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Virtual Negotiation: The responsibility for getting it right

May 13, 2014

Yesterday I wrote about the impact of virtual (technology-based) negotiation on the resulting quality of contracts and business results. My conclusion was that many of the efficiency benefits and savings that are supposed to flow from reduced physical meetings are not achieved – and that any gains are far outweighed by the losses in creativity, understanding and quality of negotiated relationships.

To emphasize this point, it is important to note that virtual negotiation and meetings are in many cases driven by growing geographic distance between suppliers and customers and (with internal teams) the elimination of the office. Technology has not only enabled virtual communication, it has also broken down the barriers of who we communicate with and where they are in the world. So ironically we are using an inferior method of communicating at the very time when communication quality matters most – when we are operating with multi-national teams (in our own organization) and across borders (with our customers or suppliers). We are handling different business cultures, different languages, different legal systems – and eliminating the benefits of physical interaction – all at the same time. No wonder so many contracts prove disappointing in terms of results.

So it is in many cases fair to conclude that the push to such extensive electronic communication has proved destructive of value. But before levelling too much criticism at senior management, I have to ask “Where is the voice of the contract and commercial community in all of this?” We see negotiation as one of our core skills so surely, as professionals, we should be undertaking and reporting analysis to help management understand the true costs of pushing virtual negotiation too far.   They cannot be expected to understand the precise blend of physical and virtual meetings that will produce optimum results – that has to be our job.

One Comment
  1. Hi Tim,

    I have been following your discussion on virtual contract negotiation – although the results of the information is concerning, Its a sign of our changing world and a new challenge. As technology increases and as our offerings move more service based – we will see a greater shift to virtual negotiation. The real question is how do we overcome this challenge? I don’t for see the virtual landscape changing in the near future but rather increasing with applications and technology.

    I also think this challenge is also faced in the way we shop for products now – so much information is available to us that we often have chosen a solution before even contacting the organization.

    I will disclaim that I work for a software provider but we deal with virtual negotiation on a daily basis. It is a significant challenge we face, but we have found that open lines of communication are the part of the key to success. Availability, open communication, upfront information, and obligation management have been the cornerstones of our process.

    From there I would suggest fine tuning the offering, opening the lines of communication between internal teams, and utilizing contract management software to ensure negotiating power and data intelligence.

    By pushing our negotiations to the physical realm when buyers may prefer the context of virtual, we may be hurting our negotiations from the beginning. We can’t force our way, especially as business costs are increasing, time is valuable, and resources are stretched thin. We must find innovative ways to overcome these challenges without losing the initial reasons why we serve the client. In the end they are the ones that matter – as a community we need to make sure we are meeting their needs and virtual structures.

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