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Openness In Negotiation

October 6, 2010

“Some of the most successful resolutions (to negotiation) have been when there is nothing left to hide. Openness clearly leads to more value, yet often it requires a crisis to make it happen.”

This statement came from a discussion I was having today with the Vice-President for Commercial Management at a major outsourcing provider. Many in our community – buy and sell – bemoan the absence of open communication and recognize the impact this has on negotiated results. But recognition of the problem does not lead to change …

The executive with whom I was having this discussion described how his function is moving from a role of ‘reactionary customer protection’ to ‘proactive business winning’. This is an increasingly common trend, but like many others, it is unclear how that transition will be made.

The IACCM studies of ‘the most admired companies’ offer a range of insights. Perhaps the key issue is the quality of teamwork in both parties. Not only must the internal planning procedures be collaborative, but  the business-to-business communications are fundamental to building trust. Flexiblity is not the most valued attribute in negotiation; it is the quality of communication. That means ensuring the right people with the right information are engaged at the right time, to enable open discussion and joint problem-solving.

In many organizations, there are several factors that work against this. One is the tendency (identified in the recent research by the International Center for Complex Project Management) for executive sponsors to engage in a ‘conspiracy of optimism’ – expecting results that cannot be achieved, at unrealistic prices and in unachievable timeframes. In principle, early engagement of the contracts personnel might reduce those risks – but in reality, contract management, legal and procurement staff are often involved too late. At that point, the contract becomes an instrument of protection, rather than a tool to assist realization of the opportunity.

Far too many opportunites are missed because negotiations become driven by protection, rather than open discussion of how the parties will mutually address the risks and create a relationship committed to success. This is not inevitable, but it is far too frequent and it requires organizations to re-think the way they assemble, empower and manage their negotiation teams and planning.

  1. An IACCM member wrote with the following helpful comment:

    I could not agree more with your note. Some of my major experiences of impacting the business were the result of betting personal trust with a negotiation partner at the other side of the table aginst both companies’ being entrenched in tight positions.
    Maybe the best example is a deal I claim to have been key in making happen between an aerospace MRO provider and an extremely large operator of freight airplanes. The two companies were a perfect match for business but had failed half a dozen times over almost 10 years to enter into framework agreements for fleet support, each time about very basic principles of their T&C.
    The moment I entered the room with my team I knew I had a partner in their legal counsel, based on eye contact and sensing. The simple key was to openly explain the real issue both companies had behind the basic T&C expectations in question, which made finding common ground afterwards a walk in the park.

    To this day I have never had a bad experience with making a down payment in trust and openness in negotiations, but of course I do not always apply this method. Still I would be surprised if others felt this way of tackling roadblocks had regularly failed.

  2. haward permalink

    Openness is a two way process. All too often it is only one side which is , or is expected to be open. And openness takes many forms. One example I remember from my days in hard negotiation is that on reaching an impasse one would be asked , if you were the supplier “are you really going to turn the work down for this issue” and in most cases our answer was to take advice from HQ or escalate the point. I developed a slightly different approach , which did not always work. I would ask the client to let me know what the response would be if we indicated that we would turn the work down or if we indicated that we would not do so. In turn the usual response to that was to refuse to answer on the grounds that to answer would be to expose thier negotiating strategy. Making the point that that is what we are being asked to do did not always help. Sometimes it did and sometimes it did not but in some cases we were able to reach a deal based on mutual exposure of the consequences of a yes or no. In those cases where mutual exposure was not possible it usually just took longer and more teeth grinding to get a deal

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