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Upgrading Negotiation

June 19, 2012

I am delighted to be working on a new book with Kate Vitasek (author of Vested Outsourcing) and colleagues Jeanette Nyden and Jacqui Crawford. Our theme is ‘Getting to We’ – an update on the thinking and methods that need to surround today’s negotiations. Between us, we will be posting a number of blogs that underlie some of our core thinking. Here is a brief background on why it is time for us to start thinking – and acting – differently.

Most of today’s business leaders have received negotiation training, yet most of that training was rooted in a different era. It was based in a world where face-to-face negotiation was the norm, where most relationships were local or within a single country, where the use of contracts was far more variable and the portfolio of risks far smaller.

Today we operate in a networked world, in which many relationships cross cultures, languages and jurisdictions, where concepts such as commoditization, compliance and contracts are the norm. Much negotiation is undertaken through virtual means – email, teleconferences, webcasts, e-auctions – and in an environment of complex regulation, superficially similar across countries or regions, yet quite different in reality. And the risks have multiplied, as social, political and economic expectations have grown and the opportunities for high-exposure failure have increased.

“In  2009, the net income of the Global 2000 declined by 30.9%. In that same period, the upper quartile of companies for ‘negotiation maturity’ posted  an average net income increase of 42.5%.”(IACCM / Huthwaite International study “Improving Corporate Negotiation Performance”)

Just as the world around us has transformed, so must the way we think about, plan for and execute negotiations. As most executives know, the ability to negotiate makes a difference, but quite what constitutes that ability remains rather vague.  So we will be looking at the characteristics of ‘best practice’ companies – those in the top quartile of performers. As the quote above shows, companies that are good at negotiating also achieve dramatically better financial results. It would be wrong to suggest that negotiation is itself the cause of these differences, but it is a contributor and it seems to reflect a broader commitment to superior business planning and clear business goals. These organizations  view negotiation as an area for strategic competence and invest accordingly.

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