Generally, we all like to find ourselves in comfortable situations where we have a good read on the environment, the people we are doing business with and the methods in which we operate. Negotiations are no different. This is typically characterized by negotiations that lack tension, disagreement and conflict. While these are safe discussions, ultimately, the best negotiations and negotiators are comfortable being uncomfortable, which allows them to employ a wider range of tools and strategies to generate the most value possible. Now, I am not subscribing that conflict plays out with loud arguments that upset both parties, as this approach is not productive. However, there is room in a negotiation for a healthy level of tension that pushes all parties involved to challenge the boundaries of what is possible.
I recall one negotiation I was in with one of the largest suppliers we were doing business with at the time. The company I was working for had financial challenges, and there was a need for our organization to renegotiate our commercial arrangements with a myriad of suppliers. As we were planning for the negotiation, some of my colleagues commented that we did not have leverage with this supplier and that there was really no reason for this company to open the agreement that was in place. Additionally, our ability to switch suppliers would have required millions of dollars in conversion costs. When we took the senior team through our negotiation plan, including our opening offer, target and walk-away points, there was an understandable high level of indigestion that we were going to upset this supplier and that the relationship would be impaired.
With this, we started the negotiation. Our opening offer was significant as we asked for the equivalent of a 40% reduction in cost. As you can imagine, this opening offer was met with a high level of resistance. In the upcoming weeks and after many meetings and discussions, we were able to agree on a 30% reduction in our costs, with the relationship very much intact.
In future blogs, I will outline the tools and techniques we used to achieve this result. The point is that the easy, safe play for us to take would have been to either not enter the discussions or to place a much more palatable offer in front of this supplier. However, in pushing the boundaries with our approach and ‘getting out of our heads’ and ‘getting into their heads,’ we achieved significant savings without any relationship impairment. Essentially, we were comfortable being uncomfortable.
In your upcoming negotiations, should you find yourself in a position where you are feeling comfortable, challenge your thinking and try some different techniques and approaches to push the boundaries of what is possible. Feeling uncomfortable in negotiations will lead to significant value creation.
To learn more about this topic or to develop your team’s negotiation skills, reach out.