fomer General Counsels, one from banking and the other from technology and outsourcing. Each of them was reflecting on the difficulty of overcoming organizational metrics, especially in long-term deals where value is not achieved at the point of signature. They discussed how Sales motivation systems and Procurement measurements still hamper the creation of longer-term value and tend to drive to less efficient and more acrimonious relationships.

So I have a lot of questions in store for the Professor and I am sure many IACCM members will look forward to hearing him on a future Ask The Expert call, when they too can seek answers on the ways that Negotiauctions may help us do better deals.

 

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